================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FINAL AMENDMENT
TO
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of
the Securities Exchange Act of 1934
and
Statement on
SCHEDULE 13D
Under the Securities Exchange Act of 1934
-----------------------
THE MULTICARE COMPANIES, INC.
(Name of Subject Company)
GENESIS ELDERCARE ACQUISITION CORP.
AND GENESIS ELDERCARE CORP.
(Bidder)
-----------------------
Common Stock, par value $.01 per share
(Title of Class of Securities)
62543 V1 0
(CUSIP Number of Class of Securities)
Michael R. Walker
Genesis ElderCare Corp.
148 West State Street
Kennett Square, PA 19348
Telephone: (610) 444-6350
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
-----------------------
Copies to:
<TABLE>
<S> <C> <C>
William E. Curbow, Esq. Richard J. McMahon, Esq. Paul J. Shim, Esq.
Simpson Thacher & Bartlett Blank Rome Comisky & McCauley Cleary, Gottlieb, Steen & Hamilton
425 Lexington Avenue 1200 Four Penn Center Plaza One Liberty Plaza
New York, New York 10017 Philadelphia, Pennsylvania 19103 New York, New York 10006
Telephone: (212) 455-2000 Telephone: (215) 569-5500 Telephone: (212) 225-2000
</TABLE>
================================================================================
<PAGE>
CUSIP NO. 62543 VI 0
NAMES OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS:
GENESIS ELDERCARE CORP.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) { }
(b) {X}
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF and BK
5 CHECK BOX IF THE DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) or 2(f)
5 CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
6 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
32,904,492
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
{ }
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
100.0% (based on 32,904,492 shares outstanding)
(10) TYPE OF REPORTING PERSON
HC
2
<PAGE>
CUSIP NO. 62543 VI 0
NAMES OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS:
GENESIS ELDERCARE ACQUISITION CORP.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) { }
(b) {X}
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF and BK
5 CHECK BOX IF THE DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) or 2(f)
5 CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
6 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
32,904,492
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
{ }
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
100.0% (based on 32,904,492 shares outstanding)
(10) TYPE OF REPORTING PERSON
CO
3
<PAGE>
This Final Amendment amends and supplements the Tender Offer Statement on
Schedule 14D-1 and Statement on Schedule 13D filed on June 20, 1997 and amended
and supplemented on July 17, 1997, August 14, 1997, September 11, 1997,
September 29, 1997, October 8, 1997 and October 10, 1997 (as amended and
supplemented, the "Schedule 14D-1/13D") relating to the offer by Genesis
ElderCare Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Genesis ElderCare Corp., a Delaware corporation (the
"Parent"), to purchase all of the outstanding shares of Common Stock, par value
$.0l per share (the "Shares"), of The Multicare Companies, Inc., a Delaware
corporation ("Multicare"), at a purchase price of S28.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 20, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with the
Offer to Purchase, constitute the "Offer").
Item 6. Interest in Securities of the Subject Company
Item 6(a) of the Schedule 14D-1/13D is hereby amended and supplemented as
follows:
On October 10, 1997, Multicare was merged with and into the Purchaser. As
a result, Multicare has become a wholly owned subsidiary of the Parent. Attached
hereto as Exhibit (a) (18) is a press release issued by the Parent on October
10, 1997 describing the merger.
Item 11. Material to be Filed as Exhibits
(a) (18) Press release issued by the Parent on October 10, 1997.
(b) (4) Indenture, dated as of August 11, 1997, among Genesis ElderCare
Acquisition Corp., as Issuer, PNC Bank, National Association, as
Trustee and Banque Internationale a Luxembourg S.A., as Paying
Agent, relating to the 9% Senior Subordinated Notes of the Issuer.
(b) (5) Credit Agreement, dated as of October 9, 1997, by and among The
Multicare Companies, Inc. and its direct and indirect subsidiaries,
as borrowers, the financial institutions identified therein, as
lenders, Mellon Bank, N.A., as issuer of letters of credit, Mellon
Bank, N.A., as administrative agent, Citicorp USA, Inc., as
syndication agent, Nationsbank, N.A., as syndication agent, and First
Union National Bank, as documentation agent.
(b) (6) Credit Agreement, dated as of October 9, 1997, by and among,
Genesis ElderCare Acquisition Corp., as borrower, the financial
institutions identified therein, as lenders, Mellon Bank, N.A., as
administrative agent and the other agents identified therein.
(b) (7) Third Amended and Restated Credit Agreement, dated as of October
9, 1997, by and among Genesis Health Ventures, Inc. and certain of
its subsidiaries, as borrowers, the financial institutions identified
therein, as lenders, Mellon Bank, N.A., as issuer of letters of
credit, Mellon Bank, N.A., as administrative agent, Citicorp USA,
Inc., as syndication agent, First Union National Bank, as
documentation agent, Nationsbank, N.A., as syndication agent and the
other agents identified therein.
(b) (8) Credit Agreement dated as of October 9, 1997, by and among The
Multicare Companies, Inc. and certain of its subsidiaries, as
borrowers, the financial institutions identified therein, as lenders,
Mellon Bank, N.A., as issuer of letters of credit, Mellon Bank, N.A.,
as administrative agent, Citicorp USA, Inc., as syndication agent,
First Union National Bank, as documentation agent Nationsbank, N.A.,
as syndication agent, and the other agents identified therein.
(c) (8) Put/Call Agreement among The Cypress Group L.L.C., TPG Partners
II, L.P., Nazem, Inc. and Genesis Health Ventures, Inc. dated
October 9, 1997.
(c) (9) Stockholders Agreement, dated as of October 9, 1997, by and among
Genesis ElderCare Corp., The Cypress Group L.L.C., TPG Partners II,
L.P., Genesis Health Ventures, Inc. and Nazem, Inc.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
GENESIS ELDERCARE CORP.
By: /s/ James L. Singleton
-----------------------------
Name: James L. Singleton
-----------------------------
Title: Vice President
-----------------------------
GENESIS ELDERCARE ACQUISITION CORP.
By: /s/ James L. Singleton
-----------------------------
Name: James L. Singleton
-----------------------------
Title: Vice President
-----------------------------
Date: October 24, 1997
3
For Immediate Release - National Circuit
Contact: George V. Hager, Jr.
Senior Vice President & Chief Financial Officer
(610) 444-6350
GENESIS ELDERCARE CORP. AND THE MULTICARE COMPANIES, INC.
COMPLETE MERGER
Kennett Square, PA -- October 10, 1997 - Genesis ElderCare Corp. announced today
that as of October 10, 1997, The Multicare Companies, Inc., had been merged with
a wholly-owned subsidiary of Genesis ElderCare Corp. As a result, each share of
common stock of Multicare not previously purchased in Genesis ElderCare Corp.'s
tender offer which expired at 7:00 p.m., New York City time, on Wednesday,
October 8, 1997 had been converted into the right to receive $28.00 in cash.
Genesis E1derCare Corp. was formed by Genesis Health Ventures, Inc. (NYSE:GHV),
The Cypress Group L.L.C. and TPG Partners II, L.P. to acquire Multicare.
####
================================================================================
GENESIS ELDERCARE ACQUISITION CORP.,
Issuer
and
PNC BANK, NATIONAL ASSOCIATION,
Trustee
and
BANQUE INTERNATIONALE A LUXEMBOURG S.A.,
Paying Agent
-----------------------
Indenture
Dated as of August 11, 1997
-----------------------
9% Senior Subordinated Notes due 2007
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1)..................................... 7.10
(a)(2)..................................... 7.10
(b)........................................ 7.08
ss. 313(c)........................................ 7.06; 11.02
ss. 314(a)........................................ 4.17; 11.02
(a)(4)..................................... 4.16; 11.02
(c)(1)..................................... 11.03
(c)(2)..................................... 11.03
(e)........................................ 11.04
ss. 315(b)........................................ 7.05; 11.02
ss. 316(a)(1)(A).................................. 6.05
(a)(1)(B).................................. 6.04
(b)........................................ 6.07
ss. 317(a)(1)..................................... 6.08
(a)(2)..................................... 6.09
ss. 318(a)........................................ 11.01
(c)........................................ 11.01
Note: The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.............................................. 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act........ 24
SECTION 1.03. Rules of Construction.................................... 25
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.......................................... 25
SECTION 2.02. Restrictive Legends...................................... 27
SECTION 2.03. Execution, Authentication and Denominations.............. 29
SECTION 2.04. Registrar and Paying Agent............................... 29
SECTION 2.05. Paying Agent to Hold Money in Trust...................... 30
SECTION 2.06. Transfer and Exchange.................................... 31
SECTION 2.07. Book-Entry Provisions for Global Notes................... 31
SECTION 2.08. Special Transfer Provisions.............................. 33
SECTION 2.09. Replacement Notes........................................ 37
SECTION 2.10. Outstanding Notes........................................ 37
SECTION 2.11. Temporary Notes.......................................... 37
SECTION 2.12. Cancellation............................................. 38
SECTION 2.13. CUSIP Numbers............................................ 38
SECTION 2.14. Defaulted Interest....................................... 38
SECTION 2.15. Issuance of Additional Notes............................. 39
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption; Mandatory Redemption................ 39
SECTION 3.02. Notices to Trustee....................................... 40
SECTION 3.03. Selection of Notes to Be Redeemed........................ 40
SECTION 3.04. Notice of Redemption..................................... 40
SECTION 3.05. Effect of Notice of Redemption........................... 41
SECTION 3.06. Deposit of Redemption Price.............................. 41
SECTION 3.07. Payment of Notes Called for Redemption................... 42
SECTION 3.08. Notes Redeemed in Part................................... 42
- --------
Note: The Table of Contents shall not for any purposes be deemed to be a part of
the Indenture.
<PAGE>
ii
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes......................................... 42
SECTION 4.02. Maintenance of Office or Agency.......................... 42
SECTION 4.03. Limitation on Indebtedness............................... 43
SECTION 4.04. Limitation on Restricted Payments........................ 43
SECTION 4.05. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries........................ 45
SECTION 4.06. Limitations on Preferred Stock of Restricted Subsidiaries 46
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries ............................................ 46
SECTION 4.08. Limitation on Transactions with Stockholders and
Affiliates .............................................. 47
SECTION 4.09. Limitation on Liens...................................... 48
SECTION 4.10. Limitation on Asset Sales................................ 49
SECTION 4.11. Repurchase of Notes upon a Change in Control............. 49
SECTION 4.12. Limitation on Senior Subordinated Indebtedness........... 50
SECTION 4.13. Limitation on Management Fees............................ 50
SECTION 4.14. Existence................................................ 50
SECTION 4.15. Payment of Taxes and Other Claims........................ 51
SECTION 4.16. Maintenance of Properties and Insurance.................. 51
SECTION 4.17. Notice of Defaults....................................... 51
SECTION 4.18. Compliance Certificates.................................. 52
SECTION 4.19. Commission Reports and Reports to Holders................ 52
SECTION 4.20. Waiver of Stay, Extension or Usury Laws.................. 53
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Issuer May Merge, Etc............................... 53
SECTION 5.02. Successor Substituted.................................... 54
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default........................................ 55
SECTION 6.02. Acceleration............................................. 56
SECTION 6.03. Other Remedies........................................... 57
SECTION 6.04. Waiver of Past Defaults.................................. 57
SECTION 6.05. Control by Majority...................................... 57
SECTION 6.06. Limitation on Suits...................................... 57
SECTION 6.07. Rights of Holders to Receive Payment..................... 58
SECTION 6.08. Collection Suit by Trustee............................... 58
<PAGE>
iii
SECTION 6.09. Trustee May File Proofs of Claim......................... 59
SECTION 6.10. Priorities............................................... 59
SECTION 6.11. Undertaking for Costs.................................... 59
SECTION 6.12. Restoration of Rights and Remedies....................... 60
SECTION 6.13. Rights and Remedies Cumulative........................... 60
SECTION 6.14. Delay or Omission Not Waiver............................. 60
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General.................................................. 60
SECTION 7.02. Certain Rights of Trustee................................ 61
SECTION 7.03. Individual Rights of Trustee............................. 62
SECTION 7.04. Trustee's Disclaimer..................................... 62
SECTION 7.05. Notice of Default........................................ 62
SECTION 7.06. Reports by Trustee to Holders............................ 62
SECTION 7.07. Compensation and Indemnity............................... 62
SECTION 7.08. Replacement of Trustee................................... 63
SECTION 7.09. Successor Trustee by Merger, Etc......................... 64
SECTION 7.10. Eligibility.............................................. 64
SECTION 7.11. Money Held in Trust...................................... 64
SECTION 7.12. Withholding Taxes........................................ 65
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Issuer's Obligations...................... 65
SECTION 8.02. Defeasance and Discharge of Indenture.................... 66
SECTION 8.03. Defeasance of Certain Obligations........................ 68
SECTION 8.04. Application of Trust Money............................... 70
SECTION 8.05. Repayment to Issuer...................................... 70
SECTION 8.06. Reinstatement............................................ 70
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders............................... 71
SECTION 9.02. With Consent of Holders.................................. 71
SECTION 9.03. Revocation and Effect of Consent......................... 72
SECTION 9.04. Notation on or Exchange of Notes......................... 73
SECTION 9.05. Trustee to Sign Amendments, Etc.......................... 73
SECTION 9.06. Conformity with Trust Indenture Act...................... 74
<PAGE>
iv
ARTICLE TEN
SECURITY
SECTION 10.01. Security................................................ 74
ARTICLE ELEVEN
SUBORDINATION
SECTION 11.01. Agreement to Subordinate................................ 75
SECTION 11.02. Distribution on Dissolution, Liquidation, Bankruptcy or
Reorganization.......................................... 76
SECTION 11.03. Suspension of Payment When Senior Indebtedness in
Default................................................. 77
SECTION 11.04. Payment Permitted if No Default......................... 79
SECTION 11.05. Subrogation to Rights of Holders of Senior Indebtedness. 79
SECTION 11.06. Provisions Solely to Define Relative Rights............. 79
SECTION 11.07. Trustee to Effectuate Subordination..................... 80
SECTION 11.08. No Waiver of Subordination Provisions................... 80
SECTION 11.09. Notice to Trustee....................................... 81
SECTION 11.10. Reliance on Judicial Order or Certificate of
Liquidating Agent ...................................... 82
SECTION 11.11. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights........................ 82
SECTION 11.12. Trust Moneys and Escrowed Funds Not Subordinated........ 82
SECTION 11.13. No Suspension of Remedies............................... 82
SECTION 11.14. Trustee's Relation to Senior Indebtedness............... 82
SECTION 11.15. Other Rights of Holders of Senior Indebtedness.......... 83
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act of 1939............................. 83
SECTION 12.02. Notices................................................. 83
SECTION 12.03. Certificate and Opinion as to Conditions Precedent...... 85
SECTION 12.04. Statements Required in Certificate or Opinion........... 85
SECTION 12.05. Rules by Trustee, Paying Agent or Registrar............. 86
SECTION 12.06. Payment Date Other Than a Business Day.................. 86
SECTION 12.07. Governing Law........................................... 86
SECTION 12.08. No Adverse Interpretation of Other Agreements........... 86
SECTION 12.09. No Recourse Against Others.............................. 86
SECTION 12.10. Successors.............................................. 87
SECTION 12.11. Duplicate Originals..................................... 87
SECTION 12.12. Separability............................................ 87
SECTION 12.13. Table of Contents, Headings, Etc........................ 87
<PAGE>
v
EXHIBIT A Form of Note...................................................A-1
EXHIBIT B Form of Certificate............................................B-1
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Non-QIB Accredited Investors..........C-1
EXHIBIT D Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S..........................D-1
EXHIBIT E Form of Supplemental Indenture.................................E-1
<PAGE>
INDENTURE, dated as of August 11, 1997, between GENESIS ELDERCARE
ACQUISITION CORP., a Delaware corporation (the "Issuer"), PNC Bank, National
Association, a national banking association duly organized under the laws of the
United States of America (the "Trustee"), and Banque Internationale a Luxembourg
S.A. (a "Paying Agent").
RECITALS
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance initially of up to $250,000,000 aggregate
principal amount of the Issuer's 9% Senior Subordinated Notes due 2007 (the
"Notes") issuable as provided in this Indenture. The Notes will be secured
pursuant to the terms of an Escrow Agreement (as defined herein) as provided by
Article Ten of this Indenture. All things necessary to make this Indenture a
valid agreement of the Issuer, in accordance with its terms, have been done, and
the Issuer has done all things necessary to make the Notes, when executed by the
Issuer and authenticated and delivered by the Trustee hereunder and duly issued
by the Issuer, the valid obligations of the Issuer as hereinafter provided.
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act of 1939 that are required to be a part of and to govern
indentures qualified under the Trust Indenture Act of 1939.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, the Issuer and the Trustee, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Restricted Subsidiary or (ii) existing at the time
and assumed in connection with the acquisition of assets by a Restricted
Subsidiary from such Person, in each case, other than Indebtedness incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or such acquisition; provided that Indebtedness of a Person which is
redeemed, defeased, retired or otherwise repaid at the time of or immediately
upon consummation of the transactions by which such Person becomes a Restricted
Subsidiary or such asset acquisition shall not be Acquired Indebtedness.
Acquired Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Restricted Subsidiary.
<PAGE>
2
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any other Person that
owns, directly or indirectly, 5% or more of such specified Person's Capital
Stock, (iii) any officer or director of (A) any such specified Person, (B) any
Subsidiary of such specified Person or (C) any Person described in clause (i) or
(ii) above or (iv) any other Person having a relationship with any natural
Person described in clause (i), (ii) or (iii) above by blood, marriage or
adoption not more remote than first cousin or any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such other Person described in this clause (iv). For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Co-Registrar, Paying Agent or authenticating
agent.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of (i) any
Capital Stock of any Restricted Subsidiary; (ii) all or substantially all of the
properties and assets of any division or line of business of the Issuer or its
Restricted Subsidiaries; or (iii) any other properties or assets of the Issuer
or any Restricted Subsidiary, other than in the ordinary course of business. For
the purposes of this definition, the term "Asset Sale" shall not include (a) any
transfer of properties and assets that is governed by Article Five, (b) any
transfer of properties or assets of the Issuer to a Restricted Subsidiary, or of
a Restricted Subsidiary to the Issuer or another Restricted Subsidiary, (c) any
transfer of inventory, receivables and other current assets, (d) any transfer of
assets for consideration at least equal to the Fair Market Value of the assets
transferred, to the extent that the consideration received would satisfy clause
(B) of Section 4.10, (e) the Therapy Sale, (f) the Pharmacy Sale, or (g) any
transfer of property or assets with a Fair Market Value not in excess of $1
million in any transaction or series of related transactions.
"Attributable Debt" in respect of a sale-leaseback transaction or an
operating lease in respect of a healthcare facility means, at the time of
determination, the present value (discounted at the interest rate implicit in
the lease, compounded semiannually) of the obligation of the lessee of the
property subject to such sale-leaseback transaction or operating lease in
respect of a healthcare facility for rental payments during the remaining term
of the lease included in such transaction including any period for which such
lease has been extended or may, at the option of the lessor, be extended or
until the earliest date on which the lessee may terminate such lease without
penalty or upon payment of penalty (in which case the rental payments shall
include such
<PAGE>
3
penalty), after excluding all amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water, utilities and
similar charges.
"Average Life" means, as of the date of determination with respect to any
Indebtedness, the quotient obtained by dividing (i) the sum of the products of
(A) the number of years from the date of determination to the date or dates of
each successive scheduled principal payment of such Indebtedness multiplied by
(B) the amount of each such principal payment by (ii) the sum of all such
principal payments.
"Bankruptcy Law" means Title 11, United States Code, as amended, or any
similar United States Federal or State law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief of debtors or
any amendment to, succession to or change in any such law.
"Board of Directors" means the Board of Directors of the Issuer or any
committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Issuer to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.
"Capital Lease Obligation" means the discounted present value of the
rental obligations under any lease of real or personal property which, in
accordance with GAAP, is required to be recorded on the balance sheet of such
Person as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated, whether voting or
non-voting) of such Person's capital stock or equity interests.
"Cash Collateral Account" means the account established with the Trustee
pursuant to the terms of the Escrow Agreement for the deposit of the net
proceeds from the sale of the Notes and such other purposes as specified
therein.
"Cash Equivalent" means (i) any security, maturing not more than six
months after the date of acquisition, issued by the United States of America, or
an instrumentality or agency thereof and guaranteed fully as to principal,
premium, if any, and interest by the United States of America, (ii) any
certificate of deposit, time deposit, money market account or bankers'
acceptance, maturing not more than six months after the date of acquisition,
issued by any
<PAGE>
4
commercial banking institution that is a member of the Federal Reserve System
and that has combined capital and surplus and undivided profits of not less than
$500,000,000, whose debt has a rating, at the time as of which any investment
therein is made, of "P-1" (or higher) according to Moody's Investors Service,
Inc. or any successor rating agency, or "A-1" (or higher) according to Standard
& Poor's Ratings Services or any successor rating agency and (iii) commercial
paper, maturing not more than three months after the date of acquisition, issued
by any corporation (other than an Affiliate or Subsidiary of the Issuer)
organized and existing under the laws of the United States of America with a
rating, at the time as of which any investment therein is made, of "P-1" (or
higher) according to Moody's Investors Service, Inc. or any successor rating
agency, or "A-1" (or higher) according to Standard & Poor's Ratings Services or
any successor rating agency.
"Change in Control" means any time that (i) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than
an Existing Stockholder or Genesis ElderCare Corp., in a single transaction or
through a series of related transactions, is or becomes the ultimate "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock of
the Issuer on a fully diluted basis and such ownership is greater than the
amount of voting power of the Voting Stock of the Issuer, on a fully diluted
basis, held by Genesis and its Affiliates on such date; (ii) the Issuer
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 the Issuer, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Issuer is changed into
or exchanged for cash, securities or other property, other than any such
transaction where (A) the outstanding Voting Stock of the Issuer is changed into
or exchanged for (x) Voting Stock of the surviving corporation which is not
Redeemable Capital Stock or (y) cash, securities or other property in an amount
which could be paid by the Issuer as a Restricted Payment under Section 4.04
(and such amount shall be treated as a Restricted Payment), and (B) the holders
of the Voting Stock of the Issuer 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; (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Issuer (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Issuer was (a) approved by a vote of at least 66% 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 or (b) approved by Genesis in connection with its acquisition of the
Common Stock of Genesis ElderCare Corp. held by Cypress or TPG) cease for any
reason to constitute a majority of the Board of Directors of the Issuer then in
office; or (iv) the Issuer is liquidated or dissolved or adopts a plan of
liquidation.
"Closing Date" means the date on which the Notes are originally issued
under this Indenture.
<PAGE>
5
"Collateral" means the Collateral as defined in the Escrow Agreement.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
date of the Indenture such Commission is not existing and performing the duties
now assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's equity, other than Preferred Stock of
such Person, whether outstanding on the Closing Date or issued thereafter,
including, without limitation, all series and classes of such common stock.
"Consolidated EBITDA" of any Person means, with respect to any period, the
Consolidated Net Income of such Person for such period, plus, to the extent such
amount was deducted in calculating such Consolidated Net Income (i) Consolidated
Income Tax Expense, (ii) depreciation expense, (iii) amortization expense, (iv)
Consolidated Interest Expense, (v) all other non-cash items reducing
Consolidated Net Income (other than items that will require cash payments and
for which an accrual or reserve is, or is required by GAAP to be, made), less
all non-cash items increasing Consolidated Net Income and (vi) all management
fees, and minus all management fees paid during such period (whether or not such
fees were deducted in calculating Consolidated Net Income for such period), all
as determined on a consolidated basis in accordance with GAAP; provided that, if
any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA of the Issuer shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (A) the amount of the
Consolidated Net Income attributable to such Restricted Subsidiary multiplied by
(B) the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by the Issuer or any of its
Restricted Subsidiaries.
"Consolidated Income Tax Expense" means for any period, as applied to any
Person, the provision for federal, state, local and foreign income taxes of such
Person and its Consolidated Subsidiaries for such period (other than income
taxes (either positive or negative) attributable to extraordinary and
non-recurring gains or losses or sales of assets) as determined in accordance
with GAAP.
"Consolidated Interest Expense" means, without duplication, for any
period, as applied to any Person, the sum of (i) the interest expense of such
Person and its Consolidated Subsidiaries for such period, including, without
limitation, (A) amortization of debt discount, (B) the net cost under interest
rate contracts (including amortization of discounts), (C) the interest portion
of any deferred payment obligation calculated in accordance with the effective
interest method of accounting and (D) accrued interest, plus (ii) the interest
component of the Capital Lease Obligations paid, accrued and/or scheduled to be
paid, or accrued by such Person
<PAGE>
6
during such period, in each case as determined in accordance with GAAP, plus
(iii) Preferred Stock dividends in respect of Preferred Stock of the Issuer or
any Restricted Subsidiary held by Persons other than the Issuer or a Wholly
Owned Restricted Subsidiary. For purposes of clause (c) of the preceding
sentence, dividends shall be deemed to be an amount equal to the actual
dividends paid divided by one minus the applicable actual combined federal,
state, local and foreign income tax rate of the Issuer and its Consolidated
Subsidiaries (expressed as a decimal).
"Consolidated Net Income" of any Person means, for any period, as applied
to any Person, the net income (or loss) of such Person and its Consolidated
Subsidiaries for such period as determined in accordance with GAAP, adjusted, to
the extent included in calculating such net income (loss), by excluding (without
duplication) (i) all extraordinary gains or losses (less all fees and expenses
relating thereto), (ii) the portion of net income of such Person and its
Consolidated Subsidiaries allocable to investments in Persons other than
Consolidated Subsidiaries to the extent that cash dividends or distributions
have not actually been received by such Person or one of its Consolidated
Subsidiaries, (iii) net income (or loss) of any Person combined with such Person
or any of its Consolidated Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) any gains or losses (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, or (vi) the net income of any Consolidated Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by that
Consolidated Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Consolidated Subsidiary.
"Consolidated Net Worth" of any Person means the Consolidated
stockholders' equity (excluding Redeemable Capital Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable for the sale of
Capital Stock) of such Person and its Consolidated Subsidiaries, as set forth on
the most recent consolidated balance sheet of such Person and its Consolidated
Subsidiaries (which shall be as of a date not more than 90 days prior to the
date of such computation determined in accordance with GAAP).
"Consolidated Rental Payments" of any Person means, for any period, the
aggregate rental obligations of such Person and its Consolidated Subsidiaries
(not including taxes, insurance, maintenance and similar expenses that the
lessee is obligated to pay under the terms of the relevant leases), determined
on a consolidated basis in conformity with GAAP, payable in respect of such
period under Attributable Debt or leases of real or personal property not
constituting Attributable Debt (net of income from subleases thereof, not
including taxes, insurance, maintenance and similar expenses that the sublessee
is obligated to pay under the terms of such sublease), whether or not such
obligations are reflected as liabilities or commitments on a consolidated
balance sheet of such Person and its Subsidiaries or in the notes
<PAGE>
7
thereto, excluding, however, in any event, (i) that portion of Consolidated
Interest Expense of such Person representing payments by such Person or any of
its Consolidated Subsidiaries in respect of Capital Lease Obligations (net of
payments to such Person or any of its Consolidated Subsidiaries under subleases
qualifying as capitalized lease subleases to the extent that such payments would
be deducted in determining Consolidated Interest Expense) and (ii) the aggregate
amount of amortization of obligations of such Person and its Consolidated
Subsidiaries in respect of such Capital Lease Obligations for such period (net
of payments to such Person or any of its Consolidated Subsidiaries and subleases
qualifying as capitalized lease subleases to the extent that such payments would
be deducted in determining such amortization amount).
"Consolidation" means, (i) with respect to the Issuer, the consolidation
of the accounts of the Issuer and each of its Restricted Subsidiaries and (ii)
with respect to any other Person, the consolidation of the accounts of such
Person and each of its Subsidiaries, in each case if and to the extent the
accounts of such Person and such Subsidiaries would normally be consolidated
with those of such Person, all in accordance with GAAP. The term "Consolidated"
shall have a similar meaning.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 1600 Market Street, Philadelphia, PA 19103, Attention: Sheila
Wallbridge.
"Credit Facility" means (i) any and all credit agreements (whether of the
Issuer or any Subsidiary of the Issuer) contemplated by the Amended and Restated
Commitment Letter dated as of June 14, 1997 between the Issuer and Mellon Bank,
N.A., Citicorp Securities, Inc., Citibank, N.A., First Union Capital Markets
Corp., First Union National Bank and NationsBank, N.A. as the same may be
amended, restated, renewed, extended, restructured, supplemented or otherwise
modified from time to time; (ii) any agreements, instruments and documents
executed or delivered pursuant to or in connection with such credit agreement;
and (iii) any credit agreement, loan agreement, note purchase agreement,
indenture or other agreement, document or instrument refinancing, refunding or
otherwise replacing the credit agreement or any other agreement deemed a Credit
Facility under clause (i), (ii) or (iii) hereof, whether or not with the same
agent, trustee, representative, lenders or holders, regardless of whether the
Credit Facility or any portion thereof was outstanding or in effect at the time
of such restatement, renewal, extension, restructuring, supplement or
modification. Without limiting the generality of the foregoing, the term "Credit
Facility" shall include any amendment, restatement, renewal, extension,
restructuring, supplement or modification to any Credit Facility and all
refundings, refinancings and replacements of any Credit Facility, including any
agreement (a) extending the maturity of any Indebtedness Incurred thereunder or
contemplated thereby, (b) adding or deleting borrowers or guarantors thereunder,
provided that the addition of such borrower or guarantor would not be prohibited
by Sections 4.03, 4.07 and 4.09, (c) increasing the amount of Indebtedness
Incurred thereunder or available to be borrowed
<PAGE>
8
thereunder, provided such increase is permitted to be Incurred under Section
4.03, or (d) otherwise altering the terms and conditions thereof in a manner not
prohibited by Sections 4.03, 4.05, 4.07 and 4.09. Notwithstanding the foregoing,
with respect to any agreement providing for the refinancing, refunding or
replacement of Indebtedness under the Credit Facility, such agreement shall be
the Credit Facility under the Indenture only if a notice to that effect is
delivered by the Issuer to the Trustee and there shall be at any time only one
instrument that is (together with the related agreements, instruments and
documents) the Credit Facility under the Indenture. No amendment or modification
to the Credit Facility shall be considered a refinancing, refunding or
replacement of Indebtedness under the Credit Facility for the purpose of
requiring notice pursuant to the preceding sentence.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Cypress" means The Cypress Group L.L.C., together with its Affiliates or
any of their respective successors.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Depositary" means The Depository Trust Issuer, its nominees, and their
respective successors.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under,
or in respect of, the Credit Facility and any Interest Rate Contract or Currency
Agreement related to Indebtedness under the Credit Facility and (ii) any other
Senior Indebtedness which, at the time of determination, has an aggregate
principal amount outstanding, together with any commitments to lend additional
amounts, of at least $30,000,000 and is specifically designated in the
instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness."
"Escrow Agreement" means the Escrow and Security Agreement made and
entered into as of the Closing Date by and among the Issuer, Genesis and the
Placement Agents in favor of the Trustee for the Holders.
"Escrow Agreement Officers' Certificate" means the Officers' Certificate
as defined in the Escrow Agreement.
"Escrow Agreement Opinion of Counsel" means the Opinion of Counsel as
defined in the Escrow Agreement.
"Event of Default" has the meaning provided in Section 6.01.
<PAGE>
9
"Excess Proceeds" has the meaning provided in Section 4.10.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Notes" means any securities of the Issuer containing terms
identical to the Notes (except that such Exchange Notes shall be registered
under the Securities Act and shall not contain terms concerning interest rate
increases) that are issued and exchanged for the Notes pursuant to the
Registration Rights Agreement and this Indenture.
"Exchange Offer" means the exchange offer by the Issuer of Exchange Notes
for the Notes pursuant to the terms of the Registration Rights Agreement.
"Existing Stockholders" means Genesis, The Cypress Group L.L.C. and TPG
Partners II, L.P. and their Affiliates.
"Expiration Date" means October 31, 1997, subject to an extension of up to
one month at the Issuer's option.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy as determined in good faith by the Board of
Directors, whose determination shall be conclusive if evidenced by a Board
Resolution.
"Fixed Charge Coverage Ratio" of any Person means, for any period, the
ratio of (i) the sum of Consolidated EBITDA plus one-third of Consolidated
Rental Payments, in each case for such period, of the Issuer and its
Consolidated Subsidiaries, as determined in accordance with GAAP to (ii) the sum
of Consolidated Interest Expense and one-third of Consolidated Rental Payments,
in each case, for such period of the Issuer and its Consolidated Subsidiaries;
provided that in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness computed on a pro forma basis and
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation had been the applicable rate for the entire period.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, as in
effect on the Closing Date. All ratios and computations contained or referred to
in this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that computations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization of any
expenses incurred in connection with the offering of the Notes, the Tender Offer
or the Merger and
<PAGE>
10
(ii) except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"Genesis" means Genesis Health Ventures, Inc.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length and are entered into in
the ordinary course of business), to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "Guaranteed Debt" shall not include
endorsements for collection or deposit, in either case in the ordinary course of
business.
"Guaranty Documents" means the Supplemental Indenture and the opinion of
counsel substantially in the form of Exhibit B-2 to the Escrow Agreement.
"Healthcare Related Business" means a business, the majority of whose
revenues result from healthcare, long-term care, or managed care related
businesses or facilities, including businesses which provide insurance relating
to the costs of healthcare, long-term care or managed care services.
<PAGE>
11
"Holder" means the registered holder of any Note.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) all obligations for the
payment of money of such Person for the deferred purchase price of property or
services, excluding any trade payables and other accrued current liabilities
arising in the ordinary course of business, but including, without limitation,
all obligations, contingent or otherwise, of such Person in connection with any
letters of credit or acceptances issued under letter of credit facilities,
acceptance facilities or other similar facilities and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock of such Person, or any warrants, rights or options to acquire
such Capital Stock, now or hereafter outstanding, (iii) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments, (iv)
all obligations under Interest Rate Contracts and Currency Agreements of such
Person, (v) all Capital Lease Obligations of such Person, (vi) all Indebtedness
of other Persons the payment of which is secured by a Lien, upon any property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness; provided that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset at such date of determination
and (B) the amount of such Indebtedness, (vii) all Guaranteed debt of such
Person, (viii) all Redeemable Capital Stock valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends, and (ix) all Attributable Debt of such Person. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (A) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at the time of its issuance
as determined in conformity with GAAP, (B) that money borrowed and set aside at
the time of the Incurrence of any Indebtedness in order to prefund the payment
of the interest on such Indebtedness shall not be deemed to be "Indebtedness"
and (C) that Indebtedness shall not include any liability for federal, state,
local or other taxes. For purposes hereof, the "maximum fixed repurchase price"
of any Redeemable Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Redeemable Capital
Stock as if such Redeemable Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is
<PAGE>
12
based upon, or measured by, the Fair Market Value of such Redeemable Capital
Stock, such Fair Market Value to be determined in good faith by the Board of
Directors.
"Indenture" means this Indenture as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
to this Indenture entered into pursuant to the applicable provisions of this
Indenture.
"Initial Blockage Period" has the meaning provided in Section 11.03.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date on
February 1 and August 1 of each year, commencing February 1, 1998.
"Interest Rate Contracts" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance,
and other similar agreements or arrangements.
"Investment" means, with respect to any Person, directly or indirectly,
any advance, loan or other extension of credit (including, without limitation,
any guarantee or similar arrangement but excluding advances in the ordinary
course of business that are, in conformity with generally accepted accounting
principles, recorded as accounts receivable on the balance sheet of the Issuer
or a Restricted Subsidiary) or capital contribution to (by means of any transfer
of cash or other property (tangible or intangible) to others, or any payment for
property or services for the account or use of others or otherwise), or any
purchase, acquisition or ownership by such Person of any Capital Stock, bonds,
notes, debentures or other securities (including, without limitation, any
interests in any partnership or joint venture) issued or owned by any other
Person and shall include (i) the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary and (ii) the issuance or sale of Capital Stock of a
Restricted Subsidiary if immediately after giving effect thereto such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and the Issuer or
another Restricted Subsidiary would have an Investment in such Restricted
Subsidiary after giving effect to such issuance or sale. For purposes of the
definition of "Unrestricted Subsidiary" and Section 4.04, (i) "Investment" shall
include the fair market value of the assets (net of liabilities (other than
liabilities to the Issuer or any of its Restricted Subsidiaries)) of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary, (ii) the fair market value of the assets (net of
liabilities (other than liabilities to the Issuer or any of its Restricted
Subsidiaries)) of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary shall be considered a reduction
in outstanding Investments and (iii) "Investment" shall include the fair market
value of the Capital Stock (or any other remaining Investment), held by the
Issuer or any of its Restricted Subsidiaries, of (or in) any Person that has
ceased to be a Restricted Subsidiary; provided that
<PAGE>
13
the fair market value of the Investment in an Unrestricted Subsidiary or any
other Person that has ceased to be a Restricted Subsidiary shall not exceed the
aggregate amount of Investments previously made in such Person valued at the
time such Investments were made less the net reduction of such Investments.
"Issuer" means Genesis ElderCare Acquisition Corp. and, following the
Merger, Multicare until a successor replaces it pursuant to Article Five and
thereafter means the successor.
"Issuer Order" means a written request or order signed in the name of the
Issuer (i) by its Chairman, a Vice Chairman, its President or a Vice President
and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee; provided, however, that such written
request or order may be signed by any two of the officers or directors listed in
clause (i) above in lieu of being signed by one of such officers or directors
listed in such clause (i) and one of the officers listed in clause (ii) above.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"Merger" means the merger of Genesis ElderCare Acquisition Corp. with and
into Multicare which shall be the surviving corporation in the merger.
"Merger Closing Date" means the date the Merger is consummated.
"Multicare" means The Multicare Companies, Inc.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof in the form of cash or Cash Equivalents including
payments in respect of deferred payment obligations when received in the form
of, or stock or other assets when disposed for, cash or Cash Equivalents (except
to the extent that such obligations are financed or sold with recourse to the
Issuer or any Restricted Subsidiary) net of (i) brokerage commissions and other
reasonable fees and expenses (including fees and expenses of counsel and
investment bankers) related to such Asset Sale, (ii) provisions for all taxes
payable as a result of such Asset Sale, (iii) payments made to retire
Indebtedness where payment of such Indebtedness either (A) is secured by the
assets or properties sold or (B) is required to be paid as a result of such
Asset Sale, (iv) amounts required to be paid to any Person (other than the
Issuer or any Subsidiary of the Issuer) owning a beneficial interest in the
assets subject to the Asset Sale and (v) appropriate amounts to be provided by
the Issuer or any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Issuer or any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other
<PAGE>
14
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an Officers' Certificate delivered to the
Trustee and (b) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or Cash
Equivalents (except to the extent such obligations are financed or sold with
recourse to the Issuer or any Restricted Subsidiary), net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
"Non-payment Default" means any default or event of default under or in
respect of any Designated Senior Indebtedness, other than a Payment Default.
"Non-U.S. Person" means a person who is not a "U.S. person" (as defined in
Regulation S).
"Notes" means any of the securities, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Indenture.
For all purposes of this Indenture, the term "Notes" shall include the Notes
initially issued on the Closing Date, any Exchange Notes to be issued and
exchanged for any Notes pursuant to the Registration Rights Agreement and this
Indenture and any other Notes issued after the Closing Date under this
Indenture. For purposes of this Indenture, all Notes shall vote together as one
series of Notes under this Indenture.
"Offer to Purchase" means an offer to purchase Notes by the Issuer from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless the Issuer defaults in the
payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii)
<PAGE>
15
that Holders whose Notes are being purchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note issued shall be
in a principal amount of $1,000 or integral multiples thereof. On the Payment
Date, the Issuer shall (i) accept for payment on a pro rata basis Notes or
portions thereof tendered pursuant to an Offer to Purchase; (ii) deposit with
the Paying Agent money sufficient to pay the purchase price of all Notes or
portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee all Notes or portions thereof so accepted together with an Officers'
Certificate specifying the Notes or portions thereof accepted for payment by the
Issuer. The Paying Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Issuer will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the paying agent for an Offer to Purchase. The Issuer will comply
with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable,
in the event that the Issuer is required to repurchase Notes pursuant to an
Offer to Purchase.
"Officer" means, with respect to the Issuer, (i) the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President or the
Chief Financial Officer, and (ii) the Treasurer or any Assistant Treasurer, or
the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer listed
in clause (i) of the definition thereof and one Officer listed in clause (ii) of
the definition thereof or two officers listed in clause (i) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Notes Exchange Date" has the meaning provided in Section 2.01.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion signed by legal counsel, who
may be an employee of or counsel to the Issuer, that meets the requirements of
Section 12.04 hereof. Each such Opinion of Counsel shall include the statements
provided for in TIA Section 314(e).
"Paying Agent" has the meaning provided in Section 2.04, except that, for
the purposes of Article Eight, the Paying Agent shall not be the Issuer or a
Subsidiary of the Issuer or an Affiliate of any of them. The term "Paying Agent"
includes any additional Paying Agent.
<PAGE>
16
"Payment Blockage Period" has the meaning provided in Section 11.03.
"Payment Default" means any default in the payment when due (at maturity,
upon acceleration of maturity, upon mandatory prepayment or otherwise) of any
amount owing under or in respect of any Designated Senior Indebtedness.
"Permanent Offshore Global Notes" has the meaning provided in Section
2.01.
"Permitted Indebtedness" means:
(a) Indebtedness outstanding at any time in an aggregate principal
amount not to exceed $625 million, less any amount of such Indebtedness
permanently repaid as provided under Section 4.10;
(b) Indebtedness of Multicare in existence on the Merger Closing
Date; provided that upon consummation of the Merger not more than $40
million of such Indebtedness shall remain outstanding;
(c) Indebtedness of the Issuer pursuant to the Notes;
(d) Indebtedness evidenced by letters of credit issued in the
ordinary course of business consistent with past practice to support the
Issuer's or any Subsidiary's insurance or self-insurance obligations
(including to secure workers' compensation and other similar insurance
coverages) to the extent such letters of credit are not drawn upon or, if
drawn upon, to the extent such drawing is reimbursed no later than the
third Business Day following a demand for reimbursement;
(e) Interest Rate Contracts and Currency Agreements to the extent
that the notional principal amount of such obligations under Interest Rate
Contracts does not exceed the amount of Indebtedness outstanding or
committed to be incurred on the date such Interest Rate Contracts are
entered into;
(f) Indebtedness owed (A) to the Issuer evidenced by an
unsubordinated promissory note or (B) to any Restricted Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent transfer of
any such Indebtedness (except to the Issuer or a Restricted Subsidiary)
shall be deemed, in each case to be an Incurrence of such Indebtedness not
permitted by this clause (f);
(g) any guarantees of Indebtedness by a Restricted Subsidiary
entered into in accordance with Section 4.07;
<PAGE>
17
(h) Indebtedness incurred by the Issuer or any Restricted
Subsidiary, and any renewals, extensions, substitutions, refundings,
refinancings or replacements thereof, in an amount not to exceed $20
million at any one time outstanding to finance the acquisition or
construction of any property or assets or any business, including Acquired
Indebtedness and Indebtedness incurred within 90 days after such
acquisition or construction, less any amount of such Indebtedness
permanently repaid as provided under Section 4.10;
(i) Capital Lease Obligations, and any renewals, extensions,
substitutions, refundings, refinancings or replacements thereof, in an
amount not to exceed $10 million at any time outstanding, less any amount
of such Indebtedness permanently repaid as provided under Section 4.10;
(j) Indebtedness in addition to that described in clauses (a)
through (i) of this definition of "Permitted Indebtedness," in an
aggregate principal amount outstanding at any time not to exceed $20
million, less any amount of such Indebtedness permanently repaid as
provided under Section 4.10; and
(k) any renewals, extensions, substitutions, refundings,
refinancings or replacements of any Indebtedness (other than Indebtedness
Incurred under clause (a), (d), (e), (f), (g), (h), (i) or (j) of this
definition of "Permitted Indebtedness"), including any successive
renewals, extensions, substitutions, refundings, refinancings or
replacements, so long as (i) any such new Indebtedness shall be in a
principal amount that does not exceed the principal amount (or, if such
Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination)
so refinanced, plus the amount of any premium required to be paid under
the terms of the instrument governing such Indebtedness being refinanced
or the amount of any premium reasonably determined by the Issuer as
necessary to accomplish such refinancing through means of a tender offer
or privately negotiated transactions and, in each case, actually paid,
plus the amount of expenses of the Issuer incurred in connection with such
refinancing; (ii) in case the Notes are refinanced in part or the
Indebtedness to be refinanced is pari passu with the Notes, such new
Indebtedness is expressly made pari passu with, or subordinate in right of
payment to, the remaining Notes; (iii) in the case of any refinancing of
Subordinated Indebtedness, such new Indebtedness is made subordinate in
right of payment to the Notes at least to the same extent as the
Indebtedness being refinanced; and (iv) such new Indebtedness, determined
as of the date of Incurrence of such new Indebtedness, does not mature
prior to the Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness is at least equal
to the remaining Average Life of the Indebtedness to be refinanced or
refunded; provided that in no event may Indebtedness of the Issuer be
refinanced by means of any Indebtedness of any Restricted Subsidiary
pursuant to this clause (k).
<PAGE>
18
For purposes of determining any particular amount of Indebtedness under Section
4.03, (1) Indebtedness Incurred under the Credit Facility on or prior to the
Merger Closing Date shall be treated as Incurred pursuant to clause (a) of this
"Permitted Indebtedness" definition, (2) Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (3) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. For purposes of determining compliance
with Section 4.03, in the event that an item of Indebtedness meets the criteria
of more than one of the types of Indebtedness described in this "Permitted
Indebtedness" definition (other than Indebtedness referred to in clause (1) of
the preceding sentence), the Issuer, in its sole discretion, shall classify such
item of Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.
(l) Notwithstanding the foregoing, for so long as the Credit Facility is
outstanding, Indebtedness Incurred under clause (a) above shall consist of (i)
$525 million of Indebtedness incurred under the Credit Facility (less any amount
referred to in clause (iii)), (ii) $100 million of Indebtedness (whether or not
incurred under the Credit Facility) and (iii) additional Indebtedness equal to
the amount by which, after giving effect to any amendment, restatement, renewal,
extension, restructuring, supplement or other modification of the Credit
Facility, the principal amounts outstanding and the commitments under the Credit
Facility have been permanently reduced (which may include subsequent increases
in the Credit Facility) less, without duplication, in the case of Indebtedness
described in clauses (i), (ii) or (iii), any amount of such Indebtedness
permanently repaid as provided under ss.4.10.
"Permitted Investment" means (i) Investments in the Issuer or a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to the Issuer or a Restricted
Subsidiary; provided that such Person's primary businesses are Healthcare
Related Businesses; (ii) Temporary Cash Investments; (iii) payroll, travel and
similar advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses in accordance with GAAP; and (iv)
Investments in existence on the Closing Date (including Investments held by
Multicare and its Subsidiaries).
"Permitted Junior Notes" has the meaning provided in Section 11.02.
"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pharmacy Sale" means the sale of Multicare's pharmacy business to Genesis
or any of its Affiliates in connection with the Merger.
<PAGE>
19
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock," as applied to any Person, means Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"principal" of a debt security, including the Notes, means the principal
amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.02.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Capital Stock" of any Person means any Capital Stock of such
Person other than Redeemable Capital Stock.
"Redeemable Capital Stock" means any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed prior
to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder
of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Notes or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Redeemable Capital Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Capital Stock upon the occurrence of an "asset sale" or "change in
control" occurring prior to the Stated Maturity of the Notes shall not
constitute Disqualified Stock if the "asset sale" or "change in control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Sections 4.10 and 4.11
and such Capital Stock specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Issuer's repurchase of such Notes as are required to be repurchased pursuant to
Sections 4.10 and 4.11.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price at which such Note is to be redeemed pursuant to this
Indenture.
"Registrar" has the meaning provided in Section 2.04.
<PAGE>
20
"Registration" has the meaning provided in Section 4.19.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the Closing Date among the Issuer and the Placement Agents.
"Registration Statement" means the Registration Statement as defined and
described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 15 or July 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer," when used with respect to the Trustee, means the
chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee in its Corporate Trust Department customarily performing
functions similar to those performed by any of the above-designated officers and
in each case having direct responsibility for the administration of this
Indenture or the Escrow Agreement and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Issuer other than an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933.
"Security Register" has the meaning provided in Section 2.04.
"Senior Indebtedness" means the following obligations, whether outstanding
on the Closing Date or thereafter Incurred: (a) all Indebtedness and other
monetary obligations of the Issuer or any Subsidiary of the Issuer under or in
respect of the Credit Facility (including obligations in respect of any lease
financing facility of the Credit Facility) or any Interest Rate Contract or
Currency Agreement related to Indebtedness under the Credit Facility, whether
for
<PAGE>
21
principal, interest (including interest accruing after the filing of a petition
by or against the Issuer or any Subsidiary of the Issuer under any state or
federal Bankruptcy Laws, whether or not such interest is allowed as a claim
after such filing in any proceeding under such law), fees, expenses,
indemnification or otherwise, and (b) the principal of, premium, if any, and
interest on all other Indebtedness of the Issuer (other than the Notes) unless,
in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall be pari passu with or subordinated in
right of payment to the Notes. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include (i) Indebtedness that is by its terms
subordinate in right of payment to any Indebtedness of the Issuer, (ii)
Indebtedness which when incurred and without respect to any election under
Section 1111(b) of the Bankruptcy Law is without recourse to the Issuer, (iii)
any repurchase, redemption or other obligation in respect of Redeemable Capital
Stock, (iv) Indebtedness for goods, materials or services purchased in the
ordinary course of business or indebtedness consisting of trade payables or
other current liabilities, (v) Indebtedness of or amounts owed by the Issuer to
employees, officers, or directors, (vi) any liability for federal, state, local
or other taxes owed or owing by the Issuer, (vii) Indebtedness of the Issuer to
a Subsidiary of the Issuer or any other Affiliate of the Issuer or any of such
Affiliate's subsidiaries, (viii) that portion of any Indebtedness which at the
time of issuance is issued in violation of the Indenture and (ix) amounts owing
under leases (other than Capital Lease Obligations).
"Senior Representative" has the meaning provided in Section 11.01.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined and described in the Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Issuer, accounted for more than 10% of the
consolidated revenues of the Issuer and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Issuer and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Issuer for such fiscal year.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"Subordinated Indebtedness" means any Indebtedness of the Issuer
subordinated in right of payment to the Notes.
<PAGE>
22
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Subsidiary Guarantee" has the meaning provided in Section 4.07.
"Supplemental Indenture" means the indenture supplemental hereto
substantially in the form of Exhibit E to this Indenture.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof and guaranteed
fully as to principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit and money market deposit, maturing not
more than one year after the date of acquisition, issued by, or time deposit of,
a commercial banking institution that is a member of the Federal Reserve System
and that has combined capital and surplus and undivided profits of not less than
$500,000,000, whose debt has a rating, at the time as of which any investment
therein is made, of "P-1" (or higher) according to Moody's Investors Service,
Inc. or any successor rating agency, or "A-1" (or higher) according to Standard
& Poor's Ratings Services or any successor rating agency or any money market
fund sponsored by a registered broker dealer or mutual fund distributor, (iii)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate or Subsidiary of the Issuer)
organized and existing under the laws of the United States of America with a
rating, at the time as of which any investment therein is made, of "P-1" (or
higher) according to Moody's Investors Service, Inc. or any successor rating
agency, or "A-1" (or higher) according to Standard & Poor's Ratings Services or
any successor rating agency and (iv) securities with maturities of six months or
less from the date of acquisition issued or fully and unconditionally guaranteed
by any state, commonwealth or territory of the United States of America, or by
any political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Services or Moody's Investors Service, Inc.
"Temporary Offshore Global Notes" has the meaning provided in Section
2.01.
"Tender Offer" means the offer to purchase all of the issued and
outstanding shares of Common Stock of Multicare made by Genesis ElderCare
Acquisition Corp.
"Therapy Sale" means the sale of Multicare's contract therapy business to
Genesis or any of its Affiliates in connection with the Merger.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
<PAGE>
23
"TPG" means TPG Partners II, L.P., together with its Affiliates, and any
of their respective successors.
"Transactions" means, collectively, the Tender Offer, the Merger, the
offering of the Notes issued hereunder, the management agreement to be entered
into by Genesis in connection with the Merger, the Therapy Sale and the Pharmacy
Sale.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article Seven of this Indenture and thereafter means such successor.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Issuer that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below; and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Issuer) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital
Stock of, or owns or holds any Lien on any property of, the Issuer or any
Restricted Subsidiary; provided that (A) any guarantee by the Issuer or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Issuer or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Sections 4.03 and 4.04. The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that (i) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to such designation and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately after such designation would, if Incurred at such time, have been
permitted to be Incurred (and shall be deemed to have been Incurred) for all
purposes of this Indenture. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the
<PAGE>
24
Stated Maturity of the Notes, and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of interest on or
principal of the U.S.
Government Obligation evidenced by such depository receipt.
"U.S. Government Securities" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America (x) the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America or (y) that are rated at
least "Aaa" (or the then equivalent grade) by Moody's Investors Service, Inc. or
"AAA" (or the then equivalent grade) by Standard & Poor's Ratings Services.
"Voting Stock" means 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).
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which is owned by the Issuer or another Wholly Owned Restricted
Subsidiary.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
<PAGE>
25
"obligor" on the indenture securities means the Issuer or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(vii) all ratios and computations based on GAAP contained in this
Indenture shall be computed in accordance with the definition of GAAP set
forth in Section 1.01; and
(viii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the Trustee's certificate of
authentication shall be substantially in the form annexed hereto as Exhibit A
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange agreements to which the
Issuer is subject or usage. The Issuer shall approve the form of the Notes and
any notation, legend or endorsement on the Notes. Each Note shall be dated the
date of its authentication.
<PAGE>
26
The terms and provisions contained in the form of the Notes annexed hereto
as Exhibit A shall constitute, and are hereby expressly made, a part of this
Indenture. To the extent applicable, the Issuer and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "U.S. Global Notes"),
registered in the name of the nominee of the Depositary, deposited with the
Trustee, as custodian for the Depositary, duly executed by the Issuer and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Notes may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary or its nominee, in accordance with the instructions given by the
Holder thereof, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on Regulation
S shall be issued initially in the form of one or more temporary global Notes in
registered form substantially in the form set forth in Exhibit A (the "Temporary
Offshore Global Notes"), registered in the name of the nominee of the
Depositary, deposited with the Trustee, as custodian for the Depositary, duly
executed by the Issuer and authenticated by the Trustee as hereinafter provided.
At any time following September 22, 1997 (the "Offshore Notes Exchange Date"),
upon receipt by the Trustee and the Issuer of a certificate substantially in the
form of Exhibit B hereto, one or more permanent global Notes in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Notes"; and together with the Temporary Offshore Global Notes, the "Offshore
Global Notes") duly executed by the Issuer and authenticated by the Trustee as
hereinafter provided shall be deposited with the Trustee, as custodian for the
Depositary, and the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the Temporary Offshore Global Notes in
an amount equal to the principal amount of the beneficial interest in the
Temporary Offshore Global Notes transferred.
Notes offered and sold in reliance on Regulation D under the Securities
Act shall be issued in the form of permanent certificated Notes in registered
form in substantially the form set forth in Exhibit A (the "U.S. Physical
Notes"). Notes issued pursuant to Section 2.07 in exchange for interests in the
Offshore Global Notes shall be in the form of permanent certificated Notes in
registered form substantially in the form set forth in Exhibit A (the "Offshore
Physical Notes").
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Notes
and the Offshore Global Notes are sometimes referred to herein as the "Global
Notes."
The definitive Notes shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the
<PAGE>
27
rules of any securities exchange on which the Notes may be listed, all as
determined by the Officers executing such Notes, as evidenced by their execution
of such Notes.
SECTION 2.02. Restrictive Legends. Unless and until a Note is exchanged
for an Exchange Note in connection with an effective Registration Statement
pursuant to the Registration Rights Agreement, the U.S. Global Notes, Temporary
Offshore Global Notes and each U.S. Physical Note shall bear the following
legend on the face thereof:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
(C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT, WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTES, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTES, THE HOLDER
<PAGE>
28
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
<PAGE>
29
SECTION 2.03. Execution, Authentication and Denominations. Subject to
Article Four, the aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is unlimited. The Notes shall be executed by
two Officers of the Issuer. The signature of these Officers on the Notes may be
by facsimile or manual signature in the name and on behalf of the Issuer.
If an Officer whose signature is on a Note no longer holds that office at
the time the Trustee or authenticating agent authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this Indenture,
the Trustee or an authenticating agent shall upon receipt of a Issuer Order
authenticate for original issue Notes in the aggregate principal amount
specified in such Issuer Order; provided that the Trustee shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel of the Issuer in
connection with such authentication of Notes. Such Issuer Order shall specify
the amount of Notes to be authenticated and the date on which the original issue
of Notes is to be authenticated and in case of an issuance of Notes pursuant to
Section 2.15, shall certify that such issuance is in compliance with Article
Four.
The Trustee may appoint an authenticating agent to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Issuer or an Affiliate of the Issuer.
The Trustee shall not be liable for the misconduct or negligence of any
authenticating agent appointed with due care.
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 in principal amount and any integral multiple of
$1,000 in excess thereof.
SECTION 2.04. Registrar and Paying Agent. The Issuer shall maintain an
office or agency where Notes may be presented for registration of transfer or
for exchange (the "Registrar"), an office or agency where Notes may be presented
for payment (the "Paying Agent") and an office or agency where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served, which shall be in the Borough of Manhattan, The City of New York or at
the principal Corporate Trust Office of the Trustee. The Issuer shall cause the
Registrar to keep a register of the Notes and of their transfer and exchange
(the "Security Register"). The Issuer may have one or more co-Registrars and one
or more additional Paying Agents.
<PAGE>
30
The Issuer shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Issuer shall give prompt written
notice to the Trustee of the name and address of any such Agent and any change
in the address of such Agent. If the Issuer fails to maintain a Registrar,
Paying Agent and/or agent for service of notices and demands, the Trustee shall
act as such Registrar, Paying Agent and/or agent for service of notices and
demands. The Issuer may remove any Agent upon written notice to such Agent and
the Trustee; provided that no such removal shall become effective until (i) the
acceptance of an appointment by a successor Agent to such Agent as evidenced by
an appropriate agency agreement entered into by the Issuer and such successor
Agent and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Issuer, any Subsidiary of the
Issuer, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands.
The Issuer initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands and Banque
Internationale a Luxembourg S.A., as Paying Agent. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders and shall otherwise comply with TIA ss.
312(a). If the Trustee is not the Registrar, the Issuer shall furnish to the
Trustee as of each Regular Record Date and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders, including the
aggregate principal amount of Notes held by each Holder.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than 11:00
a.m. (New York City time) on each due date of the principal, premium, if any,
and interest on any Notes, the Issuer shall deposit with the Paying Agent money
in immediately available funds sufficient to pay such principal, premium, if
any, and interest so becoming due. The Issuer shall require each Paying Agent
other than the Trustee to agree in writing that such Paying Agent shall hold in
trust for the benefit of the Holders or the Trustee all money held by the Paying
Agent for the payment of principal of, premium, if any, and interest on the
Notes (whether such money has been paid to it by the Issuer or any other obligor
on the Notes), and such Paying Agent shall promptly notify the Trustee of any
default by the Issuer (or any other obligor on the Notes) in making any such
payment. The Issuer at any time may require a Paying Agent to pay all money held
by it to the Trustee and account for any funds disbursed, and the Trustee may at
any time during the continuance of any payment default, upon written request to
a Paying Agent, require such Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed. Upon doing so, the Paying Agent
shall have no further liability for the money so paid over to the Trustee. If
the Issuer or any Subsidiary of the Issuer or any Affiliate of any of them acts
as Paying Agent, it will, on or before each due date of any principal of,
premium, if any, or interest on the Notes, segregate and hold in a separate
trust fund for the benefit of the Holders a sum of money sufficient to pay such
principal, premium, if any, or interest so
<PAGE>
31
becoming due until such sum of money shall be paid to such Holders or otherwise
disposed of as provided in this Indenture, and will promptly notify the Trustee
of its action or failure to act.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only in
registered form. A Holder may transfer a Note only by written application to the
Registrar stating the name of the proposed transferee and otherwise complying
with the terms of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer by the Registrar in the Security
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Issuer, the Trustee, and any agent of the Issuer shall treat the
person in whose name the Note is registered as the owner thereof for all
purposes whether or not the Note shall be overdue, and neither the Issuer, the
Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry. When Notes are presented
to the Registrar or a co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other authorized
denominations (including an exchange of Notes for Exchange Notes), the Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met (including that such Notes are duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Trustee and Registrar duly executed by the Holder thereof or by an
attorney who is authorized in writing to act on behalf of the Holder); provided
that no exchanges of Notes for Exchange Notes shall occur until a Registration
Statement shall have been declared effective by the Commission and that any
Notes that are exchanged for Exchange Notes shall be cancelled by the Trustee.
To permit registrations of transfers and exchanges, the Issuer shall execute and
the Trustee shall authenticate Notes at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange or redemption
of the Notes, but the Issuer may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon exchanges pursuant to Section 2.11, 3.08 or 9.04).
The Registrar shall not be required (i) to issue, register the transfer of
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes selected
for redemption under Section 3.03 and ending at the close of business on the day
of such mailing, or (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) The U.S. Global
Notes and Offshore Global Notes initially shall (i) be registered in the name of
the Depositary for such
<PAGE>
32
Global Notes or the nominee of such Depositary, (ii) be delivered to the Trustee
as custodian for such Depositary and (iii) bear legends as set forth in Section
2.02.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Note, and the Depositary may be treated by the Issuer, the Trustee and
any agent of the Issuer or the Trustee as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee, from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Note. Neither the Issuer nor the Trustee shall be
liable for any delay by the Depositary in identifying the beneficial owners of
the Notes and the Issuer and the Trustee may conclusively rely on, and shall be
protected in relying on, instructions from the Depositary for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of any Notes to be issued).
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in a Global Note may
be transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore Global
Notes, respectively, if (i) the Depositary notifies the Issuer that it is
unwilling or unable to continue as Depositary for the U.S. Global Notes or the
Offshore Global Notes, as the case may be, and a successor depositary is not
appointed by the Issuer within 90 days of such notice, (ii) an Event of Default
has occurred and is continuing and the Registrar has received a request from the
Depositary or (iii) in accordance with the rules and procedures of the
Depositary and the provisions of Section 2.08.
(c) Any beneficial interest in one of the Global Notes that is transferred
to a person who takes delivery in the form of an interest in the other Global
Note will, upon transfer, cease to be an interest in such Global Note and become
an interest in the other Global Note and, accordingly, will thereafter be
subject to all transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such an
interest.
(d) In connection with any transfer of a portion of the beneficial
interests in the U.S. Global Notes to beneficial owners pursuant to paragraph
(b) of this Section 2.07, the Registrar shall reflect on its books and records
the date and a decrease in the principal amount of the U.S. Global Notes in an
amount equal to the principal amount of the beneficial interest in the
<PAGE>
33
U.S. Global Notes to be transferred, and the Issuer shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Physical Notes of like
tenor and amount.
(e) In connection with the transfer of the entire U.S. Global Note or
Offshore Global Note to beneficial owners pursuant to paragraph (b) of this
Section 2.07, the U.S. Global Note or Offshore Global Note, as the case may be,
shall be deemed to be surrendered to the Trustee for cancellation, and the
Issuer shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the U.S. Global Note or Offshore Global Note, as the case may be, an
equal aggregate principal amount of U.S. Physical Notes or Offshore Physical
Notes, as the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest in the
U.S. Global Note pursuant to paragraph (b) or (d) of this Section 2.07 shall,
except as otherwise provided by paragraph (f) of Section 2.08, bear the legend
regarding transfer restrictions applicable to the U.S. Physical Note set forth
in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an interest in
the Offshore Global Note pursuant to paragraph (b) of this Section 2.07 shall,
except as otherwise provided by paragraph (f) of Section 2.08, bear the legend
regarding transfer restrictions applicable to the Offshore Physical Note set
forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.08. Special Transfer Provisions. Unless and until a Note is
exchanged for an Exchange Note in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The following
provisions shall apply with respect to the registration of any proposed transfer
of a Note to any Institutional Accredited Investor which is not a QIB (excluding
Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether
or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act or (y) the proposed transferee has delivered to the
Registrar (A) a certificate substantially in the form of Exhibit C hereto
and (B) if the aggregate principal amount of the Notes being transferred
is less than $100,000, an opinion of counsel acceptable to the Issuer that
such transfer is in compliance with the Securities Act.
<PAGE>
34
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Note in an
amount equal to the principal amount of the beneficial interest in the
U.S. Global Note to be transferred, and the Issuer shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Physical Notes of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with respect
to the registration of any proposed transfer of a U.S. Physical Note or an
interest in the U.S. Global Note to a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) U.S. Physical
Notes, the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Issuer and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Issuer and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Issuer as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A or (y) an
interest in the U.S. Global Note, the transfer of such interest may be
effected only through the book entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of U.S. Physical Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions
given in accordance with the Depositary's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the U.S. Global Note in an amount
equal to the principal amount of the U.S. Physical Notes to be
transferred, and the Trustee shall cancel the U.S. Physical Note so
transferred.
(c) Transfers of Interests in the Temporary Offshore Global Note. The
following provisions shall apply with respect to registration of any proposed
transfer of interests in the Temporary Offshore Global Note:
<PAGE>
35
(i) The Registrar shall register the transfer of any Note (x) if the
proposed transferee is a Non-U.S. Person and the proposed transferor has
delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto or (y) if the proposed transferee is a QIB and the
proposed transferor has checked the box provided for on the form of Note
stating, or has otherwise advised the Issuer and the Registrar in writing,
that the sale has been made in compliance with the provisions of Rule 144A
to a transferee who has signed the certification provided for on the form
of Note stating, or has otherwise advised the Issuer and the Registrar in
writing, that it is purchasing the Note for its own account or an account
with respect to which it exercises sole investment discretion and that it
and any such account is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as
it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, upon receipt by
the Registrar of the documents referred to in clause (i)(y) above and
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the U.S. Global Note in an
amount equal to the principal amount of the Temporary Offshore Global Note
to be transferred, and the Trustee shall decrease the amount of the
Temporary Offshore Global Note.
(d) Transfers of Interests in the Permanent Offshore Global Note or
Offshore Physical Notes to U.S. Persons. The following provisions shall apply
with respect to any transfer of interests in the Permanent Offshore Global Note
or Offshore Physical Notes to U.S. Persons: The Registrar shall register the
transfer of any such Note without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following provisions
shall apply with respect to any transfer of a Note to a Non-U.S. Person:
(i) Prior to September 22, 1997, the Registrar shall register any
proposed transfer of a Note to a Non-U.S. Person upon receipt of a
certificate substantially in the form of Exhibit D hereto from the
proposed transferor.
(ii) On and after September 22, 1997, the Registrar shall register
any proposed transfer to any Non-U.S. Person if the Note to be transferred
is a U.S. Physical Note or an interest in the U.S. Global Note, upon
receipt of a certificate substantially in the form of Exhibit D hereto
from the proposed transferor.
<PAGE>
36
(iii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Note in an
amount equal to the principal amount of the beneficial interest in the
U.S. Global Note to be transferred, and (b) if the proposed transferee is
an Agent Member, upon receipt by the Registrar of instructions given in
accordance with the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the Offshore Global Note in an amount equal to
the principal amount of the U.S. Physical Notes or the U.S. Global Note,
as the case may be, to be transferred, and the Trustee shall cancel the
Physical Note, if any, so transferred or decrease the amount of the U.S.
Global Note.
(f) Private Placement Legend. Upon the transfer, exchange or replacement
of Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement Legend, the Registrar
shall deliver only Notes that bear the Private Placement Legend unless either
(i) the circumstances contemplated by the fourth paragraph of Section 2.01 or
paragraph (a)(i)(x) or (e)(ii) of this Section 2.08 exist or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Issuer and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(g) General. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture. The
Registrar shall not register a transfer of any Note unless such transfer
complies with the restrictions on transfer of such Note set forth in this
Indenture. In connection with any transfer of Notes, each Holder agrees by its
acceptance of the Notes to furnish the Registrar or the Issuer such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Issuer with respect to)
the sufficiency of any such certifications, legal opinions or other information.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.07 or this Section 2.08.
The Issuer shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
<PAGE>
37
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered to the
Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of the second
paragraph of Section 2.10 are met. If required by the Trustee or the Issuer, an
indemnity bond must be furnished that is sufficient in the judgment of both the
Trustee and the Issuer to protect the Issuer, the Trustee or any Agent from any
loss that any of them may suffer if a Note is replaced. The Issuer may charge
such Holder for its expenses and the expenses of the Trustee in replacing a
Note. In case any such mutilated, lost, destroyed or wrongfully taken Note has
become or is about to become due and payable, the Issuer in its discretion may
pay such Note instead of issuing a new Note in replacement thereof.
Every replacement Note is an additional obligation of the Issuer and shall
be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are all
Notes that have been authenticated by the Trustee except for those cancelled by
it, those delivered to it for cancellation and those described in this Section
2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Issuer receive proof
satisfactory to them that the replaced Note is held by a bona fide purchaser.
If the Paying Agent (other than the Issuer or an Affiliate of the Issuer)
holds on the maturity date money sufficient to pay Notes payable on that date,
then on and after that date such Notes cease to be outstanding and interest on
them shall cease to accrue.
A Note does not cease to be outstanding because the Issuer or one of its
Affiliates holds such Note, provided, however, that in determining whether the
Holders of the requisite principal amount of the outstanding Notes have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Issuer or any other obligor upon the Notes or any
Affiliate of the Issuer or of such other obligor shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Notes so owned which have been
pledged in good faith may be regarded as outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Issuer or any other obligor upon the
Notes or any Affiliate of the Issuer or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
delivery, the Issuer may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall
<PAGE>
38
be substantially in the form of definitive Notes but may have insertions,
substitutions, omissions and other variations determined to be appropriate by
the Officers executing the temporary Notes, as evidenced by their execution of
such temporary Notes. If temporary Notes are issued, the Issuer will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Issuer designated for such purpose pursuant to Section 4.02, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 2.12. Cancellation. The Issuer at any time may deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Issuer has not issued and sold. The Registrar and the Paying
Agent shall forward to the Trustee any Notes surrendered to them for transfer,
exchange or payment. The Trustee shall cancel all Notes surrendered for
transfer, exchange, payment or cancellation and shall destroy them in accordance
with its normal procedure. Except as expressly permitted by this Indenture, the
Issuer may not issue new Notes to replace Notes it has paid in full or delivered
to the Trustee for cancellation.
SECTION 2.13. CUSIP Numbers. The Issuer in issuing the Notes may use
"CUSIP," "CINS" or "ISIN" numbers (if then generally in use), and the Trustee
shall use CUSIP, CINS or ISIN numbers, as the case may be, in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice shall state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of
redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Notes. The Issuer will promptly notify the
Trustee of any change in "CUSIP," "CINS" or "ISIN" numbers for the Notes.
SECTION 2.14. Defaulted Interest. If the Issuer defaults in a payment of
interest on the Notes, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date. A special
record date, as used in this Section 2.14 with respect to the payment of any
defaulted interest, shall mean the 15th day next preceding the date fixed by the
Issuer for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Issuer shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
<PAGE>
39
SECTION 2.15. Issuance of Additional Notes. The Issuer may, subject to
Article Four of this Indenture, issue additional Notes under this Indenture. The
Notes issued on the Closing Date and any additional Notes subsequently issued
shall be treated as a single class for all purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption; Mandatory Redemption. (a) The Notes
will be redeemable, at the Issuer's option, in whole or in part, at any time or
from time to time, on or after August 1, 2002 and prior to maturity, upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's last address, as it appears in the Security Register, at the
following Redemption Prices (expressed in percentages of principal amount), plus
accrued and unpaid interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing August 1 of the years set forth
below:
Redemption
Year Price
---- ----------
2002.................... 104.500%
2003.................... 102.250
2004 and thereafter..... 100.000
(b) In the event that the Tender Offer is not consummated and certain
other conditions set forth in the Escrow Agreement are not satisfied by the
Expiration Date, or if it appears, in the sole judgment of the Issuer, that the
Tender Offer will not be consummated and such conditions will not be satisfied
by the Expiration Date, the Issuer shall redeem the Notes in whole, on 10 days'
prior notice mailed by first-class mail to each Holder's last address as it
appears in the Security Register, at a Redemption Price equal to 101% of the
principal amount of the Notes, plus accrued and unpaid interest to the
Redemption Date. On the earlier of (i) the Expiration Date, if the Trustee has
not received the Escrow Agreement Officers' Certificate stating that the Tender
Offer has been consummated (or will be consummated promptly upon the release of
the escrowed proceeds of the offering of the Notes to the Issuer) and certain
conditions have been satisfied and the Escrow Agreement Opinion of Counsel, and
(ii) such date on which the Trustee receives an officer's certificate under the
Escrow Agreement that the Tender Offer will not be consummated and such
conditions will not be satisfied by the Expiration Date, the Trustee will mail
by first-class mail to each Holder's last address as it appears in the Security
Register a written notice that the Notes will be redeemed within 10 days of such
notice.
<PAGE>
40
SECTION 3.02. Notices to Trustee. If the Issuer elects to redeem Notes
pursuant to Section 3.01(a) or (b), it shall notify the Trustee in writing of
the Redemption Date and the principal amount of Notes to be redeemed.
The Issuer shall give notice provided for in this Section 3.02, (i)
pursuant to an election to redeem Notes under Section 3.01(a), in an Officers'
Certificate at least 45 days before the Redemption Date and (ii) pursuant to an
election to redeem Notes under Section 3.01(b), in an Officers' Certificate at
least 15 days before the Redemption Date (in each case unless a shorter period
shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of the
Notes are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed in compliance with the requirements, as certified to it by the Issuer,
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed on a national securities exchange, by lot
or by such other method as the Trustee in its sole discretion shall deem fair
and appropriate; provided that no Notes of $1,000 in principal amount or less
shall be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption. Notes in denominations of $1,000 in principal
amount may only be redeemed in whole. The Trustee may select for redemption
portions (equal to $1,000 in principal amount or any integral multiple thereof)
of Notes that have denominations larger than $1,000 in principal amount.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption. The Trustee shall notify the
Issuer and the Registrar promptly in writing of the Notes or portions of Notes
to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption of
Notes pursuant to Section 3.01(a), at least 30 days but not more than 60 days
before a Redemption Date, the Issuer, and with respect to any redemption of
Notes pursuant to Section 3.01(b), within 10 days before a Redemption Date, the
Trustee, shall mail a notice of redemption by first-class mail to each Holder
whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
<PAGE>
41
(v) that, unless the Issuer defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the Holders is
to receive payment of the Redemption Price plus accrued interest to the
Redemption Date upon surrender of the Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be reissued;
and
(vii) that, if any Note contains a CUSIP, CINS or ISIN number as
provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may be
placed only on the other identification numbers printed on the Notes.
At the Issuer's request (which request may be revoked by the Issuer at any
time prior to the time at which the Trustee shall have given such notice to the
Holders), made in writing to the Trustee at least 45 days (or such shorter
period as shall be satisfactory to the Trustee) before a Redemption Date, the
Trustee shall give the notice of redemption pursuant to Section 3.01(a) in the
name and at the expense of the Issuer. If, however, the Issuer gives such notice
to the Holders, the Issuer shall concurrently deliver to the Trustee an
Officers' Certificate stating that such notice has been given. The Trustee shall
give the notice of redemption if and as required pursuant to Section 3.01(b).
SECTION 3.05. Effect of Notice of Redemption. Once notice of redemption is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon surrender of any Notes to the Paying
Agent, such Notes shall be paid at the Redemption Price, plus accrued interest,
if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed, whether or
not the Holder receives the notice. In any event, failure to give such notice,
or any defect therein, shall not affect the validity of the proceedings for the
redemption of Notes held by Holders to whom such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any Redemption
Date, the Issuer shall deposit with the Paying Agent (or, if the Issuer is
acting as its own Paying Agent, shall segregate and hold in trust as provided in
Section 2.05) money sufficient to pay the Redemption Price of and accrued
interest on all Notes to be redeemed on that date other than
<PAGE>
42
Notes or portions thereof called for redemption on that date that have been
delivered by the Issuer to the Trustee for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Issuer shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest. Upon surrender of any Note
for redemption in accordance with a notice of redemption, such Note shall be
paid and redeemed by the Issuer at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Regular
Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note that is
redeemed in part, the Issuer shall execute and the Trustee shall authenticate
and deliver to the Holder a new Note equal in principal amount to the unredeemed
portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Issuer shall pay the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Issuer, a Subsidiary of the Issuer, or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment. If the Issuer or any Subsidiary of the Issuer or any
Affiliate of any of them acts as Paying Agent, an installment of principal,
premium, if any, or interest shall be considered paid on the due date if the
entity acting as Paying Agent complies with the last sentence of Section 2.05.
As provided in Section 6.09, upon any bankruptcy or reorganization procedure
relative to the Issuer, the Trustee shall serve as the Paying Agent, if any, for
the Notes.
The Issuer shall pay interest on overdue principal, premium, if any, and
interest on overdue installments of interest, to the extent lawful, at the rate
per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Issuer will maintain in
the Borough of Manhattan, The City of New York, an office or agency where Notes
may be surrendered for registration of transfer or exchange or for presentation
for payment and where
<PAGE>
43
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuer shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 12.02.
The Issuer may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided that no
such designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York for such purposes. The Issuer will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
The Issuer hereby initially designates the Corporate Trust Office of the
Trustee as such office of the Issuer in accordance with Section 2.04.
SECTION 4.03. Limitation on Indebtedness. The Issuer will not, and will
not permit any of its Restricted Subsidiaries to, Incur any Indebtedness
(including any Acquired Indebtedness but excluding Permitted Indebtedness)
unless at the time of such event and after giving effect thereto on a pro forma
basis the Issuer's Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding such event taken as one period, calculated on the
assumption that (i) such Indebtedness, and any Indebtedness Incurred or repaid
after the first day of such four-quarter period and on or prior to the date of
such event (other than Indebtedness Incurred or repaid under a revolving credit
or similar arrangement to the extent of the commitment thereunder (or under any
predecessor revolving credit or similar arrangement) in effect on the last day
of such four-quarter period unless any portion of such Indebtedness is
projected, in the reasonable judgment of the senior management of the Issuer, to
remain outstanding for a period in excess of 12 months from the date of the
Incurrence thereof) had been Incurred or repaid on the first day of such
four-quarter period and (ii) any acquisition or disposition by the Issuer and
its Restricted Subsidiaries out of the ordinary course of business of any assets
constituting a company, division, line of business or business facility, in each
case after the first day of such four-quarter period, and on or prior to the
date of such event, had been consummated on the first day of such four-quarter
period (including giving pro forma effect to the application of the proceeds of
any such disposition), would have been at least equal to 2:00:1.00.
SECTION 4.04. Limitation on Restricted Payments. The Issuer will not, and
will not permit any Restricted Subsidiary to, directly or indirectly:
<PAGE>
44
(i) declare or pay any dividend on, or make any distribution to
holders of, its Capital Stock (other than (x) dividends or distributions
payable solely in shares of its Qualified Capital Stock or in options,
warrants or other rights to acquire such Qualified Capital Stock and (y)
pro rata dividends or distributions on Common Stock of Restricted
Subsidiaries held by minority stockholders);
(ii) purchase, redeem, defease or otherwise acquire or retire for
value any Capital Stock (or any option, warrant or other right to acquire
such Capital Stock) of (A) the Issuer or an Unrestricted Subsidiary held
by any Person or (B) a Restricted Subsidiary held by an Affiliate of the
Issuer (other than any Wholly Owned Restricted Subsidiary) or any holder
(or any Affiliate of such holder) of 5% or more of the Capital Stock of
the Issuer;
(iii) make any principal payment on, or redeem, repurchase, defease
or otherwise acquire or retire for value, in each case, prior to any
scheduled repayment, or maturity, any Subordinated Indebtedness; or
(iv) make any Investment in any Person (other than a Permitted
Investment)
(such payments described in (i) through (iv) collectively, "Restricted
Payments"), unless at the time of and after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other than
cash, as determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution), (x) no Default or Event of
Default shall have occurred and be continuing and such Restricted Payment shall
not be an event which is, or after notice or lapse of time or both, would be, an
"event of default" under the terms of any Indebtedness of the Issuer or any
Restricted Subsidiary; (y) the Issuer could Incur $1.00 of additional
Indebtedness under Section 4.03 (other than Permitted Indebtedness); and (z) the
aggregate amount of all Restricted Payments, including any Restricted Payments
made pursuant to clauses (i) and (iv) of the succeeding paragraph, declared or
made after the Closing Date shall not exceed the sum of:
(A) 50% of the Consolidated Net Income of the Issuer accrued on a
cumulative basis during the period beginning on the first day of the
fiscal quarter beginning immediately following the Closing Date and ending
on the last day of the fiscal quarter ending prior to the date of such
proposed Restricted Payment for which reports have been filed with the
Commission or provided to the Trustee pursuant to Section 4.19 (or, if
such aggregate cumulative Consolidated Net Income shall be a loss, minus
100% of the amount of such loss);
(B) the aggregate Net Cash Proceeds received after the Closing Date
by the Issuer as capital contributions to the Issuer;
<PAGE>
45
(C) the aggregate Net Cash Proceeds received after the Closing Date
by the Issuer from the issuance and sale (other than to any of its
Subsidiaries) of shares of Qualified Capital Stock of the Issuer or any
options or warrants to purchase such shares (other than issuances to the
extent used to make a Restricted Payment under clause (ii) of the
subsequent paragraph) of Qualified Capital Stock of the Issuer;
(D) the aggregate Net Cash Proceeds received after the Closing Date
by the Issuer for debt securities that have been converted into or
exchanged for Qualified Capital Stock of the Issuer to the extent such
debt securities were originally sold for cash plus the aggregate cash
received by the Issuer at the time of such conversion or exchange; and
(E) $10 million.
None of the foregoing provisions shall be deemed to prohibit the following
Restricted Payments so long as in the case of clauses (ii), (iii) and (iv) at
the time of and after giving effect to the proposed Restricted Payment no
Default or Event of Default shall have occurred and be continuing:
(i) dividends paid within 60 days after the date of declaration if
at the date of declaration, such payment would be permitted by the
provisions of the preceding paragraph;
(ii) the redemption, repurchase or other acquisition or retirement
of Capital Stock of the Issuer or Subordinated Indebtedness in exchange
for, or out of the net proceeds of, a substantially concurrent issue and
sale (other than to a Subsidiary) of shares of Qualified Capital Stock of
the Issuer;
(iii) the redemption, repurchase, or other acquisition or retirement
of Subordinated Indebtedness of the Issuer, including premium, if any, and
accrued and unpaid interest, made by exchange for, or out of the proceeds
of the substantially concurrent sale of, Indebtedness of the Issuer
permitted to be Incurred under clause (k) of the definition of "Permitted
Indebtedness"; and
(iv) Investments in an aggregate amount not to exceed $25 million in
any Person which owns, operates or services Healthcare Related Businesses.
SECTION 4.05. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Issuer will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or suffer to exist or become
effective any restriction of any kind, on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distribution on its Capital
Stock to the Issuer or any other Restricted Subsidiary, (ii) pay any
Indebtedness owed
<PAGE>
46
to the Issuer or any other Restricted Subsidiary, (iii) make any Investment in
the Issuer or any other Restricted Subsidiary or (iv) transfer any of its
property or assets to the Issuer or any other Restricted Subsidiary, except (a)
any encumbrance or restriction existing under or by reason of applicable law;
(b) any encumbrance or restriction existing under or by reason of customary
non-assignment provisions of any lease governing a leasehold interest of the
Issuer, or any Restricted Subsidiary; (c) any restriction pursuant to an
agreement in effect at or entered into on the Closing Date; (d) any restriction,
with respect to a Restricted Subsidiary that is not a Subsidiary on the Closing
Date, in existence at the time such Person becomes a Restricted Subsidiary and
not incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary; (e) any restriction existing under any agreement that
extends, renews, refinances or replaces the agreements containing the
restrictions in the foregoing clauses (c) and (d), provided that the terms and
conditions of any such restrictions are not materially less favorable to the
Holders than those under or pursuant to the agreement so extended, renewed,
refinanced or replaced (in the opinion of the Board of Directors of the Issuer
whose determination shall be conclusive); (f) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of property or assets
of the Issuer or any Restricted Subsidiary in any manner material to the Issuer
or any Restricted Subsidiary; (g) with respect to a Restricted Subsidiary and
imposed pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary; or (h) contained in the terms of any
Indebtedness or any agreement pursuant to which such Indebtedness was issued if
(A) the encumbrance or restriction applies only in the event of a payment
default or a default with respect to a financial covenant contained in such
Indebtedness or agreement, (B) the encumbrance or restriction is not materially
more disadvantageous to the Holders than is customary in comparable financings
(as determined by the Issuer) and (C) the Issuer determines that any such
encumbrance or restriction will not materially affect the Issuer's ability to
make principal or interest payments on the Notes.
SECTION 4.06. Limitations on Preferred Stock of Restricted Subsidiaries.
The Issuer will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any Preferred Stock of a Restricted
Subsidiary other than to the Issuer or a Wholly Owned Restricted Subsidiary, or
permit any Person (other than the Issuer or a Wholly Owned Restricted
Subsidiary) to own or hold any Preferred Stock of any Restricted Subsidiary,
unless such Restricted Subsidiary would be entitled to Incur Indebtedness
pursuant to Section 4.03 in an aggregate principal amount equal to the aggregate
liquidation value of the Preferred Stock to be issued.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. (a) The Issuer will not permit any Restricted Subsidiary, directly
or indirectly, to assume, guarantee or in any other manner become liable with
respect to any Indebtedness of the Issuer which is expressly by its terms pari
passu with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness") unless (i) such Restricted Subsidiary simultaneously executes and
<PAGE>
47
delivers a supplemental indenture to the Indenture providing for a guarantee of
payment of the Notes by such Restricted Subsidiary and (ii) such Subsidiary
waives and will not in any manner whatsoever claim or take the benefit or
advantage of any rights of reimbursement, indemnity or subrogation or any other
rights against the Issuer or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Subsidiary Guarantee. If the
Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be pari passu with, or subordinate in right
of payment to, the Subsidiary Guarantee or (B) subordinated to the Notes, then
the Guarantee of such Guaranteed Indebtedness shall be subordinated in right of
payment to the Subsidiary Guarantee at least to the extent that the Guaranteed
Indebtedness is subordinated in right of payment to the Notes.
(b) Each guarantee created pursuant to the provisions described in the
foregoing paragraph is referred to as a "Subsidiary Guarantee," and the issuer
of each such Guarantee is referred to as a "Subsidiary Guarantor."
Notwithstanding the foregoing, any Subsidiary Guarantee may provide by its terms
that it (together with any Liens arising from such Subsidiary Guarantee) shall
be automatically and unconditionally released and discharged upon (i) any sale,
exchange or transfer, to any Person not an Affiliate of the Issuer, of all of
the Issuer's Capital Stock in, or all or substantially all the assets of, such
Subsidiary Guarantor, which is in compliance with this Indenture or (ii) the
release or discharge of the assumption, guarantee or other liability which
resulted in the creation of such Subsidiary Guarantee, except a release or
discharge by or as a result of payment under such Subsidiary Guarantee.
SECTION 4.08. Limitation on Transactions with Stockholders and Affiliates.
The Issuer will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into, renew or extend any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with any Affiliate of the
Issuer (other than a Wholly Owned Restricted Subsidiary) unless (i) such
transaction or series of related transactions is on terms that are no less
favorable to the Issuer or such Restricted Subsidiary, as the case may be, than
would be available in a comparable transaction in arm's-length dealings with an
unrelated third party and (ii) with respect to a transaction or series of
related transactions involving payments in excess of $10 million in the
aggregate, the Issuer delivers an Officers' Certificate to the Trustee
certifying that (A) such transaction complies with clause (i) above and (B) such
transaction or series of related transactions shall have been approved by a
majority of the independent directors of the Board of Directors of the Issuer or
for which the Issuer or a Restricted Subsidiary has received a written opinion
of a nationally recognized investment banking firm stating that the transaction
is fair to the Issuer or such Restricted Subsidiary from a financial point of
view (a copy of which opinion shall be attached to such Officers' Certificate);
provided, however, that the foregoing restriction shall not apply to (a) the
payment of reasonable and customary regular fees to directors of the Issuer or
any of its Restricted Subsidiaries who are not employees of the Issuer or any
Affiliate, (b) the payment of monthly fees in accordance with Section 4.13 and
the reimbursement of expenses pursuant to the terms of management agreements
with Genesis or
<PAGE>
48
any of its affiliates, (c) any payments or other transactions pursuant to any
tax-sharing agreement between the Issuer and any other Person with which the
Issuer files a consolidated tax return or with which the Issuer is part of a
consolidated group for tax purposes, (d) the Therapy Sale, provided the Issuer
or its Restricted Subsidiaries receives at least $20 million from the Therapy
Sale, (e) the Pharmacy Sale, provided the Issuer or its Restricted Subsidiaries
receives at least $50 million from the Pharmacy Sale, (f) transactions in the
ordinary course of business with Genesis or any of its Affiliates, related to
the Issuer's healthcare businesses or facilities; provided that the aggregate
amount of any such transactions in any twelve month period does not exceed $10
million, (g) any Restricted Payments not prohibited by Section 4.04 or (h) the
payment of fees and expenses in connection with the Transactions to Genesis,
Cypress and TPG.
SECTION 4.09. Limitation on Liens. The Issuer will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or suffer to exist
any Liens of any kind upon any of its respective properties now owned or
acquired after the Closing Date or any income or profits therefrom securing (i)
any Indebtedness of the Issuer which is expressly subordinate in right of
payment to any other Indebtedness of the Issuer, unless the Notes are equally
and ratably secured; provided that, if such Indebtedness is subordinate in right
of payment to the Notes, the Lien securing such Indebtedness shall be
subordinate to the Lien securing the Notes with the same relative priority as
such subordinated Indebtedness shall have with respect to the Notes; provided
further that this clause (i) shall not be applicable to any Liens securing any
such Indebtedness which became Indebtedness of the Issuer pursuant to a
transaction permitted under Article Five or Liens securing Acquired Indebtedness
and, in each case, which Liens were in existence at the time of such transaction
or Incurrence of such Acquired Indebtedness and not Incurred in connection with
or in contemplation of such transaction or Incurrence, so long as such Liens do
not extend to or cover any property or assets of the Issuer or any Restricted
Subsidiary other than property or assets acquired in such transaction, or (ii)
any assumption, guarantee or other liability of any Restricted Subsidiary in
respect of any Indebtedness of the Issuer which is expressly subordinate in
right of payment to any other Indebtedness of the Issuer, unless the
substantially similar assumption, guarantee or other liability of such
Restricted Subsidiary in respect of the Notes is equally and ratably secured;
provided that, if such subordinated Indebtedness is subordinate in right of
payment to the Notes, the Lien securing the assumption, guarantee or other
liability of such Restricted Subsidiary in respect of such Indebtedness shall be
subordinate to the Lien securing the assumption, guarantee or other liability of
such Restricted Subsidiary with respect to the Notes with the same relative
priority as such subordinated Indebtedness shall have with respect to the Notes;
provided further that this clause (ii) shall not be applicable to Liens securing
any such assumption, guarantee or other liability which existed at the time such
Restricted Subsidiary became a Restricted Subsidiary and which Liens were in
existence at the time of such transaction (unless such assumption, guarantee or
other liability was Incurred in connection with or in contemplation of such
Person becoming a Restricted Subsidiary), so long as such Liens do not extend to
or cover any property or assets of the Issuer or any other Restricted
Subsidiary.
<PAGE>
49
SECTION 4.10. Limitation on Asset Sales. The Issuer will not, and will not
permit any Restricted Subsidiary to, consummate any Asset Sale, unless (i) the
consideration received by the Issuer or such Restricted Subsidiary is at least
equal to the fair market value of the assets sold or disposed of and (ii) at
least 75% of the consideration received consists of cash or Temporary Cash
Investments. In the event and to the extent that the Net Cash Proceeds received
by the Issuer or any of its Restricted Subsidiaries from one or more Asset Sales
occurring on or after the Closing Date in any period of 12 consecutive months
exceed $10 million, then the Issuer shall or shall cause the relevant Restricted
Subsidiary to (i) within 12 months after the date Net Cash Proceeds so received
exceed $10 million (A) apply an amount equal to such excess Net Cash Proceeds to
permanently repay Senior Indebtedness of the Issuer or any Subsidiary Guarantor
or Indebtedness of any other Restricted Subsidiary, in each case owing to a
Person other than the Issuer or any of its Restricted Subsidiaries or (B) invest
an equal amount, or the amount not so applied pursuant to clause (A) (or enter
into a definitive agreement committing to so invest within 12 months after the
date of such agreement; provided that if any such agreement is terminated, the
Issuer may invest such Net Cash Proceeds prior to the end of the 12-month period
referred to in clause (i) or six months after the termination of such agreement,
whichever is later), in property or assets (other than current assets) of a
nature or type or that are used in a business (or in a company having property
and assets of a nature or type, or engaged in a business) similar or related to
the nature or type of the property and assets of, or the business of, the Issuer
and its Restricted Subsidiaries existing on the date of such investment and (ii)
apply (no later than the end of the 12-month period referred to in clause (i))
such excess Net Cash Proceeds (to the extent not applied pursuant to clause (i))
as provided in the following paragraph of this Section 4.10. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set forth in clause (i) of the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.10 totals at least $10 million, the Issuer must commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
100% of the principal amount of the Notes, plus, in each case, accrued interest
(if any) to the Payment Date.
SECTION 4.11. Repurchase of Notes upon a Change in Control. The Issuer
must commence, within 30 days of the occurrence of a Change in Control, and
consummate an Offer to Purchase for all Notes then outstanding, at a purchase
price equal to 101% of the principal amount thereof, plus accrued interest (if
any) to the Payment Date.
Within 30 days following a Change of Control, the Issuer shall mail a
notice to each Holder and the Trustee stating the terms of the Change of
Control.
<PAGE>
50
SECTION 4.12. Limitation on Senior Subordinated Indebtedness. The Issuer
will not Incur any Indebtedness, other than the Notes, that is subordinate in
right of payment to any Senior Indebtedness, unless such Indebtedness is also
pari passu with, or subordinate in right of payment to, the Notes pursuant to
subordination provisions substantially similar to those contained in the
Indenture; provided that the foregoing limitation shall not apply to
distinctions between categories of Senior Indebtedness of the Issuer that exist
by reason of any Liens or Guarantees arising or created in respect of some but
not all of such Senior Indebtedness.
SECTION 4.13. Limitation on Management Fees. The Issuer will not, and will
not permit any of its Restricted Subsidiaries to, pay any management fees in any
month to the extent such fees would exceed the greater of (i) $1,991,666 and
(ii) 4% of the Issuer's consolidated net revenues for such month; provided that
the Issuer may pay management fees in excess of such amount (including accrued
fees) to the extent that (A) both before and after giving effect to the proposed
payment (x) no Default or Event of Default shall have occurred and be continuing
and (y) the Issuer's Fixed Charge Coverage Ratio for the four full fiscal
quarters immediately preceding such event, taken as one period and calculated on
the assumption that (I) any Indebtedness Incurred or repaid after the first day
of such four-quarter period and on or prior to the date of such payment (other
than Indebtedness Incurred or repaid under a revolving credit or similar
arrangement to the extent of the commitment thereunder (or under any predecessor
revolving credit or similar arrangement) in effect on the last day of such four
quarter period unless any portion of such Indebtedness is projected, in the
reasonable judgment of the senior management of the Issuer, to remain
outstanding for a period in excess of 12 months from the date of the Incurrence
thereof), had been Incurred or repaid on the first day of such four-quarter
period, (II) any acquisition or disposition by the Issuer and its Restricted
Subsidiaries out of the ordinary course of business of any assets constituting a
company, division, line of business or business facility, in each case after the
first day of such four-quarter period, and on or prior to the date of such
payment, had been consummated on the first day of such four-quarter period
(including giving pro forma effect to the application of the proceeds of any
such disposition) and (III) the proposed management fees were paid during such
period, would have been at least equal to 2:00:1.00; and (B) the aggregate
amount of management fees paid with respect to any month do not exceed 6% of the
Issuer's consolidated net revenues for such month. To the extent the Issuer is
prohibited from paying any management fees as a result of clause (y) of the
proviso to the preceding sentence, the Issuer may accrue such fees until they
may be paid in accordance with this Section 4.13 provided the payment of such
accrued fees is subordinated in right of payment to the prior payment in full in
cash or Cash Equivalents of all of the Issuer's obligations under the Notes and
this Indenture.
SECTION 4.14. Existence. Subject to Articles Four and Five of this
Indenture, the Issuer will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Issuer and each such Subsidiary and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material
<PAGE>
51
licenses and franchises of the Issuer and each such Subsidiary; provided that
the Issuer shall not be required to preserve any such right, license or
franchise, or the existence of any Restricted Subsidiary, if the maintenance or
preservation thereof is no longer desirable in the conduct of the business of
the Issuer and its Restricted Subsidiaries taken as a whole.
SECTION 4.15. Payment of Taxes and Other Claims. The Issuer will pay or
discharge and shall cause each of its Subsidiaries to pay or discharge, or cause
to be paid or discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or imposed upon (a)
the Issuer or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Issuer or any such
Subsidiary and (ii) all material lawful claims for labor, materials and supplies
that, if unpaid, might by law become a lien upon the property of the Issuer or
any such Subsidiary; provided that the Issuer shall not be required to pay or
discharge, or cause to be paid or discharged, any such tax, assessment, charge
or claim the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established.
SECTION 4.16. Maintenance of Properties and Insurance. The Issuer will
cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Issuer may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided that nothing in
this Section 4.16 shall prevent the Issuer or any such Subsidiary from
discontinuing the use, operation or maintenance of any of such properties or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Issuer, desirable in the conduct of the business of the Issuer or such
Subsidiary.
The Issuer will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which the Issuer or any such Restricted Subsidiary, as the case may
be, is then conducting business.
SECTION 4.17. Notice of Defaults. In the event that the Issuer becomes
aware of any Default or Event of Default, the Issuer, promptly after it becomes
aware thereof, will give written notice thereof to the Trustee.
<PAGE>
52
SECTION 4.18. Compliance Certificates. (a) The Issuer shall deliver to the
Trustee, within 45 days after the end of each fiscal quarter (90 days after the
end of the last fiscal quarter of each year), an Officers' Certificate stating
whether or not the signers know of any Default or Event of Default that occurred
during such fiscal quarter. In the case of the Officers' Certificate delivered
within 90 days after the end of the Issuer's fiscal year, such certificate shall
contain a certification from the principal executive officer, principal
financial officer or principal accounting officer of the Issuer that a review
has been conducted of the activities of the Issuer and its Restricted
Subsidiaries and the Issuer's and its Restricted Subsidiaries' performance under
this Indenture and that the Issuer has complied with all conditions and
covenants under this Indenture. For purposes of this Section 4.18, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture. If the officers of the
Issuer signing such certificate do know of such a Default or Event of Default,
the certificate shall describe any such Default or Event of Default and its
status. The first certificate to be delivered pursuant to this Section 4.18(a)
shall be for the first fiscal quarter beginning after the execution of this
Indenture.
(b) The Issuer shall deliver to the Trustee, within 90 days after the end
of the Issuer's fiscal year, a certificate signed by the Issuer's independent
certified public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Notes as they relate to
accounting matters, (ii) that they have read the most recent Officers'
Certificate delivered to the Trustee pursuant to paragraph (a) of this Section
4.18 and (iii) whether, in connection with their audit examination, anything
came to their attention that caused them to believe that the Issuer was not in
compliance with any of the terms, covenants, provisions or conditions of Article
Four and Section 5.01 of this Indenture as they pertain to accounting matters
and, if any Default or Event of Default has come to their attention, specifying
the nature and period of existence thereof; provided that such independent
certified public accountants shall not be liable in respect of such statement by
reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing standards in effect at
the date of such examination.
SECTION 4.19. Commission Reports and Reports to Holders. At all times from
and after the earlier of (i) the date of the commencement of an Exchange Offer
or the effectiveness of the Shelf Registration Statement (the "Registration")
and (ii) the date that is six months after the Closing Date, in either case,
whether or not the Issuer is then required to file reports with the Commission,
the Issuer shall file with the Commission the annual, quarterly and other
reports and other information required by Section 13(a) or 15(d) of the Exchange
Act, regardless of whether such sections of the Exchange Act are applicable to
the Issuer (unless the Commission will not accept such a filing). The Issuer
shall mail or cause to be mailed copies of such reports and information to
Holders and the Trustee within 15 days after the date it files such reports and
information with the Commission or after the date it would have been required to
file such reports and information with the Commission had it been subject to
such sections
<PAGE>
53
of the Exchange Act; provided, however, that the copies of such reports and
information mailed to Holders may omit exhibits, which the Issuer will supply to
any Holder at such Holder's request. In addition, at all times prior to the
earlier of the date of the Registration and the date that is six months after
the Closing Date, the Issuer shall, at its cost, deliver to each Holder of the
Notes quarterly and annual reports substantially equivalent to those which would
be required by the Exchange Act. In addition, at all times prior to the
Registration, upon the request of any Holder or any prospective purchaser of the
Notes designated by a Holder, the Issuer shall supply to such Holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
SECTION 4.20. Waiver of Stay, Extension or Usury Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Issuer from paying all or any portion of the
principal of, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Issuer hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Issuer May Merge, Etc. The Issuer shall not, in a
single transaction or through a series of related transactions, consolidate with
or merge with or into any other Person or sell, assign, convey, transfer or
lease or otherwise dispose of all or substantially all of its properties and
assets as an entirety to any Person or group of affiliated Persons, or permit
any of its Restricted Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions, in the aggregate, would result
in a sale, assignment, transfer, lease or disposal of all or substantially all
of the properties and assets of the Issuer and its Restricted Subsidiaries on a
consolidated basis to any other Person or group of affiliated Persons, unless at
the time and after giving effect thereto (i) either (A) the Issuer shall be the
continuing corporation, or (B) the Person (if other than the Issuer) formed by
such consolidation or into which the Issuer is merged or the Person which
acquires by conveyance, transfer, lease or disposition the properties and assets
of the Issuer, substantially as an entirety (the "Surviving Entity") shall be a
corporation duly organized and validly existing under the laws of the United
States of America, any state thereof or the District of Columbia and shall, in
either case, expressly assume, by an indenture supplemental to this Indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Issuer under the Notes and this Indenture, and this
Indenture shall remain in full force and effect; (ii) immediately before
<PAGE>
54
and immediately after giving effect to such transaction on a pro forma basis
(and treating any Indebtedness not previously an obligation of the Issuer or a
Restricted Subsidiary which becomes the obligation of the Issuer or any of its
Restricted Subsidiaries in connection with or as a result of such transaction as
having been incurred at the time of such transaction), no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Consolidated Net Worth of
the Issuer (or the Surviving Entity if the Issuer is not the continuing obligor
under the Indenture) is at least equal to the Consolidated Net Worth of the
Issuer immediately before such transaction; (iv) immediately before and
immediately after giving effect to such transaction on a pro forma basis (and
treating any Indebtedness not previously an obligation of the Issuer or a
Restricted Subsidiary which becomes the obligation of the Issuer or any of its
Restricted Subsidiaries in connection with or as a result of such transaction as
having been incurred at the time of such transaction), the Issuer (or the
Surviving Entity if the Issuer is not the continuing obligor under this
Indenture) could incur $1.00 of additional Indebtedness under Section 4.03
(other than Permitted Indebtedness); provided that this clause (iv) shall not
apply to (x) a consolidation or merger with or into a Wholly Owned Restricted
Subsidiary with a positive net worth; provided that, in connection with any such
merger or consolidation, no consideration (other than Qualified Capital Stock in
the Surviving Entity or the Issuer) shall be issued or distributed to the
stockholders of the Issuer or (y) the merger of Genesis ElderCare Acquisition
Corp. with and into Multicare; and (v) the Issuer or the Surviving Entity shall
have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that such consolidation, merger, transfer, lease or
disposition and such supplemental indenture comply with the terms of this
Indenture.
SECTION 5.02. Successor Substituted. Upon any consolidation or merger, or
any sale, assignment, conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Issuer in accordance with
the immediately preceding paragraph, the successor Person formed by such
consolidation or into which the Issuer is merged or the successor Person to
which such sale, assignment, conveyance, transfer, lease or disposition is made
shall succeed to, and be substituted for, and may exercise every right and power
of, the Issuer under this Indenture with the same effect as if such successor
had been named as the Issuer herein. When a successor assumes all the
obligations of its predecessor under this Indenture and the Notes, the
predecessor shall be released from those obligations; provided that in the case
of a transfer by lease, the predecessor shall not be released from the payment
of principal and interest on the Notes.
<PAGE>
55
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall occur with
respect to the Notes if:
(a) the Issuer defaults in the payment of the principal of (or
premium, if any, on) any Note when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise, whether or not such
payment is prohibited by Article Eleven;
(b) the Issuer defaults in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period
of 30 days, whether or not such payment is prohibited by Article Eleven;
(c) the Issuer defaults in the performance of, or breaches the
provisions of, Article Five or Section 3.01(b) or fails to make or
consummate an Offer to Purchase in accordance with Section 4.10 or 4.11;
(d) the Issuer defaults in the performance of or breaches any
covenant or agreement of the Issuer in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) above), and such
default or breach continues for a period of 30 consecutive days after
written notice by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Issuer or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of
such acceleration and/or (II) the failure to make a principal payment at
the final (but not any interim) fixed maturity and such defaulted payment
shall not have been made, waived or extended within 30 days of such
payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Issuer or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 30 consecutive days
following entry of the final judgment or order that causes the aggregate
amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to
<PAGE>
56
exceed $10 million during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Issuer or any Significant
Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or any Significant
Subsidiary or for all or substantially all of the property and assets of
the Issuer or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Issuer or any Significant Subsidiary
and, in each case, such decree or order shall remain unstayed and in
effect for a period of 30 consecutive days;
(h) the Issuer or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (B) consents
to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or any Significant Subsidiary or for all or substantially all of
the property and assets of the Issuer or any Significant Subsidiary or (C)
effects any general assignment for the benefit of creditors; or
(i) the Guaranty Documents are not executed and delivered within
three Business Days after the consummation of the Tender Offer (unless
prior to or at the end of such three Business Days the Merger shall have
been consummated).
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of
Default specified in clause (g) or (h) of Section 6.01 that occurs with respect
to the Issuer) occurs and is continuing under this Indenture, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by written notice to the Issuer (and to the Trustee if such notice
is given by the Holders), may, and the Trustee at the request of such Holders
shall, declare the principal of, premium, if any, and accrued interest on the
Notes to be immediately due and payable. Upon a declaration of acceleration,
such principal, premium, if any, and accrued interest shall be immediately due
and payable. In the event of a declaration of acceleration because an Event of
Default set forth in clause (e) of Section 6.01 has occurred and is continuing,
such declaration of acceleration shall be automatically rescinded and annulled
if the event of default triggering such Event of Default pursuant to clause (e)
shall be remedied or cured by the Issuer or the relevant Significant Subsidiary
or waived by the holders of the relevant Indebtedness within 60 days after the
declaration of acceleration with respect thereto. If an Event of Default
specified in clause (g) or (h) of Section 6.01 occurs with respect to the
Issuer, the principal of, premium, if any, and accrued interest on the Notes
then outstanding
<PAGE>
57
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
The Holders of at least a majority in principal amount of the outstanding
Notes, by written notice to the Issuer and to the Trustee, may waive all past
defaults and rescind and annul a declaration of acceleration and its
consequences if (i) all existing Events of Default, other than the nonpayment of
the principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
(ii) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least a
majority in principal amount of the outstanding Notes shall, pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.02, 6.07 and
9.02, the Holders of at least a majority in principal amount of the outstanding
Notes, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences, except a Default in the payment of principal of,
premium, if any, or interest on any Note as specified in clause (a) or (b) of
Section 6.01 or in respect of a covenant or provision of this Indenture which
cannot be modified or amended without the consent of the Holder of each
outstanding Note affected. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a majority in
aggregate principal amount of the outstanding Notes may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture,
that may involve the Trustee in personal liability, or that the Trustee
determines in good faith may be unduly prejudicial to the rights of Holders of
Notes not joining in the giving of such direction and may take any other action
it deems proper that is not inconsistent with any such direction received from
Holders of Notes.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any remedy with
respect to this Indenture or the Notes unless:
<PAGE>
58
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer (and if requested provide) the
Trustee indemnity satisfactory to the Trustee against any costs, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section 6.06, the
Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of outstanding
Notes have concurred in any request or direction of the Trustee to pursue any
remedy available to the Trustee or the Holders with respect to this Indenture or
the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
The limitations set forth in this Section 6.06 shall not apply to the
right of any Holder of a Note to receive payment of the principal of, premium,
if any, or interest on, such Note or to bring suit for the enforcement of any
such payment, on or after the due date expressed in the Notes, which right shall
not be impaired or affected without the consent of the Holder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Note to receive
payment of the principal of, premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Notes, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (a), (b) or (c) of
Section 6.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Issuer or any other
obligor of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue
<PAGE>
59
installments of interest, in each case at the rate specified in the Notes, and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.07) and the Holders allowed in any judicial proceedings relative to the Issuer
(or any other obligor of the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any monies, securities or other
property payable or deliverable upon conversion or exchange of the Notes or upon
any such claims and to distribute the same, and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07. Nothing herein contained shall be deemed to empower
the Trustee to authorize or consent to, or accept or adopt on behalf of any
Holder, any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal, premium, if any, and interest,
respectively; and
Third: to the Issuer or any other obligors of the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Issuer, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted
<PAGE>
60
by it as Trustee, a court may require any party litigant in such suit to file an
undertaking to pay the costs of the suit, and the court may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of
more than 10% in principal amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then, and in
every such case, subject to any determination in such proceeding, the Issuer,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Issuer, Trustee and the Holders shall continue as though no such proceeding had
been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
wrongfully taken Notes in Section 2.09, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article Six or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the Trustee
shall be as provided by the TIA and as set forth herein. Notwithstanding the
foregoing, no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
<PAGE>
61
Whether or not herein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections 315(a)
through (d):
(i) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in any such document;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 12.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate or opinion;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or
agent appointed with due care;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities that might be incurred by it in compliance with such
request or direction;
(v) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the written direction of the Holders of a majority in principal
amount of the outstanding Notes relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate; and
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report,
<PAGE>
62
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Issuer personally or by
agent or attorney.
SECTION 7.03. Individual Rights of Trustee. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and may
otherwise deal with the Issuer or its Affiliates with the same rights it would
have if it were not the Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Issuer's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Holder in the
manner and to the extent provided in TIA Section 313(c) notice of the Default or
Event of Default within 45 days after it occurs, unless such Default or Event of
Default has been cured; provided, however, that, except in the case of a default
in the payment of the principal of, premium, if any, or interest on any Note,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each
August 1, beginning with August 1, 1998, the Trustee shall mail to each Holder
as provided in TIA Section 313(c) a brief report dated as of such August 1, if
required by TIA Section 313(a).
SECTION 7.07. Compensation and Indemnity. The Issuer shall pay to the
Trustee such compensation as shall be agreed upon in writing for its services.
The compensation of the Trustee shall not be limited by any law on compensation
of a trustee of an express trust. The Issuer shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses and advances incurred or made
by the Trustee. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel.
The Issuer shall indemnify the Trustee against any and all losses,
liabilities, obligations, damages, penalties, judgments, actions, suits,
proceedings, reasonable costs and expenses
<PAGE>
63
(including reasonable fees and disbursements of counsel) of any kind whatsoever
which may be incurred by the Trustee in connection with any investigative,
administrative or judicial proceeding (whether or not such indemnified party is
designated a party to such proceeding) arising out of or in connection with the
acceptance or administration of its duties under this Indenture; provided,
however, that the Issuer need not reimburse any expense or indemnify against any
loss, obligation, damage, penalty, judgment, action, suit, proceeding,
reasonable cost or expense (including reasonable fees and disbursements of
counsel) of any kind whatsoever which may be incurred by the Trustee in
connection with any investigative, administrative or judicial proceeding
(whether or not such indemnified party is designated a party to such proceeding)
in which it is determined that the Trustee acted with negligence, bad faith or
willful misconduct. The Trustee shall notify the Issuer promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the Issuer
shall not relieve the Issuer of its obligations hereunder, unless the Issuer is
materially prejudiced thereby. The Issuer shall defend the claim and the Trustee
shall cooperate in the defense. Unless otherwise set forth herein, the Trustee
may have separate counsel and the Issuer shall pay the reasonable fees and
expenses of such counsel. The Issuer need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
To secure the Issuer's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, in its capacity as Trustee, except money or property
held by the Trustee pursuant to the Escrow Agreement and money or property held
in trust to pay principal of, premium, if any, and interest on particular Notes.
If the Trustee incurs expenses or renders services after the occurrence of
an Event of Default specified in clause (g) or (h) of Section 6.01, the expenses
and the compensation for the services will be intended to constitute expenses of
administration under Title 11 of the Bankruptcy Law or any applicable federal or
state law for the relief of debtors.
SECTION 7.08. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.
The Trustee may resign at any time by so notifying the Issuer in writing
at least 30 days prior to the date of the proposed resignation. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Trustee in writing and may appoint a successor Trustee with the
consent of the Issuer. The Issuer may remove the Trustee if: (i) the Trustee is
no longer eligible under Section 7.10; (ii) the Trustee is adjudged a bankrupt
or an insolvent; (iii) a receiver or other public officer takes charge of the
Trustee or its property; or (iv) the Trustee becomes incapable of acting
pursuant to the requirement of TIA Section 310(b).
<PAGE>
64
If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, the Issuer shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuer. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders
of a majority in principal amount of the outstanding Notes may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuer. Immediately after the delivery of
such written acceptance, subject to the lien provided in Section 7.07, (i) the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, (ii) the resignation or removal of the retiring Trustee shall
become effective and (iii) the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee shall
mail notice of its succession to each Holder.
If the Trustee is no longer eligible under Section 7.10, any Holder who
satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Issuer shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Issuer's obligation under Section 7.07 shall continue for the benefit of the
retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $25 million as set forth in its most
recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree with the
Issuer. Money held in trust
<PAGE>
65
by the Trustee need not be segregated from other funds except to the extent
required by law and except for money held in trust under Article Eight of this
Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for the Issuer,
shall exclude and withhold from each payment of principal and interest and other
amounts due hereunder or under the Notes any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders of
the Notes, that it will file any necessary withholding tax returns or statements
when due, and that, as promptly as possible after the payment thereof, it will
deliver to each Holder of a Note appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such Holders may
reasonably request from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Issuer's Obligations. Except as otherwise
provided in this Section 8.01, the Issuer may terminate its obligations under
the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Issuer, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Issuer has paid all sums payable by it
hereunder; or
(ii) (A) the Notes mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption, (B) the Issuer
irrevocably deposits in trust with the Trustee during such one-year
period, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds solely for the
benefit of the Holders for that purpose, money or U.S. Government
Obligations sufficient (in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee), without consideration of any
reinvestment of any interest thereon, to pay principal, premium, if, any,
and interest on the Notes to maturity or redemption, as the case may be,
and to pay all other sums payable by it hereunder, (C) no Default or Event
of Default with respect to the Notes shall have occurred and be continuing
on the date of such deposit, (D) such deposit will not result in a breach
or violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Issuer is a party or by which
it is bound and
<PAGE>
66
(E) the Issuer has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Issuer's obligations under
Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Issuer's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09,
2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05, 8.06 and Article Eleven (with respect
to payments in respect of Indebtedness that is subordinated in right of payment
to any Senior Indebtedness other than with respect to the assets held in trust
as described in the foregoing clause (ii)) shall survive until the Notes are no
longer outstanding. Thereafter, only the Issuer's obligations in Sections 7.07,
8.05 and 8.06 shall survive. After any such irrevocable deposit, the Trustee
upon request shall acknowledge in writing the discharge of the Issuer's
obligations under the Notes and this Indenture except for those surviving
obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Issuer will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the date of the deposit referred to
in clause (A) of this Section 8.02, and the provisions of this Indenture will no
longer be in effect with respect to the Notes, and the Trustee, at the expense
of the Issuer, shall execute proper instruments acknowledging the same, except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
apparently mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of
Holders to receive payments of principal thereof and interest thereon, (iv) the
Issuer's obligations under Section 4.02, (v) the rights, obligations and
immunities of the Trustee hereunder and (vi) the rights of the Holders as
beneficiaries of this Indenture with respect to the property so deposited with
the Trustee payable to all or any of them; provided that the following
conditions shall have been satisfied:
(A) with reference to this Section 8.02, the Issuer has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 7.10 acting as the
agent of the Trustee) and conveyed all right, title and interest for the
benefit of the Holders, under the terms of an irrevocable trust agreement
in form and substance satisfactory to the Trustee as trust funds in trust,
specifically pledged to the Trustee for the benefit of the Holders as
security for payment of the principal of, premium, if any, and interest,
if any, on the Notes, and dedicated solely to, the benefit of the Holders,
in and to (1) money in an amount, (2) U.S. Government Obligations that,
through the payment of interest, premium, if any, and principal in respect
thereof in accordance with their terms, will provide, not later than one
day before the due date of any payment referred to in this clause (A),
money in an amount or (3) a combination thereof in an amount sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, without consideration of the reinvestment
of such interest and after payment of all federal, state and local taxes
<PAGE>
67
or other charges and assessments in respect thereof payable by the
Trustee, the principal of, premium, if any, and accrued interest on the
outstanding Notes at the Stated Maturity of such principal or interest;
provided that the Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government Obligations to the
payment of such principal, premium, if any, and interest with respect to
the Notes;
(B) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound and is
permitted by Article Eleven;
(C) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on the
123rd day after such date of deposit;
(D) the Issuer shall have delivered to the Trustee (1) either (x) a
ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the Issuer's exercise of its
option under this Section 8.02 and will be subject to federal income tax
on the same amount and in the same manner and at the same times as would
have been the case if such option had not been exercised or (y) an Opinion
of Counsel to the same effect as the ruling described in clause (x) above
accompanied by a ruling to that effect published by the Internal Revenue
Service, unless there has been a change in the applicable federal income
tax law since the date of this Indenture such that a ruling from the
Internal Revenue Service is no longer required and (2) an Opinion of
Counsel to the effect that (x) the creation of the defeasance trust does
not violate the Investment Issuer Act of 1940 and (y) after the passage of
123 days following the deposit (except, with respect to any trust funds
for the account of any Holder who may be deemed to be an "insider" for
purposes of the Bankruptcy Law, after one year following the deposit), the
trust funds will not be subject to the effect of Section 547 of the
Bankruptcy Law or Section 15 of the New York Debtor and Creditor Law in a
case commenced by or against the Issuer under either such statute, and
either (I) the trust funds will no longer remain the property of the
Issuer (and therefore will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally) or (II) if a court were to rule under any
such law in any case or proceeding that the trust funds remained property
of the Issuer, (a) assuming such trust funds remained in the possession of
the Trustee prior to such court ruling to the extent not paid to the
Holders, the Trustee will hold, for the benefit of the Holders, a valid
and perfected security interest in such trust funds that is not avoidable
in bankruptcy or otherwise except for the effect of Section 552(b) of the
Bankruptcy Law on interest on the trust funds accruing after the
commencement of a case under such statute and (b) the Holders will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used in such case or proceeding;
<PAGE>
68
(E) if the Notes are then listed on a national securities exchange,
the Issuer shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit, defeasance and discharge will not cause the
Notes to be delisted; and
(F) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (D)(2)(y) of this Section 8.02, none of the
Issuer's obligations under this Indenture shall be discharged. Subsequent to the
end of such 123-day (or one year) period with respect to this Section 8.02, the
Issuer's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09,
2.14, 4.01, 4.02, 7.07, 7.08, 8.05, 8.06 and Article Eleven (with respect to
payments in respect of Indebtedness that is subordinated in right of payment to
any Senior Indebtedness other than with respect to the assets held in trust as
described in this Section 8.02) shall survive until the Notes are no longer
outstanding. Thereafter, only the Issuer's obligations in Sections 7.07, 8.05
and 8.06 shall survive. If and when a ruling from the Internal Revenue Service
or an Opinion of Counsel referred to in clause (D)(1) of this Section 8.02 is
able to be provided specifically without regard to, and not in reliance upon,
the continuance of the Issuer's obligations under Section 4.01, then the
Issuer's obligations under such Section 4.01 shall cease upon delivery to the
Trustee of such ruling or Opinion of Counsel and compliance with the other
conditions precedent provided for herein relating to the defeasance contemplated
by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Issuer's obligations under the Notes
and this Indenture except for those surviving obligations in the immediately
preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Issuer may omit to
comply with any term, provision or condition set forth in clauses (iii) and (iv)
of Section 5.01 and Sections 4.03 through 4.19, clause (c) of Section 6.01 with
respect to clauses (iii) and (iv) of Section 5.01, clause (d) of Section 6.01
with respect to Sections 4.03 through 4.19, and clauses (e) and (f) of Section
6.01 shall be deemed not to be Events of Default, and Article Eleven shall not
apply to the money and/or U.S. Government Obligations held by the trust referred
to in clause (i) below, in each case with respect to the outstanding Notes if:
(i) with reference to this Section 8.03, the Issuer has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 7.10) and conveyed
all right, title and interest to the Trustee for the benefit of the
Holders, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee as trust funds in trust,
specifically pledged to the Trustee for the benefit of the Holders as
security for payment of the principal of,
<PAGE>
69
premium, if any, and interest, if any, on the Notes, and dedicated solely
to, the benefit of the Holders, in and to (A) money in an amount, (B) U.S.
Government Obligations that, through the payment of interest and principal
in respect thereof in accordance with their terms, will provide, not later
than one day before the due date of any payment referred to in this clause
(i), money in an amount or (C) a combination thereof in an amount
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, without consideration of the
reinvestment of such interest and after payment of all federal, state and
local taxes or other charges and assessments in respect thereof payable by
the Trustee, the principal of, premium, if any, and interest on the
outstanding Notes on the Stated Maturity of such principal or interest;
provided that the Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government Obligations to the
payment of such principal, premium, if any, and interest with respect to
the Notes;
(ii) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound and is
permitted by Article Eleven;
(iii) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on the
123rd day after such date of deposit;
(iv) the Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that (A) the creation of the defeasance trust does not
violate the Investment Issuer Act of 1940, (B) the Trustee, for the
benefit of the Holders, has a valid first-priority security interest in
the trust funds, (C) the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance
of certain obligations and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred and (D)
after the passage of 123 days following the deposit (except, with respect
to any trust funds for the account of any Holder who may be deemed to be
an "insider" for purposes of the Bankruptcy Law, after one year following
the deposit), the trust funds will not be subject to the effect of Section
547 of the Bankruptcy Law or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Issuer under either
such statute, and either (1) the trust funds will no longer remain the
property of the Issuer (and therefore will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (2) if a court were to rule
under any such law in any case or proceeding that the trust funds remained
property of the Issuer, (x) assuming such trust funds remained in the
possession of the Trustee prior to such court ruling to the extent not
paid to the Holders, the Trustee will hold, for the benefit of the
Holders, a valid and perfected
<PAGE>
70
security interest in such trust funds that is not avoidable in bankruptcy
or otherwise (except for the effect of Section 552(b) of the Bankruptcy
Law on interest on the trust funds accruing after the commencement of a
case under such statute) and (y) the Holders will be entitled to receive
adequate protection of their interests in such trust funds if such trust
funds are used in such case or proceeding;
(v) if the Notes are then listed on a national securities exchange,
the Issuer shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit defeasance and discharge will not cause the
Notes to be delisted; and
(vi) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section 8.06, the
Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the case may be,
and shall apply the deposited money and the money from U.S. Government
Obligations in accordance with the Notes and this Indenture to the payment of
principal of, premium, if any, and interest on the Notes; but such money need
not be segregated from other funds except to the extent required by law.
SECTION 8.05. Repayment to Issuer. Subject to Sections 7.07, 8.01, 8.02
and 8.03, the Trustee and the Paying Agent shall promptly pay to the Issuer upon
request set forth in an Officers' Certificate any excess money held by them at
any time and thereupon shall be relieved from all liability with respect to such
money. The Trustee and the Paying Agent shall pay to the Issuer upon request any
money held by them for the payment of principal, premium, if any, or interest
that remains unclaimed for two years. After payment to the Issuer, Holders
entitled to such money must look to the Issuer for payment as general creditors
unless an applicable law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with Section 8.01,
8.02 or 8.03, as the case may be, by reason of any legal proceeding or by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Issuer's obligations
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01, 8.02 or 8.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with Section 8.01, 8.02 or
8.03, as the case may be; provided that, if the Issuer has made any payment of
principal of, premium, if any, or interest on any Notes because of the
reinstatement of its obligations, the Issuer shall be subrogated to
<PAGE>
71
the rights of the Holders of such Notes to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Issuer, when authorized by a
resolution of its Board of Directors (as evidenced by a Board Resolution
delivered to the Trustee), and the Trustee may amend or supplement this
Indenture or the Notes without notice to or the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that such amendments or supplements shall not, in the
good faith opinion of the Board of Directors as evidenced by a Board
Resolution, adversely affect the interests of the Holders in any material
respect;
(2) to comply with Article Five;
(3) to comply with any requirements of the Commission in connection
with the qualification of this Indenture under the TIA;
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(5) to make any change that, in the good faith opinion of the Board
of Directors as evidenced by a Board Resolution, does not materially and
adversely affect the rights of any Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and 6.07
and without prior notice to the Holders, the Issuer, when authorized by its
Board of Directors (as evidenced by a Board Resolution delivered to the
Trustee), and the Trustee may amend this Indenture, the Notes and the Escrow
Agreement with the written consent of the Holders of a majority in principal
amount of the Notes then outstanding, and the Holders of a majority in principal
amount of the Notes then outstanding by written notice to the Trustee may waive
future compliance by the Issuer with any provision of this Indenture, the Notes
and the Escrow Agreement.
Notwithstanding the provisions of this Section 9.02, without the consent
of each Holder affected, an amendment or waiver, including a waiver pursuant to
Section 6.04, may not:
<PAGE>
72
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or adversely affect any right of repayment at the
option of any Holder of any Note, or change any place of payment where, or
the currency in which, any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(ii) reduce the percentage in principal amount of outstanding Notes
the consent of whose Holders is required for any such supplemental
indenture, for any waiver of compliance with certain provisions of this
Indenture or certain Defaults and their consequences provided for in this
Indenture;
(iii) waive a default in the payment of principal of, premium, if
any, or interest on, any Note;
(iv) modify Article Eleven or the Escrow Agreement in a manner that
adversely affects the rights of any Holder in any material respect; or
(v) modify any of the provisions of this Section 9.02, except to
increase any such percentage or to provide that certain other provisions
of this Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Note affected thereby.
Notwithstanding the foregoing and without affecting any restrictions on
amendments to this Indenture under the Credit Facility, any amendment to the
provisions of Article Eleven that is adverse to the holders of Senior
Indebtedness shall require the consent of such holders.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Issuer shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. The Issuer will mail
supplemental indentures to Holders upon request. Any failure of the Issuer to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of
<PAGE>
73
the consenting Holder, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to its
Note or portion of its Note. Such revocation shall be effective only if the
Trustee receives the notice of revocation before the time the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver shall
become effective on receipt by the Trustee of written consents from the Holders
of the requisite percentage in principal amount of the outstanding Notes.
The Issuer may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Holder unless it is of the type described in any of clauses (i) through
(v) of the second paragraph of Section 9.02. In case of an amendment or waiver
of the type described in clauses (i) through (v) of the second paragraph of
Section 9.02, the amendment or waiver shall bind each Holder who has consented
to it and every subsequent Holder of a Note that evidences the same indebtedness
as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. At the Issuer's expense, the Trustee may
place an appropriate notation on the Note about the changed terms and return it
to the Holder and the Trustee may place an appropriate notation on any Note
thereafter authenticated. Alternatively, if the Issuer or the Trustee so
determines, the Issuer in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation, or issue a new Note, shall not affect the validity and
effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and that it will be valid and binding upon the Issuer. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
<PAGE>
74
SECTION 9.06. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
ARTICLE TEN
SECURITY
SECTION 10.01. Security. (a) On the Closing Date, the Issuer shall (i)
enter into the Escrow Agreement and comply with the terms and provisions thereof
and (ii) cause the Collateral to be pledged to the Trustee for the benefit of
the Holders in an amount equal to the net proceeds to be received by the Issuer
from the sale of the Notes. The Collateral shall be pledged by the Issuer to the
Trustee for the benefit of the Holders and shall be held by the Trustee in the
Cash Collateral Account pending disposition pursuant to the terms of the Escrow
Agreement.
(b) Each Holder, by its acceptance of a Note, consents and agrees to the
terms of the Escrow Agreement (including, without limitation, the provisions
providing for foreclosure and release of the Collateral) as the same may be in
effect or may be amended from time to time in accordance with its terms, and
authorizes and directs the Trustee to enter into the Escrow Agreement and to
perform its respective obligations and exercise its respective rights thereunder
in accordance therewith. The Issuer will do or cause to be done all such acts
and things as may be necessary or proper, or as may be required by the
provisions of the Escrow Agreement, to assure and confirm to the Trustee the
security interest in the Collateral contemplated hereby, by the Escrow Agreement
or any part thereof, as from time to time constituted, so as to render the same
available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purposes herein expressed. The
Issuer shall take, or shall cause to be taken, any and all actions reasonably
required (and any action requested by the Trustee) to cause the Escrow Agreement
to create and maintain, as security for the obligations of the Issuer under this
Indenture and the Notes, valid and enforceable first priority liens in and on
all the Collateral, in favor of the Trustee, superior to and prior to the rights
of third Persons and subject to no other Liens.
(c) The release of any Collateral pursuant to the Escrow Agreement will
not be deemed to impair the security under this Indenture in contravention of
the provisions hereof if and to the extent the Collateral is released pursuant
to this Indenture and the Escrow Agreement. To the extent applicable, the Issuer
shall cause TIA Section 314(d) relating to the release of property or securities
from the Lien and security interest of the Escrow Agreement (other than pursuant
to Sections 7(c) and 7(d) thereof) and relating to the substitution therefor of
any property or securities to be subjected to the Lien and security interest of
the Escrow Agreement to be complied with. Any certificate or opinion required by
TIA Section 314(d) may be made by an Officer of the Issuer, except in cases
where TIA Section 314(d) requires that such
<PAGE>
75
certificate or opinion be made by an independent Person, which Person shall be
an independent engineer, appraiser or other expert selected by the Issuer.
(d) The Issuer shall cause TIA Section 314(b), relating to opinions of
counsel regarding the Lien under the Escrow Agreement, to be complied with. The
Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as
conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such instruments.
(e) The Trustee, in its sole discretion and without the consent of the
Holders, may, and at the request of the Holders of at least 25% in aggregate
principal amount of Notes then outstanding shall, on behalf of the Holders, take
all actions it deems necessary or appropriate in order to (i) enforce any of the
terms of the Escrow Agreement and (ii) collect and receive any and all amounts
payable in respect of the obligations of the Issuer thereunder. The Trustee
shall have power to institute and to maintain such suits and proceedings as the
Trustee may deem expedient to preserve or protect its interests and the
interests of the Holders in the Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest hereunder or be
prejudicial to the interests of the Holders or of the Trustee).
ARTICLE ELEVEN
SUBORDINATION
SECTION 11.01. Agreement to Subordinate. The Issuer, for itself, its
successors and assigns, covenants and agrees, and each Holder, by his or her
acceptance thereof, likewise covenants and agrees, that the payment of the
principal of and premium, if any, and interest on each and all of the Notes
(including any payment in connection with the repurchase, redemption or other
acquisition thereof) is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full,
in cash or Cash Equivalents of all Senior Indebtedness. This Article Eleven
constitutes a continuing offer to all persons or entities who become holders of,
or continue to hold, Senior Indebtedness, each of whom is an obligee hereunder
and is entitled to enforce such holder's rights hereunder, subject to the
provisions hereof, without any act or notice of acceptance hereof or reliance
hereon. All provisions of this Article Eleven shall be subject to Section 11.12.
For the purposes of this Article Eleven, (a) no Senior Indebtedness shall
be deemed to have been paid in full unless and until all commitments or other
obligations of the holders of the Senior Indebtedness to make advances or
otherwise extend credit shall have terminated and the holders thereof shall have
indefeasibly received payment in full in cash or Cash Equivalents, and
<PAGE>
76
(b) the term "Senior Representative" shall mean the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness.
SECTION 11.02. Distribution on Dissolution, Liquidation, Bankruptcy or
Reorganization. Upon any distribution of assets of the Issuer upon any total or
partial dissolution, winding up, liquidation or reorganization of the Issuer,
whether in bankruptcy, insolvency, reorganization or receivership proceedings or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Issuer or otherwise,
(a) The holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents or, as acceptable to each
holder of Senior Indebtedness, in any other manner, of all amounts and
obligations due on or in respect of all Senior Indebtedness before the
Holders are entitled to receive any payment or distribution of any kind or
character (excluding securities of the Issuer provided for in a plan of
reorganization with respect to the Issuer approved by the bankruptcy court
that are equity securities or are subordinated in right of payment to all
Senior Indebtedness to the same extent as, or to a greater extent than,
the Notes are so subordinated as provided in this Article; such securities
are hereinafter collectively referred to as "Permitted Junior Notes") on
account of principal of, premium, if any, or interest on the Notes
(including any payment or other distribution which may be received from
the holders of Subordinated Indebtedness as a result of any payment on
such Subordinated Indebtedness); and
(b) any payment or distribution of assets of the Issuer or any
Subsidiary of the Issuer of any kind or character, whether in cash,
property or securities (excluding Permitted Junior Notes), by set-off or
otherwise, to which the Holders or the Trustee would be entitled but for
the provisions of this Article (including any payment or other
distribution which may be received from the holders of Subordinated
Indebtedness as a result of any payment on such Subordinated Indebtedness)
shall be paid by the liquidating trustee or agent or other Person making
such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their Senior Representative or Representatives, ratably
according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness held or represented by each, to the extent necessary
to make payment in full in cash, Cash Equivalents or in any other form
acceptable to each, of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or any Holder shall have received any payment or
distribution of assets of the Issuer or any Subsidiary of the Issuer of
any kind or character, whether in cash, property or securities (excluding
Permitted Junior Notes), in respect of principal,
<PAGE>
77
premium, if any, and interest on the Notes before all Senior Indebtedness
is paid in full in cash, then and in such event, such payment or
distribution (including any payment or other distribution which may be
received from the holders of Subordinated Indebtedness as a result of any
payment on such Subordinated Indebtedness) shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution
of assets of the Issuer for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in cash, Cash Equivalents or, as acceptable to each
holder of Senior Indebtedness, any other manner, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness or deposited with a court of competent jurisdiction.
The consolidation of the Issuer with, or the merger of the Issuer into,
another corporation or the liquidation or dissolution of the Issuer following
the sale or conveyance of its property or assets as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution, winding
up, liquidation or reorganization of the Issuer for the purposes of this Article
Eleven if such other corporation shall, as a part of such consolidation, merger,
sale or conveyance, comply with the conditions stated in Article Five.
If the Trustee or any Holder does not file a proper claim or proof of debt
in the form required in any proceeding referred to above prior to 30 days before
the expiration of the time to file such claim in such proceeding, then the
holder of any Senior Indebtedness (or its Senior Representative) is hereby
authorized, and has the right, to file an appropriate claim or claims for or on
behalf of such Holder.
SECTION 11.03. Suspension of Payment When Senior Indebtedness in Default.
(a) Unless Section 11.02 shall be applicable, upon the occurrence of a Payment
Default, then no payment or distribution of any assets of the Issuer or any
Subsidiary of the Issuer of any kind or character (excluding Permitted Junior
Notes) shall be made by the Issuer or any Subsidiary of the Issuer or on behalf
of or out of the property of the Issuer, or received by the Trustee or any
Noteholder on account of principal of, premium, if any, or interest on, the
Notes or on account of the purchase, redemption, defeasance (whether under
Section 8.02 or 8.03) or other acquisition of or in respect of the Notes unless
and until such Payment Default shall have been cured or waived in writing by the
holders of the Designated Senior Indebtedness or shall have ceased to exist or
the Designated Senior Indebtedness shall have been paid in full in cash, Cash
Equivalents or in any other manner as acceptable to each holder of such
Designated Senior Indebtedness, after which the Issuer shall resume making any
and all required payments in respect of the Notes, including any missed
payments.
(b) Unless Section 11.02 shall be applicable, upon (i) the occurrence of a
Non-payment Default pursuant to which the maturity of the applicable Designated
Senior
<PAGE>
78
Indebtedness may be accelerated, either immediately or upon the giving of
notice, the passage of time or both, and (ii) receipt by the Trustee and the
Issuer from a Senior Representative or the holder of any Designated Senior
Indebtedness of written notice of such occurrence, no payment (other than any
payments made pursuant to Section 8.02 or 8.03 or from the money or proceeds of
U.S. Government Securities held under the Escrow Agreement as provided in
Section 10.01) or distribution of any assets of the Issuer or any Subsidiary of
the Issuer of any kind or character (excluding Permitted Junior Notes) shall be
made by the Issuer or any Subsidiary of the Issuer or on behalf of or out of the
property of the Issuer or any Subsidiary of the Issuer, or received by the
Trustee or any Holder on account of any principal of, premium, if any, or
interest on, the Notes (including payments under any guaranty thereof) or on
account of the purchase, redemption or other acquisition of or in respect of
Notes (including payments under any guaranty thereof) for a period ("Payment
Blockage Period") commencing on the date of receipt by the Trustee of such
notice until the earliest of (x) 179 days after receipt of such written notice
by the Trustee (provided any Designated Senior Indebtedness as to which notice
was given shall theretofore have not been accelerated), (y) the date such
Non-payment Default and all other Non-payment Defaults as to which notice is
also given after such period is initiated shall have been cured or waived in
writing by the holders of the Designated Senior Indebtedness or shall have
ceased to exist or the Senior Indebtedness related thereto shall have been paid
in full in cash or Cash Equivalents or (z) the date such Payment Blockage Period
and any Payment Blockage Periods initiated during such period shall have been
terminated by written notice to the Issuer or the Trustee from the Senior
Representative and the holders of the Designated Senior Indebtedness that have
given notice of a Non-payment Default at or after the initiation of such Payment
Blockage Period, after which in the case of clause (x), (y) or (z), the Issuer
shall resume making any and all required payments in respect of the Notes
including any missed payments. Notwithstanding any other provision of this
Indenture, in no event shall a Payment Blockage Period extend beyond 179 days
from the date of the receipt by the Issuer or the Trustee of the notice referred
to in clause (ii) of this paragraph (b) (the "Initial Blockage Period"). Not
more than one Payment Blockage Period may be commenced with respect to the Notes
during any period of 360 consecutive days; provided that, subject to the
limitations set forth in the next sentence, the commencement of a Payment
Blockage Period by the representative of Designated Senior Indebtedness other
than the Credit Facility shall not bar the commencement of another Payment
Blockage Period by the representative for the Credit Facility within such period
of 360 consecutive days. Notwithstanding anything in this Indenture to the
contrary, there must be 180 days in any 360-day period in which no Payment
Blockage Period is in effect. No event of default (other than an event of
default pursuant to the financial maintenance covenants under the Credit
Facility) that existed or was continuing (it being acknowledged that any
subsequent action that would give rise to an event of default pursuant to any
provision under which an event of default previously existed or was continuing
shall constitute a new event of default for this purpose) on the date of
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or shall
be made, the basis for the commencement of a second Payment Blockage Period by
the representative for, or the holders of, such Designated Senior
<PAGE>
79
Indebtedness, whether or not within a period of 360 consecutive days, unless
such event of default shall have been cured or waived for a period of not less
than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Issuer or any
Subsidiary of the Issuer shall make, or the Trustee or any Holder shall receive,
any payment to the Trustee or any Holder prohibited by the foregoing provisions
of this Section, then and in such event such payment shall be paid over and
delivered forthwith to a Senior Representative of the holders of the Designated
Senior Indebtedness.
SECTION 11.04. Payment Permitted if No Default. Nothing contained in this
Article, elsewhere in this Indenture or in any of the Notes shall prevent the
Issuer, at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshaling of assets and liabilities of the Issuer referred
to in Section 11.02 or under the conditions described in Section 11.03, from
making payments at any time of principal of, premium, if any, or interest on the
Notes.
SECTION 11.05. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of, premium, if any, and interest on the
Notes shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders or the Trustee,
shall, as among the Issuer, its creditors other than holders of Senior
Indebtedness, and the Holders, be deemed to be a payment or distribution by the
Issuer to or on account of the Senior Indebtedness.
SECTION 11.06. Provisions Solely to Define Relative Rights. The provisions
of this Article are intended solely for the purpose of defining the relative
rights of the Holders on the one hand and the holders of Senior Indebtedness on
the other hand. Nothing contained in this Article or elsewhere in this Indenture
or in the Notes is intended to or shall (i) impair, as among the Issuer, its
creditors other than holders of Senior Indebtedness and the Holders, the
obligation of the Issuer, which is absolute and unconditional, to pay to the
Holders the principal of, premium, if any, and interest on the Notes as and when
the same shall become due and payable in accordance with their terms; or (ii)
affect the relative rights against the Issuer of the Holders and creditors of
the Issuer other than their rights in relation to the holders of Senior
Indebtedness; or (iii) prevent the Trustee or any Holder from exercising all
remedies otherwise permitted by applicable law upon Default under this
Indenture, subject to the rights, under this Article of the holders of Senior
Indebtedness to receive distributions and payments otherwise payable to Holders
(A) in any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Issuer
<PAGE>
80
referred to in Section 11.02, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or deliverable to
the Trustee or such Holder, or (B) under the conditions specified in Section
11.03, to prevent any payment prohibited by such Section or enforce their rights
pursuant to Section 11.03(c).
SECTION 11.07. Trustee to Effectuate Subordination. Each Holder by his or
her acceptance thereof authorizes and directs the Trustee on his or her behalf
to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his or her
attorney-in-fact for any and all such purposes, including, in the event of any
dissolution, winding-up, liquidation or reorganization of the Issuer whether in
bankruptcy, insolvency, receivership proceedings, or otherwise, the timely
filing of a claim for the unpaid balance of the indebtedness of Issuer owing to
such Holder in the form required in such proceedings and the causing of such
claim to be approved. If the Trustee does not file a proper claim at least 30
days before the expiration of the time to file such claim, then the holders of
Senior Indebtedness, and their agents, trustees or other representatives are
authorized to do so for and on behalf of the Holders.
SECTION 11.08. No Waiver of Subordination Provisions. (a) No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Issuer or any Holder or by any act or
failure to act, in good faith, by any such holder, or by any non-compliance by
the Issuer or any Holder with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Holders and without impairing or releasing the
subordination provided in this Article or the obligations hereunder of the
Holders to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, or waive compliance with the terms of, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
or payment of Senior Indebtedness; (iv) exercise or refrain from exercising any
rights against the Issuer and any other Person; (v) amend, supplement, restate
or otherwise modify or restructure the Senior Indebtedness; and (vi) otherwise
deal with any Person liable on account of Senior Indebtedness; provided,
however, that in no event shall any such actions limit the right of the Holders
to take any action to accelerate the maturity of the Notes pursuant to Article
Six of this Indenture or to pursue any rights or remedies hereunder or under
applicable laws if the taking of such action does not otherwise violate the
terms of this Article, subject to the rights, if any, under this
<PAGE>
81
Article, of the holders, from time to time, of Senior Indebtedness to receive
the cash, property or securities receivable upon the exercise of such rights or
remedies.
SECTION 11.09. Notice to Trustee. (a) The Issuer shall give prompt written
notice to the Trustee of any fact known to the Issuer which would prohibit the
making of any payment to or by the Trustee in respect of the Notes.
Notwithstanding the provisions of this Article or any provision of this
Indenture, the Trustee or any Paying Agent shall not be charged with knowledge
of the existence of any facts which would prohibit the making of any payment to
or by the Trustee or any Paying Agent in respect of the Notes, unless and until
the Trustee shall have received written notice thereof from the Issuer or a
holder of Senior Indebtedness or from a Senior Representative or any trustee,
fiduciary or agent therefor; and, prior to the receipt of any such written
notice, the Trustee shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section at least three Business Days prior to the
date upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of, premium, if
any, or interest on any Note), then, anything herein contained to the contrary
notwithstanding but without limiting the rights and remedies of the holders of
Senior Indebtedness or any trustee, fiduciary or agent thereof, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purpose for which such money was received and shall not be affected by
any notice to the contrary which may be received by it within three Business
Days prior to such date; nor shall the Trustee be charged with knowledge of the
elimination of the act or condition preventing any such payment unless and until
the Trustee shall have received an Officers' Certificate to such effect.
(b) The Trustee shall be entitled to rely on the delivery to it of a
written notice to the Trustee and the Issuer by a Person representing himself to
be a Senior Representative or a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor) to establish that such notice has been given by a
Senior Representative or a holder of Senior Indebtedness (or a trustee,
fiduciary or agent thereof and the Trustee shall have no duty to investigate the
authenticity thereof or the authority of the person signing and shall have no
liability for relying thereon); provided, however, that failure to give such
notice to the Issuer shall not affect in any way the ability of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment or the Trustee or the Paying
Agent may deposit the funds in question with a court of competent jurisdiction.
<PAGE>
82
SECTION 11.10. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Issuer referred to in
this Article, the Trustee and the Holders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Issuer, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article,
provided that the foregoing shall apply only if such court has been fully
apprised of the provisions of this Article.
SECTION 11.11. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder of Senior Indebtedness.
Nothing in this Article shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 7.07.
SECTION 11.12. Trust Moneys and Escrowed Funds Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from (x)
money or the proceeds of U.S. Government Obligations held in trust under Article
Eight by the Trustee for the payment of principal of, premium, if any, and
interest on the Notes (provided that at the time deposited, such deposit did not
violate any then outstanding Senior Indebtedness) and (y) money or the proceeds
of U.S. Government Securities held under the Escrow Agreement shall not be
subordinated to the prior payment of any Senior Indebtedness or subject to the
restrictions set forth in this Article Eleven, and none of the Holders shall be
obligated to pay over any such amount to any holder of Senior Indebtedness.
SECTION 11.13. No Suspension of Remedies. Nothing contained in this
Article shall limit the right of the Trustee or the Holders to take any action
to accelerate the maturity of the Notes pursuant to Article Six of this
Indenture or to pursue any rights or remedies hereunder or under applicable law,
subject to the rights, if any, under this Article of the holders, from time to
time, of Senior Indebtedness to receive the cash, property or securities
receivable upon the exercise of such rights or remedies.
SECTION 11.14. Trustee's Relation to Senior Indebtedness. With respect to
the holders of Senior Indebtedness, the Trustee undertakes to perform or to
observe only such of its covenants and obligations as are specifically set forth
in this Article, and no implied covenants or obligations with respect to the
holders of Senior Indebtedness shall be read into this Article
<PAGE>
83
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness.
SECTION 11.15. Other Rights of Holders of Senior Indebtedness. All rights
and interests under this Indenture of the holders of Senior Indebtedness, and
all agreements and obligations of the Trustee, the Holders and the Issuer under
this Article shall remain in full force and effect irrespective of (i) any lack
of validity or enforceability of the Credit Facility, and promissory notes
evidencing the Credit Facility or any other agreement or instrument relating
thereto or to any other Senior Indebtedness or (ii) any other circumstance that
might constitute a defense available to, or a discharge of, a guarantor or
surety (other than as a result of any payments indefeasibly made on the Credit
Facility or any other Senior Indebtedness).
The holders of Senior Indebtedness are hereby authorized to demand
specific performance of this Article, whether or not the Issuer shall have
complied with any provisions of this Article applicable to it, at any time when
the Trustee or any Holder shall have failed to comply with any of these
provisions.
The provisions of this Article shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by any holder of Senior
Indebtedness upon the insolvency, bankruptcy or reorganization of the Issuer or
otherwise, all as though such payment had not been made.
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act of 1939. Prior to the effectiveness of
the Registration Statement, this Indenture shall incorporate and be governed by
the provisions of the TIA that are required to be part of and to govern
indentures qualified under the TIA. After the effectiveness of the Registration
Statement, this Indenture shall be subject to the provisions of the TIA that are
required to be a part of this Indenture and shall, to the extent applicable, be
governed by such provisions. If any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by TIA 318(c), the imposed duties
shall control.
SECTION 12.02. Notices. Any notice or communication shall be sufficiently
given if in writing and delivered in person, mailed by first-class mail or sent
by telecopier transmission addressed as follows:
<PAGE>
84
if to the Issuer:
Genesis ElderCare Acquisition Corp.
148 West State Street
Kennett Square, PA 19348
Telecopier No.: (610) 444-7483
Attention: George V. Hager, Jr.
if to the Trustee:
PNC Bank, National Association
Corporate Trust Department
1600 Market Street
Philadelphia, PA 19103
Telecopier No.: (215) 585-8872
Attention: Sheila Wallbridge
if to the Paying Agent:
Banque Internationale a Luxembourg S.A.
69, route d'Esch
L-1470 Luxembourg
Telecopier No.: (352) 4590-4227
Attention: Jacques Kinnen
The Issuer, the Trustee or the Paying Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery. Copies of any
such communication or notice to a Holder shall also be mailed to the Trustee and
each Paying Agent at the same time.
Any notice or communication (i) mailed to a Holder shall be mailed to it
at its address as it appears on the Security Register by first-class mail and
shall be sufficiently given to him if so mailed within the time prescribed and
(ii) for so long as the Notes are listed on the Luxembourg Stock Exchange, shall
be published in a leading newspaper of general circulation in Luxembourg, not
later than the latest date, and not earlier than the earliest date, prescribed
<PAGE>
85
in the Notes for the giving of such notice or communication. Copies of any such
communication or notice to a Holder shall also be mailed to the Trustee and each
Agent at the same time.
Failure to transmit a notice or communication to a Holder as provided
herein or any defect in any such notice shall not affect its sufficiency with
respect to other Holders. Except for a notice to the Trustee, which is deemed
given only when received, and except as otherwise provided in this Indenture, if
a notice or communication is mailed in the manner provided in this Section
12.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 12.03. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Issuer to the Trustee to take any action under
this Indenture, the Issuer shall furnish to the Trustee:
(i) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such Counsel,
all such conditions precedent have been complied with.
SECTION 12.04. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(i) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
<PAGE>
86
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that, with respect to matters of fact, an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 12.05. Rules by Trustee, Paying Agent or Registrar. The Trustee
may make reasonable rules for action by or at a meeting of Holders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 12.06. Payment Date Other Than a Business Day. If an Interest
Payment Date, Redemption Date, Payment Date, Stated Maturity or date of maturity
of any Note shall not be a Business Day, then payment of principal of, premium,
if any, or interest on such Note, as the case may be, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Payment Date or Redemption
Date, or at the Stated Maturity or date of maturity of such Note; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Payment Date, Redemption Date, Stated Maturity or date of maturity, as the
case may be.
SECTION 12.07. Governing Law. The laws of the State of New York shall
govern this Indenture and the Notes. The Trustee, the Issuer and the Holders
agree to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Indenture or the
Notes.
SECTION 12.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Issuer or any Subsidiary of the Issuer. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 12.09. No Recourse Against Others. No recourse for the payment of
the principal of, premium, if any, or interest on any of the Notes, or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Issuer contained in this
Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, shareholder, other equityholder,
officer, director,
<PAGE>
87
employee or controlling person, as such, of the Issuer or of any successor
Person, either directly or through the Issuer or any successor Person, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issue of the Notes.
SECTION 12.10. Successors. All agreements of the Issuer in this Indenture
and the Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 12.11. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 12.12. Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 12.13. Table of Contents, Headings, Etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
and provisions hereof.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
GENESIS ELDERCARE ACQUISITION CORP.
By: /s/ Michael R. Walker
------------------------------------
Name: Michael R. Walker
Title: Chairman and Chief
Executive Officer
Attest: /s/ Ira C. Gubernick
---------------------------
Name: Ira C. Gubernick
Title: Secretary
PNC BANK, NATIONAL ASSOCIATION
By:
------------------------------------
Name:
Title:
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
By:
------------------------------------
Name:
Title:
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
GENESIS ELDERCARE ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Sheila Wallbridge
------------------------------------
Name: Sheila Wallbridge
Title: Assistant Vice President
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
By:
------------------------------------
Name:
Title:
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
GENESIS ELDERCARE ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By:
------------------------------------
Name:
Title:
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
By: /s/ J. KINNEN /s/ Daniel Schammo
------------------------------------
Name: J. KINNEN Daniel Schammo
Title: Premier Consellier
<PAGE>
EXHIBIT A
[FACE OF NOTE]
GENESIS ELDERCARE ACQUISITION CORP.
9% Senior Subordinated Note due 2007
[CUSIP] [CINS] [__________]
No. $_________
GENESIS ELDERCARE ACQUISITION CORP., a Delaware corporation (the "Issuer",
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to _____________, or its registered assigns,
the principal sum of ____________ ($____) on August 1, 2007.
Interest Payment Dates: February 1 and August 1, commencing February 1,
1998.
Regular Record Dates: January 15 and July 15.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: August 11, 1997 GENESIS ELDERCARE ACQUISITION
CORP.
By:
------------------------------------
Name:
Title:
<PAGE>
(Trustee's Certificate of Authentication)
This is one of the 9% Senior Subordinated Notes due 2007 described in the
within-mentioned Indenture.
PNC BANK, NATIONAL ASSOCIATION
as Trustee
By:
------------------------------------
Authorized Signatory
<PAGE>
A-4
[REVERSE SIDE OF NOTE]
GENESIS ELDERCARE ACQUISITION CORP.
9% Senior Subordinated Note due 2007
1. Principal and Interest.
The Issuer will pay the principal of this Note on August 1, 2007.
The Issuer promises to pay interest on the principal amount of this Note
on each Interest Payment Date, as set forth below, at the rate per annum shown
above.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the January 15 or July 15 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
February 1, 1998.
If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or prior to the earlier of
(x) the date that is six months after the Merger Closing Date and (y) March 31,
1998, in accordance with the terms of the Registration Rights Agreement dated as
of August 11, 1997 between the Issuer and Morgan Stanley & Co. Incorporated,
First Union Capital Markets Corp. and Montgomery Securities, the per annum
interest rate borne by the Notes shall be increased by 0.5% from the rate shown
above accruing from the earlier of (x) the date that is six months after the
Merger Closing Date and (y) March 31, 1998, payable in cash semiannually, in
arrears, on each Interest Payment Date, commencing August 1, 1998 until the
Exchange Offer is consummated or the Shelf Registration Statement is declared
effective. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from August 11, 1997;
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Issuer shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at a
rate per annum that is 2% in excess of the rate otherwise payable.
<PAGE>
A-5
2. Method of Payment.
The Issuer will pay interest (except defaulted interest) on the principal
amount of the Notes as provided above on each February 1 and August 1 commencing
February 1, 1998 to the persons who are Holders (as reflected in the Security
Register at the close of business on the January 15 or July 15 immediately
preceding the Interest Payment Date), in each case, even if the Note is
cancelled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the Issuer
will make payment to the Holder that surrenders this Note to a Paying Agent on
or after August 1, 2007.
The Issuer will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Issuer may pay
principal, premium, if any, and interest by its check payable in such money. It
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent, Paying Agent and
Registrar. The Issuer may change any authenticating agent, Paying Agent or
Registrar without notice. The Issuer, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
The Issuer issued the Notes under an Indenture dated as of August 11, 1997
(the "Indenture"), between the Issuer, PNC Bank, National Association, trustee
(the "Trustee") and Banque Internationale a Luxembourg S.A., a paying agent.
Capitalized terms herein are used as defined in the Indenture unless otherwise
indicated. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and the Trust Indenture Act for a statement of all such terms. To the extent
permitted by applicable law, in the event of any inconsistency between the terms
of this Note and the terms of the Indenture, the terms of the Indenture shall
control.
The Notes are general obligations of the Issuer.
<PAGE>
A-6
5. Optional Redemption.
The Notes will be redeemable, at the Issuer's option, in whole or in part,
at any time or from time to time, on or after August 1, 2002 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing August 1 of the
years set forth below:
Redemption
Year Price
---- ----------
2002.................... 104.500%
2003.................... 102.250
2004 and thereafter..... 100.000
Notes in original denominations larger than $1,000 may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Issuer defaults in the
payment of the Redemption Price.
6. Special Redemption.
In the event that the Tender Offer is not consummated and certain other
conditions set forth in the Escrow Agreement are not satisfied by the Expiration
Date, or if it appears, in the sole judgment of the Issuer, that the Tender
Offer will not be consummated and such conditions will not be satisfied by the
Expiration Date, the Issuer shall redeem the Notes in whole, on 10 days' prior
notice mailed by first-class mail to each Holder's last address as it appears in
the Security Register, at a Redemption Price equal to 101% of the principal
amount of the Notes, plus accrued and unpaid interest to the Redemption Date. On
the earlier of (i) the Expiration Date, if the Trustee has not received the
Escrow Agreement Officers' Certificate that the Tender Offer has been
consummated (or will be consummated promptly upon the release of the escrowed
proceeds of the offering of the Notes to the Issuer) and certain conditions have
been satisfied and the Escrow Agreement Opinion of Counsel, and (ii) such date
on which the Trustee receives an officer's certificate under the Escrow
Agreement that the Tender Offer will not be consummated and such conditions will
not be satisfied by the Expiration Date, the Trustee will mail by first-class
mail to each Holder's last address as it appears in the Security Register a
written notice that the Notes will be redeemed within 10 days of such notice.
<PAGE>
A-7
7. Repurchase upon Change of Control.
Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Issuer in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Payment Date").
A notice of such Change of Control will be mailed within 30 days after any
Change of Control occurs to each Holder at its last address as it appears in the
Security Register. Notes in original denominations larger than $1,000 may be
sold to the Issuer in part. On and after the Payment Date, interest ceases to
accrue on Notes or portions of Notes surrendered for purchase by the Issuer,
unless the Issuer defaults in the payment of the purchase price.
8. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.
9. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
10. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Issuer at its request. After that, Holders entitled to the
money must look to the Issuer for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity.
If the Issuer deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest on the Notes (a) to redemption or maturity, the Issuer
will be discharged from the Indenture and the Notes,
<PAGE>
A-8
except in certain circumstances for certain sections thereof, and (b) to the
Stated Maturity, the Issuer will be discharged from certain covenants set forth
in the Indenture.
12. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
13. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Issuer and
its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or merge, consolidate or transfer
substantially all of its assets. Within 45 days after the end of each fiscal
quarter (90 days after the end of the last fiscal quarter of each year), the
Issuer must report to the Trustee on compliance with such limitations.
14. Subordination.
The payment of the Notes will, to the extent set forth in the Indenture,
be subordinated in right of payment to the prior payment in full, in cash or
Cash Equivalents, of all Senior Indebtedness.
15. Successor Persons.
When a successor person or other entity assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor person will be
released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the Indenture:
(a) default in the payment of principal of (or premium, if any, on) any Note
when the same becomes due and payable at maturity, upon acceleration, redemption
or otherwise, whether or not such payment is prohibited by the subordination
provisions set forth in Article Eleven; (b) default in the payment of interest
on any Note when the same becomes due and payable, and such default
<PAGE>
A-9
continues for a period of 30 days, whether or not such payment is prohibited by
the subordination provisions set forth in Article Eleven; (c) default in the
performance or breach of Article Five or Section 3.01(b) of the Indenture or the
failure to make or consummate an Offer to Purchase in accordance with Section
4.10 or 4.11 of the Indenture; (d) default in the performance of or breach of
any covenant or agreement of the Issuer in the Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) above), and such
default or breach continues for a period of 30 consecutive days after written
notice by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding; (e) there occurs with respect to any issue
or issues of Indebtedness of the Issuer or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate for all
such issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Issuer or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 30 consecutive days
following entry of the final judgment or order that causes the aggregate amount
for all such final judgments or orders outstanding and not paid or discharged
against all such Persons to exceed $10 million during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (g) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Issuer or any
Significant Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B) appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or any Significant Subsidiary or for all or substantially
all of the property and assets of the Issuer or any Significant Subsidiary or
(C) the winding up or liquidation of the affairs of the Issuer or any
Significant Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 30 consecutive days; (h) the Issuer or
any Significant Subsidiary (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case under any
such law, (B) consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Issuer or any Significant Subsidiary or for all or substantially all of the
property and assets of the Issuer or any Significant Subsidiary or (C) effects
any general assignment for the benefit of creditors; or (i) the Guaranty
Documents are not executed and delivered within three Business Days after the
consummation of the Tender Offer (unless prior to or at the end of such three
Business Days the Merger shall have been consummated).
<PAGE>
A-10
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Issuer occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of at least a majority in principal amount of the Notes then outstanding
may direct the Trustee in its exercise of any trust or power.
17. Trustee Dealings with Issuer.
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from and perform services for the Issuer or
its Affiliates and may otherwise deal with the Issuer or its Affiliates as if it
were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder, other
equity holder, officer, director, employee or controlling person as such, of the
Issuer or of any successor Person shall have any liability for any obligations
of the Issuer under the Escrow Agreement, the Notes or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Issuer will furnish a copy of the Indenture to any Holder upon written
request and without charge. Requests may be made to Genesis ElderCare
Acquisition Corp., 148 West State Street, Kennett Square, Pennsylvania 19348;
Attention: George V. Hager, Jr.
<PAGE>
A-11
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ___________________________________ attorney to transfer said Note on
the books of the Issuer with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
PERMANENT OFFSHORE GLOBAL NOTES AND
PERMANENT OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
<PAGE>
A-12
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:___________________ __________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:____________________ _______________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
A-13
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Issuer pursuant to Section
4.10 or 4.11 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Issuer
pursuant to Section 4.10 or 4.11 of the Indenture, state the amount:
$___________________.
Date: _________________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT B
Form of Certificate
________________, __
PNC Bank, National Association
1600 Market Street
Philadelphia, PA 19103
Attention: Corporate Trust Department
Re: Genesis ElderCare Acquisition Corp. (the "Issuer")
9% Senior Subordinated Notes due 2007 (the "Notes")
Dear Sirs:
This letter relates to U.S. $______ principal amount of Notes represented
by a Note (the "Legended Note") which bears a legend outlining restrictions upon
transfer of such Legended Note. Pursuant to Section 2.01 of the Indenture dated
as of August 11, 1997 (the "Indenture") relating to the Notes, we hereby certify
that we are (or we will hold such securities on behalf of) a person outside the
United States to whom the Notes could be transferred in accordance with Rule 904
of Regulation S promulgated under the U.S. Securities Act of 1933. Accordingly,
you are hereby requested to exchange the legended certificate for an unlegended
certificate representing an identical principal amount of Notes, all in the
manner provided for in the Indenture.
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
---------------------------------
Authorized Signature
<PAGE>
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
________________, __
PNC Bank, National Association
1600 Market Street
Philadelphia, PA 19103
Attention: Corporate Trust Department
Re: Genesis ElderCare Acquisition Corp. (the "Issuer")
9% Senior Subordinated Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $____________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of
August 11, 1997 (the "Indenture"), relating to the Notes, and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the Securities
Act of 1933 (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Notes, we will do so only (A) to the Issuer or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Issuer a signed letter substantially in the form of this letter, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act (if available), or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Issuer such certifications, legal opinions
and other information as you and
<PAGE>
C-2
the Issuer may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
-----------------------------
Authorized Signature
<PAGE>
EXHIBIT D
Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to Regulation S
________________, __
PNC Bank, National Association
1600 Market Street
Philadelphia, PA 19103
Attention: Corporate Trust Department
Re: Genesis ElderCare Acquisition Corp. (the "Issuer")
9% Senior Subordinated Notes due 2007 (the "Notes")
Dear Sirs:
In connection with our proposed sale of U.S.$ aggregate principal amount
of the Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933 and, accordingly,
we represent that:
(1) the offer of the Notes was not made to a person in the United States;
(2) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------
Authorized Signature
<PAGE>
EXHIBIT E
FORM OF FIRST SUPPLEMENTAL INDENTURE
THE FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture")
dated as of __________, 1997, among The Multicare Companies, Inc., a Delaware
corporation ("Multicare"), Genesis ElderCare Acquisition Corp., a Delaware
corporation (the "Issuer"), PNC Bank, National Association, as trustee under the
indenture referred to below (the "Trustee") and Banque Internationale a
Luxembourg S.A. (a "Paying Agent").
R E C I T A L S
WHEREAS, the Issuer heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of August 11, 1997, providing for the
issuance of an aggregate principal amount of $250,000,000 of 9% Senior
Subordinated Notes due 2007 (the "Notes");
WHEREAS, the Tender Offer is required to be consummated by the
Expiration Date and the Merger is required to be consummated within four months
after consummation of the Tender Offer;
WHEREAS, Multicare desires to guarantee, on a senior subordinated
basis, the obligations of the Issuer under the Indenture and the Notes and to
comply with the requirements of the Indenture with respect to the execution of a
supplemental indenture in connection with its senior subordinated guaranty; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Issuer and
the Trustee are authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Issuer, Multicare and the Trustee mutually covenant and agree for the equal and
ratable benefit of the holders of the Notes as follows:
<PAGE>
2
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined herein, terms
defined in the Indenture are used herein as defined therein. In addition, as
used herein:
"Guaranteed Obligations" has the meaning provided in Section 2.01.
"Guarantor Senior Indebtedness" means the following obligations
whether outstanding on the Closing Date or thereafter Incurred: (a) all
Indebtedness and other monetary obligations of Multicare or any Subsidiary
of Multicare under or in respect of the Credit Facility (including
obligations in respect of any lease financing facility of the Credit
Facility) or any Interest Rate Contract or Currency Agreement related to
Indebtedness under the Credit Facility, whether for principal, interest
(including interest accruing after the filing of a petition by or against
Multicare or any Subsidiary of Multicare under any state or federal
Bankruptcy Laws, whether or not such interest is allowed as a claim after
such filing in any proceeding under such law), fees, expenses,
indemnification or otherwise, and (b) the principal of, premium, if any,
and interest on all other Indebtedness of Multicare (other than the
Multicare Senior Subordinated Guaranty) unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall be pari passu with or subordinated in right of payment
to the Multicare Senior Subordinated Guaranty. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness that
is by its terms subordinate in right of payment to any Indebtedness of
Multicare, (ii) Indebtedness which when incurred and without respect to
any election under Section 1111(b) of the Bankruptcy Law is without
recourse to Multicare, (iii) any repurchase, redemption or other
obligation in respect of Redeemable Capital Stock, (iv) Indebtedness for
goods, materials or services purchased in the ordinary course of business
or indebtedness consisting of trade payables or other current liabilities,
(v) Indebtedness of or amounts owed by Multicare to employees, officers,
or directors, (vi) any liability for federal, state, local or other taxes
owed or owing by Multicare, (vii) Indebtedness of Multicare to a
Subsidiary of Multicare or any other Affiliate of Multicare or any of such
Affiliate's subsidiaries, (viii) that portion of any Indebtedness which at
the time of issuance is issued in violation of the Indenture and (ix)
amounts owing under leases (other than Capital Lease Obligations).
"Guarantor Designated Senior Indebtedness" means (i) all Guarantor
Senior Indebtedness under, or in respect of, the Credit Facility and any
Interest Rate Contract or Currency Agreement related to Indebtedness under
the Credit Facility and (ii) any other Guarantor Senior Indebtedness
which, at the time of determination, has an aggregate principal amount
outstanding, together with any commitments to lend additional amounts, of
at least $30,000,000 and is specifically designated in the
<PAGE>
3
instrument evidencing such Senior Indebtedness as "Guarantor Designated
Senior Indebtedness."
"Guarantor Subordinated Indebtedness" means any Indebtedness of
Multicare subordinated in right of payment to the Multicare Senior
Subordinated Guaranty.
"Multicare Restricted Subsidiary" means any Subsidiary of Multicare
other than a Multicare Unrestricted Subsidiary.
"Multicare Unrestricted Subsidiary" means (i) any Subsidiary of
Multicare that at the time of determination shall be designated a
Multicare Unrestricted Subsidiary by the Board of Directors in the manner
provided below; and (ii) any Subsidiary of a Multicare Unrestricted
Subsidiary. The Board of Directors may designate any Multicare Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of
Multicare) to be a Multicare Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, Multicare or any Multicare Restricted Subsidiary; provided
that (A) any guarantee by Multicare or any Multicare Restricted Subsidiary
of any Indebtedness of the Subsidiary being so designated shall be deemed
an "Incurrence" of such Indebtedness and an "Investment" by Multicare or
such Multicare Restricted Subsidiary (or both, if applicable) at the time
of such designation; (B) either (I) the Subsidiary to be so designated has
total assets of $1,000 or less or (II) if such Subsidiary has assets
greater than $1,000, such designation would be permitted under Section
4.04 of the Indenture and (C) if applicable, the Incurrence of
Indebtedness and the Investment referred to in clause (A) of this proviso
would be permitted under Sections 4.03 and 4.04 of the Indenture. The
Board of Directors may designate any Multicare Unrestricted Subsidiary to
be a Multicare Restricted Subsidiary; provided that (i) no Default or
Event of Default shall have occurred and be continuing at the time of or
after giving effect to such designation and (ii) all Liens and
Indebtedness of such Multicare Unrestricted Subsidiary outstanding
immediately after such designation would, if Incurred at such time, have
been permitted to be Incurred (and shall be deemed to have been Incurred)
for all purposes of the Indenture. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such designation
and an Officers' Certificate certifying that such designation complied
with the foregoing provisions.
"Multicare Senior Subordinated Guaranty" means the unconditional
guaranty by Multicare of the Guaranteed Obligations on the terms and
conditions provided herein.
"Placement Agreement" means the placement agreement between the
Issuer and Morgan Stanley & Co. Incorporated, Montgomery Securities and
First Union Capital Markets Corp. dated August 4, 1997.
<PAGE>
4
ARTICLE TWO
MULTICARE SENIOR SUBORDINATED GUARANTY
SECTION 2.01. Multicare Senior Subordinated Guaranty. Subject to the
provisions of this Article Two, Multicare, as primary obligor and not merely as
surety, hereby fully, unconditionally and irrevocably guarantees, from the
consummation of the Tender Offer to and until the consummation of the Merger, to
each Holder and to the Trustee on behalf of the Holders: (i) the due and
punctual payment of the principal of, premium, if any, on and interest on each
Note, when and as the same shall become due and payable, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal of and interest, if any, on the Notes, to the extent lawful,
and the due and punctual performance of all other obligations of the Issuer to
the Holders or the Trustee (the "Guaranteed Obligations"), all in accordance
with the terms of such Note and the Indenture and (ii) in the case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, at Stated Maturity, by
acceleration or otherwise. Multicare hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of merger or
bankruptcy of the Issuer any right to require a proceeding first against the
Issuer the benefit of discussion, protest or notice with respect to any such
Note or the debt evidenced thereby and all demands whatsoever, and covenants
that this Multicare Senior Subordinated Guaranty will not be discharged as to
any such Note except upon the earlier of (x) the payment in full of the
principal thereof, premium, if any, and interest thereon and (y) the
consummation of the Merger. The maturity of the obligations guaranteed hereby
may be accelerated as provided in Article Six of the Indenture for the purposes
of this Article Two. In the event of any declaration of acceleration of such
obligations as provided in Article Six of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by
Multicare for the purpose of this Article Two. In addition, without limiting the
foregoing provisions, upon the effectiveness of any acceleration under Article
Six of the Indenture, the Trustee shall promptly make a demand for payment on
the Notes under the Multicare Senior Subordinated Guaranty provided for in this
Article Two.
If the Trustee or the Holder of any Note is required by any court or
otherwise to return to the Issuer or Multicare, or any custodian, receiver,
liquidator, trustee, sequestrator or other similar official acting in relation
to the Issuer or Multicare, any amount paid to the Trustee or such Holder in
respect of a Note, this Multicare Senior Subordinated Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and effect. Multicare
further agrees, to the fullest extent that it may lawfully do so, that, as
between it, on the one hand, and the Holders and the Trustee, on the other hand,
the maturity of the obligations guaranteed hereby may be accelerated as provided
in Article Two hereof for the purposes of this Multicare Senior Subordinated
Guaranty, notwithstanding any stay, injunction or other prohibition extant under
any applicable bankruptcy law preventing such acceleration in respect of the
obligations guaranteed hereby.
<PAGE>
5
Until such time as the Notes are fully and finally paid, including
all interest, premium, principal and liquidated damages with respect thereto,
Multicare hereby irrevocably waives any claim or other rights which it may now
or hereafter acquire against the Issuer that arise from the existence, payment,
performance or enforcement of its obligations under this Multicare Senior
Subordinated Guaranty and the Indenture, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of the Holders against the
Issuer or any collateral which any such Holder or the Trustee on behalf of such
Holder hereafter acquires, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including, without limitation,
the right to take or receive from the Issuer, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to Multicare
in violation of the preceding sentence and the principal of, premium, if any,
and accrued interest on the Notes shall not have been paid in full, such amount
shall be deemed to have been paid to Multicare for the benefit of, and held in
trust for the benefit of, the Holders, and shall forthwith be paid to the
Trustee for the benefit of the Holders to be credited and applied upon the
principal of, premium, if any, and accrued interest on the Notes. Multicare
acknowledges that it will receive direct and indirect benefits from the issuance
of the Notes pursuant to this Indenture and that the waivers set forth in this
Section 2.01 are knowingly made in contemplation of such benefits.
The Multicare Senior Subordinated Guaranty set forth in this Section
2.01 shall not be valid or become obligatory for any purpose with respect to a
Note until the certificate of authentication on such Note shall have been signed
by or on behalf of the Trustee.
SECTION 2.02. Obligations Unconditional. Subject to Section 2.05,
nothing contained in this Article Two or in the Indenture or in the Notes is
intended to or shall impair, as between Multicare and the Holders, the
obligation of Multicare, which is absolute and unconditional, upon failure by
the Issuer, to pay to the Holders the principal of, premium, if any, and
interest on the Notes as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of Multicare, nor shall anything herein or
therein prevent any Holder or the Trustee on their behalf from exercising all
remedies otherwise permitted by applicable law upon default under the Indenture.
Without limiting the foregoing, nothing contained in this Article
Two will restrict the right of the Trustee or the Holders to take any action to
declare the Multicare Senior Subordinated Guaranty to be due and payable prior
to the Stated Maturity of the Notes pursuant to Section 6.02 of the Indenture or
to pursue any rights or remedies hereunder.
SECTION 2.03. Notice to Trustee. Multicare shall give prompt written
notice to the Trustee of any fact known to Multicare which would prohibit the
making of any payment
<PAGE>
6
to or by the Trustee in respect of the Multicare Senior Subordinated Guaranty
pursuant to the provisions of this Article Two.
SECTION 2.04. This Article Not to Prevent Events of Default. The
failure to make a payment on account of principal of, premium, if any, or
interest on the Notes by reason of any provision of this Article will not be
construed as preventing the occurrence of an Event of Default.
SECTION 2.05. Net Worth Limitation. Notwithstanding any other
provision of the Indenture or the Notes, this Multicare Senior Subordinated
Guaranty shall not be enforceable against Multicare in an amount in excess of
the net worth of Multicare at the time that determination of such net worth is,
under applicable law, relevant to the enforceability of this Multicare Senior
Subordinated Guaranty. Such net worth shall include any claim or future claim of
Multicare against the Issuer for reimbursement and any claim against any grantor
of a Guarantee for contribution.
ARTICLE THREE
SUBORDINATION
SECTION 3.01. Agreement to Subordinate. Multicare, for itself, its
successors and assigns, covenants and agrees, and each Holder, by his or her
acceptance thereof, likewise covenants and agrees, that the payment of the
principal of and premium, if any, and interest on each and all of the Notes
under this Multicare Senior Subordinated Guaranty (including any payment in
connection with the repurchase, redemption or other acquisition thereof) is
hereby expressly subordinated, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full, in cash or Cash
Equivalents of all Guarantor Senior Indebtedness. This Article Three constitutes
a continuing offer to all persons or entities who become holders of, or continue
to hold, Guarantor Senior Indebtedness, each of whom is an obligee hereunder and
is entitled to enforce such holder's rights hereunder, subject to the provisions
hereof, without any act or notice of acceptance hereof or reliance hereon. All
provisions of this Article Three shall be subject to Section 3.12.
For the purposes of this Article Three, (a) no Guarantor Senior
Indebtedness shall be deemed to have been paid in full unless and until all
commitments or other obligations of the holders of the Senior Indebtedness
thereunder to make advances or otherwise extend credit shall have terminated and
the holders thereof shall have indefeasibly received payment in full in cash or
Cash Equivalents, and (b) the term "Guarantor Senior Representative" shall mean
the indenture trustee or other trustee, agent or representative for any
Guarantor Senior Indebtedness.
<PAGE>
7
SECTION 3.02. Distribution on Dissolution, Liquidation, Bankruptcy
or Reorganization. Upon any distribution of assets of Multicare upon any total
or partial dissolution, winding up, liquidation or reorganization of Multicare,
whether in bankruptcy, insolvency, reorganization or receivership proceedings or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of Multicare or otherwise,
(a) the holders of Guarantor Senior Indebtedness shall be entitled
to receive payment in full in cash or Cash Equivalents or, as acceptable
to each holder of Guarantor Senior Indebtedness, in any other manner, of
all amounts and obligations due on or in respect of all Guarantor Senior
Indebtedness before the Holders are entitled to receive any payment or
distribution of any kind or character (excluding securities of Multicare
provided for in a plan of reorganization with respect to Multicare
approved by the bankruptcy court that are equity securities or are
subordinated in right of payment to all Guarantor Senior Indebtedness to
the same extent as, or to a greater extent than, the Multicare Senior
Subordinated Guaranty is so subordinated as provided in this Article; such
securities are hereinafter collectively referred to as "Multicare
Permitted Junior Notes") on account of principal of, premium, if any, or
interest on the Notes (including any payment or other distribution which
may be received from the holders of Guarantor Subordinated Indebtedness as
a result of any payment on such Guarantor Subordinated Indebtedness);
(b) any payment or distribution of assets of Multicare or any
Subsidiary of Multicare of any kind or character, whether in cash,
property or securities (excluding Multicare Permitted Junior Notes), by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article (including any payment or
other distribution which may be received from the holders of Guarantor
Subordinated Indebtedness as a result of any payment on such Guarantor
Subordinated Indebtedness) shall be paid by the liquidating trustee or
agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Guarantor Senior Indebtedness or their
Guarantor Senior Representative or Representatives, ratably according to
the aggregate amounts remaining unpaid on account of the Guarantor Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full in cash, Cash Equivalents or in any other form acceptable
to each, of all Guarantor Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of
such Guarantor Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 3.02, the Trustee or any Holder shall have received any
payment or distribution of assets of Multicare or any Subsidiary of
Multicare of any kind or character, whether in cash, property or
securities (excluding Multicare Permitted Junior Notes), in respect of
principal, premium, if any, and interest on the Notes before all Guarantor
Senior
<PAGE>
8
Indebtedness is paid in full in cash, then and in such event, such payment
or distribution (including any payment or other distribution which may be
received from the holders of Guarantor Subordinated Indebtedness as a
result of any payment on such Guarantor Subordinated Indebtedness) shall
be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of Multicare for application to
the payment of all Guarantor Senior Indebtedness remaining unpaid to the
extent necessary to pay all Guarantor Senior Indebtedness in full in cash,
Cash Equivalents or, as acceptable to each holder of Guarantor Senior
Indebtedness, any other manner, after giving effect to any concurrent
payment or distribution to or for the holders of Guarantor Senior
Indebtedness or deposited with a court of competent jurisdiction.
The consolidation of Multicare with, or the merger of Multicare
into, another corporation or the liquidation or dissolution of Multicare
following the sale or conveyance of its property or assets as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five of the Indenture shall not be deemed a
dissolution, winding up, liquidation or reorganization of Multicare for the
purposes of this Article Three if such other corporation shall, as a part of
such consolidation, merger, sale or conveyance, comply with the conditions
stated in Article Five of the Indenture.
If the Trustee or any Holder does not file a proper claim or proof
of debt in the form required in any proceeding referred to above prior to 30
days before the expiration of the time to file such claim in such proceeding,
then the holder of any Guarantor Senior Indebtedness (or its Guarantor Senior
Representative) is hereby authorized, and has the right, to file an appropriate
claim or claims for or on behalf of such Holder.
SECTION 3.03. Suspension of Payment When Guarantor Senior
Indebtedness in Default. (a) Unless Section 3.02 shall be applicable, upon the
occurrence of a Payment Default in respect of Guarantor Designated Senior
Indebtedness, then no payment or distribution of any assets of Multicare or any
Subsidiary of Multicare of any kind or character (excluding Multicare Permitted
Junior Notes) shall be made by Multicare or any Subsidiary of Multicare or on
behalf of or out of the property of Multicare, or received by the Trustee or any
Holder on account of principal of, premium, if any, or interest on, the Notes or
on account of the purchase, redemption, defeasance (whether under Section 8.02
or 8.03 of the Indenture) or other acquisition of or in respect of the Notes
unless and until such Payment Default shall have been cured or waived in writing
by the holders of the Guarantor Designated Senior Indebtedness or shall have
ceased to exist or the Guarantor Designated Senior Indebtedness shall have been
paid in full in cash, Cash Equivalents or in any other manner as acceptable to
each holder of such Guarantor Designated Senior Indebtedness, after which
Multicare shall resume making any and all required payments in respect of the
Notes, including any missed payments.
<PAGE>
9
(b) Unless Section 3.02 shall be applicable, upon (i) the occurrence
of a Non-payment Default pursuant to which the maturity of the applicable
Designated Senior Indebtedness may be accelerated in respect of Guarantor
Designated Senior Indebtedness, either iimmediately or upon the giving of
notice, the passage of time, or both, and (ii) receipt by the Trustee and
Multicare from a Guarantor Senior Representative or the holder of any Guarantor
Designated Senior Indebtedness of written notice of such occurrence, no payment
(other than any payments made pursuant to Section 8.02 or 8.03 of the Indenture
or from the money or proceeds of U.S. Government Securities held under the
Escrow Agreement as provided in Section 10.01 of the Indenture) or distribution
of any assets of Multicare or any Subsidiary of Multicare thereof of any kind or
character (excluding Multicare Permitted Junior Notes) shall be made by
Multicare or any Subsidiary of Multicare thereof or on behalf of or out of the
property of Multicare or any Subsidiary of Multicare, or received by the Trustee
or any Holder on account of any principal of, premium, if any, or interest on,
the Notes (including payments under any guaranty thereof) or on account of the
purchase, redemption or other acquisition of or in respect of Notes (including
payments under any guaranty thereof) for a period ("Payment Blockage Period")
commencing on the date of receipt by the Trustee of such notice until the
earliest of (x) 179 days after receipt of such written notice by the Trustee
(provided any Guarantor Designated Senior Indebtedness as to which notice was
given shall theretofore have not been accelerated), (y) the date such
Non-payment Default and all other Non-payment Defaults as to which notice is
also given after such period is initiated shall have been cured or waived in
writing by the holders of the Guarantor Designated Senior Indebtedness or shall
have ceased to exist or the Guarantor Senior Indebtedness related thereto shall
have been paid in full in cash or Cash Equivalents or (z) the date such Payment
Blockage Period and any Payment Blockage Periods initiated during such period
shall have been terminated by written notice to Multicare or the Trustee from
the Guarantor Senior Representative and the holders of the Guarantor Designated
Senior Indebtedness that have given notice of a Non-payment Default at or after
the initiation of such Payment Blockage Period, after which in the case of
clause (x), (y) or (z), Multicare shall resume making any and all required
payments in respect of the Notes including any missed payments. Notwithstanding
any other provision of this Supplemental Indenture, in no event shall a Payment
Blockage Period extend beyond 179 days from the date of the receipt by Multicare
or the Trustee of the notice referred to in clause (ii) of this paragraph (b)
(the "Initial Blockage Period"). Not more than one Payment Blockage Period may
be commenced with respect to the Notes during any period of 360 consecutive
days; provided that subject to the limitations set forth in the next sentence,
the commencement of a Payment Blockage Period by the representative of Guarantor
Designated Senior Indebtedness other than the Credit Facility shall not bar the
commencement of another Payment Blockage Period by the representative for the
Credit Facility within such period of 360 consecutive days. Notwithstanding
anything in this Supplemental Indenture to the contrary, there must be 180 days
in any 360-day period in which no Payment Blockage Period is in effect. No event
of default (other than an event of default pursuant to the financial maintenance
covenants under the Credit Facility) that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to an event of
default pursuant to any provision under which an event of default previously
existed or was
<PAGE>
10
continuing shall constitute a new event of default for this purpose) on the date
of commencement of any Payment Blockage Period with respect to the Guarantor
Designated Senior Indebtedness initiating such Payment Blockage Period shall be,
or shall be made, the basis for the commencement of a second Payment Blockage
Period by the representative for, or the holders of, such Guarantor Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, Multicare or
any of its Subsidiaries shall make, or the Trustee or any Holder shall receive,
any payment to the Trustee or any Holder prohibited by the foregoing provisions
of this Section, then and in such event such payment shall be paid over and
delivered forthwith to a Guarantor Senior Representative of the holders of the
Guarantor Designated Senior Indebtedness.
SECTION 3.04. Payment Permitted If No Default. Nothing contained in
this Article, in the Indenture or in any of the Notes shall prevent Multicare,
at any time except during the pendency of any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of Multicare referred to in Section
3.02 of this Supplemental Indenture and Section 11.02 of the Indenture or under
the conditions described in Section 3.03 of this Supplemental Indenture and
Section 11.03 of the Indenture, from making payments at any time of principal
of, premium, if any, or interest on the Notes.
SECTION 3.05. Subrogation to Rights of Holders of Guarantor Senior
Indebtedness. Subject to the payment in full of all Guarantor Senior
Indebtedness, Holders shall be subrogated to the rights of the holders of such
Guarantor Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Guarantor Senior Indebtedness until
the principal of, premium, if any, and interest on the Notes shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of Guarantor Senior Indebtedness of any cash, property or securities to
which the Holders or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article to
the holders of Guarantor Senior Indebtedness by Holders or the Trustee, shall,
as among Multicare, its creditors other than holders of Guarantor Senior
Indebtedness, and the Holders, be deemed to be a payment or distribution by
Multicare to or on account of the Guarantor Senior Indebtedness.
SECTION 3.06. Provisions Solely to Define Relative Rights. The
provisions of this Article are intended solely for the purpose of defining the
relative rights of the Holders on the one hand and the holders of Guarantor
Senior Indebtedness on the other hand. Nothing contained herein or in the
Indenture or in the Notes is intended to or shall (i) impair, as among
Multicare, its creditors other than holders of Guarantor Senior Indebtedness and
the Holders, the obligation of Multicare, which is absolute and unconditional,
to pay to the Holders the
<PAGE>
11
principal of, premium, if any, and interest on the Notes under this Multicare
Senior Subordinated Guaranty in accordance with its terms; or (ii) affect the
relative rights against Multicare of the Holders and creditors of Multicare
other than their rights in relation to the holders of Guarantor Senior
Indebtedness; or (iii) prevent the Trustee or any Holder from exercising all
remedies otherwise permitted by applicable law upon Default under the Indenture,
subject to the rights, under this Article of the holders of Guarantor Senior
Indebtedness to receive distributions and payments otherwise payable to Holders
(A) in any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshaling of assets and
liabilities of Multicare referred to in Section 3.02 of this Supplemental
Indenture, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder, or (B) under the conditions specified in Section 3.03 of this
Supplemental Indenture, to prevent any payment prohibited by such Section or
enforce their rights pursuant to Section 3.03(c) of this Supplemental Indenture.
SECTION 3.07. Trustee to Effectuate Subordination. Each Holder by
his or her acceptance thereof authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his or her
attorney-in-fact for any and all such purposes, including, in the event of any
dissolution, winding-up, liquidation or reorganization of Multicare whether in
bankruptcy, insolvency, receivership proceedings, or otherwise, the timely
filing of a claim for the unpaid balance of the indebtedness of Multicare owing
to such Holder in the form required in such proceedings and the causing of such
claim to be approved. If the Trustee does not file a proper claim at least 30
days before the expiration of the time to file such claim, then the holders of
Guarantor Senior Indebtedness, and their agents, trustees or other
representatives are authorized to do so for and on behalf of the Holders.
SECTION 3.08. No Waiver of Subordination Provisions. (a) No right of
any present or future holder of any Guarantor Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of Multicare or any Holder or
by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by Multicare or any Holder with the terms, provisions and
covenants of this Supplemental Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section, the holders of Guarantor Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the Holders,
without incurring responsibility to the Holders and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders to the holders of Guarantor Senior Indebtedness, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, or waive compliance with
the terms of, Guarantor Senior
<PAGE>
12
Indebtedness or any instrument evidencing the same or any agreement under which
Guarantor Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Indebtedness; (iii) release any Person liable in any manner for
the collection or payment of Guarantor Senior Indebtedness; (iv) exercise or
refrain from exercising any rights against Multicare and any other Person; (v)
amend, supplement, restate or otherwise modify or restructure the Guarantor
Senior Indebtedness; and (vi) otherwise deal with any Person liable on account
of Guarantor Senior Indebtedness; provided, however, that in no event shall any
such actions limit the right of the Holders to take any action to accelerate the
maturity of the Notes pursuant to Article Six of the Indenture or to pursue any
rights or remedies thereunder or under applicable laws if the taking of such
action does not otherwise violate the terms of this Article, subject to the
rights, if any, under this Article, of the holders, from time to time, of
Guarantor Senior Indebtedness to receive the cash, property or securities
receivable upon the exercise of such rights or remedies.
SECTION 3.09. Notice to Trustee. (a) Multicare shall give prompt
written notice to the Trustee of any fact known to Multicare which would
prohibit the making of any payment to or by the Trustee in respect of the Notes.
Notwithstanding the provisions of this Article or any provision of the
Indenture, the Trustee or any Paying Agent shall not be charged with knowledge
of the existence of any facts which would prohibit the making of any payment to
or by the Trustee or any Paying Agent in respect of the Notes, unless and until
the Trustee shall have received written notice thereof from Multicare, a holder
of Senior Indebtedness or a holder of Guarantor Senior Indebtedness or from a
Guarantor Senior Representative or any trustee, fiduciary or agent therefor;
and, prior to the receipt of any such written notice, the Trustee shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section at least three Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Note), then, anything herein contained to the contrary notwithstanding but
without limiting the rights and remedies of the holders of Guarantor Senior
Indebtedness or any trustee, fiduciary or agent thereof, the Trustee shall have
full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date; nor shall the Trustee be charged with knowledge of the
elimination of the act or condition preventing any such payment unless and until
the Trustee shall have received an Officers' Certificate to such effect.
(b) The Trustee shall be entitled to rely on the delivery to it of a
written notice to the Trustee and Multicare by a Person representing himself to
be a Guarantor Senior Representative or a holder of Guarantor Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a Guarantor Senior Representative or a holder of
Guarantor Senior Indebtedness (or a trustee, fiduciary or agent thereof and the
Trustee shall have no duty to investigate the authenticity thereof or the
authority of the person
<PAGE>
13
signing and shall have no liability for relying thereon); provided, however,
that failure to give such notice to Multicare shall not affect in any way the
ability of the Trustee to rely on such notice. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Guarantor Senior Indebtedness to participate
in any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Guarantor Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article,
and if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment or the Trustee or the Paying Agent may deposit the funds in
question with a court of competent jurisdiction.
SECTION 3.10. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of Multicare
referred to in this Article, the Trustee and the Holders shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Trustee or to the Holders, for
the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the holders of Guarantor Senior Indebtedness and other
indebtedness of Multicare, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article, provided that the foregoing shall apply only if such court has
been fully apprised of the provisions of this Article.
SECTION 3.11. Rights of Trustee as a Holder of Guarantor Senior
Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual
capacity shall be entitled to all the rights set forth in this Article with
respect to any Guarantor Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Guarantor Senior Indebtedness, and
nothing in this Supplemental Indenture shall deprive the Trustee of any of its
rights as such holder of Guarantor Senior Indebtedness. Nothing in this Article
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 7.07 of the Indenture.
SECTION 3.12. Trust Moneys and Escrowed Funds Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from (x)
money or the proceeds of U.S. Government Obligations held in trust under Article
Eight by the Trustee for the payment of principal of, premium, if any, and
interest on the Notes (provided that at the time deposited, such deposit did not
violate any then outstanding Guarantor Senior Indebtedness) and (y) money or the
proceeds of U.S. Government Securities held under the Escrow Agreement shall not
be subordinated to the prior payment of any Guarantor Senior Indebtedness or
subject
<PAGE>
14
to the restrictions set forth in this Article Three, and none of the Holders
shall be obligated to pay over any such amount to any holder of Guarantor Senior
Indebtedness.
SECTION 3.13. No Suspension of Remedies. Nothing contained in this
Article shall limit the right of the Trustee or the Holders to take any action
to accelerate the maturity of the Notes pursuant to Article Six of the Indenture
or to pursue any rights or remedies hereunder or under applicable law, subject
to the rights, if any, under this Article of the holders, from time to time, of
Guarantor Senior Indebtedness to receive the cash, property or securities
receivable upon the exercise of such rights or remedies.
SECTION 3.14. Trustee's Relation to Guarantor Senior Indebtedness.
With respect to the holders of Guarantor Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Guarantor Senior Indebtedness shall
be read into this Article against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Guarantor Senior Indebtedness.
SECTION 3.15. Other Rights of Holders of Guarantor Senior
Indebtedness. All rights and interests under this Supplemental Indenture of the
holders of Guarantor Senior Indebtedness, and all agreements and obligations of
the Trustee, the Holders and Multicare under this Article shall remain in full
force and effect irrespective of (i) any lack of validity or enforceability of
the Credit Facility, and promissory notes evidencing the Credit Facility or any
other agreement or instrument relating thereto or to any Guarantor Senior
Indebtedness or (ii) any other circumstance that might constitute a defense
available to, or a discharge of, a guarantor or surety (other than as a result
of any payments indefeasibly made on the Credit Facility or any Guarantor Senior
Indebtedness).
The holders of Guarantor Senior Indebtedness are hereby authorized
to demand specific performance of this Article, whether or not Multicare shall
have complied with any provisions of this Article applicable to it, at any time
when the Trustee or any Holder shall have failed to comply with any of these
provisions.
The provisions of this Article shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guarantor Senior Indebtedness is rescinded or must otherwise be returned by any
holder of Guarantor Senior Indebtedness upon the insolvency, bankruptcy or
reorganization of Multicare or otherwise, all as though such payment had not
been made.
<PAGE>
15
ARTICLE FOUR
EXECUTION AND DELIVERY OF MULTICARE
SENIOR SUBORDINATED GUARANTY
SECTION 4.01. Execution of Multicare Senior Subordinated Guaranty.
(a) To evidence its Multicare Senior Subordinated Guaranty set forth in this
Supplemental Indenture, Multicare hereby agrees that a notation of such
Multicare Senior Subordinated Guaranty substantially in the form of Annex A
hereto shall be endorsed by an officer of Multicare on each Note authenticated
and delivered by the Trustee after the date hereof until consummation of the
Merger.
(b) Notwithstanding the foregoing, Multicare hereby agrees that the
Multicare Senior Subordinated Guaranty set forth herein shall remain in full
force and effect for the term provided herein notwithstanding any failure to
endorse on each Note a notation of such Multicare Senior Subordinated Guaranty.
(c) If an officer whose signature is on this Supplemental Indenture
or on the Multicare Senior Subordinated Guaranty no longer holds that office at
the time the Trustee authenticates the Note on which a Multicare Senior
Subordinated Guaranty is endorsed, the Multicare Senior Subordinated Guaranty
shall be valid nevertheless.
SECTION 4.02. Delivery and Enforceability of Multicare Senior
Subordinated Guaranty. (a) The delivery of the Note by the Trustee, after the
authentication thereof under the Indenture, shall constitute due delivery of the
Multicare Senior Subordinated Guaranty set forth in this Supplemental Indenture
on behalf of Multicare.
(b) Multicare hereby agrees that its obligations hereunder shall be
unconditional, regardless of the validity, regularity or enforceability of the
Notes or this Supplemental Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder with respect to any provisions hereof
or thereof, the recovery of any judgment against the Issuer, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
SECTION 4.03. Waiver of Presentment; Rights and Remedies. (a)
Multicare hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, protest, notice and all
demands whatsoever and covenants that the Multicare Senior Subordinated Guaranty
made pursuant to this Supplemental Indenture will not be discharged except by
complete performance of the obligations contained in the Notes and the
Indenture.
(b) If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Supplemental Indenture and such
proceeding has been discontinued
<PAGE>
16
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then, and in every such case, subject to any determination in
such proceeding, Multicare, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of Multicare, the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE FIVE
MISCELLANEOUS PROVISIONS
SECTION 5.01. Releases upon Release of Multicare Senior Subordinated
Guaranty. Concurrently with the release or discharge of this Multicare Senior
Subordinated Guaranty (other than a release or discharge by or as a result of
payment under such guarantee of Guaranteed Obligations), Multicare shall
automatically be released from and relieved of its obligations under this
Supplemental Indenture. Upon delivery by the Issuer to the Trustee of an
Officers' Certificate to the effect that such release or discharge has occurred,
the Trustee shall execute any documents reasonably required in order to evidence
the release of Multicare from its obligations under this Supplemental Indenture.
SECTION 5.02. Effect of Supplemental Indenture. Upon the execution
and delivery of this Supplemental Indenture by Multicare, the Issuer and the
Trustee, the Indenture shall be supplemented in accordance herewith, and this
Supplemental Indenture shall form a part of the Indenture for all purposes, and
every Holder heretofore or hereafter authenticated and delivered under the
Indenture shall be bound thereby.
SECTION 5.03. Indenture Remains in Full Force and Effect. Except as
supplemented hereby, all provisions in the Indenture shall remain in full force
and effect.
SECTION 5.04. Indenture and Supplemental Indenture Construed
Together. This Supplemental Indenture is an indenture supplemental to and in
implementation of the Indenture, and the Indenture and this Supplemental
Indenture shall henceforth be read and construed together.
SECTION 5.05. Conflict with Trust Indenture Act. If any provision of
this Supplemental Indenture limits, qualifies or conflicts with any provision of
the Trust Indenture Act that is required under such Act to be part of and govern
any provision of this Supplemental Indenture, the provision of such Act shall
control. If any provision of this Supplemental Indenture modifies or excludes
any provision of the Trust Indenture Act that may be so modified or excluded,
the provision of such Act shall be deemed to apply to the Indenture as so
modified or to be excluded by this Supplemental Indenture, as the case may be.
<PAGE>
17
SECTION 5.06. Separability Clause. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 5.07. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
SECTION 5.08. Benefits of Supplemental Indenture, Etc. Nothing in
this Supplemental Indenture, the Indenture or the Notes express or implied,
shall give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders, any benefit of any legal or
equitable right, remedy or claim under the Indenture, this Supplemental
Indenture or the Notes.
SECTION 5.09. Successors and Assigns. All covenants and agreements
in this Supplemental Indenture by Multicare shall bind its successors and
assigns, whether so expressed or not.
SECTION 5.10. Certain Duties and Responsibilities of Trustee. In
entering into this Supplemental Indenture, the Trustee shall be entitled to the
benefit of every provision of the Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee, whether or not
elsewhere herein so provided.
SECTION 5.11. Governing Law. This Supplemental Indenture shall be
governed by and construed in accordance with the laws of the State of New York.
<PAGE>
SECTION 5.12. Counterparts. This Supplemental Indenture may be
executed in counterparts, each of which, when so executed, shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
Dated: _____________, 1997 THE MULTICARE COMPANIES, INC.
By:
----------------------------------------
Name:
Title
GENESIS ELDERCARE ACQUISITION
Dated: _____________, 1997 CORP.
By:
----------------------------------------
Name:
Title
Dated: _____________, 1997 PNC BANK, NATIONAL ASSOCIATION
as Trustee
By:
----------------------------------------
Name:
Title
<PAGE>
ANNEX A TO SUPPLEMENTAL INDENTURE
FORM OF NOTATION OF MULTICARE SENIOR
SUBORDINATED GUARANTY ON NOTE
The Multicare Companies, Inc. ("Multicare"), as primary obligor and
not merely as surety, fully unconditionally and irrevocably guarantees (a) the
due and punctual payment of the principal of, premium, if any, or interest on
the Notes, whether at Stated Maturity or an Interest Payment Date, by
acceleration, call for redemption or otherwise, (b) the due and punctual payment
of interest on the overdue principal and premium of, and interest on the Notes
and (c) that in case of any extension of time of payment or renewal of any Notes
or any of such other obligations, the same will be promptly paid in full when
due in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise.
Notwithstanding the foregoing, in the event that the Multicare
Senior Subordinated Guaranty would constitute or result in a violation of any
applicable fraudulent conveyance or similar law of any relevant jurisdiction,
the liability of Multicare under its Multicare Senior Subordinated Guaranty
shall be limited to such amount as will not, after giving effect thereto, and to
all other liabilities of Multicare, result in such amount constituting a
fraudulent transfer or conveyance.
The Multicare Senior Subordinated Guaranty shall not be valid or
obligatory for any purpose until the certificate of authentication on the Note
upon which the Multicare Senior Subordinated Guaranty is noted shall have been
executed by the Trustee under the Indenture by the manual or facsimile signature
of one of its authorized officers.
THE MULTICARE COMPANIES, INC.
By:
----------------------------------------
Name:
Title
(SHORT TERM AGREEMENT)
================================================================================
CREDIT AGREEMENT
dated as of October 9, 1997
by and among
THE MULTICARE COMPANIES, INC. and
ITS DIRECT AND INDIRECT SUBSIDIARIES, AS BORROWERS,
THE FINANCIAL INSTITUTIONS IDENTIFIED HEREIN, AS LENDERS,
MELLON BANK, N.A., AS ISSUER OF LETTERS OF CREDIT,
MELLON BANK, N.A., AS ADMINISTRATIVE AGENT,
CITICORP USA, INC., AS SYNDICATION AGENT,
NATIONSBANK, N.A., AS SYNDICATION AGENT, and
FIRST UNION NATIONAL BANK, AS DOCUMENTATION AGENT
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
CREDIT AGREEMENT........................................................... 1
ARTICLEARTICLE 1 - CREDIT FACILITY......................................... 2
1.1 COMMITMENT TO LEND............................................ 2
1.2 JOINT AND SEVERAL OBLIGATIONS................................. 2
1.3 MANNER OF BORROWING.......................................... 2
1.4 REPAYMENT AND MANDATORY PREPAYMENTS.......................... 5
1.5 VOLUNTARY PREPAYMENTS........................................ 6
1.6 PAYMENTS BY THE BORROWERS IN GENERAL......................... 7
1.7 REDUCTIONS OF COMMITMENT..................................... 9
1.8 INTEREST..................................................... 9
1.9 FEES......................................................... 10
1.10 COMPUTATION OF INTEREST AND FEES.............................. 10
1.11 PROMISSORY NOTES; RECORDS OF ACCOUNT.......................... 10
1.12 PRO RATA TREATMENT............................................ 11
1.13 TAXES ON PAYMENTS............................................. 11
1.14 CHANGE OF LENDING OFFICE..................................... 12
ARTICLE 1A.-LETTERS OF CREDIT.............................................. 14
1A.1 ISSUANCE OF LETTERS OF CREDIT..................................14
ARTICLE 2 - CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS................................................. 20
2.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND
INITIAL FUNDING.............................................. 20
2.2 CONDITIONS TO EACH LOAN....................................... 26
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES................................. 28
3.1 REPRESENTATIONS............................................... 28
3.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE...................... 37
ARTICLE 4 - AFFIRMATIVE COVENANTS.......................................... 38
4.1 REPORTING REQUIREMENTS....................................... 38
4.2 MAINTENANCE OF EXISTENCE..................................... 43
4.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES
AND OTHER PROPERTY........................................... 43
4.4 MAINTENANCE OF RECORDS; FISCAL YEAR.......................... 44
4.5 COMPLIANCE WITH LAWS......................................... 44
-i-
<PAGE>
4.6 ERISA........................................................ 45
4.7 RIGHT OF INSPECTION.......................................... 46
4.8 INSURANCE.................................................... 46
4.9 PAYMENT OF TAXES AND OTHER CHARGES........................... 46
4.10 SUBSIDIARIES TO BE BORROWERS................................. 46
4.11 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS................ 47
4.12 CORPORATE SEPARATENESS....................................... 47
4.13 TRANSACTIONS WITH AFFILIATES.................................. 48
4.14 MERGER........................................................ 48
4.15 USE OF PROCEEDS............................................... 48
4.16 CERTAIN DISPOSITIONS.......................................... 48
ARTICLE 5 - FINANCIAL COVENANTS............................................ 49
5.1 CERTAIN FINANCIAL COVENANTS................................... 49
ARTICLE 6 - NEGATIVE COVENANTS............................................. 52
6.1 INDEBTEDNESS................................................. 52
6.2 LIENS........................................................ 53
6.3 LOANS, ADVANCES AND INVESTMENTS.............................. 55
6.4 ACQUISITIONS, ETC............................................ 56
6.5 DISPOSITIONS................................................. 57
6.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP
INTERESTS.................................................... 58
6.7 LEASES........................................................ 58
6.8 DIVIDENDS AND RELATED DISTRIBUTIONS.......................... 59
6.9 CONSOLIDATED TAX RETURN...................................... 59
6.10 LIMITATION ON PAYMENTS, PREPAYMENTS,
DEFEASEMENT AND OTHER ACTION WITH RESPECT TO CERTAIN
DEBT OBLIGATIONS............................................. 60
6.11 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS............. 60
6.12 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS................. 61
6.13 LIMITATIONS ON MERGERS, ETC.................................. 61
6.14 AVOIDANCE OF OTHER CONFLICTS................................. 61
6.15 CAPITAL EXPENDITURES......................................... 61
6.16 MANAGEMENT FEE................................................ 61
ARTICLE 7 - DEFAULTS....................................................... 63
7.1 EVENTS OF DEFAULT............................................ 63
7.2 CONSEQUENCES OF AN EVENT OF DEFAULT........................... 66
7.3 APPLICATION OF PROCEEDS...................................... 67
ARTICLE 8 - THE ADMINISTRATIVE AGENT....................................... 69
8.1 APPOINTMENT.................................................. 69
8.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES.............. 69
-ii-
<PAGE>
8.3 EXERCISE OF POWERS........................................... 70
8.4 GENERAL EXCULPATORY PROVISIONS............................... 70
8.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT................... 71
8.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE
AGENT OR OTHER LENDERS....................................... 72
8.7 INDEMNIFICATION.............................................. 72
8.8 HOLDERS OF NOTES............................................. 73
8.9 SUCCESSOR ADMINISTRATIVE AGENT............................... 73
8.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL
AGENT........................................................ 74
8.11 CALCULATIONS................................................. 74
8.12 OTHER AGENTS................................................. 74
8.13 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.............. 74
ARTICLE 8A- SPECIAL INTER-BORROWER PROVISIONS.............................. 76
8A.1 CERTAIN BORROWER ACKNOWLEDGEMENTS............................ 76
8A.2 CERTAIN INTER-BORROWER AGREEMENTS............................ 76
8A.3 RECORDS...................................................... 77
ARTICLE 9 - DEFINITIONS; CONSTRUCTION...................................... 78
9.1 CERTAIN DEFINITIONS........................................... 78
9.2 CONSTRUCTION................................................. 98
9.3 ACCOUNTING PRINCIPLES........................................ 99
ARTICLE 10- MISCELLANEOUS..................................................101
10.1 NOTICES......................................................101
10.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT.......................101
10.3 SEVERABILITY..................................................101
10.4 DESCRIPTIVE HEADINGS..........................................102
10.5 GOVERNING LAW.................................................102
10.6 NON-MERGER OF REMEDIES........................................102
10.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES.......................102
10.8 AMENDMENTS; WAIVERS...........................................103
10.9 SUCCESSORS AND ASSIGNS........................................104
10.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE
PAGES........................................................106
10.11 MAXIMUM LAWFUL INTEREST RATE..................................106
10.12 INDEMNIFICATION...............................................107
10.13 EXPENSES.....................................................108
10.14 MAXIMUM AMOUNT OF JOINT AND SEVERAL LIABILITY................109
10.15 AUTHORIZATION OF MULTICARE BY OTHER BORROWERS................109
10.17 CERTAIN WAIVERS BY BORROWERS..................................110
10.18 SET-OFF......................................................110
10.19 SHARING OF COLLECTIONS.......................................111
-iii-
<PAGE>
10.20 CONSENT TO JURISDICTION, SERVICE AND VENUE;
WAIVER OF JURY TRIAL.........................................111
-iv-
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October 9, 1997, by and among THE
MULTICARE COMPANIES, INC., a Delaware corporation (together with its successors,
"Multicare"), the Subsidiaries of Multicare referred to on the signature pages
hereto and such other Subsidiaries of Multicare which may from time to time
become Borrowers hereunder in accordance with the provisions hereof
(collectively with Multicare, the "Borrowers"), the Lenders referred to on the
signature pages hereto and other lenders parties hereto from time to time
(together with their successors and assigns, the "Lenders"), MELLON BANK, N.A.,
a national banking association, as Administrative Agent for itself, and for the
Lenders hereunder (in such capacity, together with its successors and assigns in
such capacity, the "Administrative Agent"), 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")
CITICORP USA, INC., a Delaware corporation as Syndication Agent for itself and
the Lenders hereunder, NATIONSBANK, N.A., a national banking association, as
Syndication Agent for itself and the Lenders hereunder and FIRST UNION NATIONAL
BANK, a national banking association as Documentation Agent. Certain terms used
herein are defined in Article 9 below.
W I T N E S S E T H T H A T
WHEREAS, Multicare has requested that the Lenders extend the Loans
to the Borrowers for the purposes described herein;
WHEREAS, the Lenders have agreed to extend the Loans to the
Borrowers on the terms and conditions described herein; and
WHEREAS, ALL OBLIGATIONS HEREUNDER AND UNDER EACH AGREEMENT AND
INSTRUMENT DELIVERED IN CONNECTION HEREWITH FROM TIME TO TIME ARE "SENIOR
INDEBTEDNESS" AND ARE HEREBY DESIGNATED BY MULTICARE AS "DESIGNATED SENIOR
INDEBTEDNESS" WITHIN THE MEANING OF THE 1997 SUBORDINATED NOTE INDENTURE.
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.
<PAGE>
ARTICLE 1
CREDIT FACILITY
1.1 COMMITMENT TO LEND. Loans. Upon the terms and subject to the
conditions of this Agreement, each Lender agrees to make, from time to time
during the period from and including the Closing Date to and including the
Maturity Date, one or more Loans ("RC Loans") to the Borrowers in an aggregate
unpaid principal amount not exceeding at any time such Lender's Commitment at
such time as set forth on Schedule 1.1 hereto. The total amount of the
Commitment of all Lenders on the Agreement Date is $425,000,000.00.
1.2 JOINT AND SEVERAL OBLIGATIONS. WHETHER OR NOT EXPRESSLY STATED HEREIN
OR IN ANY OTHER LOAN DOCUMENT, ALL OBLIGATIONS OF THE BORROWERS (OR OF ANY
BORROWER) HEREUNDER AND UNDER EACH OTHER LOAN DOCUMENT (WHETHER IN CONNECTION
WITH LOANS, LETTERS OF CREDIT OR OTHER OBLIGATIONS) ARE JOINT AND SEVERAL
OBLIGATIONS OF ALL BORROWERS.
1.3 MANNER OF BORROWING.
(a) Notice of Borrowing.
(1) Revolving Credit Loans. Except for the Swing Loans (which
shall be governed by paragraph (e) below) Multicare (on behalf of the Borrowers)
shall give the Administrative Agent notice (which shall be irrevocable), no
later than 11:00 a.m. (Philadelphia, Pennsylvania time) one Business Day prior
to the requested date for the making of Loans. Each such notice shall be in the
form of Exhibit B hereto and shall specify (i) the requested date for the making
of such Loans which date shall be a Business Day, (ii) the amount of the
requested Loans, which amount shall be $5,000,000.00 or any integral multiple of
$1,000,000.00 in excess thereof (except that the amount of the requested Loans
may be less if the amount requested is equal to the total Available Commitment).
Upon receipt of any such notice, the Administrative Agent shall promptly notify
each applicable Lender of the contents thereof and of the amount of the Loans to
be made by such Lender on the requested date specified therein.
(2) Swing Loans. Upon the terms and subject to the conditions
of this Agreement, the Swing Loan Lender agrees to make, from time to time, from
and including the Closing Date to but excluding the Maturity Date, one or more
Swing Loans to the Borrowers, in an aggregate unpaid principal amount not
exceeding at any time $10,000,000.00, provided however that no Swing Loan shall
be made at any time in an amount in excess of the Available Commitment. Each
Swing Loan shall be in a principal
-2-
<PAGE>
amount equal to $500,000.00 or an integral multiple thereof and shall be made
and maintained as a Prime Rate Loan unless a fixed rate shall be agreed upon by
the Swing Loan Lender and Multicare (on behalf of the Borrowers). All Swing
Loans shall be disbursed by the Swing Loan Lender in Dollars in funds
immediately available to Multicare (on behalf of the Borrowers) by crediting an
account of Multicare at the Swing Loan Lender's Office, or in such other manner
as may have been specified in the applicable notice of borrowing and as shall be
acceptable to the Swing Loan Lender.
(b) Funding by Lenders. Not later than 12:00 noon (Philadelphia,
Pennsylvania time) on each requested date for the making of Loans (other than
Swing Loans) each Lender shall make available to the Administrative Agent, in
Dollars in funds immediately available to the Administrative Agent at the office
designated by the Administrative Agent, the Loans to be made by such Lender on
such date, provided however that if a Lender does not receive timely notice from
the Administrative Agent as set forth in paragraph (a) above, such Lender shall
fund the required amount promptly upon receipt of such notice. The obligations
of the Lenders hereunder are several; accordingly, any Lender's failure to make
any Loan to be made by it on the requested date therefor shall not relieve any
other Lender of its obligation to make any Loan to be made by it on such date,
but the latter shall not be liable for the former's failure.
(c) Permitted Assumption as to Funding. Unless the Administrative
Agent shall have received notice from a Lender prior to 11:00 a.m.
(Philadelphia, Pennsylvania time) on the requested date for the making of any
Loan (other than a Swing Loan) that such Lender will not make available to the
Administrative Agent the Loan requested to be made by it on such date, the
Administrative Agent may assume that such Lender has made such Loan available.
The Administrative Agent in its sole discretion and in reliance upon such
assumption, may make available to the Borrowers on the requested date a
corresponding amount on behalf of such Lender. If and to the extent such Lender
shall not have made available to the Administrative Agent the Loans requested to
be made by such Lender on such date and the Administrative Agent shall have so
made available to the Borrowers a corresponding amount on behalf of such Lender,
(i) such Lender shall, on demand, pay to the Administrative Agent such
corresponding amount together with interest thereon, for each day from the date
such amount shall have been so made available by the Administrative Agent to the
Borrowers until the date such amount shall have been paid in full to the
Administrative Agent, at the Federal Funds Rate until (and including) the third
Business Day after demand is made and thereafter at the Prime Rate, and (ii) the
Administrative Agent shall be entitled to all interest payable by Borrowers on
such amount for the period commencing on the date such amount was advanced by
the Administrative Agent to but not including the date on which such amount is
received by the Administrative Agent from such Lender. Moreover, any Lender that
shall have failed to make available the required amount shall not be entitled to
vote on such matters as Lenders or Required Lenders are otherwise entitled to
vote on or consent to or approve under this Agreement and the other Loan
Documents until such amount with interest is paid in full to the Administrative
Agent by such Lender. Without limiting any obligations of any Lender pursuant to
this paragraph
-3-
<PAGE>
(c), if such Lender does not pay such corresponding amount promptly upon the
Administrative Agent's demand therefor, the Administrative Agent shall notify
Multicare (on behalf of the Borrowers) and the Borrowers shall promptly repay
such corresponding amount to the Administrative Agent together with accrued
interest thereon at the applicable rate or rates on such Loans.
(d) Disbursements of Funds to Borrowers. All amounts made available
to the Administrative Agent in accordance with paragraph (b) above shall be
disbursed by the Administrative Agent promptly but in any event not later than
4:00 p.m. (Philadelphia, Pennsylvania time) on the requested date therefor in
Dollars, in funds immediately available to the Borrowers by crediting such
amount to an account of Multicare at the Administrative Agent's office or in
such other manner as may be agreed to by Multicare and the Administrative Agent.
(e) Special Provisions Respecting Swing Loans.
(i) Request for Borrowing. Multicare (on behalf of the
Borrowers) shall give the Swing Loan Lender notice (which shall be irrevocable)
of a request for a Swing Loan (with a copy to the Administrative Agent) no later
than 12:00 noon (Philadelphia, Pennsylvania time) on the day such Loan is
requested; if such notice is received later than 12:00 noon (Philadelphia,
Pennsylvania time), then the request shall be deemed to be a request for a Swing
Loan to be made on the next Business Day. The Swing Loan Lender shall provide
prompt notice to the Administrative Agent of the making of any Swing Loans to
the Borrowers.
(ii) Participation by Lenders. Upon demand made to all of the
Lenders by the Swing Loan Lender, which demand may be made before or after a
Default (including a Default arising under Section 7.1(m) (Bankruptcy, Etc.)),
and before or after the maturity date of the subject Swing Loans but subject to
the provisions of paragraph (iv) below, each Lender (other than the Swing Loan
Lender) shall promptly, irrevocably and unconditionally purchase from the Swing
Loan Lender, without recourse or warranty, an undivided interest and
participation in the Swing Loans then outstanding. Each Lender shall effect such
purchase by paying to the Swing Loan Lender, without reduction or deduction of
any kind, including reductions or deductions for set-off, recoupment or
counterclaim, in Dollars immediately available to the Swing Loan Lender at the
Swing Loan Lender's office, an amount equal to such Lender's pro rata share of
the principal amount of all Swing Loans then outstanding. Each Lender's pro rata
share of the Swing Loans shall be based on the amount of such Lender's pro rata
share of the total Commitment. Thereafter, the Lenders' respective interests in
such Swing Loans, and the remaining interest of the Swing Loan Lender in such
Swing Loans, shall in all respects be treated as Loans under this Agreement,
except that subject to Section 1.8(c) (Default Rate) such Swing Loans shall
continue to bear interest at the rate specified for such Swing Loans until such
Swing Loans are due and payable and such Swing Loans shall be due and payable by
the Borrowers on the dates referred to in Section 1.4(b). If any Lender does not
pay any amount which it is required to
-4-
<PAGE>
pay promptly upon the Swing Loan Lender's demand therefor, (i) the Swing Loan
Lender shall be entitled to recover such amount on demand from such Lender,
together with interest thereon, at the Federal Funds Rate for the first three
Business Days, and thereafter at the Prime Rate, for each day from the date of
such demand, if made prior to 2:00 p.m. (Philadelphia, Pennsylvania time) on any
Business Day, or, if made at any later time, from the next Business Day
following the date of such demand, until the date such amount is paid in full to
the Swing Loan Lender by such Lender and (ii) the Swing Loan Lender shall be
entitled to all interest payable by the Borrowers on such amount until the date
on which such amount is received by the Swing Loan Lender from such Lender.
Moreover, any Lender that shall fail to make available the required amount shall
not be entitled to vote on or consent to or approve any matter under this
Agreement and the other Loan Documents until such amount with interest is paid
in full to the Swing Loan Lender by such Lender. Without limiting any
obligations of any Lender pursuant to this paragraph (ii), if such Lender does
not pay such corresponding amount promptly upon the Swing Loan Lender's demand
therefor, the Swing Loan Lender shall notify Multicare (on behalf of the
Borrowers) and the Borrowers shall promptly repay such corresponding amount to
the Swing Loan Lender together with accrued interest thereon at the applicable
rate on such Swing Loans.
(iii) No Set-off, Etc. Subject only to the limitations set
forth in the following paragraph (iv), the obligations of each Lender to make
available to the Swing Loan Lender the amounts set forth in the preceding
paragraph (ii) shall be absolute, unconditional and irrevocable under any and
all circumstances without reduction for any set-off or counterclaim of any
nature whatsoever and may not be terminated, suspended or delayed for any reason
whatsoever, shall not be subject to qualification or exception and shall be made
in accordance with the terms of this Agreement.
(iv) Certain Limitations. No Lender shall be obligated to
purchase a participation in any Swing Loan if such Lender proves that (A) the
Swing Loan Lender did not in good faith believe that the conditions specified in
clauses (i), (iii), and (iv) of Section 2.2(a) were satisfied at the time such
Swing Loan was made (unless such condition was waived in accordance with the
terms of this Agreement) or (B) such Lender had actual knowledge that any such
condition had not been satisfied and notified the Swing Loan Lender in a writing
received by the Swing Loan Lender at least one Business Day prior to the time
that it made such Swing Loan that the Swing Loan Lender was not authorized to
make such Swing Loan and stating with specificity the reason therefor.
1.4 REPAYMENT AND MANDATORY PREPAYMENTS.
(a) RC Loans. The aggregate outstanding principal amount of the RC
Loans shall mature and become due and payable, and shall be repaid by the
Borrowers, on the earlier of (i) the date 120 days after the Closing Date or
(ii) the date on which the Merger becomes effective (the earlier of such dates
being the "Maturity Date").
-5-
<PAGE>
(b) Swing Loans. The Borrowers shall repay each Swing Loan no later
than 3:00 p.m. (Philadelphia, Pennsylvania time) on the date specified in the
notice of borrowing delivered under Section 1.3(e) (which shall be a date not
later than the earlier of (A) the fifth Business Day after the date on which
such Swing Loan is to be made and (B) the Maturity Date). The Swing Loan Lender
shall provide prompt notice to the Administrative Agent of any repayment of
Swing Loans by the Borrowers.
(c) Letters of Credit. The Borrowers shall reimburse the Issuer,
through the Administrative Agent, for each Drawing under a Letter of Credit on
the date determined with respect to such Drawing in the manner set forth in
Article 1A below. In addition, the Borrowers shall fund the cash collateral
account securing the Letter of Credit obligations in the manner set forth in
Article 1A below.
(d) Mandatory Prepayments. (i) In the event there occurs a
disposition of assets which would otherwise result in a mandatory prepayment
under the 1997 Subordinated Notes to the extent the Borrowers are not otherwise
required to make a mandatory prepayment hereunder, the Borrowers shall be
required to make a mandatory prepayment hereunder in an amount and at a time not
later than is necessary to avoid any prepayment under the 1997 Subordinated
Notes or the 1997 Subordinated Note Indenture.
(ii) At any time that the Commitment is reduced pursuant to
Section 1.7 (Reductions of Commitment) to an amount less than the amount of the
outstanding Loans, the Borrowers shall prepay the Loans in an amount equal to
such excess amount.
1.5 VOLUNTARY PREPAYMENTS.
(a) Optional Prepayments. The Borrowers may, at any time and from
time to time, prepay the Loans in whole or in part, without premium or penalty,
except that any optional partial prepayment (other than a prepayment of all
outstanding Loans) shall be in an aggregate principal amount of $5,000,000.00 or
any integral multiple of $1,000,000.00 in excess thereof except that a Swing
Loan (prior to the time that the Swing Loan Lender makes a demand under Section
1.3(e)(ii)) may be prepaid in an aggregate principal amount of $500,000.00 or
any integral multiple thereof. Amounts to be so prepaid shall irrevocably be due
and payable on the date specified in the applicable notice of prepayment
delivered pursuant to paragraph (b) of this Section 1.5 together with interest
thereon as provided in Section 1.8 (Interest).
(b) Application and Timing of Voluntary Prepayments.
(i) Notice. Subject to the provisions of the last sentence of
this paragraph (i), the Borrowers shall give the Administrative Agent notice of
each prepayment of Loans, no later than 11:00 a.m. (Philadelphia, Pennsylvania
time) three (3) Business Days before the date of such prepayment. Each such
notice of prepayment shall be in the form of Exhibit C hereto and shall specify
the date and amount of such prepayment. Upon receipt of
-6-
<PAGE>
any such notice, the Administrative Agent shall promptly notify each Lender of
the contents thereof. Notwithstanding the foregoing, if the Borrowers wish to
make a prepayment of Swing Loans only, they may prepay such Swing Loans by
giving the Swing Loan Lender and the Administrative Agent written notice no
later than 12:00 noon (Philadelphia time) one Business Day prior to the date of
such prepayment or as otherwise agreed to by Multicare (on behalf of the
Borrowers) and the Swing Loan Lender.
(ii) Timing and Application of Voluntary Prepayments. Any
voluntary prepayments pursuant to paragraph (a) of this Section 1.5 shall be
applied in the following order:
(1) First, prepayments shall be applied against the
principal of the Loans.
(2) Second, prepayments shall be applied to any other
amounts owing under, or in respect of, the Loan Documents or
deposited in the Letter of Credit cash collateral account if
required under Article 1A below and, if all such Loan
Obligations have been paid in full and the amount of
outstanding Letters of Credit is less than the sum of the
amount in the cash collateral account (as required) and the
Available Commitment, then any excess amount shall be returned
to Multicare (on behalf of the Borrowers) or as otherwise
required by applicable Law.
(c) Certain Provisions Respecting Prepayments Generally. Prepayments
shall be subject to the interest payment provisions, as applicable, set forth in
Section 1.8 below.
1.6 PAYMENTS BY THE BORROWERS IN GENERAL.
(a) Time, Place and Manner. All payments due to the Administrative
Agent under the Loan Documents shall be made to the Administrative Agent at the
office designated by the Administrative Agent on the signature pages hereto or
to such other Person or at such other address as the Administrative Agent may
designate by written notice to Multicare on behalf of the Borrowers. Except as
otherwise set forth in this Agreement, a payment shall not be deemed to have
been made on any day unless such payment has been received by the required
Person, at the required place of payment, in Dollars in funds immediately
available to such Person, no later than 1:00 p.m. (Philadelphia, Pennsylvania
time) on such day; provided, however, that the failure of the Borrowers to make
any such payment by such time shall not constitute a Default hereunder so long
as such payment is received no later than 3:00 p.m. (Philadelphia, Pennsylvania
time) on such day, but any such payment received later than 1:00 p.m.
(Philadelphia, Pennsylvania time) on such day shall be deemed to have been made
on the next Business Day for the purpose of calculating interest on the amount
paid, provided further, that any such payment made with the proceeds of
-7-
<PAGE>
Loans shall be deemed to have been made on the date of the making of such Loans,
so long as such proceeds are immediately so applied and are not otherwise
disbursed to the Borrowers.
(b) No Reductions. All payments due to the Administrative Agent or
any Lender under this Agreement and the other Loan Documents, shall be made by
the Borrowers without any reduction or deduction whatsoever, including any
reduction or deduction for any charge, set-off, holdback, recoupment or
counterclaim (whether sounding in tort, contract or otherwise).
(c) Authorization to Charge Accounts. The Borrowers hereby authorize
each Lender Party, and each participant and each Affiliate of each Lender Party,
if and to the extent any amount payable by the Borrowers under the Loan
Documents (whether payable to such Person or to any other Lender Party) is not
otherwise paid when due, to charge such amount against any or all of the demand
deposit or other accounts of any Borrower with such Person (whether maintained
at a branch or office located within or without the United States), with the
Borrowers remaining jointly and severally liable for any deficiency. The Person
so charging any such account shall give the relevant Borrower prompt notice
thereof, but any failure to give or delay in giving such notice shall not affect
such Person's right to effect such charge.
(d) Extension of Payment Dates if Not a Business Day. Whenever any
payment to the Administrative Agent or any Lender under the Loan Documents would
otherwise be due (except by reason of acceleration) on a day that is not a
Business Day, such payment shall instead be due on the next succeeding Business
Day. If the due date for any payment under the Loan Documents is extended
(whether by operation of any Loan Document, applicable Law or otherwise), such
payment shall bear interest for such extended time at the rate of interest
applicable hereunder.
(e) Disbursement of Payments to Lenders. The Administrative Agent
shall promptly distribute to each of the applicable Lender Parties its ratable
share of each payment received by the Administrative Agent under the Loan
Documents for the account of such Lender Party by crediting an account of such
Lender Party at the Administrative Agent's office or by wire transfer to an
account of such Lender Party at an office of any other commercial bank located
in the United States or at any Federal Reserve Bank designated by such Person.
Unless the Administrative Agent shall have received notice from Multicare (on
behalf of the Borrowers) prior to the date on which any payment is due to any
Lender Parties under the Loan Documents that the Borrowers will not make such
payment in full, the Administrative Agent may assume that the Borrowers have
made such payment in full to the Administrative Agent on such date and the
Administrative Agent in its sole discretion may, in reliance upon such
assumption, cause to be distributed to each applicable Lender Party on such due
date a corresponding amount with respect to the amount then due to such Person.
If and to the extent that the Borrowers shall not have so made such payment in
full to the Administrative Agent and the Administrative Agent shall have so
distributed to such Lender
-8-
<PAGE>
Party or Lender Parties a corresponding amount, such Lender Party or Lender
Parties shall, on demand, repay to the Administrative Agent the amount so
distributed together with interest thereon, for each day from the date such
amount is distributed to such Lender Party until the date the such Person repays
such amount to the Administrative Agent, at the Federal Funds Rate until (and
including) the third Business Day after demand is made and thereafter at the
Prime Rate. Moreover, any Lender Party that shall have failed to make available
the required amount shall not be entitled to vote on such matters as the Lenders
or Required Lenders are otherwise entitled to vote on or consent to or approve
under this Agreement and the other Loan Documents until such amount with
interest is paid in full to the Administrative Agent by such Lender Party.
Nothing in this Section 1.6 shall relieve the Borrowers from any payment
obligations.
1.7 REDUCTIONS OF COMMITMENT.
(a) Optional Reductions. The Borrowers may reduce the Commitment by
giving the Administrative Agent notice (which shall be irrevocable) thereof no
later than 11:00 a.m. (Philadelphia, Pennsylvania, time) on the third Business
Day before the requested date of such reduction, provided, that each partial
reduction thereof shall be in an amount equal to $10,000,000.00 or any integral
multiple of $5,000,000.00 in excess thereof and, provided, further, that no
reduction shall reduce the Commitment to an amount less than the aggregate of
the principal amount of all Loans outstanding on such date (after giving effect
to any repayment or prepayment of Loans made on or prior to such date). Upon
receipt of any such notice, the Administrative Agent shall promptly notify each
Lender of the contents thereof and the amount (based on a pro rata reduction to
each Lender's Commitment) to which such Lender's Commitment is to be reduced.
(b) Automatic Mandatory Reductions. At the time of any mandatory
prepayment of Loans pursuant to Section 1.4, the Commitment shall be reduced to
the extent required by said Section 1.4, except that only the first $50,000,000
of the Net Cash Proceeds received in connection with the disposition of the
assets mentioned in Section 6.5(e) hereof shall reduce the Commitment.
(c) No Reinstatement of Commitment. All reductions of the Commitment
are permanent and the Commitment cannot be restored without the written consent
of all Lenders.
1.8 INTEREST.
(a) Interest Rate in General. Subject to the terms and conditions of
this Agreement, the Loans shall bear interest on the outstanding principal
amount thereof until paid in full at a rate per annum equal to 1.5 percentage
points in excess of the Prime Rate as
-9-
<PAGE>
in effect from time to time except that Swing Loans shall bear interest at the
prime Rate with no margins.
(b) Interest Payment Dates. Except for Swing Loans on which interest
is payable when each such Loan is due, interest shall be payable quarterly in
arrears on each Quarterly Payment Date, and (ii) when the Loans shall be due
(whether at maturity, by reason of notice of prepayment or acceleration or
otherwise), but only to the extent then accrued on the amount then so due.
Interest at the Default Rate shall be payable on demand.
(c) Default Rate. At any time that an Event of Default shall have
occurred and shall be continuing, any amount payable hereunder and under each
other Loan Document shall bear interest (whether before or after judgment),
payable on demand, at a rate per annum equal to the applicable Default Rate.
1.9 FEES.
(a) Commitment Fees. The Borrowers shall pay to the Administrative
Agent, for the account of each Lender, a commitment fee on the daily unused
amount of such Lender's Commitment for each day from and including the Agreement
Date to but excluding the Maturity Date at the rate of .50% per annum, payable
in arrears (i) on each Quarterly Payment Date, and (ii) on the Maturity Date.
(b) Letter of Credit Fees. The Borrowers shall pay to the
Administrative Agent, for the respective accounts of the RC Lenders, a letter of
credit commission on the daily aggregate amount of the Contingent Reimbursement
Obligations under each Letter of Credit at a rate per annum equal to the
Applicable Margin that would be applicable to RC Loans that are LIBO Rate Loans
at such time. In addition, the Borrowers shall pay to the Administrative Agent,
for the sole account of the Issuer, a Letter of Credit fronting fee on the daily
aggregate amount of the Contingent Reimbursement Obligations under each Letter
of Credit at a rate per annum equal to .10%. Such fees shall be payable in
arrears on successive Quarterly Payment Dates and at the expiration or other
termination of each Letter of Credit. In addition, the Borrowers shall pay to
the Administrative Agent, for the benefit of the Issuer, the Issuer's standard
posted charges for such matters as opening, negotiation and transfer.
(c) Other Fees. The Borrowers shall pay to the Administrative Agent
for the respective accounts of the Administrative Agent, the Lenders and/or the
other Agents, as the case may be, such other fees as have been or may be agreed
to by the Borrowers, by Genesis, or by Acquisition Corp. in connection with the
commitment to enter into this Agreement (including any facility fees referred to
in any commitment letters) and the transactions contemplated by this Agreement.
-10-
<PAGE>
1.10 COMPUTATION OF INTEREST AND FEES. Interest calculated on the basis of
the Federal Funds Rate shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed. Commitment fees, letter of credit
fees and interest calculated on the basis of the Prime Rate shall be computed on
the basis of a year of 365 or 366 days, as applicable, and paid for the actual
number of days elapsed. Interest, commitment fees and letter of credit fees for
any period shall be calculated from and including the first day thereof to but
excluding the last day thereof.
1.11 PROMISSORY NOTES; RECORDS OF ACCOUNT. Each Lender's Loans and the
Borrowers' joint and several obligations to repay such Loans with interest in
accordance with the terms of this Agreement shall be evidenced by this
Agreement, the records of the Administrative Agent and such Lender and a single
Note payable to the order of such Lender except that the Swing Loans and the
Borrowers' joint and several obligations to repay such Loans shall be evidenced
by a single Swing Loan Note payable to the order of the Swing Loan Lender. Each
Lender's participation in Letters of Credit shall be evidenced by this
Agreement, the records of such Lender and the Issuer and the Letters of Credit.
The amount of each Lender's Commitment and the amount of outstanding Loan
Obligations shall at all times be ascertained from the records of the
Administrative Agent, which shall be conclusive absent manifest error and the
outstanding amount of any Swing Loans and the amount of unpaid interest thereon
shall at all times be ascertained from the records of the Swing Loan Lender,
which shall be conclusive absent manifest error.
1.12 PRO RATA TREATMENT. Except to the extent otherwise provided herein,
the Loans shall be made by, and principal, interest and fees in respect thereof
shall be paid or repaid to, the Lenders pro rata in accordance with their
respective Commitments. Each participation of obligations in respect to Letters
of Credit shall be allocated among, and each reimbursement for Drawings under
Letters of Credit or letter of credit commissions shall be made for the account
of, the Lenders pro rata in accordance with their respective amounts of
Commitments.
1.13 TAXES ON PAYMENTS.
(a) Taxes Payable by the Borrowers. If any Tax is required to be
withheld or deducted from, or is otherwise payable by the Borrowers in
connection with, any payment due to the Administrative Agent, the Issuer or any
Lender that is not a "United States Person" (as such term is defined in Section
7701(a)(30) of the Code), the Borrowers (i) shall, if required, withhold or
deduct the amount of such Tax from such payment and, in any case, pay such Tax
to the appropriate taxing authority in accordance with applicable Law and (ii)
except in the case of any Bank Tax, shall pay to the Issuer, such Lender or the
Administrative Agent such additional amounts as may be necessary so that the net
amount received by such Person with respect to such payment, after withholding
or deducting all Taxes required to be withheld or deducted, is equal to the full
amount payable hereunder. If any Tax is withheld or deducted from, or is
otherwise payable by the Borrowers in
-11-
<PAGE>
connection with, any payment due to the Issuer, any Lender or the Administrative
Agent hereunder, the Borrowers shall furnish to such Person the original or a
certified copy of a receipt (if any) for such Tax from the applicable taxing
authority or other evidence of payment thereof satisfactory to such Person
within 30 days after the date of such payment (or, if such receipt shall not
have been made available by such taxing authority within such time, the
Borrowers shall use reasonable efforts to promptly obtain and furnish such
receipt). If the Borrowers fail to pay any such Taxes when due to the
appropriate taxing authority or fail to remit to the Issuer any Lender or the
Administrative Agent the required receipts or other evidence of payment thereof
satisfactory to such Person, the Borrowers shall indemnify such person for any
Taxes, interest, penalties or additions to Tax that may become payable such
Person as a result of any such failure.
(b) Taxes Payable by the Issuer, any Lender or the Administrative
Agent. The Borrowers shall, promptly upon request by the Issuer, any Lender or
the Administrative Agent that is not a United States Person, pay to such Person
an amount equal to (i) all Taxes (other than Bank Taxes and without duplication
of amounts paid pursuant to the preceding paragraph (a)) payable by such Person
with respect to any payment due to such Person hereunder and (ii) all Taxes
(other than Bank Taxes) payable by such Person as a result of payments made by
the Borrowers (whether made to a taxing authority or to such Person pursuant to
the preceding paragraph (a) or this paragraph (b)).
(c) Credits and Deductions. If any Lender or the Administrative
Agent is, in its sole opinion, able to apply for any refund, offset, credit,
deduction or other reduction in Taxes by reason of any payment made by the
Borrowers under the preceding paragraph (a) or (b), such Lender or the
Administrative Agent, as the case may be, shall use reasonable efforts to obtain
such refund, offset, credit, deduction or other reduction and, upon receipt
thereof, will pay to the Borrowers such amount, not exceeding the increased
amount paid by the Borrowers, as is equal to the net after-tax value to such
Lender or the Administrative Agent, in its sole opinion, of such part of such
refund, offset, credit, deduction or other reduction as it considers to be
allocable to such payment by the Borrowers, having regard to all of such
Person's dealings giving rise to similar refunds, offsets, credits, deductions
or other reductions in relation to the same tax period and to the cost of
obtaining the same; provided, however, that if such Person has made a payment to
the Borrowers pursuant to this paragraph (c) and the applicable refund, offset,
credit, deduction or other reduction in Tax is subsequently disallowed, the
Borrowers shall, promptly upon request by the Issuer, the Administrative Agent
or such Lender refund to such Person that portion of such payment determined by
such Person, in its sole opinion, relating to such disallowance; and provided,
further that (i) the Administrative Agent or such Lender, as the case may be,
shall not be obligated to disclose to the Borrowers any information regarding
its Tax affairs or computations and (ii) nothing in this paragraph (c) shall
interfere with the right of such Person to arrange its Tax affairs as it deems
appropriate.
(d) Exemption from U.S. Withholding Taxes. Each Lender that is not a
United States Person shall submit to the Borrowers and the Administrative Agent,
on or
-12-
<PAGE>
before the fifth day prior to the first Quarterly Payment Date occurring after
the Closing Date (or, in the case of a Person that is not a United States Person
and that became a Lender by assignment, promptly upon such assignment), two duly
completed and signed copies of either (A) Form 1001 of the United States
Internal Revenue Service entitling such Lender to a complete exemption from
withholding on all amounts to be received by such Lender pursuant to this
Agreement and the Loans or (B) Form 4224 of the United States Internal Revenue
Service relating to all amounts to be received by such Lender pursuant to this
Agreement and the Loans or (C) in the case of a Lender Party that is claiming an
exemption from United States withholding tax under Section 871(h) or 881(c) of
the Internal Revenue Code with respect to payments of "portfolio interest" two
accurate and complete signed original Forms W-8 (or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender Party is
exempt from or is entitled to a reduced rate of United States withholding tax on
payments under this Agreement or the Notes) and, if such Lender Party delivers
such Forms W-8 (or successor form), two signed certificates that such Lender
Party is not (1) a "bank" for purposes of Section 881(c) of the Internal Revenue
Code, (2) is not a 10% shareholder (within the meaning of Section 871(h)(3)(B)
of the Internal Revenue Code) of the Borrower and (3) is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Internal Revenue Code), as appropriate. Each such Lender shall,
from time to time after submitting either such Form, submit to the Borrowers and
the Administrative Agent such additional duly completed and signed copies of one
or the other such Forms (or any successor forms as shall be adopted from time to
time by the relevant United States taxing authorities) as may be (A) requested
in writing by the Borrowers or the Administrative Agent and (B) appropriate
under the circumstances and under then current United States law or regulations
to avoid or reduce United States withholding taxes on payments in respect of all
amounts to be received by such Lender pursuant to this Agreement or the Loans.
Upon the request of the Borrowers or the Administrative Agent, each Lender that
is a United States Person shall submit to the Borrowers and the Administrative
Agent a certificate to the effect that it is a United States Person.
1.14 CAPITAL AND RESERVE REQUIREMENTS. If, in the determination of any
Lender, such Lender or any Affiliate thereof is required, under applicable Law
(including Regulation D), interpretations, directives, requests and governmental
or regulatory guidelines (whether or not having the force of law), to maintain
capital or deposit any reserve on account of any Loan or any commitment to make
any Loan, then, upon request by such Lender, the Borrowers shall pay to such
Lender such additional amounts as such Person determines will fully compensate
it for any reduction in the rate of return on the capital that such Lender or
such Affiliate is so required to maintain. Such additional amounts shall be
payable, in the case of those applicable to prior periods, within 15 Business
Days after request by such Lender for such payment accompanied by the
certificate described below and, in the case of those relating to future
periods, on the dates specified, or determined in accordance with the method
specified, by such Lender.
-13-
<PAGE>
In making the determinations contemplated by this Section 1.14, each
Lender and the Issuer shall make such estimates, assumptions, allocations and
the like that such Person is good faith determines to be appropriate, and such
Person's selection thereof in accordance with this Section 1.14, and the
determinations made by such Person on the basis thereof, shall be final, binding
and conclusive upon the Borrowers, except, the case of such determinations, for
manifest errors. Each Lender and the Issuer shall furnish to the Borrowers, at
the time of any request for compensation under Section 1.14, a certificate
outlining in reasonable detail the computation of any amounts claimed by it
under this Section 1.14 and the assumptions underlying such computations, which
shall include a statement of an officer of such Lender certifying that such
request for compensation is being made pursuant to a policy adopted by such
Lender to seek such compensation generally from customers similar to the
Borrowers and having similar provisions in agreements with such Lender.
1.15 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.13 (Taxes on
Payments) or Section 1.14 (Capital and Reserve Requirements), with respect to
such Lender, it will, if requested by the Borrowers, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
lending office for any Loans affected by such event, provided that such
designation is made on such terms that the such Lender and its lending office
suffer no material economic, legal or regulatory disadvantage, with the object
of avoiding the consequence of the event giving rise to the operations of any
such Section. Nothing in this Section 1.15 shall affect or postpone any of the
obligations of the Borrowers or the right of any Lender provided in Section 1.13
(Taxes on Payments) or Section 1.14 (Capital and Reserve Requirements).
-14-
<PAGE>
ARTICLE 1A
LETTERS OF CREDIT
1A.1 ISSUANCE OF LETTERS OF CREDIT.
(a) In General. Upon the terms and subject to the conditions of this
Agreement, the Issuer shall, from time to time, from the Closing Date to the
date which is 90 days prior to the Maturity Date, issue one or more Letters of
Credit for the account of any Borrower, provided that (i) the sum of the
Contingent Reimbursement Obligations (after giving effect to the requested
Letter of Credit) plus the aggregate unpaid amount of all Drawings under Letters
of Credit shall not exceed $5,000,000.00 and provided, further, that the face
amount of the Letter of Credit so requested shall not exceed the Available
Commitment at such time. Each Letter of Credit shall be in a form and shall
contain such terms as shall be reasonably satisfactory to the Issuer. Letters of
Credit shall be issued only on a Business Day, and shall be used for the general
corporate purposes of the Borrowers or for such other purposes as shall be
acceptable to the Issuer in its sole discretion.
(b) Terms. Each Letter of Credit shall be denominated only in
Dollars and shall expire on or before the first anniversary of the issuance
thereof and in any event not later than the fifth Business Day preceding the
Maturity Date. No Letter of Credit shall 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. All other
extensions and renewals are also at the sole discretion of the Issuer. Any
extension of the expiry date of a Letter of Credit to a date beyond the first
anniversary of the issuance thereof shall constitute an "issuance" of such
Letter of Credit for all purposes hereof.
(c) Form of Request. The Borrowers shall request the issuance of a
Letter of Credit by furnishing to the Administrative Agent and the Issuer, at
least five Business Days before the requested date of such issuance (or at such
later time as shall be acceptable to the Issuer), such notice thereof as shall
be reasonably satisfactory to the Issuer to which shall be attached a
certificate of the chief financial officer or other Responsible Officer of
Multicare representing that Multicare is, and after giving effect to the
additional Indebtedness will be, in compliance with Section 4.03 of the 1997
Subordinated Note Indenture, that the obligations with respect to such Letter of
Credit constitute "Senior Indebtedness" and "Designated Senior Indebtedness" as
defined in the 1997 Subordinated Note Indenture, and as to such other matters as
required by Section 2.2 below.
(d) Participation by Lenders. Upon the date of issuance of a Letter
of Credit, the Issuer shall be deemed to have granted to each Lender (other than
the Issuer), and each Lender (other than the Issuer) shall be deemed to have
acquired from the Issuer without further action by any party hereto, a
participation in such Letter of Credit and any Drawings
-15-
<PAGE>
that may at any time be made thereunder, to the extent of such Lender's pro rata
share of the Commitment.
(e) Notice of Drawings. The Issuer shall promptly notify Multicare
(on behalf of the Borrowers) of its receipt of each Drawing request with respect
to a Letter of Credit, stating the date and amount of the Drawing requested
thereby and the date and amount of each Drawing disbursed pursuant to such
request. The failure of the Issuer to give, or delay in giving, any such notice
shall not release or diminish the obligations hereunder of the Borrowers in
respect of such Drawing.
(f) Reimbursement of Drawings by Borrowers. If at any time Multicare
(on the behalf of the Borrowers) receives notice of a Drawing, the Borrowers
shall reimburse such Drawing by paying to the Issuer in immediately available
funds the amount of the payment made by the Issuer with respect to such Drawing,
together with interest thereon at a rate per annum equal to the Prime Rate from
the day that the Drawing is made until the day such reimbursement is made if
such Drawing is not reimbursed on the day the Drawing is made. Such
reimbursement shall be made by the Borrowers to the Issuer no later than one (1)
Business Day following the date that Multicare (on behalf of Borrowers) receives
the relevant notice of Drawing if such notice is received on or prior to 10:00
a.m. (Philadelphia, Pennsylvania time) and no later than two (2) Business Days
following the date that Multicare receives the relevant notice of Drawing if
such notice is received after 10:00 a.m. (Philadelphia, Pennsylvania time). If
the Borrowers shall fail to make any payment required by this paragraph (f) at
the time specified, and if at such time, there shall be any Available RC
Commitment, the Administrative Agent may (but is not obligated to) assume that
the Borrowers intend to use the proceeds of RC Loans to make such payment. In
reliance on such assumption, the Administrative Agent may (but is not obligated
to) notify the Lenders (and Multicare (on behalf of the Borrowers)) that
notwithstanding the Borrowers' failure to provide notice pursuant to Section 1.3
above, such notice is deemed given pursuant to this paragraph (f) requesting an
RC Loan in an amount sufficient to make the payments required by this paragraph
(f). Such notice from the Administrative Agent shall be treated by the Lenders
in the same manner as a notice from the Borrowers under Section 1.3 above. The
Administrative Agent may, at the direction of the Issuer, apply the proceeds of
such Loans to satisfy the requirements of this paragraph (f).
(g) Obligations of Lenders to Issuer. In the event that the
Borrowers shall fail to make any payment when due pursuant to the preceding
paragraph (f) and for so long as such failure shall be continuing, the Issuer
may give notice of such failure to the Administrative Agent and each Lender,
which notice shall include, in the case of an Lender, the amount of such
Lender's interest in such Drawing, whereupon each such Lender (other than the
Issuer) shall promptly remit such amount to the Administrative Agent for the
account of the Issuer as provided in this paragraph (g). Each Lender (other than
the Issuer) shall, in the event it receives such notice from the Issuer at or
before 12:00 noon (Philadelphia, Pennsylvania time) on any Business Day, fund
its participation in any unreimbursed Drawing by remitting to the Administrative
Agent, no later than 2:00 p.m.
-16-
<PAGE>
(Philadelphia, Pennsylvania time) on such day, in immediately available funds
its share of the reimbursement obligations in respect of each Drawing. In the
event that the Administrative Agent receives such funds from an Lender at or
before 2:00 p.m. (Philadelphia, Pennsylvania time) on any day, the
Administrative Agent shall make available the amount thereof to the Issuer, in
immediately available funds no later than 4:00 p.m. (Philadelphia, Pennsylvania
time) on that same day. Any amount payable by an Lender to the Administrative
Agent for the account of the Issuer under this paragraph (g), and any amount
payable by the Administrative Agent to the Issuer under this paragraph (g),
shall bear interest for each day from the date due (and including such day if
paid after 2:00 p.m. (Philadelphia, Pennsylvania time) in the case of any such
payment by a Lender to the Administrative Agent, or 4:00 p.m. (Philadelphia,
Pennsylvania time), in the case of any such payment by the Administrative Agent
to the Issuer, on such day) until the date it is received by the Issuer at a
rate equal to the Federal Funds Rate until (and including) the third Business
Day after the date due and thereafter at the Prime Rate. Moreover, any Lender
that shall have failed to make available the required amount shall not be
entitled to vote on such matters as Lenders or Required Lenders are otherwise
entitled to vote on or consent to or approve under this Agreement and the other
Loan Documents until such amount with interest is paid in full to the
Administrative Agent by such Lender. Each Lender shall, upon the demand of the
Issuer, reimburse the Issuer, through the Administrative Agent to the extent
that the Issuer has not been reimbursed by the Borrowers after demand therefor,
for the reasonable costs and expenses (including reasonable legal fees) incurred
by it (other than as a result of its willful misconduct or gross negligence as
finally determined by a court of competent jurisdiction) in connection with the
collection of amounts due under, the administration of, and the preservation and
enforcement of any rights conferred by, the Letters of Credit or the performance
of the Issuer's obligations under this Agreement in respect thereof on a pro
rata basis relative to such Lender's pro rata share of the Commitment (as of the
time such costs and expenses are incurred). The Issuer shall refund through the
Administrative Agent any costs and expenses reimbursed by such Lender that are
subsequently recovered from the Borrowers in an amount equal to such Lender's
ratable share thereof.
(h) Cash Collateral. It is intended that at all times that the
Borrowers shall have contingent or other obligations (including obligations in
respect of fees) relating to Letters of Credit, there shall be sufficient
availability under the Commitment to reimburse the Issuer (and the Lenders) out
of proceeds of RC Loans. Accordingly, in the event that there shall, at any
time, be insufficient availability under the Commitment (after giving effect to
all outstanding Swing Loans and RC Loans) to do so (whether because the amount
of the Commitment is reduced pursuant to a mandatory reduction or is terminated
at maturity, upon acceleration or otherwise or because the amount of outstanding
RC Loans, Swing Loans and such Letter of Credit obligations exceeds the amount
of the Commitment for any other reason), the Borrowers shall forthwith pay to
the Administrative Agent an amount equal to the aggregate face value of all
outstanding Letters of Credit plus the aggregate amount of all unreimbursed
Drawings plus the amount of all fees or other obligations in respect of Letters
of Credit to the extent of such excess. Such amount shall be maintained by the
Administrative Agent in an interest-bearing cash collateral account in the name
of and for the
-17-
<PAGE>
benefit of the Issuer and the Lenders to secure such payment obligations of the
Borrowers until such time as all outstanding Letters of Credit have expired or
been cancelled and all amounts in respect thereof have been paid in full. Upon
receipt of a notice from the Issuer that there are unreimbursed Drawings or
other amounts due in respect of such Letters of Credit (which notice shall set
forth the amount of such unreimbursed Drawings or other obligations) the
Administrative Agent shall promptly disburse from the cash collateral account
the amount specified in the notice and shall pay such amount to the Issuer and
Lenders ratably in accordance with the respective amounts owing to each such
Person, first, for fees and indemnities until the same are paid in full and,
second, for unreimbursed Drawings. The Administrative Agent and the Issuer may
rely on their records as to any amounts so owing and shall be fully protected in
doing so. Such records shall be conclusive, absent manifest error. At any time
that the Commitment again becomes available for reimbursement of Drawings under
outstanding Letters of Credit such that (i) the sum of the Commitment at that
time and the amount in the cash collateral account exceeds (ii) the sum of all
outstanding RC Loans and Swing Loans, the face amount of all outstanding Letters
of Credit and the amount of all unreimbursed Drawings, then, upon written
request of Multicare (on behalf of the Borrowers) (which request shall (A)
represent that there exists no Default or Event of Default and (B) specify the
amount of such excess), the Administrative Agent shall release such excess
amount to the Borrowers from the cash collateral account. 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 in full in cash, all Commitments have terminated and all
Letters of Credit have expired, promptly following demand by Multicare (on
behalf of the Borrowers) the Administrative Agent shall release to the Borrowers
all remaining funds in the Letter of Credit cash collateral account.
(i) Obligations Absolute. The obligation of each Borrower and each
Lender to make available to the Issuer the amounts set forth in this Article 1A
shall be absolute, unconditional and irrevocable under any and all circumstances
without reduction for any set-off or counterclaim of any nature whatsoever, and
may not be terminated, suspended or delayed for any reason whatsoever, shall not
be subject to any qualification or exception and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances,
including any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which any Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), the Administrative Agent, the
Issuer, any Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any
-18-
<PAGE>
underlying transaction between such Borrower and the beneficiary named in
any such Letter of Credit);
(iii) any draft, certificate or any 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;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Event of Default.
(j) Limitations on Liability; Protection of Issuer, Administrative
Agent and Lenders.
(i) Limitation on Liability of Lender Parties. Without
affecting any rights any Lender Party may have under applicable Law, each of the
Borrowers agrees that none of the Lenders, the Issuer, the Administrative Agent
or their respective officers or directors shall be liable or responsible for,
and the obligations of the Borrowers to the Lenders, the Issuer and the
Administrative Agent hereunder shall not in any manner be affected by: (A) the
use that may be made of any Letter of Credit or the proceeds thereof by the
beneficiary thereof or any other Person or any acts or omissions of such
beneficiary or any other Person; (B) the validity, sufficiency or genuineness of
documents presented in connection with any Drawing, or of any endorsements
thereon, even if such documents should, in fact, prove to be in any or all
respects, invalid, insufficient, fraudulent or forged; or (C) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit or any other action taken or omitted to be taken by any Person under
or in connection with any Letter of Credit, except that the Borrowers shall have
a claim against the Issuer and the Issuer shall be liable to the Borrowers, in
each case to the extent and only to the extent of any damages suffered by the
Borrowers that they prove are caused by the Issuer's willful misconduct or gross
negligence. In furtherance and not in limitation of the foregoing, in
determining whether to pay under any Letter of Credit, the Issuer shall not have
any obligation relative to the other Lenders other than to determine that any
documents required to be delivered under such Letter of Credit appear to have
been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit, regardless of any notice or information
to the contrary. Any action taken or omitted to be taken by the Issuer under or
in connection with any Letter of Credit (if taken or omitted in the absence of
gross negligence or willful misconduct, as finally determined by a court of
competent jurisdiction) shall not create for the Issuer any resulting liability
to any Borrower or any Lender.
(ii) Indemnification and Expenses. In addition to any other
amounts payable under this Agreement, the Borrowers agree jointly and severally
to protect, indemnify, pay and hold the Issuer and each Lender harmless from and
against any and all
-19-
<PAGE>
claims, costs, charges and expenses (including reasonable attorneys' fees) which
the Issuer may incur or be subject to as a consequence, direct or indirect, of
(A) the issuance of, or payment of any drawing under, any Letter of Credit,
other than as a result of the gross negligence or willful misconduct of the
Issuer as finally determined by a court of competent jurisdiction or (B) the
failure of the Issuer to honor a Drawing under any Letter of Credit as a result
of any act or omission of any present or future government or Governmental
Authority.
(iii) Issuer Not Responsible. In furtherance of the foregoing
limitations on liability, the Issuer shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the issuance of Letters of Credit; (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part; (C) errors, omissions,
interruptions, or delays in transmissions or delivery of any messages, by mail,
cable, telecopy, telex or otherwise, whether or not in cipher, except for
damages proven to be caused by the Issuer's gross negligence or willful
misconduct; (D) the misapplication by the beneficiary of any Letter of Credit or
the proceeds of any drawing under such Letter of Credit; or (E) any consequence
arising from causes beyond the control of the Issuer, including any governmental
acts.
-20-
<PAGE>
ARTICLE 2
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS
2.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND INITIAL FUNDING. The
effectiveness of this Agreement (other than this Article 2) and the obligation
of the Lenders to make the initial Loans hereunder and the obligation of the
Issuer to issue Letters of Credit hereunder are subject to the fulfillment of
the following conditions on or before October 15, 1997 (unless such date is
extended in writing by the Agents in their sole discretion), in each case to the
satisfaction of the Agents and, to the extent specified below, to the
satisfaction of each Lender (each Lender upon making its initial Loan hereunder
being deemed to have waived or found satisfactory all such conditions so
specified).
(a) Secretary's Certificates. The Borrowers shall have delivered, or
caused to be delivered, a certificate of the Secretary or an Assistant Secretary
(or general partner, as applicable) of each of the Borrowers, Acquisition Corp.
and Genesis ElderCare Corp., with specimen signatures of the authorized
signatories to the Loan Documents, and to which shall be attached copies of the
following, as applicable: articles or certificate of incorporation (each of
which shall be certified as of a recent date by the Secretary of State of the
state of such Borrower's, Acquisition Corp. and Genesis ElderCare Corp.),
certificates of formation (each of which shall be certified as of a recent date
by the Secretary of State of the state of such Person's formation), operating
agreements, management agreements, bylaws, partnership agreements, resolutions
and shareholder agreements.
(b) Good Standing Certificates. The Borrowers shall have delivered,
or caused to be delivered, a good standing or subsistence certificate, as the
case may be, issued as of a recent date with respect to each Borrower (and
corporate or limited liability company or limited partnership, general partners
of Borrowers that are partnerships), Acquisition Corp. and Genesis ElderCare
Corp., (i) issued by the Secretary of State or other appropriate official of the
jurisdiction of formation of such Person and (ii) issued by the Secretary of
State or other appropriate official of each jurisdiction where such Person is
required to qualify to do business and, if any such certificate is dated more
than seven (7) days prior to the Closing Date, a confirmation (which may be
provided by a reputable corporate service) of the information in such
certificate.
(c) The Notes. The Borrowers shall have delivered the Notes to the
Administrative Agent for distribution to the Lenders and the Swing Loan Note to
the Administrative Agent.
(d) Lien Searches. The Borrowers shall have delivered to the
Administrative Agent Uniform Commercial Code, tax, and judgment lien searches of
the Borrowers,
-21-
<PAGE>
Acquisition Corp. and Genesis ElderCare Corp. as of a recent date, in such form
and with such content as are acceptable to the Administrative Agent.
(e) Pledge Agreement. The Borrowers shall each have executed and
delivered Pledge Agreements whereby the Administrative Agent shall receive a
pledge and first priority security interest for the benefit of the Lender
Parties in all of the equity interests in each of the direct and indirect
Subsidiaries of Multicare and all inter-Borrower notes (collectively, as such
agreements are amended, modified, restated or supplemented from time to time in
accordance with the terms hereof and thereof, the "Pledge Agreement") in
substantially the form annexed to this Agreement as Exhibit D (together with the
stock certificates, assignment powers, Uniform Commercial Code financing
statements (in proper form for filing in the appropriate offices to perfect the
security interest of the Administrative Agent for the benefit of the Secured
Parties, in the Collateral granted under the Pledge Agreement) and other items
required thereunder to the extent that such items were not previously delivered
to the Administrative Agent).
(f) Multicare Management Agreement. Prior to or substantially
contemporaneously with the initial funding hereunder, GENESIS HEALTH VENTURES,
INC. ("Genesis") (and/or one or more of its Subsidiaries) shall have entered
into a Management Agreement with Genesis ElderCare Corp. (the "Multicare
Management Agreement") under which Genesis (and/or such Subsidiaries) will
provide management services to the Borrowers and its Subsidiaries. As a further
condition, Genesis and Multicare and the Agents shall enter into the Multicare
Management Subordination Agreement.
(g) Transaction Documents. The Borrowers shall have delivered to
each of the Agents and any Lender that so requests, each of the other
Transaction Documents certified by a Responsible Officer of Multicare as being a
true and correct copy of such Transaction Document as in full force and effect
on the Closing Date.
(h) Completion of Tender Offer. Simultaneously with the Closing
hereunder, the Tender Offer shall close with the purchase of at least a majority
of the common stock of Multicare having been purchased for $28 per share and the
other transactions contemplated by the Transaction Documents to have occurred on
or before the Closing Date shall take place in strict compliance with the terms
of said Transaction Documents, subject only to such modifications as are
acceptable to the Agents. There shall be no legal impediment to the merger of
Acquisition Corp. into Multicare under Section 253 or 251, as the case may be,
of the Delaware General Corporation Law on the terms set forth in the Merger
Agreement and the restrictions in Section 203 of the Delaware General
Corporation Law and any other impediment under Delaware law shall be
inapplicable to the acquisition of the shares of Multicare by Acquisition Corp.
and the proposed merger pursuant to the terms of the Merger Agreement.
(i) Multicare Board of Directors. Simultaneously with the Closing
hereunder, Acquisition Corp. shall have the unrestricted right, subject to
ss.14(f) of the
-22-
<PAGE>
Securities Exchange Act of 1934, to designate and cause to be elected a majority
of the board of directors of Multicare.
(j) Approval of Merger. The board of directors of Multicare, as
constituted before any change in its composition pursuant to the right described
in paragraph (i) of this Section 2.1, shall have approved the Merger.
(k) Certain Legal Matters. The restrictions of ss.203 of the
Delaware General Corporation Law and any other impediment under the Delaware
General Corporation Law shall be inapplicable to the acquisition of the
Multicare Shares pursuant to the Tender Offer; no legal impediment (under ss.251
or ss.253 of the Delaware General Corporation Law or otherwise) to the Merger
shall exist; and there shall not be pending or threatened any legal or
administrative proceeding seeking to restrain or prevent the consummation of the
Tender Offer, the Merger or any other of the transactions contemplated by this
Agreement or the Transaction Documents or questioning the legality or validity
thereof; and the Tender Offer and other related transactions shall be
consummated in accordance with all applicable Laws.
(l) Maximum Price. The total amount payable by Acquisition Corp. and
the Borrowers, in connection with the Tender Offer and the Merger, including
consulting, noncompetition, severance and other payments to employees of the
Borrowers, and including amounts provided (hereunder or otherwise) to refinance
Indebtedness of the Borrowers, plus the amount of existing Indebtedness of
Multicare not repaid in connection with the Tender Offer and the Merger, shall
not exceed $1,533,000,000.00.
(m) Opinions of Counsel. (i) The Borrowers shall have delivered
favorable opinions of counsel, dated as of the Closing Date, from:
(A) Blank, Rome, Comisky & McCauley, counsel to the Borrowers,
as to the absence of conflicts with other financing agreements and other
material agreements of the Borrowers, the status of the Loan Obligations as
"Senior Indebtedness" and "Designated Senior Indebtedness" within the meaning of
the 1997 Subordinated Note Indenture, and compliance with Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System, compliance with
Laws applicable to the Tender Offer, the perfection of security interests under
the Pledge Agreement, issuance of capital stock of the Borrowers, the due
organization of the Borrowers, the due authorization of the transactions
referred to herein, the enforceability of the Loan Documents, certain health
care and licensing compliance issues and such other matters as the Agents may
reasonably request, in form and substance satisfactory to the Agents; and
(B) local counsel to the Borrowers in the States of
Massachusetts, West Virginia, New Jersey, Ohio, Pennsylvania, Wisconsin,
Connecticut, Illinois, Rhode Island, Vermont and Virginia as to certain health
care matters and such other matters as the Agents may reasonably request, in
form and substance satisfactory to the Agents.
-23-
<PAGE>
(ii) Drinker Biddle & Reath LLP, special counsel to the
Administrative Agent shall have delivered to the Administrative Agent a
favorable opinion of counsel, dated as of the Closing Date, as to such matters
as the Administrative Agent shall reasonably request.
(n) Solvency Opinion. The Borrowers shall have delivered letters
from their chief financial officers and from a nationally recognized appraisal
firm, valuation consultant or investment banking firm satisfactory to the Agents
in form and substance satisfactory to the Agents, attesting to the solvency of
the Borrowers, taken as a whole, after giving effect to the transactions
referred to herein (including the making of the initial Loans)
(o) Officers Certificate Regarding Senior Subordinated 12-1/2% Notes
and Convertible 7% Subordinated Debentures. Multicare, on behalf of Borrowers
shall have delivered a certificate dated the Closing Date signed by a
Responsible Officer detailing as of the Closing Date the amount of Multicare's
Convertible 7% Subordinated Debentures remaining outstanding and the maximum
amount necessary to redeem and retire all such Debentures by no later than March
16, 1998; and the amount of Multicare's Senior Subordinated 12-1/2% Notes
remaining outstanding and the maximum amount necessary to redeem and retire all
such Notes by no later than January 2, 1998.
(p) Consents and Approvals. All material corporate, governmental,
judicial and third party consents and approvals necessary in connection with
this Agreement and the other Loan Documents, the Tender Offer and the related
transactions (including without limitation consents and approvals required under
or referred to in the Merger Agreement) shall have been obtained and, as
applicable, become final orders (without imposition of any conditions that are
not acceptable to the Lenders) and shall remain in full force and effect and, to
the extent requested by any Agent, copies thereof shall have been delivered to
the Administrative Agent. Without limiting the generality of the foregoing, all
appropriate filings shall have been made under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the applicable waiting periods
relating thereto shall have expired or been terminated without requests for
additional information from the reviewing agencies.
(q) Financial Statements; Projections.
(i) Financial Statements. The Borrowers shall have delivered,
or caused to be delivered, to the Administrative Agent and the
Lenders at least three (3) Business Days prior to the Closing Date
each of the following:
(x) a consolidated income statement of Multicare and its
consolidated Subsidiaries, for the twelve calendar month
period ending on June 30, 1997, adjusted, on a pro forma basis
to the beginning of the period (as required for the financial
covenants) to reflect the consummation of all of the
transactions set forth in the Transaction Documents and all
Acquisitions and dispositions which shall have
-24-
<PAGE>
occurred within said twelve month period as if such
transactions, Acquisitions and dispositions had occurred on
the first day of such period, which statement shall be
supplemented by information separating out and explaining all
pro forma adjustments made thereto; and
(y) a consolidated balance sheet of Multicare and its
consolidated Subsidiaries as of June 30, 1997, reflecting, on
a pro forma basis, the consummation of all transactions set
forth in the Transaction Documents including all borrowings in
connection therewith and all borrowings otherwise contemplated
hereunder, the application of all proceeds of such borrowings
and the amount of all outstanding Indebtedness after giving
effect to the foregoing, which balance sheet shall be
supplemented by information separating out and explaining all
pro forma adjustments made thereto;
each of which statements shall be (1) in form acceptable to the Agents, (2)
accompanied by explanatory notes acceptable to the Agents and (3) certified by
the chief financial officer of the Borrowers to fairly present on a pro forma
basis the financial condition and results of operations as at the date, or for
the period, indicated.
(ii) Projections. Multicare on behalf of the Borrowers shall
have delivered to each Lender projections respecting the
consolidated financial condition and results of operations of
Multicare and its Subsidiaries for the period commencing on January
1, 1997 and ending on December 31, 2002, which projections shall be
in reasonable detail, shall reflect the consummation of the
transactions contemplated hereby and the Transaction Documents
including the making of the initial Loans and shall be accompanied
by a written statement of the assumptions and estimates underlying
such projections.
(r) Officer's Compliance Certificate. Multicare on behalf of the
Borrowers shall have delivered an Officer's Compliance Certificate, dated as of
the Closing Date, as to the truth of the representations and warranties herein
and in the other Loan Documents and the absence of any Default (in each case,
both before and after giving effect to the initial Loans). The Officers
Compliance Certificate shall demonstrate that EBITDA of the Borrowers for the
twelve calendar month period ending June 30, 1997 (after making all adjustments
referred to in paragraph Q above) is no less than $118,000,000.00 and Total
Funded Indebtedness of the Borrowers is not more than $760,000,000.00. The
Officers Compliance Certificate delivered pursuant to this paragraph (r) shall
include a reconciliation of the financial information set forth thereon
respecting Multicare and its Restricted Subsidiaries and that set forth on the
financial statements for Multicare and its consolidated subsidiaries.
-25-
<PAGE>
(s) Repayment of Predecessor Indebtedness. The Borrowers shall have
delivered to the Administrative Agent evidence that, prior to or substantially
simultaneously with the making of the initial Loans, (a) all Indebtedness of the
Borrowers other than that expressly permitted under Section 6.1 (Indebtedness)
below will be repaid, (b) all commitments to lend in respect of the such
Indebtedness shall have been effectively terminated and (c) all collateral held
in connection therewith shall have been released (or undertakings to release
such collateral upon receipt of specified funds shall have been duly made) and
UCC-3 termination statements and all other documents necessary in the
determination of the Administrative Agent to effectively terminate of record all
security interests related to such Indebtedness shall have been duly executed by
the proper parties and shall have been delivered to the Administrative Agent (or
undertakings to do so upon receipt of specified funds shall have been furnished
to the Administrative Agent).
(t) Insurance. The Borrowers shall have delivered to the
Administrative Agent evidence of the insurance required by Section 4.8 below.
(u) Fees and Expenses. The Borrowers shall have paid the fees
required to be paid to the Agents and the Lenders on or before the Closing Date
and the fees and disbursements of counsel for the Agents in connection with the
negotiation, preparation, execution and delivery of the Loan Documents and the
making of the initial Loans.
(v) Concurrent Closing of Genesis and Acquisition Corp. Credit
Facilities. All conditions to the initial funding under (i) the Third Amended
and Restated Credit Agreement, dated as of the date hereof, among Genesis,
certain of its Subsidiaries, Mellon as administrative agent, and certain other
agents and lenders referred to therein (the "Genesis Credit Agreement") and (ii)
the Credit Agreement, dated as of the date hereof, among Acquisition Corp.,
Mellon as administrative agent, and certain other agents and lenders referred to
therein (the "Acquisition Corp. Credit Agreement") shall have been satisfied.
The closings under those credit facilities shall occur substantially
simultaneously with the closing under this Agreement.
(w) Investment in Genesis ElderCare Corp. and in Acquisition Corp.
Substantially contemporaneously with the initial funding hereunder, Genesis
shall have acquired approximately 44% of the common stock of Genesis ElderCare
Corp. for a cash purchase price of at least $325,000,000.00; Cypress, Nazem and
TPG, collectively, shall have paid at least $420,000,000.00 in cash for the
remainder of the common stock of Genesis ElderCare Corp.; substantially
contemporaneously with the initial funding hereunder, Genesis ElderCare Corp.
shall have contributed at least $745,000,000.00 to Acquisition Corp. in exchange
for common stock of the Acquisition Corp.; and the Acquisition Corp.
shall be wholly owned by Genesis ElderCare Corp.
(x) 1997 Subordinated Note Indenture. The 1997 Subordinated Note
Indenture with terms and conditions satisfactory to the Agents in their sole
discretion, shall have been executed by the parties thereto, and Acquisition
Corp. shall have received at least
-26-
<PAGE>
$250,000,000.00 in gross proceeds from the sale of the 1997 Subordinated Note
and the net proceeds from such issuance shall have been released to Acquisition
Corp. from the escrow in which they were deposited.
(y) Tax Sharing Agreement. The Borrowers shall have delivered a copy
of the Tax Sharing Agreement duly executed by the Borrowers and Genesis
ElderCare Corp. and the Excluded Subsidiaries (the "Tax Sharing Agreement"),
limiting, as between the parties thereto, the tax liabilities of the Borrowers
in connection with a consolidated tax filing (which may include as part of the
consolidated group for tax purposes the Borrowers and the Excluded
Subsidiaries), to the amount of tax liabilities that the Borrowers would have
incurred had they filed separately. The Tax Sharing Agreement shall be certified
as such by a Responsible Officer of Multicare.
(z) Subordination of Management Fees. The Borrowers, the
Administrative Agent and Genesis shall have entered into a subordination
agreement as of the date hereof, whereby Genesis shall agree to subordinate its
rights to a portion of its fees under the Multicare Management Agreement (those
fees in excess of the greater of $23,900,000.00 per annum and 4% of consolidated
net revenue) to the rights of the Lender Parties hereunder (the "Management Fee
Subordination Agreement").
2.2 CONDITIONS TO EACH LOAN.
(a) Conditions. The obligation of the Lenders to make any Loans,
including the initial Loans and the obligation of the Issuer to issue any
Letters of Credit, are subject to fulfillment of each of the following
conditions, in each case, unless otherwise specified, to the satisfaction of the
Administrative Agent:
(i) Absence of Default. There shall not, either prior to or
after giving effect to each such Loan, exist an Event of Default or a Default.
(ii) Borrowing Notice/L.C. Request Notice. In connection with
any request for Loans (other than Swing Loans), the Administrative Agent shall
have received a borrowing notice as required by Section 1.3(a)(1) above; in
connection with any request for the issuance of a Letter of Credit, the Issuer
and the Administrative Agent shall have received a Letter of Credit request as
required by Section 1A.1(c) above; and in connection with any request for any
Swing Loans, the Swing Loan Lender and the Administrative Agent shall have
received a Swing Loan request as required by Section 1.3(e).
(iii) Truth of Representations. The representations and
warranties of the Borrowers and each other Loan Party made in this Agreement and
each other Loan Document shall be true and correct in all material respects as
of the date each such Loan is made or Letter of Credit issued (both immediately
prior to and after giving effect to said Loan or Letter of Credit) as if made on
and as of such date.
-27-
<PAGE>
(iv) No Violations of Law. Neither the making of, nor use of
the proceeds of, any Loans nor the issuance of, or use of the proceeds of, any
Letters of Credit shall conflict with, or cause any Borrower to violate any Law.
(v) Compliance with Indenture Covenants. Neither the making of
such Loans nor the issuance of any Letters of Credit shall not violate the terms
of the 1997 Subordinated Note Indenture and Multicare shall deliver a
certificate of its chief financial officer or controller representing that, both
before and after giving effect to such additional Indebtedness, (A) Multicare is
in compliance with the financial covenants set forth in Section 4.03 of the 1997
Subordinated Note Indenture and (B) that the Loans or Letters of Credit as the
case may be constitute "Senior Indebtedness" and "Designated Senior
Indebtedness" as defined in the 1997 Subordinated Note Indenture.
(vi) Additional Information. The Lenders shall have received
such additional information and documentation as the Lenders may reasonably
request.
(vii) Business Activities. In the case of any Loan made before
the effective date of the Merger, Acquisition Corp. shall not be engaged in any
business activity except in connection with the Tender Offer.
(b) Deemed Representation and Warranty. The request for, and
acceptance of, any Loan (including any Swing Loan) by any Borrowers shall be
deemed a representation and warranty by the Borrowers that the conditions
specified in clauses (i), (iii), (iv), (v), and (vii) of the preceding paragraph
(a) have been satisfied.
-28-
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS. The Borrowers hereby jointly and severally represent
and warrant to each Lender Party as follows:
(a) Status of Borrowers. Each Borrower is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each Borrower has the power and authority to own its property and
to transact the business in which it is engaged or presently proposes to engage.
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 any failures to maintain such
qualifications which, individually or in the aggregate, could not have a
Material Adverse Effect. Schedule 3.1(a) hereto sets forth for each Borrower, as
of the Closing Date, (i) whether it is a corporation, limited partnership or
general partnership, (ii) the jurisdiction of its organization, and (iii) the
jurisdictions in which it is qualified to do business as a foreign corporation
or a foreign partnership, as the case may be, except where the failure to
maintain such qualification could not, individually or in the aggregate, have a
Material Adverse Effect. Each direct and indirect Subsidiary of Multicare (other
than the Excluded Subsidiaries) is a Borrower hereunder and is designated as
such on the signature pages hereto (or, after the Closing Date, on signature
pages of a Joinder Supplement hereto). The states in which any Borrowers operate
Health Care Businesses are Massachusetts West Virginia, New Jersey, Ohio,
Pennsylvania, Wisconsin, Connecticut, Illinois, Rhode Island, Vermont and
Virginia.
(b) Capitalization of Borrowers. Schedule 3.1(b) hereto sets forth
(i) for each corporate Borrower, (A) the authorized capitalization, (B) the
names of the owners (indicating whether they are Borrowers) of the outstanding
capital stock, (C) the number and class of shares issued to each such owner and
(D) the percentage of outstanding shares of each class of capital stock owned by
each such owner, and (ii) for each Borrower which is a partnership, (A) the
names of the owners (indicating whether they are Borrowers) of the outstanding
equity thereof and (B) the percentage ownership interest of, and type of equity
issued to, each such owner. The outstanding equity of each Borrower has been
duly authorized and validly issued. All capital stock is fully paid and
nonassessable. Each Borrower owns beneficially and of record and has good title
to all equity indicated as being owned by it on said Schedule 3.1(b), free and
clear of any Lien, except for Liens in favor of the Administrative Agent, as
agent for the benefit of the Secured Parties, as contemplated by the Loan
Documents and other Permitted Liens. There are no options, warrants, calls, or
similar rights relating to equity of the Borrowers. No Excluded Subsidiary has
any equity interest in any Borrower.
-29-
<PAGE>
(c) Authorization, Execution and Binding Effect of Loan Documents.
Each Borrower has the 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 (as the case may be) proceedings on its part. This Agreement and
each other Loan Document has been duly and validly executed and delivered by
each Loan Party listed on the signature pages hereto or thereto, as the case may
be. This Agreement and each other Loan Document constitutes the legal, valid and
binding obligation of each Loan Party purporting to be a party hereto or
thereto, as the case may be, enforceable against such Person in accordance with
its terms, except as the enforceability hereof of 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.
(d) Security. The Pledge Agreement creates in favor of the
Administrative Agent for the benefit of the Secured Parties a legal, valid and
enforceable Lien on all right, title and interest of each Borrower in the
Collateral described therein, and the Administrative Agent has (or, upon the
filing of the UCC-1 financing statements delivered by the Borrowers on the
Closing Date, will have), for the benefit of the Secured Parties, a fully
perfected and continuing first priority Lien on all of the right, title and
interest of each Borrower in the Collateral described in the Pledge Agreement,
subject to no Liens other than Permitted Liens.
(e) Governmental Approvals and Filings; Absence of Conflicts. No
approval, order, consent, authorization, exemption or other action by, or
filing, recording or registration with, or notice to, any Governmental Authority
or other Person is necessary in connection with, the execution and delivery of
any Loan Document by any Loan Party, or in connection with the performance of
the terms hereof or thereof by such Person, other than the filing of Uniform
Commercial Code financing and continuation statements as referred to in the
Pledge Agreement. No Loan Party is subject to any Law which purports to restrict
or regulate its ability to borrow money, obtain credit or provide a guarantee or
other form of credit support as a consequence of the nature of the business
conducted by such Loan Party. Neither the execution and delivery of this
Agreement or any other Loan Document by any Loan Party, nor the performance of
or compliance with the terms and conditions hereof or thereof (including the
execution, delivery and performance of the Transaction Documents) by any Loan
Party does or will
(i) violate or conflict with any Law or any judgment, decree,
or order of a court or Governmental Authority or any settlement
agreement,
(ii) violate, conflict with or result in a breach of any term
or condition of, or constitute a default under, or cause an
acceleration of, or result in the creation or imposition of any Lien
upon any of property of any Loan Party (except for any Lien in favor
of the Administrative Agent pursuant to the Pledge Agreement) under
or in connection with,
-30-
<PAGE>
(x) its articles or certificate of incorporation or
bylaws, partnership agreement or operating agreement (or other
constituent documents),
(y) any agreement or instrument creating, evidencing or
securing any Indebtedness in the aggregate amount of
$250,000.00 or more to which any Loan Party is a party or by
which it or any of its properties (now owned or hereafter
acquired) may be subject or bound, or
(z) any other agreement or instrument or arrangement to
which it is a party or by which it or any of its properties
(now owned or hereafter acquired) may be subject or bound,
except, in the case of the foregoing clause (z), for matters that,
individually or in the aggregate, could not have a Material Adverse
Effect, or
(iii) result in a Limitation on any Licenses applicable to the
operations or properties of any Borrower, or adversely affect the
ability of any Borrower to participate in any Third Party Payor
Arrangement.
(iv) except to the extent that the failure to obtain the same
could not have a Material Adverse Effect, no approval, order,
consent of, authorization, exemption or other action by, or filing,
recording or registration with, or notice to, any Governmental
Authority or other Person is necessary in connection with the Tender
Offer and merger of Acquisition Corp. into Multicare except such
consents as are listed on Schedule 3.1(e) hereto all of which have
been obtained and are in full force and effect.
(f) Financial Statements. Multicare has heretofore furnished to the
Administrative Agent and each Lender consolidated balance sheets of Multicare
and its consolidated Subsidiaries as of December 31, 1996 and December 31, 1995
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 Multicare,
who delivered an unqualified opinion in respect thereof. Such financial
statements (including the notes thereto) present fairly the financial condition
of Multicare 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. Multicare has heretofore
furnished to the Administrative Agent, the Issuer and each Lender interim
consolidated balance sheets of Multicare and its consolidated Subsidiaries as of
the first two fiscal quarters of the fiscal year beginning January 1, 1997,
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), as well as
those financial statements
-31-
<PAGE>
delivered pursuant to paragraph (q) of Section 2.1 above, present fairly the
financial condition of Multicare and its consolidated Subsidiaries (or Persons
referred to therein) as of the date specified and the results of their
operations and their cash flows for the fiscal periods specified, all in
conformity with GAAP, subject to normal and recurring year-end audit
adjustments, except that such financial statements do not contain all of the
footnote disclosures required by GAAP. There are no material liabilities of the
Borrowers except as disclosed on such financial statements. Schedule 6.1 hereto
sets forth, as of the Closing Date, all Indebtedness (and commitments for
Indebtedness) of the Borrowers.
(g) Projections. The projections delivered pursuant to Section
2.1(q) above and the assumptions and estimates referred to therein are as of the
Closing Date reasonable, are made in good faith, are consistent with the Loan
Documents and represent the Borrowers' best judgment as to such matters. Nothing
has come to the attention of any Borrower which would lead such Borrower to
believe that such projections will not be attained or exceeded provided,
however, that nothing contained in this paragraph (g) shall constitute a
representation or warranty that such future financial performance or results of
operations will in fact be achieved.
(h) Absence of Material Adverse Change. Since December 31, 1996,
there has been no material adverse change in the business, operations, condition
(financial or otherwise), properties or prospects of the Borrowers taken as a
whole or the industry served by the Borrowers.
(i) Title to Property. Each Borrower has good and marketable title
to all property owned or purported to be owned by it, including but not limited
to all property reflected in the most recent balance sheets delivered to the
Lenders pursuant to this Agreement (except such property as was sold or
otherwise disposed of in accordance with Section 6.5 (Dispositions) below)
subject to no Liens except Permitted Liens. Schedule 6.2 hereto sets forth, as
of the Closing Date, all Liens on property of the Borrowers.
(j) Solvency. The present fair saleable value of the assets of the
Borrowers, taken as a whole, after giving effect to all the transactions
contemplated by the Loan Documents and the funding of the Loans and the issuance
of the Letters of Credit hereunder exceeds the amount that will be required to
be paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of such Borrowers, taken as a whole, as they mature.
Multicare does not intend to, nor does Multicare believe that it will, incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be received by Multicare, and of amounts to be
payable on or in respect of debt of Multicare). The property of each Borrower
does not constitute unreasonably small capital for such Borrower to carry out
its business as now conducted and as proposed to be conducted including the
capital needs of such Borrower. The cash available to each Borrower after taking
into account all other anticipated uses of the cash of such Borrower, is
anticipated to be sufficient to pay all such amounts on or in respect of debt of
such Borrower when such amounts are required to be paid.
-32-
<PAGE>
(k) Accurate and Complete Disclosure. The information heretofore,
contemporaneously or hereafter provided in writing by or on behalf of any
Borrower to any Lender Party pursuant to or in connection with this Agreement or
any other Loan Document 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 Lender Party) and does not or will not (as the
case may be) omit to state any material fact necessary to make such information
not misleading at such time in light of the circumstances in which it was
provided.
(l) Legal and Administrative Proceedings. There is no action, suit,
litigation or proceeding pending, or to the knowledge of the Borrowers,
threatened nor, to the knowledge of the Borrowers, is there any investigation
pending or threatened, in any court or before any arbitrator or Governmental
Authority or any payor appeals bodies respecting or relating to any Borrowers
(or any officer or director thereof) or any property of any Borrowers that,
individually or in the aggregate, (i) could have a material adverse effect on
the business, condition (financial or otherwise), operations, properties or
prospects of the Borrowers taken as a whole or (ii) could materially adversely
affect the Lenders' rights and remedies hereunder or under the other Loan
Documents, this Agreement or other Loan Documents or the ability of the
Borrowers to perform their obligations hereunder or thereunder.
(m) Absence of Violations and Conflicts. No Borrower is in violation
of, in default under, or is subject to any contingent liability on account of
any violation of or conflict with: (i) any Law; (ii) its articles or certificate
of incorporation, bylaws, partnership agreement, operating agreement (or other
constituent documents); or (iii) any financing agreement or other 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 (i) or (iii) above for matters that, individually or in the aggregate,
could not have a Material Adverse Effect.
(n) Operation of Health Care Facilities.
(i) Except where the failure to possess the same, either
individually or in the aggregate, could not have a Material Adverse Effect, each
Borrower possesses all Licenses and Reimbursement Approvals necessary to operate
its Health Care Business substantially as now operated and as presently proposed
to be operated. No Borrower is in material violation of the terms of its
Licenses and Reimbursement Approvals.
(ii) Except for Limitations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
there is no threatened or pending Limitation of any material License or
Reimbursement Approval relating to the operation of any of Borrowers' Health
Care Businesses.
-33-
<PAGE>
(iii) Except where the failure to file same, either
individually or in the aggregate, could not have a Material Adverse Effect, each
of the Borrowers has caused there to be accurately prepared and filed (or
obtained extensions for) all applicable cost reports with respect to any and all
Third Party Payor Arrangements that are material to conduct its Health Care
Businesses substantially as now conducted.
(iv) No Borrower is subject to any claim (including any claim
for overpayment), litigation, proceeding or other action or, to any Borrower's
knowledge, investigation relating to a claim or action by any Governmental
Authority, except matters that, if adversely decided, individually or in the
aggregate, could not have a Material Adverse Effect.
(v) Each of the Borrowers participates in an internal
comprehensive compliance program respecting compliance with all Laws affecting
the types of business carried on by Borrowers (including health care Laws) and
has made such program available for review by any Lender, upon request.
(vi) Each of the foregoing statements in this paragraph (n)
are also true as applied to Persons managed by any Borrower to the extent that
the failure of any such statement to be true (as applied to any Person managed
by a Borrower) could have a Material Adverse Effect.
(o) Management Agreements. Schedule 3.1(o) sets forth as of the
Closing Date, a complete and correct list of all Management Agreements relating
to (i) the operation and management by a Person that is not a Borrower of each
health care facility owned by a Borrower and (ii) the operation and management
by a Borrower of each health care facility owned by a Person that is not a
Borrower. As of the Closing Date, each such Management Agreement is in full
force and effect subject to no material default.
(p) Health Care Business. Schedule 3.1(p) sets forth, as of the
Closing Date, a complete and correct list of all Health Care Businesses owned or
operated by the Borrowers and the locations thereof indicating which such Health
Care Businesses are operated but not owned.
(q) Leased Properties. Schedule 3.1(q) identifies all properties
leased by any Borrower as of the Closing Date. As of the Closing Date, all
leases relating to such leased properties are in full force and effect subject
to no material default. Such leases comply with the provisions of Section 6.7
below.
(r) Intellectual Property. 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 computer programs and software), processes, data bases and other
rights (collectively, "intellectual property"), free from burdensome
restrictions, necessary to own and operate its properties and to carry on its
-34-
<PAGE>
business as presently conducted and presently planned to be conducted without
conflict with the rights of others. No Borrower is in material violation of the
rights of others with respect to any intellectual property.
(s) Employee Benefits/ERISA.
(i) The Borrowers and the members of their Controlled Groups
maintain only those Defined Benefit Pension Plans, Defined Contribution Plans
and other Plans listed on Schedule 3.1(s) attached hereto and contribute to only
those Multiemployer Plans listed on Schedule 3.1(s).
(ii) Each Defined Benefit Plan and Defined Contribution Plan,
as most recently amended, including amendments to any trust agreement, group
annuity, or insurance contracts, or other governing instrument, is the subject
of a favorable determination letter by the Internal Revenue Service with respect
to its qualification under ss.401(a) of the Code.
(iii) All Plans comply, both in form and in operation, with
the requirements of the Code and ERISA.
(iv) There is not now, and has not been, any material
violation of the Code or ERISA with respect to the filing of applicable reports,
documents, and notices regarding any Plan with the Secretary of Labor, the
Secretary of the Treasury, the PBGC or any other governmental entity or the
furnishing of such documents to the participants or beneficiaries of any Plan.
Borrowers have furnished to the Lenders copies of the most recent annual report,
audited financial statements, and other reports filed with the Secretary of
Labor, the Secretary of the Treasury, the PBGC or any other governmental entity
with respect to each Plan.
(v) All Pension Plans, as of the date hereof, meet the minimum
funding standards of ss.412 of the Code and ss.302 of ERISA without regard to
any funding waiver. Borrowers and the members of their Controlled Group have, as
of the date hereof, made all contributions or payments to or under Pension Plans
required by the terms of any such Plan or any contract or agreement.
(vi) No Material liability to the PBGC has been, or is
expected by any Borrower or any member of its Controlled Group to be, incurred
by the Borrower or any member of its Controlled Group.
(vii) No Defined Benefit Pension Plan has any Amount of
Unfunded Benefit Liabilities except as listed on Schedule 5.1(s) which, in the
aggregate, do not exceed $500,000.00.
-35-
<PAGE>
(viii) No trust was established in connection with any Defined
Benefit Pension Plan pursuant to ss.4049 of ERISA (as in effect on December 17,
1987) and no liabilities (whether or not such liability is being litigated) have
been asserted against any Borrower or any member of its Controlled Group in
connection with any such Defined Benefit Pension Plan by the PBGC or by a
trustee appointed pursuant to ss.4042(b) or (c) of ERISA, and no lien has been
attached and no person has threatened to attach a lien on any property of any
Borrower or any member of its Controlled Group as a result of any failure to
comply with the Code or ERISA.
(ix) No Prohibited Transaction has occurred with respect to
any Plan.
(x) No Reportable Event has occurred with respect to any
Defined Benefit Plan.
(xi) No Borrower or any member of its Controlled Group has any
unfunded liabilities of unfunded and uninsured "employee welfare benefit plans"
(as defined in ss.3(1) of ERISA).
(xii) There is not now, and has not been, any COBRA Violation
with respect to any Plan to which such continuation coverage requirements apply
which has a material adverse effect, directly or indirectly, on the financial
condition of any of the Borrowers.
(xiii) Borrowers and the members of their Controlled Group
have established only those irrevocable trusts the assets of which remain
subject to the general creditors of Borrowers and/or members of their Controlled
Group (sometimes referred to as "rabbi trusts") listed on Schedule 3.1(s)
attached hereto and have furnished to the Lenders copies of each such "rabbi
trust."
(xiv) If any Borrower or any member of its Controlled Group
were obligated to pay the entire potential Withdrawal Liabilities for which any
of them would be liable if each of them were to withdraw from the Multiemployer
Plans to which any of them makes contributions, such obligations would not be in
excess of $500,000.00.
(xv) Borrowers and the members of their Controlled Group have
complied with the requirements of ss.515 of ERISA with respect to Multiemployer
Plans.
(t) Environmental Matters.
(i) Each Borrower and each of its respective Environmental
Affiliates is and has been, in full compliance with all applicable
Environmental Laws, except for matters which, individually or in the
aggregate, could not have a Material Adverse Effect. There are no
circumstances that may prevent or interfere with such full
compliance now or in the future.
-36-
<PAGE>
(ii) Each Borrower and each of its 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, in the future, except
for matters which, individually or in the aggregate, could not have
a Material Adverse Effect.
(iii) 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 Environmental Affiliates of Borrowers) that could form the
basis of any Environmental Claim against any Borrower or any such
Environmental Affiliates, except for matters which, if adversely
decided, individually or in the aggregate, could not have a Material
Adverse Effect.
(iv) No facility or property now or previously owned, operated
or leased by any Borrower or any of their respective Environmental
Affiliates is an Environmental Cleanup Site. No Borrower and none of
their respective Environmental Affiliates has directly transported
or disposed of or arranged for the transportation or disposal 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.
(u) Margin Regulations. No proceeds of any Loan hereunder will be
used for the purpose of purchasing 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 purchasing or carrying any "margin stock". Neither the making of any
Loan or issuance of any Letter of Credit nor any use of proceeds of the Loans
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.
(v) 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.
-37-
<PAGE>
(w) 1997 Subordinated Notes. Multicare hereby confirms that the Loan
Obligations are "Senior Indebtedness" and hereby designates the Loan Obligations
as "Designated Senior Indebtedness" under the 1997 Subordinated Note Indenture.
All of the Loan Obligations constitute and will constitute "Senior Indebtedness"
and "Designated Senior Indebtedness" within the meaning ascribed to such terms
in such indenture. The subordination provisions therein are enforceable against
the respective issuers thereunder and the holders, from time to time, of the
1997 Subordinated Notes. The respective issuers are not in default under any
such indenture.
(x) Certain Documents and Transactions. Each of the Transaction
Documents (including the Multicare Management Agreement), and the Tax Sharing
Agreement are in full force and effect and no amendments, modifications or
supplements have been made to any such documents as the same were delivered to
the Agents pursuant to Article 2 above, except such amendments, modifications or
supplements to Transaction Documents as could not reasonably be expected to have
an adverse effect on any Borrower (including the condition, financial or
otherwise, properties or prospects of such Borrower), the Loan Documents or any
Lender Parties and supplements or amendments to the Tax Sharing Agreement
necessary to join any other Subsidiaries of Multicare which may hereafter be
consolidated with Multicare for tax purposes. There exists no default under any
such agreements except for immaterial breaches.
(y) Labor Matters. There are no existing, or, to the best of
Borrowers' knowledge, threatened or contemplated, strikes, slowdowns, picketing
or work stoppages by any employees against any Borrower, any lockouts by any
Borrower of any of its employees or any labor trouble or other occurrence, event
or condition of a similar character which individually or in the aggregate,
could have a Material Adverse Effect.
3.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE. The
representations and warranties of the Borrowers set forth in this Article 3 are
unaffected by any prior or subsequent investigation by, or knowledge of, any
Agent or any Lender.
-38-
<PAGE>
ARTICLE 4
AFFIRMATIVE COVENANTS
So long as any Loan Obligation shall remain unpaid or any Lender
shall have any Commitment under this Agreement, each of the Borrowers shall
comply with the following covenants.
4.1 REPORTING REQUIREMENTS.
(a) Annual Financial Statements. As soon as practicable, and in any
event within 90 days after the close of each fiscal year of Multicare, Multicare
(on behalf of the Borrowers) shall furnish to the Administrative Agent and each
Lender, audited (i) consolidated statements of income, cash flows and changes in
stockholders' equity of Multicare and its consolidated Subsidiaries (the
"Multicare Group") for such fiscal year and a consolidated balance sheet of such
Persons as of the close of such fiscal year. If at any time the Cash Flow of the
Excluded Subsidiaries in the aggregate exceeds 3.0% of the Cash Flow of
Multicare and its consolidated Subsidiaries, Multicare on behalf of the
Borrowers shall furnish statements of income, cash flows and changes in
stockholders equity of the Borrowers, on a consolidated basis, for such fiscal
year and a balance sheet of such Persons, on a consolidated basis, as of the
close of such fiscal year, in lieu of the requirements of the preceding
sentence; and (ii) statements of income, cash flows and changes in stockholders
equity of Genesis and its Subsidiaries (including the Multicare Group), on a
consolidated basis, for such fiscal year and a balance sheet of Genesis and its
Subsidiaries, on a consolidated basis, as of the close of such fiscal year, and
with respect to all of the foregoing financial statements referred to above
setting forth the appropriate footnotes, 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 unqualified opinion in form
and substance satisfactory to the Administrative Agent of independent certified
public accountants of recognized national standing selected by the Borrowers and
satisfactory to the Administrative Agent.
(b) Quarterly Financial Statements. As soon as practicable, and in
any event within 45 days after the close of each fiscal quarter of each fiscal
year of Multicare, Multicare, on behalf of the Borrowers, shall furnish to the
Administrative Agent, the Issuer and each Lender, the following unaudited
financial statements:
(i) consolidated statements of income, cash flows, and
changes in stockholders' equity of the Multicare Group for such fiscal quarter
and the applicable year to date period, and a consolidated balance sheet of such
Persons as of the close of such fiscal quarter. If at any time the Cash Flow of
the Excluded Subsidiaries in the aggregate exceeds 3.0% of the Cash Flow of
Multicare and its Subsidiaries, Multicare, on behalf of the Borrowers, shall
furnish statements of income, cash flows and changes in stockholders equity
-39-
<PAGE>
of the Borrowers, on a consolidated basis, for such fiscal quarter and
applicable year-to-date period, in lieu of the requirements of the preceding
sentence; and
(ii) statements of income, cash flows and changes in
stockholders' equity for Genesis and its Subsidiaries (including the Multicare
Group), on a consolidated basis, for such fiscal quarter, together with the
applicable year to date period and a balance sheet of such Persons on a
consolidated basis as of the end of such fiscal quarter, 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 of the prior fiscal year end), together with a consolidating
schedule showing the financial information respecting Multicare and its
Subsidiaries, the financial information respecting Genesis and its Subsidiaries
and any adjustments made to reconcile the financial information of Multicare and
its Subsidiaries and Genesis and its Subsidiaries, on a consolidated basis. Such
financial statements shall be certified by the chief financial officer or other
Responsible Officer of Multicare 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) Quarterly Compliance Certificates. Multicare, on behalf of the
Borrowers, shall deliver to the Administrative Agent, the Issuer and each
Lender, an Officer's Compliance Certificate concurrently with the delivery of
the financial statements referred to in paragraph (a) of this Section 4.1 (with
respect to the fiscal year, and paragraph (b) of this Section 4.1 (with respect
to the first three fiscal quarters). Each such Officer's Compliance Certificate
shall include among other things referred to therein the calculations necessary
to demonstrate the Borrowers' compliance with the covenants set forth in Article
5 hereof. In addition, the Officers' Compliance Certificate shall show the
calculations necessary to confirm compliance with the financial covenants set
forth in Section 4.03 of the 1997 Subordinated Note Indenture. The Officer's
Compliance Certificate delivered pursuant to this paragraph (c) shall include a
reconciliation of the financial information set forth thereon respecting
Multicare and its Restricted Subsidiaries and that set forth on the financial
statements for Multicare and its consolidated Subsidiaries.
(d) Other Information To Be Delivered Annually. Multicare, on behalf
of the Borrowers, shall deliver to the Administrative Agent, the Issuer and each
Lender, the following: (i) annually, within one hundred twenty (120) days of the
end of the Borrowers' fiscal year, an accountants' management letter provided by
independent certified public accountants satisfactory to the Administrative
Agent, and (ii) annually, no later than ninety (90) days prior to the
commencement of each fiscal year of the Borrowers, an annual budget, setting
forth in reasonable detail, expected sources and uses of funds, for the fiscal
year then beginning in form and substance satisfactory to the Administrative
Agent.
-40-
<PAGE>
(e) SEC Filings and Other Disclosure. Promptly upon their becoming
available to any Borrower but no later than ten Business Days after the same are
filed with the Securities Exchange Commission or any securities exchange,
Multicare, on behalf of the Borrowers, shall deliver to the Administrative
Agent, 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 of its Affiliates shall file with the Securities and Exchange Commission or
any securities exchange, (ii) all reports, proxy statements, financial
statements and other information distributed by any Borrower or any of its
Affiliates to its stockholders, bondholders or the financial community
generally, (iii) all accountants' management letters (not otherwise delivered
pursuant to the preceding paragraph (d)) and all other reports submitted by
accountants in connection with any audit of any Borrower, and (iv) copies of all
compliance certificates and notices delivered to or from the trustees under the
1997 Subordinated Note Indenture.
(f) Notice of Certain Events. Promptly upon any Borrower becoming
aware of any of the following, such Borrower or Multicare, on behalf of the
Borrowers, shall give the Administrative Agent notice thereof, together with a
written statement setting forth the details thereof and any action with respect
thereto taken or proposed to be taken by any Borrower:
(i) Loss of Licenses or Reimbursement Approvals. Any actual
Limitation (other than in the ordinary course of business) or any
threatened Limitation (to the extent that it individually or in the
aggregate with all other actual or threatened Limitations is
material) of any License or Reimbursement Approval relating to the
operation of a Health Care Business or, if the same individually or
in the aggregate could have a Material Adverse Effect, any
Limitation of any License or Reimbursement Approval of any Person
managed by any Borrower;
(ii) Default. Any Event of Default or Default;
(iii) Material Adverse Change. Any material adverse change in
the business, operations, or condition (financial or otherwise), or
prospects of any Borrower;
(iv) Material Litigation. Any pending or threatened action,
suit, proceeding or investigation by or before any Governmental
Authority against or affecting any Borrower (or any officer or
director thereof) or any property of any Borrower, except for
matters that if adversely decided, individually or in the aggregate,
could not have a Material Adverse Effect;
(v) Breach or Termination of Certain Agreements. Any breach,
claimed breach, termination, or purported or threatened termination
(including a copy of any notice of termination) of (A) the Multicare
Management
-41-
<PAGE>
Agreement, (B) any other Transaction Document (except a termination
in accordance with its terms), (C) any other Management Agreement
except in the ordinary course of business, (D) the 1997 Subordinated
Note Indenture (including a copy of any notice of default delivered
thereunder), or (E) any other agreement or instrument material to
the business, operations, condition (financial or otherwise) or
prospects of Multicare and its Restricted Subsidiaries taken as a
whole.
(vi) ERISA.
(A) Any taxes, penalties, interest charges and other
financial obligations in excess of $250,000.00
that have been assessed or otherwise imposed or
which any Borrower has reason to believe may be
assessed or otherwise imposed in excess of
$250,000.00, against any Borrower or any member of
its Controlled Group by the Internal Revenue
Service, the PBGC, the Department of Labor or any
other governmental entity with respect to any Plan
or Multiemployer Plan;
(B) Any application for a waiver by a Borrower or any
member of its Controlled Group of the minimum
funding standard under ss.412 of the Code with
respect to a Pension Plan;
(C) The adoption of any Plan, including but not
limited to a Defined Benefit Pension Plan, or any
obligation to contribute to any Multiemployer Plan
by a Borrower or any member of its Controlled
Group;
(D) Any Prohibited Transaction with respect to a Plan.
(E) (1) that any Reportable Event has or will occur
with respect to any Defined Benefit Pension Plan
maintained by any Borrower or any member of its
Controlled Group, (2) that any Defined Benefit
Pension Plan maintained by any Borrower or any
member of its Controlled Group is to be terminated
in "distress termination" (within the meaning
ofss.4041(c) of ERISA), (3) that the PBGC has
instituted or will institute proceedings under
Title IV of ERISA to terminate any Defined Benefit
Pension Plan maintained by any Borrower or any
member of its Controlled Group, (4) that any
Borrower has incurred Withdrawal Liability
-42-
<PAGE>
from a Multiemployer Plan maintained by it or any
member of its Controlled Group, (5) that any
Multiemployer Plan to which any Borrower or any
member of its Controlled Group has made
contributions is or will be in Reorganization, or
(6) that any other condition exists with respect
to a Defined Benefit Pension Plan or Multiemployer
Plan which presents a material risk of termination
of any such Plan, Borrowers will furnish a
statement to the Lenders setting forth the details
of such Reportable Event, distress termination,
termination proceedings, Withdrawal Liability,
Reorganization or condition, and the action that
Borrowers propose to take with respect thereto,
together with a copy of any notice of such
Reportable Event or distress termination given to
the PBGC, or a copy of any notice of termination
proceedings, Withdrawal Liability or
Reorganization received by such Borrower or any
member of its Controlled Group.
(F) any default by any Borrower or any member of its
Controlled Group (as defined in ss.4219(c)(5) of
ERISA) with respect to payments to a Multiemployer
Plan required by reason of its withdrawal (as
defined in ss.4203 or ss.4205 of ERISA).
(G) any action brought against any Borrower or any
member of its Controlled Group under ss.502 of
ERISA with respect to its failure to comply with
ss.519 of ERISA.
(vii) Environmental. Any Environmental Claim pending or
threatened against any Borrower or any of its 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 of its 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.
(g) Other ERISA Information. The Borrowers shall deliver to the
Administrative Agent copies of the following:
-43-
<PAGE>
(A) Promptly after the filing thereof with the Secretary of
Labor, the Secretary of the Treasury, the PBGC or any
other governmental entity, copies of each annual report,
each audited financial statement and any other report so
filed with respect to each Plan.
(B) As soon as possible (and in any event within five days)
after the receipt by any Borrower or any member of its
Controlled Group of a demand letter from the PBGC
notifying any Borrower or any member of its Controlled
Group of the final decision finding liability and the
date by which such liability must be paid, Borrowers
will furnish to the Lenders a copy of such letter
together with a statement to the Lenders setting forth
the action which Borrowers propose to take with respect
thereto.
(C) Borrowers will furnish to the Lenders as soon as
possible after receipt thereof a copy of any notice that
any Borrower or any member of its Controlled Group
receives from the PBGC, the Internal Revenue Service,
the Department of Labor or any other governmental entity
or the sponsor of any Multiemployer Plan that sets forth
or proposes any action to be taken or determination made
by the PBGC, the Internal Revenue Service, the
Department of Labor or any other governmental entity or
the sponsor of any Multiemployer Plan with respect to
any Plan.
(h) Amendments to Transaction Documents. Multicare (on behalf of the
Borrowers) shall furnish the Administrative Agent copies or drafts of all
proposed amendments, modifications or waivers to any Transaction Documents (1)
in the case of any amendments, modifications or waivers requiring the consent of
the Required Lenders at least 20 Business Days prior to the effective date
thereof and (2) in all other cases, at least 5 Business Days prior to the
effective date thereof.
(i) Non-Renewal of Management Agreement. Multicare, on behalf of the
Borrowers shall give the Administrative Agent written notice promptly upon
receipt of delivery of any notice of non-renewal or termination delivered under
or relating to the Multicare Management Agreement. The Administrative Agent
shall give each Lender a copy of any notice delivered pursuant to this paragraph
(i).
(j) Notices under Indenture. Multicare, on behalf of the Borrowers
shall furnish to the Administrative Agent copies of all notices, reports,
certificates or other material delivered to or by the trustee or any other party
under the 1997 Subordinated Note Indenture, promptly upon receipt thereof.
-44-
<PAGE>
(k) Other Information. In addition, the Borrowers will promptly
furnish to the Administrative Agent such other information as any Lender Party,
through the Administrative Agent, may reasonably request including information
submitted by the Borrowers or the Surety to any Governmental Authority and the
Administrative Agent will furnish such information to the requesting Lender
Party.
4.2 MAINTENANCE OF EXISTENCE. Each Borrower shall preserve and
maintain, its corporate or partnership existence, as the case may be, and good
standing in the jurisdiction of its organization, provided, however, upon giving
written notice to the Administrative Agent, the Borrowers may dissolve any
Subsidiary if (a) such Subsidiary is not (either individually or in the
aggregate with all other entities dissolved pursuant to this proviso) a material
Borrower (or material Borrowers) and (b) Multicare determines that it is in the
best interest of the Borrowers, taken as a whole, that such Subsidiary be
dissolved. Multicare and (to the extent that any failure to qualify or remain
qualified could have a Material Adverse Effect) each Restricted Subsidiary,
shall qualify and remain qualified as a foreign corporation or partnership in
each jurisdiction in which such qualification is required, provided, however
nothing in this Section 4.2 shall prohibit any sales or other dispositions
permitted under Section 6.5.
4.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES AND OTHER PROPERTY.
(a) Type of Business. Each Borrower shall continue to engage in the business of
the same general type as conducted by the Borrowers on the Closing Date and not
engage in any other type of business without the consent of the Required
Lenders.
(b) Healthcare and Regulatory Rights. Except where the failure
to take any of the following actions, individually or in the aggregate, could
not have a Material Adverse Effect, each Borrower shall (i) maintain in effect
all Licenses and Reimbursement Approvals necessary or appropriate to own and
operate all Health Care Businesses which it owns or operates and (ii) obtain all
Licenses and Reimbursement Approvals necessary or appropriate to own and operate
all Health Care Businesses which it acquires and (iii) continue its
participation in any and all Third Party Payor Arrangements. Except where such
failure to so comply (together with all other failures from time to time by the
same or other Borrowers) could not reasonably be expected to have a Material
Adverse Effect, each Borrower shall comply with any and all rules, regulations,
standard procedures and decrees necessary to maintain its participation in any
such Third Party Payor Arrangements and prepare and file, all applicable cost
reports with respect to all Third Party Payor Arrangements to the extent
required thereby. Each Borrower shall use its best efforts to cause each Person
managed by it to obtain and maintain its Licenses and Reimbursement Approvals
necessary for the conduct of its business and to continue its participation in
Third Party Payor Arrangements and comply with all rules, regulations, standard
procedures and decrees relating thereto to the extent that the failure to do so
could have a Material Adverse Effect.
-45-
<PAGE>
(c) Maintenance of Property. Each Borrower shall maintain,
keep and preserve all of its property necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted (except for sales and other dispositions of property permitted under
Section 6.5 below (Dispositions)). Without limiting the generality of the
foregoing, each Borrower shall maintain in full force and effect each lease,
Management Agreement and other material agreement used or useful in its
business, subject to no material default except where the loss of, or default
under, such lease, Management Agreement or other agreement (i) could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (ii) is not otherwise prohibited by the terms of this
Agreement.
4.4 MAINTENANCE OF RECORDS; FISCAL YEAR. Each Borrower shall keep adequate
records and books of account, in which complete entries will be made in
accordance with historical practice and GAAP, reflecting all financial
transactions of the Borrowers. Each Borrower shall maintain, and shall cause the
Surety to maintain, a fiscal year end of December 31.
4.5 COMPLIANCE WITH LAWS. Each Borrower shall comply (and maintain
procedures to assure compliance) in all material respects with all applicable
Laws (including environmental and health care Laws) and all judgments, decrees
or orders of any court or Governmental Authority and all settlement agreements.
Without limiting the generality of the foregoing, each of the Borrowers shall
maintain in full force and effect an internal compliance program respecting
compliance with all Laws affecting the types of businesses carried on by the
Borrowers (including healthcare Laws) and make such program available for review
by any Lender, upon request.
4.6 ERISA.
(a) Each Borrower will, and will cause each member of its Controlled
Group, to comply in all material respects with the provisions of ERISA and the
Code with respect to any Plan both in form and in operation.
(b) Each Borrower will cause to be made all contributions required
to avoid any Accumulated Funding Deficiency, whether or not waived, with respect
to any Pension Plan.
(c) No Borrower will adopt or permit the adoption by any member of
its Controlled Group of any Defined Benefit Pension Plan which would result in
any Amount of Unfunded Benefit Liabilities in excess of $500,000.00.
-46-
<PAGE>
(d) No Borrower will acquire, or permit the acquisition by any
member of its Controlled Group of, any trade or business which has incurred
either directly or indirectly any Amount of Unfunded Benefit Liabilities under
any Defined Benefit Pension Plan in excess of $500,000.00.
(e) The Borrowers will not permit with respect to any Plan, any
Prohibited Transaction or Prohibited Transactions under ERISA or the Code
resulting in liability of any Borrower or any member of its Controlled Group
which together with any other liabilities subject to this paragraph (e) would in
the aggregate be in excess of $500,000.00, unless such Borrower or any member of
its Controlled Group will be contesting in good faith and by appropriate
proceedings any such matter and measures are available and are being taken which
have the effect of preventing the seizure of property of such Borrower or any
member of its Controlled Group pending the outcome of such contest.
(f) No Borrower will withdraw, or permit any member of its
Controlled Group to withdraw, from any Multiemployer Plan to which any of them
may hereafter contribute if the Withdrawal Liability which would thereupon be
incurred would have a material adverse effect, directly or indirectly, on the
financial condition of any of the Borrowers.
(g) No Borrower will permit any unfunded liabilities of unfunded and
uninsured "employee welfare benefit plans" (as defined in ss.3(1) of ERISA) of
any Borrower and of any member of its Controlled Group in excess of $500,000.00
in the aggregate with all other liabilities subject to this paragraph (g).
(h) No Borrower will, or will permit any member of its Controlled
Group to, cause or suffer to exist a COBRA Violation with respect to any Plan to
which such continuation coverage requirements apply if the violation(s) could
result in a liability in excess of $500,000.00 in the aggregate.
4.7 RIGHT OF INSPECTION. Each Borrower shall, at any reasonable time and
from time to time, and upon reasonable advance notice (but no advance notice
shall be required if a Default or an Event of Default shall then exist), permit
the Administrative Agent or any Lender or any agent or representative thereof,
to examine and make copies and abstracts from the records and books of account
of, and visit and inspect the properties of, any Borrower, and to discuss the
affairs, finances and accounts of such Borrower with any of its officers,
directors and independent accountants.
4.8 INSURANCE. Each Borrower shall 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
-47-
<PAGE>
properties similarly situated, 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. The Borrowers shall have the
Administrative Agent named to receive certificates evidencing such insurance
annually at least thirty days prior to the anniversary date of such insurance
policies and any other time requested by the Administrative Agent.
4.9 PAYMENT OF TAXES AND OTHER CHARGES. Each Borrower shall
(a) on or prior to the date on which penalties attach thereto, pay
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, pay 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 need not pay or discharge any such tax, assessment,
charge or claim so long as (x) the validity thereof is being contested in good
faith and by appropriate proceedings diligently conducted and (y) such reserves
or other appropriate provisions as may be required by GAAP shall have been made
therefor.
4.10 SUBSIDIARIES TO BE BORROWERS. (a) Each Borrower shall cause all of
its Subsidiaries, other than Excluded Subsidiaries, at all times to be Borrowers
hereunder (by signing Joinder Supplements hereto, each a "Joinder Supplement"),
executing Notes or allonges thereto and taking such other action as the
Administrative Agent may reasonably request) and cause all the capital stock or
other equity interests in such Subsidiaries, other than Excluded Subsidiaries,
and all notes or other rights to receive payment from another Borrower to be
pledged to the Administrative Agent for the benefit of the Secured Parties
pursuant to the Pledge Agreement.
Without limiting the generality of the foregoing, when the Borrowers are
required, in connection with an Acquisition or otherwise, to cause one or more
(direct or indirect) Subsidiaries of Multicare (each, a "Joining Subsidiary") to
become Borrowers hereunder, then the Borrowers and each such Joining Subsidiary
shall take the actions set forth on Schedule 4.10, in the case of the formation
of a new Subsidiary, promptly upon such formation, and in the case of the
acquisition of an entity which shall become a Subsidiary, no later than the date
of the consummation of the relevant Acquisition.
(b) With the prior written consent of the Administrative Agent,
Multicare (on behalf of the Borrowers) may from time to time redesignate one or
more Subsidiaries which are designated as Excluded Subsidiaries on Schedule 11.1
to be Borrowers and Restricted Subsidiaries hereunder, Pledgors under the Pledge
Agreement and comparable
-48-
<PAGE>
parties under the other Loan Documents (and not Excluded Subsidiaries).
Thereupon and upon satisfaction of the requirements set forth in paragraph (a)
above for Joining Subsidiaries, such redesignated Subsidiaries shall be
Borrowers hereunder, Pledgors under the Pledge Agreement and comparable parties
to the other Loan Documents. The Administrative Agent shall give the Lenders
notice of any such redesignation.
4.11 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS. The
Borrowers shall comply with the terms of the 1997 Subordinated Note Indenture.
Each Borrower shall promptly take or cause Genesis to take, as appropriate, all
action necessary or requested by the Administrative Agent at any time to
protect, preserve and give effect to the status of the Loan Obligations as
"Senior Indebtedness" and "Designated Senior Indebtedness" within the meaning of
the 1995 Subordinated Note Indenture and the 1996 Subordinated Note Indenture
(if and when applicable to Multicare or the other Borrowers) and the 1997
Subordinated Note Indenture.
4.12 CORPORATE SEPARATENESS. Each Borrower shall observe all
requirements necessary to cause it to be treated as a separate legal entity for
all purposes under applicable corporate law. Without limiting the foregoing
requirement, each Borrower specifically shall (i) maintain and cause each
Excluded Subsidiary to maintain separate corporate and financial records and to
observe all corporate formalities; (ii) maintain, and cause each Excluded
Subsidiary to maintain, capitalization adequate to meet its business needs;
(iii) cause all reports, filings and public information to refer to such
Borrower or Excluded Subsidiary, as the case may be, as a separate company (and
not a division of each other); and (iv) otherwise conduct and cause each
Excluded Subsidiary to conduct its dealings with third parties in its own name
and as a separate and independent entity. Without limiting the generality of the
foregoing, except as expressly permitted or required elsewhere by this Agreement
or unless specifically agreed to by the Required Lenders, no Borrower may enter
into any merger or other combination with or transfer assets to Genesis or any
of its Subsidiaries, make any loan to, advance to, or other investment in
Genesis or any of its Subsidiaries, guarantee any Indebtedness or otherwise be
liable for obligations of Genesis or any of its Subsidiaries or any Excluded
Subsidiaries, provided, nothing in this Section 4.12 shall prohibit the
execution and delivery of the MultiCare Management Agreement or the Tax Sharing
Agreement or the transactions contemplated thereby. Notwithstanding the
foregoing, the Borrowers may make such Investments in, borrow money from, and
carry on other transactions with, Excluded Subsidiaries on an arm's length basis
to the extent that this Agreement permits the Borrowers to carry on such
activities with unrelated third parties.
4.13 TRANSACTIONS WITH AFFILIATES. Each Borrower shall effect all
transactions with Affiliates (excluding transactions with other Borrowers) on a
basis at least as favorable to such Borrower as would at the time be obtainable
for a comparable transaction on an arm's length dealing with an unrelated third
party, except that this Section 4.13 shall not apply to (a) the Tax Sharing
Agreement or (b) the Transaction Documents or
-49-
<PAGE>
(c) transaction fees and expenses payable to Genesis, Cypress and TPG within
seven days of the Closing Date, to the extent such are permitted by the 1997
Subordinated Note Indenture.
4.14 MERGER. The Borrowers and Acquisition Corp. shall use their best
efforts to cause the Merger to occur as soon after the Closing Date as
practicable in accordance with the terms of the Merger Agreement.
4.15 USE OF PROCEEDS. The Borrowers will apply the proceeds of the Loans
only (i) to refinance all of the existing Indebtedness of Multicare and its
Subsidiaries (including without limitation Indebtedness acquired by Multicare as
a result of its merger with Acquisition Corp.) except Indebtedness identified on
Schedule 6.1 hereto, (ii) to fund working capital and Capital Expenditure needs,
subject to the other limitations set forth in this Agreement, (iii) to fund
interest and principal payments on the Loans and other permitted Indebtedness,
(iv) to pay fees, expenses or any other amounts owing hereunder or under any
other Loan Document, and (v) for general corporate purposes.
4.16 CERTAIN DISPOSITIONS. On or before December 31, 1997, the
Borrowers shall sell to Genesis and/or one or more of its Subsidiaries (other
than the Surety or Multicare or any Subsidiary of either of them) their contract
therapy business for a cash purchase price of approximately $24,000,000.00 and
their institutional pharmacy business for a cash purchase price of approximately
$50,000,000.00, each on terms and conditions satisfactory to the Agents.
-50-
<PAGE>
ARTICLE 5
FINANCIAL COVENANTS
5.1 CERTAIN FINANCIAL COVENANTS. So long as any Loan Obligations shall
remain unpaid or any Lender has any Commitment under this Agreement, the
Borrowers shall comply with the following 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
------ -----
9/30/97 through 6/30/99 1.20
7/1/99 through 9/30/01 1.25
10/1/01 through 9/30/02 1.30
10/1/02 and thereafter 1.35
(b) Consolidated Net Worth. The total amount of stockholders' equity
of Multicare and the Restricted Subsidiaries, on a consolidated basis, at any
date of determination after the Agreement Date shall be not less than the sum of
(i) Six Hundred Eighty Five Million Dollars ($685,000,000.00)
plus
(ii) an amount equal to the sum of:
(A) an amount equal to the net proceeds of all
equity offerings of the Genesis ElderCare Corp. on a
cumulative basis commencing on the Agreement Date
through such date of determination, plus
(B) 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 Multicare and its
Restricted Subsidiaries, on a consolidated basis, for
the period commencing on the first day of the fiscal
quarter in which the Agreement Date occurs through the
last day of the fiscal quarter ending on, or most
recently prior to, such date of determination, plus
(C) any reduction in the amount of debt of
Multicare and its Restricted Subsidiaries as a result of
the conversion of convertible debt securities into
equity (excluding Multicare's Convertible Subordinated
7% Debentures).
-51-
<PAGE>
(c) Adjusted Total Debt/Cash Flow. The Adjusted Total Debt/Cash Flow
Ratio shall be not greater than the ratios set forth below during the periods
indicated below:
Period Ratio
------ -----
9/30/97 through 9/30/98 6.50
10/1/98 through 9/30/99 5.75
10/1/99 through 9/30/00 5.25
10/1/00 and thereafter 4.50
(d) Adjusted Senior Debt/Cash Flow. The Adjusted Senior Debt/Cash
Flow Ratio shall be not greater than the ratios set forth below during the
periods indicated below:
Period Ratio
------ -----
9/30/97 through 9/30/98 4.50
10/1/98 through 9/30/99 4.00
10/1/99 and thereafter 3.50
5.2 CALCULATION OF FINANCIAL COVENANTS. The financial covenants
set forth in this Article 5 shall be maintained continuously and 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 Multicare or any of its Restricted Subsidiaries and that is
permitted under Section 6.4 hereof (Acquisitions Etc.), the financial covenants
set forth in this Article 5 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 that
will no longer be incurred after the Acquisition, to the extent demonstrated by
Multicare to the satisfaction of the Administrative 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
Multicare to the satisfaction of the Administrative Agent. Following the
effective date of any disposition that is effected by Multicare or any of its
Restricted Subsidiaries and that is permitted under Section 6.5 hereof
(Dispositions), the financial covenants set forth in this Article 5 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. Following the Closing Date,
the financial covenants set forth in this Article 5 shall be computed on a pro
forma basis as if all transactions in connection with the Transaction Documents
had been consummated, including as if the Multicare Management Agreement had
been in effect since the first day of the earliest of the four fiscal quarters
ended on, or most recently prior to, the Closing Date. Unless otherwise agreed
to by the Required Lenders, the financial condition and results of operations of
the Excluded
-52-
<PAGE>
Subsidiaries shall not be combined with those of the Borrowers for purposes of
calculating the financial covenants set forth in this Article 5.
-53-
<PAGE>
ARTICLE 6
NEGATIVE COVENANTS
So long as any Loan Obligations shall remain unpaid or any Lender shall
have any Commitment under this Agreement, each of the Borrowers shall comply
with the following covenants.
6.1 INDEBTEDNESS. No Borrower shall, at any time, create, incur, assume or
suffer to exist any Indebtedness (including any Guaranties, Capitalized Leases
or Assumed Indebtedness), except:
(a) Indebtedness to the Lender Parties pursuant to this Agreement
and the other Loan Documents;
(b) Indebtedness constituting inter-Borrower loans and advances
evidenced by promissory notes duly pledged to the Administrative Agent for the
benefit of the Secured Parties pursuant to the terms of the Pledge Agreement;
(c) A guaranty of the obligations of Acquisition Corp. of its
obligations under the Acquisition Corp. Credit Agreement and a subordinated
guaranty of Acquisition Corp.'s obligations under the 1997 Subordinated Notes;
(d) Indebtedness (including the indebtedness under the 1997
Subordinated Notes) existing on the Closing Date acceptable to the Agents and
described on Schedule 6.1 hereto, which sets forth certain Indebtedness in a
principal amount not exceeding $300,000,000; and any extensions, renewals,
refinancings of the same so long as such extensions, renewals and refinancings
(i) are in a principal amount no greater than the amount the Indebtedness so
extended, renewed or refinanced, (ii) have maturity dates (and amortization
schedules) no earlier than the debt being refinanced, (iii) are incurred
pursuant to agreements or instruments which do not prohibit the Indebtedness or
Liens created pursuant to the Loan Documents or otherwise conflict with the
terms of the Loan Documents, and (iv) are not made at a time that a Default or
an Event of Default has occurred and is continuing or would be caused thereby.
(e) With respect to the Borrowers other Indebtedness incurred from
time to time, in an aggregate outstanding principal amount not to exceed Five
Million Dollars ($5,000,000.00) at any time so long as such Indebtedness is
incurred pursuant to agreements or instruments which do not cause a Default or
Event of Default hereunder, which contain terms and conditions no more onerous
than the terms and conditions hereof and which do not mature, or have principal
amortization prior to, the Maturity Date;
-54-
<PAGE>
(f) With respect to the Borrowers, Indebtedness in an aggregate
amount not to exceed $20,000,000 incurred to finance the construction of the of
the assisted living facilities identified on Schedule 6.1(f) attached hereto
provided that the Borrowers' obligations with respect to such Indebtedness shall
be terminated in connection with the disposition of such facilities as
contemplated in Section 6.5 (Dispositions) hereto;
(g) Provided that the terms of this Agreement and the consummation
of the transactions contemplated hereby and by the Transaction Documents are
consistent with, and do not cause a default under, Multicare's Convertible
Subordinated 7% Debentures or the Indenture under which they were issued,
Indebtedness evidenced by Multicare's Convertible Subordinated 7% Debentures in
the original principal amount of $86,250,000.00 of which no more than
$39,424,000 in principal amount shall remain outstanding as of the Closing Date,
provided that the Borrowers shall cause all such Indebtedness to be redeemed or
converted, by no later than March 16, 1998, at an aggregate cost to the
Borrowers (including amounts expended prior to, on and after the Closing Date)
not to exceed $122,000,000.00 plus interest through the redemption date;
(h) Provided that the terms of this Agreement and the consummation
of the transactions contemplated hereby and by the Transaction Documents are
consistent with, and do not cause a default under, Multicare's Senior
Subordinated 12-1/2% Notes on the Indenture under which they were issued,
Indebtedness evidenced by Multicare's Senior Subordinated 12-1/2% Notes in the
original principal amount of $100,000,000.00 of which no more than $75,000.00 in
principal amount shall remain outstanding as of the Closing Date provided that
the Borrowers shall cause all such Indebtedness to be redeemed by no later than
January 2, 1998, at an aggregate cost to the Borrowers (including amounts
expended prior to, on and after the Closing Date) not to exceed $26,000,000.00
plus interest through the redemption date.
provided, however, that all Indebtedness incurred pursuant to paragraph (e)
above shall be subject to the following: (i) it shall be incurred on terms which
do not prohibit the Indebtedness created pursuant to the Loan Documents, or
otherwise conflict with the terms hereof or the other Loan Documents; (ii) at
the time such Indebtedness is incurred, no Default or Event of Default shall
have occurred and be continuing or shall be caused or created thereby; (iii)
prior to the incurrence of such Indebtedness, Multicare (on behalf of the
Borrowers) shall deliver to the Administrative Agent a certificate of a
Responsible Officer of Multicare (A) stating the amount of such Indebtedness,
(B) containing a representation that such Indebtedness was incurred in
compliance with the provisions of this Section 6.1 and showing calculations
thereof, and (C) containing a representation that such Indebtedness was incurred
in compliance with the financial covenants set forth herein, in Section 5.9 of
the 1995 Subordinated Note Indenture and in Section 5.9 of the 1996 Subordinated
Note Indenture, if and when applicable to Multicare as set forth in Section
5.1(w), and the 1997 Subordinated Note Indenture and showing calculations
thereof; (iv) the terms of the instruments and agreements respecting such
Indebtedness shall be no more restrictive than the terms of this Agreement; and
(v) the instruments and agreements respecting such
-55-
<PAGE>
Indebtedness shall not contain provisions that would violate the terms of
Section 6.12 (Limitation on Certain Restrictive Provisions) below.
6.2 LIENS. No Borrower shall, at any time, create, incur, assume or suffer
to exist any Lien on any of its assets (now owned or hereafter acquired), except
for the following ("Permitted Liens"):
(a) Liens granted pursuant to the Loan Documents;
(b) Liens acceptable to the Agents and existing on the Closing Date
securing obligations existing on the Closing Date which Liens and obligations
are listed on Schedule 6.2 hereto (and any extension, renewal and replacement
Liens upon the same property theretofore subject to a listed Lien, provided that
(i) 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) and (ii) such replacement Liens are incurred pursuant to
agreements or instruments which do not prohibit the Liens or Indebtedness
created pursuant to the Loan Documents or otherwise conflict with the terms of
the Loan Documents);
(c) Liens arising from taxes, assessments, charges or claims
described in Section 4.9 hereof to the extent permitted by said Section 4.9,
provided that the aggregate amount secured by all Liens described in this clause
(c) shall not at any time exceed $500,000.00;
(d) Other Liens (other than on Collateral) securing Indebtedness
incurred pursuant to paragraph (f) of Section 6.1 above in an amount not to
exceed $20,000,000 in the aggregate;
(e) Liens in respect of property or assets of the Borrowers imposed
by law which were incurred in the ordinary course of business, such as
carriers', warehousemen's and mechanics' Liens, statutory landlord's Liens, and
other similar Liens arising in the ordinary course of business, and (i) which do
not in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the business of
the Borrowers taken as a whole or (ii) which are being contested in good faith
by appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such lien and that
adequate reserves have been set aside on the Borrower's books to protect against
an adverse result;
(f) Liens arising from judgments, decrees or attachments and Liens
securing appeal bonds arising from judgments, in each case in circumstances not
constituting an Event of Default under Section 7.1(g);
(g) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation,
-56-
<PAGE>
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money); and
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title to real property and other similar charges or
encumbrances on real property not interfering in any material respect with the
ordinary conduct of the business of the Borrowers taken as a whole or the value
or salability of the assets so encumbered or affecting their use for their
intended purposes;
(i) Liens existing on real estate and equipment acquired by any
Borrower in an Acquisition permitted under Section 6.4 hereof so long as any
such Lien secures only the corresponding Assumed Indebtedness permitted under
clause (e) of Section 6.1, above;
(j) With respect to the Borrowers other (i) purchase money Liens
encumbering only the property purchased with the proceeds from the corresponding
Indebtedness, and (ii) Capitalized Leases, in each case securing Indebtedness
permitted under clause (e) of Section 6.1 above;
provided, however, that no Lien permitted under clauses (d), (i) and (j) above
shall be created at any time, if there shall exist, either before or after
giving effect to such transaction, a Default or 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.
6.3 LOANS, ADVANCES AND INVESTMENTS. No Borrower shall, at any time (i)
make or suffer to exist 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 (collectively,
"Investments") any other Person, except:
(a) Receivables owing to such 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 to
subcontractors or suppliers under usual and customary terms in the ordinary
course of business;
(b) Loans from Multicare to a wholly-owned Restricted Subsidiary of
Multicare or loans from a wholly-owned Restricted Subsidiary of Multicare to
Multicare or another wholly-owned Restricted Subsidiary of Multicare, provided,
however, all such loans and advances shall be evidenced by promissory notes duly
pledged to the Administrative Agreement for the benefit of the Secured Parties
pursuant to the Pledge Agreement;
-57-
<PAGE>
(c) The capital stock or other ownership interests in other
Borrowers duly pledged to the Administrative Agent, for the benefit of the
Secured Parties;
(d) Cash Equivalent Investments; and
(e) Investments existing on the Closing Date in an amount not
greater than $20,050,000.00 which are listed on Schedule 6.3 hereto.
(f) Acquisitions permitted under Section 6.4 (Acquisitions) below;
(g) The capital stock or other ownership interests in the Excluded
Subsidiaries existing on the Closing Date and set forth on Schedule 9.1 hereto;
(h) With respect to the Borrowers other Investments not covered by
clauses (a) through (h) of this Section 6.3 provided, that
(i) at the time that any Investment is made, the aggregate
amount (which shall include all existing amounts and all new
commitments therefor) of all Investments pursuant to this paragraph
(i) shall not exceed $5,000,000.00; and
(ii) no Default or Event of Default shall then exist either
before or after giving effect to such transaction.
Investments referred to in paragraph (e) which are existing on the Closing Date
and the amount of each such Investment are listed on Schedule 6.3 hereto. On or
before (if practicable) but in any event within 5 days after any Investment is
made pursuant to the preceding paragraph (h), Multicare (on behalf of the
Borrowers) shall deliver to the Administrative Agent a supplement to Schedule
6.3 showing the proposed Investment, together with a certificate of a
Responsible Officer of Multicare stating that such Investment was made in
compliance with this Section 6.3 and in compliance with the provisions of the
1997 Subordinated Note Indenture. The "amount" of any Investment referred to in
this Section 6.3 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.
6.4 ACQUISITIONS, ETC. No Borrower shall engage in any Acquisition (other
than an acquisition of assets in the ordinary course of business) except:
(a) A Borrower may merge with or into or consolidate with Multicare
or any direct or indirect wholly-owned Restricted Subsidiary of Multicare,
provided that (i) if Multicare is a party to the merger, Multicare is the
surviving entity and (ii) if Multicare is not a party to the merger, a
wholly-owned Restricted Subsidiary of
-58-
<PAGE>
Multicare is the surviving entity and provided, further, that no Event of
Default or Default shall occur and be continuing before or after giving
effect to such transaction; and
(b) So long as no Default or Event of Default has occurred or would
exist after giving effect to such Acquisition, any Borrower may make an
Acquisition not covered by clause (a) of this Section 6.4, provided,
however, that (i) the Acquisition Cost of all Acquisitions made pursuant
to this paragraph (b) does not exceed $5,000,000.00 in any fiscal year,
and (ii) the "Acquisition Conditions" set forth on Schedule 6.4 hereto
shall have been satisfied.
6.5 DISPOSITIONS. No Borrower shall sell, convey, assign, lease as lessor,
transfer, abandon or otherwise dispose of (collectively, for purposes of this
Section 6.5, "transfer"), voluntarily or involuntarily, any of its assets,
except:
(a) A Borrower may sell inventory in the ordinary course of
business;
(b) A Borrower may dispose of equipment which is obsolete or no
longer useful in its business;
(c) A Borrower may transfer its properties to Multicare or a
wholly-owned Restricted Subsidiary of Multicare so long as no Event of
Default or Default shall exist either before or after giving effect to
such transfer;
(d) Subject to the mandatory prepayment provisions set forth above,
the Borrowers may transfer at any time the facilities identified on
Schedule 6.5(d) located in the states of Ohio, Wisconsin or Illinois (i)
for a cash price, or (ii) in connection with a swap of assets of the same
type and generating cash flow at approximately the same level, or greater,
than the facilities identified in Schedule 6.5(d) being transferred, as
certified by a Responsible Officer of Multicare, on behalf of the
Borrowers, in writing prior to such transfer with such detail and
supporting financing information as the Administrative Agent may require;
provided that in the case of either (i) or (ii) above, the Board of
Directors of Multicare determines that the fair market value in either
case is equal to the fair market value in an arm's length transaction with
an unrelated third party and such transfer is on such terms as are (A)
reflective of market conditions at the time of sale, (B) consistent with
the terms of this Agreement, and (C) satisfactory to the Administrative
Agent.
(e) Subject to the mandatory prepayment provisions set forth above,
the Borrowers shall sell to Genesis (i) their contract therapy business
for a cash purchase price of approximately $24,000,000.00 and (ii) their
institutional pharmacy business for a cash price of approximately
$50,000,000.00.
-59-
<PAGE>
(f) Subject to the mandatory prepayment provisions set forth above,
the Borrowers may transfer the assisted living facilities described in
Schedule 6.5(f) attached hereto to a Person who is not a Borrower for a
sales price at least sufficient to repay any Indebtedness associated
therewith provided that the Cash Flow for the immediately preceding four
fiscal quarters such facilities (and if such facilities have not been in
operation for four fiscal quarters, then such Cash Flow for the period
since operations commenced on an annualized basis) does not exceed 15% of
the associated Indebtedness.
(g) The Borrowers may grant Liens permitted under Section 6.2
(Liens).
(h) So long as no Default or Event of Default has occurred or would
exist after giving effect to such transfer, a Borrower may transfer other
assets (including ownership interests of a Restricted Subsidiary),
provided, however, that (i) the "Disposition Conditions" set forth on
Schedule 6.5(h) hereto shall have been satisfied and (ii) both of the
following financial tests shall be satisfied: 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
pursuant to this paragraph (h) at any time after the Closing Date (in each
case determined as of the date of transfer or proposed transfer, as the
case may be) is less than (A) an amount equal to 5% of the total assets of
Multicare and its Restricted Subsidiaries on a consolidated basis,
determined as of the fiscal year ending on, or most recently prior to, the
date of the proposed transfer and (B) $5,000,000.00.
(i) Subject to the mandatory prepayment provisions set forth above,
so long as no Default or Event of Default has occurred or would exist
after giving effect to such transfer, any Borrower may transfer its
interest in Excluded Subsidiaries.
6.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP INTERESTS. The
Borrowers shall not create, acquire, dispose of, or change any interest in any
Restricted Subsidiary except as follows:
(a) Restricted Subsidiaries of Borrower(s) (or any interest therein)
may be created or acquired in connection with an Acquisition to the extent
permitted under Section 6.4 above (Acquisitions, Etc.);
(b) Restricted Subsidiaries of Borrowers (or any interest therein)
may be created or acquired in connection with an Investment to the extent
permitted under Section 6.3 above (Loans, Advances and Investments);
(c) Restricted Subsidiaries of Borrowers may be created as
wholly-owned direct or indirect Subsidiaries of Multicare for other
purposes consistent with the terms of this Agreement; and
-60-
<PAGE>
(d) Restricted Subsidiaries (or any interest therein) may be
disposed of pursuant to the provisions of Section 6.5 above
(Dispositions);
provided, however, that with respect to Subsidiaries created or acquired in
accordance with paragraphs (a), (b) or (c) above, they shall become "Borrowers"
hereunder and corresponding parties to the other Loan Documents, their equity
shall be pledged to the Administrative Agent, for the benefit of the Secured
Parties, pursuant to the Pledge Agreement and they shall become parties to the
Tax Sharing Agreement.
6.7 LEASES. The Borrowers shall not at any time, enter into or suffer to
remain in effect any lease, as lessee, of any property, except:
(a) Leases (including subleases) by Multicare or a wholly-owned
Subsidiary of Multicare as lessor (or sublessor) to Multicare or another
wholly-owned Subsidiary of Multicare as lessee (or sublessee);
(b) Capitalized Leases permitted under Section 6.1 above; and
(c) Other leases which are not Capitalized Leases or Synthetic
Leases but only to the extent that the aggregate Rental Expense of the
Borrowers with respect to all such other leases does not exceed (i) during
the fiscal year ending December 31, 1997, $15,000,000.00 and (ii) during
each fiscal year thereafter, an amount equal to the amount permitted in
the preceding year plus an additional $2,000,000.00 (e.g., $17,000,000.00
in the fiscal year ending December 31, 1998).
6.8 DIVIDENDS AND RELATED DISTRIBUTIONS. Except for dividends from
Multicare to Acquisition Corp. and from Acquisition Corp. to Genesis ElderCare
Corp. in an amount necessary to permit Acquisition Corp. and Genesis ElderCare
Corp. to pay their respective taxes and general corporate operating expenses of
the type typically incurred by a corporation whose only assets are the stock of
operating companies with no other business activity, Multicare shall not, and
the Borrowers shall not permit Acquisition Corp. to (a) declare or pay any
dividends, (b) purchase, redeem, retire or otherwise acquire for value any of
its capital stock now or hereafter outstanding, or (c) make any distribution of
assets to its stockholders as such whether in cash, assets or obligations of
Multicare, (d) allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption or retirement of,
any shares of its capital stock, (e) or make any other distribution by return of
capital or otherwise in respect of any shares of its capital stock except that
Multicare may declare and pay dividends and make distributions payable solely in
its common stock, or options, warrants or other rights to purchase common stock
provided that such stock, warrants, options or other rights are pledged to the
Administrative Agent for the benefit of the Secured Parties pursuant to the
Pledge Agreement.
6.9 CONSOLIDATED TAX RETURN. No Borrower shall file or consent to the
filing of any consolidated income tax return with any Person other than other
Borrowers or
-61-
<PAGE>
other Persons party to the Tax Sharing Agreement or become party to any tax
sharing or tax allocation agreement with any other Person other than the other
Borrowers, except as contemplated in the Tax Sharing Agreement. From and after
the effective date of the Tax Sharing Agreement (which shall be on or about the
Closing 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 (a) joinder of additional Subsidiaries of Multicare, from time to time,
such that at all times all Subsidiaries of Multicare shall be parties thereto,
and (b) such amendments or modifications which, individually or in the
aggregate, could not reasonably be expected to have an adverse effect on the
Borrowers taken as a whole (including the business, operations, condition,
financial or otherwise, properties or prospects of the Borrowers), the Loan
Documents or any Lender Party.
6.10 LIMITATION ON PAYMENTS, PREPAYMENTS, DEFEASEMENT AND OTHER ACTION
WITH RESPECT TO CERTAIN DEBT OBLIGATIONS.
(a) No Borrower shall, or shall permit any of its Subsidiaries,
directly or indirectly, pay, prepay, purchase, defease, redeem, retire,
acquire, or otherwise make any payment (on account of principal, interest,
premium or otherwise) in respect of any obligation under, or evidenced by
the 1997 Subordinated Note Indenture (or cause or allow any event or
condition to exist which would require any payment, prepayment, purchase,
defeasance, redemption, retirement, acquisition or other payment of any
such obligation), except that a Borrower may make cash interest 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 applicable thereto. Multicare 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. Multicare shall not take or omit to take any action
under or in connection with, any such agreement or instrument, which would
violate or impair the subordination provisions thereof. No Loan Party
shall designate any of its Indebtedness as "Designated Senior
Indebtedness" for purposes of the 1997 Subordinated Note Indenture except
Indebtedness incurred pursuant to this Agreement.
(b) No Borrower will make or give any notice that it shall make any
voluntary or optional payment or prepayment or redemption or acquisition
for value of, or will refund, refinance or exchange any Indebtedness
(excluding Loan Obligations) if at such time any Default or Event of
Default has occurred and is continuing or would be directly or indirectly
caused as a result thereof.
No Loan Party shall designate any of its Indebtedness as "Designated
Senior Indebtedness" for purposes of the 1997 Subordinated Note Indenture except
Indebtedness incurred pursuant to this Agreement, the other Loan Documents, or
Qualifying Interest Rate Hedging Agreements.
-62-
<PAGE>
6.11 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS.
(a) Constituent Documents. No Borrower shall, amend, modify or
supplement its articles or certificate of incorporation, bylaws,
partnership agreement or similar constituent documents (i) if a Material
Adverse Effect could result from such amendment, modification or
supplement or (ii) if such amendment, modification or waiver could
reasonably be expected to materially adversely affect the rights or
interests of the Agents or the Lenders.
(b) Transaction Documents. No Borrower shall amend, modify or
supplement the other Transaction Documents, except for such amendments,
modifications or supplements which could not reasonably be expected to
have an adverse effect on the Borrowers, taken as a whole (including the
condition (financial or otherwise), properties or prospects of the
Borrowers, the Loan Documents or any Lender Party.
6.12 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS. No
Borrower shall enter into, or remain a party to, any agreement or instrument
which would impose any restriction (a) on the right of such Person from time to
time to declare and pay dividends or take similar actions with respect to
capital stock owned by such Person or pay any Indebtedness, obligations or
liabilities from time to time owed to a another Borrower; or (b) that would
prohibit the grant of any Lien upon any of its properties (now owned or
hereafter acquired) to secure any senior Indebtedness except for restrictions in
agreements respecting Permitted Liens to the extent that the prohibition applies
only to property subject to the Permitted Lien; or (c) that would prohibit, or
require the consent of any Person to, any amendment, modification or supplement
to any of the Loan Documents except (i) restrictions set forth in the Loan
Documents; (ii) legal restrictions of general applicability; and (iii)
restrictions in the 1997 Subordinated Note Indenture.
6.13 LIMITATIONS ON MERGERS, ETC. No Borrower shall merge or consolidate
with or into any Person, except (a) mergers of any Borrower with Multicare where
Multicare is the survivor, (b) mergers of any Restricted Subsidiary of Multicare
with any wholly-owned Restricted Subsidiary of Multicare where such wholly-owned
Restricted Subsidiary is the survivor, or (c) any merger pursuant to an
Acquisition permitted under Section 6.4 above (Acquisitions, Etc.) or (d) any
merger pursuant to a transfer permitted under Section 6.5 (Dispositions) above.
6.14 AVOIDANCE OF OTHER CONFLICTS. No Borrower shall violate or conflict
with, be in default under, or be or remain subject to any liability (contingent
or otherwise) on account of any violation or conflict with (a) its articles or
certificate of incorporation, bylaws or partnership agreement (or other
constituent documents), or (b) any agreement or instrument to which it is party
or by which any of its properties (now owned or hereafter acquired) may be
subject or bound, except, with respect to clause (b), for matters that could
not, individually or in the aggregate, have a Material Adverse Effect.
-63-
<PAGE>
6.15 CAPITAL EXPENDITURES. No Borrower shall make or commit to make any
Capital Expenditure if, after giving effect to such Capital Expenditure, the
aggregate amount of all Capital Expenditures of the Borrowers incurred (i)
during the fiscal year ending December 31, 1997, would exceed $45,000,000.00,
and (ii) during any fiscal year thereafter, would exceed $35,000,000.00
6.16 MANAGEMENT FEE. The Borrowers shall not pay management fees under the
Multicare Management Agreement in any fiscal year in an amount less than
$23,900,000.00, or in excess of 6% of the consolidated net revenue of the
Borrowers. All such management fees shall be subordinated to the obligations of
the Borrowers hereunder in accordance with the terms contained in the Management
Fee Subordination Agreement as in effect on the Agreement Date. Such management
fees may be accrued but not paid except that such fees may be paid to the extent
they do not exceed in any fiscal year the greater of (a) 4% of the consolidated
net revenue of the Borrowers, and (b) $23,900,000.00. To the extent such
management fees in any fiscal year (including the payment in such year of
accrued management fees) would exceed the amount specified in the preceding
sentence, such excess amount shall be payable only to the extent that, both
before and after giving effect to such payment, (i) there exists no Event of
Default or Default, (ii) Borrower's Fixed Charge Coverage Ratio shall be not
less than 1.4 for the two most recent completed fiscal quarters of the
Borrowers, and (iii) the Adjusted Total Debt/Cash Flow Ratio for the two most
recently completed fiscal quarters of the Borrowers shall be less than 4.00. No
Borrower shall agree with any Person (other than the Lender Parties) to
withhold, defer or change the amount or timing of payments under the Multicare
Management Agreement.
-64-
<PAGE>
ARTICLE 7
DEFAULTS
7.1 "EVENTS OF DEFAULT" An Event of Default means any one of the following
events (whatever the reason for such Event of Default, whether it shall be
voluntary or involuntary and whether it shall be by action or inaction, by
operation of law, pursuant to a court order or any rule or regulation of any
Governmental Authority or otherwise):
(a) Failure to Pay Principal. The Borrowers shall fail to make any
payment of the principal of any Loan on the date when the same shall become due
and payable, whether at stated maturity or at a date fixed for any installment
or prepayment thereof or otherwise; or the Borrowers shall fail to make any
reimbursement of any Drawing under a Letter of Credit or shall fail to deposit
any amount into the cash collateral account, in either case, at the times and in
the amounts specified in Article 1A above.
(b) Failure to Pay Interest, Fees and Other Amounts. The Borrowers
shall fail to make any payment of interest on any Loan or shall fail to pay any
fees or any other amounts owing hereunder or under any other Loan Documents
(other than as specified in paragraph (a) above) on the dates when such
interest, fees or other amounts shall become due and payable and such failure
continues for more than three (3) Business Days.
(c) Covenant Defaults. (i) There shall occur a default in the due
performance or observance of any term, covenant or agreement to be performed or
observed pursuant to any of Sections 4.1(f)(ii), 4.2, 4.3, 4.7, 4.10, 4.11, 4.13
or 4.15 or Article 5 or Article 6.
(ii) There shall occur any default in the due performance or
observance of any term, covenant or agreement to be performed or observed
pursuant to the provisions of this Agreement (other than as provided in
paragraph (a) or paragraph (b) above or subparagraph (i) of this paragraph (c))
and, if capable of being remedied, such default shall continue unremedied for
thirty (30) days after any Borrower becomes aware, or should in the exercise of
reasonable diligence have become aware, of such default.
(d) Misrepresentation. Any representation or warranty made or deemed
made by any Loan Party in or 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.
(e) Subordinated Debentures. Any "Event of Default" (or similar
term) as defined in the 1997 Subordinated Note Indenture and any other
subordinated indentures to which any Borrower may from time to time be a party
shall have occurred and be
-65-
<PAGE>
continuing; or, any term or provision of the subordination provisions contained
in any such 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 1997
Subordinated Note or other subordinated note or other subordinated obligations
(or any trustee or agent on behalf of such holder) shall terminate, repudiate,
declare voidable or void or otherwise contest any term or provision of such
subordination provisions; or Multicare shall make, or shall be required to make
or to offer to make, any defeasance, redemption or purchase of 1997 Subordinated
Notes under the 1997 Subordinated Note Indenture, or Multicare shall make, or be
required to make, or offer to make, any defeasance, redemption or purchase of
subordinated notes under any similar provision, if any, under any such other
subordinated indentures or other subordinated note or other subordinated
obligations.
(f) Other Cross-Defaults. (i) Any Loan Party shall fail to pay, in
accordance with its terms and when due and payable, any Indebtedness (other than
Indebtedness referred in paragraph (a) or (e) above) under, or arising out of an
agreement or instrument (or group or series of related agreements or
instruments) which evidences outstanding Indebtedness in excess of
$5,000,000.00; (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; (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; (iv) a default by any Loan Party
shall be continuing under any other instrument or agreement (whether or not
relating to Indebtedness) binding upon such Person, except a default that,
together with all other such defaults under this clause (iv), could not have a
Material Adverse Effect; or (v) there shall have occurred and be continuing any
"Event of Default" as such term is defined in the Acquisition Corp. Credit
Agreement.
(g) Judgments and Executions. One or more judgments for the payment
of money shall have been entered against any Loan Party or Loan Parties which
judgment or judgments, to the extent not paid or fully covered by insurance,
exceed $1,000,000.00 in the aggregate, and such judgment or judgments shall have
remained undischarged and unstayed for a period of 30 consecutive days; or one
or more writs or warrants of attachment, garnishment, execution, distraint or
similar process or any attachment (prejudgment or otherwise) of assets exceeding
in value the aggregate amount of $1,000,000.00 shall have been issued against
any Loan Party or Loan Parties or any of its or their respective properties.
(h) Invalidity or Noncompliance With Loan Documents. Any of the Loan
Parties shall fail to perform any of its obligations under any of the Loan
Documents (after taking into account any applicable cure period set forth in
such agreements), or the validity of this Agreement or any of the other Loan
Documents, or the subordination provisions of any other instrument or document
intended by the parties hereto to benefit the Lender Parties, shall have been
challenged or disaffirmed by or on behalf of any of the Loan
-66-
<PAGE>
Parties, or any of the Loan Documents shall cease to be in full force and effect
(other than pursuant to its terms) or, other than as a direct result of any
action or inaction of a Lender Party, any Liens created or intended to be
created by any of the Loan Documents shall at any time cease to be valid and
perfected subject to no equal or prior Liens except Permitted Liens.
(i) Material Adverse Effect. The Required Lenders shall have
determined in good faith that an event or condition has occurred which could
have a Material Adverse Effect.
(j) 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 Borrower or any Loan Party or any of their respective 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) the existence of any
pending or threatened Environmental Claim against any such Person, or the
existence of any past or present acts, omissions, events or circumstances that
could form the basis of any Environmental Claim against any such Person.
(k) Change of Control. A Change of Control shall have occurred; or a
"Change in Control" (as defined in the 1997 Subordinated Note Indenture) shall
have occurred.
(l) Subsidiaries as Loan Parties. Any direct or indirect Subsidiary
of Multicare, other than Excluded Subsidiaries, shall fail to be, or shall cease
to be, or fail to become, a Borrower hereunder; or the equity of any such Person
owned by any Borrower or of Multicare shall cease to be, or fail to be, pledged
under the Pledge Agreement.
(m) Insolvency, Bankruptcy, Etc. Any Loan Party shall make an
assignment for the benefit of creditors or a composition with creditors, shall
generally not be paying its debts as they mature, shall admit its inability to
pay its debts as they mature, shall file a petition in bankruptcy, shall be
adjudicated insolvent or bankrupt, shall petition or apply to any tribunal for
the appointment of any receiver, custodian, liquidator or trustee of or for it
or any substantial part of its property or assets, shall commence any proceeding
relating to it under any bankruptcy, reorganization, arrangement, readjustment
of debt, receivership, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or there shall be commenced
against such Loan Party, any such proceeding and the same shall not be dismissed
within thirty (30) days or an order, judgment or decree approving the petition
in any such proceeding shall be entered against such Loan Party; or any Loan
Party, Acquisition Corp., or Genesis ElderCare Corp. shall by any act or failure
to act indicate its consent to, approval of or acquiescence in, any such
proceeding or any appointment of any receiver, custodian, liquidator or trustee
of or for it or for any
-67-
<PAGE>
substantial part of its property or assets, or shall suffer the appointment of
any receiver, liquidator or trustee, or shall take any corporate action for the
purpose of effecting any of the foregoing; or any court of competent
jurisdiction shall assume jurisdiction with respect to any such proceeding and
the same shall not be dismissed within thirty (30) days or a receiver or a
trustee or other officer or representative of a court or of creditors, or any
court, governmental office or agency, shall, under color of legal authority,
take and hold possession of any substantial part of the property or assets of
such Person and shall not have relinquished possession within thirty (30) days,
or such Loan Party, Acquisition Corp., or Genesis ElderCare Corp. shall have
concealed, removed, or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors, or any of them,
or any Loan Party shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its property through legal proceedings or
distraint.
(n) Termination of Multicare Management Agreement or other
Transaction Documents. Except as permitted by the Required Lenders, (i) the
Multicare Management Agreement shall cease to be in full force and effect or
there shall be any breach by any party thereto or a default thereunder, or an
amendment, modification or supplement thereto not permitted by the terms of this
Agreement or any notice a non-renewal or termination thereunder shall have been
delivered by any party thereto, or (ii) any other Transaction Document shall
cease to be in full force and effect (other than by its terms) or there shall be
any material breach by any party thereto or a default thereunder or any such
document shall be amended, restated, modified or supplemented in a manner not
expressly permitted by the terms of this Agreement or (iii) any other Management
Agreement of any Borrower shall be terminated or cease to be renewed or extended
or shall be amended, restated, modified or supplemented if such termination,
failure to renew or extend or amendment, restatement, modification or supplement
(either singly or collectively with all other such events relating to other
Management Agreements) could have a Material Adverse Effect.
(o) Loss of Licenses, Reimbursement Approvals, Etc. There shall be a
Limitation of one or more Licenses or Reimbursement Approvals of any Borrower or
Borrowers or Persons managed by a Borrower or Borrowers and the Required Lenders
shall determine in good faith that such Limitation, and individually or
collectively all such Limitations could reasonably be expected to have a
Material Adverse Effect.
7.2 CONSEQUENCES OF AN EVENT OF DEFAULT
(a) Events of Default in General. If an Event of Default
(other than one specified in paragraph (m) of Section 7.1 (Insolvency,
Bankruptcy, Etc.) hereof) shall occur and be continuing or shall exist, then, in
addition to all other rights and remedies which the Administrative Agent or any
other 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 Administrative Agent may, (and upon the written
request of the
-68-
<PAGE>
Required Lenders, shall), by notice to Multicare (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 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 notice they will pay) to
the Administrative Agent cash for deposit to the credit of the
Letter of Credit collateral account in accordance with Article 1A
hereof.
(iv) Take any and all actions permitted under the Pledge
Agreement or other Loan Documents.
(v) Exercise such other remedies as may be available to the
Lender Parties under applicable Law.
(b) Automatic Acceleration; Certain Bankruptcy-Related Events.
If an Event of Default specified in paragraph (m) of Section 7.1 (Insolvency,
Bankruptcy, Etc.) hereof shall occur or exist, then, in addition to all other
rights and remedies which any Lender Party 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 those referred to in
clause (iii) of the preceding paragraph (a), 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 Administrative Agent may, (and upon the written request of the
Required Lenders), shall, by notice to Multicare (on behalf of the Borrowers),
do one or more of the following: (i) take any and all actions permitted under
the Pledge Agreement or any other Loan Document or (ii) exercise such other
remedies as may be available to the Lender Parties under applicable Law.
(c) Equitable Remedies. It is agreed that, in addition to all
other rights hereunder or under Law, the Administrative Agent shall have the
right to institute proceedings in equity or other appropriate proceedings for
the specific performance of any
-69-
<PAGE>
covenant or agreement made in any of the Loan Documents or for an injunction
against the violation of any of the terms of any of the Loan Documents or in aid
of the exercise of any power granted in any of the Loan Documents or by Law or
otherwise.
7.3 APPLICATION OF PROCEEDS. After the occurrence of an Event of Default
and acceleration of the Loans, any amounts received on account of Loan
Obligations shall be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Loan Obligations
constituting fees, indemnities, expenses and other amounts due to the
Administrative Agent in its capacity as such;
Second, to payment of that portion of the Loan Obligations
constituting fees, indemnities (other than those paid pursuant to the
preceding clause First) due to the Lender Parties, ratably among them in
proportion to the amounts described in this clause Second due to them;
Third, to payment of that portion of the Loan Obligations
constituting accrued and unpaid interest on Loans and accrued and unpaid
interest on Drawings, ratably among the Lender Parties 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 or unreimbursed Drawings
ratably among the Lender Parties in proportion to the respective amounts
described in this clause Fourth due to them;
Fifth, to be deposited in such cash collateral account, if any, as
may be required under Article 1A above.
Sixth, to payment of all other Loan Obligations, ratably among the
Lender Parties 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 indefeasibly paid in full and all of the Letters of Credit shall have
terminated (or funds equal to the amount of any contingent liabilities in
respect thereof shall have been deposited in the Letter of Credit cash
collateral account), to Multicare (on behalf of the Borrowers) or as
otherwise required by Law.
-70-
<PAGE>
ARTICLE 8 - THE ADMINISTRATIVE AGENT
8.1 APPOINTMENT. Each Lender Party hereby irrevocably appoints Mellon to
act as Administrative Agent for such Lender Party under this Agreement and the
other Loan Documents. Each Lender Party hereby irrevocably authorizes the
Administrative 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 Administrative Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto. Mellon hereby agrees to
act as Administrative 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 8.9 hereof. Each Lender Party hereby
irrevocably authorizes the Administrative 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 Administrative Agent. Each Lender Party agrees
that the rights and remedies granted to the Administrative Agent under the Loan
Documents shall be exercised exclusively by the Administrative Agent (or a
Person designated by the Administrative Agent), and that no Lender shall have
any right individually to exercise any such right or remedy, except to the
extent, if any, expressly provided herein or therein.
8.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES.
Notwithstanding anything to the contrary elsewhere in this Agreement or in any
other Loan Document:
(a) The Administrative 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 Administrative Agent shall be read into this Agreement or any
other Loan Document or shall otherwise exist.
(b) The duties and responsibilities of the Administrative Agent
under this Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and the Administrative Agent shall not have a
fiduciary relationship with respect to any Lender Party.
(c) The Administrative Agent's relationship with and to the Lender
Parties is governed exclusively by the terms of this Agreement and the
other Loan Documents. The Administrative Agent does not assume, and shall
not at any time be deemed to have, any relationship of agency or trust
with or for, any Lender Party or any other Person or (except only as
expressly provided in this Agreement and the other Loan Documents) any
other duty or responsibility to such Lender Party or other Person.
-71-
<PAGE>
(d) The Administrative Agent shall be under no obligation to take
any action hereunder or under any other Loan Document if the
Administrative 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 Administrative Agent to qualify to do
business in any jurisdiction where it is not then so qualified.
(e) The authority of the Administrative Agent to request information
from the Borrowers or take any other voluntary action hereunder shall
impose no duty of any kind on the Administrative Agent to make such
request or take any such action.
8.3 EXERCISE OF POWERS. The Administrative Agent shall take any action of
the type specified in this Agreement or any other Loan Document as being within
the Administrative 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 direction, the Administrative 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 that 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 Administrative 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 each Lender Party (whether
or not it so consented). The Administrative Agent shall not have any liability
to any Person as a result of any action or inaction in conformity with this
Section 8.3.
8.4 GENERAL EXCULPATORY PROVISIONS. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) The Administrative 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 or
other) damages suffered by a Person and only to the extent that such Person
proves that such damages were caused by the Administrative Agent's own gross
negligence or willful misconduct.
(b) The Administrative Agent shall not be responsible for (i) the
execution, delivery, effectiveness, enforceability, genuineness, validity or
adequacy of any Loan Document, (ii) any recital, representation, warranty,
document, certificate, report or statement in, provided for in, or received
under or in connection with, any Loan Document, (iii) any failure of any Loan
Party or any Lender to perform any of their respective obligations under any
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 Loan
Document or otherwise from time to time, or (v) caring for, protecting,
insuring, or paying any taxes, charges or assessments with respect to any
Collateral or (vi) the enforceability of any subordination.
-72-
<PAGE>
(c) The Administrative 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 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
(even if the Administrative Agent knows or should know that some event or
condition exists or fails to exist), or (iii) except to the extent set forth in
Section 8.5(f) below, the existence of any Event of Default or Default.
(d) The Administrative 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, whether obtained under or in connection with this
Agreement or otherwise, except for such notices, reports and other information
expressly required by this Agreement or any other Loan Document to be furnished
by the Administrative Agent to such Lender Party.
8.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT.
(a) The Administrative 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 Administrative Agent shall not have any duty to verify the identity or
authority of any Person giving such notice or other communication.
(b) The Administrative Agent may consult with legal counsel
(including in-house counsel for the Administrative 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 Administrative 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 Administrative 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 Administrative Agent in accordance with the
requirements of this Agreement or any other Loan Document. Whenever the
Administrative 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 Administrative 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 Administrative 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
-73-
<PAGE>
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 which may be imposed on, incurred by or asserted against
the Administrative Agent by reason of taking or continuing to take any such
action.
(e) The Administrative Agent may perform any of its duties under
this Agreement or any other Loan Document by or through agents or
attorneys-in-fact. The Administrative 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 Administrative Agent shall not be deemed to have any
knowledge or notice of the occurrence of any Event of Default or Default unless
the Administrative Agent has received notice from a Lender Party or a Borrower
referring to this Agreement, describing such Event of Default or Default, and
stating that such notice is a "notice of default." If the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to each Lender Party.
8.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE AGENT OR OTHER LENDERS.
Each Lender Party acknowledges as follows: (a) neither the Administrative Agent
nor any other Lender Party has made any representations or warranties to it, and
no act taken hereafter by the Administrative Agent or any other Lender Party
shall be deemed to constitute any representation or warranty by the
Administrative Agent or such other Lender Party to it; (b) it has, independently
and without reliance upon the Administrative 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 Administrative 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.
8.7 INDEMNIFICATION. Each Lender agrees to reimburse and indemnify each
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 share of
(without duplication) the Commitment and the Loans, 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 such Agent or such other
Person in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Agent or such other
Person shall be designated a party thereto) that may at any time be imposed on,
incurred by or asserted against such Agent or such other Person as a result of,
or arising out of, or in any way related to or by reason of,
-74-
<PAGE>
this Agreement, any other Loan Document, any 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, 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 that
such Lender Party proves were the result of the gross negligence or willful
misconduct of such Agent or such other Person. Payments under this Section 8.7
shall be due and payable on demand.
8.8 HOLDERS OF NOTES. The Administrative 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 an Assignment and Acceptance with respect to
the assignment or transfer thereof shall have been filed with the Administrative
Agent in accordance with Section 10.9 hereof.
8.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving 30 days' prior written notice thereof to the other
Lender Parties and Multicare on behalf of the Borrowers. The Administrative
Agent may be removed by the Required Lenders at any time for cause by such
Required Lenders giving 30 days' prior written notice thereof to the
Administrative Agent, the other Lender Parties and Multicare on behalf of the
Borrowers. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Administrative Agent with (so long as no
Default or Event of Default shall have occurred and then be continuing) the
consent of Multicare on behalf of the Borrowers whose consent shall not be
unreasonably withheld. If no successor Administrative 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
Administrative Agent may (but shall not be required to) appoint a successor
Administrative Agent. Each successor Administrative Agent shall be a Lender if
any Lender shall at the time be willing to become the successor Administrative
Agent, and if no Lender shall then be so willing, then such successor
Administrative Agent shall be an Eligible Institution. Upon the acceptance by a
successor Administrative Agent of its appointment as Administrative Agent
hereunder, such successor Administrative Agent shall thereupon succeed to and
become vested with all the properties, rights, powers, privileges and duties of
the former Administrative Agent in its capacity as such, without further act,
deed or conveyance. Upon the effective date of resignation or removal of a
retiring Administrative Agent, such Administrative 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 Administrative Agent under this Agreement. If and
so long as no successor Administrative Agent shall have been appointed, then any
notice or other communication required or permitted to be given by the
Administrative Agent shall be sufficiently given if given by the Required
Lenders, all notices or other communications required or permitted to be given
to the Administrative Agent shall be given to each Lender, and all payments to
be made to the Administrative Agent shall be made directly to the Loan Party or
Lender Party for whose account such payment is made.
-75-
<PAGE>
8.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL AGENT.
If the Administrative 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 Administrative 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 Administrative Agent,
to constitute one or more other Persons designated by the Administrative Agent,
to act as co-Administrative Agent or agent with respect to any part of the
Collateral, with such powers of the Administrative Agent as may be provided in
such supplemental agreement, and to vest in such other Person as such co-Agent
or separate agent, as the case may be, any properties, rights, powers,
privileges and duties of the Administrative Agent under this Agreement or any
other Loan Document.
8.11 CALCULATIONS. The Administrative 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 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.
8.12 OTHER AGENTS.
(a) In General. The title "Syndication Agent" given to Citicorp USA, Inc.
and NationsBank, in this Agreement and the title "Documentation Agent" given to
First Union National Bank in this Agreement are solely for identification
purposes and imply no rights in favor of such Person and no responsibility by
such Person except such rights or obligations of "Agents" (including the right
to make certain determinations) as are expressly stated herein. No such Agent
shall be liable for any act or failure to act on its part except for that which
the claimant proves constitutes the gross negligence or willful misconduct of
such Agent.
(b) Successor Agents. Any Syndication Agent and the Documentation Agent
may resign at any time and such Agents may be removed at any time for cause by
the other Agents and Multicare in which event, Multicare (on behalf of the
Borrowers) if no Default or Event of Default shall then exist, and the
Administrative Agent may (in their sole discretion) appoint a successor Agent.
8.13 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitment hereunder and the Loan Obligations owing to it, the Administrative
Agent shall have the same rights and powers under this Agreement and each
-76-
<PAGE>
other Loan Document as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the terms "Lender", "Holder of Notes" and
like terms shall include the Administrative Agent in its individual capacity as
such. The Administrative 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 "Administrative Agent" for other financing vehicles,
issue letters of credit on behalf of, and engage in any other business with (a)
any Loan Party, or any stockholder, Subsidiary of Affiliate of any Loan Party,
or (b) any other Person, whether such other Person may be engaged in any
conflict or dispute with any Loan Party or any Lender Party or otherwise, as
though the Administrative Agent were not the Administrative Agent hereunder.
-77-
<PAGE>
ARTICLE 8A
SPECIAL INTER-BORROWER PROVISIONS
8A.1 CERTAIN BORROWER ACKNOWLEDGEMENTS.
(a) Each Borrower acknowledges that it will enjoy significant
benefits from the business conducted by the other Borrowers because of, inter
alia, their combined ability to bargain with other Persons including without
limitation their ability to receive the credit facilities on favorable terms
granted by this Agreement and other Loan Documents which would not have been
available to an individual Borrower acting alone. Each Borrower has determined
that it is in its best interest to procure credit facilities which each Borrower
may utilize directly and which receive the credit support of the other Borrowers
as contemplated by this Agreement and the other Loan Documents.
(b) The Lenders have advised the Borrowers that they are unwilling
to enter into this Agreement and the other Loan Documents and make available the
credit facilities extended hereby to any Borrower unless each Borrower agrees,
among other things, to be jointly and severally liable for the due and proper
payment of the obligations of each other Borrower under this Agreement and other
Loan Documents. Each Borrower has determined that it is in its best interest and
in pursuit of its purposes that it so induce the Lenders to extend credit
pursuant to this Agreement and the other documents executed in connection
herewith (i) because of the desirability to each Borrower of the credit
facilities, the interest rates and the modes of borrowing available hereunder,
(ii) because each Borrower may engage in transactions jointly with other
Borrowers and (iii) because each Borrower may require, from time to time, access
to funds under this Agreement for the purposes herein set forth.
(c) Each Borrower has determined that it has and, after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents (including, without limitation, the inter-Borrower arrangement set
forth in this Article 8A) will have assets having a fair saleable value in
excess of the amount required to pay its probable liability on its existing
debts as they fall due for payment and that the sum of its debts is not and will
not then be greater than all of its property at a fair valuation, that such
Borrower has, and will have, access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature and that the value of the benefits to
be derived by such Borrower from the access to funds under this Agreement
(including, without limitation, the inter-Borrower arrangement set forth in this
Section 8A) is reasonably equivalent to the obligations undertaken pursuant
hereto.
8A.2 CERTAIN INTER-BORROWER AGREEMENTS.
(a) Subject to paragraph (b) below, each Borrower as indemnitor
shall indemnify the other Borrowers as indemnitees for all Loan Obligations
incurred by the indemnitee Borrowers for Loans advanced to, or Letters of Credit
issued for the account of, the indemnitor Borrower.
-78-
<PAGE>
(b) The rights and obligations of the Borrowers pursuant to
paragraph (a) above shall be subordinated in all respects to the rights of the
Administrative Agent and the other Lender Parties with respect to the Loan
Obligations and, accordingly, each Borrower agrees that it shall not make any
payment or receive any payment pursuant to the preceding paragraph (a) at any
time a Default has occurred and is continuing or would be caused thereby. Each
Borrower agrees that in the event it receives any payment described by this
paragraph (a), it shall accept such payment as agent of the Administrative
Agent, for the benefit of the Lender Parties, and hold the same in trust on
behalf of and for the benefit of the Administrative Agent, for the benefit of
the Lender Parties.
8A.3 RECORDS. Multicare (on behalf of each Borrower) shall maintain
records specifying (a) all Loan Obligations incurred by each Borrower, (b) the
date of such incurrence, (c) the date and amount of any payments made in respect
of such Loan Obligations and (d) all inter-Borrower obligations pursuant to
paragraph 8A.2 above. Multicare shall make copies of such records available to
the Administrative Agent, upon request.
-79-
<PAGE>
ARTICLE 9
DEFINITIONS; CONSTRUCTION
9.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings, (terms defined in the singular to have a
correlative meaning when used in the plural) unless the context hereof otherwise
clearly requires:
"Accumulated Funding Deficiency" has the meaning given to such term
in ss.4001(a)(18) of ERISA.
"Acquisition" means any acquisition by one or more of the Borrowers,
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 Corp." means Genesis ElderCare Acquisition Corp., a
Delaware corporation.
"Acquisition Corp. Credit Agreement" has the meaning ascribed to
such term in Section 2.1(v).
"Acquisition Cost" means, 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
(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 Senior Debt/Cash Flow Ratio" means as of any date of
determination:
(a) Adjusted Senior Debt as of such date of determination
divided by
(b) Cash Flow of Multicare and its Restricted Subsidiaries, on
a consolidated basis, for the four fiscal quarters ending on,
or most recently prior to, such date of determination.
"Adjusted Senior Debt" means, as of any date of determination, the
result of:
(a) Adjusted Total Indebtedness, as of such date of
determination
-80-
<PAGE>
less
(b) the sum of (i) Indebtedness which is evidenced by the 1997
Subordinated Notes, and (ii) 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 Administrative Agent.
"Adjusted Total Debt/Cash Flow Ratio" means, as of any date of
determination, the ratio of:
(a) Adjusted Total Indebtedness as of such date of
determination
divided by
(b) Cash Flow of Multicare and its Restricted Subsidiaries, on
a consolidated basis, for the four fiscal quarters ended on,
or most recently prior to, such date of determination.
"Adjusted Total Indebtedness" means, as at any date of
determination, the sum of:
(a) Total Funded Indebtedness as of such date of
determination
plus
(b) the product of (i) the amount of Rental Expense of
Multicare and its Restricted Subsidiaries, on a consolidated
basis, for the four fiscal quarters ended on, or most recently
prior to, such date of determination multiplied by (ii) eight
(8).
"Administrative Agent" has the meaning ascribed to such term in the
preamble of this Agreement.
"Affiliate" of a Person means (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
-81-
<PAGE>
that is not a corporation, 5% or more of any class of equity interest). Excluded
Subsidiaries may be "Affiliates" of Multicare.
"Agents" means collectively the Administrative Agent, Citicorp USA,
Inc., and NationsBank, N.A., each as a Syndication Agent, and First Union
National Bank, as Documentation Agent.
"Agreement" means this Credit Agreement as the same may be amended,
modified, restated or supplemented from time to time in accordance with its
terms.
"Agreement Date" means the date first-above written.
"Amount of Unfunded Benefit Liabilities" has the meaning given to
such term in ss.4001(a)(18) of ERISA.
"Assignment and Acceptance" shall have the meaning ascribed to such
term in Section 10.9.
"Assumed Indebtedness" means Indebtedness incurred by a Person which
is not a Borrower and which (a) is existing at the time such Person (or assets
of such Person) is acquired by a Borrower and (b) is assumed by a Borrower in
connection with such Acquisition, other than Indebtedness incurred by the
original obligor in connection with, or in contemplation of, such Acquisition.
"Available Commitment" means, as of any date, the difference between
(a) and (b) where (a) is the amount of the RC Commitment on such date and (b) is
the sum of (i) the aggregate outstanding principal amount of all Loans on such
date, (ii) the face amount of all outstanding Letters of Credit on such date,
(iii) the aggregate unpaid amount of all Drawings under Letters of Credit as of
such date, (iv) the aggregate outstanding principal amount of all Swing Loans on
such date, (v) the maximum amount necessary to redeem by March 16, 1998, all
shares of stock issuable on conversion of Multicare's Convertible Subordinated
7% Debentures outstanding on the date of determination of "Available
Commitment," and (v) the maximum amount (including principal, interest, premiums
and fees, if any) necessary to repay by January 2, 1998, all of Multicare's
Senior Subordinated 12-1/2% Notes outstanding on the date of determination of
"Available Commitment." For purposes of clauses (iv) and (v) the phrase
"outstanding on the date of determination of "Available Commitment" shall
initially be determined with reference to the Officers Certificate delivered by
Multicare pursuant to Section 2.1(r) hereof and thereafter shall be determined
with reference to updated Officer's Certificates (in the form and with the same
level of detail as the Officer's Certificate delivered pursuant to Section
4.1(c) above) which Multicare may deliver to the Administrative Agent from time
to time, provided that Multicare shall deliver not more than four (4) such
updated Officer's Certificates hereunder.
-82-
<PAGE>
"Bank Taxes" means (i) any Tax based on or measured by net income of
a Lender Party, any franchise Tax and any doing business Tax imposed upon any
Lender Party by any jurisdiction (or any political subdivision thereof) in which
such Lender Party or any lending office of a Lender Party is located and (ii)
for the purposes of Section 1.13, any other Tax imposed by a jurisdiction other
than the United States or a political subdivision thereof that would not have
been imposed but for a present or former connection between such Lender Party or
lending office (as the case may be) and such jurisdiction.
"Borrowers" has the meaning ascribed to such term in the preamble
hereto. It is the intent of the parties (and a covenant of the Borrowers herein)
that each Person which is now or hereafter becomes a direct or indirect
Subsidiary of Multicare other than Excluded Subsidiaries shall at all times
after becoming a Subsidiary of Multicare be a "Borrower" pursuant to the terms
of this Agreement.
"Business Day" means any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania and the State of New
York, or other day on which banking institutions are authorized or obligated to
close in the city in which the Administrative Agent's domestic lending office is
located.
"Capital Expenditures", with respect to any Person, means, for any
period, all expenditures (whether paid in cash or accrued as liabilities) of
such Person during such period which are, or should be, classified as capital
expenditures in accordance with GAAP.
"Capitalized Lease" means 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.
"Capitalized Lease Obligation" of any Person at any time means 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.
"Cash Equivalent Investments" means 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
$1,000,000,000.00 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 Multicare 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,
-83-
<PAGE>
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 $1,000,000,000.00 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, means (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 and, (v) income taxes, all as
adjusted for changes in accrued management fees under the Multicare Management
Agreement, in each case for such period.
"CERCLA" means 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" means the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be amended
from time to time.
"Change of Control" means the occurrence of any of the following
events:
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) other than a Permitted Holder (as hereinafter defined), 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, except that a
Person shall be deemed a "beneficial owner" of all securities that
such Person has a right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the
happening of an event or otherwise), directly or indirectly, of more
than, on a fully diluted basis, 35% of the total Voting Stock of the
Genesis ElderCare Corp. (and all rights and options to purchase such
Voting Stock) if such beneficial ownership is greater than the
amount of voting power of the Voting Stock (and all rights and
options to purchase such Voting Stock) of Genesis ElderCare Corp.
held by Genesis and its Affiliates on such date;
(b) if TPG, Cypress, Nazem and Genesis, collectively, shall
cease to own beneficially and of record at least 51% of the shares
of each class of capital stock of Genesis ElderCare Corp. (and all
rights and options to purchase such shares of capital stock) subject
to no Liens;
(c) if Genesis ElderCare Corp. at any time fails to own
beneficially and of record 100% of the capital stock of Acquisition
Corp (and all rights and options to purchase such capital stock);
-84-
<PAGE>
(d) if Acquisition Corp. at any time fails to own beneficially
and of record at least 51% of the capital stock of Multicare (and
all rights and options to purchase such capital stock);
(e) if Multicare at any time fails to own beneficially and of
record 100% of the capital stock (and all rights and options to
purchase such capital stock) of all the Borrowers (subject to any
permitted disposition pursuant to Section 6.5 hereof);
(f) if Genesis, Genesis ElderCare Corp., Acquisition Corp.,
Multicare or any other Loan Party 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, Genesis ElderCare
Corp., Acquisition Corp., Multicare or any other Loan Party, in any
such event pursuant to a transaction in which the outstanding Voting
Stock of Genesis, Genesis ElderCare Corp., Acquisition Corp.,
Multicare or any other Loan Party is changed into or exchanged for
cash, securities or other property, other than the Merger and other
than any such transaction where (i) the outstanding Voting Stock of
Genesis, Genesis ElderCare Corp., Acquisition Corp., Multicare or
any other Loan Party 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 such party would not be prohibited,
under the 1997 Subordinated Note Indenture if then in effect from
paying as a "restricted payment" (as defined in such indentures),
and (ii) the holders of the Voting Stock of Genesis, Genesis
ElderCare Corp., Acquisition Corp., Multicare or any other Loan
Party, as the case may be, 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;
(g) if during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of Genesis, Genesis ElderCare Corp., Acquisition Corp.,
Multicare or any other Loan Party (together with any new directors
whose election by any such Board of Directors or whose nomination
for election by the stockholders of such company 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 constitute a majority of such Board of
Directors then in office; except in the case of a change in the
composition of the Board of Directors of Acquisition Corp. or
Genesis ElderCare Corp., approved by Genesis in connection with its
acquisition of the common stock of Genesis ElderCare Corp. held by
Nazem, Cypress and TPG; or
-85-
<PAGE>
(h) if Genesis, Genesis ElderCare Corp., Acquisition Corp.,
Multicare or any other Loan Party 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
1997 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; (C) "Board of Directors" of a company shall
mean the board of directors of such company or the executive committee of such
company; and (D) "Permitted Holder" shall mean (i) Genesis, Cypress and TPG, in
the case of Genesis ElderCare Corp., (ii) Genesis ElderCare Corp. in the case of
Acquisition Corp., (iii) Genesis ElderCare Corp. or Acquisition Corp. in the
case of Multicare, and (iv) Multicare in the case of its Subsidiaries.
"Closing Date" means the date that the initial Loans are made
hereunder.
"COBRA Violation" means any violation of the "continuation coverage
requirements" of "group health plans" of former ss.162(k) of the Code (as in
effect for tax years beginning on or before December 31, 1988) and of ss.4980B
of the Code (as in effect for tax years beginning on or after January 1, 1989)
and Part 6 of Subtitle B of Title I of ERISA.
"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, and the Treasury regulations thereunder.
"Collateral" means (a) the cash collateral account, if any, in
respect of Letters of Credit from time to time and (b) the collateral subject
to, or purported to be subject to, the Liens of the Pledge Agreement, from time
to time.
"Commitment" means, (1) with respect to any Lender, (i) the amount
set forth opposite such Lender's name under the heading "Commitment" on Schedule
1.1 hereto or, in the case of a Lender that becomes a Lender pursuant to an
assignment, the amount of the assignor's Commitment assigned to such Lender, in
either case as the same may be reduced from time to time pursuant to Section 1.7
or increased or reduced from time to time pursuant to assignments in accordance
with Section 10.9 or (ii) as the context may require,
-86-
<PAGE>
the obligation of such Lender to make Loans in an aggregate unpaid principal
amount not exceeding such amount pursuant to this Agreement, and with respect to
the Issuer, to issue Letters of Credit; and (2) with respect to all Lenders, the
sum of each Lender's Commitment.
"Contingent Reimbursement Obligation" means the contingent
obligation of the Borrowers to reimburse the Issuer for any Drawings that may be
made under an outstanding Letter of Credit, whenever issued. Without limiting
the generality of the foregoing, the amount of all Contingent Reimbursement
Obligations at any time shall be the aggregate amount available to be drawn
under outstanding Letters of Credit at such time.
"Controlled Group" means a group of employers, of which any Borrower
is a member and which group constitutes:
(a) A controlled group of corporations (as defined inss.414(b)
of the Code);
(b) Trades or businesses (whether or not incorporated) which
are under common control (as defined in ss.414(c) of the Code);
(c) Trades or businesses (whether or not incorporated) which
constitute an affiliated service group (as defined in ss.414(m) of the Code); or
(d) Any other entity required to be aggregated with any
Borrower pursuant to ss.414(o) of the Code.
"Cypress" shall mean The Cypress Group L.L.C., a Delaware limited
liability company together with (a) any Subsidiary thereof and (b) any other
Affiliate thereof reasonably acceptable to the Administrative Agent. Without
limiting the generality of the foregoing, "Cypress" shall include Cypress
Associates L.P., Cypress Offshore Partners L.P., Cypress Merchant Banking
Partners L.P. and Cypress Advisors Inc.
"Default" means any event or condition which with notice, passage of
time or both, would constitute an Event of Default.
"Default Rate" means, with respect to any amounts payable hereunder
or under the other Loan Documents, a rate equal to the sum of (a) two percent
(2%) per annum plus (b) the interest rate otherwise in effect with respect to
such amounts.
"Defined Benefit Pension Plan" means a defined benefit plan (other
than a Multiemployer Plan) as defined in ss.3(35) of ERISA which is maintained
by any Borrower or any member of its Controlled Group.
-87-
<PAGE>
"Defined Contribution Plan" means an individual account plan (other
than a Multiemployer Plan) as defined in ss.3(34) of ERISA which is maintained
by any Borrower or any member of its Controlled Group.
"Dollar," "Dollars" and the symbol "$" means lawful money of the
United States of America.
"Drawing" means (a) any amount disbursed by the Issuer pursuant to
the terms of a Letter of Credit or (b) as the context may require, the
obligation of the Borrowers to reimburse the Issuer for such disbursement.
"EBITDA" means Net Income before Interest Expense, provision for
income taxes, depreciation and amortization, as adjusted on a pro forma basis
for the transactions contemplated by the Multicare Management Agreement.
"Eligible Institution" means (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a commercial bank organized under the laws of the United States,
or any State thereof, and having a combined capital surplus of at least
$1,000,000,000.00; (iv) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having a combined
capital surplus of at least $1,000,000,000.00; (v) a commercial bank organized
under the laws of any other country that is a member of the Organization for
Economic Cooperation and Development or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrower or under the laws of a political subdivision of any
such country, and having a combined capital and surplus of at least
$1,000,000,000.00, so long as such bank is acting through a branch or agency
located in the United States; and (vi) a finance company, insurance company or
other financial institution or fund (whether a corporation, partnership, trust
or other entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having a combined
capital and surplus or total assets of at least $500,000,000.00 and (vii) with
respect to any Lender that is a fund, any other fund with assets in excess of
$100,000,000.00 that invests in bank loans and is managed by the same investment
advisor as such Lender; provided, however, that neither any Loan Party nor any
Affiliate of a Loan Party shall qualify as an Eligible Institution under this
definition.
"Environmental Affiliate" means, 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" means any approval, order, consent,
authorization, certificate, license, permit or validation of, or exemption or
other action by, or filing, recording or registration with, any Governmental
Authority pursuant to or required under any Environmental Law.
-88-
<PAGE>
"Environmental Claim" means, 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 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" means 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" 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 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" 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 (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. "Environmental Law" shall also include any Environmental Approval and
the terms and conditions thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations thereunder.
"Event of Default" means any of the Events of Default described in
Section 7.1 hereof.
-89-
<PAGE>
"Excluded Subsidiaries" means the entities listed on Schedule 9.1
attached hereto and, after the Closing Date, each Subsidiary of any Excluded
Subsidiary.
"Federal Funds Rate" for any day means the rate per annum determined
by the Administrative 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.
"Fixed Charge Coverage Ratio" means, as of any date of
determination, the result of:
(a) Cash Flow of Multicare 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, income taxes and Rental
Expense of Multicare 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 on Total
Funded Indebtedness for the four fiscal quarters ending on, or
most recently prior to, such date of determination.
"GAAP" has the meaning set forth in Section 9.3(a) hereof.
"Genesis" has the meaning ascribed to such term in Section 2.1(f)
hereof.
"Genesis Credit Agreement" has the meaning ascribed to such term in
Section 2.1 hereof.
"Genesis ElderCare Corp." means the Delaware corporation of that
name, formerly named Waltz Corp.
"Genesis Group" means Genesis and those of its Subsidiaries which
filed tax returns on a consolidated basis with Genesis prior to the acquisition
of capital stock of Multicare by Acquisition Corp. under the Tender Offer.
"Governmental Authority" means any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of
-90-
<PAGE>
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.
"Guaranty" means, 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.
"Health Care Business" means any healthcare related business
including a facility, unit, operation, or business supplying health care
services, supplies or products, including long-term care, rehabilitation
therapy, specialized health care, health care management and pharmacies.
"Indebtedness" of any Person means (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;
(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 lesser of (i) the
fair market value of the asset subject to such Lien and (ii) the amount of such
Indebtedness;
(e) 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);
(f) 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;
-91-
<PAGE>
(g) all obligations of such Person with respect to acceptances
or similar obligations issued for the account of such Person;
(h) 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;
(i) 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;
(j) all Guaranties of such Person; and
(k) 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.
"Indemnified Parties" means collectively, the Lender Parties and
their respective Affiliates and (without duplication) the directors, officers,
employees, attorneys and agents of each of the foregoing.
"Indemnitees" has the meaning set forth in Section 10.12 hereof.
"Interest Expense" means, 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 excluding any
obligations under any Synthetic Leases) 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" means any rate swap, cap or collar
agreement to which any or all of the Borrowers are party and which is on terms
and conditions satisfactory to the Administrative Agent.
"Investments" has the meaning set forth in Section 6.3 hereof.
-92-
<PAGE>
"JCAHO" means Joint Commission on Accreditation of Healthcare
Organizations.
"Joinder Effective Date" means the date that any Joining Subsidiary
becomes a Borrower hereunder.
"Joinder Supplement" has the meaning ascribed to such term in
Section 4.10 hereof.
"Joining Subsidiary" has the meaning set forth in Section 4.10
hereof.
"Law" means any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lender" has the meaning ascribed to such term in the preamble
hereto and shall include the Swing Loan Lender.
"Lender Parties" means collectively the Lenders and the Agents.
"Letter of Credit" means any letter of credit issued by the Issuer
pursuant to Article 1A hereof.
"Letter of Credit Participation" means, with respect to any Lender,
the participation interest of such Lender in any Letter of Credit acquired
pursuant to Article 1A above. The amount of the Letter of Credit Participation
of a Lender in any Letter of Credit shall be deemed to be the amount equal to
such Lender's pro rata share (determined on the basis of the Commitment at such
time) of the sum of (a) the aggregate unpaid amount of all Drawings thereunder
at such time and (b) the amount of any Contingent Reimbursement Obligations with
respect thereto at such time.
"Licenses" means any and all licenses, including provisional
licenses, certificates of need, JCAHO and/or other accreditations, permits,
franchises, rights to conduct business, approvals by a Governmental Authority or
otherwise, consents, qualifications, operating authority, and/or any other
authorizations.
"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.
"Limitation" means a revocation, suspension, termination,
impairment, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement and/or loss of any other rights.
-93-
<PAGE>
"Loans" means RC Loans or Swing Loans or either or both as the
context indicates.
"Loan Documents" means this Agreement, the Notes, Letters of Credit,
the Pledge Agreement, 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" means 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 whether such obligations are direct or
indirect, absolute or contingent, due or to become due, now or hereafter arising
(specifically including obligations arising or accruing after the commencement
of any bankruptcy, insolvency, or similar proceeding with respect to any Loan
Party, or which would have accrued but for the commencement of such proceeding
even if the claim is not allowed in such proceeding under applicable law).
"Loan Parties" means the Borrowers and any other Person who from
time to time grants or purports to grant to the Administrative Agent a Lien on
any property pursuant to the Pledge Agreement or is a Guarantor of any Loan
Obligations.
"Management Agreement" means any agreement pursuant to which a
Person (or group of Persons) manages the business of another Person (or group of
Persons).
"Management Fee Subordination Agreement" has the meaning given to
such term in Section 2.1 (z) hereof.
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, condition (financial or otherwise), properties or
prospects of Multicare or of the Borrowers, 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 Administrative Agent or any Lender Party to
enforce any rights or remedies under or in connection with any Loan Document.
Without limiting the generality of the foregoing, as used in connection with any
provisions respecting the ownership or operation of any Health Care Business,
Material Adverse Effect may include, among other things, any loss or suspension
of a License or Reimbursement Approval for any material nursing home or other
material Health Care Business or material group of nursing homes or other
material group of Health Care Businesses of the Borrowers, or any event,
occurrence or matter or series thereof giving rise to a reasonable probability
of any of the foregoing consequences.
"Maturity Date" has the meaning ascribed to such term in Section 1.4
hereof.
"Mellon" means Mellon Bank, N.A., a national banking association,
and any successor or assign thereof.
-94-
<PAGE>
"Merger" means the merger of Acquisition Corp., into Multicare on
the terms stated in the Merger Agreement without any change therein or waiver of
any provision thereof not approved the Required Lenders.
"Merger Agreement" means the Agreement and Plan of Merger dated as
of June 16, 1997, among Multicare, Genesis ElderCare Corp. and Acquisition Corp.
"Multicare" has the meaning ascribed to such term in the preamble of
this Agreement.
"Multicare Group" has the meaning ascribed to such term in Section
4.1 hereof.
"Multicare Management Agreement" has the meaning ascribed to such
term in Section 2.1(f).
"Multicare Management Subordination Agreement" means the
Subordination Agreement among Genesis, Multicare and the Agents dated of even
date herewith whereby Genesis has agreed to subordinate its rights to payments
under the Multicare Management Agreement to the extent and on the terms and
conditions as set forth in the Multicare Management Subordination Agreement,
which such terms and conditions are subject to the Agents' approval.
"Multicare Shares" means shares of Multicare common stock, par value
$0.01 per share.
"Multiemployer Plan" means such term in ss.4001(a)(3) of ERISA.
"Nazem" means Nazem, Inc., a Delaware corporation and (a) any
Subsidiary thereof and (b) any other Affiliate thereof reasonably acceptable to
the Administrative Agent. Without limiting the generality of the foregoing,
"Nazem" shall include Genesis ElderCare Portfolio K, L.P.
"Net Cash Proceeds" means, with respect to any transaction involving
a Borrower, 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) that are attributable to or
secured by the properties that are the subject of a sale, assignment or other
disposition which is part of the transaction, (b) reasonable brokerage
commissions and other reasonable fees and expenses (including reasonable fees
and expenses of legal counsel and investment bankers) related to such
transaction, and (c) all taxes actually paid or estimated in good faith to be or
become payable as a result of such transaction.
"Net Cash Provided by Operations" means for any period, the Net
Income of the Borrowers on a consolidated basis for such period plus
amortization and depreciation
-95-
<PAGE>
expense of the Borrowers for such period plus cash extraordinary gains less
Capital Expenditures of the Borrowers for such period (to the extent permitted
by this Agreement), all as adjusted for changes in working capital (as
determined in accordance with GAAP) of the Borrowers during such period less
increases in working capital (or plus decreases in working capital).
"Net Income" means, with respect to any Person, for any period the
net earnings (or loss) after taxes of such Person for such period less non-cash
interest income, less extraordinary gains, plus extraordinary non-cash losses.
"1997 Subordinated Note Indenture" means the Indenture, dated as of
August 11, 1997 between Acquisition Corp., PNC Bank, National Association as
trustee, and Banque Internationale a Luxembourg, S.A., as paying agent, relating
to the 1997 Subordinated Notes, as such Indenture may be amended, restated,
modified or supplemented from time to time in accordance with the terms of this
Agreement.
"1997 Subordinated Notes" means Acquisition Corp.'s 9% Senior
Subordinated Note issued pursuant to the 1997 Subordinated Note Indenture, in
the original principal amount of $250,000,000.00.
"Note" means each promissory note of the Borrowers issued to Lender
relating to such Lender's RC Loans and Commitments substantially in the form of
Exhibit A-1 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.
"Officer's Compliance Certificate" means a certificate, as of a
specified date, of the chief financial officer or controller of Multicare in
substantially the form of Exhibit E hereto as to each of the following: (a) the
absence of any Event of Default or 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 Article 5 and the financial
limitations set forth in Sections 6.1(e), 6.2(i), 6.4(b), and 6.7(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a pension plan (as defined in ss.3(2) of ERISA)
which is subject to Part 3 of Subtitle B of Title I of ERISA or subject to
ss.412 of the Code and maintained by any Borrower or any member of its
Controlled Group.
-96-
<PAGE>
"Permitted Liens" has the meaning set forth in Section 6.2 hereof.
"Person" means an individual, corporation, partnership, trust,
unincorporated association, joint venture, joint-stock company, Governmental
Authority or any other entity.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) as defined in ss.3(3) of ERISA which is either (1) maintained by any
Borrower or any member of its Controlled Group, or (2) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which any Borrower or any member of its
Controlled Group is then making or accruing an obligation to make contributions
or has ever been obligated to make contributions.
"Pledge Agreement" has the meaning ascribed to such term in Section
2.1(e) hereof.
"Premises" has the meaning set forth in Section 10.12 hereof.
"Prime Rate" means the interest rate per annum announced from time
to time by the Administrative Agent as its prime rate. The Prime Rate may be
greater or less than other interest rates charged by the Administrative Agent to
other borrowers.
"Prohibited Transaction" has the meaning given to such term in
ss.406 of ERISA or ss.4975(c) of the Code.
"Quarterly Payment Date" means the last Business Day of each
December, March, June and September.
"RC Loans" has the meaning ascribed to such term in Section 1.1
hereof.
"Regulatory Action" has the meaning set forth in Section 10.12
hereof.
"Regulatory Change" means any applicable law, interpretation,
directive, request or guideline (whether or not having the force of law), or any
change therein or in the administration or enforcement thereof, that becomes
effective or is implemented or first required or expected to be complied with
after the Agreement Date (including any applicable law that shall have become
such as the result of any act of omission of the Borrowers or any of their
Affiliates, without regard to when such applicable law shall have been enacted
or implemented), whether the same is (i) the result of an enactment by a
government or any agency or political subdivision thereof, a determination of a
court or regulatory authority or otherwise or (ii) enacted, adopted, issued or
proposed before or after the Agreement Date, including any such that imposes,
increases or modifies any Tax, reserve requirement, insurance charge, special
deposit requirement, assessment or capital adequacy requirement, but excluding
any such that imposes, increases or modifies any Bank Tax.
-97-
<PAGE>
"Reimbursement Approvals" means, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations (including JCAHO
accreditation) and/or any other agreements with or approvals by organizations
and Governmental Authorities.
"Rental Expense" means, with respect to any Person for any period,
the aggregate rental obligations of such Person, payable in respect of any
leases (including Synthetic Leases but excluding Capitalized 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).
"Required Lenders" means, as of any date, Lenders (otherwise
eligible to vote pursuant to the terms of this Agreement) holding, in the
aggregate, at least 51% of the aggregate outstanding Loans, participations in
Letters of Credit and available Commitments held by Lenders so eligible to vote.
"Reserved Commitment" has the meaning ascribed to such term in
Section 1.1. hereof.
"Responsible Officer" of a Person means the President, the
Secretary, the Chief Executive Officer, any Vice President, the Controller, the
Treasurer or the Chief Financial Officer of such Person.
"Restricted Subsidiaries" means all direct and indirect Subsidiaries
of Multicare at any time, other than Excluded Subsidiaries.
"Secured Parties" has the meaning ascribed to such term in the
Pledge Agreement.
"Subsidiary" of a Person at any time means:
(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;
-98-
<PAGE>
(c) any partnership, limited liability company, 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; or
(d) any entity which is consolidated with such Person for
financial reporting purposes.
"Swing Loan" means an amount advanced by the Swing Loan Lender
pursuant to Section 1.3 hereof.
"Swing Loan Lender" means Mellon, in its capacity as such.
"Swing Loan Note" means the promissory note of the Borrowers issued
to the Swing Loan Lender in substantially the form of Exhibit A-2 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 in part, in
each case as the same may be amended, modified, restated or supplemented from
time to time.
"Syndication Agents" has the meaning ascribed to such term in the
preamble of this Agreement.
"Synthetic Lease" means any lease (other than a Capitalized Lease)
wherein the lessee is treated (or purported to be treated) as the owner of the
leased property for income tax purposes.
"Tax" means any federal, state, local or foreign tax assessment or
other governmental charge or levy (including any withholding tax) upon a Person
or upon its assets, revenues, income or profits.
"Tax Sharing Agreement" has the meaning ascribed to such term in
Section 2.1(y) hereof.
"Tender Offer" means Acquisition Corp.'s offer to purchase the
outstanding common shares of Multicare as contained in its "Offer to Purchase
for Cash All Outstanding Shares of Common Stock of Multicare Companies" dated
June 20, 1997, as extended from time to time.
"Third Party Claims" has the meaning set forth in Section 10.12
hereof.
-99-
<PAGE>
"Third Party Payor Arrangements" means any and all arrangements with
Medicare, Medicaid, CHAMPUS, and any other Governmental Authority, or
quasi-public agency, Blue Cross, Blue Shield, any and all managed care plans and
organizations, including but not limited to HMOs and preferred provider
organizations, private commercial insurance companies, employee assistance
programs and/or any other third party arrangements, plans or programs for
payment or reimbursement in connection with health care services, products or
supplies.
"Total Funded Indebtedness" means the aggregate amount of
consolidated Indebtedness (including the current portion thereof), of Multicare
and its Restricted Subsidiaries (including without limitation all Indebtedness
consisting of Capitalized Lease Obligations, Synthetic Leases, Guaranties and
letter of credit reimbursement obligations).
"TPG" means TPG Partners II L.P., a Delaware limited partnership and
(a) any Subsidiary thereof and (b) any other Affiliate thereof reasonably
acceptable to the Administrative Agent. Without limitation to the generality of
the foregoing, "TPG" shall include TPG Parallel II, L.P., TPG Investors II, L.P.
and TPG MC Coinvestment, L.P.
"Transaction Documents" means each of the material documents as may
exist on the date that the Tender Offer is consummated with such changes thereto
as are permitted by the terms of this Agreement respecting (i) the Tender Offer,
(ii) the proposed merger between the Acquisition Corp. and Multicare, (iii) the
relationship between Genesis, Cypress, Nazem and TPG and the rights and
obligations relating thereto and (iv) related matters including the Put/Call
Agreement and the Stockholders Agreement respecting Genesis ElderCare Corp., the
Merger Agreement and the Multicare Management Agreement.
"United States Person" has the meaning ascribed to such term in
Section 1.13 hereof.
"Withdrawal Liability" has the meaning given to such term in ss.4201
of ERISA.
9.2 CONSTRUCTION. In this Agreement and each other Loan Document, unless
the context otherwise clearly requires,
(a) references to the plural include the singular, the singular the
plural and the part the whole;
(b) "or" has the inclusive meaning represented by the phrase
"and/or;"
(c) 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;
-100-
<PAGE>
(d) 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;
(e) 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 whether or not stated; and
(f) references 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 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 Multicare's
reasonable 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.
9.3 ACCOUNTING PRINCIPLES.
(a) As used herein, "GAAP" shall mean generally accepted accounting
principles (other than as set forth herein as to consolidation) in the United
States, applied on a basis consistent with the principles used in preparing the
financial statements of Multicare and its consolidated Subsidiaries as of
December 31, 1996 and for the fiscal year then ended. When the word
"consolidated" is used in this Agreement, it shall be used in a manner
consistent with generally accepted accounting principles in the United States
except that such principals relating to what entities shall be consolidated
shall be superseded by any terms of this Agreement which designate what entities
shall be consolidated for purposes relating hereto.
(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.
-101-
<PAGE>
ARTICLE 10 - MISCELLANEOUS
10.1 NOTICES. Unless otherwise expressly provided under this Agreement all
notices, requests, demands, directions and other communications (collectively
"notices") given to or made upon any party under the provisions of this
Agreement (and unless otherwise specified, in each other Loan Document) shall be
by telephone (immediately confirmed in writing) or in writing (including
facsimile communication) and if in writing shall be delivered by hand,
nationally recognized overnight courier or U.S. mail or sent by facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages of this Agreement or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly provided in this Agreement, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective unless otherwise expressly
provided, telephonic notices must be confirmed in writing no later than the next
day by letter or facsimile, (d) if given by U.S. mail, the day after such
communication is deposited in the mails with overnight first class postage
prepaid, return receipt requested, and (e) if given by any other means
(including by air courier), when delivered; provided, further, that notices to
the Administrative Agent shall not be effective until received. Any Lender
giving any notice to the Borrowers shall simultaneously send a copy of such
notice to the Administrative Agent, and the Administrative Agent shall promptly
notify the other Lenders of the receipt by it of any such notice. Except as
otherwise provided in this Agreement, in the event of a discrepancy between any
telephonic or written notice, the written notice shall control.
10.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT. 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 except as expressly provided
otherwise (e.g., certain fee agreements and fee arrangements set forth in the
commitment letter relating hereto). This Agreement and the other Loan Documents
represent the entire agreement between the parties to this Agreement with
respect to the transactions contemplated hereby or thereby and, except as
expressly provided herein or in the other Loan Documents, shall not be affected
by reference to any other documents.
10.3 SEVERABILITY. Every provision of this Agreement and each of the other
Loan Documents is intended to be severable, and if any term or provision of this
Agreement or any of the other Loan Documents shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction. 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
-102-
<PAGE>
amended to modify or delete, as 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.
10.4 DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
affect the meaning or construction of any of the provisions of this Agreement.
10.5 GOVERNING LAW. This Agreement and the rights and obligations of the
parties under this Agreement and under the other Loan Documents shall be
construed in accordance with and shall be governed by the laws of the
Commonwealth of Pennsylvania.
10.6 NON-MERGER OF REMEDIES. The covenants and obligations of the
Borrowers and the rights and remedies of the Administrative Agent and other
Lender Parties hereunder and under the other Loan Documents shall not merge with
or be extinguished by the entry of a judgment hereunder or thereunder, and such
covenants, obligations, rights and remedies shall survive any entry of a
judgment until payment in full of the Loan Obligations and termination of the
Commitment. All obligations under the Loan Documents shall continue to apply
with respect to and during the collection of amounts due under the Loan
Documents or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and in any workout, restructuring or in connection
with the protection, preservation, exercise or enforcement of any of the terms
of this Agreement or of any rights under this Agreement or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings. Without limiting the generality of the foregoing, post-judgment
interest rate shall be the interest rate provided in paragraph (c) of Section
1.8 (Default Rate) above.
10.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES. No course of
dealing and no delay or failure of the Administrative Agent or any other Lender
Party 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 Administrative 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 Administrative 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 10.8 below
shall be effective only as to such specific default and shall not apply to any
subsequent default.
-103-
<PAGE>
10.8 AMENDMENTS; WAIVERS. Any term, covenant, agreement or condition of
any Loan Document to which the Lenders (or the Administrative Agent) are party
may be amended, and any right under the Loan Documents may be waived, if, but
only if, such amendment or waiver is in writing and is signed by the Required
Lenders (or by the Administrative Agent at the direction of the Required
Lenders); provided, however, if the rights and duties of the Administrative
Agent are affected thereby, such amendment or waiver must be executed by the
Administrative Agent; and provided, further, that any amendment or waiver of the
terms of Article 1A hereof or any other amendment or waiver that relates to
Letters of Credit or rights or obligations relating thereto or the rights or
obligations of the Issuer must also be executed by the Issuer; and provided,
further, that no such amendment or waiver shall be effective unless in writing
and signed by each Lender referred to below, if it would
(a) increase such Lender's Commitment or the outstanding
amount of such Lender's Loans or Letters of Credit Participation, or
(b) extend the maturity of any Loan held by such Lender or the
time of any scheduled principal payment of any Loan of such Lender, or
(c) decrease the rate of interest or amount of fees due to
such Lender, or decrease the principal amount in respect of any Loan held
by such Lender or extend the time of payment of interest or fees due to
such Lender, provided that the written consent of the Required Lenders,
rather than the consent of all Lenders, shall be sufficient to waive
imposition of the Default Rate, or
(d) reduce or waive any payment owing to such Lender in
respect to any unreimbursed Drawings; or
(e) change the number of Lenders which are required to consent
to any proposed action under this Agreement before such action may be
taken under this Agreement if such change could cause such Lender to lose
its right to participate in such consent;
and provided, further, that no such amendment or waiver shall be effective
unless in writing and signed by all the Lenders if it would
(i) amend the definition of "Required Lenders" or
(ii) release any Borrower of its Obligations or release
any guaranty or collateral security granted pursuant to the Loan
Documents; provided, however, the Administrative Agent may, without
the consent of any Person, release any Borrower, guarantor or
collateral security granted pursuant to the Loan Documents, (A) as a
court of competent jurisdiction may direct, or (B) in connection
with a disposition permitted under Section 6.5 above (other
-104-
<PAGE>
than a disposition to another Borrower) or as may be otherwise
provided under the Loan Documents and provided, further, that for
purposes of determining whether "all Lenders", "the Required
Lenders" or "any Lender" has consented to any amendment or waiver,
no effect shall be given to the determination of any Lender who has
lost its right to vote pursuant to Sections 1.3(c), 1.3(e)(iii), or
1.6(e). Without limiting the generality of the foregoing, the
Administrative Agent is authorized and directed to take such action
as it deems necessary or desirable (including, without limitation,
the execution and filing of UCC-3 termination statements or the
giving of direction to another Person to do the same) to release any
security interest referred to in the proviso to this clause (ii).
Further, the Administrative Agent and the Lenders may amend or modify the
provisions of Article 8 hereof (except for Section 8.9 (Successor Administrative
Agent) and Section 8.12(b) (Successor Agent)) without the need for any consent
or approval from the Borrowers, it being acknowledged that the Borrowers are not
third party beneficiaries of the provisions of said Article 8 (except for
Section 8.9 (Successor Administrative Agent) and Section 8.12(b) (Successor
Agent)) and (y) without the consent of any Lenders, the Administrative Agent may
enter into amendments and modifications to this Agreement and the other Loan
Documents as necessary or desirable to cure any ambiguities herein or therein or
to add additional borrowers or add additional Collateral.
10.9 SUCCESSORS AND ASSIGNS
(a) Assignments by the Borrowers. Without the prior written consent
of all of the Lenders, no Borrower may assign any of its rights or delegate any
of its duties or obligations under this Agreement or any other Loan Document.
(b) Participations. Any Lender may sell participations to one or
more Eligible Institutions of all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment); provided, however, that, with respect to any Lender, (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties to this Agreement
for the performance of such obligations, (iii) all amounts payable by the
Borrowers under this Agreement shall be determined as if such transferor Lender
had not sold such participation and no participant shall be entitled to receive
any greater amount pursuant to this Agreement than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such participant had no such transfer
occurred, (iv) such participant shall agree to be bound by the provisions of
this Agreement and the other Loan Documents, and (v) with respect to any sale of
a participation hereunder, such Lender shall contemporaneously sell to the same
participant a proportionately equal amount of its interest in the Acquisition
Corp. Credit Agreement, the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such transferor Lender
in connection with such Lender's rights
-105-
<PAGE>
and obligations under this Agreement, and such Lender shall retain the sole
rights and responsibility vis-a-vis the Borrowers to enforce the obligations of
the Borrowers relating to the Loans and Letters of Credit including the right to
approve any amendment, modification or waiver of any provision of this Agreement
(except that such Lender may give its participants the right to direct such
Lender to approve or disapprove any amendment, modification or waiver which
would require such Lender's consent under clause (a), (c), (i) or (ii) of the
preceding Section 10.8).
(c) Assignments by Lenders. Each Lender may assign to one or more
Eligible Institutions all or a portion of its interest, rights and obligations
under this Agreement (including all or a portion of its Commitment) and the
other Loan Documents; provided, however, that with respect to any assignment,
(i) unless the assignee is (prior to the effective time of the assignment) an
existing Lender or an Affiliate of an existing Lender, the Administrative Agent
and, if no Event of Default has occurred and is continuing, Multicare (on behalf
of the Borrowers) must give their prior written consent to such assignment
(which consents shall not be unreasonably withheld), (ii) the parties to each
such assignment shall execute and deliver to the Administrative Agent and,
unless an Event of Default has occurred and is continuing Multicare (on behalf
of the Borrowers), for their acceptance, an Assignment and Acceptance Agreement
in substantially the form of Exhibit F hereto (the "Assignment and Acceptance"),
together with (A) any Note subject to such assignment, and (B) a processing and
recordation fee of $3,500.00 or such lesser amount as is required for the
Administrative Agent to receive an aggregate amount equal to $3,500.00 under
this Agreement and the Acquisition Corp. Credit Agreement in respect of such
transfer, (iii) with respect to any assignment of or interest hereunder, such
Lender shall contemporaneously assign to the same assignee a proportionately
equal amount of its interest in the Acquisition Corp. Credit Agreement, (iv) no
Lender may make a partial assignment if the amount of its portion of the
Commitment and (without duplication) the outstanding Loans, together with the
amount of its interest under the Acquisition Corp. Credit Agreement assigned in
accordance with clause (vi) below is, or after giving effect to the proposed
assignment would be, less than Ten Million Dollars ($10,000,000.00), (v) unless
the assignee is (prior to the effective time of the assignment) a Lender
hereunder, the aggregate amount of any interest so sold to any assignee pursuant
to any partial assignment hereunder, together with the aggregate amount so sold
to such assignee in accordance with clause (vi) below may not be less than Ten
Million Dollars ($10,000,000.00), and (vi) with respect to any assignment of an
interest hereunder, the assigner shall contemporaneously assign to the same
assignee a proportionately equal amount of its interest under the Acquisition
Corp. Credit Agreement. "Partial assignment" as used in clauses (iv) and (v)
above means any assignment of a Lender's rights and obligations hereunder except
an assignment of all of such Lender's rights and obligations such that after the
assignment such Lender shall have no Commitment and no interest in any Loans or
Letters of Credit hereunder. Upon compliance with clauses (i) through (vi)
above, from and after the effective date specified in the relevant Assignment
and Acceptance, (x) the assignee shall be a party to this Agreement and the
other Loan Documents to which the assignor was a party, and to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement and under
-106-
<PAGE>
the other Loan Documents and (y) the assigning Lender shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement and the other Loan Documents.
(d) Procedures Respecting Assignment. Upon their receipt of an
Assignment and Acceptance executed by the assignor and the assignee, subject to
the conditions set forth in the preceding paragraph (c), the Administrative
Agent and (unless an Event of Default shall have occurred and be continuing)
Multicare (on behalf of the Borrowers) shall accept such Assignment and
Acceptance. Within thirty (30) Business Days after such Assignment and
Acceptance is signed and accepted by all parties, the Borrowers, at their own
expense, shall execute and deliver to the Administrative Agent new Notes in
exchange for the surrendered Notes, each to the order of such assignee in an
amount equal to its portion of the Commitment and Loans assigned to it pursuant
to such Assignment and Acceptance and new Notes to the order of the assigning
Lender in an amount equal to the Commitment and Loans retained by it. Such Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Notes, shall be dated the date of such surrendered
Notes (each assignee shall confirm in the Assignment and Acceptance that,
notwithstanding the date of the new Notes made in favor of such assignee, such
assignee shall have no right to, or interest in, any fees or interest which
shall have accrued on the Loans prior to the effective date of the Assignment
and Acceptance). Cancelled or replaced Notes shall be returned to the Borrowers
upon the execution of such new Notes.
(e) Assignments to Federal Reserve Bank. Notwithstanding any of the
terms of this Section 10.9, without consent of Administrative Agent or Borrower
any Lender may assign all or any portion of its rights to payments in connection
with this Agreement to a Federal Reserve Bank as collateral in accordance with
Regulation A of the Board of Governors of the Federal Reserve System. Such
assignment shall not affect any other rights or any obligations of the assigning
Lender.
10.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE
PAGES. Any Loan Document may be executed in one or more counterparts, each of
which shall constitute an original, but all of which together shall constitute
one and the same instrument. Delivery of a photocopy or telecopy of an executed
counterpart of a signature page to any Loan Document shall be as effective as
delivery of a manually executed counterpart of such Loan Document.
10.11 MAXIMUM LAWFUL INTEREST RATE. Notwithstanding any provision
contained in this Agreement or the Notes or any other Loan Document, 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 payment
by the Borrowers includes interest in excess of such a maximum amount, each
Lender shall apply such excess to the reduction of the unpaid principal amount
due pursuant to this Agreement and the Notes, or if none is due,
-107-
<PAGE>
to the other Loan Obligations, if any, and then such excess shall be refunded to
Multicare (on behalf of the Borrowers).
10.12 INDEMNIFICATION.
(a) Whether or not any fundings are made under this Agreement, the
Borrowers jointly and severally shall unconditionally upon demand, pay or
reimburse the Administrative Agent and other Lender Parties for, and indemnify
and save the Administrative Agent, the other Lender Parties and their respective
Affiliates, officers, directors, employees, agents, attorneys, shareholders and
consultants (collectively, "Indemnitees") harmless 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 Indemnitee in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may at any time be imposed on, asserted against or incurred
by such Indemnitee 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, any Acquisition or
transaction from time to time contemplated hereby or by any other Loan Document,
the Tender Offer, the Merger, or any transaction actually or proposed to be
financed in whole or in part or directly or indirectly with the proceeds of any
Loan pr Letter of Credit, any transaction contemplated by the Transaction
Documents but excluding any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements that
the Borrower proves were the result solely of the gross negligence or willful
misconduct of such Indemnitee, as finally determined by a court of competent
jurisdiction. If and to the extent that the foregoing obligations of the
Borrowers under this paragraph (a), 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.
(b) Without limiting the generality of the foregoing, the Borrowers
jointly and severally hereby indemnify and agree to defend and hold harmless
each Indemnitee, from and against any and all claims, actions, causes of action,
liabilities, penalties, fines, damages, judgments, losses, suits, expenses,
legal or administrative proceedings, interest, costs and expenses (including
court costs and attorneys', consultants' and experts' fees) arising out of or in
any way relating to: (i) the use, handling, management, production, treatment,
processing, storage, transfer, transportation, disposal, release or threat of
release of any Environmental Concern Material by or on behalf of, any Borrower
or any of its Environmental Affiliates; (ii) the presence of Environmental
Concern Materials on, about, beneath or arising from any premises owned or
occupied by any Borrower or any of its Environmental Affiliates (herein
collectively, the "Premises"); (iii) the failure of any Borrower or
Environmental Affiliate of a Borrower or any occupant of any Premises to comply
with the Environmental Laws; (iv) any Borrower's breach of any of the
representations, warranties and covenants contained herein or in any Loan
Documents; (v)
-108-
<PAGE>
Regulatory Actions (as hereinafter defined) and Third Party Claims (as
hereinafter defined); or (vi) the imposition or recording of a Lien against any
Premises in connection with any release at, on or from any Premises or any
activities undertaken on or occurring at any Premises, or arising from such
Premises or pursuant to any Environmental Law. The Borrowers' indemnity and
defense obligations under this section shall include, whether foreseeable or
unforeseeable, any and all costs related to any remedial action. "Regulatory
Action" means any notice of violation, citation, complaint, request for
information, order, directive, compliance schedule, notice of claim, consent
decree, action, litigation or proceeding brought or instituted by any
governmental authority under or in connection with any Environmental Law
involving any Borrower or any occupant of any of the Premises or involving any
of the Premises or any activities undertaken on or occurring at any Premises.
"Third Party Claims" means claims by a party (other than a party to this
Agreement and other than Regulatory Actions) based on negligence, trespass,
strict liability, nuisance, toxic tort or detriment to human health or welfare
due to Environmental Concern Materials on, about, beneath or arising from any
Premises or in any way related to any alleged violation of any Environmental
Laws or any activities undertaken on or occurring at any Premises.
(c) The indemnities contained herein shall survive repayment of the
Loan Obligations, termination of the Commitment and satisfaction, release, and
discharge of the Loan Documents, whether through full payment of the Loans,
foreclosure, deed in lieu of foreclosure or otherwise.
(d) The foregoing amounts are in addition to any other amounts which
may be due and payable to the Administrative Agent and/or the Lenders under this
Agreement. A certification by the Administrative Agent or a Lender hereunder of
the amount of liabilities, losses, costs, expenses, claims and/or charges shall
be conclusive, absent manifest error.
10.13 EXPENSES
(a) Whether or not there shall be any funding hereunder, the
Borrowers agree, jointly and severally, to pay promptly or cause to be paid
promptly and to hold harmless:
(i) with respect to matters relating to clause (A) of this
paragraph (i), the Agents, and with respect to matters relating to (B) and (C)
of this paragraph (i), the Administrative Agent (and after an Event of Default
and for the period in which the same shall continue, each Lender Party) 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 it from
time to time arising from or relating to (A) the negotiation, preparation,
execution and delivery of this Agreement and the other Loan Documents (B) the
administration and performance of this Agreement and the other Loan Documents,
and (C) any requested amendments,
-109-
<PAGE>
modifications, supplements, waivers or consents (whether or not ultimately
entered into or granted) to this Agreement or any other Loan Documents;
(ii) the Administrative Agent (and, with respect to clause (D)
below, after an Event of Default and for the period in which the same shall
continue, each Lender Party), 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 it from time to time arising from
or relating to the enforcement or preservation of rights under, or
administration of, 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 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); and
(iii) each Lender Party against liability for 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.
10.14 MAXIMUM AMOUNT OF JOINT AND SEVERAL LIABILITY. To the
extent that applicable Law otherwise would render the full amount of the joint
and several obligations of any Subsidiary of Multicare 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, provided,
however, that each Borrower's obligations hereunder and under the other Loan
Documents shall be presumptively valid and enforceable to their fullest extent
in accordance with the terms hereof or thereof, as if this Section 10.14 were
not a part of this Agreement.
10.15 AUTHORIZATION OF MULTICARE BY OTHER BORROWERS. (a) Each of the
Borrowers hereby irrevocably authorizes Multicare 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 is coupled with an interest and shall be
irrevocable, and the Administrative Agent and each Lender Party may rely on any
notice, request, information supplied by Multicare and every document executed
by Multicare, agreement made by Multicare or other action taken by Multicare in
respect of the Borrowers or any thereof as if the same were supplied, made or
taken 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
-110-
<PAGE>
connection herewith shall not, unless the context clearly requires, relieve any
such Borrower from obligations in respect of such writing.
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 and Letters of Credit hereunder.
Multicare and, subject only to the terms of the preceding paragraph (a), 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.
10.16 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect
to its Commitment hereunder and the Loan Obligations owing to it, the
Administrative 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 Administrative Agent, and the terms "Lender," "Holders of
Notes" and like terms shall include the Administrative Agent in its individual
capacity as such. The Administrative 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, serve as
"Administrative Agent" for other financing vehicles, issue letters of credit on
behalf of, and engage in any other business with, (a) any Loan Party or any
stockholder, Subsidiary or Affiliate of any Loan Party or (b) any other Person,
whether such other Person may be engaged in any conflict or dispute with any
Loan Party or any Lender Party or otherwise, as though the Administrative Agent
were not the Administrative Agent hereunder.
10.17 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 Person or
any collateral or other direct or indirect security for any of the Loan
Obligations. Without limiting the generality of the foregoing, each Borrower
acknowledges and agrees that the Administrative Agent or other Lender Party may
commence an action against such Borrower whether or not any action is brought
against any other Borrower or against any collateral and it shall be no defense
to any action brought against any Borrower that the Lender Parties have failed
to bring an action against any other Loan Party or any Collateral.
10.18 SET-OFF. The Borrowers hereby agree that, to the fullest extent
permitted by Law, if any Loan Obligation 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 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
-111-
<PAGE>
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 10.18. The rights provided by this Section 10.18 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.
10.19 SHARING OF COLLECTIONS. The Lender Parties hereby agree among
themselves that if any Lender Party shall receive (by voluntary payment,
realization upon security, set-off or from any other source) any amount on
account of the Loan Obligations in greater proportion than any such amount
received by any other Lender Party (based on the relative amount of each such
Lender Party's interest in the Loan Obligations), then the Lender Party
receiving such proportionately greater payment shall notify each other Lender
Party and the Administrative Agent of such receipt, and equitable adjustment
will be made in the manner stated in this Section 10.19 so that, in effect, all
such excess amounts will be shared ratably among all of the Lender Parties. The
Lender Party 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 Lender Parties a participation in the applicable Loan
Obligations owed to such other Lender Parties in such amount as shall result in
a ratable sharing by all Lender Parties of such excess amount (and to such
extent the receiving Lender Party shall be a participant). If all or any portion
of such excess amount is thereafter recovered from the Lender Party 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 Party making such purchase. The
Borrowers hereby consent to and confirm the foregoing arrangements. Each
participant shall be bound by this Section 10.19 as fully as if it were a Lender
hereunder.
10.20 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER OF
JURY TRIAL.
(a) Consent to Jurisdiction. For the purpose of enforcing payment
and performance of the Loan Documents, including, any payment under the Notes
and performance of other obligations under the Loan Documents, or in any other
matter relating to, or arising out of, the Loan Documents, each of the Borrowers
hereby consents to the jurisdiction and venue of the courts of the Commonwealth
of Pennsylvania or of any federal court located in such state, waive personal
service of any and all process upon it and consents that all such service of
process be made by certified or registered mail directed to Multicare (on behalf
of the applicable Borrowers) at the address provided for in Section 10.1 and
service so made shall be deemed to be completed upon actual receipt or execution
of a receipt by any Person at such address. Each of the Borrowers hereby waives
the right to contest the jurisdiction and venue of the courts located in the
Commonwealth of Pennsylvania on the ground of inconvenience or otherwise and,
further, waives any right to bring any action or proceeding against (a) the
Administrative Agent in any court outside the
-112-
<PAGE>
Commonwealth of Pennsylvania, or (b) any other Lender other than in a state
within the United States designated by such Lender. The provisions of this
Section 10.20 shall not limit or otherwise affect the right of the
Administrative Agent or any other Lender Party to institute and conduct an
action in any other appropriate manner, jurisdiction or court.
(b) WAIVER OF JURY TRIAL; DAMAGES. NEITHER ANY LENDER PARTY NOR ANY
LOAN PARTY, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE
FOREGOING SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF
THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT, OR INVOLVING ANY COLLATERAL OR ANY
GUARANTY RELATING TO THE INDEBTEDNESS HEREUNDER OR THE RELATIONSHIP BETWEEN OR
AMONG SUCH PERSONS OR ANY OF THEM. NO SUCH PERSON WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES
ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS
SECTION 10.20 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS
AGREEMENT (i) CERTIFIES THAT NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER
PARTY NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR ANY
LENDER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE
AGENT OR SUCH LENDER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH (b) OF SECTION 10.20.
THE PROVISIONS OF THIS SECTION 10.20 HAVE BEEN FULLY DISCLOSED TO THE PARTIES
AND THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION 10.20 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
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.
-113-
<PAGE>
Agents and Lenders:
MELLON BANK, N.A., as a Lender
and as Administrative Agent
By
----------------------------------
Name:
Title:
Address for notices:
street address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, Pennsylvania 19106
mailing address:
AIM 199-5220
P.O. Box 7899
Philadelphia, Pennsylvania 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, Pennsylvania 19462
Attention: Barbara J. Hauswald
Vice President
Telephone: 610-941-8612
Facsimile: 610-941-4136
-114-
<PAGE>
Domestic Lending Office:
CITICORP, USA, INC., as a Lender and as
Syndication Agent
By
---------------------------------------
Name:
Title:
Address for notices:
399 Park Avenue
8th Floor
New York, NY 10043
Attention: Margaret A. Brown
Telephone: 212-559-0501
Facsimile: 212-793-3053
-115-
<PAGE>
FIRST UNION NATIONAL BANK, as a
Lender and as Documentation Agent
By
---------------------------------------
Name:
Title:
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
NATIONSBANK, N.A., as a Lender and as a
Syndication Agent
By
---------------------------------------
Name:
Title:
Address for notices:
1 Nationsbank Plaza
5th Floor
Nashville, TN 37239
Attention: Scott Ward
Telephone:
Facsimile: 615-749-4640
-116-
<PAGE>
BORROWERS:
THE MULTICARE COMPANIES, INC., a
Delaware corporation
By____________________________
Name: James V. McKeon
Title: Vice President, Controller
and Assistant Secretary
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
ADS APPLE VALLEY LIMITED PARTNERSHIP, a Massachusetts limited partnership, by:
ADS Apple Valley, Inc. its General Partner
ADS DARTMOUTH GENERAL PARTNERSHIP, a Massachusetts general partnership, by ADS
Dartmouth ALF, Inc. and ADS Senior Housing, Inc., its General Partners
ADS HINGHAM LIMITED PARTNERSHIP, a Massachusetts limited partnership, by ADS
Hingham Nursing Facility, Inc., its General Partner
ADS RECUPERATIVE CENTER LIMITED PARTNERSHIP, a Massachusetts limited
partnership, by ADS Recuperative Center, Inc., its General Partner
CARE 4, L.P., a Delaware limited partnership, by Institutional Health Care
Services, Inc., its General Partner
CARE HAVEN ASSOCIATES LIMITED PARTNERSHIP, a West Virginia limited partnership,
by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its
General Partners
---------------------
Initials of Signor
-117-
<PAGE>
CUMBERLAND ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by
Health Resources of Cumberland, Inc., its General Partner
GLENMARK PROPERTIES I, LIMITED PARTNERSHIP, a West Virginia limited partnership,
by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its
General Partners
GROTON ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by
Health Resources of Groton, Inc., its General Partner
MIDDLETOWN (RI) ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited
partnership, by Health Resources of Middletown (R.I.), Inc., its General Partner
POINT PLEASANT HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership,
by Glenmark Associates, Inc., its General Partner
RALEIGH MANOR LIMITED PARTNERSHIP, a West Virginia limited partnership, by
Glenmark Associates, Inc., its General Partner
ROMNEY HEALTH CARE CENTER LIMITED PARTNERSHIP, a West Virginia limited
partnership, by Glenmark Associates, Inc., its General Partner
SISTERVILLE HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by
Glenmark Associates, Inc., its General Partner
TEAYS VALLEY HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by
Glenmark Associates, Inc., its General Partner
THE STRAUS GROUP - HOPKINS HOUSE, L.P., a New Jersey limited partnership, by
Encare of Wyncote, Inc., its General Partner
THE STRAUS GROUP - QUAKERTOWN MANOR, L.P., a New Jersey limited partnership, by
Encare of Quakertown, Inc., its General Partner
WALLINGFORD ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by
Health Resources of Wallingford, Inc., its General Partner
WARWICK ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by
Health Resources of Warwick, Inc., its General Partner
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
By:__________________________
On behalf of each of the foregoing
as Vice President, Controller
and Assistant Secretary of the General
Partner
-118-
<PAGE>
HOLLY MANOR ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by
Encare of Mendham, L.L.C., its General Partner, by Century Care Management,
Inc., its authorized manager
MERCERVILLE ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by
Breyut Convalescent Center, L.L.C., its General Partner, by Century Care
Management, Inc., its authorized manager
POMPTON ASSOCIATES, L.P., a New Jersey limited partnership, by Pompton Corp.,
L.L.C., its General Partner, by Century Care Management, Inc., its authorized
manager
THE STRAUS GROUP - OLD BRIDGE, L.P., a New Jersey limited partnership, by Health
Resources of Emery, L.L.C., its General Partner, by Century Care Management,
Inc., its authorized manager
THE STRAUS GROUP - RIDGEWOOD, L.P., a New Jersey limited partnership, by Health
Resources of Ridgewood, L.L.C., its General Partner, by Century Care Management,
Inc., its authorized manager
By:__________________________
On behalf of each of the foregoing
as Vice President, Controller
and Assistant Secretary of the manager
Address for notices:
149 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
-119-
<PAGE>
ACADEMY NURSING HOME, INC., a
Massachusetts corporation
ADS APPLE VALLEY, INC., a
Massachusetts corporation
ADS CONSULTING, INC., a
Massachusetts corporation
ADS DANVERS ALF, INC., a Delaware
corporation
ADS DARTMOUTH ALF, INC., a
Delaware corporation
ADS HINGHAM ALF, INC., a Delaware
Corporation
ADS HINGHAM NURSING FACILITY,
INC., a Massachusetts corporation
ADS HOME HEALTH, INC., a Delaware
corporation
ADS MANAGEMENT, INC., a
Massachusetts corporation
ADS/MULTICARE, INC., a Delaware
corporation
ADS RECUPERATIVE CENTER, INC.,
a Massachusetts corporation
ADS SENIOR HOUSING, INC., a
Massachusetts corporation
ADS VILLAGE MANOR, INC., a
Massachusetts corporation
ANR, INC., a Delaware corporation
APPLEWOOD HEALTH RESOURCES,
INC., a Delaware corporation
AUTOMATED PROFESSIONAL
ACCOUNTS, INC., a West Virginia
corporation
BERKS NURSING HOMES, INC., a
Pennsylvania corporation
BETHEL HEALTH RESOURCES, INC.,
a Delaware corporation
BRIGHTWOOD PROPERTY, INC., a
West Virginia corporation
CENTURY CARE CONSTRUCTION,
INC., a New Jersey corporation
CENTURY CARE MANAGEMENT,
INC., a Delaware corporation
CHATEAU VILLAGE HEALTH
RESOURCES, INC., a Delaware
corporation
CHG INVESTMENT CORP., INC., a
Delaware corporation
CHNR-1, INC., a Delaware corporation
COLONIAL HALL HEALTH
RESOURCES, INC., a Delaware
corporation
COLONIAL HOUSE HEALTH
RESOURCES, INC., a Delaware
corporation
COMPASS HEALTH SERVICES, INC.,
a West Virginia corporation
CONCORD HEALTH GROUP, INC., a
Delaware corporation
--------------------
Initials of Signor
-120-
<PAGE>
CONCORD HOME HEALTH, INC., a
Pennsylvania corporation
CONCORD PHARMACY SERVICES,
INC., a Pennsylvania corporation
CONCORD REHAB, INC., a
Pennsylvania corporation
CONCORD SERVICE CORPORATION,
a Pennsylvania corporation
CVNR, INC., a Delaware corporation
DELM NURSING, INC., a Pennsylvania
corporation
ELMWOOD HEALTH RESOURCES,
INC., a Delaware corporation
ENCARE OF MASSACHUSETTS, INC.,
a Delaware corporation
ENCARE OF PENNYPACK, INC., a
Pennsylvania corporation
ENCARE OF QUAKERTOWN, INC., a
Pennsylvania corporation
ENCARE OF WYNCOTE, INC., a
Pennsylvania corporation
ENR, INC., a Delaware corporation
GLENMARK ASSOCIATES, INC., a
West Virginia corporation
GMA - BRIGHTWOOD, INC., a West
Virginia corporation
GMA CONSTRUCTION, INC., a West
Virginia corporation
GMA - MADISON, INC., a West
Virginia corporation
GMA PARTNERSHIP HOLDING
COMPANY, INC., a West Virginia
corporation
GMA - UNIONTOWN, INC., a
Pennsylvania corporation
HEALTH RESOURCES OF
BROADMAN, INC., a Delaware
corporation
HEALTH RESOURCES OF CEDAR
GROVE, INC., a New Jersey corporation
HEALTH RESOURCES OF
COLCHESTER, INC., a Connecticut
corporation
HEALTH RESOURCES OF
COLUMBUS, INC., a Delaware
corporation
HEALTH RESOURCES OF
CUMBERLAND, INC., a Delaware
corporation
HEALTH RESOURCES OF
EATONTOWN, INC., a New Jersey
corporation
HEALTH RESOURCES OF
FARMINGTON, INC., a Delaware
corporation
HEALTH RESOURCES OF GARDNER,
INC., a Delaware corporation
--------------------
Initials of Signor
-121-
<PAGE>
HEALTH RESOURCES OF
GLASTONBURY, INC., a Connecticut
corporation
HEALTH RESOURCES OF GROTON,
INC., a Delaware corporation
HEALTH RESOURCES OF LAKEVIEW,
INC., a New Jersey corporation
HEALTH RESOURCES OF LEMONT,
INC., a Delaware corporation
HEALTH RESOURCES OF LYNN,
INC., a New Jersey corporation
HEALTH RESOURCES OF KARMENTA
AND MADISON, INC., a Delaware
corporation
HEALTH RESOURCES OF
MARCELLA, INC., a Delaware
corporation
HEALTH RESOURCES OF
MIDDLETOWN (R.I.), INC., a Delaware
corporation
HEALTH RESOURCES OF
MORRISTOWN, INC., a New Jersey
corporation
HEALTH RESOURCES OF NORFOLK,
INC., a Delaware corporation
HEALTH RESOURCES OF NORWALK,
INC., a Connecticut corporation
HEALTH RESOURCES OF
PENNINGTON, INC., a New Jersey
corporation
HEALTH RESOURCES OF
ROCKVILLE, INC., a Delaware
corporation
HEALTH RESOURCES OF SOUTH
BRUNSWICK, INC., a New Jersey
corporation
HEALTH RESOURCES OF TROY
HILLS, INC., a New Jersey corporation
HEALTH RESOURCES OF
WALLINGFORD, INC., a Delaware
corporation
HEALTH RESOURCES OF WARWICK,
INC., a Delaware corporation
HEALTHCARE REHAB SYSTEMS,
INC., a Pennsylvania corporation
HORIZON ASSOCIATES, INC., a West
Virginia corporation
HORIZON MEDICAL EQUIPMENT
AND SUPPLY, INC., a West Virginia
corporation
HORIZON MOBILE, INC., a West
Virginia corporation
HORIZON REHABILITATION, INC., a
West Virginia corporation
HR OF CHARLESTON, INC., a West
Virginia corporation
HRWV Huntington, Inc., a West Virginia
corporation
--------------------
Initials of Signor
-122-
<PAGE>
INSTITUTIONAL HEALTH CARE
SERVICES, INC., a New Jersey
corporation
LAKEWOOD HEALTH RESOURCES,
INC., a Delaware corporation
LAUREL HEALTH RESOURCES, INC.,
a Delaware corporation
LEHIGH NURSING HOMES, INC., a
Pennsylvania corporation
LWNR, INC., a Delaware corporation
MABRI CONVALESCENT CENTER,
INC., a Connecticut corporation
MARKGLEN, INC., a West Virginia
corporation
MARSHFIELD HEALTH RESOURCES,
INC., a Delaware corporation
MONTGOMERY NURSING HOMES,
INC., a Pennsylvania corporation
MULTICARE AMC, INC., a Delaware
Corporation
MULTICARE HOME HEALTH OF
ILLINOIS, INC., a Delaware corporation
NATIONAL PHARMACY SERVICE,
INC., a Pennsylvania corporation
NURSING AND RETIREMENT
CENTER OF THE ANDOVERS, INC., a
Massachusetts corporation
PHC OPERATING CORP., a Delaware
corporation
POCAHONTAS CONTINUOUS CARE
CENTER, INC., a West Virginia
corporation
PRESCOTT NURSING HOME, INC., a
Massachusetts corporation
PROGRESSIVE REHABILITATION
CENTERS, INC., a Delaware corporation
PROVIDENCE HEALTH CARE, INC., a
Delaware corporation
REST HAVEN NURSING HOME, INC,
a West Virginia corporation
RIDGELAND HEALTH RESOURCES,
INC., a Delaware corporation
RIVER PINES HEALTH RESOURCES,
INC., a Delaware corporation
RIVERSHORES HEALTH RESOURCES,
INC., a Delaware corporation
RLNR, INC., a Delaware corporation
ROSE HEALTHCARE, INC.,
a New Jersey corporation
ROSE VIEW MANOR, INC., a
Pennsylvania corporation
RSNR, INC., a Delaware corporation
RVNR, INC., a Delaware corporation
SENIOR LIVING VENTURES, INC., a
Pennsylvania corporation
------------------
Initials of Signor
-123-
<PAGE>
SCHUYLKILL NURSING HOMES,
INC., a Pennsylvania corporation
SCHUYLKILL PARTNERSHIP
ACQUISITION CORP., a Pennsylvania
corporation
SENIOR SOURCE, INC., a Massachusetts
corporation
SNOW VALLEY HEALTH
RESOURCES, INC., a Delaware
corporation
SOLOMONT FAMILY FALL RIVER
VENTURE, INC., a Massachusetts
corporation
SOLOMONT FAMILY MEDFORD
VENTURE, INC., a Massachusetts
corporation
STAFFORD CONVALESCENT
CENTER, INC., a Delaware corporation
S.T.B. INVESTORS, LTD., a New York
corporation
SVNR, INC., a Delaware corporation
THE ADS GROUP, INC., a
Massachusetts corporation
TRI-STATE MOBILE MEDICAL
SERVICES, INC., a West Virginia
corporation
WESTFORD NURSING AND
RETIREMENT CENTER, INC., a
Massachusetts corporation
WILLOW MANOR NURSING HOME,
INC., a Massachusetts corporation
By:_______________________
On behalf of each of the foregoing as Vice
President, Controller and Assistant
Secretary
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
-124-
<PAGE>
BREYUT CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
ENCARE OF MENDHAM, L.L.C., a New Jersey limited liability company, by Century
Care Management, Inc., its authorized manager
HEALTH RESOURCES OF BRIDGETON, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF CINNAMINSON, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF CRANBURY, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF EMERY, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF ENGLEWOOD, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF EWING, L.L.C., a New Jersey limited liability company. by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF FAIR LAWN, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF JACKSON, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF RIDGEWOOD, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF WEST ORANGE, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
POMPTON CARE, L.L.C., a New Jersey limited liability company, by Century Care
Management, Inc., its authorized manager
ROEPHEL CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
------------------
Initials of Signor
-125-
<PAGE>
TOTAL REHABILITATION CENTER, L.L.C., a New
Jersey limited liability corporation, by
Century Care Management, Inc., its authorized
manager
By:_______________________
On behalf of each of the foregoing
Vice President, Controller
and Assistant Secretary of the manager
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
-126-
<PAGE>
The Surety hereby joins this Credit Agreement for the purposes of (1)
acknowledging the terms and conditions and receipt of a true, correct and
complete copy hereof, (2) representing and warranting to the Lender Parties that
the representations and warranties contained herein are true and correct, and
(3) agreeing with the Lender Parties to comply with the affirmative, financial
and negative covenants contained herein to the extent they apply, by their
terms, to the Surety.
GENESIS ELDERCARE CORP.
By
----------------------------------
Title:
-127-
<PAGE>
LIST OF SCHEDULES
1.1 Lenders' Commitments
3.1(a) Corporate/Partnership Status of Borrowers
3.1(b) Capitalization of Borrowers
3.1(o) Management Agreements
3.1(p) Health Care Businesses
3.1(q) Leases of Borrowers
3.1(s) Employee Benefits/ERISA Matters
4.10 Adding Borrowers
6.1 Existing Indebtedness
6.2 Permitted Liens
6.3 Investments
6.4 Acquisition Conditions
6.5(d) Ohio, Illinois and Wisconsin Operations
6.5(f) Assisted Living Facilities
6.5(h) Disposition Conditions
9.1 Excluded Subsidiaries
-128-
<PAGE>
LIST OF EXHIBITS
A-1 Form of Note
A-2 Form of Swing Loan Note
B Form of Advance Request
C Form of Prepayment Notice
D Form of Pledge Agreement
E Form of Officer's Compliance Certificate
F Form of Assignment and Acceptance Agreement
-129-
<PAGE>
SCHEDULE 1.1
Allocations
Multicare Short Term Facility
$425,000,000.00
Bank
----
Mellon $106,250,000.00
Citibank $106,250,000.00
NationsBank $106,250,000.00
First Union $106,250,000.00
-130-
<PAGE>
SCHEDULE 4.10
JOINDER OF BORROWERS
1. Joinder Supplement. Multicare (on behalf of itself and the other
Borrowers) and each Joining Subsidiary shall execute and deliver to the
Administrative Agent, with an executed counterpart for each Lender Party, a
"Joinder Supplement" as defined in Section 4.10 to this Agreement as to becoming
a party hereto and to the relevant Loan Documents.
2. Notes. Each Joining Subsidiary and each existing Borrower shall
execute and deliver to the Administrative Agent a replacement Note or Allonge
for each Lender, as necessary.
3. Collateral. Each applicable Borrower and each applicable Joining
Subsidiary shall deliver to the Administrative Agent (1) certificates and
instruments representing the stock certificates and other instruments to be
pledged pursuant to the Pledge Agreement accompanied by duly executed
instruments of transfer or assignments in blank to the extent required by the
Pledge Agreement 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 Administrative 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 (or by each existing
Borrower in the collateral comprised of equity of any Joining Subsidiaries)
under and pursuant to the Pledge Agreement.
4. Lien Searches. For each Joining Subsidiary which is acquired by a
Borrower pursuant to an Acquisition, each Joining Subsidiary shall deliver to
the Administrative Agent such evidence of recent searches of Uniform Commercial
Code, tax, judgment records and other appropriate registers as the
Administrative Agent shall request.
5. Corporate or Partnership Proceedings. Each Joining Subsidiary
shall deliver to the Administrative Agent, with an executed counterpart for each
Lender Party, certificates by the Secretary or Assistant Secretary of each
Joining Subsidiary (or general partner thereof), dated as of the Joinder
Effective Date (as defined below) as to the incumbency and signatures of the
respective officers of such Joining Subsidiary who are authorized to sign Loan
Documents, together with (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. 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
-131-
<PAGE>
such Joining Subsidiary in its state of incorporation or organization and each
state in which such Joining Subsidiary does business.
6. Legal Opinions of Counsel. The Borrowers and each Joining
Subsidiary collectively shall cause to be delivered to the Administrative Agent,
with an executed counterpart for each Lender, an opinion or opinions addressed
to each Lender, dated the relevant Joinder Effective Date, of counsel to such
Joining Subsidiary, Genesis and each of the other Borrowers as to such matters
as may be requested by the Administrative Agent, all in form and substance
satisfactory to the Administrative Agent.
7. 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 pursuant hereto or pursuant to any other written agreement on
or prior to the Joinder Effective Date.
8. Additional Matters. The Borrowers and each Joining Subsidiary
shall deliver, or cause to be delivered, to the Administrative Agent such other
revised schedules, certificates, opinions, instruments and other documents
(including those relating to licensing) as may be requested by the
Administrative Agent. All such schedules, certificates, opinions, instruments
and other documents shall be satisfactory in form and substance to the
Administrative Agent.
-132-
<PAGE>
SCHEDULE 6.4
ACQUISITION CONDITIONS
1. Notice. Not later than 15 Business Days before the consummation
of a proposed Acquisition, Multicare (on behalf of the Borrowers) shall have
delivered to each Lender a notice of the proposed Acquisition, together with the
following:
(1) copies of audited financial statements of the entity to be
acquired (the "Target") for its last three fiscal years (to the extent
that such audited statements are available, or, to the extent such audited
statements are not so available, unaudited statements for as much of such
period as is available);
(2) copies of the interim financial statements of the Target
for the latest fiscal quarter;
(3) a pro forma projected balance sheet of Multicare and its
Restricted Subsidiaries as of the date of, and after giving effect to, the
proposed Acquisition and a pro forma income statement of Multicare 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 (1) but no later than five (5)
Business Days prior to the date of the proposed Acquisition); and
(5) revisions to the most recent financial projections
delivered to the Lender Parties by Multicare, which revisions shall take
into account the projected financial condition and results of operations
of the Target for the period covered by such projections.
2. Other Information. In addition, Multicare (on behalf of the
Borrowers) shall have delivered to the Administrative Agent (and with respect to
the information referred to in paragraph (2) below, the requesting Lender) the
following:
(1) copies of any agreements entered into or proposed to be
entered into by such Borrower in connection with such Acquisition; and
(2) such other information about the Target or such
Acquisition as any Lender may reasonably request.
-133-
<PAGE>
3. Board Approval. The board of directors (or equivalent governing
body) of the Target shall have approved such Acquisition.
4. Line of Business. Not less than 75% of the Target's revenues
during its most recently completed fiscal year shall have been derived from
lines of business which are, at the time of the Acquisition, among the principal
lines of business of any of the Borrowers.
5. No Default. No Event of Default or Default shall have occurred
and be continuing before, or after giving effect to, the consummation of the
Acquisition.
6. Limitations on Mergers and Consolidations. If any merger is
effected in connection with the Acquisition, a Borrower (including an entity
that becomes a Borrower consistent with the provisions of this Agreement) shall
be the surviving entity in the merger. No consolidation shall be permitted in
connection with any Acquisition.
7. Joinder to Loan Documents. The Borrowers shall cause any new
(direct or indirect) Subsidiary of Genesis which is created or acquired as a
direct or indirect result of, or in connection with, such Acquisition, to become
a Borrower hereunder pursuant to and in accordance with the terms of Section
4.10 of this Agreement and shall cause the ownership interests therein to be
pledged under the Pledge Agreement.
8. Arm's Length. The Acquisition shall be made in good faith in an
arm's-length transaction to a Person which is not an Affiliate of any Borrower,
except as otherwise agreed to by the Lenders. Without limiting the generality of
the foregoing, the total consideration paid for the Acquisition shall be no
greater than the fair market value of the subject assets (including intangible
assets).
-134-
<PAGE>
SCHEDULE 6.5(h)
DISPOSITION CONDITIONS
1. Notice. Multicare (on behalf of the Borrowers) shall have given
each Lender Party at least 5 days prior written notice of any transfer (as
defined in Section 6.5 of this Agreement), together with an Officer's Compliance
Certificate showing pro forma compliance with the financial covenants referred
to therein (including the financial tests set forth in paragraph (h) of Section
6.5) after giving effect to such transfer.
2. Arm's Length. The transfer shall be made in good faith in an
arm's-length transaction to a Person which is not an Affiliate of any Borrower,
except as otherwise agreed to by the Required Lenders. Without limiting the
generality of the foregoing, the total consideration for the transfer shall be
at least equal to the fair market value of the subject assets (including
intangible assets).
3. Transfer of Equity of a Borrower. In the event that any shares of
capital stock, partnership interests or other ownership interests of a Borrower
are to be disposed of or otherwise transferred in such transaction each of the
following additional conditions shall be met:
(a) 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
to it are terminated; and
(b) The Administrative Agent shall have received such
replacement Notes, certificates, opinions, documents and/or instruments it
shall reasonably request.
4. 1997 Subordinated Debt Indenture. The disposition shall not be
prohibited by or result in a default or breach under, or trigger a mandatory
prepayment requirement under the terms of the 1997 Subordinated Debt Indenture.
-135-
================================================================================
CREDIT AGREEMENT
dated as of October 9, 1997
by and among
GENESIS ELDERCARE ACQUISITION CORP., AS BORROWER,
THE FINANCIAL INSTITUTIONS IDENTIFIED HEREIN AS LENDERS,
MELLON BANK, N.A. AS ADMINISTRATIVE AGENT
and the OTHER AGENTS IDENTIFIED HEREIN
================================================================================
<PAGE>
Page
----
ARTICLE 1
CREDIT FACILITY............................ 1
1.1 COMMITMENT TO LEND....................................... 1
1.2 MANNER OF BORROWING...................................... 2
1.3 REPAYMENT................................................ 3
1.4 VOLUNTARY PREPAYMENTS.................................... 4
1.5 PAYMENTS BY THE BORROWER IN GENERAL...................... 4
1.6 REDUCTIONS OF COMMITMENT................................. 6
1.7 INTEREST................................................. 6
1.8 FEES..................................................... 7
1.9 COMPUTATION OF INTEREST AND FEES......................... 7
1.10 PROMISSORY NOTES; RECORDS OF ACCOUNT...................... 7
1.11 PRO RATA TREATMENT........................................ 7
1.12 TAXES ON PAYMENTS......................................... 7
1.13 CAPITAL AND RESERVE REQUIREMENTS.......................... 9
1.14 REGISTERED NOTES.......................................... 10
1.15 REPLACEMENT OF LENDERS.................................... 11
1.16 CHANGE OF LENDING OFFICE.................................. 12
ARTICLE 2
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS.............................. 13
2.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND
INITIAL FUNDING.......................................... 13
2.2 CONDITIONS TO EACH LOAN.................................. 18
ARTICLE 3
REPRESENTATIONS AND WARRANTIES..................... 19
3.1 REPRESENTATIONS.......................................... 19
3.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE.................. 28
ARTICLE 4
AFFIRMATIVE COVENANTS......................... 29
4.1 REPORTING REQUIREMENTS................................... 29
<PAGE>
Page
----
4.2 MAINTENANCE OF EXISTENCE................................. 34
4.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES
AND OTHER PROPERTY....................................... 34
4.4 MAINTENANCE OF RECORDS; FISCAL YEAR...................... 35
4.5 COMPLIANCE WITH LAWS..................................... 35
4.6 ERISA.................................................... 35
4.7 RIGHT OF INSPECTION...................................... 36
4.8 INSURANCE................................................ 36
4.9 PAYMENT OF TAXES AND OTHER CHARGES....................... 37
4.10 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS............ 37
4.11 CORPORATE SEPARATENESS................................... 37
4.12 TRANSACTIONS WITH AFFILIATES............................. 38
4.13 MERGER................................................... 38
4.14 USE OF PROCEEDS.......................................... 38
4.15 CERTAIN DISPOSITIONS..................................... 38
ARTICLE 5
NEGATIVE COVENANTS........................... 39
5.1 INDEBTEDNESS............................................. 39
5.2 LIENS.................................................... 39
5.3 LOANS, ADVANCES AND INVESTMENTS.......................... 40
5.4 ACQUISITIONS, ETC........................................ 40
5.5 DISPOSITIONS............................................. 40
5.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP
INTERESTS................................................ 40
5.7 LEASES................................................... 41
5.8 DIVIDENDS AND RELATED DISTRIBUTIONS...................... 41
5.9 LIMITATION ON PAYMENTS, PREPAYMENTS, DEFEASANCE
AND OTHER ACTION WITH RESPECT TO CERTAIN DEBT
OBLIGATIONS.............................................. 41
5.10 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS......... 42
5.11 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS. .......... 42
5.12 LIMITATIONS ON MERGERS, ETC.............................. 42
5.13 AVOIDANCE OF OTHER CONFLICTS............................. 43
ARTICLE 6
DEFAULTS................................ 43
6.1 "EVENT OF DEFAULT"....................................... 43
6.2 CONSEQUENCES OF AN EVENT OF DEFAULT...................... 47
6.3 APPLICATION OF PROCEEDS.................................. 48
ARTICLE 7
-ii-
<PAGE>
Page
----
THE ADMINISTRATIVE AGENT........................ 48
7.1 APPOINTMENT.............................................. 48
7.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES.......... 49
7.3 EXERCISE OF POWERS....................................... 50
7.4 GENERAL EXCULPATORY PROVISIONS........................... 50
7.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT............... 51
7.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE
AGENT OR OTHER LENDERS................................... 52
7.7 INDEMNIFICATION.......................................... 52
7.8 HOLDERS OF NOTES......................................... 53
7.9 SUCCESSOR ADMINISTRATIVE AGENT........................... 53
7.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL
AGENT.................................................... 54
7.11 CALCULATIONS............................................. 54
7.12 OTHER AGENTS............................................. 54
7.13 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.......... 55
ARTICLE 8
DEFINITIONS; CONSTRUCTION....................... 55
8.1 CERTAIN DEFINITIONS...................................... 55
8.2 CONSTRUCTION............................................. 72
8.3 ACCOUNTING PRINCIPLES.................................... 73
ARTICLE 9
MISCELLANEOUS............................. 74
9.1 NOTICES.................................................. 74
9.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT................... 74
9.3 SEVERABILITY............................................. 74
9.4 DESCRIPTIVE HEADINGS..................................... 75
9.5 GOVERNING LAW............................................ 75
9.6 NON-MERGER OF REMEDIES................................... 75
9.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES................... 75
9.8 AMENDMENTS; WAIVERS...................................... 76
9.9 SUCCESSORS AND ASSIGNS................................... 77
9.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE
PAGES.................................................... 79
9.11 MAXIMUM LAWFUL INTEREST RATE............................. 79
9.12 INDEMNIFICATION.......................................... 79
9.13 EXPENSES................................................. 81
9.14 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.......... 82
9.15 CERTAIN WAIVERS BY BORROWER.............................. 82
9.16 SET-OFF.................................................. 82
-iii-
<PAGE>
9.17 SHARING OF COLLECTIONS................................... 83
9.18 OTHER LOAN DOCUMENTS..................................... 83
9.19 CERTAIN BORROWER ACKNOWLEDGEMENTS........................ 83
9.20 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER
OF JURY TRIAL............................................ 84
-iv-
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of October 9, 1997, by and among GENESIS
ELDERCARE ACQUISITION CORP., a Delaware corporation formerly named Waltz
Acquisition Corp. (together with its successors, the "Borrower"), the Lenders
referred to on the signature pages hereto together with other lenders parties
hereto from time to time pursuant to Section 9.9 below and their successors and
assigns, the "Lenders"), MELLON BANK, N.A., a national banking association, as
Administrative Agent for itself, the other Agents, and for the Lenders hereunder
(in such capacity, together with its successors and assigns in such capacity,
the "Administrative Agent"), and CITICORP USA, INC., a Delaware corporation, as
Syndication Agent, NATIONSBANK, N.A., a national banking association, as
Syndication Agent and FIRST UNION NATIONAL BANK, a national banking association,
as Documentation Agent. Certain terms used herein are defined in Article 8
below.
WITNESSETH THAT
WHEREAS, the Borrower has requested that the Lenders extend the
Loans to the Borrower for the purposes described herein; and
WHEREAS, the Lenders have agreed to extend the Loans to the Borrower
on the terms and conditions described herein; and
WHEREAS, ALL OBLIGATIONS HEREUNDER AND UNDER EACH AGREEMENT AND
INSTRUMENT DELIVERED IN CONNECTION HEREWITH FROM TIME TO TIME ARE "SENIOR
INDEBTEDNESS" AND ARE HEREBY DESIGNATED BY THE BORROWER AS "DESIGNATED SENIOR
INDEBTEDNESS" WITHIN THE MEANING OF THE 1997 SUBORDINATED NOTE INDENTURE.
ARTICLE 1
CREDIT FACILITY
1.1 COMMITMENT TO LEND. (a) Loans. Upon the terms and subject to the
conditions of this Agreement, each Lender agrees to make, from time to time,
during the period from and including the Closing Date to but excluding the
Maturity Date, one or more Loans ("Loans") to the Borrower in an aggregate
unpaid principal amount not exceeding at any time such Lender's Commitment at
such time; provided, however, that the Borrower shall not request, and the
Lenders shall have no obligation to make, any Loans at any time in
<PAGE>
excess of the Available Commitment. The total amount of the Commitment of all
Lenders on the Agreement Date is $150,000,000.
(b) Reserved Commitment. $5,000,000 of the Commitment (the "Reserved
Commitment") shall be reserved and may be borrowed only for the purpose of
paying interest on the Loans and fees and other amounts payable to the
Administrative Agent and the Lenders under the Loan Documents.
1.2 MANNER OF BORROWING.
(a) Notice of Borrowing. The Borrower shall give the Administrative
Agent notice (which shall be irrevocable) no later than 11:00 a.m.
(Philadelphia, Pennsylvania, time) one Business Day prior to the requested date
for the making of Loans. Each such notice shall be in the form of Exhibit A
hereto and shall specify (i) the requested date for the making of such Loans,
which date shall be a Business Day, (ii) the amount of the requested Loans,
which shall be $5,000,000 or any integral multiple of $1,000,000 in excess
thereof (except in the case of Loans under the Reserved Commitment and except
that the amount of the requested Loans may be less if the amount requested is
equal to the total Available Commitment). Upon receipt of any such notice, the
Administrative Agent shall promptly notify each applicable Lender of the
contents thereof and of the amount of the Loan to be made by such Lender on the
requested date specified therein.
(b) Funding by Lenders. Not later than 12:00 noon (Philadelphia,
Pennsylvania, time) on each requested date for the making of Loans, each Lender
shall make available to the Administrative Agent, in Dollars in funds
immediately available to the Administrative Agent at the office designated by
the Administrative Agent, the Loan to be made by such Lender on such date,
provided however that if a Lender does not receive timely notice from the
Administrative Agent as set forth in paragraph (a) above, such Lender shall fund
the required amount promptly upon receipt of such notice. The obligations of the
Lenders hereunder are several; accordingly, any Lender's failure to make any
Loan to be made by it on the requested date therefor shall not relieve any other
Lender of its obligation to make any Loan to be made by it on such date, but the
latter shall not be liable for the former's failure.
(c) Permitted Assumption as to Funding. Unless the Administrative
Agent shall have received notice from a Lender prior to 11:00 a.m.
(Philadelphia, Pennsylvania, time) on the requested date for the making of any
Loan that such Lender will not make available to the Administrative Agent the
Loan requested to be made by it on such date, the Administrative Agent may
assume that such Lender has made such Loan available. The Administrative Agent
in its sole discretion and reliance upon such assumption, may make available to
the Borrower on the requested date a corresponding amount on behalf of such
Lender. If and to the extent such Lender shall not have made available to the
Administrative Agent the Loan requested to be made by such Lender on such date
and the
-2-
<PAGE>
Administrative Agent shall have so made available to the Borrower a
corresponding amount on behalf of such Lender, (i) such Lender shall, on demand,
pay to the Administrative Agent such corresponding amount together with interest
thereon, for each day from the date such amount shall have been so made
available by the Administrative Agent to the Borrower until the date such amount
shall have been paid in full to the Administrative Agent, at the Federal Funds
Rate until (and including) the third Business Day after demand is made and
thereafter at the Prime Rate and (ii) the Administrative Agent shall be entitled
to all interest payable by the Borrower on such amount for the period commencing
on the date such amount was advanced by the Administrative Agent to but not
including the date on which such amount is received by the Administrative Agent
from such Lender. Moreover, any Lender that shall have failed to make available
the required amount shall not be entitled to vote on such matters as the Lenders
or Required Lenders are otherwise entitled to vote on or consent to or approve
under this Agreement and the other Loan Documents until such amount with
interest is paid in full to the Administrative Agent by such Lender. Without
limiting any obligations of any Lender pursuant to this paragraph (c), if such
Lender does not pay such corresponding amount promptly upon the Administrative
Agent's demand therefor, the Administrative Agent shall notify the Borrower and
the Borrower shall promptly repay such corresponding amount to the
Administrative Agent together with accrued interest thereon at the applicable
rate or rates on such Loans.
(d) Disbursements of Funds to Borrower. All amounts made available
to the Administrative Agent in accordance with paragraph (b) above shall be
disbursed by the Administrative Agent promptly but in any event not later than
4:00 p.m. (Philadelphia, Pennsylvania, time) on the requested date therefor in
Dollars in funds immediately available to the Borrower by crediting such amount
to an account of the Borrower at the Administrative Agent's office or in such
other manner as may be agreed to by the Borrower and the Administrative Agent.
(e) Certain Loans to be Made Without Request. Notwithstanding
paragraph (a) of this Section 1.2, Loans under the Reserved Commitment may be
made for the purposes specified in Section 1.1(b) without any request by the
Borrower on notice to the Lenders from the Administrative Agent. If the proceeds
of any Loan under this paragraph (e) are to be paid ratably to the Lenders, it
shall not be necessary for any Lender to make the proceeds of its Loan available
to the Administrative Agent.
1.3 REPAYMENT. The Loans shall mature and become due and payable and shall
be repaid by the Borrower on the earliest of (i) the date 120 days after the
Closing Date, (ii) the date on which the Merger becomes effective, or (iii) if
Multicare and the Borrower decide to abandon the Merger, the date on which they
so notify the Administrative Agent in writing (the earliest of such dates being
the "Maturity Date").
-3-
<PAGE>
1.4 VOLUNTARY PREPAYMENTS. The Borrower may, at any time and from time to
time, prepay the Loans in whole or in part, without premium or penalty, except
that any optional partial prepayment (other than a prepayment of all outstanding
Loans) shall be in an aggregate principal amount of $5,000,000.00 or any
integral multiple of $1,000,000.00 in excess thereof. Amounts to be so prepaid
shall irrevocably be due and payable on the date specified in the applicable
notice of prepayment delivered pursuant to this Section 1.4, together with
interest thereon as provided in Section 1.7. The Borrower shall give the
Administrative Agent notice of each prepayment of Loans no later than 11:00 a.m.
(Philadelphia, Pennsylvania, time) three (3) Business Days before the date of
such prepayment. Each such notice of prepayment shall be in the form of Exhibit
B hereto and shall specify the date and amount of such prepayment. Upon receipt
of any such notice, the Administrative Agent shall promptly notify each Lender
of the contents thereof. Any voluntary prepayments pursuant to this Section 1.4
shall be applied first to interest, second to principal and last to any other
amounts owing in respect of the Loan Obligations.
1.5 PAYMENTS BY THE BORROWER IN GENERAL.
(a) Time, Place and Manner. All payments due to the Administrative
Agent under the Loan Documents shall be made to the Administrative Agent at the
office designated by the Administrative Agent or to such other Person or at such
other address as the Administrative Agent may designate by notice to the
Borrower. Except as otherwise set forth in this Agreement, a payment shall not
be deemed to have been made on any day unless such payment has been received by
the required Person, at the required place of payment, in Dollars in funds
immediately available to such Person, no later than 1:00 p.m. (Philadelphia,
Pennsylvania, time) on such day; provided, however, that the failure of the
Borrower to make any such payment by such time shall not constitute a Default
hereunder so long as such payment is received no later than 3:00 p.m.
(Philadelphia, Pennsylvania, time) on such day, but any such payment received
later than 1:00 p.m. (Philadelphia, Pennsylvania, time) on such day shall be
deemed to have been made on the next Business Day for the purpose of calculating
interest on the amount paid, provided further, that any such payment made with
the proceeds of Loans shall be deemed to have been made on the date of the
making of such Loans, so long as such proceeds are immediately so applied and
are not otherwise disbursed to the Borrower.
(b) No Reductions. All payments due to the Administrative Agent or
any Lender under this Agreement and the other Loan Documents shall be made by
the Borrower without any reduction or deduction whatsoever, including any
reduction or deduction for any charge, set-off, holdback, recoupment or
counterclaim (whether sounding in tort, contract or otherwise).
(c) Authorization to Charge Accounts. The Borrower hereby authorizes
the Administrative Agent, each Lender, and each participant and each Affiliate
of each Lender Party, if and to the extent any amount payable by the Borrower
under the Loan Documents (whether payable to such Person or to any other Lender
Party) is not otherwise paid when
-4-
<PAGE>
due, to charge such amount against any or all of the demand deposit or other
accounts of the Borrower with such Person (whether maintained at a branch or
office located within or without the United States), with the Borrower remaining
liable for any deficiency. The Person so charging any such account shall give
the Borrower prompt notice thereof, but any failure to give or delay in giving
such notice shall not affect such Person's right to effect such charge. Such
charging of accounts shall be subject to the provisions of Section 9.17 hereof.
(d) Extension of Payment Dates if Not a Business Day. Whenever any
payment to the Administrative Agent or any Lender under the Loan Documents would
otherwise be due (except by reason of acceleration) on a day that is not a
Business Day, such payment shall instead be due on the next succeeding Business
Day. If the due date for any payment under the Loan Documents is extended
(whether by operation of any Loan Document, applicable Law or otherwise), such
payment shall bear interest for such extended time at the rate of interest
applicable hereunder.
(e) Disbursement of Payments to Lenders. The Administrative Agent
shall promptly distribute to each Lender its ratable share of each payment
received by the Administrative Agent under the Loan Documents for the account of
such Lender by crediting an account of such Lender at the Administrative Agent's
office or by wire transfer to an account of such Lender at an office of any
other commercial bank located in the United States or at any Federal Reserve
Bank designated by such Lender. Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to any Lender Parties under the Loan Documents that the Borrower will not make
such payment in full, the Administrative Agent may assume that the Borrower has
made such payment in full to the Administrative Agent on such date and the
Administrative Agent, in its sole discretion may, in reliance upon such
assumption, cause to be distributed to the applicable Lender Parties on such due
date, a corresponding amount with respect to the amount then due to the
applicable Lender Parties. If and to the extent that the Borrower shall not have
so made such payment in full to the Administrative Agent, and the Administrative
Agent shall have so distributed to any Lender Parties a corresponding amount,
each applicable Lender Party shall, on demand, repay to the Administrative Agent
the amount so distributed to it, together with interest thereon, for each day
from the date such amount is distributed to such Lender Party until the date the
such Lender repays such amount to the Administrative Agent, at the Federal Funds
Rate until (and including) the third Business Day after demand is made and
thereafter at the Prime Rate. Moreover, any Lender that shall have failed to
make available the required amount shall not be entitled to vote on such matters
as the Lenders or Required Lenders are otherwise entitled to vote on or consent
to or approve under this Agreement and the other Loan Documents until such
amount with interest is paid in full to the Administrative Agent by such Lender.
Nothing in this Section 1.5 shall relieve the Borrower from any payment
obligations.
-5-
<PAGE>
1.6 REDUCTIONS OF COMMITMENT.
(a) Optional Reductions. The Borrower may reduce the Commitment by
giving the Administrative Agent notice (which shall be irrevocable) thereof no
later than 11:00 a.m. (Philadelphia, Pennsylvania, time) on the third Business
Day before the requested date of such reduction, provided, that each partial
reduction thereof shall be in an amount equal to $10,000,000.00 or any integral
multiple of $5,000,000.00 in excess thereof and, provided, further, that no
reduction shall reduce the Commitment to an amount less than the aggregate of
the principal amount of all Loans outstanding on such date (after giving effect
to any repayment or prepayment of Loans made on or prior to such date). Upon
receipt of any such notice, the Administrative Agent shall promptly notify each
Lender of the contents thereof and the amount to which such Lender's Commitment
is to be reduced.
(b) Automatic Reductions. At the time of any prepayment of Loans
pursuant to Section 1.4, the Commitment shall be reduced by the amount of the
prepayment.
(c) No Reinstatement of Commitment. All reductions of the Commitment
are permanent, and the Commitment cannot be restored without the written consent
of all Lenders.
1.7 INTEREST.
(a) Interest Rate in General. Subject to the terms and conditions of
this Agreement, the Loans shall bear interest on the outstanding principal
amount thereof until paid in full at a rate per annum 1.5 percentage points in
excess of the Prime Rate as in effect from time to time.
(b) Interest Payment Dates. Interest shall be payable (i) quarterly
in arrears on each Quarterly Payment Date and (ii) when the Loans shall be due
(whether at maturity, by reason of notice of prepayment or acceleration, or
otherwise), but only to the extent then accrued on the amount then so due.
Interest at the Default Rate shall be payable on demand.
(c) Default Rate. At any time that an Event of Default shall have
occurred and shall be continuing, any amount payable hereunder and under each
other Loan Document shall bear interest (whether before or after judgment),
payable on demand, at a rate per annum equal to the applicable Default Rate.
-6-
<PAGE>
1.8 FEES.
(a) Commitment Fees. The Borrower shall pay to the Administrative
Agent, for the account of each Lender, a commitment fee on the daily unused
amount of such Lender's Commitment for each day from and including the Agreement
Date to but excluding the Maturity Date at the rate of 0.5% per annum.
(b) Other Fees. The Borrower shall pay to the Administrative Agent,
for the respective accounts of the Administrative Agent, the Lenders and the
other Agents, such other fees as have been or may be agreed to by the Borrower
or by Genesis in connection with the commitment to enter into this Agreement
(including any facility fees referred to in any commitment letters) and the
transactions contemplated by this Agreement.
1.9 COMPUTATION OF INTEREST AND FEES. Interest calculated on the basis of
the Federal Funds Rate shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed. Commitment fees and interest
calculated on the basis of the Prime Rate shall be computed on the basis of a
year of 365 or 366 days, as applicable, and paid for the actual number of days
elapsed. Interest and commitment fees for any period shall be calculated from
and including the first day thereof to but excluding the last day thereof.
1.10 PROMISSORY NOTES; RECORDS OF ACCOUNT. Each Lender's Loans and the
Borrower's obligation to repay such Loans with interest in accordance with the
terms of this Agreement shall be evidenced by this Agreement, the records of the
Administrative Agent and such Lender and a single Note payable to the order of
such Lender. The records of each Lender shall be prima facie evidence of such
Lender's Loans and, in each case, of accrued interest thereon and all payments
made in respect thereof. In the event there is any dispute concerning the amount
of any such obligations, the amount of each Lender's Commitment and the amount
of outstanding Loan Obligations of each and every type shall at all times be
ascertained from the records of the Administrative Agent, which shall be
conclusive absent manifest error.
1.11 PRO RATA TREATMENT. Except to the extent otherwise provided herein,
the Loans shall be made by, and principal, interest and fees in respect thereof
shall be paid or repaid to, the Lenders pro rata in accordance with their
respective Commitments.
1.12 TAXES ON PAYMENTS.
(a) Taxes Payable by the Borrower. If any Tax is required to be
withheld or deducted from, or is otherwise payable by the Borrower in connection
with, any payment
-7-
<PAGE>
due to the Administrative Agent or any Lender that is not a "United States
Person" (as such term is defined in Section 7701(a)(30) of the Code), the
Borrower (i) shall, if required, withhold or deduct the amount of such Tax from
such payment and, in any case, pay such Tax to the appropriate taxing authority
in accordance with applicable Law and (ii) except in the case of any Bank Tax,
shall pay to such Lender or the Administrative Agent such additional amounts as
may be necessary so that the net amount received by such Person with respect to
such payment, after withholding or deducting all Taxes required to be withheld
or deducted, is equal to the full amount payable hereunder. If any Tax is
withheld or deducted from, or is otherwise payable by the Borrower in connection
with, any payment due to any Lender or the Administrative Agent hereunder, the
Borrower shall furnish to such Person the original or a certified copy of a
receipt (if any) for such Tax from the applicable taxing authority or other
evidence of payment thereof satisfactory to such Person within 30 days after the
date of such payment (or, if such receipt shall not have been made available by
such taxing authority within such time, the Borrower shall use reasonable
efforts to promptly obtain and furnish such receipt). If the Borrower fails to
pay any such Taxes when due to the appropriate taxing authority or fail to remit
to any Lender or the Administrative Agent the required receipts or other
evidence of payment thereof satisfactory to such Person, the Borrower shall
indemnify such Person for any Taxes, interest, penalties or additions to Tax
that may become payable such Person as a result of any such failure.
(b) Taxes Payable by any Lender or the Administrative Agent. The
Borrower shall, promptly upon request by any Lender or the Administrative Agent
that is not a United States Person, pay to such Person an amount equal to (i)
all Taxes (other than Bank Taxes and without duplication of amounts paid
pursuant to the preceding paragraph (a)) payable by such Person with respect to
any payment due to such Person hereunder and (ii) all Taxes (other than Bank
Taxes) payable by such Person as a result of payments made by the Borrower
(whether made to a taxing authority or to such Person pursuant to the preceding
paragraph (a) or this paragraph (b)).
(c) Credits and Deductions. If any Lender or the Administrative
Agent is, in its sole opinion, able to apply for any refund, offset, credit,
deduction or other reduction in Taxes by reason of any payment made by the
Borrower under the preceding paragraph (a) or (b), such Lender or the
Administrative Agent, as the case may be, shall use reasonable efforts to obtain
such refund, offset, credit, deduction or other reduction and, upon receipt
thereof, will pay to the Borrower such amount, not exceeding the increased
amount paid by the Borrower, as is equal to the net after-tax value to such
Lender or the Administrative Agent, in its sole opinion, of such part of such
refund, offset, credit, deduction or other reduction as it considers to be
allocable to such payment by the Borrower, having regard to all of such Person's
dealings giving rise to similar refunds, offsets, credits, deductions or other
reductions in relation to the same tax period and to the cost of obtaining the
same; provided, however, that if such Person has made a payment to the Borrower
pursuant to this paragraph (c) and the applicable refund, offset, credit,
deduction or other reduction in Tax is subsequently disallowed, the Borrower
shall, promptly upon request by the Administrative Agent or such Lender refund
to such Person that portion of such payment determined by
-8-
<PAGE>
such Person, in its sole opinion, relating to such disallowance; and provided,
further that (i) the Administrative Agent or such Lender, as the case may be,
shall not be obligated to disclose to the Borrower any information regarding its
Tax affairs or computations and (ii) nothing in this paragraph (c) shall
interfere with the right of such Person to arrange its Tax affairs as it deems
appropriate.
(d) Exemption from U.S. Withholding Taxes. Each Lender that is not a
United States Person shall submit to the Borrower and the Administrative Agent,
on or before the fifth day prior to the first Quarterly Payment Date occurring
after the Closing Date (or, in the case of a Person that is not a United States
Person and that became a Lender by assignment, promptly upon such assignment),
two duly completed and signed copies of either (A) Form 1001 of the United
States Internal Revenue Service entitling such Lender to a complete exemption
from withholding on all amounts to be received by such Lender pursuant to this
Agreement and the Loans, (B) Form 4224 of the United States Internal Revenue
Service relating to all amounts to be received by such Lender pursuant to this
Agreement and the Loans or (C) in the case of a Lender Party that is claiming an
exemption from United States withholding tax under Section 871(h) or 881(c) of
the Internal Revenue Code with respect to payments of "portfolio interest" two
accurate and complete signed original Forms W-8 (or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender Party is
exempt from or is entitled to a reduced rate of United States withholding tax on
payments under this Agreement or the Notes) and, if such Lender Party delivers
such Forms W-8 (or successor form), two signed certificates that such Lender
Party is not (1) a "bank" for purposes of Section 881(c) of the Internal Revenue
Code, (2) is not a 10% shareholder (within the meaning of Section 871(h)(3)(B)
of the Internal Revenue Code) of the Borrower and (3) is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Internal Revenue Code), as appropriate. Each such Lender shall,
from time to time after submitting either such Form, submit to the Borrower and
the Administrative Agent such additional duly completed and signed copies of one
or the other such Forms (or any successor forms as shall be adopted from time to
time by the relevant United States taxing authorities) as may be (A) requested
in writing by the Borrower or the Administrative Agent and (B) appropriate under
the circumstances and under then current United States law or regulations to
avoid or reduce United States withholding taxes on payments in respect of all
amounts to be received by such Lender pursuant to this Agreement or the Loans.
Upon the request of the Borrower or the Administrative Agent, each Bank that is
a United States Person shall submit to the Borrower and the Administrative Agent
a certificate to the effect that it is a United States Person.
(e) Obligations under this Section 1.12 shall survive payment of the
Loans.
1.13 CAPITAL AND RESERVE REQUIREMENTS. If, in the determination of any
Lender, such Lender or any Affiliate thereof is required, under applicable Law
(including Regulation D) or interpretations, directives, requests and
governmental or regulatory guidelines (whether or not having the force of law),
to maintain capital or deposit
-9-
<PAGE>
any reserve on account of any Loan or any commitment to make any Loan, then,
upon request by such Lender, the Borrower shall pay to such Lender such
additional amounts as such Lender determines will fully compensate it for any
reduction in the rate of return on the capital that such Lender or such
Affiliate is so required to maintain. Such additional amounts shall be payable,
in the case of those applicable to prior periods, within 15 Business Days after
request for such payment by such Lender accompanied by the certificate described
below (provided that the Borrower shall not be liable for any amount payable
with respect to any period more than 90 days before the date of such request or
certificate, or, if earlier, the retroactive effective date of such
determination if made during such 90-day period), and, in the case of those
relating to future periods, on the dates specified, or determined in accordance
with a method specified, by such Lender. In making the determinations
contemplated by this Section 1.13, each Lender may make such estimates,
assumptions, allocations and the like that such Lender in good faith determines
to be appropriate, and such Lender's selection thereof in accordance with this
Section 1.13, and the determinations made by such Lender on the basis thereof,
shall be final, binding and conclusive upon the Borrower, except, in the case of
such determinations, for manifest errors. Each Lender shall furnish to the
Borrower, at the time of any request for compensation under this Section 1.13 a
certificate outlining in reasonable detail the computation of any amounts
claimed by it under this Section 1.13 and the assumptions underlying such
computations, which shall include a statement of an officer of such Lender
certifying that such request for compensation is being made pursuant to a policy
adopted by such Lender to seek such compensation generally from customers
similar to the Borrower and having similar provisions in agreements with such
Lender.
1.14 REPLACEMENT OF LENDERS. If any Lender requests compensation pursuant
to Sections 1.12 (Taxes on Payments), or 1.13 (Capital and Reserve Requires), or
such Lender has defaulted on its obligations to make or participate in Loans
pursuant to Section 1.2 (Manner of Borrowing), the Borrower, upon three Business
Days' notice, may require that such Lender transfer all of its right, title and
interest under this Agreement, such Lender's Notes, and the other Loan Documents
to any Eligible Institution identified by the Borrower subject to
(a) the consent of the Administrative Agent (which consent shall not
be unreasonably withheld),
(b) satisfaction of the other conditions specified in Section 9.9
below (Successors and Assigns),
(c) the agreement of the proposed transferee to assume all of the
obligations of such Lender hereunder and under the other Loan Documents for
consideration equal to the outstanding principal amount of such Lender's Loans,
payable to the transferor, interest thereon to the date of such transfer, and
all other amounts payable hereunder to such Lender to the date of transfer,
-10-
<PAGE>
(d) such transferor Lender shall have been paid on or prior to the
date of such transfer all fees and other amounts payable to such transferor
hereunder including those amounts payable under said Sections 1.12 or 1.13, as
applicable, or arrangements satisfactory to the transferor Lender shall have
been made for such payments, and
(e) satisfaction of the condition that if the Lender being replaced
has requested compensation pursuant to Sections 1.12 or 1.13, the proposed
transferee's aggregate requested compensation, if any, pursuant to Sections 1.12
or 1.13 with respect to such replaced Lender's Loans is lower than that of the
Lender replaced.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements of the Borrower contained in Sections 1.12 (Taxes on
Payments), 1.13 (Capital and Reserve Requirements, 9.12 (Indemnification) and
9.13 (Expenses) (without duplication of any payments made to such Lender by the
Borrower or the proposed transferee) shall survive for the benefit of any Lender
replaced under this Section 1.14 with respect to the time prior to such
replacement.
1.15 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Sections 1.12 (Taxes on
Payments) or 1.13 (Capital and Reserve Requirements) with respect to such
Lender, it will, if requested by the Borrower, use reasonable efforts (subject
to overall policy considerations of such Lender) to designate another lending
office for any Loans affected by such event, provided that such designation is
made on such terms that such Lender and its lending office suffer no material
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such Section.
Nothing in this Section 1.15 shall affect or postpone any of the obligations of
the Borrower or the right of any Lender provided in Section 1.12 (Taxes on
Payments) or 1.13 (Capital and Reserve Requirements).
ARTICLE 2
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS
2.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND INITIAL FUNDING. The
effectiveness of this Agreement and the obligation of the Lenders to make the
initial Loans hereunder are subject to the fulfillment of the following
conditions on or before October 15, 1997 (unless such date is extended in
writing by the Agents in their sole discretion), in each case to the
satisfaction of the Agents and, to the extent specified below, to the
satisfaction of each Lender (each Lender upon making its initial Loan hereunder
being deemed to have waived or found satisfactory all such conditions so
specified).
-11-
<PAGE>
(a) Secretary's Certificates. The Borrower shall have delivered, or
caused to be delivered, a certificate of the Secretary or an Assistant
Secretary, of each of the Borrower, Genesis ElderCare Corp. and Multicare (each
of which shall be certified as of a recent date by the Secretary of State of the
state of such Person's incorporation), with specimen signatures of the
authorized signatories to the Loan Documents, and to which shall be attached
copies of the following, as applicable: articles or certificate of
incorporation, bylaws, resolutions and shareholder agreements.
(b) Good Standing Certificates. The Borrower shall have delivered,
or caused to be delivered, a good standing or subsistence certificate, as the
case may be, issued as of a recent date with respect to Borrower, Genesis
ElderCare Corp., Multicare and each member of the Multicare Group issued by (i)
the Secretary of State or other appropriate official of the jurisdiction of
formation of such Person and (ii) the Secretary of State or other appropriate
official of each jurisdiction where such Person is required to qualify to do
business and, if any such certificate is dated more than seven (7) days prior to
the Closing Date, a confirmation (which may be provided by a reputable corporate
service) of the information in such certificate.
(c) The Notes. The Borrower shall have delivered the Notes to the
Administrative Agent for distribution to the Lenders.
(d) Lien Searches. The Borrower shall have delivered to the
Administrative Agent Uniform Commercial Code, tax, and judgment lien searches of
the Borrower, Genesis ElderCare Corp., Multicare and each member of the
Multicare Group, all as of a recent date, in such form and with such content as
are acceptable to the Administrative Agent.
(e) Pledge Agreements. The Borrower and Genesis ElderCare Corp.
shall have executed and delivered the Pledge Agreements relating to the Tendered
Multicare Shares and all the outstanding capital stock of the Borrower,
respectively, in substantially the forms of Exhibit C and Exhibit D respectively
(together with the stock certificates, assignment powers, Uniform Commercial
Code financing statements (in proper form for filing in the appropriate offices
to perfect the security interest of the Administrative Agent for the benefit of
the Lender Parties in the Collateral granted under the Pledge Agreements) and
other items required thereunder).
(f) Guaranties. Genesis ElderCare Corp. shall have executed and
delivered the Genesis ElderCare Corp. Guaranty in substantially the form of
Exhibit E, and Multicare shall have executed and delivered the Multicare
Guaranty in substantially the form of Exhibit F.
(g) Multicare Management Agreement. Prior to or substantially
contemporaneously with the initial funding hereunder, Genesis (and/or one or
more of its Subsidiaries) shall have entered into a Management Agreement with
Genesis Eldercare Corp. (the "Multicare Management Agreement"), under which
Genesis (and/or such Subsidiaries)
-12-
<PAGE>
will provide management services to Genesis Eldercare Corp. and its
Subsidiaries. As a further condition, Genesis, Multicare and the Agents shall
enter into the Multicare Management Subordination Agreement.
(h) Other Transaction Documents. The Borrower shall have delivered
to each of the Agents and any Lender that so requests, each of the other
Transaction Documents certified by a Responsible Officer of the Borrower as
being a true and correct copy of such Transaction Document as in full force and
effect on the Closing Date. The Tender Offer and the other transactions
contemplated by the Transaction Documents to have occurred on or before the
Closing Date shall have taken place in strict compliance with the terms of said
Transaction Documents, subject only to such modifications as are acceptable to
the Agents.
(i) Completion of Tender Offer. Simultaneously with the closing
hereunder, more than a majority of the outstanding Multicare Shares (including,
for this purpose, shares of common stock of Multicare issuable upon the
conversion of convertible securities or the exercise of options, warrants or
other rights to purchase or subscribe for shares of common stock of Multicare)
shall have been validly tendered to and purchased by the Borrower pursuant to
the Tender Offer at a price of $28 per share.
(j) Multicare Board of Directors. Simultaneously with the closing
hereunder, the Borrower shall have the unrestricted right, subject to ss.14(f)
of the Securities Exchange Act of 1934, to designate and cause to be elected a
majority of the board of directors of Multicare.
(k) Approval of Merger. The board of directors of Multicare, as
constituted before any change in its composition pursuant to the right described
in paragraph (j) of this Section 2.1, shall have recommended acceptance of the
Tender Offer and shall have approved the Merger.
(l) Certain Legal Matters. The restrictions of ss.203 of the
Delaware General Corporation Law and any other impediment under the Delaware
General Corporation Law shall be inapplicable to the acquisition of the
Multicare Shares pursuant to the Tender Offer; no legal impediment (under ss.251
or ss.253 of the Delaware General Corporation Law or otherwise) to the Merger
exists or would exist upon completion of the Tender Offer; and there shall not
be pending or threatened any legal or administrative proceeding seeking to
restrain or prevent the consummation of the Tender Offer, the Merger or any of
the transactions contemplated by this Agreement or the Transaction Documents or
questioning the legality or validity thereof; and the Tender Offer and other
related transactions shall be consummated in accordance with all applicable
Laws.
(m) Maximum Price. The total amount payable by the Borrower,
Multicare and its Subsidiaries in connection with the Tender Offer and the
Merger, including consulting, noncompetition, severance and other payments to
employees of Multicare or its Subsidiaries, and including amounts provided to
refinance Indebtedness of Multicare or any
-13-
<PAGE>
of its Subsidiaries, plus the amount of existing Indebtedness of Multicare not
repaid in connection with the Tender Offer and the Merger, shall not exceed
$1,533,000,000.
(n) Opinions of Counsel. (i) The Borrower shall have delivered
favorable opinions of counsel, dated as of the Closing Date, from:
(1) Blank Rome Comisky & McCauley, counsel to the Borrower, as
to the absence of conflicts with other financing agreements and other material
agreements of the Borrower, the status of the Loan Obligations as "Senior
Indebtedness" and "Designated Senior Indebtedness" within the meaning of the
1997 Subordinated Note Indenture, compliance with the Margin Rules, compliance
with Laws applicable to the Tender Offer, the perfection of security interests
under the Pledge Agreement, the due organization of the Loan Parties, the due
authorization of the transactions referred to herein, the enforceability of the
Loan Documents, certain health care and licensing compliance issues and such
other matters as the Agents may reasonably request, in form reasonably
satisfactory to the Lenders; and
(2) local counsel to the Borrower in the States of
Massachusetts, West Virginia, New Jersey, Ohio, Pennsylvania, Wisconsin,
Connecticut, Illinois, Rhode Island, Vermont, and Virginia as to certain health
care matters and such other matters as the Agents may reasonably request, in
form and substance satisfactory to the Agents.
(3) Drinker Biddle & Reath LLP, special counsel to the
Administrative Agent, shall have delivered an opinion to the Administrative
Agent a favorable opinion of counsel, dated as of the Closing Date, as to such
matters as the Administrative Agent shall reasonably request.
(o) [INTENTIONALLY OMITTED]
(p) Consents and Approvals. All material corporate, governmental,
judicial and third party consents and approvals necessary in connection with
this Agreement and the other Loan Documents, the Tender Offer and the related
transactions (including consents and approvals required under or referred to in
the Merger Agreement) shall have been obtained and, as applicable, become final
orders (without imposition of any conditions that are not acceptable to the
Lenders) and shall remain in full force and effect and, to the extent requested
by any Agent, copies thereof shall have been delivered to the Administrative
Agent. Without limiting the generality of the foregoing, all appropriate filings
shall have been made under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the applicable waiting periods relating thereto shall have
expired or been terminated without requests for additional information from the
reviewing agencies.
(q) Financial Statements; Projections.
-14-
<PAGE>
(i) Financial Statements. The Borrower shall have delivered,
or caused to be delivered, to the Administrative Agent and the
Lenders at least three (3) Business Days prior to the Closing Date
each of the following:
(x) a consolidated income statement of Multicare and its
consolidated Subsidiaries, for the twelve calendar month
period ending on June 30, 1997, adjusted on a pro forma basis,
to the beginning of the period (as required for financial
covenants) to reflect the consummation of all of the
transactions set forth in the Transaction Documents and all
Acquisitions and dispositions which shall have occurred within
said twelve month period as if such transactions, Acquisitions
and dispositions had occurred on the first day of such period,
which statement shall be supplemented by information
separating out and explaining all pro forma adjustments made
thereto; and
(y) a consolidated balance sheet of Multicare and its
consolidated Subsidiaries as of June 30, 1997, reflecting, on
a pro forma basis, the consummation of all transactions set
forth in the Transaction Documents, including all borrowings
in connection therewith and all borrowings otherwise
contemplated hereunder, the application of all proceeds of
such borrowings and the amount of all outstanding Indebtedness
after giving effect to the foregoing, which balance sheet
shall be supplemented by information separating out and
explaining all pro forma adjustments made thereto,
each of which statements shall be (1) in form acceptable to the
Agents, (2) accompanied by explanatory notes acceptable to the
Agents and (3) certified by the chief financial officer of the
Borrower to fairly present on a pro forma basis the financial
condition and results of operations as at the date, or for the
period, indicated.
(ii) Projections. The Borrower shall have delivered to each
Lender projections respecting the consolidated financial condition
and results of operations of Multicare and its Subsidiaries for the
period commencing on January 1, 1997 and ending on December 31,
2005, which projections shall be in reasonable detail, shall reflect
the consummation of the transactions contemplated hereby and the
Transaction Documents, including the making of the initial Loans,
and shall be accompanied by a written statement of the assumptions
and estimates underlying such projections.
(r) Officer's Compliance Certificate. The Borrower shall have
delivered an Officer's Compliance Certificate, dated as of the Closing Date, as
to the truth of the
-15-
<PAGE>
representations and warranties herein and in the other Loan Documents and the
absence of any Default (in each case, both before and after giving effect to the
initial Loans).
(s) Fees and Expenses. The Borrower shall have paid the fees
required to be paid to the Agents and the Lenders on or before the Closing Date
and the fees and disbursements of counsel for the Agents in connection with the
negotiation, preparation, execution and delivery of the Loan Documents and the
making of the initial Loans.
(t) Closing of Genesis and Multicare Credit Facilities. All
conditions to the initial funding under (i) the Third Amended and Restated
Credit Agreement, dated as of the date hereof, among Genesis, certain of its
Subsidiaries, Mellon as administrative agent, and certain other agents and
lenders referred to therein (the "Genesis Credit Agreement") and (ii) either the
(Short-Term Pre-Merger) Credit Agreement or the (Long-Term) Credit Agreement,
dated as of the date hereof, among Multicare, certain of the Subsidiaries of
Multicare, Mellon as administrative agent, and certain other agents and lenders
referred to therein (as applicable, the "Multicare Credit Agreement") shall have
been satisfied.
(u) Investment in Genesis ElderCare Corp. and in the Borrower.
Genesis shall have acquired approximately 44% of the common stock of Genesis
ElderCare Corp. for a purchase price of at least $325,000,000.00; Cypress, Nazem
and TPG, collectively, shall have paid at least $420,000,000.00 in cash for the
remainder of the common stock of Genesis ElderCare Corp.; Genesis ElderCare
Corp. shall have contributed at least $745,000,000.00 to the Borrower in
exchange for common stock of the Borrower; and the Borrower shall be wholly
owned by Genesis ElderCare Corp.
(v) 1997 Subordinated Notes. The 1997 Subordinated Note Indenture
with terms and conditions satisfactory to the Agents in their sole discretion
shall have been executed by the parties thereto and the Borrower shall have
received gross proceeds of at least $250,000,000.00 from the sale of the 1997
Subordinated Notes and the net proceeds from such sale shall have been released
to the Borrower from the escrow in which they were deposited.
2.2 CONDITIONS TO EACH LOAN.
(a) Conditions. The obligation of the Lenders to make any Loans,
including the initial Loans, are subject to fulfillment of each of the following
conditions, in each case, unless otherwise specified, to the satisfaction of the
Administrative Agent:
(i) Absence of Default. There shall not, either prior to or
after giving effect to each such Loan, exist an Event of Default or a Default.
-16-
<PAGE>
(ii) Borrowing Notice. In connection with any request for
Loans (other than Loans described in Section 1.1(b)), the Administrative Agent
shall have received a borrowing notice as required by Section 1.2 above.
(iii) Truth of Representations. The representations and
warranties of the Borrower and each other Loan Party made in this Agreement and
each other Loan Document shall be true and correct in all material respects as
of the date each such Loan is made (both immediately prior to and after giving
effect to said Loan) as if made on and as of such date.
(iv) No Violations of Law. Neither the making of, nor the use
of proceeds of, such Loans shall conflict with or cause the Borrower to violate
any Law.
(v) Compliance with Indenture Covenants. The making of such
Loans shall not violate the terms of the 1997 Subordinated Note Indenture, and
the Borrower shall deliver a certificate of its chief financial officer or other
Responsible Officer representing that, both before and after giving effect to
such additional Indebtedness, the Borrower is in compliance with the financial
covenants set forth in Section 4.03 of the 1997 Subordinated Note Indenture and
that such Loans constitute Senior Indebtedness and Designated Senior
Indebtedness (as defined in the 1997 Subordinated Note Indenture).
(vi) Additional Information. The Lenders shall have received
such additional information and documentation as the Lenders may reasonably
request.
(vii) Business Activities. In the case of any Loan made before
the effective date of the Merger, the Borrower shall not be engaged in any
business activity except in connection with the Tender Offer.
(viii) Pledge of Multicare Shares. Such action as shall be
specified by the Administrative Agent shall have been taken so that the
Administrative Agent has a perfected, first priority security interest in all
Tendered Shares purchased by the Borrower in the Tender Offer, including
Tendered Shares purchased with the proceeds of such Loan.
(ix) Prior Application of Equity Contributions. All amounts
contributed to the equity of the Borrower, as described in Section 2.1(u) shall
have been used, or shall simultaneously be used, to pay for Tendered Shares
purchased in the Tender Offer.
(x) Application of Proceeds of Subordinated Financing. The
amount of proceeds of the issuance of the 1997 Subordinated Notes used to
purchase Tendered Shares (including any such proceeds so used concurrently with
the making of such
-17-
<PAGE>
Loan) shall equal or exceed the amount of all Loans outstanding after giving
effect to such Loan.
(xi) Ratio of Tendered Share Value to Indebtedness. After
giving effect to the making of such Loan and the purchase of Tendered Shares
with the proceeds thereof, the "current market value" (determined as provided in
Regulation U of the Board of Governors of the Federal Reserve System) of all
Tendered Shares purchased by the Borrower with funds provided by all sources
shall not be less than 2.5 times the amount of the Borrower's Indebtedness, and
the Borrower shall have furnished a certificate to the Agents demonstrating this
in form, substance and detail satisfactory to the Agents.
(b) Deemed Representation and Warranty. The request for, and
acceptance of, any Loan by the Borrower shall be deemed a representation and
warranty by the Borrower that the conditions specified in clauses (i), (iii),
(iv), (v) and (vii) through (xi) of the preceding paragraph (a) have been
satisfied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS. The Borrower hereby represents and warrants to each
Lender Party as follows:
(a) Status of Loan Parties. Each Loan Party is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Each Loan Party has the power and authority to own its property
and to transact the business in which it is engaged or presently proposes to
engage. Each Loan Party is duly qualified to do business as a foreign
corporation 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 any failures to maintain such
qualifications which, individually or in the aggregate, could not have a
Material Adverse Effect. Schedule 3.1(a) hereto sets forth for each Loan Party,
as of the Closing Date, the jurisdictions in which it is qualified to do
business as a foreign corporation.
(b) Capitalization of Loan Parties. Schedule 3.1(b) hereto sets
forth the authorized capitalization of each Loan Party. As of the Closing Date,
the Borrower is a wholly-owned subsidiary of Genesis ElderCare Corp., and
Genesis ElderCare Corp. is owned as described in Section 2.1(u). The outstanding
equity securities of each Loan Party have been duly authorized and validly
issued and are fully paid and nonassessable. The equity securities of the
Borrower and Genesis ElderCare Corp. are owned beneficially and of record as
stated in Section 2.1(u) and are free and clear of any Lien, except for Liens in
favor of the Administrative Agent for the benefit of the Secured Parties as
contemplated by
-18-
<PAGE>
the Loan Documents and other Permitted Liens. Except as provided in the
Transaction Documents, there are no options, warrants, calls, or similar rights
relating to equity securities of the Loan Parties. No Excluded Subsidiary has
any equity interest in any member of the Multicare Group.
(c) Authorization, Execution and Binding Effect of Loan Documents.
Each Loan Party has the 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
proceedings on its part. This Agreement and each other Loan Document has been
duly and validly executed and delivered by each Loan Party listed on the
signature pages hereto or thereto, as the case may be. This Agreement and each
other Loan Document constitutes the legal, valid and binding obligation of each
Loan Party purporting to be a party hereto or thereto, as the case may be,
enforceable against such Person in accordance with its terms, except as the
enforceability hereof of 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.
(d) Security. The Pledge Agreements create in favor of the
Administrative Agent for the benefit of the Secured Parties a legal, valid and
enforceable Lien on all right, title and interest of the Borrower and Genesis
ElderCare Corp. in the Collateral described therein, and the Administrative
Agent has, for the benefit of the Secured Parties, a fully perfected and
continuing first priority Lien on all of the right, title and interest of the
Borrower and Genesis ElderCare Corp. in the Collateral described in the Pledge
Agreements, subject to no Liens other than Permitted Liens.
(e) Governmental Approvals and Filings; Absence of Conflicts. Except
as described in Schedule 3.1(e), no approval, order, consent, authorization,
exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority or other Person is necessary in connection
with, the execution and delivery of any Loan Document by any Loan Party, or in
connection with the performance of the terms hereof or thereof by such Person,
other than the filing of Uniform Commercial Code financing and continuation
statements as referred to in the Pledge Agreements. No Loan Party is subject to
any Law which purports to restrict or regulate its ability to borrow money,
obtain credit or provide a guarantee or other form of credit support as a
consequence of the nature of the business conducted by such Loan Party. Neither
the execution and delivery of this Agreement or any other Loan Document by any
Loan Party, nor the performance of or compliance with the terms and conditions
hereof or thereof by any Loan Party does or will
(i) violate or conflict with any Law or any judgment, decree,
or order of a court or Governmental Authority or any settlement
agreement,
-19-
<PAGE>
(ii) violate, conflict with or result in a breach of any term
or condition of, or constitute a default under, or cause an
acceleration of, or result in the creation or imposition of any Lien
upon any of property of any Loan Party (except for any Lien in favor
of the Administrative Agent pursuant to the Pledge Agreements) under
or in connection with,
(x) its articles or certificate of incorporation or
bylaws (or other constituent documents),
(y) any agreement or instrument creating, evidencing or
securing any Indebtedness in the aggregate amount of
$250,000.00 or more to which any Loan Party is a party or by
which it or any of its properties (now owned or hereafter
acquired) may be subject or bound, or
(z) any other agreement or instrument or arrangement to
which it is a party or by which it or any of its properties
(now owned or hereafter acquired) may be subject or bound,
except, in the case of the foregoing clause (z), for matters
that,individually or in the aggregate, could not have a Material
Adverse Effect, or
(iii) result in a Limitation on any Licenses applicable to the
operations or properties of any Loan Party or any Subsidiary of any
Loan Party, or adversely affect the ability of any Loan Party or any
Subsidiary of any Loan Party to participate in any Third-Party Payor
Arrangement.
Except to the extent that the failure to obtain the same could not have a
Material Adverse Effect, no approval, order, consent of, authorization,
exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority or other Person is necessary in connection
with the Tender Offer or the Merger except such consents as are listed on
Schedule 3.1(e) hereto, all of which have been obtained and are in full force
and effect.
(f) Financial Statements. The Borrower has heretofore furnished to
the Administrative Agent and each Lender consolidated balance sheets of
Multicare and its consolidated Subsidiaries as of December 31, 1996 and December
31, 1995 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
Multicare, who delivered an unqualified opinion in respect thereof. Such
financial statements (including the notes thereto) present fairly the financial
condition of Multicare 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. The Borrower has
heretofore furnished to the Administrative Agent
-20-
<PAGE>
and each Lender interim consolidated balance sheets of Multicare and its
consolidated Subsidiaries as of the first two fiscal quarters of the fiscal year
beginning January 1, 1997, 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), as well as those financial statements delivered pursuant to Section
2.1(q) above, present fairly the financial condition of Multicare and its
consolidated Subsidiaries as of the date specified and the results of their
operations and their cash flows for the fiscal periods specified, all in
conformity with GAAP, subject to normal and recurring year-end audit
adjustments, except that such financial statements do not contain all of the
footnote disclosures required by GAAP. There are no material liabilities of the
parties reported on except as disclosed on such financial statements. Schedule
3.1(f) hereto sets forth, as of the Closing Date, all Indebtedness (and
commitments for Indebtedness) of the Borrower.
(g) Projections. The projections delivered pursuant to Section
2.1(q) above and the assumptions and estimates referred to therein are
reasonable, are, as of the Closing Date, made in good faith, are consistent with
the Loan Documents and represent the Borrower's best judgment as to such
matters. Nothing has come to the attention of the Borrower which would lead the
Borrower to believe that such projections will not be attained or exceeded
provided, however, that nothing contained in this paragraph (g) shall constitute
a representation or warranty that such future financial performance or results
of operations will in fact be achieved.
(h) Absence of Material Adverse Change. Since December 31, 1996,
there has been no material adverse change in the business, operations, condition
(financial or otherwise), properties or prospects of the members of the
Multicare Group taken as a whole or the industry served by the members of the
Multicare Group.
(i) Title to Property. Each Loan Party and each of the members of
the Multicare Group has good and marketable title to all property owned or
purported to be owned by it, including but not limited to all property reflected
in the most recent balance sheets delivered to the Lenders pursuant to this
Agreement (except such property as was sold or otherwise disposed of in
accordance with Section 5.5 below) subject to no Liens except Permitted Liens.
(j) Solvency. The present fair saleable value of the assets of the
Loan Parties, taken as a whole, after giving effect to all the transactions
contemplated by the Loan Documents and the funding of the Loans hereunder
exceeds the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of the
Loan Parties, taken as a whole, as they mature. The property of each Loan Party
does not constitute unreasonably small capital for such Loan Party to carry out
its business as now conducted and as proposed to be conducted including the
capital needs of such Loan Party. Each Loan Party does not intend to, nor does
such Loan Party believe that it will, incur debts beyond its ability to pay such
debts as they mature (taking into account
-21-
<PAGE>
the timing and amounts of cash to be received by such Loan Party, and of amounts
to be payable on or in respect of debt of such Loan Party). The cash available
to each Loan Party after taking into account all other anticipated uses of the
cash of such Loan Party, is anticipated to be sufficient to pay all such amounts
on or in respect of debt of such Loan Party when such amounts are required to be
paid.
(k) Accurate and Complete Disclosure. The information heretofore,
contemporaneously or hereafter provided in writing by or on behalf of any Loan
Party to any Lender Party pursuant to or in connection with this Agreement or
any other Loan Document 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 Lender Party) and does not or will not (as the
case may be) omit to state any material fact necessary to make such information
not misleading at such time in light of the circumstances in which it was
provided.
(l) Legal and Administrative Proceedings. There is no action, suit,
litigation or proceeding pending, or to the knowledge of the Borrower,
threatened nor, to the knowledge of the Borrower, is there any investigation
pending or threatened, in any court or before any arbitrator or Governmental
Authority or any payor appeals bodies respecting or relating to any Loan Party
or any of the members of the Multicare Group (or any officer or director
thereof) or any property of any Loan Party or any of the members of the
Multicare Group that, individually or in the aggregate, (i) could have a
material adverse effect on the Tender Offer, the Merger or the business,
condition (financial or otherwise), operations, properties or prospects of the
Loan Parties and the members of the Multicare Group taken as a whole or (ii) in
the judgment of the Majority Lenders, could materially adversely affect the
Lenders' rights and remedies hereunder or under the other Loan Documents, this
Agreement or other Loan Documents or the ability of the Loan Parties to perform
their obligations hereunder or thereunder.
(m) Absence of Violations and Conflicts. No Loan Party and no member
of the Multicare Group is in violation of, in default under, or is subject to
any contingent liability on account of any violation of or conflict with: (i)
any Law; (ii) its articles or certificate of incorporation, bylaws, partnership
agreement, operating agreement (or other constituent documents); or (iii) any
financing agreement or other 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 (i) or (iii) above, for
matters that, individually or in the aggregate, could not have a Material
Adverse Effect.
(n) Operation of Health Care Facilities.
(i) Except where failure to possess the same, either
individually or in the aggregate, could not have a Material Adverse Effect,
Multicare and each member of the Multicare Group possess all Licenses and
Reimbursement Approvals necessary to operate its Health Care Businesses
substantially as now operated and as
-22-
<PAGE>
presently proposed to be operated. Neither Borrower, Multicare nor any member of
the Multicare Group is in material violation of the terms of its Licenses and
Reimbursement Approvals.
(ii) Except for Limitations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
there is no threatened or pending Limitation of any material License or
Reimbursement Approval relating to the operation of Multicare or any member of
the Multicare Group's Health Care Businesses.
(iii) Except where the failure to file the same, either
individually or in the aggregate, could not have a Material Adverse Effect,
Multicare and each member of the Multicare Group have caused there to be
accurately prepared and filed (or obtained extensions for) all applicable cost
reports with respect to any and all Third Party Payor Arrangements that are
material to conduct its Health Care Businesses substantially as now conducted.
(iv) Neither Multicare nor any member of the Multicare Group
is subject to any claim (including any claim for overpayment), litigation,
proceeding or other action or, to any Loan Party's knowledge, investigation
relating to a claim or action by any Governmental Authority except matters that
if adversely decided, individually or in the aggregate, could not have a
Material Adverse Effect.
(v) Multicare and each member of the Multicare Group
participate in an internal comprehensive compliance program respecting
compliance with all Laws affecting the types of businesses carried on by
Multicare and any member of the Multicare Group (including health care Laws) and
has made such program available for review by any Lender, upon request.
(vi) Each of the foregoing statements in this paragraph (n)
are also true as applied to Persons managed by any member of the Multicare Group
to the extent that the failure of any such statement to be true (as applied to
any Person managed by a member of the Multicare Group) could have a Material
Adverse Effect.
(o) Management Agreements. Schedule 3.1(o) sets forth as of the
Closing Date, a complete and correct list of all Management Agreements relating
to (i) the operation and management by a Person that is not a Loan Party or a
member of the Multicare Group of each health care facility owned by Multicare or
any member of the Multicare Group and (ii) the operation and management by
Multicare or any member of the Multicare Group of each health care facility
owned by a Person that is not a Loan Party or a member of the Multicare Group.
As of the Closing Date, each such Management Agreement is in full force and
effect subject to no material default.
(p) Health Care Businesses. Schedule 3.1(p) sets forth, as of the
Closing Date, a complete and correct list of all Health Care Businesses owned or
operated by
-23-
<PAGE>
Multicare or any member of the Multicare Group and the locations thereof,
indicating which such Health Care Businesses are operated but not owned.
(q) Leased Properties. Schedule 3.1(q) identifies all properties
leased by Multicare or any member of the Multicare Group as of the Closing Date.
As of the Closing Date, all leases relating to such leased properties are in
full force and effect subject to no material default. Such leases comply with
the provisions of Section 5.7 below.
(r) Intellectual Property. Each Loan Party and each member of the
Multicare Group 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 (collectively,
"intellectual property"), free from burdensome restrictions, necessary to own
and operate its properties and to carry on its business as presently conducted
and presently planned to be conducted without conflict with the rights of
others. No Loan Party nor any member of the Multicare Group is in material
violation of the rights of others with respect to intellectual property.
(s) Employee Benefits/ERISA.
(i) The Loan Parties and the members of their Controlled
Groups maintain only those Defined Contribution Plans and other
Plans listed on Schedule 3.1(s) attached hereto and contribute only
to those Multiemployer Plans listed on Schedule 3.1(s) attached
hereto. No Loan Party nor any member of its Controlled Groups has
ever maintained or made contributions to, or has ever been required
to make contributions to, any Multiemployer Plan or any Defined
Benefit Pension Plan.
(ii) Each Defined Contribution Plan, as most recently amended,
including amendments to any trust agreement, group annuity, or
insurance contracts, or other governing instrument, is the subject
of a favorable determination letter by the Internal Revenue Service
with respect to its qualification under ss.401(a) of the Code.
(iii) All Plans comply, both in form and in operation, with
the requirements of the Code and ERISA.
(iv) There is not now, and has not been, any material
violation of the Code or ERISA with respect to the filing of
applicable reports, documents, and notices regarding any Plan with
the Secretary of Labor, the Secretary of the Treasury, the PBGC or
any other governmental entity or the furnishing of such documents to
the participants or beneficiaries of any Plan. The Borrower has
furnished to the Lenders copies of the most recent annual report,
audited financial statements, and other reports filed with the
Secretary of Labor, the
-24-
<PAGE>
Secretary of the Treasury, the PBGC or any other governmental entity
with respect to each Plan.
(v) All Pension Plans, as of the date hereof, meet the minimum
funding standards of ss.412 of the Code and ss.302 of ERISA without
regard to any funding waiver. The Loan Parties and the members of
their Controlled Groups have, as of the date hereof, made all
contributions or payments to or under Pension Plans required by the
terms of any such Plan or any contract or agreement.
(vi) No Prohibited Transaction has occurred with respect to
any Plan.
(vii) No Loan Party or any member of its Controlled Group has
any unfunded liabilities of unfunded and uninsured "employee welfare
benefit plans" (as defined in ss.3(1) of ERISA).
(viii) There is not now, and has not been, any COBRA Violation
with respect to any Plan to which such continuation coverage
requirements apply which has a material adverse effect, directly or
indirectly, on the financial condition of any Loan Party or any
member of the Multicare Group.
(ix) The Loan Parties and the members of their Controlled
Groups have established only those irrevocable trusts the assets of
which remain subject to the general creditors of the Loan Parties
and/or members of their Controlled Group (sometimes referred to as
"rabbi trusts") listed on Schedule 3.1(s) attached hereto and have
furnished to the Lenders copies of each such "rabbi trust."
(x) If the Borrower or any member of its Controlled Group were
obligated to pay the entire potential withdrawal liabilities for
which any of them would be liable if each of them were to withdraw
from the Multiemployer Plans to which any of them makes
contributions, such obligations would not be in excess of
$500,000.00
(xi) The Borrower and the members of its Controlled Group have
complied with the requirements of ss.515 of ERISA with respect to
Multiemployer Plans.
(t) Environmental Matters.
(i) Each Loan Party and each of their respective Environmental
Affiliates is and has been, in full compliance with all applicable
Environmental Laws, except for matters which, individually or in the
aggregate, could not
-25-
<PAGE>
have a Material Adverse Effect. There are no circumstances that may
prevent or interfere with such full compliance now or in the future.
(ii) Each Loan Party 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 in the future, except
for matters which, individually or in the aggregate, could not have
a Material Adverse Effect.
(iii) There is no Environmental Claim pending or, to the
knowledge of any Loan Party 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 Loan
Party or any Environmental Affiliates of the Loan Parties) that
could form the basis of any Environmental Claim against any Loan
Party or any such Environmental Affiliates, except for matters
which, if adversely decided, individually or in the aggregate, could
not have a Material Adverse Effect.
(iv) No facility or property now or previously owned, operated
or leased by any Loan Party or any of their respective Environmental
Affiliates is an Environmental Cleanup Site. No Loan Party and none
of their respective Environmental Affiliates has directly
transported or disposed of or arranged for the transportation or
disposal of any Environmental Concern Materials to any Environmental
Cleanup Site. No Lien exists, and, to the Loan Parties' knowledge
after due inquiry, no condition exists which could result in the
filing of a Lien, against any property of any Subsidiary of any Loan
Party or any of their Environmental Affiliates, under any
Environmental Law.
(u) Margin Rules. Neither the making of the Loans nor any use of
proceeds of the Loans will violate or conflict with the provisions of the Margin
Rules.
(v) Regulation O. No director, executive officer or principal
shareholder of any Loan Party 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.
(w) 1997 Subordinated Notes. The Borrower hereby confirms that the
Loan Obligations are "Senior Indebtedness" and hereby designates the Loan
Obligations as "Designated Senior Indebtedness" under the 1997 Subordinated Note
Indenture. All of the Loan Obligations constitute and will constitute "Senior
Indebtedness" and "Designated Senior Indebtedness" within the meaning ascribed
to such terms in the 1997 Subordinated Note
-26-
<PAGE>
Indenture and the subordination provisions therein are enforceable against
Genesis or the Borrower, as the case may be, and against the holders, from time
to time, of the 1997 Subordinated Notes. The Borrower is not in default under
the 1997 Subordinated Note Indenture.
(x) Certain Documents and Transactions. Each of the Transaction
Documents (including the Multicare Management Agreement) is in full force and
effect and no amendments, modifications or supplements have been made to any
such documents as the same were delivered to the Agents pursuant to Article 2
above except such amendments, modifications or supplements to Transaction
Documents as could not reasonably be expected to have an adverse effect on any
Loan Party (including the condition (financial or otherwise), properties or
prospects of such Loan Party), the Loan Documents or any Lender Parties. There
exists no default under any such agreements except for immaterial breaches.
(y) Labor Matters. There are no existing, or, to the best of
Borrower's knowledge, threatened or contemplated, strikes, slowdowns, picketing
or work stoppages by any employees against any Loan Party or any member of the
Multicare Group, any lockouts by any Loan Party or any member of the Multicare
Group of any of its employees or any labor trouble or other occurrence, event or
condition of a similar character which, individually or in the aggregate, could
have a Material Adverse Effect.
3.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE. The representations and
warranties of the Borrower set forth in this Article 3 are unaffected by any
prior or subsequent investigation by, or knowledge of, any Agent or any Lender.
ARTICLE 4
AFFIRMATIVE COVENANTS
So long as any Loan Obligation shall remain unpaid or any Lender
shall have any Commitment under this Agreement, the Borrower shall comply, and
shall cause the other Loan Parties to comply, with the following covenants.
4.1 REPORTING REQUIREMENTS.
(a) Annual Financial Statements. As soon as practicable, and in any
event within 90 days after the close of each fiscal year of the Borrower, the
Borrower shall furnish to the Administrative Agent and each Lender, audited:
(i) consolidated statements of income, cash flows and changes
in stockholders' equity of the Borrower and its Subsidiaries for
such fiscal year
-27-
<PAGE>
and a consolidated balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal year. If at any time the
Cash Flow of the Excluded Subsidiaries in the aggregate exceeds 3%
of the Cash Flow of Borrower and its consolidated Subsidiaries, the
Borrower shall furnish statements of income, cash flows and changes
in stockholders equity of the Borrower and its Subsidiaries on a
consolidated basis, for such fiscal year and a balance sheet of the
Borrower and its Subsidiaries, on a consolidated basis, as of the
close of such fiscal year, in lieu of the requirements of the
preceding sentence; and
(ii) statements of income, cash flows and changes in
stockholders equity of Genesis and its Subsidiaries (including the
Multicare Group), on a consolidated basis, for such fiscal year and
a balance sheet of Genesis and its Subsidiaries, on a consolidated
basis, as of the close of such fiscal year,
and with respect to all of the foregoing financial statements
referred to above setting forth the appropriate footnotes, 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 unqualified opinion in form
and substance satisfactory to the Administrative Agent of
independent certified public accountants of recognized national
standing selected by the Borrower and satisfactory to the
Administrative Agent.
(b) Quarterly Financial Statements. As soon as practicable, and in
any event within 45 days after the close of each fiscal quarter of each fiscal
year of the Borrowers, the Borrower shall furnish to the Administrative Agent
and each Lender, the following unaudited financial statements:
(i) consolidated statements of income, cash flows and changes
in stockholders' equity of the Borrower and its Subsidiaries for
such fiscal quarter and the applicable year to date period, and a
consolidated balance sheet of the Borrower and its Subsidiaries as
of the close of such fiscal quarter. If at any time the Cash Flow of
the Excluded Subsidiaries in the aggregate exceeds 3% of the Cash
Flow of Borrower and its Subsidiaries, the Borrower shall furnish
statements of income, cash flows and changes in stockholders equity
of the Borrower and its Subsidiaries on a consolidated basis, for
such fiscal quarter and applicable year-to-date period, in lieu of
the requirements of the preceding sentence; and
(ii) statement of income, cash flows and changes in
stockholders' equity for Genesis and its Subsidiaries (including the
Multicare Group), on a consolidated basis, for such fiscal quarter,
together with the applicable year to date period and a balance sheet
of such Persons on a consolidated basis as of the end of such fiscal
quarter.
-28-
<PAGE>
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 of the prior fiscal year end). Such financial statements
shall be certified by the chief financial officer or other
Responsible Officer of the Borrower 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) SEC Filings and Other Disclosure. Promptly upon their becoming
available to the Borrower but no later than ten Business Days after the same are
filed with the Securities Exchange Commission or any securities exchange (if
they are so filed), the Borrower shall deliver to the Administrative Agent and
each Lender, a copy of (i) all regular or special reports, registration
statements and amendments to the foregoing which any Loan Party shall file with
the Securities and Exchange Commission or any securities exchange, (ii) all
reports, proxy statements, financial statements and other information
distributed by any Loan Party to its stockholders, bondholders or the financial
community generally, (iii) all accountants' management letters (not otherwise
delivered pursuant to the preceding paragraph (b)) and all other reports
submitted by accountants in connection with any audit of any Loan Party, and
(iv) copies of all compliance certificates furnished to the trustee under the
1997 Subordinated Note Indenture.
(d) Notice of Certain Events. Promptly upon the Borrower becoming
aware of any of the following, the Borrower shall give the Administrative Agent
notice thereof, together with a written statement setting forth the details
thereof and any action with respect thereto taken or proposed to be taken by any
Loan Party:
(i) Loss of Licenses or Reimbursement Approvals. Any
actual Limitation (other than in the ordinary course of business) or
any threatened Limitation (to the extent that it individually or in
the aggregate with all other actual or threatened Limitations is
material) of any License or Reimbursement Approval relating to the
operation of a Health Care Business or, if the same individually or
in the aggregate could have a Material Adverse Effect, any
Limitation of any License or Reimbursement Approval of any Person
managed by the Borrower or any member of the Multicare Group;
(ii) Default. Any Event of Default or Default;
(iii) Material Adverse Change. Any material adverse
change in the business, operations or condition (financial or
otherwise) or prospects of any Loan Party;
-29-
<PAGE>
(iv) Material Litigation. Any pending or threatened
action, suit, proceeding or investigation by or before any
Governmental Authority against or affecting any Loan Party or any
member of the Multicare Group (officer or director thereof) or any
property of any Loan Party or any member of the Multicare Group,
except for matters that if adversely decided, individually or in the
aggregate, could not have a Material Adverse Effect;
(v) Breach or Termination of Certain Agreements. Any
breach, claimed breach, termination or purported or threatened
termination (including a copy of any notice of termination) of (A)
the Multicare Management Agreement, (B) any other Transaction
Document (except a termination in accordance with its terms), (C)
any other Management Agreement except in the ordinary course of
business, (D) the 1997 Subordinated Note Indenture (including a copy
of any notice of default received thereunder), or (E) any other
agreement or instrument material to the business, operations,
condition (financial or otherwise) or prospects of any Loan Party
and the members of the Multicare Group taken as a whole;
(vi) ERISA.
(A) any taxes, penalties, interest charges and other
financial obligations in excess of $250,000.00 that have been
assessed or otherwise imposed, or which the Borrower has
reason to believe may be assessed or otherwise imposed in
excess of $250,000.00, against any Loan Party or any member of
its Controlled Group by the Internal Revenue Service, the
PBGC, the Department of Labor or any other governmental entity
with respect to any Plan or Multiemployer Plan;
(B) any application for a waiver by a Loan Party or any
member of its Controlled Group of the minimum funding standard
under ss.412 of the Code with respect to a Pension Plan;
(C) the adoption of any Plan, including but not limited
to a Defined Benefit Pension Plan, or any obligation to
contribute to any Multiemployer Plan by a Loan Party or any
member of its Controlled Group.
(D) any Prohibited Transaction with respect to a Plan.
(E) (1) that any Loan Party has incurred Withdrawal
Liability from a Multiemployer Plan maintained by it or any
member of its Controlled Group, (2) that any Multiemployer
Plan to which any Loan Party or any member of its Controlled
Group has made contributions is or will be in Reorganization,
or (3) that any other
-30-
<PAGE>
condition exists with respect to a Multiemployer Plan which
presents a material risk of termination of any such Plan, the
Borrower will furnish a statement to the Lenders setting forth
the details of such Withdrawal Liability, Reorganization or
condition, and the action that the Borrower proposes to take
with respect thereto, together with a copy of any notice of
Withdrawal Liability or Reorganization received by such
Borrower or any member of its Controlled Group.
(F) any default by any Loan Party or any member of its
Controlled Group (as defined in ss.4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan required by reason
of its withdrawal (as defined in ss.4203 or ss.4205 of ERISA).
(G) any action brought against any Loan Party or any
member of its Controlled Group under ss.502 of ERISA with
respect to its failure to comply with ss.519 of ERISA.
(vii) Environmental. Any Environmental Claim pending or
threatened against any Loan Party or any of its 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 Loan Party or any of its 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.
(e) Other ERISA Information. The Borrower shall deliver to the
Administrative Agent copies of the following:
(A) Promptly after the filing thereof with the Secretary
of Labor, the Secretary of the Treasury, the PBGC or any other
governmental entity, copies of each annual report, each
audited financial statement and any other report so filed with
respect to each Plan.
(B) The Borrower will furnish to the Lenders as soon as
possible after receipt thereof, a copy of any notice that any
Loan Party or any member of its Controlled Group receives from
the PBGC, the Internal Revenue Service, the Department of
Labor or any other governmental entity that sets forth or
proposes any action to be taken or determination made by the
PBGC, the Internal Revenue Service, the
-31-
<PAGE>
Department of Labor or any other governmental entity with
respect to any Plan.
(f) Amendments to Transaction Documents. The Borrower shall furnish
the Administrative Agent with copies or drafts of all proposed amendments,
modifications or waivers to any Transaction Documents (1) in the case of any
amendments, modifications or waivers requiring the consent of the Required
Lenders at least 20 Business Days prior to the effective date thereof and (2) in
all other cases, at least 5 Business Days prior to the effective date thereof.
(g) Notice of Non-Renewal of Management Agreement. The Borrower
shall give the Administrative Agent written notice promptly upon receipt of
delivery of any notice of non-renewal or termination delivered under or relating
to the Multicare Management Agreement. The Administrative Agent shall promptly
give each Lender a copy of any notice delivered pursuant to this paragraph (g).
(h) Notices under Indenture. The Borrower shall furnish to the
Administrative Agent copies of all notices, reports, certificates or other
material delivered to or by the trustee or any other party under the 1997
Subordinated Note Indenture, promptly upon receipt thereof.
(i) Other Information. In addition, the Borrower will promptly
furnish to the Administrative Agent such other information as any Lender through
the Administrative Agent may reasonably request, including information submitted
by the Borrower to any Governmental Authority, and the Administrative Agent will
furnish such information to the requesting Lender.
4.2 MAINTENANCE OF EXISTENCE. Each Loan Party shall, and shall cause the
members of the Multicare Group to, preserve and maintain its corporate or
partnership existence, as the case may be, and good standing in the jurisdiction
of its organization, and shall qualify and remain qualified as a foreign
corporation or partnership in each jurisdiction in which such qualification is
required, provided, however nothing in this Section 4.2 shall prohibit any sales
or other dispositions permitted under Section 5.5.
4.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES AND OTHER PROPERTY.
(a) Type of Business. The Borrower shall not engage in any business
activity except in connection with the Tender Offer. The Borrower shall cause
Genesis ElderCare Corp. not to engage in any business activity other than the
ownership of the capital stock of the Borrower. The Borrower shall cause the
Multicare Group to continue to engage in the business of the same general type
as conducted by the Multicare Group on the
-32-
<PAGE>
Closing Date and not to engage in any other type of business without the consent
of the Required Lenders.
(b) Healthcare and Regulatory Rights. Except where the failure to
take any of the following actions, individually or in the aggregate, could not
have a Material Adverse Effect, the Borrower shall cause the Multicare Group to
(i) maintain in effect all Licenses and Reimbursement Approvals necessary or
appropriate to own and operate all Health Care Businesses which it owns or
operates, (ii) obtain all Licenses and Reimbursement Approvals necessary or
appropriate to own and operate all Health Care Businesses which it acquires, and
(iii) continue its participation in any and all Third Party Payor Arrangements.
Except where such failure to so comply (together with all other failures from
time to time by the same or other members, could not reasonably be expected to
have a Material Adverse Effect, the Borrower shall cause each member of the
Multicare Group to comply with any and all rules, regulations, standard
procedures and decrees necessary to maintain its participation in any such Third
Party Payor Arrangements and prepare and file all applicable cost reports with
respect to all Third Party Payor Arrangements to the extent required. The
Borrower shall cause the Multicare Group to use its efforts to cause each Person
managed by it to obtain and maintain its Licenses and Reimbursement Approvals
necessary for the conduct of its business and to continue its participation in
Third Party Payor Arrangements and comply with all rules, regulations, standard
procedures and decrees relating thereto to the extent that the failure to do so
could have a Material Adverse Effect.
(c) Maintenance of Property. The Borrower shall cause each member of
the Multicare Group to maintain, keep and preserve all of its property necessary
or useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted (except for sales and other
dispositions of property permitted under Section 5.5 below (Dispositions)).
Without limiting the generality of the foregoing, the Borrower shall cause each
member of the Multicare Group to maintain in full force and effect each lease,
Management Agreement and other material agreement used or useful in its
business, subject to no material default except where the loss of, or default
under, such lease, Management Agreement or other agreement (i) could not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect or (ii) is not otherwise prohibited by the terms of this
Agreement.
4.4 MAINTENANCE OF RECORDS; FISCAL YEAR. Each Loan Party and each member
of the Multicare Group shall keep adequate records and books of account, in
which complete entries will be made in accordance with historical practice and
GAAP, reflecting all financial transactions of the Borrowers. Each Loan Party
shall maintain a fiscal year end of December 31.
-33-
<PAGE>
4.5 COMPLIANCE WITH LAWS. Each Loan Party and each member of the Multicare
Group shall comply (and maintain procedures to assure compliance) in all
material respects with all applicable Laws (including environmental and health
care Laws) and all judgments, decrees or orders of any court or Governmental
Authority and all settlement agreements. Without limiting the generality of the
foregoing, each Loan Party and each member of the Multicare Group shall maintain
in full force and effect an internal compliance program respecting compliance
with all Laws affecting the types of businesses carried on by it (including
healthcare Laws) and make such program available for review by any Lender, upon
request.
4.6 ERISA.
(a) Each Loan Party will, and will cause each member of its
Controlled Group, to comply in all material respects with the provisions of
ERISA and the Code with respect to any Plan both in form and in operation.
(b) Each Loan Party will cause to be made all contributions required
to avoid any Accumulated Funding Deficiency, whether or not waived, with respect
to any Pension Plan.
(c) No Loan Party will adopt or permit the adoption by any member of
its Controlled Group of any Defined Benefit Pension Plan which would result in
any Amount of Unfunded Benefit Liabilities in excess of $500,000.00.
(d) No Loan Party will acquire, or permit the acquisition by any
member of its Controlled Group of, any trade or business which has incurred
either directly or indirectly any Amount of Unfunded Benefit Liabilities under
any Defined Benefit Pension Plan in excess of $500,000.00.
(e) The Loan Parties will not permit with respect to any Plan, any
Prohibited Transaction or Prohibited Transactions under ERISA or the Code
resulting in liability of any Loan Party or any member of its Controlled Group
which together with any other liabilities subject to this paragraph (e) would in
the aggregate be in excess of $500,000.00, unless such Loan Party or any member
of its Controlled Group will be contesting in good faith and by appropriate
proceedings any such matter and measures which are available and are being taken
which have the effect of preventing the seizure of property of such Loan Party
or any member of its Controlled Group pending the outcome of such contest.
(f) No Loan Party will withdraw, or permit any member of its
Controlled Group to withdraw, from any Multiemployer Plan to which any of them
may hereafter contribute if the Withdrawal Liability which would thereupon be
incurred would have a
-34-
<PAGE>
material adverse effect, directly or indirectly, on the financial condition of
any of the Loan Parties.
(g) No Loan Party will permit any unfunded liabilities of unfunded
and uninsured "employee welfare benefit plans" (as defined in ss.3(1) of ERISA)
of any Loan Party and of any member of its Controlled Group in excess of
$500,000.00 in the aggregate with all other liabilities subject to this
paragraph (g).
(h) No Loan Party will, or will permit any member of its Controlled
Group to, cause or suffer to exist a COBRA Violation with respect to any Plan to
which such continuation coverage requirements apply if the violation(s) could
result in a liability in excess of $500,000.00 in the aggregate.
4.7 RIGHT OF INSPECTION. Each Loan Party and each member of the Multicare
Group shall, at any reasonable times and from time to time, and upon reasonable
advance notice (but no advance notice shall be required if a Default or an Event
of Default shall then exist), permit the Administrative Agent or any Lender or
any agent or representative thereof, to examine and make copies and abstracts
from the records and books of account of, and visit and inspect the properties
of, any Loan Party and any member of the Multicare Group, and to discuss the
affairs, finances and accounts of such Loan Party and any member of the
Multicare Group with any of its officers, directors and independent accountants.
4.8 INSURANCE. Each Loan Party and each member of the Multicare Group
shall 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, 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 "stop loss" and business interruption. The Borrower shall
have the Administrative Agent named to receive certificates evidencing such
insurance annually at least thirty days prior to the anniversary date of such
insurance policies and any other time requested by the Administrative Agent.
4.9 PAYMENT OF TAXES AND OTHER CHARGES. Each Loan Party and each member of
the Multicare Group shall
(a) on or prior to the date on which penalties attach thereto, pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties; and
-35-
<PAGE>
(b) on or prior to the date when due, pay 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 Loan Party or member of the
Multicare Group need not pay or discharge any such tax, assessment, charge or
claim so long as (x) the validity thereof is being contested in good faith and
by appropriate proceedings diligently conducted and (y) such reserves or other
appropriate provisions as may be required by GAAP shall have been made therefor.
4.10 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS. The Borrower shall
comply with the terms of the 1997 Subordinated Note Indenture. The Borrower
shall promptly take all action necessary or requested by the Administrative
Agent at any time to protect, preserve and give effect to the status of the Loan
Obligations as "Senior Indebtedness" and "Designated Senior Indebtedness" within
the meaning of the 1997 Subordinated Note Indenture.
4.11 CORPORATE SEPARATENESS. Each of the Loan Parties and each member of
the Multicare Group shall observe all requirements necessary to cause it to be
treated as a separate legal entity for all purposes under applicable corporate
law. Without limiting the foregoing requirement, each of the Loan Parties and
each member of the Multicare Group specifically shall (i) maintain and cause
each Excluded Subsidiary to maintain separate corporate and financial records
and observing all corporate formalities; (ii) maintain, and cause each Excluded
Subsidiary to maintain, capitalization adequate to meet its business needs;
(iii) cause all reports, filings and public information to refer to such Person
or Excluded Subsidiary, as the case may be, as a separate company (and not a
division of each other); and (iv) otherwise conduct and cause each Excluded
Subsidiary to conduct, its dealings with third parties in its own name and as a
separate and independent entity. Without limiting the generality of the
foregoing, except as permitted or required by this Agreement or unless
specifically agreed to by the Required Lenders, no Loan Party nor any member of
the Multicare Group may enter into any merger or other combination with or
transfer assets to any of its Excluded Subsidiaries or to Genesis or any of its
Subsidiaries, or make any loan to, advance to, or other investment in any of its
Excluded Subsidiaries or in Genesis or any of its Subsidiaries, or guarantee any
Indebtedness of any of its Excluded Subsidiaries or of Genesis or any of its
Subsidiaries, provided, nothing in this Section 4.11 shall prohibit the
execution and delivery of the MultiCare Management Agreement, the MultiCare
Management Agreement Termination Letter or the Tax Sharing Agreement, and the
transactions contemplated thereby. Notwithstanding the foregoing, the Loan
Parties and each member of the Multicare Group may make such Investments in,
borrow money from, and carry on other transactions with, Excluded Subsidiaries
on an arm's length basis to the
-36-
<PAGE>
extent that this Agreement permits the Loan Parties and each member of the
Multicare Group to carry on such activities with unrelated third parties.
4.12 TRANSACTIONS WITH AFFILIATES. Each Loan Party and each member of the
Multicare Group shall effect all transactions with Affiliates (excluding
transactions among members of the Multicare Group) on a basis at least as
favorable to such Loan Party as would at the time be obtainable for a comparable
transaction on an arm's length dealing with an unrelated third party, except
that this Section 4.12 shall not apply to (a) the Tax Sharing Agreement, (b) the
Transaction Documents, or (c) transaction fees and expenses to Genesis, Cypress
and TPG within seven days of the Closing Date, to the extent such are permitted
by the 1997 Subordinated Note Indenture.
4.13 MERGER. The Borrower and Multicare shall use their best efforts to
cause the Merger to occur as soon after the Closing Date as practicable in
accordance with the terms of the Merger Agreement.
4.14 USE OF PROCEEDS. The Borrower will apply the proceeds of the Loans
only (i) to purchase Tendered Shares pursuant to the Tender Offer and (ii) for
the purposes described in Section 1.1(b).
4.15 CERTAIN DISPOSITIONS. On or before December 31, 1997, the
Borrower shall cause Multicare and its applicable Subsidiaries to sell to
Genesis and/or one or more of its Subsidiaries (other than the Borrower, Genesis
ElderCare Corp. or Multicare or any Subsidiary of any of them) their contract
therapy business for a cash purchase price of approximately $24,000,000.00 and
their institutional pharmacy business for a cash purchase price of approximately
$50,000,000.00, each on terms and conditions satisfactory to the Agents.
ARTICLE 5
NEGATIVE COVENANTS
So long as any Loan Obligation shall remain unpaid or any Lender shall
have any Commitment under this Agreement, the Borrower shall comply, and shall
cause the other Loan Parties to comply, with the following covenants.
-37-
<PAGE>
5.1 INDEBTEDNESS. No Loan Party and no member of the Multicare Group
shall, at any time, create, incur, assume or suffer to exist any Indebtedness
(including any Guaranties, Capitalized Leases or Assumed Indebtedness), except:
(a) Indebtedness to the Lender Parties pursuant to this Agreement
and the other Loan Documents; and
(b) Indebtedness of the Borrower evidenced by the 1997 Subordinated
Notes; and
(c) Indebtedness of Genesis ElderCare Corp. and members of the
Multicare Group under or permitted by the Multicare Credit Agreement.
5.2 LIENS. No Loan Party and no member of the Multicare Group shall, at
any time create, incur, assume or suffer to exist any Lien on any of its assets
(now owned or hereafter acquired), except for the following ("Permitted Liens"):
(a) Liens pursuant to the Loan Documents;
(b) Liens on property of members of the Multicare Group under or
permitted by the Multicare Credit Agreement; and
(c) Liens on property of the Borrower or Genesis ElderCare Corp.
arising from taxes, assessments, charges or claims described in Section 4.9
hereof to the extent permitted by said Section 4.9, provided that the aggregate
amount secured by all Liens described in this clause (c) shall not at any time
exceed $500,000.00.
5.3 LOANS, ADVANCES AND INVESTMENTS. No Loan Party and no
member of the Multicare Group shall, at any time (i) make or suffer to exist 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 (collectively, "Investments") any other
Person, except:
(a) in the case of the Borrower, Multicare Shares;
(b) in the case of Genesis ElderCare Corp., the capital stock of the
Borrower;
(c) in the case of members of the Multicare Group, as permitted by
the Multicare Credit Agreement;
(d) Cash Equivalent Investments; and
-38-
<PAGE>
(e) in the case of members of the Multicare Group, acquisitions
permitted under Section 5.4(c).
5.4 ACQUISITIONS, ETC. No Loan Party and no member of the Multicare Group
shall engage in any Acquisition (other than an acquisition of assets in the
ordinary course of business) except:
(a) the Borrower may acquire Multicare Shares;
(b) Genesis ElderCare Corp. may acquire the capital stock of the
Borrower; and
(c) members of the Multicare Group may make Acquisitions permitted
by the Multicare Credit Agreement.
5.5 DISPOSITIONS. No Loan Party and no member of the Multicare Group shall
sell, convey, assign, lease as lessor, transfer, abandon or otherwise dispose of
(collectively, for purposes of this Section 5.5, "transfer"), voluntarily or
involuntarily, any of its properties, except that members of the Multicare Group
may do so if permitted or required by the Multicare Credit Agreement.
5.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP INTERESTS. No Loan
Party and no member of the Multicare Group shall create, acquire, dispose of, or
change any interest in any Subsidiary except that members of the Multicare Group
may do so if permitted by the Multicare Credit Agreement.
5.7 LEASES. No Loan Party and no member of the Multicare Group shall at
any time enter into or suffer to remain in effect any lease, as lessee, of any
property, except that members of the Multicare Group may do so if permitted by
the Multicare Credit Agreement.
5.8 DIVIDENDS AND RELATED DISTRIBUTIONS. No Loan Party and no members of
the Multicare Group shall (a) declare or pay any dividends, (b) purchase,
redeem, retire or otherwise acquire for value any of its capital stock now or
hereafter outstanding, or (c) make any distribution of assets to its
stockholders as such whether in cash, assets or obligations, (d) allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of, any shares of its capital
stock, (e) or make any other distribution by return of capital or otherwise in
respect of any shares of its capital stock, except that members of the Multicare
Group may do so if permitted by the Multicare Credit Agreement, and except that
the Borrower or
-39-
<PAGE>
Genesis ElderCare Corp. may declare and pay dividends and make distributions
payable solely in its common stock, or options, warrants or other rights to
purchase common stock provided that any such stock, warrants, options or other
rights (other than such as are issued by Genesis ElderCare Corp. to Cypress,
Nazem or TPG) are pledged to the Administrative Agent for the benefit of the
Secured Parties pursuant to the Pledge Agreements.
5.9 LIMITATION ON PAYMENTS, PREPAYMENTS, DEFEASANCE AND OTHER ACTION WITH
RESPECT TO CERTAIN DEBT OBLIGATIONS. No Loan Party shall, or shall permit any of
its Subsidiaries to, directly or indirectly, pay, prepay, purchase, defease,
redeem, retire, acquire, or otherwise make any payment (on account of principal,
interest, premium or otherwise) in respect of any obligation under, or evidenced
by the 1997 Subordinated Note Indenture (or cause or allow any event or
condition to exist which would require any payment, prepayment, purchase,
defeasance, redemption, retirement, acquisition or other payment of any such
obligation) except that the Borrower may make cash interest payments on the 1997
Subordinated Notes as and when required to do so by the mandatory terms thereof,
all to the extent consistent with the subordination provisions applicable
thereto. The Borrower shall not amend, modify or supplement the terms or
provisions contained in the 1997 Subordinated Notes, the 1997 Subordinated Note
Indenture, or any agreement or instrument evidencing, relating or applicable
thereto. The Borrower shall not take or omit to take any action under or in
connection with the 1997 Subordinated Notes, the 1997 Subordinated Note
Indenture, or any related agreement or instrument which would violate or impair
the subordination provisions thereof. No Loan Party will make (or give any
notice that it shall make) any voluntary or optional payment or prepayment or
redemption or acquisition for value of, or will refund, refinance or exchange
any Indebtedness (excluding Loan Obligations) if at such time any Default or
Event of Default has occurred and is continuing or would be directly or
indirectly caused as a result thereof. No Loan Party shall designate any of its
Indebtedness as "Designated Senior Indebtedness" for purposes of the 1997
Subordinated Note Indenture except Indebtedness incurred pursuant to this
Agreement or the Multicare Credit Agreement.
5.10 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS.
(a) Constituent Documents. No Loan Party and no member of the
Multicare Group shall amend, modify or supplement its articles or certificate of
incorporation, bylaws, partnership agreement or similar constituent documents
(i) if a Material Adverse Effect could result from such amendment, modification
or supplement or (ii) if such amendment, modification or waiver could reasonably
be expected to materially adversely affect the rights or interests of the Agents
or the Lenders.
(b) Transaction Documents. No Loan Party shall amend, modify or
supplement any Transaction Document, except for such amendments, modifications
or supplements which could not reasonably be expected to have an adverse effect
on the Loan
-40-
<PAGE>
Parties and the members of the Multicare Group taken as a whole (including the
condition (financial or otherwise), properties or prospects of such Persons),
the Loan Documents or any Lender Party.
5.11 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS. No Loan Party and no
member of the Multicare Group shall enter into, or remain a party to, any
agreement or instrument which would impose any restriction; (a) on the right of
such Person from time to time to declare and pay dividends or take similar
actions with respect to capital stock owned by such Person or pay any
Indebtedness, obligations or liabilities from time to time owed to a another
Loan Party or Subsidiary; or (b) that would prohibit the grant of any Lien upon
any of its properties (now owned or hereafter acquired) to secure any senior
Indebtedness except for restrictions in agreements respecting Permitted Liens to
the extent that the prohibition applies only to property subject to the
Permitted Lien; or (c) would prohibit, or require the consent of any Person to,
any amendment, modification or supplement to any of the Loan Documents, except
(i) restrictions set forth in the Loan Documents or in documents entered into in
connection with the Multicare Credit Agreement; (ii) legal restrictions of
general applicability; and (iii) restrictions pursuant to the 1997 Subordinated
Note Indenture.
5.12 LIMITATIONS ON MERGERS, ETC. No Loan Party and no member of the
Multicare Group shall merge or consolidate with or into any Person, except (a)
the Merger and (b) in the case of Multicare and its Subsidiaries, mergers
permitted by the Multicare Credit Agreement.
5.13 AVOIDANCE OF OTHER CONFLICTS. No Loan Party and no member
of the Multicare Group shall violate or conflict with, be in default under, or
be or remain subject to any liability (contingent or otherwise) on account of
any violation or conflict with (a) its articles or certificate of incorporation,
bylaws or partnership agreement (or other constituent documents), or (b) any
agreement or instrument to which it is party or by which any of its properties
(now owned or hereafter acquired) may be subject or bound, except, with respect
to clause (b), for matters that could not, individually or in the aggregate,
have a Material Adverse Effect.
-41-
<PAGE>
ARTICLE 6
DEFAULTS
6.1 "EVENT OF DEFAULT" means any one of the following events (whatever the
reason for such Event of Default, whether it shall be voluntary or involuntary
and whether it shall be by action or inaction, by operation of law, pursuant to
a court order or any rule or regulation of any Governmental Authority or
otherwise):
(a) Failure to Pay Principal. The Borrower shall fail to make any
payment of the principal of any Loan on the date when the same shall become due
and payable, whether at stated maturity or at a date fixed for any prepayment
thereof or otherwise.
(b) Failure to Pay Interest, Fees and Other Amounts. The Borrower
shall fail to make any payment of interest on any Loan or shall fail to pay any
fees or any other amounts owing hereunder or under any other Loan Documents
(other than as specified in paragraph (a) above) on the dates when such
interest, fees or other amounts shall become due and payable and such failure
continues for more than three (3) Business Days.
(c) Covenant Defaults. (i) There shall occur a default in the due
performance or observance of any term, covenant or agreement to be performed or
observed pursuant to any of Sections 4.1(d)(ii), 4.2, 4.3, 4.7, 4.10, 4.12, or
4.14 or any Section of Article 5.
(ii) There shall occur any default in the due performance or
observance of any term, covenant or agreement to be performed or observed
pursuant to the provisions of this Agreement (other than as provided in
paragraph (a) or paragraph (b) above or subparagraph (i) of this paragraph (c))
and, if capable of being remedied, such default shall continue unremedied for
thirty (30) days after the Borrower becomes aware, or should in the exercise of
reasonable diligence have become aware, of such default.
(d) Misrepresentation. Any representation or warranty made or deemed
made by any Loan Party in or 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.
(e) Multicare Credit Agreement Default. There shall have occurred
and be continuing any "Event of Default" as such term is defined in the
Multicare Credit Agreement.
(f) Subordinated Notes. Any "Event of Default" (or similar term) as
defined in the 1997 Subordinated Note Indenture and any other subordinated
indenture to
-42-
<PAGE>
which any Loan Party may from time to time be party shall have occurred and be
continuing; or, any term or provision of the subordination provisions contained
in such 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 1995 Subordinated
Note or of any 1996 Subordinated Note or other subordinated note or other
subordinated obligations or of any 1997 Subordinated Note (or any trustee or
agent on behalf of such holder) shall terminate, repudiate, declare voidable or
void or otherwise contest any term or provision of such subordination
provisions; or the Borrower shall make, or shall be required to make or to offer
to make, any purchase, defeasance or redemption of 1997 Subordinated Notes under
the 1997 Subordinated Note Indenture or the Borrower shall make, or shall be
required to make or offer to make any defeasance, redemption or purchase of
subordinate notes under any similar provisions, if any, under any other such
subordinated indenture or other subordinated obligations.
(g) Other Cross-Defaults. (i) Any Loan Party shall fail to pay, in
accordance with its terms and when due and payable, any Indebtedness (other than
Indebtedness referred in paragraph (a), (e) or (f) above) under, or arising out
of an agreement or instrument (or group or series of related agreements or
instruments) which evidences outstanding Indebtedness in excess of
$5,000,000.00; (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; (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 (iv) a default by any Loan
Party shall be continuing under any other instrument or agreement (whether or
not relating to Indebtedness) binding upon such Person, except a default that,
together with all other such defaults under this clause (iv), could not have a
Material Adverse Effect.
(h) Judgments and Executions. One or more judgments for the payment
of money shall have been entered against any Loan Party or Loan Parties, which
judgment or judgments, to the extent not paid or fully covered by insurance,
exceed $1,000,000.00 in the aggregate, and such judgment or judgments shall have
remained undischarged and unstayed for a period of 30 consecutive days; or one
or more writs or warrants of attachment, garnishment, execution, distraint or
similar process or any attachment (prejudgment or otherwise) of assets exceeding
in value the aggregate amount of $1,000,000.00 shall have been issued against
any Loan Party or Loan Parties or any of its or their respective properties.
(i) Invalidity or Noncompliance With Loan Documents. Any of the Loan
Parties shall fail to perform any of its obligations under any of the Loan
Documents (after taking into account any applicable cure period set forth in
such agreements), or the validity of this Agreement or any of the other Loan
Documents shall have been challenged or disaffirmed by or on behalf of any of
the Loan Parties, or any of the Loan Documents shall cease to be in full force
and effect (other than pursuant to its terms) or, other than as a direct
-43-
<PAGE>
result of any action or inaction of a Lender Party, any Liens created or
intended to be created by any of the Loan Documents shall at any time cease to
be valid and perfected subject to no equal or prior Liens except Permitted
Liens.
(j) Material Adverse Effect. The Required Lenders shall have
determined in good faith that an event or condition has occurred which could
have a Material Adverse Effect.
(k) 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 Loan Party or any of their respective Environmental Affiliates, and the
Required Lenders shall determine in good faith (which determination shall be
conclusive) that such event(s) or condition(s), 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) the existence of any pending
or threatened Environmental Claim against any such Person, or the existence of
any past or present acts, omissions, events or circumstances that could form the
basis of any Environmental Claim against any such Person.
(l) Change of Control. A Change of Control shall have occurred; or a
"Change in Control" (as defined in the 1997 Subordinated Note Indenture) shall
have occurred.
(m) Insolvency, Bankruptcy, Etc. Any Loan Party or any entity in the
Multicare Group shall make an assignment for the benefit of creditors or a
composition with creditors, shall generally not be paying its debts as they
mature, shall admit its inability to pay its debts as they mature, shall file a
petition in bankruptcy, shall become insolvent (howsoever such insolvency may be
evidenced), shall be adjudicated insolvent or bankrupt, shall petition or apply
to any tribunal for the appointment of any receiver, custodian, liquidator or
trustee of or for it or any substantial part of its property or assets, shall
commence any proceeding relating to it under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, dissolution or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect; or there
shall be commenced against Loan Party or any entity in the Multicare Group any
such proceeding and the same shall not be dismissed within thirty (30) days, or
an order, judgment or decree approving the petition in any such proceeding shall
be entered against any Loan Party or any entity in the Multicare Group; or any
Loan Party or any entity in the Multicare Group shall by any act or failure to
act indicate its consent to, approval of or acquiescence in, any such proceeding
or any appointment of any receiver, custodian, liquidator or trustee of or for
it or for any substantial part of its property or assets, or shall suffer the
appointment of any receiver, liquidator or trustee, or shall take any corporate
action for the purpose of effecting any of the foregoing; or any court of
competent jurisdiction shall assume jurisdiction with respect to any such
proceeding and the same shall not be dismissed within thirty (30) days or a
receiver or a trustee or other officer or representative of a court or of
creditors, or any court,
-44-
<PAGE>
governmental office or agency, shall, under color of legal authority, take and
hold possession of any substantial part of the property or assets of such Loan
Party or any entity in the Multicare Group and shall not have relinquished
possession within thirty (30) days, or any Loan Party or any entity in the
Multicare Group shall have concealed, removed, or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors, or any of them, or any Loan Party or any entity in the Multicare
Group shall have suffered or permitted, while insolvent, any creditor to obtain
a Lien upon any of its property through legal proceedings or distraint.
(n) Termination of Multicare Management Agreement or other
Transaction Documents. Except as permitted by the Required Lenders, (i) the
Multicare Management Agreement shall cease to be in full force and effect or
there shall be any breach by any party thereto or a default thereunder or an
amendment, modification or supplement thereto not permitted by the terms of this
Agreement or any notice of non-renewal or termination thereunder shall have been
delivered by any party thereto or (ii) any other Transaction Document shall
cease to be in full force and effect (other than by its terms) or there shall be
any material breach by any party thereto or a default thereunder or any such
document shall be amended, modified, restated or supplemented in a manner not
expressly permitted by the terms of this Agreement or (iii) any other Management
Agreement of any entity in the Multicare Group shall be terminated or cease to
be renewed or extended or shall be amended, modified, restated or supplemented
if such termination, failure to renew or extend or amendment, modification,
restatement, or supplement (either singly or collectively with all other such
events relating to other Management Agreements) could have a Material Adverse
Effect.
(o) Loss of Licenses, Reimbursement Approvals, Etc. There shall be a
Limitation of one or more Licenses or Reimbursement Approvals of any Loan Party
or any member of the Multicare Group or any Person managed thereby and the
Required Lenders shall determine in good faith that such Limitation, and
individually or collectively all such Limitations, could reasonably be expected
to have a Material Adverse Effect.
6.2 CONSEQUENCES OF AN EVENT OF DEFAULT
(a) Events of Default in General. If an Event of Default (other than
one specified in paragraph (m) of Section 6.1 hereof (Insolvency, Bankruptcy,
Etc.) shall occur and be continuing or shall exist, then, in addition to all
other rights and remedies which the Administrative Agent or any other 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, and
the Administrative Agent may, (and upon the written request of the Required
Lenders, shall), by notice to the Borrower, from time to time do any or all of
the following:
-45-
<PAGE>
(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 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) Take any and all actions permitted under the Security
Documents.
(iv) Exercise such other remedies as may be available to the
Lender Parties under applicable Law.
(b) Automatic Acceleration; Certain Bankruptcy-Related Events. If an
Event of Default specified in paragraph (m) of Section 6.1 hereof (Insolvency,
Bankruptcy, Etc.) shall occur or exist, then, in addition to all other rights
and remedies which any Lender Party 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 unpaid principal amount of the Loans, interest accrued thereon and all
other Loan Obligations 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
Administrative Agent may, (and upon the written request of the Required
Lenders), shall, by notice to the Borrower, do one or more of the following: (i)
take any and all actions permitted under the Pledge Agreement or any other Loan
Document or (ii) exercise such other remedies as may be available to the Lender
Parties under applicable Law.
(c) Equitable Remedies. It is agreed that, in addition to all other
rights hereunder or under Law, the Administrative Agent shall have the right to
institute proceedings in equity or other appropriate proceedings for the
specific performance of any covenant or agreement made in any of the Loan
Documents or for an injunction against the violation of any of the terms of any
of the Loan Documents or in aid of the exercise of any power granted in any of
the Loan Documents or by Law or otherwise.
6.3 APPLICATION OF PROCEEDS. After the occurrence of an Event of Default
and acceleration of the Loans, any amounts received on account of Loan
Obligations shall be applied by the Administrative Agent in the following order:
-46-
<PAGE>
First, to payment of that portion of the Loan Obligations
constituting fees, indemnities, expenses and other amounts due to the
Administrative Agent in its capacity as such;
Second, to payment of that portion of the Loan Obligations
constituting fees, indemnities (other than those paid pursuant to the
preceding clause First), expenses and other amounts due to the Lender
Parties, ratably among them in proportion to the amounts described in this
clause Second due to them;
Third, to payment of that portion of the Loan Obligations
constituting accrued and unpaid interest on Loans, ratably among the
Lender Parties 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 among the Lender
Parties in proportion to the respective amounts described in this clause
Fourth due to them;
Fifth, to payment of all other Loan Obligations, ratably among the
Lender Parties in proportion to the respective amounts described in this
clause Fifth due to them; and
Finally, the balance, if any, after all of the Loan Obligations have
been indefeasibly paid in full, to the Borrower or as otherwise required
by Law.
ARTICLE 7
THE ADMINISTRATIVE AGENT
7.1 APPOINTMENT. Subject to the provisions of the second sentence of
Section 7.9 below, each Lender Party hereby irrevocably appoints Mellon to act
as Administrative Agent for such Lender Party under this Agreement and the other
Loan Documents. Each Lender Party hereby irrevocably authorizes the
Administrative 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 Administrative Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto. Mellon hereby agrees to
act as Administrative 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 7.9 hereof. Each Lender Party hereby
irrevocably authorizes the Administrative 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 Administrative Agent. Each Lender Party agrees
that the rights and remedies granted to the Administrative Agent under
-47-
<PAGE>
the Loan Documents shall be exercised exclusively by the Administrative Agent
(or a Person designated by the Administrative Agent), and that no Lender shall
have any right individually to exercise any such right or remedy, except to the
extent, if any, expressly provided herein or therein.
7.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES. Notwithstanding
anything to the contrary elsewhere in this Agreement or in any other Loan
Document:
(a) The Administrative 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 Administrative Agent shall be read into this Agreement or any
other Loan Document or shall otherwise exist.
(b) The duties and responsibilities of the Administrative Agent
under this Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and the Administrative Agent shall not have a
fiduciary relationship with respect to any Lender Party.
(c) The Administrative Agent's relationship with and to the Lender
Parties is governed exclusively by the terms of this Agreement and the
other Loan Documents. The Administrative Agent does not assume, and shall
not at any time be deemed to have, any relationship of agency or trust
with or for, any Lender Party or any other Person or (except only as
expressly provided in this Agreement and the other Loan Documents) any
other duty or responsibility to such Lender Party or other Person.
(d) The Administrative Agent shall be under no obligation to take
any action hereunder or under any other Loan Document if the
Administrative 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 Administrative Agent to qualify to do
business in any jurisdiction where it is not then so qualified.
(e) The authority of the Administrative Agent to request information
from the Borrower or to take any other voluntary action hereunder shall
impose no duty of any kind on the Administrative Agent to make such
request or take any such action.
7.3 EXERCISE OF POWERS. The Administrative Agent shall take any action of
the type specified in this Agreement or other Loan Document as being within the
Administrative 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
-48-
<PAGE>
direction, the Administrative 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 that 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
Administrative 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 each Lender Party (whether or not it so consented).
The Administrative Agent shall not have any liability to any Person as a result
of any action or inaction in conformity with this Section 7.3.
7.4 GENERAL EXCULPATORY PROVISIONS. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) The Administrative 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 or
other) damages suffered by a Person and only to the extent that such Person
proves that such damages were caused by the Administrative Agent's own gross
negligence or willful misconduct.
(b) The Administrative Agent shall not be responsible for (i) the
execution, delivery, effectiveness, enforceability, genuineness, validity or
adequacy of any Loan Document, (ii) any recital, representation, warranty,
document, certificate, report or statement in, provided for in, or received
under or in connection with, any Loan Document, (iii) any failure of any Loan
Party or any Lender to perform any of their respective obligations under any
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 Loan
Document 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 Administrative 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
(even if the Administrative Agent knows or should know that some event or
condition exists or fails to exist), or (iii) except to the extent set forth in
Section 7.5(f) below, the existence of any Event of Default or Default.
(d) The Administrative 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, whether obtained under or in connection with this
Agreement or otherwise, except for such notices, reports
-49-
<PAGE>
and other information expressly required by this Agreement or any other Loan
Document to be furnished by the Administrative Agent to such Lender Party.
7.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT.
(a) The Administrative 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 Administrative Agent shall not have any duty to verify the identity or
authority of any Person giving such notice or other communication.
(b) The Administrative Agent may consult with legal counsel
(including in-house counsel for the Administrative 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 Administrative 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 Administrative 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 Administrative Agent in accordance with the
requirements of this Agreement or any other Loan Document. Whenever the
Administrative 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 Administrative 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 Administrative 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 which may be imposed on,
incurred by or asserted against the Administrative Agent by reason of taking or
continuing to take any such action.
(e) The Administrative Agent may perform any of its duties under
this Agreement or any other Loan Document by or through agents or
attorneys-in-fact. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
-50-
<PAGE>
(f) The Administrative Agent shall not be deemed to have any
knowledge or notice of the occurrence of any Event of Default or Default unless
the Administrative Agent has received notice from a Lender Party or the Borrower
referring to this Agreement, describing such Event of Default or Default, and
stating that such notice is a "notice of default." If the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to each Lender Party.
7.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE AGENT OR OTHER LENDERS.
Each Lender Party acknowledges as follows: (a) neither the Administrative Agent
nor any other Lender Party has made any representations or warranties to it, and
no act taken hereafter by the Administrative Agent or any other Lender Party
shall be deemed to constitute any representation or warranty by the
Administrative Agent or such other Lender Party to it; (b) it has, independently
and without reliance upon the Administrative 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 Administrative 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.
7.7 INDEMNIFICATION. Each Lender agrees to reimburse and indemnify each
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 share of
(without duplication) the Commitment and the Loans, 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 such Agent or such other
Person in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Agent or such other
Person shall be designated a party thereto) that may at any time be imposed on,
incurred by or asserted against such 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 Tender Offer, the Merger, any 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, 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 that
such Lender proves were the result of the gross negligence or willful misconduct
of such Agent or such other Person. Payments under this Section 7.7 shall be due
and payable on demand.
-51-
<PAGE>
7.8 HOLDERS OF NOTES. The Administrative 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 an Assignment and Acceptance with respect to
the assignment or transfer thereof shall have been delivered to the
Administrative Agent in accordance with Section 9.9 hereof.
7.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign at
any time by giving 30 days' prior written notice thereof to the other Lender
Parties and the Borrower. The Administrative Agent may be removed by the
Required Lenders at any time for cause by such Required Lenders giving 30 days'
prior written notice thereof to the Administrative Agent, the other Lender
Parties and the Borrower. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Administrative Agent with
(so long as no Default or Event of Default shall have occurred and then be
continuing) the consent of the Borrower, whose consent shall not be unreasonably
withheld or delayed. If no successor Administrative 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
Administrative Agent may (but shall not be required to) appoint a successor
Administrative Agent. Each successor Administrative Agent shall be a Lender if
any Lender shall at the time be willing to become the successor Administrative
Agent, and if no Lender shall then be so willing, then such successor
Administrative Agent shall be an Eligible Institution. Upon the acceptance by a
successor Administrative Agent of its appointment as Administrative Agent
hereunder, such successor Administrative Agent shall thereupon succeed to and
become vested with all the properties, rights, powers, privileges and duties of
the former Administrative Agent in its capacity as such, without further act,
deed or conveyance. Upon the effective date of resignation or removal of a
retiring Administrative Agent, such Administrative 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 Administrative Agent under this Agreement. If and
so long as no successor Administrative Agent shall have been appointed, then any
notice or other communication required or permitted to be given by the
Administrative Agent shall be sufficiently given if given by the Required
Lenders, all notices or other communications required or permitted to be given
to the Administrative Agent shall be given to each Lender, and all payments to
be made to the Administrative Agent shall be made directly to the Loan Party or
Lender Party for whose account such payment is made.
7.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL AGENT. If the
Administrative 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 Administrative Agent and the Borrower shall (and the
Borrower 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 Administrative
-52-
<PAGE>
Agent, to constitute one or more other Persons designated by the Administrative
Agent, to act as co-Administrative Agent or agent with respect to any part of
the Collateral, with such powers of the Administrative Agent as may be provided
in such supplemental agreement, and to vest in such other Person as such
co-Agent or separate agent, as the case may be, any properties, rights, powers,
privileges and duties of the Administrative Agent under this Agreement or any
other Loan Document.
7.11 CALCULATIONS. The Administrative 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 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.
7.12 OTHER AGENTS.
(a) In General. The title "Syndication Agent" given to Citicorp USA,
Inc., and NationsBank, N.A. in this Agreement and the title "Documentation
Agent" given to First Union National Bank in this Agreement are solely for
identification purposes and imply no rights in favor of such Person and no
responsibility by such Person except such rights or obligations of "Agents"
(including the right to make certain determinations) as are expressly stated
herein. No such Agent shall be liable for any act or failure to act on its part
except for that which the claimant proves constitutes the gross negligence or
willful misconduct of such Agent.
(b) Successor Agents. Any Syndication Agent and the Documentation
Agent may resign at any time and such Agents may be removed at any time for
cause by the other Agents and the Borrower in which event, the Borrower (if no
Default or Event of Default shall then exist) and the Administrative Agent may
(in their sole discretion) appoint a successor Agent.
7.13 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitment hereunder and the Loan Obligations owing to it, the Administrative
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 Administrative Agent, and the terms "Lender", "Holder of Notes" and like
terms shall include the Administrative Agent in its individual capacity as such.
The Administrative Agent and its Affiliates may, without liability to account,
make loans to, accept deposits
-53-
<PAGE>
from, acquire debt or equity interests in, act as trustee under indentures of,
serve as "Administrative Agent" for other financing vehicles, issue letters of
credit on behalf of, and engage in any other business with, (a) any Loan Party
or any stockholder, Subsidiary or Affiliate of any Loan Party or (b) any other
Person, whether such other Person may be engaged in any conflict or dispute with
any Loan Party or any Lender Party or otherwise, as though the Administrative
Agent were not the Administrative Agent hereunder.
ARTICLE 8
DEFINITIONS; CONSTRUCTION
8.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings, (terms defined in the singular to have a
correlative meaning when used in the plural) unless the context hereof otherwise
clearly requires:
"Accumulated Funding Deficiency" has the meaning given to such term
in ss.4001(a)(18) of ERISA.
"Acquisition" means any acquisition by any Loan Party or any member
of the Multicare Group, 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.
"Administrative Agent" has the meaning ascribed to such term in the
preamble of this Agreement.
"Affiliate" of a Person means (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).
-54-
<PAGE>
"Agents" means collectively the Administrative Agent, Citicorp USA,
Inc., and NationsBank, N.A., each as a Syndication Agent, and First Union
National Bank, as Documentation Agent.
"Agreement" means this Credit Agreement as the same may be amended,
modified, restated or supplemented from time to time in accordance with its
terms.
"Agreement Date" means the date first-above written.
"Amount of Unfunded Benefit Liabilities" has the meaning given to
such term in ss.4001(a)(18) of ERISA.
"Assignment and Acceptance" has the meaning ascribed to such term in
Section 9.9.
"Assumed Indebtedness" means Indebtedness incurred by a Person which
is not a Loan Party or a Subsidiary of a Loan Party and which (a) is existing at
the time such Person (or assets of such Person) is acquired by a Loan Party or a
Subsidiary of a Loan Party and (b) is assumed by a Loan Party or a Subsidiary of
a Loan Party in connection with such Acquisition, other than Indebtedness
incurred by the original obligor in connection with, or in contemplation of,
such Acquisition.
"Available Commitment" means, as of any date, the difference between
(a) the amount of the Commitment on such date and (b) the aggregate principal
amount of all Loans made on or before such date.
"Bank Tax" means (i) any Tax based on or measured by net income of a
Lender Party, any franchise Tax and any doing business Tax imposed upon any
Lender Party by any jurisdiction (or any political subdivision thereof) in which
such Lender Party or any lending office of a Lender Party is located and (ii)
for the purposes of Section 1.12, any other Tax imposed by a jurisdiction other
than the United States or a political subdivision thereof that would not have
been imposed but for a present or former connection between such Lender Party or
lending office (as the case may be) and such jurisdiction.
"Borrower" has the meaning ascribed to such term in the preamble
hereto.
"Business Day" means 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 Administrative Agent's lending office is located.
"Capitalized Lease" means 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.
-55-
<PAGE>
"Capitalized Lease Obligation" of any Person at any time means 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.
"Cash Equivalent Investments" means 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
$1,000,000,000.00 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 Services;
(iii) commercial paper of companies, banks, trust companies or national banking
associations (in each case excluding Multicare 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 Services;
and (iv) repurchase agreements with any financial institution having combined
capital and surplus of not less than $1,000,000,000.00 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, means (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 and (v) income taxes, all as
adjusted for changes in accrued management fees under the Multicare Management
Agreement, in each case for such period.
"CERCLA" means 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" means the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be amended
from time to time.
"Change of Control" means the occurrence of any of the following
events:
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 as
amended), other than a Permitted Holder (as hereinafter defined), 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, except
-56-
<PAGE>
that a Person shall be deemed to be the "beneficial owner" of all
securities that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time,
upon the happening of an event or otherwise), directly or
indirectly, of more than, on a fully diluted basis, 35% of the total
Voting Stock of Genesis ElderCare Corp. (and all rights and options
to purchase such Voting Stock) if such "beneficial ownership" is
greater than the amount of voting power of the Voting Stock of
Genesis ElderCare Corp. (and all rights and options to purchase such
Voting Stock), held by Genesis and its Affiliates on such date;
(b) TPG, Cypress, Nazem and Genesis, collectively, shall cease
to own beneficially and of record at least 51% of the shares of each
class of capital stock of Genesis ElderCare Corp. (and all rights
and options to purchase such shares of capital stock) subject to no
Liens;
(c) Genesis ElderCare Corp. shall cease to own beneficially
and of record 100% of the capital stock of the Borrower or, after
the Merger, of Multicare (and all rights and options to purchase
such shares of capital stock);
(d) Multicare at any time fails to own beneficially and of
record 100% of the capital stock of each of its Subsidiaries
(subject to any disposition permitted by this Agreement);
(e) any "person" or "group" (as defined in paragraph (a) of
this definition), in a single transaction or through a series of
related transactions, is or becomes the "beneficial owner" (as
defined in paragraph (a) of this definition), directly or
indirectly, of more than 50% of the total Voting Stock (as
hereinafter defined) of Genesis;
(f) Genesis or any Loan Party 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 or any Loan Party, in
any such event pursuant to a transaction in which the outstanding
Voting Stock of Genesis or such Loan Party is changed into or
exchanged for cash, securities or other property, other than the
Merger and other than any such transaction where (i) the outstanding
Voting Stock of Genesis or such Loan Party 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 (as applicable)
Genesis would not be prohibited, under Section 5.10 of the 1995
Subordinated Note Indenture if then in effect, or under Section 5.10
of the 1996 Subordinated Note Indenture if then in effect, from
paying as a "restricted payment" (as defined in such indentures), or
which the Borrower would not be prohibited, under Section 4.04 of
the 1997 Subordinated Note
-57-
<PAGE>
Indenture if then in effect from paying as a "restricted payment"
(as defined in such indenture), and (ii) the holders of the Voting
Stock of Genesis or such Loan Party 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;
(g) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of Genesis or of a Loan Party (together with any new
directors whose election by such Board of Directors or whose
nomination for election by the stockholders of Genesis or such Loan
Party 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 constitute a
majority of the Board of Directors of Genesis or of such Loan Party
then in office, except in the case of a change in the composition of
the Board of Directors of Multicare, approved by Genesis in
connection with its acquisition of the Common Stock of Genesis
ElderCare Corp. held by Cypress, Nazem and TPG ; or
(h) Genesis or any Loan Party is liquidated or dissolved or
adopts a plan of liquidation.
For purposes of this definition of "Change of Control," (A) "Voting Stock" means
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 means 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, the 1996 Subordinated
Notes or the 1997 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; (C) "Board of Directors" of a
Person means the board of directors of such Person or the executive committee of
such Person; and (D) "Permitted Holder" means Genesis, Cypress, Nazem, TPG and
their wholly-owned Subsidiaries.
"Closing Date" means the date that the initial Loans are made
hereunder.
"COBRA Violation" means any violation of the "continuation coverage
requirements" of "group health plans" of former ss.162(k) of the Code (as in
effect for tax years beginning on or before December 31, 1988) and of ss.4980B
of the Code (as in effect
-58-
<PAGE>
for tax years beginning on or after January 1, 1989) and Part 6 of Subtitle B of
Title I of ERISA.
"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, and the Treasury regulations thereunder.
"Collateral" means the collateral subject to, or purported to be
subject to, the Liens of the Pledge Agreements, from time to time.
"Commitment" means, with respect to any Lender, (i) the amount set
forth opposite such Lender's name under the heading "Commitment" on Schedule 1.1
hereto or, in the case of a Lender that becomes a Lender pursuant to an
assignment, the amount of the assignor's Commitment assigned to such Lender, in
either case as the same may be reduced from time to time pursuant to Section 1.6
above or increased or reduced from time to time pursuant to assignments in
accordance with Section 9.9 below or (ii) as the context may require, the
obligation of such Lender to make Loans in an aggregate unpaid principal amount
not exceeding such amount. "Commitment" means with respect to all Lenders, the
sum of each Lender's Commitment.
"Controlled Group" means a group of employers, of which any Loan
Party is a member and which group constitutes:
(a) A controlled group of corporations (as defined inss.414(b)
of the Code);
(b) Trades or businesses (whether or not incorporated) which
are under common control (as defined in ss.414(c) of the Code);
(c) Trades or businesses (whether or not incorporated) which
constitute an affiliated service group (as defined in ss.414(m) of the Code); or
(d) Any other entity required to be aggregated with the
Borrower pursuant to ss.414(o) of the Code.
"Cypress" means The Cypress Group L.L.C., a Delaware limited
liability company and (a) any Subsidiary thereof and (b) any other Affiliate
thereof reasonably acceptable to the Administrative Agent. Without limiting the
generality of the foregoing, "Cypress" shall include Cypress Associates L.P.,
Cypress Offshore Partners L.P., Cypress Merchant Banking Partners L.P. and
Cypress Advisors Inc.
"Default" means any event or condition which with notice, passage of
time or both, would constitute an Event of Default.
-59-
<PAGE>
"Default Rate" means, with respect to any amounts payable hereunder
or under the other Loan Documents, a rate equal to the sum of (a) two percent
(2%) per annum plus (b) the interest rate otherwise in effect with respect to
such amounts.
"Defined Benefit Pension Plan" means a defined benefit plan (other
than a Multiemployer Plan) as defined in ss.3(35) of ERISA which is maintained
by the Borrower or any member of its Controlled Group.
"Defined Contribution Plan" means an individual account plan as
defined in ss.3(34) of ERISA which is maintained by the Borrower or any member
of its Controlled Group.
"Dollar," "Dollars" and the symbol "$" means lawful money of the
United States of America.
"Eligible Institution" means (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a commercial bank organized under the laws of the United States,
or any State thereof, and having a combined capital and surplus of at least
$1,000,000,000; (iv) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $1,000,000,000; (v) a commercial bank organized
under the laws of any other country that is a member of the Organization for
Economic Cooperation and Development (the OECD) or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow or under the laws of a political subdivision of any such
country, and having a combined capital and surplus of at least $1,000,000,000,
so long as such bank is acting through a branch or agency located in the United
States; (vi) a finance company, insurance company or other financial institution
or fund (whether a corporation, partnership, trust or other entity) that is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and having a combined capital and surplus or
total assets of at least $500,000,000; and (vii) with respect to any Lender that
is a fund, any other fund with assets in excess of $100,000,000 that invests in
bank loans and is managed by the same investment advisor as such Lender;
provided, however, that neither any Loan Party nor any Affiliate of a Loan Party
shall qualify as an Eligible Institution under this definition.
"Environmental Affiliate" means, 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" means any approval, order, consent,
authorization, certificate, license, permit or validation of, or exemption or
other action by, or filing, recording or registration with, any Governmental
Authority pursuant to or required under any Environmental Law.
-60-
<PAGE>
"Environmental Claim" means, 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 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" means 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" 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 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" 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 (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. "Environmental Law" shall also include any Environmental Approval and
the terms and conditions thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations thereunder.
"Event of Default" means any of the Events of Default described in
Section 6.1 hereof.
-61-
<PAGE>
"Excluded Subsidiaries" means the entities listed on Schedule 8.1
attached hereto and, after the Closing Date, each Subsidiary of any Excluded
Subsidiary, except, in any case, any such entity that shall have been designated
a "Restricted Subsidiary" pursuant to Section 6.10(b) of the Multicare Credit
Agreement.
"Federal Funds Rate" for any day means the rate per annum determined
by the Administrative 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.
"GAAP" has the meaning set forth in Section 8.3 below.
"Genesis" means Genesis Health Ventures, Inc., a Pennsylvania
corporation.
"Genesis Credit Agreement" has the meaning set forth in Section
2.1(t).
"Genesis ElderCare Corp." means the Delaware corporation of that
name, formerly named Waltz Corp.
"Genesis ElderCare Corp. Guaranty" means the guaranty of even date
herewith executed by Genesis ElderCare Corp. in favor the Administrative Agent
and the Lenders, as it may be amended, modified, restated or supplemented form
time to time in accordance with the terms hereof and thereof.
"Governmental Authority" means 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" means, 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.
"Health Care Business" means any healthcare related business
including any facility, unit, operation or business supplying health care
services, supplies or products, including long-term care, rehabilitation
therapy, specialized health care, health care management, and pharmacies.
-62-
<PAGE>
"Indebtedness" of any Person means (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;
(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 lesser of (i) the fair market value of the asset
subject to such Lien and (ii) the amount of such Indebtedness;
(e) 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);
(f) 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;
(g) all obligations of such Person with respect to acceptances
or similar obligations issued for the account of such Person;
(h) 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;
(i) 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; and
(j) all Guaranties of such Person.
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)
-63-
<PAGE>
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.
"Indemnified Parties" means, collectively, the Lender Parties and
their respective Affiliates and (without duplication) the directors, trustees,
officers, employees, attorneys and agents of each of the foregoing.
"Interest Expense" means, 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 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" means any rate swap, cap or collar
agreement to which any or all of the Loan Parties are party.
"Investments" has the meaning set forth in Section 5.3 above.
"JCAHO" - Joint Commission on Accreditation of Healthcare
Organizations.
"Law" means any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lender" has the meaning ascribed to such term in the preamble
hereto.
"Lender Parties" means, collectively, the Lenders and the Agents.
"Licenses" means any and all licenses, including provisional
licenses, certificates of need, JCAHO and/or other accreditations, permits,
franchises, rights to conduct business, approvals by a Governmental Authority or
otherwise, consents, qualifications, operating authority, and/or any other
authorizations.
"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.
"Limitation" means a revocation, suspension, impairment,
termination, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement and/or loss of any other rights.
-64-
<PAGE>
"Loans" has the meaning ascribed to such term in Section 1.1 of this
Agreement.
"Loan Documents" means this Agreement, the Notes, the Pledge
Agreements, and all other agreements and instruments executed in connection
herewith or therewith in each case as the same may be amended, modified,
restated or supplemented from time to time.
"Loan Obligations" means 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 whether such obligations are direct or
indirect, absolute or contingent, due or to become due, now or hereafter
arising, (specifically including obligations arising or accruing after the
commencement of any bankruptcy, insolvency, or similar proceeding with respect
to any Loan Party, or which would have accrued but for the commencement of such
proceeding even if the claim is not allowed in such proceeding under applicable
law).
"Loan Parties" means the Borrower, Genesis ElderCare Corp.,
MultiCare and any other Person who from time to time grants or purports to grant
to the Administrative Agent a Lien on any property pursuant to the Pledge
Agreement or is a Guarantor of any Loan Obligations.
"Management Agreement" means any agreement pursuant to which a
Person (or group of Persons) manages the business of another Person (or group of
Persons).
"Margin Rules" means Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System.
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, condition (financial or otherwise), properties or
prospects of any Loan Party, Multicare and the members of the Multicare Group,
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
Administrative Agent or any Lender Party to enforce any rights or remedies under
or in connection with any Loan Document. Without limiting the generality of the
foregoing, as used in connection with any provisions respecting the ownership or
operation of any Health Care Business, Material Adverse Effect may include,
among other things, any loss or suspension of a License or Reimbursement
Approval for any material nursing home or other material Health Care Business or
material group of nursing homes or other material group of Health Care
Businesses of any member of the Multicare Group, or any event, occurrence or
matter or series thereof giving rise to a reasonable probability of any of the
foregoing consequences.
"Maturity Date" has the meaning ascribed to such term in Section
1.3.
-65-
<PAGE>
"Mellon" means Mellon Bank, N.A., a national banking association,
and any successor or assign thereof.
"Merger" means the merger of the Borrower into Multicare on the
terms stated in the Merger Agreement without any change therein or waive of any
provision thereof not approved by the Required Lenders.
"Merger Agreement" means the Agreement and Plan of Merger dated as
of June 16, 1997, among the Borrower, Genesis ElderCare Corp. and Multicare.
"Multicare" means The Multicare Companies, Inc., a Delaware
corporation.
"Multicare Credit Agreement" has the meaning assigned to such term
in Section 2.1(t).
"Multicare Group" means Multicare and/or any of Multicare's
Subsidiaries from time to time other than Excluded Subsidiaries.
"Multicare Guaranty" means the guaranty of even date herewith
executed by Multicare in favor of the Administrative Agent and the Lenders, as
it may be amended, modified, restated or supplemented from time to time in
accordance with the terms hereof and thereof.
"Multicare Management Agreement" has the meaning ascribed to such
term in Section 2.1(g) above.
"Multicare Management Subordination Agreement" means the
Subordination Agreement among Genesis, Multicare and the Agents dated of even
date herewith whereby Genesis has agreed to subordinate its rights to payments
under the Multicare Management Agreement to the extent and on the terms and
conditions as set forth in the Multicare Management Subordination Agreement,
which such terms and conditions are subject to the Agents' approval.
"Multicare Shares" means shares of Multicare common stock, par value
$0.01 per share.
"Multiemployer Plan" means such term in ss.4001(a)(3) of ERISA.
"Nazem" means Nazem, Inc., a Delaware corporation and (a) any
Subsidiary thereof and (b) any other Affiliate thereof reasonably acceptable to
the Administrative Agent. Without limiting the generality of the foregoing,
"Nazem" includes Genesis ElderCare Portfolio K, L.P.
-66-
<PAGE>
"Net Income" means, with respect to any Person, for any period the
net earnings (or loss) after taxes of such Person for such period less non-cash
interest income, less extraordinary gains plus extraordinary non-cash losses.
"1995 Subordinated Note Indenture" means 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,
restated or supplemented from time to time in accordance with the terms of this
Agreement.
"1995 Subordinated Notes" means Genesis' 9-3/4% Senior Subordinated
Notes issued pursuant to the 1995 Subordinated Note Indenture in the original
aggregate principal amount of $120,000,000.
"1996 Subordinated Note Indenture" means the Indenture, dated as of
October 7, 1996, between Genesis and First Union National Bank, as Trustee,
relating to the 1996 Subordinated Notes, as such Indenture may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of this Agreement.
"1996 Subordinated Notes" means Genesis' 9 1/4% Senior Subordinated
Notes issued pursuant to the 1996 Subordinated Note Indenture, in the original
aggregate principal amount of ($125,000,000).
"1997 Subordinated Note Indenture" means the Indenture, dated as of
August 11, 1997, between the Borrower, PNC Bank, National Association, as
trustee, and Banque Internationale a Luxembourg S.A., as paying agent, relating
to the 1997 Subordinated Notes, as such Indenture may be amended, modified,
restated or supplemented from time to time in accordance with the terms of this
Agreement.
"1997 Subordinated Notes" means the Borrower's 9% Senior
Subordinated Notes issued pursuant to the 1997 Subordinated Note Indenture, in
the original principal amount of $250,000,000.
"Non-U.S. Lender" has the meaning ascribed to such term in Section
1.14 above.
" Note" means each promissory note of the Borrower issued to a
Lender relating to such Lender's Loans and Commitments substantially in the form
of Exhibit A-1 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,
restated or supplemented from time to time.
"Officer's Compliance Certificate" means a certificate, as of a
specified date, of a Responsible Officer of the Borrower as to each of the
following: (a) the absence of any
-67-
<PAGE>
Event of Default or Default on such date, (b) the truth of the representations
and warranties herein and in the other Loan Documents as of such date.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a pension plan (as defined in ss.3(2) of ERISA)
which is subject to Part 3 of Subtitle B of Title I of ERISA or subject to
ss.412 of the Code and maintained by the Borrower or any member of its
Controlled Group.
"Permitted Liens" has the meaning set forth in Section 5.2 above.
"Person" means an individual, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture, joint-stock
company, Governmental Authority or any other entity.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) as defined in ss.3(3) of ERISA which is either (1) maintained by the
Borrower or any member of its Controlled Group, or (2) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the Borrower or any member of its
Controlled Group is then making or accruing an obligation to make contributions
or has ever been obligated to make contributions.
"Pledge Agreements" means (i) the pledge agreement of even date
herewith executed by the Borrower in favor of the Administrative Agent for the
benefit of itself and the Lenders, and (ii) the pledge agreement of even date
herewith executed by Genesis ElderCare Corp. in favor of the Administrative
Agent for the benefit of itself and the Lenders, as each may be amended,
modified, restated or supplemented from time to time in accordance with the
terms hereof and thereof.
"Put/Call Agreement" means the Put/Call Agreement dated _________,
1997, among Genesis, TPG and Cypress.
"Prime Rate" means the greater of (A) the interest rate per annum
announced from time to time by the Administrative Agent as its prime rate or (B)
the Federal Funds Rate plus .50%. The Prime Rate may be greater or less than
other interest rates charged by the Administrative Agent to other borrowers.
"Prohibited Transaction" has the meaning given to such term in
ss.406 of ERISA or ss.4975(c) of the Code.
"Quarterly Payment Date" means the last Business Day of each
January, April, July and October.
-68-
<PAGE>
"Registered Noteholder" has the meaning ascribed to such term in
Section 1.14 above.
"Regulatory Change" means any applicable law, interpretation,
directive, request or guideline (whether or not having the force of law), or any
change therein or in the administration or enforcement thereof, that becomes
effective or is implemented or first required or expected to be complied with
after the Agreement Date (including any applicable law that shall have become
such as the result of any act of omission of the Borrower or any of its
Affiliates, without regard to when such applicable law shall have been enacted
or implemented), whether the same is (i) the result of an enactment by a
government or any agency or political subdivision thereof, a determination of a
court or regulatory authority or otherwise or (ii) enacted, adopted, issued or
proposed before or after the Agreement Date, including any such that imposes,
increases or modifies any Tax, reserve requirement, insurance charge, special
deposit requirement, assessment or capital adequacy requirement, but excluding
any such that imposes, increases or modifies any Bank Tax.
"Reimbursement Approvals" means, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations (including JCAHO
accreditation) and/or any other agreements with or approvals by organizations
and Governmental Authorities.
"Rental Expense" means, 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 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).
"Required Lenders" means, as of any date, Lenders otherwise eligible
to vote pursuant to the terms of this Agreement holding, in the aggregate, at
least 51% of the outstanding Loans and unused Commitments held by all Lenders so
eligible to vote.
"Reserved Commitment" has the meaning ascribed to such term in
Section 1.1(b).
"Responsible Officer" of a Person means the President, the
Secretary, the Chief Executive Officer, any Vice President, the Controller, the
Treasurer or the Chief Financial Officer of such Person.
"Secured Parties" has the meaning ascribed to such term in the
Pledge Agreements.
"Subsidiary" of a Person at any time means:
-69-
<PAGE>
(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;
(c) any partnership, limited liability company, 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; or
(d) any entity which is consolidated with such Person for
financial reporting purposes.
"Tax" means any federal, state, local or foreign tax assessment or
other governmental charge or levy (including any withholding tax) upon a Person
or upon its assets, revenues, income or profits.
"Tax Sharing Agreement" means the Tax Sharing Agreement among the
members of the Multicare Group, Genesis ElderCare Corp. and the Excluded
Subsidiaries delivered pursuant to the Multicare Credit Agreement.
"Tendered Multicare Shares" means Multicare Shares tendered pursuant
to the Tender Offer.
"Tender Offer" means the Borrower's offer to purchase the
outstanding Multicare Shares as contained in its "Offer to Purchase for Cash All
Outstanding Shares of Common Stock of the Multicare Companies," dated June 20,
1997, as extended from time to time.
"Third Party Payor Arrangements" means any and all arrangements with
Medicare, Medicaid, CHAMPUS, and any other Governmental Authority, or
quasi-public agency, Blue Cross, Blue Shield, any and all managed care plans and
organizations, including but not limited to HMOs and preferred provider
organizations, private commercial insurance companies, employee assistance
programs and/or any other third party
-70-
<PAGE>
arrangements, plans or programs for payment or reimbursement in connection with
health care services, products or supplies.
"TPG" means TPG Partners II, L.P., a Delaware limited partnership
and (a) any Subsidiary thereof and (b) any other Affiliate thereof reasonably
acceptable to the Administrative Agent. Without limiting the generality of the
foregoing, "TPG" includes TPG Paralell II, L.P., TPG Investors II, L.P. and TPG
MC Coinvestment, L.P.
"Transaction Documents" means each of the material documents as may
exist on the date that the Tender Offer is consummated with such changes as are
permitted by the terms of this Agreement respecting (i) the Tender Offer, (ii)
the Merger, (iii) the relationship between Genesis, Cypress, Nazem and TPG and
the rights and obligations relating thereto and (iv) related matters including
the Put/Call Agreement, the Shareholders Agreement respecting Genesis ElderCare
Corp. and the Merger Agreement.
"United States Person" has the meaning ascribed to such term in
Section 1.12 above.
"Withdrawal Liability" has the meaning given to such term in ss.4201
of ERISA.
8.2 CONSTRUCTION. In this Agreement and each other Loan Document, unless
the context otherwise clearly requires,
(a) references to the plural include the singular, the singular the
plural and the part the whole;
(b) "or" has the inclusive meaning represented by the phrase
"and/or;"
(c) 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;
(d) 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;
(e) 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 whether or not stated; and
-71-
<PAGE>
(f) references 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 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 the Borrower's
reasonable 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.
8.3 ACCOUNTING PRINCIPLES.
(a) As used herein, "GAAP" means generally accepted accounting
principles (other than as set forth in this Section 8.3(a) as to consolidation)
in the United States, applied on a basis consistent with the principles used in
preparing the financial statements of Multicare and its consolidated
Subsidiaries as of December 31, 1996 and for the fiscal year then ended. When
the word "consolidated" is used in this Agreement, it shall be used in a manner
consistent with generally accepted accounting principles in the United States
except that such principles relating to what entities shall be consolidated
shall be superseded by any terms of this Agreement which designate what entities
shall be consolidated for purposes relating hereto.
(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.
ARTICLE 9
MISCELLANEOUS
9.1 NOTICES. Unless otherwise expressly provided under this Agreement all
notices, requests, demands, directions and other communications (collectively
"notices")
-72-
<PAGE>
given to or made upon any party under the provisions of this Agreement (and
unless otherwise specified, in each other Loan Document) shall be by telephone
(immediately confirmed in writing) or in writing (including facsimile
communication) and if in writing shall be delivered by hand, nationally
recognized overnight courier or U.S. mail or sent by facsimile to the respective
parties at the addresses and numbers set forth under their respective names on
the signature pages of this Agreement or in accordance with any subsequent
unrevoked written direction from any party to the others. All notices shall,
except as otherwise expressly provided in this Agreement, be effective (a) in
the case of facsimile, when received, (b) in the case of hand-delivered notice,
when hand delivered, (c) in the case of telephone, when telephoned, provided,
however, that in order to be effective unless otherwise expressly provided,
telephonic notices must be confirmed in writing no later than the next day by
letter or facsimile, (d) if given by U.S. mail, the day after such communication
is deposited in the mails with overnight first class postage prepaid, return
receipt requested, and (e) if given by any other means (including by air
courier), when delivered; provided, further, that notices to the Administrative
Agent shall not be effective until received. Any Lender giving any notice to the
Borrower shall simultaneously send a copy of such notice to the Administrative
Agent, and the Administrative Agent shall promptly notify the other Lenders of
the receipt by it of any such notice. Except as otherwise provided in this
Agreement, in the event of a discrepancy between any telephonic or written
notice, the written notice shall control.
9.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT. 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 except as expressly provided
otherwise (e.g., certain fee agreements and fee arrangements set forth in the
commitment letter relating hereto and indemnification obligations under the
Existing Credit Agreement). This Agreement and the other Loan Documents
represent the entire agreement between the parties to this Agreement with
respect to the transactions contemplated hereby or thereby and, except as
expressly provided herein or in the other Loan Documents, shall not be affected
by reference to any other documents.
9.3 SEVERABILITY. Every provision of this Agreement and each of the other
Loan Documents is intended to be severable, and if any term or provision of this
Agreement or any of the other Loan Documents shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction. 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 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
-73-
<PAGE>
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.
9.4 DESCRIPTIVE HEADINGS. The descriptive headings of the several sections
of this Agreement are inserted for convenience only and shall not affect the
meaning or construction of any of the provisions of this Agreement.
9.5 GOVERNING LAW. This Agreement and the rights and obligations of the
parties under this Agreement and under the other Loan Documents shall be
construed in accordance with and shall be governed by the laws of the
Commonwealth of Pennsylvania.
9.6 NON-MERGER OF REMEDIES. The covenants and obligations of the Borrower
and the rights and remedies of the Administrative Agent and other Lender Parties
hereunder and under the other Loan Documents shall not merge with or be
extinguished by the entry of a judgment hereunder or thereunder, and such
covenants, obligations, rights and remedies shall survive any entry of a
judgment until payment in full of the Loans Obligations and termination of the
Commitment. All obligations under the Loan Documents shall continue to apply
with respect to and during the collection of amounts due under the Loan
Documents or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and in any workout, restructuring or in connection
with the protection, preservation, exercise or enforcement of any of the terms
of this Agreement or of any rights under this Agreement or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings. Without limiting the generality of the foregoing, post-judgment
interest rate shall be the interest rate provided in paragraph (c) of Section
1.7 above.
9.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES. No course of dealing and no
delay or failure of the Administrative Agent or any other Lender Party 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
Administrative 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 Administrative 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 9.8 below shall be effective
only as to such specific default and shall not apply to any subsequent default.
-74-
<PAGE>
9.8 AMENDMENTS; WAIVERS. Any term, covenant, agreement or condition of any
Loan Document to which the Lenders (or the Administrative Agent) are party may
be amended, and any right under the Loan Documents may be waived, if, but only
if, such amendment or waiver is in writing and is signed by the Required Lenders
(or by the Administrative Agent at the direction of the Required Lenders);
provided, however, if the rights and duties of the Administrative Agent are
affected thereby such amendment or waiver must be executed by the Administrative
Agent; and provided, further, that no such amendment or waiver shall be
effective unless in writing and signed by each Lender referred to below, if it
would
(a) increase such Lender's Commitment or the outstanding
amount of such Lender's Loans,
(b) extend the maturity of the Note of such Lender,
(c) decrease the rate of interest or amount of fees due to
such Lender or decrease the principal amount in respect of the Note of such
Lender or extend the time of payment of interest or fees due to such Lender,
provided that the written consent of the Required Lenders, rather than the
consent of all Lenders, shall be sufficient to waive imposition of the Default
Rate, or
(d) change the number of Lenders which are required to consent
to any proposed action under this Agreement before such action may be taken
under this Agreement if such change could cause such Lender to lose its right to
participate in such consent;
and provided, further, that no such amendment or waiver shall be effective
unless in writing and signed by all the Lenders if it would
(i) amend the definition of "Required Lenders" or
(ii) release the Borrower of its Obligations or release any
guaranty or collateral security granted pursuant to the Loan
Documents.
Further, the Administrative Agent and the Lenders may amend or modify the
provisions of Article 7 hereof (except for Section 7.9 (Successor Administrative
Agent) and paragraph (b) of Section 7.12 (Other Agents)) without the need for
any consent or approval from the Borrower, it being acknowledged that the
Borrower is not a third party beneficiary of the provisions of said Article 7
(except for Section 7.9 (Successor Administrative Agent) and paragraph (b) of
Section 7.12 (Other Agents)) and (y) without the consent of any Lenders, the
Administrative Agent may enter into amendments and modifications to this
Agreement and the other Loan Documents as necessary or desirable to cure any
ambiguities herein or therein or to add additional borrowers or add additional
Collateral.
-75-
<PAGE>
9.9 SUCCESSORS AND ASSIGNS
(a) Assignments by the Borrower. Without the prior written consent
of all of the Lenders, the Borrower may not assign any of its rights or delegate
any of its duties or obligations under this Agreement or any other Loan
Document.
(b) Participations. Any Lender may sell participations to one or
more Eligible Institutions of all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment); provided, however, that, with respect to any Lender, (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties to this Agreement
for the performance of such obligations, (iii) all amounts payable by the
Borrower under this Agreement shall be determined as if such transferor Lender
had not sold such participation and no participant shall be entitled to receive
any greater amount pursuant to this Agreement than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such participant had no such transfer
occurred, (iv) such participant shall agree to be bound by the provisions of
this Agreement and the other Loan Documents, and (v) with respect to any sale of
a participation hereunder, such Lender shall contemporaneously sell to the same
participant a proportionately equal amount of its interest in the Multicare
Credit Agreement and (vi) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such transferor Lender
in connection with such Lender's rights and obligations under this Agreement,
and such Lender shall retain the sole rights and responsibility vis-a-vis the
Borrower to enforce the obligations of the Borrower relating to the Loans,
including the right to approve any amendment, modification or waiver of any
provision of this Agreement (except that such Lender may give its participants
the right to direct such Lender to approve or disapprove any amendment,
modification or waiver which would require such Lender's consent under clause
(a) (b), (c), (i) or (ii) of the preceding Section 9.8).
(c) Assignments by Lenders. Each Lender may assign to one or more
Eligible Institutions all or a portion of its interest, rights and obligations
under this Agreement (including all or a portion of its Commitment) and the
other Loan Documents; provided, however, that with respect to any assignment,
(i) unless the assignee is (prior to the effective time of the assignment) an
Existing Lender or an Affiliate of an existing Lender, the Administrative Agent
and, if no Event of Default has occurred and is continuing, the Borrower must
give their prior written consent to such assignment (which consents shall not be
unreasonably withheld), (ii) the parties to each such assignment shall execute
and deliver to the Administrative Agent and, unless an Event of Default has
occurred and is continuing, the Borrower, for their acceptance, an Assignment
and Acceptance Agreement in form and content satisfactory to the Administrative
Agent (the "Assignment and Acceptance"), together with (A) any Note subject to
such assignment, and (B) a processing and recordation fee of $3,500 (or such
lesser amount as is required for the Administrative Agent to receive an
aggregate amount equal to $3,500.00 under this Agreement and the
-76-
<PAGE>
Multicare Credit Agreement in respect of such transfer), (iii) no Lender may
make a partial assignment if the amount of its portion of the Commitment and
(without duplication) the outstanding Loans, together with the amount of its
interest under the Multicare Credit Agreement assigned in accordance with clause
(v) below, is, or after giving effect to the proposed assignment would be, less
than Ten Million Dollars ($10,000,000.00), (iv) unless the assignee is (prior to
the effective time of the assignment) a Lender hereunder, the aggregate amount
of any interest so sold to any assignee pursuant to any partial assignment
hereunder, together with the aggregate amount so sold to such assignee in
accordance with clause (v) below, may not be less than Ten Million Dollars
($10,000,000.00), and (v) with respect to any assignment of an interest
hereunder, the assignor shall contemporaneously assign to the same assignee a
proportionately equal amount of its interest under the Multicare Credit
Agreement.
"Partial assignment" as used in clauses (iii) and (iv) above means
any assignment of a Lender's rights and obligations hereunder except an
assignment of all of such Lender's rights and obligations such that after the
assignment such Lender shall have no Commitment and no interest in any Loans
hereunder. Upon compliance with clauses (i) through (iii) above, from and after
the effective date specified in the relevant Assignment and Acceptance, (x) the
assignee shall be a party to this Agreement and the other Loan Documents to
which the assignor was a party, and to the extent provided in such Assignment
and Acceptance, have the rights and obligations of a Lender under this Agreement
and under the other Loan Documents and (y) the assigning Lender shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement and the other Loan Documents.
(d) Procedures Respecting Assignment. Upon their receipt of an
Assignment and Acceptance executed by the assignor and the assignee, subject to
the conditions set forth in the preceding paragraph (c), the Administrative
Agent and (unless an Event of Default shall have occurred and be continuing) the
Borrower shall accept such Assignment and Acceptance. Within thirty (30) days
after such Assignment and Acceptance is signed and accepted by all parties, the
Borrower, at its own expense, shall execute and deliver to the Administrative
Agent new Notes in exchange for the surrendered Notes, each to the order of such
assignee in an amount equal to its portion of the Commitment and Loans assigned
to it pursuant to such Assignment and Acceptance and new Notes to the order of
the assigning Lender in an amount equal to the Commitment and Loans retained by
it. Such Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the date of such
surrendered Notes (each assignee shall confirm in the Assignment and Acceptance
that, notwithstanding the date of the new Notes made in favor of such assignee,
such assignee shall have no right to, or interest in, any fees or interest which
shall have accrued on the Loans prior to the effective date of the Assignment
and Acceptance). Cancelled Notes shall be returned to the Borrower upon the
execution of such new Notes.
-77-
<PAGE>
(e) Assignments to Federal Reserve Bank. Notwithstanding any of the
terms of this Section 9.9, without the consent of the Administrative Agent or
the Borrower, any Lender may assign all or any portion of its rights to payments
in connection with this Agreement to a Federal Reserve Bank as collateral in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System. Such assignment shall not affect any other rights or any obligations of
the assigning Lender.
9.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE PAGES. Any Loan
Document may be executed in one or more counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. Delivery of a photocopy or telecopy of an executed counterpart
of a signature page to any Loan Document shall be as effective as delivery of a
manually executed counterpart of such Loan Document.
9.11 MAXIMUM LAWFUL INTEREST RATE. Notwithstanding any provision contained
in this Agreement or the Notes or any other Loan Document, the total liability
of the Borrower 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 Borrower, and if any payment by the
Borrower includes interest in excess of such a maximum amount, each Lender shall
apply such excess to the reduction of the unpaid principal amount due pursuant
to this Agreement and the Notes, or if none is due, to the other Loan
Obligations, if any, and then such excess shall be refunded to the Borrower.
9.12 INDEMNIFICATION.
(a) Whether or not any fundings are made under this Agreement, the
Borrower shall unconditionally upon demand, pay or reimburse the Administrative
Agent and other Lender Parties for, and indemnify and save the Administrative
Agent, the other Lender Parties and their respective Affiliates, officers,
directors, employees, agents, attorneys, shareholders and consultants
(collectively, "Indemnitees") harmless 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 Indemnitee in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may at any time be imposed on, asserted against or incurred
by such Indemnitee 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 Tender Offer,
the Merger, any transaction actually or proposed to be financed in whole or in
part or directly or indirectly with the proceeds of any Loan, any transaction
contemplated by the Transaction Documents, but excluding any such losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements that the Borrower
-78-
<PAGE>
proves were the result solely of the gross negligence or willful misconduct of
such Indemnitee, as finally determined by a court of competent jurisdiction. If
and to the extent that the foregoing obligations of the Borrower under this
paragraph (a), or any other indemnification obligation of the Borrower hereunder
or under any other Loan Document are unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable Law.
(b) Without limiting the generality of the foregoing, the Borrower
hereby indemnifies and agrees to defend and hold harmless each Indemnitee, from
and against any and all claims, actions, causes of action, liabilities,
penalties, fines, damages, judgments, losses, suits, expenses, legal or
administrative proceedings, interest, costs and expenses (including court costs
and attorneys', consultants' and experts' fees) arising out of or in any way
relating to: (i) the use, handling, management, production, treatment,
processing, storage, transfer, transportation, disposal, release or threat of
release of any Environmental Concern Material by or on behalf of, the Borrower
or any of its Environmental Affiliates; (ii) the presence of Environmental
Concern Materials on, about, beneath or arising from any premises owned or
occupied by the Borrower or any of its Environmental Affiliates (herein
collectively, the "Premises"); (iii) the failure of the Borrower or any of its
Environmental Affiliates or any occupant of any Premises to comply with the
Environmental Laws; (iv) the breach by the Borrower of any of the
representations, warranties and covenants contained herein or in any Loan
Documents; (v) Regulatory Actions (as hereinafter defined) and Third Party
Claims (as hereinafter defined); or (vi) the imposition or recording of a Lien
against any Premises in connection with any release at, on or from any Premises
or any activities undertaken on or occurring at any Premises, or arising from
such Premises or pursuant to any Environmental Law. The Borrower's indemnity and
defense obligations under this section shall include, whether foreseeable or
unforeseeable, any and all costs related to any remedial action. "Regulatory
Action" means any notice of violation, citation, complaint, request for
information, order, directive, compliance schedule, notice of claim, consent
decree, action, litigation or proceeding brought or instituted by any
governmental authority under or in connection with any Environmental Law
involving the Borrower or any occupant of any of the Premises or involving any
of the Premises or any activities undertaken on or occurring at any Premises.
"Third Party Claims" means claims by a party (other than a party to this
Agreement and other than Regulatory Actions) based on negligence, trespass,
strict liability, nuisance, toxic tort or detriment to human health or welfare
due to Environmental Concern Materials on, about, beneath or arising from any
Premises or in any way related to any alleged violation of any Environmental
Laws or any activities undertaken on or occurring at any Premises.
(c) The indemnities contained herein shall survive repayment of the
Loan Obligations, termination of the Commitment and satisfaction, release, and
discharge of the Loan Documents, whether through full payment of the Loans,
foreclosure, deed in lieu of foreclosure or otherwise.
-79-
<PAGE>
(d) The foregoing amounts are in addition to any other amounts which
may be due and payable to the Administrative Agent and/or the Lenders under this
Agreement. A certification by the Administrative Agent or a Lender hereunder of
the amount of liabilities, losses, costs, expenses, claims and/or charges shall
be conclusive, absent manifest error.
9.13 EXPENSES
(a) Whether or not there shall be any funding the Borrower agrees to
pay promptly or cause to be paid promptly and to hold harmless:
(i) with respect to matters relating to clause (A) of this
paragraph (i), the Agents, and with respect to clauses (B) and (C) of this
paragraph (i), the Administrative Agent (and after an Event of Default and for
the period in which the same shall continue, each Lender Party) 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 it from
time to time arising from or relating to (A) the negotiation, preparation,
execution and delivery of this Agreement and the other Loan Documents, (B) the
administration and performance of this Agreement and the other Loan Documents,
and (C) any requested amendments, modifications, supplements, waivers or
consents (whether or not ultimately entered into or granted) to this Agreement
or any other Loan Document;
(ii) the Administrative Agent (and after an Event of Default,
and for the period in which the same shall continue, each Lender Party with
respect to matters relating to clause (B) of this paragraph (ii)) 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 it from
time to time arising from or relating to the enforcement or preservation of
rights under, or administration of, 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 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); and
(iii) each Lender Party against liability for 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.
-80-
<PAGE>
9.14 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitment hereunder and the Loan Obligations owing to it, the Administrative
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 Administrative Agent, and the terms "Lender," "Holders of Notes" and
like terms shall include the Administrative Agent in its individual capacity as
such. The Administrative 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 "Administrative Agent" for other financing vehicles,
issue letters of credit on behalf of, and engage in any other business with, (a)
any Loan Party or any stockholder, Subsidiary or Affiliate of any Loan Party or
(b) any other Person, whether such other Person may be engaged in any conflict
or dispute with any Loan Party or any Lender Party or otherwise, as though the
Administrative Agent were not the Administrative Agent hereunder.
9.15 CERTAIN WAIVERS BY BORROWER. The 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 Person or any collateral or other
direct or indirect security for any of the Loan Obligations. Without limiting
the generality of the foregoing, the Borrower acknowledges and agrees that the
Administrative Agent or other Lender Party may commence an action against the
Borrower whether or not any action is brought against any other Loan Party or
against any collateral and it shall be no defense to any action brought against
the Borrower that the Lender Parties have failed to bring an action against any
other Loan Party or any Collateral.
9.16 SET-OFF. The Borrower hereby agrees that, to the fullest extent
permitted by Law, if any Loan Obligation shall be due and payable (by
acceleration or otherwise), each Lender Party shall have the right, without
notice to the Borrower, to set-off against and to appropriate and apply to such
Loan Obligation any indebtedness, liability or obligation of any nature owing to
the Borrower by such Lender Party, including but not limited to all deposits now
or hereafter maintained by the 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 the Borrower or any other Person. The Borrower
hereby agrees 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 9.16. The rights
provided by this Section 9.16 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.
-81-
<PAGE>
9.17 SHARING OF COLLECTIONS. The Lender Parties hereby agree among
themselves that if any Lender Party shall receive (by voluntary payment,
realization upon security, charging of accounts, set-off or from any other
source) any amount on account of the Loan Obligations in greater proportion than
any such amount received by any other Lender Party (based on the relative amount
of each such Lender Party's interest in the Loan Obligations), then the Lender
Party receiving such proportionately greater payment shall notify each other
Lender Party and the Administrative Agent of such receipt, and equitable
adjustment will be made in the manner stated in this Section 9.17 so that, in
effect, all such excess amounts will be shared ratably among all of the Lender
Parties. The Lender Party 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 Lender Parties a participation in the applicable
Loan Obligations owed to such other Lender Parties in such amount as shall
result in a ratable sharing by all Lender Parties of such excess amount (and to
such extent the receiving Lender Party shall be a participant). If all or any
portion of such excess amount is thereafter recovered from the Lender Party
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 Party making such
purchase. The Borrower hereby consents to and confirms the foregoing
arrangements. Each participant shall be bound by this Section 9.17 as fully as
if it were a Lender hereunder.
9.18 OTHER LOAN DOCUMENTS. Each Lender acknowledges that on signing
this Agreement it is bound by the terms of the Loan Documents.
9.19 CERTAIN BORROWER ACKNOWLEDGEMENTS. The Borrower hereby acknowledges
that neither the Administrative Agent nor any other Lender Party has any
fiduciary relationship with, or any fiduciary duty to the Borrower arising out
of or in connection with this Agreement or any of the other Loan Documents and
the relationship between the Administrative Agent and the other Lender Parties,
on the one hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor.
9.20 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER OF JURY TRIAL.
(a) Consent to Jurisdiction. For the purpose of enforcing payment
and performance of the Loan Documents, including, any payment under the Notes
and performance of other obligations under the Loan Documents, or in any other
matter relating to, or arising out of, the Loan Documents, the Borrower hereby
consents to the jurisdiction and venue of the courts of the Commonwealth of
Pennsylvania or of any federal court
-82-
<PAGE>
located in such state, waive personal service of any and all process upon it and
consents that all such service of process be made by certified or registered
mail directed to the Borrower at the address provided for in Section 9.1 and
service so made shall be deemed to be completed upon actual receipt or execution
of a receipt by any Person at such address. The Borrower hereby waives the right
to contest the jurisdiction and venue of the courts located in the Commonwealth
of Pennsylvania on the ground of inconvenience or otherwise and, further, waives
any right to bring any action or proceeding against (a) the Administrative Agent
in any court outside the Commonwealth of Pennsylvania, or (b) any other Lender
other than in a state within the United States designated by such Lender. The
provisions of this Section 9.20 shall not limit or otherwise affect the right of
the Administrative Agent or any other Lender Party to institute and conduct an
action in any other appropriate manner, jurisdiction or court.
(b) WAIVER OF JURY TRIAL; DAMAGES. NEITHER ANY LENDER PARTY NOR THE
BORROWER NOR ANY OTHER LOAN PARTY, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL
REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED
UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT, OR INVOLVING
ANY COLLATERAL OR ANY GUARANTY RELATING TO THE INDEBTEDNESS HEREUNDER OR THE
RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM. NO SUCH PERSON WILL
SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO
THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO IN THIS SECTION 9.20 ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH PARTY TO THIS AGREEMENT (i) CERTIFIES THAT NEITHER THE
ADMINISTRATIVE AGENT NOR ANY LENDER NOR ANY REPRESENTATIVE OR ATTORNEY OF THE
ADMINISTRATIVE AGENT OR ANY LENDER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR SUCH LENDER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES
THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN
DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
PARAGRAPH (b) OF SECTION 9.20. THE PROVISIONS OF THIS SECTION 9.20 HAVE BEEN
FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION 9.20 WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
-83-
<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.
BORROWER:
GENESIS ELDERCARE ACQUISITION
CORP., a Delaware corporation
By
--------------------------------
Name:
Title:
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
-84-
<PAGE>
AGENTS AND LENDERS:
MELLON BANK, N.A., as a Lender
and as Administrative Agent
By
--------------------------------
Name:
Title:
Address for notices:
street address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, Pennsylvania 19106
mailing address:
AIM 199-5220
P.O. Box 7899
Philadelphia, Pennsylvania 19101-7899
Attention: Linda WP,
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, Pennsylvania 19462
Attention: Barbara J. Hauswald
Vice President
Telephone: 610-941-8409
Facsimile: 610-941-4136
-85-
<PAGE>
With a copy for notices respecting
assignments to:
MELLON BANK, N.A.
One Mellon Bank Center, 45th Floor
Pittsburgh, PA 15258-0001
Attention: Dean Hazleton
Telephone: 412-236-0316
Facsimile: 412-234-4612
-86-
<PAGE>
CITICORP USA, INC., as a Lender and as a
Syndication Agent
By
--------------------------------
Name:
Title
Address for notices:
399 Park Avenue
8th Floor, Zone 6
New York, NY 10043
Attention: Margaret A. Brown
Telephone: 212-559-0501
Facsimile: 212-793-0289
-87-
<PAGE>
FIRST UNION NATIONAL BANK, as a Lender
and as Documentation Agent
By
--------------------------------
Name:
Title:
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
-88-
<PAGE>
NATIONSBANK, N.A., as a Lender and as a
Syndication Agent
By
-------------------------------
Name:
Title:
Address for notices:
101 North Tryon Street
15th Floor
Charlotte, NC 28225
NC1-001-15-11
Attention: Jacquetta Banks
Telephone: 704-388-1111
Facsimile: 704-386-8694
With a copy to:
100 North Tryon Street
8th Floor
Charlotte, NC 28225
NC1-007-0813
Attention: Scott S. Ward
Telephone: 704-388-7839
Facsimile: 704-388-6002
-89-
<PAGE>
JOINDERS
GENESIS ELDERCARE CORP. and THE MULTICARE COMPANIES, INC. hereby join in
the execution and delivery of this Agreement and, by so doing, (1) confirm the
accuracy of all representations and warranties in this Agreement concerning
them, both as of the date of this Agreement and as of each time on which such
representations and warranties are deemed to be restated, and (2) agree to
perform and comply with (and, in the case of Multicare, cause its Subsidiaries
to comply with) all covenants and obligations stated in this Agreement to be
applicable to them or which the Borrower agrees to cause them to perform or
comply with. The obligations of the undersigned under this joinder are separate
from and independent of their obligations under the Genesis ElderCare Guaranty,
the Multicare Guaranty, the Pledge Agreements and any other Loan Documents to
which either of them is or becomes a party. Further, Genesis ElderCare Corp.
agrees that all cash proceeds it receives from the issuance or sale of equity
securities or as capital contributions will be immediately contributed by it to
the capital of the Borrower or, after the Merger, Multicare.
GENESIS ELDERCARE CORP. THE MULTICARE COMPANIES, INC.
By By
------------------------------- ------------------------------------
Name: Name:
Title: Title:
EXECUTION COPY
================================================================================
THIRD AMENDED AND RESTATED CREDIT
AGREEMENT
dated as of October 9, 1997
by and among
GENESIS HEALTH VENTURES, INC. and
CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
THE FINANCIAL INSTITUTIONS IDENTIFIED HEREIN AS LENDERS,
MELLON BANK, N.A. AS ISSUER OF LETTERS OF CREDIT,
MELLON BANK, N.A. AS ADMINISTRATIVE AGENT
CITICORP USA, INC. AS SYNDICATION AGENT
FIRST UNION NATIONAL BANK AS DOCUMENTATION AGENT
NATIONSBANK, N.A. AS SYNDICATION AGENT
and the OTHER AGENTS IDENTIFIED HEREIN
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 - CREDIT FACILITY................................................. 2
1.1 COMMITMENT TO LEND............................................. 2
1.2 JOINT AND SEVERAL OBLIGATIONS.................................. 3
1.3 MANNER OF BORROWING............................................ 4
1.4 SCHEDULED REPAYMENTS........................................... 7
1.5 VOLUNTARY PREPAYMENTS AND UNSCHEDULED,
MANDATORY PREPAYMENTS.......................................... 9
1.6 PAYMENTS BY THE BORROWERS IN GENERAL........................... 13
1.7 REDUCTIONS OF RC COMMITMENT.................................... 15
1.8 INTEREST....................................................... 15
1.9 FEES........................................................... 17
1.10 COMPUTATION OF INTEREST AND FEES............................... 18
1.11 PROMISSORY NOTES; RECORDS OF ACCOUNT........................... 18
1.12 PRO RATA TREATMENT............................................. 19
1.13 TAXES ON PAYMENTS.............................................. 19
1.14 REGISTERED NOTES AND LOANS..................................... 21
ARTICLE 2 - YIELD PROTECTION AND BREAKAGE INDEMNITY.........................22
2.1 MANDATORY SUSPENSION AND CONVERSION OF LIBO RATE
LOANS.......................................................... 22
2.2 REGULATORY CHANGES............................................. 23
2.3 CAPITAL AND RESERVE REQUIREMENTS............................... 24
2.4 BREAKAGE....................................................... 24
2.5 DETERMINATIONS................................................. 25
2.6 REPLACEMENT OF LENDERS......................................... 25
2.7 CHANGE OF LENDING OFFICE....................................... 26
ARTICLE 3 - LETTERS OF CREDIT.............................................. 26
3.1 ISSUANCE OF LETTERS OF CREDIT.................................. 26
ARTICLE 4 - CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS................................................... 32
4.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND
INITIAL FUNDING................................................ 32
4.2 CONDITIONS TO EACH LOAN AND ISSUANCE OF EACH
LETTER OF CREDIT............................................... 38
4.3 RELATIONSHIP WITH EXISTING CREDIT AGREEMENT.................... 39
-i-
<PAGE>
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES................................. 39
5.1 REPRESENTATIONS................................................ 39
5.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE........................ 47
ARTICLE 6 - AFFIRMATIVE COVENANTS.......................................... 47
6.1 REPORTING REQUIREMENTS......................................... 48
6.2 MAINTENANCE OF EXISTENCE....................................... 53
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES
AND OTHER PROPERTY............................................. 53
6.4 MAINTENANCE OF RECORDS; FISCAL YEAR............................ 54
6.5 COMPLIANCE WITH LAWS........................................... 54
6.6 ERISA.......................................................... 54
6.7 RIGHT OF INSPECTION............................................ 55
6.8 INSURANCE...................................................... 55
6.9 PAYMENT OF TAXES AND OTHER CHARGES............................. 55
6.10 SUBSIDIARIES TO BE BORROWERS................................... 56
6.11 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS.................. 56
6.12 INTEREST RATE HEDGING AGREEMENTS............................... 56
6.13 CORPORATE SEPARATENESS......................................... 57
6.14 TRANSACTIONS WITH AFFILIATES................................... 57
6.15 MERGER OF GENESIS ELDERCARE ACQUISITION CORP. INTO
MULTICARE...................................................... 57
6.16 CERTAIN ACQUISITIONS........................................... 57
6.17 USE OF PROCEEDS................................................ 57
ARTICLE 7 - FINANCIAL COVENANTS............................................ 58
7.1 CERTAIN FINANCIAL COVENANTS.................................... 58
7.2 CALCULATION OF FINANCIAL COVENANTS............................. 59
ARTICLE 8 - NEGATIVE COVENANTS............................................. 60
8.1 INDEBTEDNESS................................................... 60
8.2 LIENS.......................................................... 62
8.3 LOANS, ADVANCES AND INVESTMENTS................................ 63
8.4 ACQUISITIONS, ETC.............................................. 65
8.5 DISPOSITIONS................................................... 65
8.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP
INTERESTS...................................................... 67
8.7 LEASES......................................................... 67
8.8 DIVIDENDS AND RELATED DISTRIBUTIONS............................ 68
8.9 CONSOLIDATED TAX RETURN........................................ 68
8.10 LIMITATION ON PAYMENTS, PREPAYMENTS, DEFEASEMENT
AND OTHER ACTION WITH RESPECT TO CERTAIN DEBT
OBLIGATIONS.................................................... 68
-ii-
<PAGE>
8.11 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS;
EXERCISE OF PUT/CALL AND UNDERTAKINGS RESPECTING
PUT/CALL....................................................... 69
8.12 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS. ................ 69
8.13 LIMITATIONS ON MERGERS, ETC.................................... 70
8.14 AVOIDANCE OF OTHER CONFLICTS................................... 70
8.15 CAPITAL EXPENDITURES........................................... 70
ARTICLE 9 - DEFAULTS....................................................... 71
9.1 EVENTS OF DEFAULT.............................................. 71
9.2 CONSEQUENCES OF AN EVENT OF DEFAULT............................ 74
9.3 APPLICATION OF PROCEEDS........................................ 76
ARTICLE 10 - THE ADMINISTRATIVE AGENT...................................... 77
10.1 APPOINTMENT.................................................... 77
10.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES................ 77
10.3 EXERCISE OF POWERS............................................. 78
10.4 GENERAL EXCULPATORY PROVISIONS................................. 78
10.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT..................... 79
10.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE
AGENT OR OTHER LENDERS......................................... 80
10.7 INDEMNIFICATION................................................ 80
10.8 REGISTER....................................................... 81
10.9 SUCCESSOR ADMINISTRATIVE AGENT................................. 81
10.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL
AGENT.......................................................... 82
10.11 CALCULATIONS................................................... 82
10.12 OTHER AGENTS................................................... 82
ARTICLE 10A - SPECIAL INTERCREDITOR PROVISIONS............................. 83
10A.1 SPECIAL PROVISIONS APPLICABLE TO LENDER PARTIES AS
PARTIES TO THE MULTICARE CREDIT AGREEMENT...................... 83
ARTICLE 10B - SPECIAL INTER-BORROWER PROVISIONS............................ 83
10B.1 CERTAIN BORROWER ACKNOWLEDGEMENTS.............................. 83
10B.2 CERTAIN INTER-BORROWER AGREEMENTS.............................. 84
10B.3 RECORDS........................................................ 84
ARTICLE 11 - DEFINITIONS; CONSTRUCTION..................................... 85
11.1 CERTAIN DEFINITIONS............................................ 85
11.2 CONSTRUCTION...................................................108
11.3 ACCOUNTING PRINCIPLES..........................................109
-iii-
<PAGE>
ARTICLE 12 - MISCELLANEOUS.................................................109
12.1 NOTICES........................................................109
12.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT.........................110
12.3 SEVERABILITY...................................................110
12.4 DESCRIPTIVE HEADINGS...........................................110
12.5 GOVERNING LAW..................................................110
12.6 NON-MERGER OF REMEDIES.........................................110
12.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES.........................111
12.8 AMENDMENTS; WAIVERS............................................111
12.9 SUCCESSORS AND ASSIGNS.........................................113
12.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE
PAGES.........................................................115
12.11 MAXIMUM LAWFUL INTEREST RATE...................................115
12.12 INDEMNIFICATION................................................116
12.13 EXPENSES.......................................................117
12.14 MAXIMUM AMOUNT OF JOINT AND SEVERAL LIABILITY..................118
12.15 AUTHORIZATION OF GENESIS BY OTHER BORROWERS....................118
12.16 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY................118
12.17 CERTAIN WAIVERS BY BORROWERS...................................119
12.18 SET-OFF........................................................119
12.19 SHARING OF COLLECTIONS.........................................119
12.20 OTHER LOAN DOCUMENTS...........................................120
12.21 CERTAIN BORROWER ACKNOWLEDGEMENTS..............................120
12.22 CERTAIN LENDER PARTY ACKNOWLEDGEMENTS..........................120
12.23 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER
OF JURY TRIAL..................................................120
-iv-
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
October 9, 1997, by and among GENESIS HEALTH VENTURES, INC., a Pennsylvania
corporation (together with its successors, "Genesis"), the Subsidiaries of
Genesis referred to on the signature pages hereto (and such other Subsidiaries
of Genesis which may from time to time become Borrowers hereunder in accordance
with the provisions hereof) (collectively with Genesis, the "Borrowers"), the
Lenders referred to on the signature pages hereto (together with other lenders
parties hereto from time to time pursuant to Section 12.9 below, and 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 for itself
and for the other Agents, the Lenders and the Issuer hereunder (in such
capacity, together with its successors and assigns in such capacity, the
"Administrative Agent"), CITICORP USA, INC., a Delaware corporation, as
Syndication Agent, FIRST UNION NATIONAL BANK, a national banking association, as
Documentation Agent, and NATIONSBANK, N.A., a national banking association, as
Syndication Agent. Certain terms used herein are defined in Article 11 below.
W I T N E S S E T H T H A T
WHEREAS, certain Borrowers, certain Lenders, the Issuer and the
Administrative Agent are parties to that certain Credit Agreement, dated as of
November 22, 1993, as amended pursuant to that certain First Amendment and
Waiver to Loan Documents, dated as of July 15, 1994, as further amended pursuant
to that certain Second Amendment to Credit Agreement, dated as of September 23,
1994, as further amended pursuant to that certain Third Amendment to Credit
Agreement, dated as of February 10, 1995, as further amended pursuant to that
certain Fourth Amendment and Modification to Loan Documents and Consent dated as
of June 15, 1995, as further amended pursuant to that certain Amended and
Restated Credit Agreement, dated as of September 29, 1995, as further amended
pursuant to that certain First Amendment to Credit Documents, dated as of April
12, 1996, as further amended pursuant to that Second Amendment and Waiver to
Loan Documents, dated as of July 19, 1996, as further amended pursuant to that
certain Second Amended and Restated Credit Agreement, dated as of October 7,
1996, as further amended pursuant to that certain Amendment No. 1 to Second
Amended and Restated Credit Agreement, dated as of March 7, 1997, and as further
amended pursuant to that certain Amendment No. 2 to Second Amended and Restated
Credit Agreement, dated as of June 20, 1997 (as so amended, the "Existing Credit
Agreement");
<PAGE>
WHEREAS, the Borrowers would like to increase the amount of the
total commitment under the Existing Credit Agreement to Eight Hundred and Fifty
Million Dollars ($850,000,000) and would like to modify certain other terms of
the Existing Credit Agreement;
WHEREAS, the Lenders are willing to so amend and restate the
Existing Credit Agreement and to so extend credit to the Borrowers on the terms
and subject to the conditions set forth herein;
WHEREAS, Genesis and its Subsidiaries, from time to time, other than
Excluded Subsidiaries, are joint and several "Borrowers" hereunder;
WHEREAS, as more particularly set forth in the Pledge Agreement,
certain collateral securing the obligations hereunder is to be shared with
certain creditors party to the Synthetic Lease Facility and certain creditors
party to the Qualifying Interest Rate Hedging Agreements (as each such term is
defined in Article 11 below); and
WHEREAS, ALL OBLIGATIONS HEREUNDER AND UNDER EACH AGREEMENT AND
INSTRUMENT DELIVERED IN CONNECTION HEREWITH FROM TIME TO TIME ARE "SENIOR
INDEBTEDNESS" AND ARE HEREBY DESIGNATED BY GENESIS AS "DESIGNATED SENIOR
INDEBTEDNESS" WITHIN THE MEANING OF THE 1995 SUBORDINATED NOTE INDENTURE AND THE
1996 SUBORDINATED NOTE INDENTURE;
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
CREDIT FACILITY
1.1 COMMITMENT TO LEND.
(a) Term Loans.
(i) Tranche A Term Loans. Upon the terms and subject to the
conditions of this Agreement, each Tranche A Lender agrees to make, on the
Closing Date, a Loan (a "Tranche A Term Loan") to the Borrowers in the amount of
such Lender's Tranche A Commitment. The total amount of the Tranche A Commitment
of all Tranche A Lenders on the Agreement Date is $200,000,000.00.
-2-
<PAGE>
(ii) Tranche B Term Loans. Upon the terms and subject to the
conditions of this Agreement, each Tranche B Lender agrees to make, on the
Closing Date, a Loan (a "Tranche B Term Loan") to the Borrowers in the amount of
such Lender's Tranche B Commitment. The total amount of the Tranche B Commitment
of all Tranche B Lenders on the Agreement Date is $200,000,000.00.
(iii) Tranche C Term Loans. Upon the terms and subject to the
conditions of this Agreement, each Tranche C Lender agrees to make, on the
Closing Date, a Loan (a "Tranche C Term Loan") to the Borrowers in the amount of
such Lender's Tranche C Commitment. The total amount of the Tranche C Commitment
of all Tranche C Lenders on the Agreement Date is $200,000,000.00.
(b) Revolving Credit Loans. Upon the terms and subject to the
conditions of this Agreement, each RC Lender agrees to make, from time to time,
during the period from and including the Closing Date to but excluding the RC
Maturity Date, one or more Loans ("RC Loans") to the Borrowers in an aggregate
unpaid principal amount not exceeding at any time such Lender's RC Commitment at
such time; provided, however, that the Borrowers shall not request, and the
Lenders shall have no obligation to make, any RC Loans at any time in excess of
the Available RC Commitment. The total amount of the RC Commitment of all RC
Lenders on the Agreement Date is $250,000,000.00.
(c) Swing Loans. Upon the terms and subject to the conditions of
this Agreement, the Swing Loan Lender agrees to make, from time to time, from
and including the Closing Date to but excluding the RC Maturity Date, one or
more Swing Loans to the Borrowers, in an aggregate unpaid principal amount not
exceeding at any time $15,000,000.00 provided, however, that no Swing Loan shall
be made at any time in an amount in excess of the Available RC Commitment. Each
Swing Loan shall be in a principal amount equal to $500,000.00 or an integral
multiple thereof and shall be made and maintained as a Prime Rate Loan unless a
fixed rate shall be agreed upon by the Swing Loan Lender and Genesis (on behalf
of the Borrowers). All Swing Loans shall be disbursed by the Swing Loan Lender
in Dollars in funds immediately available to Genesis (on behalf of the
Borrowers) by crediting an account of Genesis at the Swing Loan Lender's
Domestic Lending Office, or in such other manner as may have been specified in
the applicable notice of borrowing and as shall be acceptable to the Swing Loan
Lender.
1.2 JOINT AND SEVERAL OBLIGATIONS.
WHETHER OR NOT EXPRESSLY STATED HEREIN OR IN ANY OTHER LOAN
DOCUMENT, ALL OBLIGATIONS OF THE BORROWERS (OR OF ANY BORROWER) HEREUNDER AND
UNDER EACH OTHER LOAN DOCUMENT (WHETHER IN CONNECTION WITH LOANS, LETTERS OF
CREDIT OR OTHER OBLIGATIONS) ARE JOINT AND SEVERAL OBLIGATIONS OF ALL BORROWERS.
-3-
<PAGE>
1.3 MANNER OF BORROWING.
(a) Notice of Borrowing. (i) Except for requests for Swing Loans
which shall be governed by paragraph (e) below, Genesis (on behalf of the
Borrowers) shall give the Administrative Agent notice (which shall be
irrevocable), in the case of Prime Rate Loans, no later than 11:00 a.m.
(Philadelphia, Pennsylvania time) one Business Day prior to the requested date
for the making of such Loans and, in the case of LIBO Rate Loans, 11:00 a.m.
(Philadelphia, Pennsylvania time) three Business Days before the requested date
for the making of such Loans. Each such notice shall be in the form of Exhibit B
hereto and shall specify (ii) whether the requested Loans are to be Tranche A
Term Loans, Tranche B Term Loans, Tranche C Term Loans or RC Loans, (iii) the
requested date for the making of such Loans, which date shall be a Business Day,
(iv) the Type or Types of Loans requested and (v) the amount of each such Type
of Loan, which amount shall be $5,000,000.00 or any integral multiple of
$1,000,000.00 in excess thereof (except that in the case of RC Loans, the amount
of the requested Loan may be less if the amount requested is equal to the total
Available RC Commitment). Upon receipt of any such notice, the Administrative
Agent shall promptly notify each applicable Lender of the contents thereof and
of the amount and Type of each Loan to be made by such Lender on the requested
date specified therein.
(b) Funding by Lenders. Not later than 12:00 noon (Philadelphia,
Pennsylvania time) on each requested date for the making of Loans (other than
Swing Loans), each Lender shall make available to the Administrative Agent, in
Dollars in funds immediately available to the Administrative Agent at the office
designated by the Administrative Agent, the Loans to be made by such Lender on
such date, provided, however, that if a Lender does not receive timely notice
from the Administrative Agent as set forth in paragraph (a) (i) above, such
Lender shall fund the required amount promptly upon receipt of such notice. The
obligations of the Lenders hereunder are several; accordingly, any Lender's
failure to make any Loan to be made by it on the requested date therefor shall
not relieve any other Lender of its obligation to make any Loan to be made by it
on such date, but the latter shall not be liable for the former's failure.
(c) Permitted Assumption as to Funding. Unless the Administrative
Agent shall have received notice from a Lender prior to 11:00 a.m.
(Philadelphia, Pennsylvania time) on the requested date for the making of any
Loan (other than a Swing Loan) that such Lender will not make available to the
Administrative Agent the Loan requested to be made by it on such date, the
Administrative Agent may assume that such Lender has made such Loan available.
The Administrative Agent in its sole discretion and in reliance upon such
assumption, may make available to the Borrowers on the requested date a
corresponding amount on behalf of such Lender. If and to the extent such Lender
shall not have made available to the Administrative Agent the Loans requested to
be made by such Lender on such date and the Administrative Agent shall have so
made available to the Borrowers a corresponding amount on behalf of such Lender,
(i) such Lender shall, on demand, pay to the Administrative Agent such
corresponding amount together with interest thereon, for each day from the date
such amount shall have been so made available by the
-4-
<PAGE>
Administrative Agent to the Borrowers until the date such amount shall have been
paid in full to the Administrative Agent, at the Federal Funds Rate until (and
including) the third Business Day after demand is made and thereafter at the
Prime Rate and (ii) the Administrative Agent shall be entitled to all interest
payable by the Borrowers on such amount for the period commencing on the date
such amount was advanced by the Administrative Agent to but not including the
date on which such amount is received by the Administrative Agent from such
Lender. Moreover, any Lender that shall have failed to make available the
required amount shall not be entitled to vote on such matters as the Lenders or
Required Lenders are otherwise entitled to vote on or consent to or approve
under this Agreement and the other Loan Documents until such amount with
interest is paid in full to the Administrative Agent by such Lender. Without
limiting any obligations of any Lender pursuant to this paragraph (c), if such
Lender does not pay such corresponding amount promptly upon the Administrative
Agent's demand therefor, the Administrative Agent shall notify Genesis (on
behalf of the Borrowers) and the Borrowers shall promptly repay such
corresponding amount to the Administrative Agent together with accrued interest
thereon at the applicable rate or rates on such Loans.
(d) Disbursements of Funds to Borrowers. All amounts made available
to the Administrative Agent in accordance with paragraph (b) above shall be
disbursed by the Administrative Agent promptly but in any event not later than
4:00 p.m. (Philadelphia, Pennsylvania time) on the requested date therefor in
Dollars in funds immediately available to the Borrowers by crediting such amount
to an account of Genesis at the Administrative Agent's Domestic Lending Office
or in such other manner as may be agreed to by Genesis and the Administrative
Agent.
(e) Special Provisions Respecting Swing Loans.
(i) Request for Borrowing. Genesis (on behalf of the
Borrowers) shall give the Swing Loan Lender notice (which shall be irrevocable)
of a request for a Swing Loan (with a copy to the Administrative Agent) no later
than 12:00 noon (Philadelphia, Pennsylvania time) on the day such Loan is
requested; if such notice is received later than 12:00 noon (Philadelphia,
Pennsylvania time), then the request shall be deemed to be a request for a Swing
Loan to be made on the next Business Day. The Swing Loan Lender shall provide
prompt notice to the Administrative Agent of the making of any Swing Loans to
the Borrowers.
(ii) Participation by RC Lenders. Upon demand made to all of
the RC Lenders by the Swing Loan Lender, which demand may be made before or
after a Default (including a Default arising under Section 9.1(n) (Bankruptcy,
Etc.)), and before or after the maturity date of the subject Swing Loans, but
subject to the provisions of paragraph (iv) below, each RC Lender (other than
the Swing Loan Lender) shall promptly, irrevocably and unconditionally purchase
from the Swing Loan Lender, without recourse or warranty, an undivided interest
and participation in the Swing Loans then outstanding. Each RC Lender shall
effect such purchase by paying to the Swing Loan Lender, without reduction or
-5-
<PAGE>
deduction of any kind, including reductions or deductions for set-off,
recoupment or counterclaim, in Dollars immediately available to the Swing Loan
Lender at the Swing Loan Lender's Domestic Lending Office, an amount equal to
such RC Lender's pro rata share of the principal amount of all Swing Loans then
outstanding. Each RC Lender's pro rata share of the Swing Loans shall be based
on the amount of such RC Lender's pro rata share of the total RC Commitment.
Thereafter, the RC Lenders' respective interests in such Swing Loans, and the
remaining interest of the Swing Loan Lender in such Swing Loans, shall in all
respects be treated as RC Loans under this Agreement, except that subject to
Section 1.8(d) (Default Rate) such Swing Loans shall continue to bear interest
at the rate specified for such Swing Loans until such Swing Loans are due and
payable and such Swing Loans shall be due and payable by the Borrowers on the
dates referred to in Section 1.4(e). If any RC Lender does not pay any amount
which it is required to pay promptly upon the Swing Loan Lender's demand
therefor, (i) the Swing Loan Lender shall be entitled to recover such amount on
demand from such RC Lender, together with interest thereon, at the Federal Funds
Rate for the first three Business Days, and thereafter at the Prime Rate, for
each day from the date of such demand, if made prior to 2:00 p.m. (Philadelphia,
Pennsylvania time) on any Business Day, or, if made at any later time, from the
next Business Day following the date of such demand, until the date such amount
is paid in full to the Swing Loan Lender by such RC Lender and (ii) the Swing
Loan Lender shall be entitled to all interest payable by the Borrowers on such
amount until the date on which such amount is received by the Swing Loan Lender
from such RC Lender. Moreover, any RC Lender that shall fail to make available
the required amount shall not be entitled to vote on or consent to or approve
any matter under this Agreement and the other Loan Documents until such amount
with interest is paid in full to the Swing Loan Lender by such RC Lender.
Without limiting any obligations of any RC Lender pursuant to this paragraph
(ii), if such RC Lender does not pay such corresponding amount promptly upon the
Swing Loan Lender's demand therefor, the Swing Loan Lender shall notify Genesis
(on behalf of the Borrowers) and the Borrowers shall promptly repay such
corresponding amount to the Swing Loan Lender together with accrued interest
thereon at the applicable rate on such Swing Loans.
(iii) No Set-off, Etc. Subject only to the limitations set
forth in the following paragraph (iv), the obligations of each RC Lender to make
available to the Swing Loan Lender the amounts set forth in the preceding
paragraph (ii) shall be absolute, unconditional and irrevocable under any and
all circumstances without reduction for any set-off or counterclaim of any
nature whatsoever and may not be terminated, suspended or delayed for any reason
whatsoever, shall not be subject to qualification or exception and shall be made
in accordance with the terms of this Agreement.
(iv) Certain Limitations. No RC Lender shall be obligated to
purchase a participation in any Swing Loan if such RC Lender proves that (A) the
Swing Loan Lender did not in good faith believe that the conditions specified in
clauses (i), (iii), (iv) and (v) of Section 4.2(a) were satisfied at the time
such Swing Loan was made (unless such condition was waived in accordance with
the terms of this Agreement) or (B) such RC Lender had actual knowledge that any
such condition had not been satisfied and notified the
-6-
<PAGE>
Swing Loan Lender in a writing received by the Swing Loan Lender at least one
Business Day prior to the time that it made such Swing Loan that the Swing Loan
Lender was not authorized to make such Swing Loan and stating with specificity
the reason therefor.
1.4 SCHEDULED REPAYMENTS.
(a) Tranche A Term Loans. The Tranche A Term Loans shall mature and
become due and payable and shall be repaid by the Borrowers in quarterly
installments, payable on successive Quarterly Payment Dates commencing on the
first Quarterly Payment Date after the Closing Date and ending on the Tranche A
Maturity Date (whether or not such date would otherwise be a Quarterly Payment
Date). Each such installment shall be in an amount equal to one quarter of the
amount set forth below for the applicable year), provided that the final
installment shall be in an amount equal to the aggregate amount of the Tranche A
Term Loans then outstanding.
Year Ending Amount (Assuming Full Percent of
----------- $200,000,000.00 is Borrowed Tranche A
and Not Otherwise Prepaid) Term Loans
-------------------------- ----------
9/30/98 $15,000,000.00 7 1/2%
9/30/99 $25,000,000.00 12 1/2%
9/30/00 $35,000,000.00 17 1/2%
9/30/01 $35,000,000.00 17 1/2%
9/30/02 $45,000,000.00 22 1/2%
9/30/03 $45,000,000.00 22 1/2%
In the event that less than the full amount of the Tranche A Term Loans is
advanced, the amount of each annual repayment will be equal to the amount
actually advanced multiplied by the applicable percentage shown above, as such
amount may be further reduced pursuant to Section 1.5 below.
(b) Tranche B Term Loans. The Tranche B Term Loans shall mature and
become due and payable and shall be repaid by the Borrowers in quarterly
installments, payable on successive Quarterly Payment Dates commencing with the
first Quarterly Payment Date after the Closing Date and ending with the Tranche
B Maturity Date (whether or not such date would otherwise be an Quarterly
Payment Date). Each such installment shall be in an amount equal to one quarter
of the amount set forth below for the applicable year, provided that the final
installment shall be in an amount equal to the aggregate amount of Tranche B
Term Loans then outstanding.
-7-
<PAGE>
Amount (Assuming Full Percent of
$200,000,000.00 is Borrowed Tranche B
Year Ending and Not Otherwise Prepaid) Term Loans
----------- -------------------------- ----------
9/30/98 $2,000,000.00 1%
9/30/99 $2,000,000.00 1%
9/30/00 $2,000,000.00 1%
9/30/01 $2,000,000.00 1%
9/30/02 $2,000,000.00 1%
9/30/03 $2,000,000.00 1%
9/30/04 $188,000,000.00 94%
In the event that less than the full amount of the Tranche B Term Loans is
advanced, the amount of each annual repayment will be equal to the amount
actually advanced multiplied by the applicable percentage shown above, as such
amount may be further reduced pursuant to Section 1.5 below.
(c) Tranche C Term Loans. The Tranche C Term Loans shall mature and
become due and payable and shall be repaid by the Borrowers in quarterly
installments, payable on each successive March 1, June 1, September 1 and
December 1 commencing with December 1, 1997 and ending with the Tranche C
Maturity Date (whether or not such date would otherwise be a date specified
above in this paragraph (c)). Each such installment shall be in an amount equal
to one quarter of the amount set forth below for the applicable year (except
that for the year ending June 1, 1998, each such installment shall be in an
amount equal to one third of the amount set forth below for the applicable
year), provided that the final installment shall be in an amount equal to the
aggregate amount of Tranche C Term Loans then outstanding.
-8-
<PAGE>
Amount (Assuming Full Percent of
$200,000,000.00 is Borrowed Tranche C
Year Ending and Not Otherwise Prepaid) Term Loans
----------- -------------------------- ----------
6/1/98 $2,000,000.00 1%
6/1/99 $2,000,000.00 1%
6/1/00 $2,000,000.00 1%
6/1/01 $2,000,000.00 1%
6/1/02 $2,000,000.00 1%
6/1/03 $2,000,000.00 1%
6/1/04 $2,000,000.00 1%
6/1/05 $186,000,000.00 93%
In the event that less than the full amount of the Tranche C Term Loans is
advanced, the amount of each annual repayment will be equal to the amount
actually advanced multiplied by the applicable percentage shown above, as such
amount may be further reduced pursuant to Section 1.5 below.
(d) RC Loans. The aggregate outstanding principal amount of the RC
Loans shall mature and become due and payable, and shall be repaid by the
Borrowers, on the RC Maturity Date.
(e) Swing Loans. The Borrowers shall repay each Swing Loan no later
than 3:00 p.m. (Philadelphia, Pennsylvania time) on the date specified in the
notice of borrowing delivered under Section 1.3(e) (which shall be a date not
later than the earlier of (A) the fifth Business Day after the date on which
such Swing Loan is to be made and (B) the RC Maturity Date). The Swing Loan
Lender shall provide prompt notice to the Administrative Agent of any repayment
of Swing Loans by the Borrowers.
(f) Letters of Credit. The Borrowers shall reimburse the Issuer,
through the Administrative Agent, for each Drawing under a Letter of Credit on
the date determined with respect to such Drawing in the manner set forth in
Article 3 below. In addition, the Borrowers shall fund the cash collateral
account securing Letter of Credit obligations in the manner set forth in Article
3 below.
1.5 VOLUNTARY PREPAYMENTS AND UNSCHEDULED, MANDATORY PREPAYMENTS.
(a) Optional Prepayments. The Borrowers may, at any time and from
time to time, prepay the Loans in whole or in part, without premium or penalty
(but with
-9-
<PAGE>
any payment required under Section 2.4 (Breakage)), except that any optional
partial prepayment (other than a prepayment of all outstanding RC Loans) shall
be in an aggregate principal amount of $5,000,000.00 or any integral multiple of
$1,000,000.00 in excess thereof except that a Swing Loan (prior to the time that
the Swing Loan Lender makes a demand under Section 1.3(e)(ii)) may be prepaid in
an aggregate principal amount of $500,000.00 or any integral multiple thereof.
Amounts to be so prepaid shall irrevocably be due and payable on the date
specified in the applicable notice of prepayment delivered pursuant to paragraph
(c) of this Section 1.5 together with interest thereon as provided in Section
1.8 (Interest) and together with any payment required under Section 2.4
(Breakage).
(b) Mandatory Prepayments.
(i) Excess Cash Flow. For each fiscal year of the Borrowers
commencing with the fiscal year ending September 30, 1998, upon the earlier of
(x) the date on which the Administrative Agent receives the annual financial
statements specified in Section 6.1 hereof and (y) the date by which the
Borrowers are required to provide such financial statements, the Borrowers shall
prepay a portion of the Loans in an amount equal to fifty percent (50%) of the
Excess Cash Flow for such fiscal year.
(ii) Net Proceeds of Dispositions. No more than five (5)
Business Days after the date of any sale, assignment, transfer or other
disposition by any Borrower of any assets (other than pursuant to paragraphs
(a), (b), (c), (d) or (f) of Section 8.5 (Dispositions) below) whether now owned
or hereafter acquired (collectively, a "disposition of assets"), Genesis, on
behalf of the Borrowers, shall notify the Administrative Agent in writing that
such disposition of assets has occurred, the date of such event and the amount
of the Net Cash Proceeds received in connection therewith. The Administrative
Agent shall promptly forward a copy of such notice to each Lender Party. In the
event that the Borrowers have not, within 364 days of the date of any such
disposition of assets, reinvested all of the corresponding Net Cash Proceeds in
their business pursuant to an Acquisition in a Health Care Business permitted by
Section 8.4 (and so state in reasonable detail in a certificate delivered by
Genesis (on their behalf) to the Administrative Agent), then Genesis (on behalf
of the Borrowers) shall give written notice of prepayment to the Administrative
Agent (at least five (5) days prior to the date of the subject prepayment) and
shall repay on or before the 364th day following such disposition of assets the
Loans in an amount equal to the amount of such Net Cash Proceeds not so
reinvested. Notwithstanding anything to the contrary contained in this
Agreement, in the event there occurs a disposition of assets which would
otherwise result in a mandatory prepayment under the 1995 Subordinated Note
Indenture or the 1996 Subordinated Note Indenture, to the extent the Borrowers
are not otherwise required to make a mandatory prepayment hereunder, the
Borrowers shall be obligated to make a mandatory prepayment hereunder in an
amount not less than the amount, and at a time not later than such time,
necessary to avoid any required prepayment under the 1995 Subordinated Note
Indenture and the 1996 Subordinated Note Indenture.
(iii) Net Proceeds of Sales of Capital Stock or Issuance of
Debt Securities. Within five (5) days of the sale or issuance of any capital
stock or debt securities of any Borrower (other than (w) a sale or issuance of
common stock of Genesis the proceeds of which are used exclusively for the
purpose of making capital contributions or other Investments in the Multicare
Group permitted under the terms of Section 6.13 below (Corporate Separateness),
(x) a sale to a Borrower, (y) a sale or issuance of non-redeemable
-10-
<PAGE>
capital stock of Genesis used to finance the purchase of capital stock of
Genesis Eldercare Corp. pursuant to the Put/Call Agreement or (z) a refinancing
of the 1995 Subordinated Note Indenture or the 1996 Subordinated Note Indenture
permitted by Section 8.1 (Indebtedness) below), the Borrowers shall prepay a
portion of the Loans in an amount equal to the amount of the Net Cash Proceeds
of such sale of stock or debt securities.
(c) Application and Timing of Prepayments.
(i) Notice. Subject to the provisions of the last sentence of
this paragraph (i), the Borrowers shall give the Administrative Agent notice of
each prepayment of Loans, which notice, in the case of a prepayment of Prime
Rate Loans, shall be given no later than 11:00 a.m. (Philadelphia, Pennsylvania
time) three (3) Business Days before and, in the case of a prepayment of LIBO
Rate Loans, no later than 11:00 A.M. (Philadelphia, Pennsylvania time) five (5)
Business Days before, the date of such prepayment. Each such notice of
prepayment shall be in the form of Exhibit C hereto and shall specify (i) the
date such prepayment is to be made and (ii) whether the Loans to be prepaid are
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, RC Loans or
Swing Loans (consistent with the provisions of this Agreement), (iii) the amount
and Type and, in the case of any LIBO Rate Loan, the last day of the applicable
Interest Period for the Loan to be prepaid, (iv) whether the prepayment is a
voluntary prepayment pursuant to paragraph (a) of this Section 1.5 or a
mandatory prepayment pursuant to paragraph (b) of this Section 1.5 and (v) if a
mandatory prepayment, the reason therefor. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each applicable Lender of the
contents thereof. Notwithstanding the foregoing, if the Borrowers wish to make a
prepayment of Swing Loans only, they may prepay such Swing Loans by giving the
Swing Loan Lender and the Administrative Agent written notice no later than
12:00 noon (Philadelphia time) one Business Day prior to the date of such
prepayment or as otherwise agreed to by Genesis (on behalf of the Borrowers) and
the Swing Loan Lender.
(ii) Timing and Application of Voluntary Prepayments and
Mandatory Prepayments in Respect of Net Cash Proceeds of The One Time
Disposition. Any voluntary prepayments pursuant to paragraph (a) of this Section
1.5 and any mandatory prepayments in respect of Net Cash Proceeds of the One
Time Disposition made in accordance with paragraph (e) of Section 8.5 below
(Dispositions) shall be applied in the following order:
(1) First, prepayments shall be applied against
the RC Loans and Swing Loans (but with no corresponding
reduction in the amount of the RC Commitment unless
otherwise specified by Genesis (on behalf of the
Borrowers)) and shall be applied among the RC Loans and
Swing Loans at the time outstanding on a pro rata basis
in accordance with the relative aggregate principal
amounts thereof held by each applicable Lender.
(2) Second, (subject to the terms of paragraph (d)
below (Tranche B/Tranche C Opt-Out)) prepayments shall
be applied against the Term Loans and shall be applied
among the Tranche A Term Loans, the Tranche B Term Loans
and the Tranche C Term Loans at the time outstanding on
a pro rata
-11-
<PAGE>
basis in accordance with the relative aggregate
principal amounts thereof held by each applicable
Lender. Prepayments of the various Term Loans shall be
applied to each of the respective remaining installments
thereof set forth in Section 1.4 on a pro rata basis in
accordance with the relative amounts thereof.
Any excess shall be applied to any other amounts owing in respect of the Loan
Obligations or deposited in the Letter of Credit cash collateral account if
required under Article 3 below and, if all such Loan Obligations have been then
paid in full and the amount of outstanding Letters of Credit is less than the
sum of the amount in the cash collateral account (as required) and the Available
RC Commitment, then any excess amount shall be returned to Genesis (on behalf of
the Borrowers) or as otherwise required by applicable Law.
(iii) Timing and Application of Mandatory Prepayments. Other
than mandatory prepayments of Net Cash Proceeds of the One Time Disposition
pursuant to paragraph (e) of Section 8.5 below (Dispositions), any mandatory
prepayments pursuant to paragraph (b) of this Section 1.5 shall be applied in
the following order:
(1) First, (subject to the terms of paragraph (d)
below (Tranche B/Tranche C Opt-Out)) prepayments shall
be applied against the Term Loans and shall be applied
among the Tranche A Term Loans, the Tranche B Term Loans
and the Tranche C Term Loans at the time outstanding on
a pro rata basis in accordance with the relative
aggregate principal amounts thereof held by each
applicable Lender. Prepayments of the various Term Loans
shall be applied to each of the respective remaining
installments thereof set forth in Section 1.4 on a pro
rata basis in accordance with the relative amounts
thereof.
(2) Second, prepayments shall be applied against
the RC Loans and Swing Loans with a corresponding
reduction in the amount of the RC Commitment and shall
be applied among the RC Loans and the Swing Loans at the
time outstanding on a pro rata basis in accordance with
the relative aggregate principal amount thereof held by
each applicable Lender provided, however, the Borrowers
need not prepay the RC Loans to the extent that there
would be, after giving effect to the reduction in the
amount of the RC Commitment (which commitment reduction
is unaffected by the terms of this proviso), sufficient
Available RC Commitment to reborrow such amounts. The
preceding proviso shall not apply to prepayments in
respect of Net Cash Proceeds of dispositions.
Any excess shall be applied to any other amounts owing in respect of the Loan
Obligations or deposited in the Letter of Credit cash collateral account and, if
all such Loan Obligations have been paid in full and the amount of outstanding
Letters of Credit is less than the sum of the amount in the cash collateral
account and the Available RC Commitment, then any excess amount shall be
returned to Genesis (on behalf of the Borrowers) or as otherwise required by
applicable Law.
-12-
<PAGE>
(d) Tranche B/Tranche C Opt-Out. With respect to any prepayment of
the Tranche B Term Loans or Tranche C Term Loans, the Administrative Agent shall
ratably pay the Tranche B Lenders or Tranche C Lenders, as the case may be, as
required under paragraph (c) of this Section 1.5, unless the Administrative
Agent shall have received written notice from any Tranche B Lender or Tranche C
Lender, as the case may be, not later than 11:00 a.m. two (2) Business Days
prior to the date of such prepayment, that such Tranche B Lender or Tranche C
Lender, as the case may be, elects not to receive any prepayment under this
paragraph (d) (a "Tranche B Opt-Out Lender" or "Tranche C Opt-Out Lender", as
applicable). Any prepayment which would have been remitted to a Tranche B
Opt-Out Lender or Tranche C Opt-Out Lender but for its election to not receive
such prepayment, shall be paid ratably to the remaining Lender Parties in the
order and as provided in paragraph (c) of this Section 1.5; provided, however,
that notwithstanding the foregoing provisions of this paragraph (d), Tranche B
Lenders and Tranche C Lenders must accept any prepayment made pursuant to this
Section 1.5 on any date on which the Tranche A Term Loans have been paid in full
(or are to be concurrently paid in full).
(e) Certain Provisions Respecting Prepayments Generally. Prepayments
shall be subject to the interest payment provisions, as applicable, set forth in
Section 1.8 below and the breakage indemnity provisions, as applicable, set
forth in Section 2.4 below.
1.6 PAYMENTS BY THE BORROWERS IN GENERAL.
(a) Time, Place and Manner. All payments due to the Administrative
Agent under the Loan Documents shall be made to the Administrative Agent at the
office designated by the Administrative Agent on the signature pages hereto or
to such other Person or at such other address as the Administrative Agent may
designate by written notice to Genesis (on behalf of the Borrowers). All
payments due to any Lender under the Loan Documents, whether made to the
Administrative Agent or directly to a Lender or the Issuer, shall be made for
the account of, in the case of payments in respect of LIBO Rate Loans, such
Lender's or Issuer's Eurodollar Lending Office and, in the case of all other
payments, such Lender's or Issuer's Domestic Lending Office. Except as otherwise
set forth in this Agreement, a payment shall not be deemed to have been made on
any day unless such payment has been received by the required Person, at the
required place of payment, in Dollars in funds immediately available to such
Person, no later than 1:00 p.m. (Philadelphia, Pennsylvania time) on such day;
provided, however, that the failure of the Borrowers to make any such payment by
such time shall not constitute a Default hereunder so long as such payment is
received no later than 3:00 p.m. (Philadelphia, Pennsylvania time) on such day,
but any such payment received later than 1:00 p.m. (Philadelphia, Pennsylvania
time) on such day shall be deemed to have been made on the next Business Day for
the purpose of calculating interest on the amount paid, provided further, that
any such payment made with the proceeds of Loans shall be deemed to have been
made on the date of the making of such Loans, so long as such proceeds are
immediately so applied and are not otherwise disbursed to the Borrowers.
(b) No Reductions. All payments due to the Administrative Agent, the
Issuer or any Lender under this Agreement and the other Loan Documents shall be
made by the Borrowers without any reduction or deduction whatsoever, including
any reduction or
-13-
<PAGE>
deduction for any charge, set-off, holdback, recoupment or counterclaim (whether
sounding in tort, contract or otherwise).
(c) Authorization to Charge Accounts. The Borrowers hereby authorize
each Lender Party, each participant and each Affiliate of each Lender Party, if
and to the extent any amount payable by the Borrowers under the Loan Documents
(whether payable to such Person or to any other Lender Party) is not otherwise
paid when due, to charge such amount against any or all of the demand deposit or
other accounts of any Borrower with such Person (whether maintained at a branch
or office located within or without the United States), with the Borrowers
remaining jointly and severally liable for any deficiency. The Person so
charging any such account shall give the relevant Borrower prompt notice
thereof, but any failure to give or delay in giving such notice shall not affect
such Person's right to effect such charge. Such charging of accounts shall be
subject to the provisions of Section 12.19 (Sharing of Collections) hereof.
(d) Extension of Payment Dates if Not a Business Day. Whenever any
payment to the Administrative Agent, the Issuer or any Lender under the Loan
Documents would otherwise be due (except by reason of acceleration) on a day
that is not a Business Day, such payment shall instead be due on the next
succeeding Business Day unless, in the case of a payment of the principal of
LIBO Rate Loans, such extension would cause payment to be due in the next
succeeding calendar month, in which case such due date shall be advanced to the
next preceding Eurodollar Business Day. If the due date for any payment under
the Loan Documents is extended (whether by operation of any Loan Document,
applicable Law or otherwise), such payment shall bear interest for such extended
time at the rate of interest applicable hereunder.
(e) Disbursement of Payments to Lenders and Issuer. The
Administrative Agent shall promptly distribute to each applicable Lender Party
its ratable share of each payment received by the Administrative Agent under the
Loan Documents for the account of such Lender Party by crediting an account of
such Lender Party at the Administrative Agent's office or by wire transfer to an
account of the Lender Party at an office of any other commercial bank located in
the United States or at any Federal Reserve Bank designated by such Person.
Unless the Administrative Agent shall have received notice from Genesis (on
behalf of the Borrowers) prior to the date on which any payment is due to any
Lender Parties under the Loan Documents that the Borrowers will not make such
payment in full, the Administrative Agent may assume that the Borrowers have
made such payment in full to the Administrative Agent on such date and the
Administrative Agent, in its sole discretion may, in reliance upon such
assumption, cause to be distributed to each applicable Lender Party on such due
date, a corresponding amount with respect to the amount then due to such Person.
If and to the extent that the Borrowers shall not have so made such payment in
full to the Administrative Agent, and the Administrative Agent shall have so
distributed to such Lender or Lenders or the Issuer a corresponding amount, such
Lender Parties shall, on demand, repay to the Administrative Agent the amount so
distributed, together with interest thereon, for each day from the date such
amount is distributed to such Lender Party until the date the such Person repays
such amount to the Administrative Agent, at the Federal Funds Rate until (and
including) the third Business Day after demand is made and thereafter at the
Prime Rate. Moreover, any Lender Party that shall have failed to make available
the required amount shall not be entitled to vote on such matters as Lenders or
Required Lenders are otherwise entitled to vote on or consent to or
-14-
<PAGE>
approve under this Agreement and the other Loan Documents until such amount with
interest is paid in full to the Administrative Agent by such Lender. Nothing in
this Section 1.6 shall relieve the Borrowers from any payment obligations.
(f) Breakage Costs on LIBO Rate Loans. Any repayment or prepayment
of a LIBO Rate Loan made on a day other than the last day of the applicable
Interest Period therefor shall be subject to payments in respect of breakage
costs as required to be paid in respect thereof pursuant to Section 2.4 below.
1.7 REDUCTIONS OF RC COMMITMENT.
(a) Optional Reductions. The Borrowers may reduce the RC Commitment
by giving the Administrative Agent notice (which shall be irrevocable) thereof
no later than 11:00 a.m. (Philadelphia, Pennsylvania time) on the third Business
Day before the requested date of such reduction, provided, that each partial
reduction thereof shall be in an amount equal to $10,000,000.00 or any integral
multiple of $5,000,000.00 in excess thereof and, provided, further, that no
reduction shall reduce the RC Commitment to an amount less than the sum of (i)
the aggregate of the principal amount of all Swing Loans outstanding on such
date (after giving effect to any repayment of Swing Loans made on or prior to
such date) (ii) the aggregate of the principal amount of all RC Loans
outstanding on such date (after giving effect to any repayment or prepayment of
RC Loans made on or prior to such date), (iii) the aggregate amount of the
Contingent Reimbursement Obligations and (iv) the aggregate amount of all
unreimbursed Drawings. Upon receipt of any such notice, the Administrative Agent
shall promptly notify each RC Lender of the contents thereof and the amount
(based on a pro rata reduction to each RC Lender's Commitment) to which such RC
Lender's RC Commitment is to be reduced.
(b) Mandatory Reductions. At the time of any mandatory prepayment of
RC Loans pursuant to Section 1.5, the RC Commitment shall be reduced to the
extent required by said Section 1.5 (which reduction does not apply to proceeds
of the One Time Disposition).
(c) No Reinstatement of RC Commitment. All reductions of the RC
Commitment are permanent and the RC Commitment cannot be restored without the
written consent of all RC Lenders.
1.8 INTEREST.
(a) Interest Rates in General. Except for Swing Loans which shall
bear the interest rate specified in Section 1.1(c) above, subject to the terms
and conditions of this Agreement, each Loan shall, at the option of the
Borrowers, bear interest on the outstanding principal amount thereof until paid
in full at a rate per annum equal to (i) the Prime Rate as in effect from time
to time or (ii) the applicable LIBO Rate for a specified Interest Period plus in
the case of both (i) and (ii) the Applicable Margin, if any.
(b) Election of LIBO Rate. Unless otherwise designated by the
Borrowers as a LIBO Rate Loan in accordance with this paragraph (b), each Loan
(other
-15-
<PAGE>
than a Swing Loan which is subject to Section 1.1(c) above) shall be deemed to
be a Prime Rate Loan as more fully set forth below.
(i) Prime Rate Unless Otherwise Designated. Prime Rate Loans
shall continue as Prime Rate Loans unless and until such Loans are converted
into Loans of another Type. LIBO Rate Loans for any Interest Period shall
continue as Loans of such Type until the end of the then current Interest Period
therefor, at which time they shall be automatically converted into Prime Rate
Loans unless Genesis (on behalf of the Borrowers) shall have given the
Administrative Agent notice in accordance with clause (ii) below requesting that
such Loans continue as LIBO Rate Loans for another Interest Period of a
specified duration.
(ii) Election of LIBO Rate. To elect a LIBO Rate, Genesis (on
behalf of the Borrowers) shall give the Administrative Agent notice (which shall
be irrevocable) no later than 11:00 a.m. (Philadelphia, Pennsylvania time) three
(3) Eurodollar Business Days before the requested date of the funding,
conversion or continuation which date shall be a Eurodollar Business Day. Each
such notice shall be in the form of Exhibit D hereto and shall specify (A) the
requested date of such funding, conversion or continuation, (B) whether the
subject Loan is a new advance or an existing Loan that is to be converted or
continued, (C) in the case of any LIBO Rate Loan being continued, the last day
of the current Interest Period, (D) whether such Loan is to be a Tranche A Term
Loan, Tranche B Term Loan, Tranche C Term Loan or an RC Loan and (E) the amount
of, and the desired Interest Period for, the Loan subject to such LIBO Rate
election provided that the Borrowers shall not be entitled to select an Interest
Period for any Loan which shall end on a date later than the Maturity Date
applicable to such Loan. Upon receipt of any such notice, the Administrative
Agent shall promptly notify each applicable Lender of the contents thereof.
(iii) LIBO Rate Suspended During Event of Default.
Notwithstanding anything to the contrary contained in clauses (i) or (ii) of
this paragraph (b), so long as an Event of Default shall have occurred and be
continuing, the Administrative Agent may (and, at the request of the Required
Lenders, shall) notify Genesis (on behalf of the Borrowers) that Loans may only
be converted into or continued upon the expiration of the applicable current
Interest Period therefor as Prime Rate Loans or Loans of such specified Types as
shall be acceptable to the Required Lenders. Thereafter, until no Event of
Default shall continue to exist, Loans may not be converted into or continued as
Loans of any Type other than Prime Rate Loans or one or more of such specified
Types.
(iv) Limitation on Types of Loans. Notwithstanding anything to
the contrary contained in this Agreement, the Borrowers shall borrow, prepay,
convert and continue Loans in a manner such that (A) unless otherwise agreed to
by the Administrative Agent, the aggregate principal amount of LIBO Rate Loans
of the same Type shall, at all times, be not less than $10,000,000.00 and (B)
there shall be, at any one time, no more than the number of Interest Periods
specified below in effect for each Tranche:
Maximum No. of Interest Periods Tranche
------------------------------- -------
five (5) RC Loans
three (3) Tranche A
-16-
<PAGE>
three (3) Tranche B
three (3) Tranche C
(v) Flexibility as to Source. Each Lender may fund LIBO Rate
Loans from any source that such Lender deems (in its sole discretion)
appropriate without loss of any rights hereunder.
(c) Interest Payment Dates. Interest shall be payable (i) in the
case of Prime Rate Loans, quarterly in arrears on each Quarterly Payment Date,
(ii) in the case of LIBO Rate Loans, on the last day of each applicable Interest
Period (and, in the case of any LIBO Rate Loan having an Interest Period longer
than three months, on each three-month anniversary of the first day of such
Interest Period) and (iii) in the case of any Loan (including Swing Loans), when
such Loan shall be due (whether at maturity, upon mandatory prepayment, by
reason of notice of prepayment or acceleration, or otherwise) or converted, but
only to the extent then accrued on the amount then so due or converted.
(d) Default Rate. At any time that an Event of Default shall have
occurred and shall be continuing, any amount payable hereunder and under each
other Loan Document shall bear interest (whether before or after judgment),
payable on demand, at a rate per annum equal to the applicable Default Rate.
1.9 FEES.
(a) Commitment Fees. The Borrowers shall pay to the Administrative
Agent, for the account of each RC Lender, a commitment fee on the daily unused
amount of such RC Lender's RC Commitment for each day from and including the
Agreement Date to but excluding the RC Maturity Date. The rate per annum shall
initially be equal to .50% of such unused amount but shall be adjusted five (5)
Business Days following delivery of the annual Officer's Compliance Certificate
for the year ending September 30, 1997 pursuant to Section 6.1 below and
thereafter shall be readjusted on the fifth (5th) Business Day following
delivery of such quarterly or annual Officer's Compliance Certificates. At any
time that such annual or quarterly Officer's Compliance Certificate is required
to be delivered pursuant to said Section 6.1 and is not so delivered, then the
Commitment Fee shall be based on the highest percentage set forth below in this
Section 1.9(a). The adjustments in the rate shall be based on the Adjusted Total
Debt/Cash Flow Ratio as set forth in the chart below. The commitment fee shall
be payable in arrears (i) on successive Quarterly Payment Dates beginning with
the first Quarterly Payment Date after the Closing Date, (ii) on the date of any
reduction of the RC Commitment (to the extent accrued and unpaid on the amount
of such reduction) and (iii) on the RC Maturity Date.
Adjusted Total Commitment
Debt/Cash Flow Ratio Fee
-------------------- ----------
less than 3.5 .25%
-17-
<PAGE>
greater than or equal
to 3.5 but less than 4.5 .3125%
greater than or equal
to 4.5 but less than 5.0 .375%
greater than or equal
to 5.0 .50%
(b) Letter of Credit Fees. The Borrowers shall pay to the
Administrative Agent, for the respective accounts of the RC Lenders, a letter of
credit commission on the daily aggregate amount of the Contingent Reimbursement
Obligations under each Letter of Credit at a rate per annum equal to the
Applicable Margin that would be applicable to RC Loans that are LIBO Rate Loans
at such time. In addition, the Borrowers shall pay to the Administrative Agent,
for the sole account of the Issuer, a Letter of Credit fronting fee on the daily
aggregate amount of the Contingent Reimbursement Obligations under each Letter
of Credit at a rate per annum equal to .10%. Such fees shall be payable in
arrears on successive Quarterly Payment Dates and at the expiration or other
termination of each Letter of Credit. In addition, the Borrowers shall pay to
the Administrative Agent, for the benefit of the Issuer, the Issuer's standard
posted charges for such matters as opening, negotiation and transfer.
(c) Other Fees. The Borrowers shall pay to the Administrative Agent,
for the respective accounts of the Administrative Agent, the Issuer, the Lenders
and/or the other Agents, as the case may be, such other fees as have been or may
be agreed to in writing by the Borrowers or by Genesis in connection with the
commitment to enter into this Agreement (including any facility fees referred to
in any commitment letters) and the transactions contemplated by this Agreement.
1.10 COMPUTATION OF INTEREST AND FEES. Interest calculated on the basis of
the LIBO Rate or the Federal Funds Rate shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed. Commitment fees,
letter of credit fees and interest calculated on the basis of the Prime Rate
shall be computed on the basis of a year of 365 or 366 days, as applicable, and
paid for the actual number of days elapsed. Interest, commitment fees and letter
of credit fees for any period shall be calculated from and including the first
day thereof to but excluding the last day thereof.
1.11 PROMISSORY NOTES; RECORDS OF ACCOUNT. Each Lender's Loans and the
Borrowers' joint and several obligations to repay such Loans with interest in
accordance with the terms of this Agreement shall be evidenced by this
Agreement, the Register and other records of the Administrative Agent and such
Lender and, in the case of Tranche A Term Loans, a single Tranche A Term Note
payable to the order of such Lender, in the case of RC Loans, a single RC Note
payable to the order of such Lender and, in the case of Swing Loans, a single
Swing Loan Note payable to the order of the Swing Loan Lender. The records of
each Lender shall be prima facie evidence of such Lender's Loans and, in each
case, of accrued interest thereon and all payments made in respect thereto. Each
Lender's participation in Letters of Credit shall be evidenced by this
Agreement, the
-18-
<PAGE>
records of such Lender and the Issuer and the Letters of Credit. In the event
that there is any dispute concerning the amount of any such obligations, the
amount of each Lender's Commitment with respect to RC Loans, Tranche A Term
Loans, Tranche B Term Loans and Tranche C Term Loans and the amount of
outstanding Loan Obligations of each and every Type shall at all times be
ascertained from the records of the Administrative Agent, including, without
limitation, the Register, all of which shall be conclusive absent manifest error
except that the outstanding face amount of any Letters of Credit, the amount of
any unpaid Drawings, the amount of unpaid interest accrued thereon and fees
relating to Letters of Credit shall at all times be ascertained from the records
of the Issuer, which shall be conclusive absent manifest error and the
outstanding amount of any Swing Loans and the amount of unpaid interest thereon
shall at all times be ascertained from the records of the Swing Loan Lender,
which shall be conclusive absent manifest error.
1.12 PRO RATA TREATMENT. Except to the extent otherwise provided herein,
(a) Tranche A Term Loans shall be made by, and principal interest and fees in
respect thereof shall be paid or repaid to, the Tranche A Lenders pro rata in
accordance with their respective Tranche A Commitments and interest in Tranche A
Loans; (b) Tranche B Term Loans shall be made by, and principal, interest and
fees in respect thereof shall be paid or repaid to, the Tranche B Lenders pro
rata in accordance with their respective Tranche B Commitments and interest in
Tranche B Loans; (c) Tranche C Term Loans shall be made by, and principal,
interest and fees in respect thereof shall be paid or repaid to, the Tranche C
Lenders pro rata in accordance with their respective Tranche C Commitments and
interest in Tranche C Loans; and (d) RC Loans shall be made by, and principal,
interest and fees in respect thereof shall be paid or repaid to, the RC Lenders
pro rata in accordance with their respective RC Commitments and interest in RC
Loans. Each participation of obligations in respect of Letters of Credit and
Swing Loans shall be allocated among, and each reimbursement of Drawings under
Letters of Credit or letter of credit commissions shall be made for the account
of, the RC Lenders pro rata in accordance with their respective amounts of RC
Commitments.
1.13 TAXES ON PAYMENTS.
(a) Taxes Payable by the Borrowers. If any Tax is required to be
withheld or deducted from, or is otherwise payable by the Borrowers in
connection with, any payment due to the Administrative Agent, the Issuer or any
Lender that is not a "United States Person" (as such term is defined in Section
7701(a)(30) of the Code), the Borrowers (i) shall, if required, withhold or
deduct the amount of such Tax from such payment and, in any case, pay such Tax
to the appropriate taxing authority in accordance with applicable Law and (ii)
except in the case of any Bank Tax, shall pay to the Issuer, such Lender or the
Administrative Agent such additional amounts as may be necessary so that the net
amount received by such Person with respect to such payment, after withholding
or deducting all Taxes required to be withheld or deducted, is equal to the full
amount payable hereunder. If any Tax is withheld or deducted from, or is
otherwise payable by the Borrowers in connection with, any payment due to the
Issuer, any Lender or the Administrative Agent hereunder, the Borrowers shall
furnish to such Person the original or a certified copy of a receipt (if any)
for such Tax from the applicable taxing authority or other evidence of payment
thereof satisfactory to such Person within 30 days after the date of such
payment (or, if such receipt shall not have been made available by such taxing
authority within such time, the Borrowers shall use reasonable efforts to
promptly obtain and furnish such receipt).
-19-
<PAGE>
If the Borrowers fail to pay any such Taxes when due to the appropriate taxing
authority or fail to remit to the Issuer, any Lender or the Administrative Agent
the required receipts or other evidence of payment thereof satisfactory to such
Person, the Borrowers shall indemnify such person for any Taxes, interest,
penalties or additions to Tax that may become payable by such Person as a result
of any such failure.
(b) Taxes Payable by the Issuer, any Lender or the Administrative
Agent. The Borrowers shall, promptly upon request by the Issuer, any Lender or
the Administrative Agent that is not a United States Person, pay to such Person
an amount equal to (i) all Taxes (other than Bank Taxes and without duplication
of amounts paid pursuant to the preceding paragraph (a)) payable by such Person
with respect to any payment due to such Person hereunder and (ii) all Taxes
(other than Bank Taxes) payable by such Person as a result of payments made by
the Borrowers (whether made to a taxing authority or to such Person pursuant to
the preceding paragraph (a) or this paragraph (b)).
(c) Credits and Deductions. If the Issuer, any Lender or the
Administrative Agent is, in its sole opinion, able to apply for any refund,
offset, credit, deduction or other reduction in Taxes by reason of any payment
made by the Borrowers under the preceding paragraph (a) or (b), the Issuer, such
Lender or the Administrative Agent, as the case may be, shall use reasonable
efforts to obtain such refund, offset, credit, deduction or other reduction and,
upon receipt thereof, will pay to the Borrowers such amount, not exceeding the
increased amount paid by the Borrowers, as is equal to the net after-tax value
to the Issuer, such Lender or the Administrative Agent, in its sole opinion, of
such part of such refund, offset, credit, deduction or other reduction as it
considers to be allocable to such payment by the Borrowers, having regard to all
of such Person's dealings giving rise to similar refunds, offsets, credits,
deductions or other reductions in relation to the same tax period and to the
cost of obtaining the same; provided, however, that if such Person has made a
payment to the Borrowers pursuant to this paragraph (c) and the applicable
refund, offset, credit, deduction or other reduction in Tax is subsequently
disallowed, the Borrowers shall, promptly upon request by the Issuer, the
Administrative Agent or such Lender refund to such Person that portion of such
payment determined by such Person, in its sole opinion, relating to such
disallowance; and provided, further that (i) the Issuer, the Administrative
Agent or such Lender, as the case may be, shall not be obligated to disclose to
the Borrowers any information regarding its Tax affairs or computations and (ii)
nothing in this paragraph (c) shall interfere with the right of such Person to
arrange its Tax affairs as it deems appropriate.
(d) Exemption from U.S. Withholding Taxes. Each Lender that is not a
United States Person shall submit to the Borrowers and the Administrative Agent,
on or before the fifth day prior to the first Quarterly Payment Date occurring
after the Closing Date (or, in the case of a Person that is not a United States
Person and that became a Lender by assignment, promptly upon such assignment),
two duly completed and signed copies of either (A) Form 1001 of the United
States Internal Revenue Service entitling such Lender to a complete exemption
from withholding on all amounts to be received by such Lender pursuant to this
Agreement and the Loans, (B) Form 4224 of the United States Internal Revenue
Service relating to all amounts to be received by such Lender pursuant to this
Agreement and the Loans, or (C) in the case of a Lender Party that is claiming
an exemption from United States withholding tax under Section 871(h) or 881(c)
of the Internal Revenue Code with respect to payments of "portfolio interest",
two accurate and complete signed
-20-
<PAGE>
original Forms W-8 (or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender Party is exempt from or is entitled to a
reduced rate of United States withholding tax on payments under this Agreement
or the Notes) and, if such Lender Party delivers Forms W-8 (or successor form),
two signed certificates certifying that such Lender Party is not (1) a "bank"
for purposes of Section 881(c) of the Internal Revenue Code, (2) is not a 10%
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of any Borrower and (3) is not a controlled foreign corporation related to
any Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue
Code), as appropriate. Each such Lender shall, from time to time after
submitting either such Form, submit to the Borrowers and the Administrative
Agent such additional duly completed and signed copies of one or the other such
Forms (or any successor forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may be (A) requested in writing by
the Borrowers or the Administrative Agent and (B) appropriate under the
circumstances and under then current United States law or regulations to avoid
or reduce United States withholding taxes on payments in respect of all amounts
to be received by such Lender pursuant to this Agreement or the Loans. Upon the
request of the Borrowers or the Administrative Agent, each Lender that is a
United States Person shall submit to the Borrowers and the Administrative Agent
a certificate to the effect that it is a United States Person.
(e) Obligations under this Section 1.13 shall survive payment of the
Loans.
1.14 REGISTERED NOTES AND LOANS.
(a) Request for Registration. Any Lender may request the Borrowers
(through the Administrative Agent), and the Borrowers agree thereupon, to
register such Loans as provided in Section 1.14(c) and, if such Lender is
otherwise entitled to a Note hereunder, to issue such Lender's Note evidencing
such Loans, or to exchange such Note for a new Note, registered as provided in
Section 1.14(c) (a "Registered Note"). A Registered Note may not be exchanged
for a Note that is not in registered form. A Registered Note shall be deemed to
be and shall be a Note for all purposes of this Agreement and the other Loan
Documents.
(b) Delivery of Tax Forms. Each Non-U.S. Lender that requests or
holds a Registered Note pursuant to Section 1.14(a) or registers its Loans
pursuant to Section 1.14(a) (a "Registered Lender") (or, if such Registered
Lender is not the beneficial owner thereof, such beneficial owner) shall deliver
to Genesis (on behalf of the Borrowers) (with a copy to the Administrative
Agent) prior to or at the time such Non-U.S. Lender becomes a Registered Lender,
the applicable form described in Section 1.13(d) (or such successor and related
forms as may from time to time be adopted by the relevant taxing authorities of
the United States) together with an annual certificate stating that such
Registered Lender or beneficial owner, as the case may be, is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and is not otherwise
described in Section 881(c)(3) of the Code. Each Registered Lender or beneficial
owner, as the case may be, shall promptly notify Genesis (on behalf of the
Borrowers) (with a copy to the Administrative Agent) if at any time such
Registered Lender or beneficial owner, as the case may be, determines that it is
no longer in a position to provide such previously delivered certificate to the
Borrowers (or any
-21-
<PAGE>
other form of certification adopted by the relevant taxing authorities of the
United States for such purposes).
(c) Registration of Loans. The Administrative Agent, acting, for
this purpose, as agent of the Borrowers, shall, upon request of any Registered
Lender, enter in the Register the name, address and taxpayer identification
number (if provided) of the Registered Lender or beneficial owner as the case
may be. In addition to the requirements of Section 12.9 (Successors and
Assigns), a Registered Note and the Loans evidenced thereby (or such Loans
pending delivery of such Registered Note) or any other Loans registered pursuant
to Section 1.14 (a) above may be assigned or otherwise transferred in whole or
in part only by registration of such assignment or transfer of such Registered
Note and/or the Loans so registered on the Register (and each such Registered
Note shall expressly so provide). Any assignment or transfer of all or part of
such Loans and such Registered Note shall be registered on the Register only
upon compliance with the provisions of Section 12.9 and, in the case of
Registered Notes, surrender for registration of assignment or transfer of the
Registered Note evidencing such Loans, duly endorsed by (or accompanied by a
written instrument of assignment or transfer fully executed by) the Registered
Lender thereof, and thereupon one or more new Registered Notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s) and, if less than all of such Registered Notes is thereby being
assigned or transferred, the assignor or transferor.
ARTICLE 2
YIELD PROTECTION AND BREAKAGE INDEMNITY
2.1 MANDATORY SUSPENSION AND CONVERSION OF LIBO RATE LOANS. Any Lender's
obligations to make, continue or convert into LIBO Rate Loans of any Type shall
be suspended, all such Lender's outstanding Loans of such Type shall be
converted into Prime Rate Loans on the last day of their applicable Interest
Periods (or, in the case of clause (c) below, on the last day such Lender may
lawfully continue to maintain Loans of such Type if earlier, or, in the case of
clause (d) below, on the day determined by such Lender to be the last Business
Day before the effective date of the applicable restriction), and all pending
requests for the making or continuation of or conversion into Loans of such Type
by such Lender shall be deemed requests for Prime Rate Loans, if:
(a) on or prior to the date required for the determination of a LIBO
Rate for any Interest Period, the Administrative Agent determines that for any
reason appropriate information is not available to it for purposes of
determining the LIBO Rate for such Interest Period;
(b) on or prior to the first day of any Interest Period for a LIBO
Rate Loan, the Required Lenders have informed the Administrative Agent of their
determination that the LIBO Rate as determined by the Administrative Agent for
such Interest Period would not accurately reflect the cost to such Lenders of
making, continuing or converting into a LIBO Rate Loan for such Interest Period;
-22-
<PAGE>
(c) at any time such Lender determines that any Regulatory Change
makes it unlawful or impracticable for such Lender or its applicable Eurodollar
Lending Office to make, continue or convert into a LIBO Rate Loan of such Type,
or to comply with its obligations hereunder in respect thereof; or
(d) such Lender notifies the Administrative Agent of its
determination that (i) by reason of any Regulatory Change, such Lender or its
applicable Eurodollar Lending Office is restricted, directly or indirectly, in
the amount that it may hold of (A) a category of liabilities that includes
deposits by reference to which, or on the basis of which, the interest rate
applicable to LIBO Rate Loans of such Type is directly or indirectly determined
or (B) the category of assets that includes LIBO Rate Loans of such Type and
(ii) in connection therewith, such Lender has elected not to make available
hereunder LIBO Rate Loans of such Type.
If, as a result of this Section 2.1, any Loan of any Lender that would otherwise
be made or maintained as or converted into a LIBO Rate Loan for any Interest
Period is instead made or maintained as or converted into a Prime Rate Loan,
then, unless the corresponding Loan of each of the other Lenders is also to be
made or maintained as or converted into a Prime Rate Loan, such Loan shall be
treated as being a LIBO Rate Loan of such Type for such Interest Period for all
purposes of this Agreement (including the timing, application and proration
among the Lenders of interest payments, conversions and prepayments) except for
the calculation of the interest rate borne by such Loan. The Administrative
Agent shall promptly notify Genesis (on behalf of the Borrowers) and each Lender
of the existence or occurrence of any condition or circumstance specified in
clause (a) or (b) above, and each Lender shall promptly notify Genesis (on
behalf of the Borrowers) and the Administrative Agent of the existence,
occurrence or termination of any condition or circumstance specified in clause
(c) or (d) above applicable to such Lender's Loans, but the failure by the
Administrative Agent or such Lender to give any such notice shall not affect
such Lender's rights hereunder.
2.2 REGULATORY CHANGES. If in the determination of any Lender or, in the
case of any Letter of Credit or Drawing, the Issuer, (a) any Regulatory Change
shall directly or indirectly.
(i) reduce the amount of any sum received or receivable by (A)
such Lender with respect to any LIBO Rate Loan or Letter of Credit
Participation or the return to be earned by such Lender on any LIBO Rate
Loan or Letter of Credit Participation or (B) the Issuer with respect to
any Letter of Credit or Drawing,
(ii) impose a cost on (A) such Lender or any Affiliate of such
Lender that is attributable to the making or maintaining of, or such
Lender's commitment to make or acquire, any LIBO Rate Loan or Letter of
Credit Participation or (B) the Issuer or any of its Affiliates that is
attributable to the issuance or maintaining of, or the commitment to
issue, any Letter of Credit or the making or maintaining of any Drawing,
(iii) require (A) such Lender or any Affiliate of such Lender
to make any payment on or calculated by reference to any amount received
by such Lender in respect of its LIBO Rate Loans or its obligations to
make LIBO Rate Loans or (B) the Issuer or any of its Affiliates to make
any payment on or calculated by reference to
-23-
<PAGE>
any amount received by the Issuer or any of its Affiliates in respect of
any Letter of Credit or its commitment to issue any Letter of Credit or
Drawing, or
(iv) reduce, or have the effect of reducing, the rate of
return on any capital (A) such Lender or any Affiliate of such Lender is
required to maintain on account of any LIBO Rate Loan or Letter of Credit
Participation or such Lender's commitment to make any LIBO Rate Loan or
Letter of Credit Participation or (B) the Issuer or any of its Affiliates
is required to maintain on account of any Letter of Credit or Drawing or
the Issuer's commitment to issue any Letter of Credit,
and (b) such reduction, increased cost or payment shall not be fully compensated
for by an adjustment in the applicable rates of interest payable under the Loan
Documents, then the Borrowers shall pay to such Lender or the Issuer such
additional amounts as such Lender or the Issuer, determines will fully
compensate it for such reduction, increased cost or payment. Such additional
amounts shall be payable, in the case of those applicable to prior periods,
within 15 Business Days after request for such payment by such Lender or the
Issuer, as the case may be, accompanied by the certificate described in Section
2.5 and, in the case of those applicable to future periods, on the dates
specified, or determined in accordance with a method specified, by such Lender
or the Issuer, as the case may be provided, that the Borrowers shall not be
liable for any amount payable with respect to any period more than 90 days
before the date of such request or certificate or, if earlier, the retroactive
effective date of the Regulatory Change if it occurred during such 90 day
period.
2.3 CAPITAL AND RESERVE REQUIREMENTS. If, in the determination of any
Lender or the Issuer, such Lender, the Issuer or any Affiliate thereof is
required, under applicable Law (including Regulation D), or interpretations,
directives, requests and governmental or regulatory guidelines (whether or not
having the force of law), to maintain capital or deposit any reserve on account
of any Loan, any Letter of Credit (whether drawn or undrawn) or any commitment
to make any Loan or issue any Letter of Credit, then, upon request by such
Lender or the Issuer, the Borrowers shall pay to such Lender or the Issuer, as
the case may be, such additional amounts as such Person determines will fully
compensate it for any reduction in the rate of return on the capital that such
Lender, the Issuer or such Affiliate thereof is so required to maintain. Such
additional amounts shall be payable, in the case of those applicable to prior
periods, within 15 Business Days after request by such Lender or the Issuer, as
the case may be, for such payment accompanied by the certificate described in
Section 2.5 (provided, that the Borrowers shall not be liable for any amount
payable with respect to any period more than 90 days before the date of such
request or certificate or, if earlier, the retroactive effective date of the
Regulatory Change if it occurred during such 90-day period) and, in the case of
those relating to future periods, on the dates specified, or determined in
accordance with a method specified, by such Lender or the Issuer, as the case
may be.
2.4 BREAKAGE. The Borrowers shall pay to each Lender, upon request, such
amount as such Lender reasonably determines is necessary to compensate it for
any loss, cost or expense (excluding loss of the Applicable Margin) incurred by
it as a result of (a) any payment, prepayment or conversion of a LIBO Rate Loan
on a date other than the last day of an Interest Period for such LIBO Rate Loan
or (b) a LIBO Rate Loan for any reason not being made or converted, or any
payment of principal thereof or interest thereon not being made, on the date
therefor determined in accordance with the applicable provisions of this
-24-
<PAGE>
Agreement. At the election of such Lender, and without limiting the generality
of the foregoing, but without duplication, such compensation on account of
losses may include an amount equal to the excess of (i) the interest that would
have been received from the Borrowers under this Agreement (excluding the
Applicable Margin) during the remainder of the applicable Interest Period over
(ii) the interest component of the return that such Lender determines it could
have obtained had it placed such amount on deposit in the interbank Dollar
market for a period equal to such remaining portion of the Interest Period.
2.5 DETERMINATIONS. In making the determinations contemplated by this
Article 2, each Lender and the Issuer shall make such estimates, assumptions,
allocations and the like that such Person in good faith determines to be
appropriate, and such Person's selection thereof in accordance with this Section
2.5, and the determinations made by such Person on the basis thereof, shall be
final, binding and conclusive upon the Borrowers, except, in the case of such
determinations, for manifest errors. Each Lender and the Issuer shall furnish to
the Borrowers, at the time of any request for compensation under Section 2.2 or
2.3, a certificate outlining in reasonable detail the computation of any amounts
claimed by it under this Article 2 and the assumptions underlying such
computations, which shall include a statement of an officer of such Person
certifying that such request for compensation is being made pursuant to a policy
adopted by such Person to seek such compensation generally from customers
similar to the Borrowers and having similar provisions in agreements with such
Person.
2.6 REPLACEMENT OF LENDERS. If any Lender requests compensation pursuant
to Sections 1.13 (Taxes on Payments), 2.2 (Regulatory Changes) or 2.3 (Capital
and Reserve Requirements), or such Lender's obligation to make or continue Loans
as LIBO Rate Loans shall be suspended pursuant to Section 2.1 (Mandatory
Suspension and Conversion of LIBO Rate Loans) or such Lender has defaulted on
its obligations to make or participate in Loans pursuant to Section 1.3 (Manner
of Borrowing), Genesis (on behalf of the Borrowers), upon three Business Days'
notice, may require that such Lender transfer all of its right, title and
interest under this Agreement, such Lender's Notes, if any, and the other Loan
Documents to any Eligible Institution identified by Genesis (on behalf of the
Borrowers) subject to
(a) the consent of the Administrative Agent (which consent shall not
be unreasonably withheld),
(b) satisfaction of the other conditions specified in Section 12.9
below (Successors and Assigns),
(c) the agreement of the proposed transferee to assume all of the
obligations of such Lender hereunder and under the other Loan Documents for
consideration equal to the outstanding principal amount of such Lender's Loans,
unreimbursed Drawings payable to the transferor, interest thereon to the date of
such transfer, and all other amounts payable hereunder to such Lender to the
date of transfer,
(d) such transferor Lender shall have been paid on or prior to the
date of such transfer all fees and other amounts payable to such transferor
hereunder including those amounts payable under said Sections 1.13, 2.2, or 2.3,
as applicable (and including any fees accrued hereunder and any amounts that
would be payable under Section 2.4 (Breakage) as if
-25-
<PAGE>
all of such Lender's Loans and share of unreimbursed Drawings were being prepaid
in full on such date) or arrangements satisfactory to the transferor Lender
shall have been made for such payments, and
(e) satisfaction of the condition that if the Lender being replaced
has requested compensation pursuant to Sections 1.13, 2.2 or 2.3, the proposed
transferee's aggregate requested compensation, if any, pursuant to Sections
1.13, 2.2 or 2.3 with respect to such replaced Lender's Loans is lower than that
of the Lender replaced.
Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements of the Borrowers contained in Sections 1.13 (Taxes on
Payments), 2.2 (Regulatory Changes), 2.3 (Capital and Reserve Requirements), 2.4
(Breakage), 12.12 (Indemnification) and 12.13 (Expenses) (without duplication of
any payments made to such Lender by the Borrowers or the proposed transferee)
shall survive for the benefit of any Lender replaced under this Section 2.6 with
respect to the time prior to such replacement.
2.7 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of Sections 1.13 (Taxes on Payments),
2.1 (Mandatory Suspension and Conversion of LIBO Rate Loans), 2.2 (Regulatory
Changes) or 2.3 (Capital and Reserve Requirements) with respect to such Lender,
it will, if requested by the Borrowers, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
officer for any Loans affected by such event, provided that such designation is
made on such terms that such Lender and its lending office suffer no material
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such Section.
Nothing in this Section 2.7 shall affect or postpone any of the obligations of
the Borrowers or the right of any Lender provided in Sections 1.13 (Taxes on
Payments), 2.1 (Mandatory Suspension and Conversion of LIBO Rate Loans), 2.2
(Regulatory Changes) or 2.3 (Capital and Reserve Requirements).
ARTICLE 3
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT.
(a) In General. Upon the terms and subject to the conditions of this
Agreement, the Issuer shall, from time to time, from the Closing Date to the
date which is 90 days prior to the RC Maturity Date, issue one or more Letters
of Credit for the account of any Borrower, provided that (i) the sum of the
Contingent Reimbursement Obligations (after giving effect to the requested
Letter of Credit) plus the aggregate unpaid amount of all Drawings under Letters
of Credit shall not exceed $25,000,000.00 and provided, further, that the face
amount of the Letter of Credit so requested shall not exceed the Available RC
Commitment at such time. Each Letter of Credit shall be in a form and shall
contain such terms as shall be reasonably satisfactory to the Issuer. Letters of
Credit shall be issued only on a Business Day, and shall be used for the general
corporate purposes of the Borrowers or for such other purposes as shall be
acceptable to the Issuer in its sole discretion.
-26-
<PAGE>
(b) Letters of Credit Issued Pursuant to the Existing Credit
Agreement. The letters of credit issued in connection with the Existing Credit
Agreement and outstanding on the Closing Date shall, from and after the
effective date of this Agreement, constitute Letters of Credit for all purposes
hereunder.
(c) Terms. Each Letter of Credit shall be denominated only in
Dollars and shall expire on or before the first anniversary of the issuance
thereof and in any event not later than the fifth Business Day preceding the RC
Maturity Date. No Letter of Credit shall 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. All other
extensions and renewals are also at the sole discretion of the Issuer. Any
extension of the expiry date of a Letter of Credit to a date beyond the first
anniversary of the issuance thereof shall constitute an "issuance" of such
Letter of Credit for all purposes hereof.
(d) Form of Request. The Borrowers shall request the issuance of a
Letter of Credit by furnishing to the Administrative Agent and the Issuer, at
least five Business Days before the requested date of such issuance (or at such
later time as shall be acceptable to the Issuer), such notice thereof as shall
be reasonably satisfactory to the Issuer to which shall be attached a
certificate of the chief financial officer or other Responsible Officer of
Genesis representing that Genesis is, and after giving effect to the additional
Indebtedness will be, in compliance with Section 5.9 of the 1995 Subordinated
Note Indenture and the 1996 Subordinated Note Indenture, that the obligations
with respect to such Letter of Credit constitute "Senior Indebtedness" and
"Designated Senior Indebtedness" as such terms are defined in said indentures
and such other matters as required by Section 4.2 below.
(e) Participation by RC Lenders. Upon the date of issuance of a
Letter of Credit (or, in the case of the Letters of Credit referred to in
paragraph (b) above, on the Closing Date), the Issuer shall be deemed to have
granted to each RC Lender (other than the Issuer), and each RC Lender (other
than the Issuer) shall be deemed to have acquired from the Issuer without
further action by any party hereto, a participation in such Letter of Credit and
any Drawings that may at any time be made thereunder, to the extent of such
Lender's pro rata share of the RC Commitment.
(f) Notice of Drawings. The Issuer shall promptly notify Genesis (on
behalf of the Borrowers) of its receipt of each Drawing request with respect to
a Letter of Credit, stating the date and amount of the Drawing requested thereby
and the date and amount of each Drawing disbursed pursuant to such request. The
failure of the Issuer to give, or delay in giving, any such notice shall not
release or diminish the obligations hereunder of the Borrowers in respect of
such Drawing.
(g) Reimbursement of Drawings by Borrowers. If at any time Genesis
(on the behalf of the Borrowers) receives notice of a Drawing, the Borrowers
shall reimburse such Drawing by paying to the Issuer in immediately available
funds the amount of the payment made by the Issuer with respect to such Drawing,
together with interest thereon at a rate per annum equal to the Prime Rate from
the day that the Drawing is made until the day such reimbursement is made if
such Drawing is not reimbursed on the day the Drawing is made. Such
reimbursement shall be made by the Borrowers to the Issuer no later than one (1)
Business Day following the date that Genesis (on behalf of Borrowers) receives
the
-27-
<PAGE>
relevant notice of Drawing if such notice is received on or prior to 10:00 a.m.
(Philadelphia, Pennsylvania time) and no later than two (2) Business Days
following the date that Genesis receives the relevant notice of Drawing if such
notice is received after 10:00 a.m. (Philadelphia, Pennsylvania time). If the
Borrowers shall fail to make any payment required by this paragraph (g) at the
time specified, and if at such time, there shall be any Available RC Commitment,
the Administrative Agent may (but is not obligated to) assume that the Borrowers
intend to use the proceeds of RC Loans to make such payment. In reliance on such
assumption, the Administrative Agent may (but is not obligated to) notify the RC
Lenders (and Genesis (on behalf of the Borrowers)) that notwithstanding the
Borrowers' failure to provide notice pursuant to Section 1.3 above, such notice
is deemed given pursuant to this paragraph (g) requesting an RC Loan bearing
interest at the Prime Rate in an amount sufficient to make the payments required
by this paragraph (g). Such notice from the Administrative Agent shall be
treated by the Lenders in the same manner as a notice from the Borrowers under
Section 1.3 above. The Administrative Agent may, at the direction of the Issuer,
apply the proceeds of such Loans to satisfy the requirements of this paragraph
(g).
(h) Obligations of RC Lenders to Issuer. In the event that the
Borrowers shall fail to make any payment when due pursuant to the preceding
paragraph (g) and for so long as such failure shall be continuing, the Issuer
may give notice of such failure to the Administrative Agent and each RC Lender,
which notice shall include, in the case of an RC Lender, the amount of such RC
Lender's interest in such Drawing, whereupon each such RC Lender (other than the
Issuer) shall promptly remit such amount to the Administrative Agent for the
account of the Issuer as provided in this paragraph (h). Each RC Lender (other
than the Issuer) shall, in the event it receives such notice from the Issuer at
or before 12:00 noon (Philadelphia, Pennsylvania time) on any Business Day, fund
its participation in any unreimbursed Drawing by remitting to the Administrative
Agent, no later than 2:00 p.m. (Philadelphia, Pennsylvania time) on such day, in
immediately available funds its share of the reimbursement obligations in
respect of each Drawing. In the event that the Administrative Agent receives
such funds from an RC Lender at or before 2:00 p.m. (Philadelphia, Pennsylvania
time) on any day, the Administrative Agent shall make available the amount
thereof to the Issuer, in immediately available funds no later than 4:00 p.m.
(Philadelphia, Pennsylvania time) on that same day. Any amount payable by an RC
Lender to the Administrative Agent for the account of the Issuer under this
paragraph (h), and any amount payable by the Administrative Agent to the Issuer
under this paragraph (h), shall bear interest for each day from the date due
(and including such day if paid after 2:00 p.m. (Philadelphia, Pennsylvania
time) in the case of any such payment by an RC Lender to the Administrative
Agent, or 4:00 p.m. (Philadelphia, Pennsylvania time), in the case of any such
payment by the Administrative Agent to the Issuer, on such day) until the date
it is received by the Issuer at a rate equal to the Federal Funds Rate until
(and including) the third Business Day after the date due and thereafter at the
Prime Rate. Moreover, any Lender that shall have failed to make available the
required amount shall not be entitled to vote on such matters as Lenders or
Required Lender are otherwise entitled to vote on or consent to or approve under
this Agreement and the other Loan Documents until such amount with interest is
paid in full to the Administrative Agent by such Lender. Each RC Lender shall,
upon the demand of the Issuer, reimburse the Issuer, through the Administrative
Agent to the extent that the Issuer has not been reimbursed by the Borrowers
after demand therefor, for the reasonable costs and expenses (including
reasonable legal fees) incurred by it (other than as a result of its willful
misconduct or gross negligence as finally determined by a court of competent
jurisdiction) in connection with the collection of amounts due under, the
administration of,
-28-
<PAGE>
and the preservation and enforcement of any rights conferred by, the Letters of
Credit or the performance of the Issuer's obligations under this Agreement in
respect thereof on a pro rata basis relative to such RC Lender's pro rata share
of the RC Commitment (as of the time such costs and expenses are incurred). The
Issuer shall refund through the Administrative Agent any costs and expenses
reimbursed by such RC Lender that are subsequently recovered from the Borrowers
in an amount equal to such RC Lender's ratable share thereof.
(i) Cash Collateral. It is intended that at all times that the
Borrowers shall have contingent or other obligations (including obligations in
respect of fees) relating to Letters of Credit, there shall be sufficient
availability under the RC Commitment to reimburse the Issuer (and the RC
Lenders) out of proceeds of RC Loans. Accordingly, in the event that there
shall, at any time, be insufficient availability under the RC Commitment (after
giving effect to all outstanding Swing Loans and RC Loans) to do so (whether
because the amount of the RC Commitment is reduced pursuant to a mandatory
reduction or is terminated at maturity, upon acceleration or otherwise or
because the amount of outstanding RC Loans, Swing Loans and such Letter of
Credit obligations exceeds the amount of the RC Commitment for any other
reason), the Borrowers shall forthwith pay to the Administrative Agent an amount
equal to the aggregate face value of all outstanding Letters of Credit plus the
aggregate amount of all unreimbursed Drawings plus the amount of all fees or
other obligations in respect of Letters of Credit to the extent of such excess.
Such amount shall be maintained by the Administrative Agent in an
interest-bearing cash collateral account in the name of and for the benefit of
the Issuer and the RC Lenders to secure such payment obligations of the
Borrowers until such time as all outstanding Letters of Credit have expired or
been cancelled and all amounts in respect thereof have been paid in full. Upon
receipt of a notice from the Issuer that there are unreimbursed Drawings or
other amounts due in respect of such Letters of Credit (which notice shall set
forth the amount of such unreimbursed Drawings or other obligations) the
Administrative Agent shall promptly disburse from the cash collateral account
the amount specified in the notice and shall pay such amount to the Issuer and
RC Lenders ratably in accordance with the respective amounts owing to each such
Person, first, for fees and indemnities until the same are paid in full and,
second, for unreimbursed Drawings. The Administrative Agent and the Issuer may
rely on their records as to any amounts so owing and shall be fully protected in
doing so. Such records shall be conclusive, absent manifest error. At any time
that the RC Commitment again becomes available for reimbursement of Drawings
under outstanding Letters of Credit such that (i) the sum of the RC Commitment
at that time and the amount in the cash collateral account exceeds (ii) the sum
of all outstanding RC Loans and Swing Loans, the face amount of all outstanding
Letters of Credit and the amount of all unreimbursed Drawings, then, upon
written request of Genesis (on behalf of the Borrowers) (which request shall (A)
represent that there exists no Default or Event of Default and (B) specify the
amount of such excess), the Administrative Agent shall release such excess
amount to the Borrowers from the cash collateral account. 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 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 Administrative Agent shall release to the Borrowers all
remaining funds in the Letter of Credit cash collateral account.
-29-
<PAGE>
(j) Obligations Absolute. The obligation of each Borrower and each
RC Lender to make available to the Issuer the amounts set forth in this Article
3 shall be absolute, unconditional and irrevocable under any and all
circumstances without reduction for any set-off or counterclaim of any nature
whatsoever, and may not be terminated, suspended or delayed for any reason
whatsoever, shall not be subject to any qualification or exception and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which any Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Administrative Agent, the Issuer, any RC
Lender or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between such Borrower and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any 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;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Event of Default.
(k) Limitations on Liability; Protection of Issuer, Administrative
Agent and Lenders.
(i) Limitation on Liability of Lender Parties. Without
affecting any rights any Lender Party may have under applicable Law, each of the
Borrowers agrees that none of the RC Lenders, the Issuer, the Administrative
Agent or their respective officers or directors shall be liable or responsible
for, and the obligations of the Borrowers to the RC Lenders, the Issuer and the
Administrative Agent hereunder shall not in any manner be affected by: (A) the
use that may be made of any Letter of Credit or the proceeds thereof by the
beneficiary thereof or any other Person or any acts or omissions of such
beneficiary or any other Person; (B) the validity, sufficiency or genuineness of
documents presented in connection with any Drawing, or of any endorsements
thereon, even if such documents should, in fact, prove to be in any or all
respects, invalid, insufficient, fraudulent or forged; or (C) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit or any other action taken or omitted to be taken by any Person under
or in connection with any Letter of Credit, except that the Borrowers shall have
a claim against the Issuer and the Issuer shall be liable to the Borrowers, in
each case to the extent and only to the extent of any damages suffered by the
Borrowers that they prove are caused by the Issuer's willful misconduct or gross
negligence. In furtherance and not in limitation of the foregoing, in
determining whether to pay under any Letter of Credit, the Issuer shall not have
any obligation relative to the other Lenders other than to determine that any
documents
-30-
<PAGE>
required to be delivered under such Letter of Credit appear to have been
delivered and that they appear to comply on their face with the requirements of
such Letter of Credit, regardless of any notice or information to the contrary.
Any action taken or omitted to be taken by the Issuer under or in connection
with any Letter of Credit (if taken or omitted in the absence of gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction) shall not create for the Issuer any resulting liability to any
Borrower or any Lender.
(ii) Indemnification and Expenses. In addition to any other
amounts payable under this Agreement, the Borrowers agree jointly and severally
to protect, indemnify, pay and hold the Issuer and each RC Lender harmless from
and against any and all claims, costs, charges and expenses (including
reasonable attorneys' fees) which the Issuer may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of, or payment of any
drawing under, any Letter of Credit, other than as a result of the gross
negligence or willful misconduct of the Issuer as finally determined by a court
of competent jurisdiction or (B) the failure of the Issuer to honor a Drawing
under any Letter of Credit as a result of any act or omission of any present or
future government or Governmental Authority.
(iii) Issuer Not Responsible. In furtherance of the foregoing
limitations on liability, the Issuer shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the issuance of Letters of Credit; (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part; (C) errors, omissions,
interruptions, or delays in transmissions or delivery of any messages, by mail,
cable, telecopy, telex or otherwise, whether or not in cipher; (D) the
misapplication by the beneficiary of any Letter of Credit or the proceeds of any
drawing under such Letter of Credit; or (E) any consequence arising from causes
beyond the control of the Issuer, including any governmental acts except for
damages proven to be caused by the Issuer's gross negligence or willful
misconduct.
-31-
<PAGE>
ARTICLE 4
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS
4.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND INITIAL FUNDING. The
effectiveness of this Agreement, the obligation of the Lenders to make the
initial Loans hereunder and the obligation of the Issuer to issue Letters of
Credit hereunder are subject to the fulfillment of the following conditions on
or before October 15, 1997 (unless such date is extended in writing by the
Agents in their sole discretion), in each case to the satisfaction of the Agents
and, to the extent specified below, to the satisfaction of each Lender (each
Lender upon making its initial Loan hereunder being deemed to have waived or
found satisfactory all such conditions so specified).
(a) Secretary's Certificates. The Borrowers shall have delivered, or
caused to be delivered, a certificate of the Secretary or an Assistant Secretary
(or general partner, as applicable) of each of the Borrowers, with specimen
signatures of the authorized signatories to the Loan Documents, and to which
shall be attached copies of the following, as applicable: articles or
certificates of incorporation, bylaws, partnership agreements, resolutions and
shareholder agreements provided, however, if any such articles, by-laws or
partnership agreements of Subsidiaries were delivered to the Administrative
Agent since October 1, 1996 and if there have been no changes to such documents,
additional copies need not be delivered pursuant to this paragraph (a) so long
as the certifying officer signs a statement to such effect in the applicable
Secretary's Certificate.
(b) Good Standing Certificates. The Borrowers shall have delivered,
or caused to be delivered, a good standing or subsistence certificate, as the
case may be, issued as of a recent date (i) with respect to each Borrower (and
corporate general partner of Borrowers that are partnerships), issued by the
Secretary of State or other appropriate official of the jurisdiction of
formation of such Person and (ii) with respect to Genesis, issued by the
Secretary of State or other appropriate official of its jurisdiction of
incorporation and also each jurisdiction where it is required to qualify to do
business and, if any such certificate is dated more than twenty-one (21) days
prior to the Closing Date, a confirmation (which may be provided by a reputable
corporate service) of the information in such certificate.
(c) The Notes. The Borrowers shall have delivered to the
Administrative Agent for distribution to each of the RC Lenders, the Tranche A
Lenders and the Swing Loan Lender the applicable Notes referred to in Section
1.11 above.
(d) Lien Searches. The Borrowers shall have delivered to the
Administrative Agent Uniform Commercial Code, tax, and judgment lien searches of
the Borrowers, in such form, as of such date and with such content as are
acceptable to the Administrative Agent.
-32-
<PAGE>
(e) Pledge Agreement. The Borrowers shall have executed and
delivered a Third Amended and Restated Pledge Agreement whereby the Collateral
Agent shall receive a first priority security interest for the benefit of the
Secured Parties in all of the Borrowers' equity interests in each of the direct
and indirect Restricted Subsidiaries of Genesis and in Genesis ElderCare Corp.
and all inter-Borrower notes (as such agreement is amended, modified, restated
or supplemented from time to time in accordance with the terms hereof and
thereof, the "Pledge Agreement") in substantially the form annexed to this
Agreement as Exhibit E (together with the stock certificates, assignment powers,
Uniform Commercial Code financing statements (in proper form for filing in the
appropriate offices to perfect the security interest of the Collateral Agent,
for the benefit of the Secured Parties, in the Collateral granted under the
Pledge Agreement) and other items required thereunder to the extent that such
items were not previously delivered to the Collateral Agent).
(f) Collateral Agency Agreement. The Borrowers shall have caused to
be delivered a Third Amended and Restated Collateral Agency Agreement, duly
executed by the Borrowers, the Administrative Agent and the agent for the
Synthetic Lease Facility (as so executed and as amended, modified, restated or
supplemented from time to time in accordance with the terms hereof and thereof,
the "Collateral Agency Agreement") in substantially the form annexed to this
Agreement as Exhibit F.
(g) Multicare Management Agreement. Prior to or substantially
contemporaneously with the initial funding hereunder, Genesis (and/or one or
more of its Restricted Subsidiaries) shall have entered into a Management
Agreement with Genesis ElderCare Corp. or Multicare (the "Multicare Management
Agreement") pursuant to which Genesis (and/or such Restricted Subsidiaries) will
provide management services to Multicare (or Genesis ElderCare Corp.) and its
Subsidiaries. The Multicare Management Agreement shall be on terms and
conditions reasonably satisfactory to the Agents.
(h) Other Transaction Documents.
(i) The Borrowers shall have delivered to each of the Agents
and any Lender that so requests, each of the other Transaction Documents
certified by a Responsible Officer of Genesis as being a true and correct copy
of such Transaction Document as in full force and effect on the Closing Date.
(ii) The Tender Offer shall have closed with the purchase of
at least a majority of the common stock of Multicare having been purchased for
$28 per share and the other transactions contemplated by the Transaction
Documents to have occurred on or before the Closing Date shall have taken place
in strict compliance with the terms of said Transaction Documents, subject only
to such modifications as are acceptable to the Agents. There shall be no legal
impediment to the merger of Genesis ElderCare Acquisition Corp. into Multicare
under Section 253 or 251, as the case may be, of the Delaware General
Corporation Law on the terms set forth in the Merger Agreement and the
restrictions in Section 203 of the Delaware General Corporation Law and any
other impediment under Delaware law shall be inapplicable to the acquisition of
the shares of Multicare by Genesis ElderCare Acquisition Corp. and the proposed
merger pursuant to the terms of the Merger Agreement.
-33-
<PAGE>
(i) Synthetic Lease Facility. The Borrowers shall have delivered
documents relating to the Synthetic Lease Facility (other than those previously
delivered under the Existing Credit Agreement), which documents shall be in form
and substance satisfactory to the Agents.
(j) Opinions of Counsel.
(i) The Borrowers shall have delivered favorable opinions of
counsel, dated as of the Closing Date, from Blank Rome Comisky & McCauley,
counsel to the Borrowers, as to the absence of conflicts with other financing
agreements and other material agreements of the Borrowers, the status of the
Loan Obligations as "Senior Indebtedness" and "Designated Senior Indebtedness"
within the meaning of the 1995 Subordinated Note Indenture and the 1996
Subordinated Note Indenture, compliance with Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System, the perfection of security
interests under the Security Documents, issuance of capital stock of the
Borrowers, the due organization of the Borrowers, the due authorization of the
transactions referred to herein, the enforceability of the Loan Documents and
such other matters as the Agents may reasonably request, in form and substance
satisfactory to the Agents.
(ii) Drinker Biddle & Reath LLP, special counsel to the
Administrative Agent, shall deliver to the Lender Parties an opinion as to the
status of the Loan Obligations as "Senior Indebtedness" within the meaning of
the 1995 Subordinated Note Indenture and the 1996 Subordinated Note Indenture
and as to such other matters as the Administrative Agent shall reasonably
request.
(iii) Simpson, Thatcher & Bartlett, counsel to Cypress (other
than Cypress Offshore Partners L.P.) Cleary, Gottlieb, Steen & Hamilton, counsel
to TPG and Latham & Watkins, counsel to Nazem, shall have delivered to the
Lender Parties a favorable opinion as to the due authorization and execution of
the Investors' Subordination Agreement.
(k) Solvency Opinion. The Borrowers shall have delivered an opinion
of Valuation Research which shall be in form and substance satisfactory to the
Agents, attesting to the solvency of the Borrowers, taken as a whole, after
giving effect to the transactions referred to herein (including the making of
the initial Loans and the purchase of the equity investment in Genesis ElderCare
Corp.).
(l) Senior Indebtedness Certification. Genesis shall have delivered
to the Lenders a certificate of Price Waterhouse LLP or other independent
certified public accountants satisfactory to the Agents in their sole discretion
calculating the Fixed Charge Coverage Ratio (as defined in the relevant
indenture), which calculation shall demonstrate compliance with the requirements
of Section 5.9 of the 1995 Subordinated Note Indenture and the 1996 Subordinated
Note Indenture, both before and after giving effect to the consummation of the
transactions contemplated by (i) this Agreement, and (ii) the Transaction
Documents (including the consummation of the Tender Offer), which certificate
shall be in form and content satisfactory to the Agents.
(m) Consents and Approvals. All material corporate, governmental,
judicial and third party consents and approvals necessary in connection with
this Agreement
-34-
<PAGE>
and the other Loan Documents, the Tender Offer and the related transactions
(including consents and approvals required under or referred to in the Merger
Agreement) shall have been obtained and, as applicable, become final orders
(without imposition of any conditions that are not acceptable to the Lenders)
and shall remain in full force and effect and, to the extent requested by any
Agent, copies thereof shall have been delivered to the Administrative Agent.
Without limiting the generality of the foregoing, all appropriate filings shall
have been made under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the applicable waiting periods relating thereto shall have
expired or been terminated without requests for additional information from the
reviewing agencies.
(n) Financial Statements; Projections.
(i) Financial Statements. The Borrowers shall have delivered,
or caused to be delivered, to the Administrative Agent, the Issuer
and the Lenders at least three (3) Business Days prior to the
Closing Date each of the following:
(x) a consolidated income statement of Genesis and its
consolidated Subsidiaries (excluding the Multicare Group) for
the twelve calendar month period ending on June 30, 1997,
adjusted on a pro forma basis to the beginning of the period
(as required for the financial covenants) to reflect the
consummation of all of the transactions set forth in the
Transaction Documents and all Acquisitions and dispositions
which shall have occurred within said twelve month period as
if such transactions, Acquisitions and dispositions had
occurred on the first day of such period, which statement
shall be supplemented by information separating out and
explaining all pro forma adjustments made thereto; and
(y) a consolidated balance sheet of Genesis and its
consolidated Subsidiaries (excluding the Multicare Group) as
of June 30, 1997, reflecting, on a pro forma basis, the
consummation of all transactions in connection with the
purchase of the equity of Genesis ElderCare Corp., the
consummation of the transactions set forth in the Transaction
Documents including all borrowings in connection therewith and
all borrowings otherwise contemplated hereunder, the
application of all proceeds of such borrowings and the amount
of all outstanding Indebtedness after giving effect to the
foregoing, which balance sheet shall be supplemented by
information separating out and explaining all pro forma
adjustments made thereto,
each of which statements shall be (1) in form acceptable to the Agents, (2)
accompanied by explanatory notes acceptable to the Agents and (3) certified by
the chief financial officer of Genesis to fairly present on a pro forma basis
the financial condition and results of operations as at the date, or for the
period, indicated.
(ii) Projections. Genesis (on behalf of the Borrowers) shall
have delivered to each Lender projections respecting the
consolidated financial condition and results of operations of
Genesis and its consolidated Subsidiaries
-35-
<PAGE>
(other than the Multicare Group) for the period commencing on
January 1, 1997 and ending on December 31, 2002, which projections
shall be in reasonable detail, shall reflect the consummation of the
transactions contemplated hereby and the Transaction Documents
including the making of the initial Loans and shall be accompanied
by a written statement of the assumptions and estimates underlying
such projections.
(o) Officer's Compliance Certificate. Genesis (on behalf of the
Borrowers) shall have delivered an Officer's Compliance Certificate, dated as of
the Closing Date, as to the truth of the representations and warranties herein
and in the other Loan Documents and the absence of any Default (in each case,
both before and after giving effect to the initial Loans). In addition, the
Officer's Compliance Certificate shall demonstrate that EBITDA of the Borrowers
for the twelve calendar month ending June 30, 1997 (after making all adjustments
as referred to above including those adjustments which relate to the inclusion
of additional general expenses and corporate overhead costs of the Multicare
Group as further adjusted to reflect savings of approximately $14,000,000.00
resulting from synergies relating to the proposed merger) is no less than
$180,000,000.00 and the Total Funded Indebtedness of the Borrowers, is not more
than $1,130,000,000.00. The Officer's Compliance Certificate delivered pursuant
to this paragraph (o) shall include a reconciliation of the financial
information set forth thereon respecting Genesis and its Restricted Subsidiaries
and that set forth on the financial statements for Genesis and its consolidated
Subsidiaries (excluding the Multicare Group).
(p) Repayment of Predecessor Indebtedness. The Borrowers shall have
delivered to the Administrative Agent evidence that, prior to or substantially
simultaneously with the making of the initial Loans, (a) all Indebtedness of the
Borrowers (including Indebtedness arising under the Existing Credit Agreement
other than contingent obligations under outstanding letters of credit which
shall be obligations of the Borrowers hereunder) other than that expressly
permitted under Section 8.1 (Indebtedness) below will be repaid, (b) all
commitments to lend in respect of such Indebtedness shall have been effectively
terminated and (c) all collateral held in connection therewith (other than
collateral securing Indebtedness under the Existing Credit Agreement to the
extent that such collateral shall continue to secure the Loan Obligations) shall
have been released (or undertakings to release such collateral upon receipt of
specified funds shall have been duly made) and UCC-3 termination statements and
all other documents necessary in the determination of the Administrative Agent
to effectively terminate of record all security interests related to such
Indebtedness shall have been duly executed by the proper parties and shall have
been delivered to the Administrative Agent (or undertakings to do so upon
receipt of specified funds shall have been furnished to the Administrative
Agent).
(q) Insurance. The Borrowers shall have delivered to the
Administrative Agent evidence of the insurance required by Section 6.8 below.
(r) Fees and Expenses. The Borrowers shall have paid the fees
required to be paid to the Agents and the Lenders on or before the Closing Date
and the fees and disbursements of counsel for the Agents in connection with the
negotiation, preparation, execution and delivery of the Loan Documents and the
making of the initial Loans.
-36-
<PAGE>
(s) Closing of Multicare Credit Facilities. All conditions to the
initial funding under (i) the Credit Agreement, dated as of the date hereof,
among Genesis ElderCare Acquisition Corp., Genesis ElderCare Corp., Mellon as
administrative agent, and certain other agents and lenders referred to therein
(the "Genesis ElderCare Credit Agreement") and (ii) the (Short-Term Pre-Merger)
Credit Agreement, dated as of the date hereof, among Multicare, the Subsidiaries
of Multicare, Mellon as administrative agent, and certain other agents and
Lenders referred to therein (the "Short-Term Multicare Credit Agreement") shall
have been satisfied. The closings under those credit facilities shall occur
substantially simultaneously with the closing under this Agreement unless (x)
with respect to the Short-Term Multicare Credit Agreement, it is not utilized
because the merger of Genesis ElderCare Acquisition Corp. into Multicare shall
take place on or about the Closing Date and the Multicare Credit Agreement is
funded in place of such short-term facility or (y) with respect to the Genesis
ElderCare Credit Agreement, it is not funded because Genesis ElderCare
Acquisition Corp. and Genesis ElderCare Corp. shall have received sufficient
cash from the issuance of equity securities and the incurrence of subordinated
debt to purchase the shares of Multicare tendered pursuant to the Tender Offer
without borrowing any amounts under the Genesis ElderCare Credit Agreement.
Without limiting the generality of the foregoing, the Supplemental Indenture
referred to in the Indenture, dated August 11, 1997, among Genesis ElderCare
Acquisition Corp. as Issuer, PNC Bank, National Association as Trustee and
Banque Internationale, a Luxembourg S.A. shall have been executed and delivered
by Multicare if and as required under such Indenture.
(t) Investment in Genesis ElderCare Corp. Substantially
contemporaneously with the initial funding hereunder, Genesis shall acquire
approximately 44% of the common stock of Genesis ElderCare Corp. for a purchase
price of at least $325,000,000.00 and prior to or substantially
contemporaneously with the initial funding hereunder Cypress, TPG and Nazem,
collectively, shall have paid, or shall pay, at least $420,000,000 for the
remainder of the common stock of Genesis ElderCare Corp.
(u) Tax Sharing Agreement. The Borrowers shall have delivered a copy
of the Tax Sharing Agreement duly executed by Genesis and each of its
Subsidiaries (the "Tax Sharing Agreement"), limiting, as between the parties
thereto, the tax liabilities of the Borrowers in connection with any
consolidated tax filings (which may include as part of the consolidated group
for tax purposes both the Borrowers and the Excluded Subsidiaries (other than
the Multicare Group)) to the amount of tax liabilities that the Borrowers would
have incurred had they filed separately. The Tax Sharing Agreement shall be duly
certified as such by a Responsible Officer of Genesis.
(v) Investors' Subordination Agreement. The Borrowers shall have
delivered an Investors' Subordination Agreement, duly executed by Cypress, TPG
and Nazem (as such agreement is amended, modified, restated or supplemented from
time to time in accordance with the terms hereof and thereof, the "Investors'
Subordination Agreement") in substantially the form annexed to this Agreement as
Exhibit J.
-37-
<PAGE>
4.2 CONDITIONS TO EACH LOAN AND ISSUANCE OF EACH LETTER OF CREDIT.
(a) Conditions. The obligation of the Lenders to make any Loans,
including the initial Loans, and the obligation of the Issuer to issue any
Letters of Credit are subject to fulfillment of each of the following
conditions, in each case, unless otherwise specified, to the satisfaction of the
Administrative Agent:
(i) Absence of Default. There shall not, either prior to or
after giving effect to each such Loan or Letter of Credit, as the case may be,
exist an Event of Default or a Default.
(ii) Borrowing Notice/L.C. Request. In connection with any
request for Loans (other than Swing Loans), the Administrative Agent shall have
received a borrowing notice as required by Section 1.3 above; in connection with
any request for the issuance of a Letter of Credit, the Issuer and the
Administrative Agent shall have received a Letter of Credit request as required
by Section 3.1 above; and in connection with any request for any Swing Loans,
the Swing Loan Lender and the Administrative Agent shall have received a Swing
Loan request as required by Section 1.3(e).
(iii) Truth of Representations. The representations and
warranties of the Borrowers and each other Loan Party made in this Agreement and
each other Loan Document and those of the subordinated creditors in the
Investors' Subordination Agreement shall be true and correct in all material
respects as of the date each such Loan is made or Letter of Credit issued (both
immediately prior to and after giving effect to said Loan or Letter of Credit)
as if made on and as of such date.
(iv) No Violations of Law. Neither the making of, nor use of
proceeds of, such Loans nor the issuance of, or use of the proceeds of, such
Letters of Credit shall conflict with, or cause any Borrower to violate any Law.
(v) Compliance with Indenture Covenants. Neither the making of
such Loans nor the issuance of such Letters of Credit shall violate the terms of
the 1995 Subordinated Note Indenture or the 1996 Subordinated Note Indenture and
Genesis shall deliver a certificate of its chief financial officer or controller
representing that, both before and after giving effect to such additional
Indebtedness, Genesis is in compliance with the financial covenants set forth in
Section 5.9 of each such indenture and that such Loans or obligations under the
Letters of Credit constitute "Senior Indebtedness" and "Designated Senior
Indebtedness" (as defined in each such indenture).
(vi) Additional Information. The Lenders shall have received
such additional information and documentation as the Lenders may reasonably
request.
(b) Deemed Representation and Warranty. The request for, and
acceptance of, any Loan (including any Swing Loan) or Letter of Credit by any
Borrowers shall be deemed a representation and warranty by the Borrowers that
the conditions specified in clauses (i), (iii) and (iv) of the preceding
paragraph (a) have been satisfied.
-38-
<PAGE>
4.3 RELATIONSHIP WITH EXISTING CREDIT AGREEMENT. Upon the effectiveness of
this Agreement pursuant to Section 4.1 above, the terms and conditions of, and
the agreements, representations and warranties set forth in, the Existing Credit
Agreement are hereby replaced and superseded in their entirety by the terms,
conditions, agreements, representations and warranties set forth in this
Agreement and the other Loan Documents and the Existing Credit Agreement shall
be of no further force and effect provided, however, that nothing contained
herein or in any of the other Loan Documents shall (a) impair, limit or affect
the continuation of the liability of each Borrower for indemnity obligations
heretofore incurred under, or in connection with, the Existing Credit Agreement
which by their express terms survive the effective date of this Agreement or (b)
impair, limit or affect the continuation of the Liens heretofore granted,
pledged and assigned to the Administrative Agent or the Collateral Agent, for
the benefit of the Secured Parties by the Borrowers to the extent that such
Liens secure the obligations under this Agreement and the other Loan Documents.
Until this Agreement shall become effective pursuant to Section 4.1 above, the
Existing Credit Agreement shall remain in full force and effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS. The Borrowers hereby jointly and severally represent
and warrant to each Lender Party as follows:
(a) Status of Borrowers. Each Borrower is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each Borrower has the power and authority to own its property and
to transact the business in which it is engaged or presently proposes to engage.
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 any failures to maintain such
qualifications which, individually or in the aggregate, could not have a
Material Adverse Effect. Schedule 5.1(a) hereto sets forth for each Borrower, as
of the Closing Date, (i) whether it is a corporation, limited partnership or
general partnership, (ii) the jurisdiction of its organization, and (iii) the
jurisdictions in which it is qualified to do business as a foreign corporation
or a foreign partnership, as the case may be, except where the failure to
maintain such qualification could not, individually or in the aggregate, have a
Material Adverse Effect. Each direct and indirect Subsidiary of Genesis, other
than the Excluded Subsidiaries, is a Borrower hereunder and is designated as
such on the signature pages hereto (or, after the Closing Date, on signature
pages of a Joinder Supplement hereto). The states in which any Borrowers operate
Health Care Businesses are Pennsylvania, New Jersey, Maryland, New Hampshire,
Florida, Connecticut, Delaware, Virginia and Massachusetts.
(b) Capitalization of Borrowers. Schedule 5.1(b) hereto sets forth
(i) for each corporate Borrower (other than Genesis), (A) the authorized
capitalization, (B) the names of the owners (indicating whether they are
Borrowers) of the outstanding capital stock, (C) the number and class of shares
issued to each such owner and (D) the percentage of outstanding shares of each
class of capital stock owned by each such owner, and (ii) for each
-39-
<PAGE>
Borrower which is a partnership, (A) the names of the owners (indicating whether
they are Borrowers) of the outstanding equity thereof and (B) the percentage
ownership interest of, and type of equity issued to, each such owner. The
outstanding equity of each Borrower has been duly authorized and validly issued.
All capital stock is fully paid and nonassessable. Each Borrower owns
beneficially and of record and has good title to all equity indicated as being
owned by it on said Schedule 5.1(b), free and clear of any Lien, except for
Liens in favor of the Collateral Agent, for the benefit of the Secured Parties,
as contemplated by the Loan Documents and other Permitted Liens. There are no
options, warrants, calls, or similar rights relating to equity of the Borrowers.
No Excluded Subsidiary has any equity interest in any Borrower.
(c) Authorization, Execution and Binding Effect of Loan Documents.
Each Borrower has the 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 (as the case may be) proceedings on its part. This Agreement and
each other Loan Document has been duly and validly executed and delivered by
each Loan Party listed on the signature pages hereto or thereto, as the case may
be. This Agreement and each other Loan Document constitutes the legal, valid and
binding obligation of each Loan Party purporting to be a party hereto or
thereto, as the case may be, enforceable against such Person in accordance with
its terms, except as the enforceability hereof or 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.
(d) Security. The Pledge Agreement creates in favor of the
Collateral Agent for the benefit of the Secured Parties a legal, valid and
enforceable Lien on all right, title and interest of each Borrower in the
Collateral described therein, and the Collateral Agent has (or, upon the filing
of the UCC-1 financing statements delivered by the Borrowers on the Closing
Date, will have), for the benefit of the Secured Parties, a fully perfected and
continuing first priority Lien on all of the right, title and interest of each
Borrower in the Collateral described in the Pledge Agreement, subject to no
Liens other than Permitted Liens.
(e) Governmental Approvals and Filings; Absence of Conflicts. No
approval, order, consent, authorization, exemption or other action by, or
filing, recording or registration with, or notice to, any Governmental Authority
or other Person is necessary in connection with, the execution and delivery of
any Loan Document by any Loan Party, or in connection with the performance of
the terms hereof or thereof by such Person, other than the filing of Uniform
Commercial Code financing and continuation statements as referred to in the
Pledge Agreement. No Loan Party is subject to any Law which purports to restrict
or regulate its ability to borrow money, obtain credit or provide a guarantee or
other form of credit support as a consequence of the nature of the business
conducted by such Loan Party. Neither the execution and delivery of this
Agreement or any other Loan Document by any Loan Party, nor the performance of
or compliance with the terms and conditions hereof or thereof (including the
execution, delivery and performance of the Transaction Documents) by any Loan
Party does or will
(i) violate or conflict with any Law or any judgment, decree,
or order of a court or Governmental Authority or any settlement
agreement,
-40-
<PAGE>
(ii) violate, conflict with or result in a breach of any term
or condition of, or constitute a default under, or cause an
acceleration of, or result in the creation or imposition of any Lien
upon any of property of any Loan Party (except for any Lien in favor
of the Collateral Agent pursuant to the Pledge Agreement) under or
in connection with,
(x) its articles or certificate of incorporation,
bylaws, partnership agreement or operating agreement (or other
constituent documents),
(y) any agreement or instrument creating, evidencing or
securing any Indebtedness in the aggregate amount of
$250,000.00 or more to which any Loan Party is a party or by
which it or any of its properties (now owned or hereafter
acquired) may be subject or bound, or
(z) any other agreement or instrument or arrangement to
which it is a party or by which it or any of its properties
(now owned or hereafter acquired) may be subject or bound,
except, in the case of the foregoing clause (z), for matters that,
individually or in the aggregate, could not have a Material Adverse
Effect, or
(iii) result in a Limitation on any Licenses applicable to the
operations or properties of any Borrower, or adversely affect the
ability of any Borrower to participate in any Third Party Payor
Arrangement.
Except to the extent that the failure to obtain the same could not have a
Material Adverse Effect, no approval, order, consent of, authorization,
exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority or other Person is necessary in connection
with the Tender Offer and merger of Genesis ElderCare Acquisition Corp. into
Multicare except such consents and other actions as are listed on Schedule
5.1(e) hereto, all of which have been obtained and are in full force and effect.
(f) Financial Statements. Genesis has heretofore furnished to the
Administrative Agent, the Issuer and each Lender consolidated balance sheets of
Genesis and its consolidated Subsidiaries (excluding the Multicare Group) as of
September 30, 1996 and September 30, 1995 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 the specified Persons
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.
Genesis has heretofore furnished to the Administrative Agent, the Issuer and
each Lender interim consolidated balance sheets of (i) Genesis and its
consolidated Subsidiaries (excluding the Multicare Group) and (ii) Genesis and
its consolidated Subsidiaries (excluding the Multicare Group), in each case as
of the first two fiscal quarters of the fiscal year beginning October 1, 1996,
together with the related consolidated statements of income, cash flows and
changes in stockholders' equity for the
-41-
<PAGE>
applicable fiscal periods ending on each such date. Such financial statements
(including the notes thereto), as well as those financial statements delivered
pursuant to paragraph (n) Section 4.1 above, present fairly the financial
condition of the specified Persons as of the date specified and the results of
their operations and their cash flows for the fiscal periods specified, all in
conformity with GAAP, subject to normal and recurring year-end audit
adjustments, except that such financial statements do not contain all of the
footnote disclosures required by GAAP. There are no material liabilities of the
Borrowers except as disclosed on such financial statements. Schedule 8.1 hereto
sets forth, as of the Closing Date, all Indebtedness (and commitments for
Indebtedness) of the Borrowers.
(g) Projections. The projections delivered pursuant to paragraph (n)
of Section 4.1 above and the assumptions and estimates referred to therein are,
as of the Closing Date, reasonable, are made in good faith, are consistent with
the Loan Documents and represent the Borrowers' best judgment as to such
matters. Nothing has come to the attention of any Borrower which would lead such
Borrower to believe that such projections will not be attained or exceeded
provided, however, that nothing contained in this paragraph (g) shall constitute
a representation or warranty that such future financial performance or results
of operations will in fact be achieved.
(h) Absence of Material Adverse Change. Since September 30, 1996,
there has been no material adverse change in the business, operations, condition
(financial or otherwise), properties or prospects of the Borrowers taken as a
whole or the industry served by the Borrowers.
(i) Title to Property. Each Borrower has good and marketable title
to all property owned or purported to be owned by it, including but not limited
to all property reflected in the most recent balance sheets delivered to the
Lenders pursuant to this Agreement (except such property as was sold or
otherwise disposed of in accordance with Section 8.5 (Dispositions) below)
subject to no Liens except Permitted Liens. Schedule 8.2 hereto sets forth, as
of the Closing Date, all Liens on property of the Borrowers.
(j) Solvency. The present fair saleable value of the assets of the
Borrowers, taken as a whole, after giving effect to all the transactions
contemplated by the Loan Documents and the funding of the Loans and the issuance
of the Letters of Credit hereunder exceeds the amount that will be required to
be paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of Borrowers, taken as a whole, as they mature. Genesis
does not intend to, nor does Genesis believe that it will, incur debts beyond
its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be received by Genesis, and of amounts to be payable on or in
respect of debt of Genesis). The property of each Borrower does not constitute
unreasonably small capital for such Borrower to carry out its business as now
conducted and as proposed to be conducted including the capital needs of such
Borrower. The cash available to each Borrower after taking into account all
other anticipated uses of the cash of such Borrower, is anticipated to be
sufficient to pay all such amounts on or in respect of debt of such Borrower
when such amounts are required to be paid.
(k) Accurate and Complete Disclosure. The information heretofore,
contemporaneously or hereafter provided in writing by or on behalf of any
Borrower to any Lender Party pursuant to or in connection with this Agreement or
any other Loan Document
-42-
<PAGE>
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 Lender Party) and does not or will not (as the case may be) omit to
state any material fact necessary to make such information not misleading at
such time in light of the circumstances in which it was provided.
(l) Legal and Administrative Proceedings. There is no action, suit,
litigation or proceeding pending, or to the knowledge of the Borrowers,
threatened nor, to the knowledge of the Borrowers, is there any investigation
pending or threatened, in any court or before any arbitrator or Governmental
Authority or any payor appeals bodies respecting or relating to any Borrowers
(or any officer or director thereof) or any property of any Borrowers that,
individually or in the aggregate, (i) could have a material adverse effect on
the business, condition (financial or otherwise), operations, properties or
prospects of Genesis or the Borrowers taken as a whole or (ii) could materially
adversely affect the Lenders' rights and remedies hereunder or under the other
Loan Documents, this Agreement or other Loan Documents or the ability of the
Borrowers to perform their obligations hereunder or thereunder.
(m) Absence of Violations and Conflicts. No Borrower is in violation
of, in default under, or is subject to any contingent liability on account of
any violation of or conflict with: (i) any Law; (ii) its articles or certificate
of incorporation, bylaws, partnership agreement, operating agreement (or other
constituent documents); or (iii) any financing agreement or other instrument or
arrangement to which it is a 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 (i) or (iii) above for matters that, individually or in the aggregate,
could not have a Material Adverse Effect.
(n) Operation of Health Care Facilities.
(i) Except where the failure to possess the same, either
individually or in the aggregate, could not have a Material Adverse Effect, each
Borrower possesses all Licenses and Reimbursement Approvals necessary to operate
its Health Care Businesses substantially as now operated and as presently
proposed to be operated. No Borrower is in material violation of the terms of
its Licenses and Reimbursement Approvals.
(ii) Except for Limitations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
there is no threatened or pending Limitation of any material License or
Reimbursement Approval relating to the operation of any of Borrowers' Health
Care Businesses.
(iii) Except where the failure to file the same, either
individually or in the aggregate, could not have a Material Adverse Effect, each
of the Borrowers has caused there to be accurately prepared and filed (or
obtained extensions for) all applicable cost reports with respect to any and all
Third Party Payor Arrangements that are material to conduct its Health Care
Businesses substantially as now conducted.
(iv) No Borrower is subject to any claim (including any claim
for overpayment), litigation, proceeding or other action or, to any Borrower's
knowledge, investigation relating to a claim or action by any Governmental
Authority except matters that
-43-
<PAGE>
if adversely decided, individually or in the aggregate, could not have a
Material Adverse Effect.
(v) Each of the Borrowers participates in an internal
comprehensive compliance program respecting compliance with all Laws affecting
the types of businesses carried on by the Borrowers (including health care Laws)
and has made such program available for review by any Lender, upon request.
(vi) Each of the foregoing statements in this paragraph (n)
are also true as applied to Persons managed by any Borrower to the extent that
the failure of any such statement to be true (as applied to any Person managed
by a Borrower) could have a Material Adverse Effect.
(o) Management Agreements. Schedule 5.1(o) sets forth as of the
Closing Date, a complete and correct list of all Management Agreements relating
to (i) the operation and management by a Person that is not a Borrower of each
health care facility owned by a Borrower and (ii) the operation and management
by a Borrower of each health care facility owned by a Person that is not a
Borrower. As of the Closing Date, each such Management Agreement is in full
force and effect subject to no material default.
(p) Nursing Home and Assisted Living Facilities. Schedule 5.1(p)
sets forth, as of the Closing Date, a complete and correct list of all nursing
homes and assisted living facilities owned or operated by the Borrowers and the
locations thereof, indicating which such facilities are operated but not owned.
(q) Leased Properties. Schedule 5.1(q) identifies all real
properties leased by any Borrower as of the Closing Date. As of the Closing
Date, all leases relating to such leased properties are in full force and effect
subject to no material default. Such leases comply with the provisions of
Section 8.7 below.
(r) Intellectual Property. 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 including "Genesis ElderCare"),
copyrights, technology (including computer programs and software), processes,
data bases and other rights (collectively "intellectual property"), free from
burdensome restrictions, necessary to own and operate its properties and to
carry on its business as presently conducted and presently planned to be
conducted without conflict with the rights of others. No Borrower is in material
violation of the rights of others with respect to any intellectual property.
(s) Employee Benefits/ERISA.
(i) The Borrowers and the members of their Controlled Groups
maintain only those Defined Contribution Plans and other Plans listed on
Schedule 5.1(s) attached hereto and contribute to only those Multiemployer Plans
listed on Schedule 5.1(s) attached hereto. No Borrower nor any member of its
Controlled Group has ever maintained or made contributions to, or has ever been
required to make contributions to any Defined Benefit Pension Plan.
-44-
<PAGE>
(ii) Each Defined Contribution Plan, as most recently amended,
including amendments to any trust agreement, group annuity, or insurance
contracts, or other governing instrument, is the subject of a favorable
determination letter by the Internal Revenue Service with respect to its
qualification under ss.401(a) of the Code.
(iii) All Plans comply, both in form and in operation, with
the requirements of the Code and ERISA.
(iv) There is not now, and has not been, any material
violation of the Code or ERISA with respect to the filing of applicable reports,
documents, and notices regarding any Plan with the Secretary of Labor, the
Secretary of the Treasury, the PBGC or any other governmental entity or the
furnishing of such documents to the participants or beneficiaries of any Plan.
Borrowers have furnished to the Lenders copies of the most recent annual report,
audited financial statements, and other reports filed with the Secretary of
Labor, the Secretary of the Treasury, the PBGC or any other governmental entity
with respect to each Plan.
(v) All Pension Plans, as of the date hereof, meet the minimum
funding standards of ss.412 of the Code and ss.302 of ERISA without regard to
any funding waiver. Borrowers and the members of their Controlled Group have, as
of the date hereof, made all contributions or payments to or under Pension Plans
required by the terms of any such Plan or any contract or agreement.
(vi) No Prohibited Transaction has occurred with respect to
any Plan.
(vii) No Borrower or any member of its Controlled Group has
any unfunded liabilities of unfunded and uninsured "employee welfare benefit
plans" (as defined in ss.3(1) of ERISA).
(viii) There is not now, and has not been, any COBRA Violation
with respect to any Plan to which such continuation coverage requirements apply
which has a material adverse effect, directly or indirectly, on the financial
condition of any of the Borrowers.
(ix) Borrowers and the members of their Controlled Group have
established only those irrevocable trusts the assets of which remain subject to
the general creditors of Borrowers and/or members of their Controlled Group
(sometimes referred to as "rabbi trusts") listed on Schedule 5.1(s) attached
hereto and have furnished to the Lenders copies of each such "rabbi trust."
(x) If any Borrower or any member of its Controlled Group were
obligated to pay the entire potential Withdrawal Liabilities for which any of
them would be liable if each of them were to withdraw from the Multiemployer
Plans to which any of them makes contributions, such obligations would not be in
excess of $500,000.00.
(xi) Borrowers and the members of their Controlled Group have
complied with the requirements of ss.515 of ERISA with respect to Multiemployer
Plans.
-45-
<PAGE>
(t) Environmental Matters.
(i) Each Borrower and each of its respective Environmental
Affiliates is and has been, in full compliance with all applicable
Environmental Laws, except for matters which, individually or in the
aggregate, could not have a Material Adverse Effect. There are no
circumstances that may prevent or interfere with such full
compliance now or in the future.
(ii) Each Borrower and each of its 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 in the future, except
for matters which, individually or in the aggregate, could not have
a Material Adverse Effect.
(iii) 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 Environmental Affiliates of Borrowers) that could form the
basis of any Environmental Claim against any Borrower or any such
Environmental Affiliates, except for matters which, if adversely
decided, individually or in the aggregate, could not have a Material
Adverse Effect.
(iv) No facility or property now or previously owned, operated
or leased by any Borrower or any of their respective Environmental
Affiliates is an Environmental Cleanup Site. No Borrower and none of
their respective Environmental Affiliates has directly transported
or disposed of or arranged for the transportation or disposal 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.
(u) Margin Regulations. No proceeds of any Loan hereunder will be
used for the purpose of purchasing 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 purchasing or carrying any "margin stock". Neither the making of any
Loan or issuance of any Letter of Credit nor any use of proceeds of the
foregoing 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.
(v) Regulation O. No director, executive officer or principal
shareholder of any Borrower is a "director," "executive officer" or "principal
shareholder" of any
-46-
<PAGE>
Lender, as such terms are used in Regulation O of the Board of Governors of the
Federal Reserve System, as amended.
(w) 1995 Subordinated Notes and 1996 Subordinated Notes. Genesis
hereby confirms that the Loan Obligations are "Senior Indebtedness" and hereby
designates the Loan Obligations as "Designated Senior Indebtedness" under the
1995 Subordinated Note Indenture and the 1996 Subordinated Note Indenture. All
of the Loan Obligations constitute and will constitute "Senior Indebtedness" and
"Designated Senior Indebtedness" within the meaning ascribed to such terms in
such indentures. The subordination provisions therein are enforceable against
Genesis and the holders, from time to time, of the 1995 Subordinated Notes and
the 1996 Subordinated Notes. Genesis is not in default under either such
indenture.
(x) Certain Documents and Transactions. Each of the Transaction
Documents (including the Multicare Management Agreement), the Tax Sharing
Agreement, and the agreements relating to the Synthetic Lease Facility are in
full force and effect and no amendments, modifications or supplements have been
made to any such documents as the same were delivered to the Agents pursuant to
Article 4 above except (i) such amendments, modifications or supplements to
Transaction Documents as could not reasonably be expected to have an adverse
effect on any Borrower (including the condition (financial or otherwise),
properties or prospects of such Borrower), the Loan Documents or any Lender
Parties, (ii) supplements or amendments to the Tax Sharing Agreement necessary
to join any other Subsidiaries of Genesis which may hereafter be consolidated
with Genesis for tax purposes and (iii) amendments, modifications or supplements
to the Synthetic Lease Facility permitted by the Collateral Agency Agreement.
There exists no default under any such agreements except for immaterial
breaches.
(y) Labor Matters. There are no existing, or, to the best of
Borrowers' knowledge, threatened or contemplated, strikes, slowdowns, picketing
or work stoppages by any employees against any Borrower, any lockouts by any
Borrower of any of its employees or any labor trouble or other occurrence, event
or condition of a similar character which, individually or in the aggregate,
could have a Material Adverse Effect.
5.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE. The representations and
warranties of the Borrowers set forth in this Article 5 are unaffected by any
prior or subsequent investigation by, or knowledge of, any Agent, the Issuer, or
any Lender.
ARTICLE 6
AFFIRMATIVE COVENANTS
So long as any Loan Obligation shall remain unpaid or any Lender or
the Issuer shall have any Commitment under this Agreement, each of the Borrowers
shall comply with the following covenants.
-47-
<PAGE>
6.1 REPORTING REQUIREMENTS.
(a) Annual Financial Statements. 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 Administrative Agent, the Issuer
and each Lender, audited
(i) consolidated statements of income, cash flows and changes in
stockholders' equity of Genesis and its consolidated Subsidiaries (excluding the
Multicare Group) for such fiscal year and a consolidated balance sheet of such
Persons as of the close of such fiscal year. If at any time that the Cash Flow
of the Excluded Subsidiaries in the aggregate (other than the Multicare Group)
exceeds 2.5% of the Cash Flow of Genesis and its consolidated Subsidiaries
(excluding the Multicare Group), Genesis on behalf of the Borrowers shall
furnish statements of income, cash flows and changes in stockholders equity of
the Borrowers, on a consolidated basis, for such fiscal year and a balance sheet
of such Persons, on a consolidated basis, as of the close of such fiscal year,
in lieu of the requirements of preceding sentence;
(ii) statements of income, cash flows and changes in stockholders
equity of Genesis and its consolidated Subsidiaries (including the Multicare
Group), on a consolidated basis, for such fiscal year and a balance sheet of
such Persons, on a consolidated basis, as of the close of such fiscal year;
(iii) statements of income, cash flows and changes in stockholders
equity of the Multicare Group, on a consolidated basis, for such fiscal year and
a balance sheet of such Persons, on a consolidated basis, as of the close of
such fiscal year;
and with respect to all of the foregoing financial statements referred to above,
setting forth the appropriate footnotes, 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 unqualified opinion in form
and substance satisfactory to the Administrative Agent of KPMG Peat Marwick or
other independent certified public accountants of recognized national standing
selected by the Borrowers and satisfactory to the Administrative Agent.
(b) Quarterly Financial Statements. As soon as practicable, and in
any event within 45 days after the close of each fiscal quarter of each fiscal
year of the Borrowers, Genesis (on behalf of the Borrowers) shall furnish to the
Administrative Agent, the Issuer and each Lender, the following unaudited
financial statements:
(i) consolidated statements of income, cash flows and changes in
stockholders' equity of Genesis and its consolidated Subsidiaries (excluding the
Multicare Group) for such fiscal quarter and the applicable year to date period,
and a consolidated balance sheet of such Persons as of the close of such fiscal
quarter. If at any time that the Cash Flow of the Excluded Subsidiaries (other
than the Multicare Group) exceeds 2.5% of the Cash Flow of Genesis and its
consolidated Subsidiaries (excluding the Multicare Group), Genesis on behalf of
the Borrowers furnish statements of income, cash flows and changes in
stockholders of the Borrowers, on a consolidated basis, for such fiscal quarter
and applicable year-to-date period
-48-
<PAGE>
and a balance sheet of such Persons, on a consolidated basis, as of the close of
such fiscal quarter, in lieu of the requirements of preceding sentence; and
(ii) statements of income, cash flows and changes in stockholders
equity of the Multicare Group, on a consolidated basis, for such fiscal quarter
and a balance sheet of such Persons, on a consolidated basis, as of the close of
such fiscal quarter;
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 of the prior fiscal year end). Such
financial statements shall be certified by the chief financial officer or other
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) Quarterly Compliance Certificates. Genesis, on behalf of the
Borrowers, shall deliver to the Administrative Agent, the Issuer and each
Lender, an Officer's Compliance Certificate concurrently with the delivery of
the financial statements referred to in paragraph (a) of this Section 6.1 (with
respect to the fiscal year) and paragraph (b) of this Section 6.1 (with respect
to the first three fiscal quarters). Each such Officer's Compliance Certificate
shall include, among other things referred to thereon, the calculations
necessary to demonstrate compliance with the covenants set forth in Article 7
hereof, the calculations necessary to confirm compliance with the financial
covenants set forth in Section 5.9 of the 1995 Subordinated Note Indenture and
in Section 5.9 of the 1996 Subordinated Note Indenture. The Officer's Compliance
Certificate delivered pursuant to this paragraph (c) shall include a
reconciliation of the financial information set forth thereon respecting Genesis
and its Restricted Subsidiaries and that set forth on the financial statements
for Genesis and its consolidated Subsidiaries (excluding the Multicare Group).
(d) Other Information To Be Delivered Annually. Genesis (on behalf
of the Borrowers) shall deliver to the Administrative Agent, the Issuer and each
Lender, the following: (i) annually, within one hundred twenty (120) days of the
end of the fiscal year of the Borrowers, an accountants' management letter
respecting Genesis and its consolidated Subsidiaries (excluding the Multicare
Group) provided by KPMG Peat Marwick or other independent certified public
accountants satisfactory to the Administrative Agent, and (ii) annually no later
than ninety (90) days prior to the commencement of each fiscal year of the
Borrowers, an annual budget respecting Genesis and its consolidated Subsidiaries
(excluding the Multicare Group), setting forth in reasonable detail, expected
sources and uses of funds, for the fiscal year then beginning, in form and
substance satisfactory to the Administrative Agent.
(e) SEC Filings and Other Disclosure. Promptly upon their becoming
available to any Borrower but no later than ten Business Days after the same are
filed with the Securities Exchange Commission or any securities exchange,
Genesis (on behalf of the Borrowers) shall deliver to the Administrative Agent,
the Issuer and each Lender, a copy of (i) all regular or special reports,
registration statements and amendments to the foregoing which any Borrower shall
file with the Securities and Exchange Commission or any securities
-49-
<PAGE>
exchange, (ii) all reports, proxy statements, financial statements and other
information distributed by any Borrower to its stockholders, bondholders or the
financial community generally, (iii) all accountants' management letters (not
otherwise delivered pursuant to the preceding paragraph (d)) and all other
reports submitted by accountants in connection with any audit of any Borrower
and (iv) copies of all compliance certificates or notices delivered to or from
the trustees under the 1995 Subordinated Note Indenture and the 1996
Subordinated Note Indenture.
(f) Notice of Certain Events. Promptly upon any Borrower becoming
aware of any of the following, such Borrower or Genesis (on behalf of the
Borrowers) shall give the Administrative Agent notice thereof, together with a
written statement setting forth the details thereof and any action with respect
thereto taken or proposed to be taken by any Borrower:
(i) Loss of Licenses or Reimbursement Approvals. Any actual
Limitation (other than in the ordinary course of business) or any
threatened Limitation (to the extent that it individually or in the
aggregate with all other actual or threatened Limitations is
material) of any License or Reimbursement Approval relating to the
operation of a Health Care Business; or, if the same individually or
in the aggregate could have a Material Adverse Effect, any
Limitation of any License or Reimbursement Approval of any Person
managed by any Borrower;
(ii) Default. Any Event of Default or Default;
(iii) Material Adverse Change. Any material adverse change in
the business, operations or condition (financial or otherwise) or
prospects of any Borrower;
(iv) Material Litigation. Any pending or threatened action,
suit, proceeding or investigation by or before any Governmental
Authority against or affecting any Borrower (or any officer or
director thereof) or any property of any Borrower, except for
matters that if adversely decided, individually or in the aggregate,
could not have a Material Adverse Effect;
(v) Breach or Termination of Certain Agreements. Any breach,
claimed breach, termination or purported or threatened termination
(including a copy of any notice of termination) of (A) the Multicare
Management Agreement, (B) any other Transaction Document (except a
termination in accordance with its terms), (C) any other Management
Agreement except in the ordinary course of business, (D) the 1995
Subordinated Note Indenture or the 1996 Subordinated Note Indenture
(including a copy of any notice of default delivered thereunder),
(E) any agreement in respect of the Synthetic Lease Facility or (F)
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;
(vi) ERISA.
-50-
<PAGE>
(A) any taxes, penalties, interest charges and other
financial obligations in excess of $250,000.00 that have been
assessed or otherwise imposed, or which any Borrower has
reason to believe may be assessed or otherwise imposed in
excess of $250,000.00, against any Borrower or any member of
its Controlled Group by the Internal Revenue Service, the
PBGC, the Department of Labor or any other governmental entity
with respect to any Plan or Multiemployer Plan.
(B) any application for a waiver by a Borrower or any
member of its Controlled Group of the minimum funding standard
under ss.412 of the Code with respect to a Pension Plan.
(C) the adoption of any Plan, including but not limited
to a Defined Benefit Pension Plan, or any obligation to
contribute to any Multiemployer Plan by a Borrower or any
member of its Controlled Group.
(D) any Prohibited Transaction with respect to a Plan.
(E) (1) that any Borrower has incurred Withdrawal
Liability from a Multiemployer Plan maintained by it or any
member of its Controlled Group, (2) that any Multiemployer
Plan to which any Borrower or any member of its Controlled
Group has made contributions is or will be in Reorganization,
or (3) that any other condition exists with respect to a
Multiemployer Plan which presents a material risk of
termination of any such Plan, Borrowers will furnish a
statement to the Lenders setting forth the details of such
Withdrawal Liability, Reorganization or condition, and the
action that Borrowers propose to take with respect thereto,
together with a copy of any notice of Withdrawal Liability or
Reorganization received by such Borrower or any member of its
Controlled Group.
(F) any default by Borrower or any member of its
Controlled Group (as defined in ss.4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan required by reason
of its withdrawal (as defined in ss.4203 or ss.4205 of ERISA).
(G) any action brought against Borrower or any member of
its Controlled Group under ss.502 of ERISA with respect to its
failure to comply with ss.519 of ERISA.
(vii) Environmental. Any Environmental Claim pending or
threatened against any Borrower or any of its 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 of its Environmental Affiliates) that could form
the basis of such Environmental Claim, which Environmental Claim, if
adversely
-51-
<PAGE>
resolved, individually or in the aggregate, could have a Material
Adverse Effect.
(g) Exercise of Put/Call. Genesis (on behalf of the Borrowers) shall
deliver to the Administrative Agent prompt written notice (but in any event
within five (5) Business Days) of the receipt or delivery of any notice pursuant
to the Put/Call Agreement relating to the exercise of the put or call provisions
thereof. The Administrative Agent shall promptly give each Lender a copy of any
notice delivered pursuant to this paragraph (g).
(h) Notice of Non-Renewal of Management Agreement. Genesis (on
behalf of the Borrowers) shall give the Administrative Agent written notice
promptly upon the receipt or delivery of any notice of non-renewal or
termination delivered under or relating to the Multicare Management Agreement.
The Administrative Agent shall promptly give each Lender a copy of any notice
delivered pursuant to this paragraph (h).
(i) Other ERISA Information. The Borrowers shall deliver to the
Administrative Agent, copies of the following:
(A) Promptly after the filing thereof with the Secretary
of Labor, the Secretary of the Treasury, the PBGC or any other
governmental entity, copies of each annual report, each
audited financial statement and any other report so filed with
respect to each Plan.
(B) Borrowers will furnish to the Lenders as soon as
possible after receipt thereof a copy of any notice that any
Borrower or any member of its Controlled Group receives from
the PBGC, the Internal Revenue Service, the Department of
Labor or any other governmental entity or the sponsor of any
Multiemployer Plan that sets forth or proposes any action to
be taken or determination made by the PBGC, the Internal
Revenue Service, the Department of Labor or any other
governmental entity or the sponsor of any Multiemployer Plan
with respect to any Plan.
(j) Amendments to Transaction Documents. Genesis (on behalf of the
Borrowers) shall furnish the Administrative Agent copies or drafts of all
proposed amendments, modifications or waivers to any Transaction Documents (1)
in the case of any amendments, modifications or waivers requiring the consent of
the Required Lenders at least 20 Business Days prior to the effective date
thereof and (2) in all other cases, at least 5 Business Days prior to the
effective date thereof.
(k) Notices under Indenture. Genesis (on behalf of the Borrowers)
shall furnish to the Administrative Agent copies of all notices, reports,
certificates or other material delivered to or by the trustee or any other party
under the 1995 Subordinated Note Indenture or 1996 Subordinated Note Indenture,
promptly upon receipt thereof.
(l) Other Information. In addition, the Borrowers will promptly
furnish to the Administrative Agent such other information as any Lender Party
(through the Administrative Agent) may reasonably request, including information
submitted by the
-52-
<PAGE>
Borrowers to any Governmental Authority and the Administrative Agent will
furnish such information to the requesting Lender Party.
6.2 MAINTENANCE OF EXISTENCE. Each Borrower shall preserve and maintain
its corporate or partnership existence, as the case may be, and good standing in
the jurisdiction of its organization provided, however, upon giving written
notice to the Administrative Agent, the Borrowers may dissolve any Subsidiary if
(a) such Subsidiary is not (either individually or in the aggregate with all
other entities dissolved pursuant to this proviso) a material Borrower (or
material Borrowers) and (b) Genesis determines that it is in the best interest
of the Borrowers, taken as a whole, that such Subsidiary be dissolved. Genesis
and (to the extent that any failure to qualify or remain qualified could have a
Material Adverse Effect) each Restricted Subsidiary, shall qualify and remain
qualified as a foreign corporation or partnership in each jurisdiction in which
such qualification is required, provided, however nothing in this Section 6.2
shall prohibit any sales or other dispositions permitted under Section 8.5 or
Section 8.13.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES AND OTHER PROPERTY.
(a) Type of Business. Each Borrower shall continue to engage in the
business of the same general type as conducted by the Borrowers on the Closing
Date and shall not engage in any other type of business without the consent of
the Required Lenders.
(b) Healthcare and Regulatory Rights. Except where the failure to
take any of the following actions, individually or in the aggregate, could not
have a Material Adverse Effect, each Borrower shall, (i) maintain in effect all
Licenses and Reimbursement Approvals necessary or appropriate to own and operate
all Health Care Businesses which it owns or operates and (ii) obtain all
Licenses and Reimbursement Approvals necessary or appropriate to own and operate
all Health Care Businesses which it acquires and (iii) continue its
participation in any and all Third Party Payor Arrangements. Except where such
failure to so comply (together with all other failures from time to time by the
same or other Borrowers), could not reasonably be expected to have a Material
Adverse Effect, each Borrower shall comply with any and all rules, regulations,
standard procedures and decrees necessary to maintain its participation in any
such Third Party Payor Arrangements and prepare and file all applicable cost
reports with respect to all Third Party Payors Arrangements to the extent
required. Each Borrower shall use its best efforts to cause each Person managed
by it to obtain and maintain its Licenses and Reimbursement Approvals necessary
for the conduct of its business and to continue its participation in Third Party
Payor Arrangements and comply with all rules, regulations, standard procedures
and decrees relating thereto to the extent that the failure to do so could have
a Material Adverse Effect.
(c) Maintenance of Property. Each Borrower shall maintain, keep and
preserve all of its property necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted
(except for sales and other dispositions of property permitted under Section 8.5
below (Dispositions)). Without limiting the generality of the foregoing, each
Borrower shall maintain in full force and effect each lease, Management
Agreement and other material agreement used or useful in its business,
-53-
<PAGE>
subject to no material default except where the loss of, or default under, such
lease, Management Agreement or other agreement (i) could not individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect or (ii)
is not otherwise prohibited by the terms of this Agreement.
6.4 MAINTENANCE OF RECORDS; FISCAL YEAR. Each Borrower shall keep adequate
records and books of account, in which complete entries will be made in
accordance with historical practice and GAAP, reflecting all financial
transactions of the Borrowers. Each Borrower shall maintain a fiscal year end of
September 30.
6.5 COMPLIANCE WITH LAWS. Each Borrower shall comply (and maintain
procedures to assure compliance) in all material respects with all applicable
Laws (including environmental and health care Laws) and all judgments, decrees
or orders of any court or Governmental Authority and all settlement agreements.
Without limiting the generality of the foregoing, each of the Borrowers shall
maintain in full force and effect an internal compliance program respecting
compliance with all Laws affecting the types of businesses carried on by the
Borrowers (including healthcare Laws) and make such program available for review
by any Lender, upon request.
6.6 ERISA.
(a) Each Borrower will, and will cause each member of its Controlled
Group, to comply in all material respects with the provisions of ERISA and the
Code with respect to any Plan both in form and in operation.
(b) Each Borrower will cause to be made all contributions required
to avoid any Accumulated Funding Deficiency, whether or not waived, with respect
to any Pension Plan.
(c) No Borrower will adopt or permit the adoption by any member of
its Controlled Group of any Defined Benefit Pension Plan which would result in
any Amount of Unfunded Benefit Liabilities in excess of $500,000.00.
(d) No Borrower will acquire, or permit the acquisition by any
member of its Controlled Group of, any trade or business which has incurred
either directly or indirectly any Amount of Unfunded Benefit Liabilities under
any Defined Benefit Pension Plan in excess of $500,000.00.
(e) The Borrowers will not permit with respect to any Plan, any
Prohibited Transaction or Prohibited Transactions under ERISA or the Code
resulting in liability of any Borrower or any member of its Controlled Group
which together with any other liabilities subject to this paragraph (e) would in
the aggregate be in excess of $500,000.00, unless such Borrower or any member of
its Controlled Group will be contesting in good faith and by appropriate
proceedings any such matter and measures are available and are being taken which
have the effect of preventing the seizure of property of such Borrower or any
member of its Controlled Group pending the outcome of such contest.
-54-
<PAGE>
(f) No Borrower will withdraw, or permit any member of its
Controlled Group to withdraw, from any Multiemployer Plan to which any of them
may hereafter contribute if the Withdrawal Liability which would thereupon be
incurred would have a material adverse effect, directly or indirectly, on the
financial condition of any of the Borrowers.
(g) No Borrower will permit any unfunded liabilities of unfunded and
uninsured "employee welfare benefit plans" (as defined in ss.3(1) of ERISA) of
any Borrower and of any member of its Controlled Group in excess of $500,000.00
in the aggregate with all other liabilities subject to this paragraph (g).
(h) No Borrower will, or will permit any member of its Controlled
Group to, cause or suffer to exist a COBRA Violation with respect to any Plan to
which such continuation coverage requirements apply if the violation(s) could
result in a liability in excess of $500,000.00 in the aggregate.
6.7 RIGHT OF INSPECTION. Each Borrower shall, at any reasonable time and
from time to time, and upon reasonable advance notice (but no advance notice
shall be required if a Default or an Event of Default shall then exist), permit
the Administrative Agent, the Issuer or any Lender or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit and inspect the properties of, any
Borrower, and to discuss the affairs, finances and accounts of such Borrower
with any of its officers, directors and independent accountants.
6.8 INSURANCE. Each Borrower shall 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, 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 "stop loss" and business
interruption. The Borrowers shall have the Administrative Agent named to receive
certificates evidencing such insurance annually and at least thirty days prior
to the anniversary date of such insurance policies and any other time requested
by the Administrative Agent.
6.9 PAYMENT OF TAXES AND OTHER CHARGES. Each Borrower shall
(a) on or prior to the date on which penalties attach thereto, pay
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, pay 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 need not pay or discharge
any such tax, assessment,
-55-
<PAGE>
charge or claim so long as (x) the validity thereof is being contested in good
faith and by appropriate proceedings diligently conducted and (y) such reserves
or other appropriate provisions as may be required by GAAP shall have been made
therefor.
6.10 SUBSIDIARIES TO BE BORROWERS. (a) Each Borrower shall cause all of
its Subsidiaries, other than Excluded Subsidiaries, at all times to be Borrowers
hereunder (by signing Joinder Supplements hereto, executing Notes or allonges
thereto and taking such other action as the Administrative Agent may reasonably
request) and cause all the capital stock or other equity interests in such
Subsidiaries owned by Borrowers, other than capital stock or other equity
interests in Excluded Subsidiaries, and all notes or other rights to receive
payment from another Borrower to be pledged to the Collateral Agent for the
benefit of the Secured Parties pursuant to the Pledge Agreement. Without
limiting the generality of the foregoing, 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 actions set forth on Schedule 6.10 hereto, in the case of the formation
of a new Subsidiary, promptly upon such formation, and in the case of the
acquisition of an entity which shall become a Subsidiary, no later than the date
of the consummation of the relevant Acquisition.
(b) With the prior written consent of the Administrative Agent,
Genesis (on behalf of the Borrowers) may from time to time redesignate one or
more Subsidiaries which are designated as Excluded Subsidiaries on Schedule 11.1
to be Borrowers and Restricted Subsidiaries hereunder, Pledgors under the Pledge
Agreement and comparable parties under the other Loan Documents (and not
Excluded Subsidiaries). Thereupon and upon satisfaction of the requirements set
forth in paragraph (a) above for Joining Subsidiaries, such redesignated
Subsidiaries shall be Borrowers hereunder, Pledgors under the Pledge Agreement
and comparable parties to the other Loan Documents. The Administrative Agent
shall give the Lenders notice of any such redesignation.
6.11 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS. The Borrowers shall
comply with the terms of the 1995 Subordinated Note Indenture and the 1996
Subordinated Note Indenture. Each Borrower shall promptly take all action
necessary or requested by the Administrative Agent at any time to protect,
preserve and give effect to the status of the Loan Obligations as "Senior
Indebtedness" and "Designated Senior Indebtedness" within the meaning of the
1995 Subordinated Note Indenture and the 1996 Subordinated Note Indenture.
6.12 INTEREST RATE HEDGING AGREEMENTS. At all times from and after ninety
(90) days after the Closing Date, the Borrowers shall maintain one or more
Interest Rate Hedging Agreements to the extent necessary to ensure that at all
times at least fifty percent (50%) of the Total Funded Indebtedness of the
Borrowers effectively bears, or is capped at, a fixed interest rate provided,
however, that no Borrower shall enter into any rate swap, cap or collar
agreement which is not an Interest Rate Hedging Agreement.
-56-
<PAGE>
6.13 CORPORATE SEPARATENESS. Each Borrower shall observe all requirements
necessary to cause it to be treated as a separate legal entity for all purposes
under applicable corporate law. Without limiting the foregoing requirement, each
Borrower specifically shall (i) maintain, and cause each Excluded Subsidiary to
maintain, separate corporate and financial records and observing all corporate
formalities; (ii) maintain, and cause each Excluded Subsidiary to maintain,
capitalization adequate to meet its business needs; (iii) cause all reports,
filings and public information to refer to such Borrower or Excluded Subsidiary,
as the case may be, as a separate company (and not a division of each other);
and (iv) otherwise conduct, and cause each Excluded Subsidiary to conduct, its
dealings with third parties in its own name and as a separate and independent
entity. Without limiting the generality of the foregoing, unless specifically
agreed to by the Required Lenders, no Borrower may enter into any merger or
other combination with or transfer assets to any Excluded Subsidiary, or make
any loan to, advance to, or other investment in any Excluded Subsidiary, or
guarantee any Indebtedness or otherwise be liable for obligations of any
Excluded Subsidiary except as expressly permitted by this Agreement, provided,
nothing in this Section 6.13 shall prohibit the execution and delivery of the
Multicare Management Agreement or the Tax Sharing Agreement and the transactions
contemplated thereby. Notwithstanding the foregoing (a) the Borrowers may make
such Investments in, borrow money from, and carry on other transactions with,
Excluded Subsidiaries on an arm's length basis to the extent that this Agreement
permits the Borrowers to carry on such activities with unrelated third parties
and (b) so long as no Default or Event of Default shall then exist or be caused
thereby, the Borrowers may contribute capital to, or make other Investments in,
The Multicare Group from the proceeds of the sale of equity of Genesis common
stock (to the extent that such proceeds are so used promptly upon the receipt
thereof).
6.14 TRANSACTIONS WITH AFFILIATES. Each Borrower shall effect all
transactions with Affiliates (excluding transactions with other Borrowers) on a
basis at least as favorable to such Borrower as would at the time be obtainable
for a comparable transaction on an arm's length dealing with an unrelated third
party, except that this Section 6.14 shall not apply to (a) the Tax Sharing
Agreement and (b) the Transaction Documents.
6.15 MERGER OF GENESIS ELDERCARE ACQUISITION CORP. INTO MULTICARE. The
Borrowers shall use their best efforts to cause the merger of Genesis ElderCare
Acquisition Corp. into Multicare either on the Closing Date or as soon
thereafter as practicable in accordance with the terms of the Merger Agreement.
6.16 CERTAIN ACQUISITIONS. On or before December 31, 1997, Genesis and/or
one or more of its Restricted Subsidiaries shall acquire the contract therapy
business of Multicare for a cash purchase price of approximately $24,000,000.00
and the institutional pharmacy business of Multicare for a cash purchase price
of approximately $50,000,000.00 unless, in either case, there shall have been a
material adverse change in such business or Borrowers shall be (either before or
after giving effect to either of such Acquisitions) in default under this
Agreement or any other Loan Document.
6.17 USE OF PROCEEDS. The Borrowers will apply the proceeds of the Loans
only (i) to refinance existing Indebtedness on the Closing Date, (ii) to fund
working capital
-57-
<PAGE>
and Capital Expenditure needs, subject to the other limitations set forth in
this Agreement, (iii) to purchase approximately 44% of the common stock of
Genesis Eldercare Corp. for an aggregate purchase price at least equal to
$325,000,000.00, (iv) to purchase the contract therapy business of Multicare for
approximately $24,000,000.00, to purchase the institutional pharmacy business of
Multicare for approximately $50,000,000.00 and to fund other Acquisitions
permitted by the terms of this Agreement, (v) to fund interest and principal
payments on the Loans and other permitted Indebtedness and (vi) for general
corporate purposes.
ARTICLE 7
FINANCIAL COVENANTS
7.1 CERTAIN FINANCIAL COVENANTS. So long as any Loan Obligations shall
remain unpaid or any Lender or the Issuer has any Commitment under this
Agreement, the Borrowers shall comply with the following 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
------ -----
September 30, 1997 through June 30, 2001 1.30 to 1.00
July 1, 2001 and thereafter 1.50 to 1.00
(b) 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 Agreement Date shall be not less than the sum of
(i) Five Hundred and Fifty Million Dollars ($550,000,000.00)
plus
(ii) an amount equal to the sum of:
(A) an amount equal to 100% of the net proceeds of
all equity offerings of Genesis on a cumulative basis
commencing on the Agreement Date through such date of
determination (other than proceeds used to acquire the
shares of Genesis ElderCare Corp. pursuant to the
Put/Call Agreement or used to make loans or advances to,
or other investments in, the Multicare Group as
permitted by Section 8.3 below),
(B) 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
-58-
<PAGE>
a consolidated basis, for the period commencing on the
first day of the fiscal quarter in which the Agreement
Date occurs through the last day of the fiscal quarter
ending on, or most recently prior to, such date of
determination, and
(C) any reduction in the amount of debt as a
result of the conversion of convertible debt securities
into equity.
(c) Adjusted Total Debt/Cash Flow Ratio. The Adjusted Total
Debt/Cash Flow Ratio shall be not greater than the ratios set forth below during
the periods indicated below:
Period Ratio
------ -----
September 30, 1997 through June 30, 1998 6.25 to 1.00
July 1, 1998 through June 30, 1999 5.75 to 1.00
July 1, 1999 through June 30, 2000 5.00 to 1.00
July 1, 2000 and thereafter 4.50 to 1.00
(d) Adjusted Senior Debt/Cash Flow. The Adjusted Senior Debt/Cash
Flow Ratio shall be not greater than the ratios set forth below during the
periods indicated below:
Period Ratio
------ -----
September 30, 1997 through June 30, 1998 5.25 to 1.00
July 1, 1998 through June 30, 1999 4.50 to 1.00
July 1, 1999 through June 30, 2000 4.00 to 1.00
July 1, 2000 and thereafter 3.50 to 1.00
7.2 CALCULATION OF FINANCIAL COVENANTS. The financial covenants
set forth in this Article 7 shall be maintained continuously and 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 8.4 below (Acquisitions, Etc.), the financial covenants
set forth in this Article 7 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 that
will no longer be incurred after the Acquisition, to the extent demonstrated by
Genesis to the satisfaction of the Administrative 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 Administrative Agent. Following the effective
date of any disposition that is effected by Genesis or any of its Restricted
Subsidiaries and that is permitted under
-59-
<PAGE>
Section 8.5 below (Dispositions), the financial covenants set forth in this
Article 7 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.
Following the Closing Date, the financial covenants set forth in this Article 7
shall be computed on a pro forma basis as if all transactions in connection with
the Transaction Documents had been consummated, including as if the Multicare
Management Agreement had been in effect since the first day of the earliest of
the four fiscal quarters ended on, or most recently prior to, the Closing Date.
Unless otherwise agreed to by the Required Lenders, the financial condition and
results of operations of the Multicare Group or other Excluded Subsidiaries
shall not be combined with those of the Borrowers for purposes of calculating
the financial covenants set forth in this Article 7 except that distributions
actually made to the Borrowers by Genesis Eldercare Corp. shall be included in
the financial statements of the Borrower Group as income on its Investments.
ARTICLE 8
NEGATIVE COVENANTS
So long as any Loan Obligations shall remain unpaid or any Lender or the
Issuer shall have any Commitment under this Agreement, each of the Borrowers
shall comply with the following covenants.
8.1 INDEBTEDNESS. No Borrower shall, at any time, create, incur, assume or
suffer to exist any Indebtedness (including any Guaranties, Capitalized Leases
or Assumed Indebtedness), except:
(a) Indebtedness to the Lender Parties pursuant to this Agreement
and the other Loan Documents;
(b) Indebtedness constituting intercompany (i.e., inter-Borrower)
loans and advances evidenced by promissory notes duly pledged to the Collateral
Agent (for the benefit of the Secured Parties) pursuant to the terms of the
Pledge Agreement;
(c) Indebtedness in a principal amount not to exceed at any time
Fifty Million Dollars ($50,000,000.00) owing to the Designated Acquiror (as such
term is defined in Section 8.5 below) on terms and conditions no more onerous
than those set forth in this Agreement and the other Loan Documents the proceeds
of which shall be used for the development of new assisted living facilities
(the "Newly Developed Facilities");
(d) Obligations of Genesis under Interest Rate Hedging Agreements
entered into pursuant to Section 6.12 hereof;
(e) Indebtedness in respect of the Synthetic Lease Facility in a
principal amount not to exceed Eighty Million Dollars ($80,000,000.00);
-60-
<PAGE>
(f) Indebtedness (including the indebtedness under the 1995
Subordinated Notes and the 1996 Subordinated Notes) existing on the Closing Date
acceptable to the Agents and described on Schedule 8.1 hereto, which sets forth
certain Indebtedness in a principal amount not exceeding $368,000,000.00; and
any extensions, renewals, refinancings of the same so long as such extensions,
renewals and refinancings (i) are in a principal amount no greater than the
amount of the Indebtedness so extended, renewed or refinanced, (ii) are incurred
pursuant to agreements or instruments which do not prohibit the Indebtedness or
Liens created pursuant to the Loan Documents or otherwise conflict with the
terms of the Loan Documents or contains terms and conditions which are more
onerous than the terms and conditions in the existing agreements and
instruments, (iii) are not made at a time that a Default or Event of Default has
occurred and is continuing or would be caused thereby, (iv) have maturity dates
(and amortization schedules) no earlier than the debt being refinanced and (v)
in the case of any extension, renewal or refinancing of the 1995 Subordinated
Notes or 1996 Subordinated Notes, shall have subordination provisions at least
as favorable to the senior lenders as those set forth in the agreement
refinanced or extended and shall generally be on terms acceptable to the
Administrative Agent;
(g) Other Indebtedness incurred from time to time, in an aggregate
outstanding principal amount not to exceed Thirty Million Dollars
($30,000,000.00) at any time, so long as such Indebtedness (other than Assumed
Indebtedness) is incurred pursuant to agreements or instruments which contain
terms and conditions no more onerous than the terms and conditions hereof and
which do not mature, or have principal amortization prior to, the Maturity Date;
and
(h) Indebtedness in an aggregate principal amount not in excess of
$200,000,000.00 which is subordinated to the Loan Obligations and obligations in
respect of the Synthetic Lease Facility on terms substantially the same or more
favorable to the senior lenders as those set forth in the 1995 Subordinated Note
Indenture and the 1996 Subordinated Note Indenture and which shall not require
any principal payments until after the Maturity Date;
provided, however, that all Indebtedness incurred pursuant to paragraph (c), (g)
or (h) above shall be subject to the following (without duplication): (i) it
shall be incurred on terms which do not prohibit the Indebtedness created
pursuant to the Loan Documents or otherwise conflict with the terms hereof or
the other Loan Documents; (ii) at the time such Indebtedness is incurred, no
Default or Event of Default shall have occurred and be continuing or shall be
caused or created thereby; (iii) prior to the incurrence of such Indebtedness,
Genesis (on behalf of the Borrowers) shall deliver to the Administrative Agent a
certificate of a Responsible Officer of Genesis stating: (1) the amount of such
Indebtedness, (2) a representation that such Indebtedness was incurred in
compliance with the provisions of this Section 8.1 (indicating how much of the
permitted Indebtedness under the relevant paragraph of this Section 8.1 is
available before and after giving effect thereto) and (3) a representation that
such Indebtedness was incurred in compliance with the financial covenants set
forth herein, in Section 5.9 of the 1995 Subordinated Note Indenture and in
Section 5.9 of the 1996 Subordinated Note Indenture and, in the case of
Indebtedness incurred pursuant to paragraph (h) above, showing the calculations
thereof; (iv) the terms of the instruments and agreements respecting such
Indebtedness shall be no more restrictive than the terms of this Agreement; and
(v) the instruments and agreements respecting such
-61-
<PAGE>
Indebtedness shall not contain provisions that would violate the terms of
Section 8.12 (Limitation on Certain Restrictive Provisions) below.
8.2 LIENS. No Borrower shall, at any time create, incur, assume or suffer
to exist any Lien on any of its assets (now owned or hereafter acquired), except
for the following ("Permitted Liens"):
(a) Liens pursuant to the Loan Documents;
(b) Liens acceptable to the Agents and existing on the Closing Date
securing obligations existing on the Closing Date, which Liens and obligations
are listed in Schedule 8.2 hereto (and any extension, renewal and replacement
Liens upon the same property theretofore subject to a listed Lien, provided that
(i) 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 and (ii) such replacement Liens are incurred pursuant to
agreements or instruments which do not prohibit the Liens or Indebtedness
created pursuant to the Loan Documents or otherwise conflict with the terms of
the Loan Documents);
(c) Liens arising from taxes, assessments, charges or claims
described in Section 6.9 hereof to the extent permitted by said Section 6.9,
provided that the aggregate amount secured by all Liens described in this clause
(c) shall not at any time exceed $500,000.00;
(d) Liens existing on real estate and equipment acquired by any
Borrower in an Acquisition permitted under Section 8.4 hereof so long as any
such Lien (i) secures only the corresponding Assumed Indebtedness permitted
under clause (g) of Section 8.1 above;
(e) Liens on the property subject to the Synthetic Lease Facility
securing the obligations in respect of the Synthetic Lease Facility;
(f) Other (i) purchase money Liens encumbering only the property
purchased with the proceeds of the corresponding Indebtedness and (ii)
Capitalized Leases, in each case, securing Indebtedness permitted under clause
(g) of Section 8.1 above and in an amount not to exceed $30,000,000.00 in the
aggregate at any time;
(g) Liens on property which constitutes Newly Developed Facilities
securing Indebtedness to the Designated Acquiror incurred pursuant to paragraph
(c) of Section 8.1 above;
(h) Liens in respect of property or assets of the Borrowers imposed
by law which were incurred in the ordinary course of business, such as carriers,
warehousemen's and mechanics' Liens, statutory landlord's Liens, and other
similar Liens arising in the ordinary course of business, and (x) which do not
in the aggregate materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of the
Borrowers taken as a whole or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or
-62-
<PAGE>
sale of the property or asset subject to such lien and that adequate reserves
have been set aside on the applicable Borrower's books to protect against an
adverse result;
(i) Liens arising from judgments, decrees or attachments and Liens
securing appeal bonds arising from judgments, in each case in circumstances not
constituting an Event of Default under Section 9.1(h);
(j) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money);
(k) easements, rights-of-way, restrictions, minor defects or
irregularities in title to real property and other similar charges or
encumbrances on real property not interfering in any material respect with the
ordinary conduct of the business of the Borrowers taken as a whole or the value
or saleability of the assets so encumbered or affecting their use for their
intended purposes; and
(l) Other Liens (which may be Capitalized Leases, purchase money
Liens or other types of Liens) securing Indebtedness in a principal amount not
to exceed at any time Ten Million Dollars ($10,000,000.00) incurred pursuant to
paragraph (g) of Section 8.1 above,
provided, however, no Lien permitted under clauses (d), (f), (g) or (h) above
shall be created at any time, if there shall exist, either before or after
giving effect to such transaction, a Default or an Event of Default. "Permitted
Liens" shall in no event include any Lien imposed by, or required to be granted
pursuant to, ERISA or any Environmental Law.
8.3 LOANS, ADVANCES AND INVESTMENTS. No Borrower shall, at any time (i)
make or suffer to exist 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 (collectively,
"Investments") any other Person, except:
(a) Receivables owing to such 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 to
subcontractors or suppliers under usual and customary terms in the ordinary
course of business;
(b) (i) Loans or advances from Genesis to a wholly-owned Restricted
Subsidiary of Genesis or (ii) loans from a wholly-owned Restricted Subsidiary of
Genesis to Genesis or another wholly-owned Restricted Subsidiary of Genesis
provided, however, all such loans and advances shall be evidenced by promissory
notes duly pledged to the Collateral Agent, for the benefit of the Secured
Parties, pursuant to the Pledge Agreement;
-63-
<PAGE>
(c) The capital stock or other ownership interests in other
Borrowers duly pledged to the Collateral Agent, for the benefit of the Secured
Parties;
(d) Cash Equivalent Investments;
(e) Acquisitions permitted under Section 8.4 below (Acquisitions);
(f) The Borrowers' initial Investment in the capital stock of
Genesis ElderCare Corp. for $325,000,000.00; the option/obligation to purchase
the remaining capital stock of Genesis ElderCare Corp. pursuant to the Put/Call
Agreement; and the exercise of the option (or the fulfillment of the obligation)
to purchase the remaining equity of Genesis ElderCare Corp. pursuant to the
Put/Call Agreement in exchange solely for (i) common stock of Genesis and/or
(ii) net cash proceeds received by Genesis from a substantially contemporaneous
sale of its common stock;
(g) (i) the capital stock or other ownership interests in the
Excluded Subsidiaries (other than the Multicare Group) existing on the Closing
Date and set forth on Schedule 11.1 hereto and (ii) the capital contributions
and other Investments in the Multicare Group referred to in the final proviso of
Section 6.13 (Corporate Separateness);
(h) Other Investments not covered by paragraphs (a) through (g) of
this Section 8.3 provided, that
(i) at the time that any investment is made, the aggregate
amount (which shall include all existing amounts and all new
commitments therefor) of all Investments pursuant to this paragraph
(h) shall not exceed an amount equal to 8.5% of the total
consolidated assets of the Borrowers (determined at the time such
Investment is made);
(ii) no Investment in any entity shall be made pursuant to
this paragraph (h) if the Borrowers' existing Investment in such
entity exceeds $25,000,000.00 or if such additional Investment would
cause the total amount of the Borrowers' Investment in such entity
to exceed Twenty Five Million Dollars ($25,000,000.00) except that
the Borrowers may make an additional Investment in an amount not
exceeding Five Million Dollars ($5,000,000.00) in the aggregate from
the Closing Date in Doctors Health Systems and an additional
Investment in an aggregate amount not exceeding Five Million Dollars
($5,000,000.00) in the aggregate from the Closing Date in Age
Institute of Florida; and
(iii) no Default or Event of Default shall then exist either
before or after giving effect to such transaction.
Investments referred to in paragraph (h) which are existing on the Closing Date
and the amount of each such Investment are listed on Schedule 8.3 hereto. On or
before (if practicable) but in any event within 5 days after any Investment is
made pursuant to the preceding paragraph (h), Genesis (on behalf of the
Borrowers) shall deliver to the Administrative Agent a supplement to Schedule
8.3 showing the proposed Investment, together with a certificate of a
Responsible Officer of Genesis stating that such Investment
-64-
<PAGE>
was made in compliance with this Section 8.3 (and showing the aggregate amount
of permitted Investments which may be made under said paragraph (h) above, the
amount of the existing Investments thereunder and the amount of the proposed
Investment) and in compliance with the provisions of the 1995 Subordinated Note
Indenture and the 1996 Subordinated Note Indenture. The "amount" of any
Investment referred to in this Section 8.3 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.
8.4 ACQUISITIONS, ETC. No Borrower shall engage in any Acquisition (other
than an acquisition of assets in the ordinary course of business) except:
(a) A Borrower may merge with or into Genesis or any direct or
indirect wholly-owned Restricted Subsidiary of Genesis, provided that (i)
if Genesis is a party to the merger, it is the surviving entity and (ii)
if Genesis is not a party to the merger, a wholly-owned Restricted
Subsidiary of Genesis is the surviving entity and provided, further, that
no Event of Default or Default shall occur and be continuing before or
after giving effect to such transaction;
(b) One or more Borrowers may purchase the institutional pharmacy
business and/or the contract therapy business of Multicare on the terms
and subject to the conditions set forth in Section 6.16 (Certain
Acquisitions) above;
(c) One or more Borrowers may acquire Genesis ElderCare Corp. on the
terms and subject to the conditions set forth in paragraph (f) of Section
8.3 (Investments) above; and
(d) So long as no Default or Event of Default has occurred or would
exist after giving effect to such Acquisition, any Borrower may make an
Acquisition not covered by paragraph (a), (b) or (c) of this Section 8.4,
subject to the following: (i) the "Acquisition Conditions" set forth on
Schedule 8.4 hereto shall have been satisfied; and (ii) the Acquisition
Cost of all Acquisitions made pursuant to this paragraph (d) shall not
exceed Fifty Million Dollars ($50,000,000.00) in any fiscal year,
provided, that if the Adjusted Total Debt/Cash Flow Ratio is, and has been
for two consecutive fiscal quarters, less than or equal to 4.5 to 1.0,
then the Acquisition Cost of all Acquisitions pursuant to this paragraph
(d) shall not exceed One Hundred Million Dollars ($100,000,000.00) in any
fiscal year but no single Acquisition (or series of related Acquisitions)
shall have an Acquisition Cost in excess of Fifty Million Dollars
($50,000,000.00).
8.5 DISPOSITIONS. No Borrower shall sell, convey, assign, lease as lessor,
transfer, abandon or otherwise dispose of (collectively, for purposes of this
Section 8.5, "transfer"), voluntarily or involuntarily, any of its assets,
except:
(a) A Borrower may sell inventory in the ordinary course of
business;
-65-
<PAGE>
(b) A Borrower may dispose of equipment which is obsolete or no
longer useful in its business;
(c) A Borrower may transfer its properties to Genesis or a
wholly-owned Restricted Subsidiary of Genesis so long as no Event of
Default or Default shall exist either before or after giving effect to
such transfer;
(d) The Borrowers may carry out the transactions contemplated by the
Synthetic Lease Facility;
(e) The Borrowers may make a one-time disposition (the "One Time
Disposition") of some or all of the assets described on Schedule 8.5 (e)
hereto having an aggregate fair market value equal to no more than
$125,000,000.00, in one transaction or in a series of related
transactions, to a single entity (the "Designated Acquiror") in exchange
for cash in a like amount on or before March 31, 1998 so long as no Event
of Default shall exist either before or after giving effect to such
disposition; after March 31, 1998, the Borrowers may, from time to time,
transfer Newly Developed Facilities to the Designated Acquiror in exchange
for cash and cancellation of liabilities in an amount equal to the fair
market value of the facilities so transferred so long as no Default or
Event of Default shall exist either before or after giving effect to such
disposition and so long as no more than Fifty Million Dollars
($50,000,000) worth of such assets are transferred in any consecutive four
fiscal quarter period;
(f) The Borrowers may grant Liens permitted under Section 8.2
(Liens) above;
(g) So long as no Default or Event of Default has occurred or would
exist after giving effect to such transfer, a Borrower may transfer other
assets (including ownership interests in Restricted Subsidiaries)
provided, however, that (i) the "Disposition Conditions" set forth on
Schedule 8.5 (g) hereto shall have been satisfied and (ii) 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 pursuant to this paragraph (g) at any time
after the Closing 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 5% 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 paragraph (g) at
any time after the Closing Date (in each case for the
four fiscal quarters ended on, or most
-66-
<PAGE>
recently prior to, the date of the transfer or proposed
transfer, as the case may be) is less than an amount
equal to 5% 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.
(h) So long as no Default or Event of Default has occurred or would
exist after giving effect to such transfer, the Borrowers may dispose of
interests in Excluded Subsidiaires.
8.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP INTERESTS. The
Borrowers shall not create, acquire, dispose of, or change any interest in any
Restricted Subsidiary except as follows:
(a) Restricted Subsidiaries of Borrowers (or any interest therein)
may be created or acquired in connection with an Acquisition to the extent
permitted under Section 8.4 above (Acquisitions, Etc.);
(b) Restricted Subsidiaries of Borrowers (or any interest therein)
may be created or acquired in connection with an Investment to the extent
permitted under Section 8.3 above (Loans, Advances and Investments);
(c) Restricted Subsidiaries of Borrowers may be created as direct or
indirect Restricted Subsidiaries of Genesis for other purposes consistent
with the terms of this Agreement; and
(d) Restricted Subsidiaries (or any interest therein) may be
disposed of pursuant to the provisions of Section 8.5 above
(Dispositions).
provided, however, that with respect to Restricted Subsidiaries created or
acquired in accordance with paragraphs (a), (b) or (c) above, they shall become
"Borrowers" hereunder and corresponding parties to the other Loan Documents,
their equity owned by Borrowers shall be pledged to the Collateral Agent, for
the benefit of the Secured Parties, pursuant to the Pledge Agreement (all as
more fully set forth in Section 6.10 above) and they shall become parties to the
Tax Sharing Agreement.
8.7 LEASES. The Borrowers shall not at any time enter into or suffer to
remain in effect any lease, as lessee, of any property, except:
(a) Leases (including subleases) by Genesis or a wholly-owned
Restricted Subsidiary of Genesis as lessor (or sublessor) to Genesis or
another wholly-owned Restricted Subsidiary of Genesis as lessee (or
sublessee);
(b) Capitalized Leases and Synthetic Leases permitted under Section
8.1 above; and
(c) Other leases which are not Capitalized Leases or Synthetic
Leases but only to the extent that the aggregate Rental Expense of the
Borrowers with respect to
-67-
<PAGE>
all such other leases does not exceed (i) during the fiscal year ending
September 30, 1997, Thirty Million Dollars ($30,000,000) and (ii) during
each fiscal year thereafter, an amount equal to the amount permitted in
the preceding year plus an additional Five Million Dollars ($5,000,000)
(e.g., $35,000,000 in the fiscal year ending September 30, 1998).
8.8 DIVIDENDS AND RELATED DISTRIBUTIONS. Genesis shall not (a) declare or
pay any dividends, (b) purchase, redeem, retire or otherwise acquire for value
any of its capital stock now or hereafter outstanding, or (c) make any
distribution of assets to its stockholders as such whether in cash, assets or
obligations of Genesis, (d) allocate or otherwise set apart any sum for the
payment of any dividend or distribution on, or for the purchase, redemption or
retirement of, any shares of its capital stock, (e) or make any other
distribution by return of capital or otherwise in respect of any shares of its
capital stock provided, however, notwithstanding the foregoing, (i) Genesis may
declare and pay dividends and make distributions payable solely in its common
stock, or options, warrants or other rights to purchase common stock and (ii) at
any time that the Adjusted Total Debt/Cash Flow Ratio is, and has been for two
consecutive fiscal quarters, less than 4.5 to 1.0, Genesis may, upon giving
written notice thereof to the Administrative Agent, redeem or otherwise purchase
outstanding shares of its capital stock in an aggregate amount not to exceed
Fifty Million Dollars ($50,000,000) from the Closing Date so long as such action
would not result in "Event of Acceleration" under the Put/Call Agreement and so
long as both before and after giving effect to such action there would exist no
Default or Event of Default hereunder.
8.9 CONSOLIDATED TAX RETURN. No Borrower shall (a) file or consent to the
filing of any consolidated income tax return with any Person other than other
Borrowers or other Persons party to the Tax Sharing Agreement or (b) become
party to any tax sharing or tax allocation agreement with any Person other than
the Tax Sharing Agreement. From and after the effective date of the Tax Sharing
Agreement (which shall be on or about the Closing 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 (a) joinder of additional
Subsidiaries of Genesis, from time to time, such that at all times all
Subsidiaries of Genesis shall be parties thereto, and (b) such amendments or
modifications which, individually or in the aggregate, could not reasonably be
expected to have an adverse effect on the Borrowers taken as a whole (including
the business, operations, condition, financial or otherwise, properties or
prospects of the Borrowers), the Loan Documents or any Lender Party.
8.10 LIMITATION ON PAYMENTS, PREPAYMENTS, DEFEASEMENT AND OTHER ACTION
WITH RESPECT TO CERTAIN DEBT OBLIGATIONS. No Borrower shall, directly or
indirectly, pay, prepay, purchase, defease, redeem, retire, acquire, or
otherwise make any payment (on account of principal, interest, premium or
otherwise) in respect of any obligation under, or evidenced by, the 1995
Subordinated Note Indenture or the 1996 Subordinated Note Indenture (or cause or
allow any event or condition to exist which would require any payment,
prepayment, purchase, defeasance, redemption, retirement, acquisition or other
payment of any such obligation) except that Genesis may make cash interest
payments on the aforesaid Indebtedness, as and when required to do so by
-68-
<PAGE>
the mandatory terms thereof, all to the extent consistent with the subordination
provisions applicable thereto. No Borrower shall amend, modify or supplement the
terms or provisions contained in the aforementioned debt agreements or any
agreement or instrument evidencing, relating or applicable thereto. No Borrower
shall take or omit to take any action under or in connection with, any such
agreement or instrument, which would violate or impair the subordination
provisions thereof. No Borrower will make (or give any notice that it shall
make) any voluntary or optional payment or prepayment or redemption or
acquisition for value of, or will refund, refinance or exchange any Indebtedness
(excluding Loan Obligations) if at such time any Default or Event of Default has
occurred and is continuing or would be directly or indirectly caused as a result
thereof. No Borrower shall designate any of its Indebtedness as "Designated
Senior Indebtedness" for purposes of the 1995 Subordinated Note Indenture or
1996 Subordinated Note Indenture except Indebtedness incurred pursuant to this
Agreement, the other Loan Documents, Qualifying Interest Rate Hedging Agreements
or the Synthetic Lease Facility. Notwithstanding the foregoing, Genesis may
refinance the 1995 Subordinated Note Indenture or the 1996 Subordinated Note
Indenture in accordance with Section 8.1(f) above.
8.11 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS; EXERCISE OF
PUT/CALL AND UNDERTAKINGS RESPECTING PUT/CALL.
(a) Constituent Documents. No Borrower shall amend, modify or
supplement its articles or certificate of incorporation, bylaws,
partnership agreement or other constituent documents (i) if a Material
Adverse Effect could result from such amendment, modification or
supplement or (ii) if such amendment, modification or waiver could
reasonably be expected to materially adversely affect the rights or
interests of the Agents, the Issuer or the Lenders.
(b) Transaction Documents. No Borrower shall amend, modify or
supplement any Transaction Document, except for such amendments,
modifications or supplements which could not reasonably be expected to
have an adverse effect on the Borrowers taken as a whole (including the
condition (financial or otherwise), properties or prospects of the
Borrowers), the Loan Documents or any Lender Party.
(c) Put/Call Agreement. Genesis shall not purchase or otherwise pay
for, directly or indirectly, any stock of Genesis ElderCare Corp.
(pursuant to the Put/Call Agreement or otherwise) for cash, or permit
Genesis ElderCare Corp. to do so, except with the consent of the Required
Lenders provided, however that Genesis may purchase the stock of Genesis
Eldercare Corp. under the Put/Call Agreement with proceeds of the issuance
of capital stock of Genesis. Genesis shall cause each of the conditions to
the ability of Genesis to issue Genesis common stock in lieu of paying the
Option Price (as defined in the Put/Call Agreement) in cash under Section
3.2 of the Put/Call Agreement (or any successor section thereto) to be
satisfied at all times relevant to the Put/Call Agreement.
8.12 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS. No Borrower shall enter
into, or remain a party to, any agreement or instrument which would
-69-
<PAGE>
impose any restriction; (a) on the right of such Person from time to time to
declare and pay dividends or take similar actions with respect to capital stock
owned by such Person or pay any Indebtedness, obligations or liabilities from
time to time owed to another Borrower; or (b) that would prohibit the grant of
any Lien upon any of its properties (now owned or hereafter acquired) to secure
any senior Indebtedness except for restrictions in agreements respecting
Permitted Liens to the extent that the prohibition applies only to property
subject to the Permitted Lien; or (c) would prohibit, or require the consent of
any Person to, any amendment, modification or supplement to any of the Loan
Documents except: (i) restrictions set forth in the Loan Documents or in
documents entered into in connection with the Synthetic Lease Facility; (ii)
legal restrictions of general applicability; and (iii) restrictions pursuant to
the 1995 Subordinated Note Indenture and the 1996 Subordinated Note Indenture or
any amendment or refinancing thereof permitted by Section 8.1(f) above; and (iv)
any public subordinated indenture permitted under Section 8.1(h).
8.13 LIMITATIONS ON MERGERS, ETC. No Borrower shall merge or
consolidate with or into any Person, except (a) mergers of any Borrower with
Genesis where Genesis is the survivor, (b) mergers of any Restricted Subsidiary
of Genesis with any wholly-owned Restricted Subsidiary of Genesis where such
wholly-owned Restricted Subsidiary is the survivor, (c) any merger pursuant to
an Acquisition permitted under Section 8.4 above (Acquisitions, Etc.) or (d) any
merger pursuant to a disposition permitted under Section 8.5 above
(Dispositions).
8.14 AVOIDANCE OF OTHER CONFLICTS. No Borrower shall violate or conflict
with, be in default under, or be or remain subject to any liability (contingent
or otherwise) on account of any violation or conflict with (a) its articles or
certificate of incorporation, bylaws or partnership agreement (or other
constituent documents), or (b) any agreement or instrument to which it is party
or by which any of its properties (now owned or hereafter acquired) may be
subject or bound, except, with respect to clause (b), for matters that could
not, individually or in the aggregate, have a Material Adverse Effect.
8.15 CAPITAL EXPENDITURES. No Borrower shall make or commit to make any
Capital Expenditure if, after giving effect to such Capital Expenditure, the
aggregate amount of all Capital Expenditures of the Borrowers incurred (i)
during the fiscal year ending September 30, 1997, would exceed Forty Million
Dollars ($40,000,000.00) and (ii) in each fiscal year thereafter, would exceed
an amount equal to the amount permitted in the preceding year plus an additional
Five Million Dollars ($5,000,000.00) (e.g., $45,000,000.00 in the fiscal year
ending September 30, 1998) provided, however, that in addition to the foregoing
amounts, the Borrowers may make or commit to make Capital Expenditures in
connection with the development of the Newly Developed Facilities so long as the
amount of such Capital Expenditures do not exceed Twenty Million Dollars
($20,000,000.00) during any four consecutive fiscal quarters.
-70-
<PAGE>
ARTICLE 9
DEFAULTS
9.1 EVENTS OF DEFAULT. An "Event of Default" means any one of the
following events (whatever the reason for such Event of Default, whether it
shall be voluntary or involuntary and whether it shall be by action or inaction,
by operation of law, pursuant to a court order or any rule or regulation of any
Governmental Authority or otherwise):
(a) Failure to Pay Principal or Reimburse Drawings. The Borrowers
shall fail to make any payment of the principal of any Loan on the date when the
same shall become due and payable, whether at stated maturity or at a date fixed
for any installment or prepayment thereof or otherwise; or the Borrowers shall
fail to make any reimbursement of any Drawing under a Letter of Credit or shall
fail to deposit any amount into the cash collateral account, in either case, at
the times and in the amounts specified in Article 3 above.
(b) Failure to Pay Interest, Fees and Other Amounts. The Borrowers
shall fail to make any payment of interest on any Loan or shall fail to pay any
fees or any other amounts owing hereunder or under any other Loan Documents
(other than as specified in paragraph (a) above) on the dates when such
interest, fees or other amounts shall become due and payable and such failure
continues for more than three (3) Business Days.
(c) Covenant Defaults. (i) There shall occur a default in the due
performance or observance of any term, covenant or agreement to be performed or
observed pursuant to any of Sections 6.1(f)(ii), 6.2, 6.3, 6.7, 6.10, 6.11, 6.14
or 6.17 or any Sections in Article 7 or Article 8.
(ii) There shall occur any default in the due performance or
observance of any term, covenant or agreement to be performed or observed
pursuant to the provisions of this Agreement (other than as provided in
paragraph (a) or paragraph (b) above or subparagraph (i) of this paragraph (c))
and, if capable of being remedied, such default shall continue unremedied for
thirty (30) days after any Borrower becomes aware, or should in the exercise of
reasonable diligence have become aware, of such default.
(d) 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 made or deemed made by any subordinated creditor in or pursuant to or in
connection with the Investors' Subordination Agreement shall prove to have been
false or misleading in any material respect as of the time when made or deemed
made.
(e) Synthetic Lease Default. There shall have occurred and be
continuing any "Lease Event of Default" or "Loan Event of Default" as such terms
are defined in the documents relating to the Synthetic Lease Facility.
(f) Subordinated Debentures. Any "Event of Default" (or similar
term) as defined in the 1995 Subordinated Note Indenture or the 1996
Subordinated Note Indenture
-71-
<PAGE>
or any other subordinated indentures to which any Borrower may from time to time
be party shall have occurred and be continuing; or, any term or provision of the
subordination provisions contained in any such indentures or the Investors'
Subordination Agreement shall cease to be in full force and effect in accordance
with its respective terms; or any Loan Party or any holder of any 1995
Subordinated Note or of any 1996 Subordinated Note or subordinated obligation
under the Investors' Subordination Agreement or other subordinated note or other
subordinated obligations (or any trustee or agent on behalf of such holder)
shall 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 to make or to offer to make, any defeasance, redemption or
purchase of 1995 Subordinated Notes under Section 4.5 or 5.13 of the 1995
Subordinated Note Indenture or Genesis shall make, or shall be required to make
or to offer to make, any purchase of 1996 Subordinated Notes under Section 4.5
or 5.13 of the 1996 Subordinated Note Indenture; or Genesis shall make, or shall
be required to make or to offer to make, any purchase, defeasance or redemption
of subordinated notes under any similar provision, if any, under any such other
subordinated indentures or other subordinated obligations.
(g) Other Cross-Defaults. (i) Any Loan Party shall fail to pay, in
accordance with its terms and when due and payable, any Indebtedness (other than
Indebtedness referred in paragraph (a), (e) or (f) above) under, or arising out
of any Qualifying Interest Rate Hedging Agreement or an agreement or instrument
(or group or series of related agreements or instruments) which evidences
outstanding Indebtedness in excess of $5,000,000.00; (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; (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 (iv) a default by any Loan Party shall be continuing
under any other instrument or agreement (whether or not relating to
Indebtedness) binding upon such Person, except a default that, together with all
other such defaults under this clause (iv), could not have a Material Adverse
Effect.
(h) Judgments and Executions. One or more judgments for the payment
of money shall have been entered against any Loan Party or Loan Parties which
judgment or judgments, to the extent not paid or fully covered by insurance,
exceed $1,000,000.00 in the aggregate, and such judgment or judgments shall have
remained undischarged and unstayed for a period of 30 consecutive days; or one
or more writs or warrants of attachment, garnishment, execution, distraint or
similar process or any attachment (prejudgment or otherwise) of assets exceeding
in value the aggregate amount of $1,000,000.00 shall have been issued against
any Loan Party or Loan Parties or any of its or their respective properties.
(i) Invalidity or Noncompliance With Loan Documents. Any of the Loan
Parties shall fail to perform any of its obligations under any of the Loan
Documents (after taking into account any applicable cure period set forth in
such agreements), or the validity of this Agreement or any of the other Loan
Documents or the subordination provisions of any other instrument or document
intended by the parties hereto to benefit the Lender Parties shall have been
challenged or disaffirmed by or on behalf of any of the Loan Parties or
subordinated creditors, or any of the Loan Documents shall cease to be in full
-72-
<PAGE>
force and effect (other than pursuant to its terms) or, other than as a direct
result of any action or inaction of a Lender Party, any Liens created or
intended to be created by any of the Loan Documents shall at any time cease to
be valid and perfected subject to no equal or prior Liens except Permitted
Liens.
(j) Material Adverse Effect. The Required Lenders shall have
determined in good faith that an event or condition has occurred which could
have a Material Adverse Effect.
(k) 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 Borrower or any Loan Party or any of their respective Environmental
Affiliates, and the Required Lenders shall determine in good faith (which
determination shall be conclusive) that such event(s) or condition(s),
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) the existence of
any pending or threatened Environmental Claim against any such Person, or the
existence of any past or present acts, omissions, events or circumstances that
could form the basis of any Environmental Claim against any such Person.
(l) Change of Control. A Change of Control shall have occurred; or a
"Change in Control" as defined in the 1995 Subordinated Note Indenture shall
have occurred; or a "Change in Control" as defined in the 1996 Subordinated Note
Indenture shall have occurred; or a "Change of Control" as defined in the
Put/Call Agreement shall have occurred.
(m) Subsidiaries as Loan Parties. Any direct or indirect Subsidiary
of Genesis, other than Excluded Subsidiaries, shall fail to be, or shall cease
to be, or fail to become, a Borrower hereunder; or the equity of any such Person
owned by any Borrower shall cease to be, or fail to be, pledged under the Pledge
Agreement.
(n) Insolvency, Bankruptcy, Etc. Any Loan Party shall make an
assignment for the benefit of creditors or a composition with creditors, shall
generally not be paying its debts as they mature, shall admit its inability to
pay its debts as they mature, shall file a petition in bankruptcy, shall be
adjudicated insolvent or bankrupt, shall petition or apply to any tribunal for
the appointment of any receiver, custodian, liquidator or trustee of or for it
or any substantial part of its property or assets, shall commence any proceeding
relating to it under any bankruptcy, reorganization, arrangement, readjustment
of debt, receivership, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or there shall be commenced
against such Loan Party, any such proceeding and the same shall not be dismissed
within thirty (30) days or an order, judgment or decree approving the petition
in any such proceeding shall be entered against such Loan Party; or any Loan
Party shall by any act or failure to act indicate its consent to, approval of or
acquiescence in, any such proceeding or any appointment of any receiver,
custodian, liquidator or trustee of or for it or for any substantial part of its
property or assets, or shall suffer the appointment of any receiver, liquidator
or trustee, or shall take any corporate action for the purpose of effecting any
of the foregoing; or any court of competent jurisdiction shall assume
jurisdiction with respect to any such proceeding and the same shall not be
dismissed within thirty (30) days or a receiver or a trustee or other officer or
-73-
<PAGE>
representative of a court or of creditors, or any court, governmental office or
agency, shall, under color of legal authority, take and hold possession of any
substantial part of the property or assets of such Loan Party and shall not have
relinquished possession within thirty (30) days, or such Loan Party shall have
concealed, removed, or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors, or any of them,
or any Loan Party shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its property through legal proceedings or
distraint.
(o) Termination of Multicare Management Agreement or other
Transaction Documents. Except as permitted by the Required Lenders, (i) the
Multicare Management Agreement shall cease to be in full force and effect or
there shall be any breach by any party thereto or a default thereunder or an
amendment, modification or supplement thereto not permitted by the terms of this
Agreement or any notice of non-renewal or termination thereunder shall have been
delivered by any party thereto or (ii) any other Transaction Document shall
cease to be in full force and effect (other than by its terms) or there shall be
any material breach by any party thereto or a default thereunder or any such
document shall be amended, modified, restated or supplemented in a manner not
expressly permitted by the terms of this Agreement or (iii) any other Management
Agreement of any Borrower shall be terminated or cease to be renewed or extended
or shall be amended, modified, restated or supplemented if such termination,
failure to renew or extend or amendment, modification or supplement (either
singly or collectively with all other such events relating to other Management
Agreements) could have a Material Adverse Effect or (iv) at the time of the
exercise by the Sponsors (as defined in the Put/Call Agreement) or their rights
as set forth in Section 2.2 of the Put/Call Agreement or Section 6.9 of the
Put/Call Agreement, any circumstance shall exist which would, under the terms of
the Put/Call Agreement, prohibit Genesis from paying the Put Option Exercise
Price (as defined in the Put/Call Agreement) in Genesis Common Stock (or with
the proceeds of a concurrent offering of Genesis Common Stock) as permitted
under the Put/Call Agreement, or (v) there shall be any "Event of Acceleration"
(or successor concept) under the Put/Call Agreement, or (vi) any event shall
occur which would entitle the Sponsors to exercise any remedy under Section 8.9
of the Put/Call Agreement.
(p) Loss of Licenses, Reimbursement Approvals, Etc. There shall be a
Limitation of one or more Licenses or Reimbursement Approvals of any Borrower or
Borrowers or Persons managed by a Borrower or Borrowers and the Required Lenders
shall determine in good faith that such Limitation, individually or collectively
all such Limitations, could reasonably be expected to have a Material Adverse
Effect.
9.2 CONSEQUENCES OF AN EVENT OF DEFAULT
(a) Events of Default in General. If an Event of Default (other than
one specified in paragraph (n) of Section 9.1 (Insolvency, Bankruptcy, Etc.)
hereof) shall occur and be continuing or shall exist, then, in addition to all
other rights and remedies which the Administrative Agent, the Collateral Agent
or any other 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 Administrative Agent may, (and upon the written
-74-
<PAGE>
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 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 notice they will pay) to
the Administrative Agent cash for deposit to the credit of the
Letter of Credit collateral account in accordance with Article 3
hereof.
(iv) Take (or direct the Collateral Agent to take) any and all
actions permitted under the Pledge Agreement or other Loan
Documents.
(v) Exercise such other remedies as may be available to the
Lender Parties under applicable Law.
(b) Automatic Acceleration; Certain Bankruptcy-Related Events. If an
Event of Default specified in paragraph (n) of Section 9.1 (Insolvency,
Bankruptcy, Etc.) hereof shall occur or exist, then, in addition to all other
rights and remedies which any Lender Party 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 those referred to in
clause (iii) of the preceding paragraph (a), 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 Administrative Agent may, (and upon the written request of the
Required Lenders), shall, by notice to Genesis (on behalf of the Borrowers), do
(or shall direct the Collateral Agent to do) one or more of the following: (i)
take any and all actions permitted under the Pledge Agreement or any other Loan
Document or (ii) exercise such other remedies as may be available to the Lender
Parties under applicable Law.
(c) Directions to Collateral Agent. It is understood that
notwithstanding any direction that may be given by the Administrative Agent to
the Collateral Agent hereunder, the Collateral Agent shall take such action as
appropriate under applicable Law and the Pledge Agreement, the Collateral Agency
Agreement and such other agreements as may bind the Collateral Agent; the
Administrative Agent shall not be liable to any Person for any act or failure to
act by the Collateral Agent regardless of any direction given, or any failure to
give direction, by the Administrative Agent.
-75-
<PAGE>
(d) Equitable Remedies. It is agreed that, in addition to all other
rights hereunder or under Law, the Administrative Agent shall have the right to
institute proceedings in equity or other appropriate proceedings for the
specific performance of any covenant or agreement made in any of the Loan
Documents or for an injunction against the violation of any of the terms of any
of the Loan Documents or in aid of the exercise of any power granted in any of
the Loan Documents or by Law or otherwise.
9.3 APPLICATION OF PROCEEDS. After the occurrence of an Event of Default
and acceleration of the Loans, any amounts received on account of Loan
Obligations (whether received under the Collateral Agency Agreement or
otherwise) shall be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Loan Obligations
constituting fees, indemnities, expenses and other amounts due to the
Administrative Agent in its capacity as such;
Second, to payment of that portion of the Loan Obligations
constituting fees, indemnities (other than those paid pursuant to the
preceding clause First) due to the Lender Parties, ratably among them in
proportion to the amounts described in this clause Second due to them;
Third, to payment of that portion of the Loan Obligations
constituting accrued and unpaid interest on Loans and accrued and unpaid
interest on Drawings, ratably among the Lender Parties 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 or unreimbursed Drawings
ratably among the Lender Parties in proportion to the respective amounts
described in this clause Fourth due to them;
Fifth, to be deposited in such cash collateral account, if any, as
may be required under Article 3 above;
Sixth, to payment of all other Loan Obligations, ratably among the
Lender Parties 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 indefeasibly paid in full and all of the Letters of Credit shall have
terminated (or funds equal to the amount of any contingent liabilities in
respect thereof shall have been deposited in the Letter of Credit cash
collateral account), to Genesis (on behalf of the Borrowers) or as
otherwise required by Law.
-76-
<PAGE>
ARTICLE 10
THE ADMINISTRATIVE AGENT
10.1 APPOINTMENT. Subject to the provisions of the second sentence of
Section 10.9 below, each Lender Party hereby irrevocably appoints Mellon to act
as Administrative Agent for such Lender Party under this Agreement and the other
Loan Documents. Each Lender Party hereby irrevocably authorizes the
Administrative 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 Administrative Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto. Mellon hereby agrees to
act as Administrative 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 10.9 hereof. Each Lender Party hereby
irrevocably authorizes the Administrative 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 Administrative Agent. Each Lender Party agrees
that the rights and remedies granted to the Administrative Agent under the Loan
Documents shall be exercised exclusively by the Administrative Agent (or a
Person designated by the Administrative Agent), and that no Lender shall have
any right individually to exercise any such right or remedy, except to the
extent, if any, expressly provided herein or therein.
10.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES. Notwithstanding
anything to the contrary elsewhere in this Agreement or in any other Loan
Document:
(a) The Administrative 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 Administrative Agent shall be read into this Agreement or any other Loan
Document or shall otherwise exist.
(b) The duties and responsibilities of the Administrative Agent
under this Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and the Administrative Agent shall not have a
fiduciary relationship with respect to any Lender Party.
(c) The Administrative Agent's relationship with and to the Lender
Parties is governed exclusively by the terms of this Agreement and the other
Loan Documents. The Administrative Agent does not assume, and shall not at any
time be deemed to have, any relationship of agency or trust with or for, any
Lender Party or any other Person or (except only as expressly provided in this
Agreement and the other Loan Documents) any other duty or responsibility to such
Lender Party or other Person.
(d) The Administrative Agent shall be under no obligation to take
any action hereunder or under any other Loan Document if the Administrative
Agent believes in good faith that taking such action may conflict with any Law
or any provision of this
-77-
<PAGE>
Agreement or any other Loan Document, or may require the Administrative Agent to
qualify to do business in any jurisdiction where it is not then so qualified.
(e) The authority of the Administrative Agent to request information
from the Borrowers or to take any other voluntary action hereunder shall impose
no duty of any kind on the Administrative Agent to make such request or take any
such action.
(f) The Administrative Agent shall have no duty to inquire whether
any Interest Rate Hedging Agreement conforms to the terms and limitations of
this Agreement and shall have no duty to inquire as to whether the Borrowers
maintain any Interest Rate Hedging Agreements.
10.3 EXERCISE OF POWERS. The Administrative Agent shall take any action of
the type specified in this Agreement or other Loan Document as being within the
Administrative 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 direction, the Administrative 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 that 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 Administrative 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 each Lender Party (whether
or not it so consented). The Administrative Agent shall not have any liability
to any Person as a result of any action or inaction in conformity with this
Section 10.3.
10.4 GENERAL EXCULPATORY PROVISIONS. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) The Administrative 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 or
other) damages suffered by a Person and only to the extent that such Person
proves that such damages were caused by the Administrative Agent's own gross
negligence or willful misconduct.
(b) The Administrative Agent shall not be responsible for (i) the
execution, delivery, effectiveness, enforceability, genuineness, validity or
adequacy of any Loan Document, (ii) any recital, representation, warranty,
document, certificate, report or statement in, provided for in, or received
under or in connection with, any Loan Document, (iii) any failure of any Loan
Party, any Lender or the Issuer to perform any of their respective obligations
under any 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 Loan Document or otherwise from time to time, (v) caring for, protecting,
insuring, or paying any taxes, charges or assessments with respect to any
Collateral or (vi) the enforceability of any subordination.
-78-
<PAGE>
(c) The Administrative 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 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
(even if the Administrative Agent knows or should know that some event or
condition exists or fails to exist), or (iii) except to the extent set forth in
Section 10.5(f) below, the existence of any Event of Default or Default.
(d) The Administrative 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, whether obtained under or in connection with this
Agreement or otherwise, except for such notices, reports and other information
expressly required by this Agreement or any other Loan Document to be furnished
by the Administrative Agent to such Lender Party.
10.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT.
(a) The Administrative 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 Administrative Agent shall not have any duty to verify the identity or
authority of any Person giving such notice or other communication.
(b) The Administrative Agent may consult with legal counsel
(including in-house counsel for the Administrative 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 Administrative 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 Administrative 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 Administrative Agent in accordance with the
requirements of this Agreement or any other Loan Document. Whenever the
Administrative 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 Administrative 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 Administrative 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 which may be imposed on,
incurred
-79-
<PAGE>
by or asserted against the Administrative Agent by reason of taking or
continuing to take any such action.
(e) The Administrative Agent may perform any of its duties under
this Agreement or any other Loan Document by or through agents or
attorneys-in-fact. The Administrative 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 Administrative Agent shall not be deemed to have any
knowledge or notice of the occurrence of any Event of Default or Default unless
the Administrative Agent has received notice from a Lender Party or a Borrower
referring to this Agreement, describing such Event of Default or Default, and
stating that such notice is a "notice of default." If the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to each Lender Party.
10.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE AGENT OR OTHER LENDERS.
Each Lender Party acknowledges as follows: (a) neither the Administrative Agent
nor any other Lender Party has made any representations or warranties to it, and
no act taken hereafter by the Administrative Agent or any other Lender Party
shall be deemed to constitute any representation or warranty by the
Administrative Agent or such other Lender Party to it; (b) it has, independently
and without reliance upon the Administrative 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 Administrative 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.
10.7 INDEMNIFICATION. Each Lender agrees to reimburse and indemnify each
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 share of
(without duplication) the Commitment, the Loans and Letter of Credit
Participations, 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 such Agent or such other Person in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Agent or such other Person shall be designated a
party thereto) that may at any time be imposed on, incurred by or asserted
against such 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
Existing Credit Agreement or any other "Loan Document" referred to therein, the
Tender Offer, any 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 Existing
Credit Agreement, provided that no Lender shall be liable for any portion of
such amounts, losses, liabilities, claims, damages, expenses, obligations,
-80-
<PAGE>
penalties, actions, judgments, suits, costs or disbursements that such Lender
proves were the result of the gross negligence or willful misconduct of such
Agent or such other Person, and, provided, further that no Lender that was not a
party to the Existing Credit Agreement shall be obligated to indemnify the
Agents or their directors, officers, employees or agents from losses and other
liabilities referred to above to the extent that such liabilities were the
result of, arose solely out of, or were related solely to the Existing 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 Agents. Payments under this Section
10.7 shall be due and payable on demand.
10.8 REGISTER. The Administrative Agent shall maintain at its address
referred to in Section 12.1 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans and stated interest thereon owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrowers, the Agents and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Genesis on behalf of the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
10.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative 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 Administrative
Agent may be removed by the Required Lenders at any time for cause by such
Required Lenders giving 30 days' prior written notice thereof to the
Administrative Agent, the other Lender Parties and Genesis (on behalf of the
Borrowers). Upon any such resignation or removal, the Required Lenders shall
have the right to appoint a successor Administrative Agent with (so long as no
Default or Event of Default shall have occurred and then be continuing) the
consent of Genesis (on behalf of the Borrowers) whose consent shall not be
unreasonably withheld or delayed. If no successor Administrative 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 Administrative Agent may (but shall not be required to) appoint a
successor Administrative Agent. Each successor Administrative Agent shall be a
Lender if any Lender shall at the time be willing to become the successor
Administrative Agent, and if no Lender shall then be so willing, then such
successor Administrative Agent shall be an Eligible Institution. Upon the
acceptance by a successor Administrative Agent of its appointment as
Administrative Agent hereunder, such successor Administrative Agent shall
thereupon succeed to and become vested with all the properties, rights, powers,
privileges and duties of the former Administrative Agent in its capacity as
such, without further act, deed or conveyance. Upon the effective date of
resignation or removal of a retiring Administrative Agent, such Administrative
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 Administrative Agent under
this Agreement. If and so long as no successor Administrative Agent shall have
been appointed, then any notice or other communication required or permitted to
be given by the
-81-
<PAGE>
Administrative Agent shall be sufficiently given if given by the Required
Lenders, all notices or other communications required or permitted to be given
to the Administrative Agent shall be given to each Lender, and all payments to
be made to the Administrative Agent shall be made directly to the Loan Party or
Lender Party for whose account such payment is made.
10.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL AGENT. If the
Administrative 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 Administrative 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 Administrative Agent, to constitute one or more
other Persons designated by the Administrative Agent, to act as
co-Administrative Agent or agent with respect to any part of the Collateral,
with such powers of the Administrative Agent as may be provided in such
supplemental agreement, and to vest in such other Person as such co-Agent or
separate agent, as the case may be, any properties, rights, powers, privileges
and duties of the Administrative Agent under this Agreement or any other Loan
Document.
10.11 CALCULATIONS. The Administrative 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 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.
10.12 OTHER AGENTS.
(a) In General. The title "Syndication Agent" given to Citicorp USA,
Inc. and NationsBank, N.A. in this Agreement and the title "Documentation Agent"
given to First Union National Bank in this Agreement are solely for
identification purposes and imply no rights in favor of such Person and no
responsibility by such Person except such rights or obligations of "Agents"
(including the right to make certain determinations) as are expressly stated
herein. No such Agent shall be liable for any act or failure to act on its part
except for that which the claimant proves constitutes the gross negligence or
willful misconduct of such Agent.
(b) Successor Agents. Any Syndication Agent and the Documentation
Agent may resign at any time and such Agents may be removed at any time for
cause by the other Agents and Genesis in which event, Genesis (on behalf of the
Borrowers) if no Default or Event of Default shall then exist, and the
Administrative Agent may (in their sole discretion) appoint a successor Agent.
-82-
<PAGE>
ARTICLE 10A
SPECIAL INTERCREDITOR PROVISIONS
10A.1 SPECIAL PROVISIONS APPLICABLE TO LENDER PARTIES AS PARTIES TO THE
MULTICARE CREDIT AGREEMENT. There are certain understandings about the Multicare
Credit Agreement which the Lenders have relied upon in entering into this
Agreement and wish to confirm in an intercreditor agreement with the parties to
the Multicare Credit Agreement. Because each of the Lenders hereunder is also a
"Lender" under the Multicare Credit Agreement, this provision (and a
corresponding provision in the Multicare Credit Agreement) shall take the place
of a separate agreement and shall serve as an intercreditor agreement among the
lenders party to this Agreement and the lenders party to the Multicare Credit
Agreement. Accordingly, each of the Lenders hereunder, in its capacity as a
"Lender" under the Multicare Credit Agreement, agree to be bound by the
following covenants so long as it remains a party to the Multicare Credit
Agreement:
(a) Without the written consent of the Required Lenders, the parties
to the Multicare Credit Agreement will not amend, modify, supplement or restate
the assignment provisions of the Multicare Credit Agreement (currently set forth
in Section 12.9 of the Multicare Credit Agreement) which require that
assignments or participations of any lender's rights and obligations thereunder
be made concurrent with a like assignment or participation of such lender's
rights and obligations hereunder; and
(b) Without the written consent of the Required Lenders, the parties
to the Multicare Credit Agreement will not amend, modify, supplement or restate
the provisions of the Multicare Credit Agreement (currently set forth in Section
8.16 of the Multicare Credit Agreement) which set forth tests respecting when
management fees under the Multicare Management Agreement may be paid in cash,
which provisions are incorporated by reference into the Multicare Management
Agreement.
ARTICLE 10B
SPECIAL INTER-BORROWER PROVISIONS
10B.1 CERTAIN BORROWER ACKNOWLEDGEMENTS.
(a) Each Borrower acknowledges that it will enjoy significant
benefits from the business conducted by the other Borrowers because of, inter
alia, their combined ability to bargain with other Persons including without
limitation their ability to receive the credit facilities on favorable terms
granted by this Agreement and other Loan Documents which would not have been
available to an individual Borrower acting alone. Each Borrower has determined
that it is in its best interest to procure credit facilities which each Borrower
may utilize directly and which receive the credit support of the other Borrowers
as contemplated by the Credit Agreement and the other Loan Documents.
-83-
<PAGE>
(b) The Lenders have advised the Borrowers that they are unwilling
to enter into this Agreement and the other Loan Documents and make available the
credit facilities extended hereby to any Borrower unless each Borrower agrees,
among other things, to be jointly and severally liable for the due and proper
payment of the obligations of each other Borrower under this Agreement and other
Loan Documents. Each Borrower has determined that it is in its best interest and
in pursuit of its purposes that it so induce the Lenders to extend credit
pursuant to this Agreement and the other documents executed in connection
herewith (i) because of the desirability to each Borrower of the credit
facilities, the interest rates and the modes of borrowing available hereunder,
(ii) because each Borrower may engage in transactions jointly with other
Borrowers and (iii) because each Borrower may require, from time to time, access
to funds under this Agreement for the purposes herein set forth.
(c) Each Borrower has determined that it has and, after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents (including, without limitation, the inter-Borrower arrangement set
forth in this Article 10B) will have, assets having a fair saleable value in
excess of the amount required to pay its probable liability on its existing
debts as they fall due for payment and that the sum of its debts is not and will
not then be greater than all of its property at a fair valuation, that such
Borrower has, and will have, access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature and that the value of the benefits to
be derived by such Borrower from the access to funds under this Agreement
(including, without limitation, the inter-Borrower arrangement set forth in this
Section 10B) is reasonably equivalent to the obligations undertaken pursuant
hereto.
10B.2 CERTAIN INTER-BORROWER AGREEMENTS.
(a) Subject to paragraph (b) below, each Borrower as indemnitor
shall indemnify the other Borrowers as indemnitees for all Loan Obligations
incurred by the indemnitee Borrowers for Loans advanced to, or Letters of Credit
issued for the account of, the indemnitor Borrower.
(b) The rights and obligations of the Borrowers pursuant to
paragraph (a) above shall be subordinated in all respects to the rights of the
Administrative Agent and the other Lender Parties with respect to the Loan
Obligations and, accordingly, each Borrower agrees that it shall not make any
payment or receive any payment pursuant to the preceding paragraph (a) at any
time a Default has occurred and is continuing or would be caused thereby. Each
Borrower agrees that in the event it receives any payment described by or in
violation of this paragraph (b), it shall accept such payment as agent of the
Administrative Agent, for the benefit of the Lender Parties, and hold the same
in trust on behalf of and for the benefit of the Administrative Agent, for the
benefit of the Lender Parties.
10B.3 RECORDS. Genesis (on behalf of each Borrower) shall maintain records
specifying (a) all Loan Obligations incurred by each Borrower, (b) the date of
such incurrence, (c) the date and amount of any payments made in respect of such
Loan Obligations and (d) all inter-Borrower obligations pursuant to paragraph
10B.2 above. Genesis shall make copies of such records available to the
Administrative Agent, upon request.
-84-
<PAGE>
ARTICLE 11
DEFINITIONS; CONSTRUCTION
11.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings, (terms defined in the singular to have a
correlative meaning when used in the plural) unless the context hereof otherwise
clearly requires:
"Accumulated Funding Deficiency" has the meaning given to such term
in ss.4001(a)(18) of ERISA.
"Acquisition" means, any acquisition by one or more of the
Borrowers, 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" means, 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
(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 Senior Debt/Cash Flow Ratio" means as of any date of
determination:
(a) Adjusted Senior Debt 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.
"Adjusted Senior Debt" means, as of any date of determination, the
result of:
(a) Adjusted Total Indebtedness, as of such date of
determination
less
(b) the sum of (i) Indebtedness which is evidenced by the 1995
Subordinated Notes, (ii) Indebtedness which is evidenced by
the 1996 Subordinated Notes and (iii) 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 Administrative
Agent.
"Adjusted Total Debt/Cash Flow Ratio" means, as of any date of
determination, the ratio of:
-85-
<PAGE>
(a) Adjusted Total 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 ended on, or
most recently prior to, such date of determination.
"Adjusted Total Indebtedness" means, as of any date of
determination, the sum of:
(a) Total Funded Indebtedness as of such date of
determination
plus
(b) the product of (i) the amount of Rental Expense 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 multiplied by (ii) eight (8).
"Administrative Agent" has the meaning ascribed to such term in the
preamble of this Agreement.
"Affiliate" of a Person means (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). Excluded Subsidiaries
may be "Affiliates" of Genesis.
"Agents" means collectively the Administrative Agent, Citicorp USA,
Inc. as Syndication Agent, First Union National Bank as Documentation Agent and
NationsBank, N.A. as Syndication Agent.
"Agreement" means this Third Amended and Restated Credit Agreement
as the same may be amended, modified, restated or supplemented from time to time
in accordance with its terms.
"Agreement Date" means the date first-above written.
"Amount of Unfunded Benefit Liabilities" has the meaning given to
such term in ss.4001(a)(18) of ERISA.
-86-
<PAGE>
"Applicable Margin" means a marginal rate of interest which is added
to the LIBO Rate or Prime Rate, as the case may be, to determine the effective
rate of interest on LIBO Loans and other payments as specified in the Loan
Documents. Until the Officer's Compliance Certificate for the fiscal year ended
September 30, 1997 is delivered to the Administrative Agent and Lenders pursuant
to Section 6.1 above, the Applicable Margin (a) for LIBO Rate Loans shall be the
following: 2.5% for any RC Loans or Tranche A Term Loans; 2.75% for any Tranche
B Term Loans; and 3.0% for any Tranche C Term Loan and (b) for Prime Rate Loans
shall be .75% for RC Loans and Tranche A Loans, shall be 1.0% for Tranche B
Loans and shall be 1.25% for Tranche C Loans. Thereafter, the Applicable Margin
shall be determined in the following manner:
(a) For any RC Loans or Tranche A Term Loans, the Applicable Margin
shall be the percentage amount set forth below under the caption
"Applicable Margin for RC Loans and Tranche A Term Loans" opposite the
relevant Adjusted Total Debt/Cash Flow Ratio:
Adjusted Total Applicable Margin for RC Loans
Debt/Cash Flow Ratio and Tranche A Term Loans
-------------------- ------------------------
Prime Rate Loans LIBO Rate Loans
---------------- ---------------
below 3.0 0% .75%
>= 3.0 < 3.5 0% 1.00%
>= 3.5 < 4.0 0% 1.25%
>= 4.0 < 4.5 0% 1.50%
>= 4.5 < 5.0 0% 1.75%
>= 5.0 < 5.5 .25% 2.00%
>= 5.5 < 6.0 .50% 2.25%
>= 6.0 .75% 2.50%
(b) For any Tranche B Term Loans, the Applicable Margin for LIBO
Rate Loans shall be 2.75%, provided, however, that any time that the
Adjusted Total Debt/Cash Flow Ratio is less than 4.5 to 1.0, the
Applicable Margin for Tranche B Term Loans shall be 2.5%. The Applicable
Margin for Tranche B Term Loans which are Prime Rate Loans shall be 1.0%
provided, however, that at any time that the Adjusted Total Debt/Cash Flow
Ratio is less than 4.5 to 1.0, the Applicable Margin for Tranche B Loans
which are Prime Rate Loans shall be .75%.
(c) For any Tranche C Term Loans, the Applicable Margin for LIBO
Rate Loans shall be 3.0%, provided, however, that any time that the
Adjusted Total Debt/Cash Flow Ratio is less than 4.5 to 1.0, the
Applicable Margin for Tranche C Term Loans shall be 2.75%. The Applicable
Margin for Tranche C Term Loans which are Prime Rate Loans shall be 1.25%
provided, however, that at any time that the Adjusted Total Debt/Cash Flow
Ratio is less than 4.5 to 1.0, the Applicable Margin for Tranche C Loans
which are Prime Rate Loans shall be 1.00%.
(d) The Applicable Margin for Swing Loans at all times shall be
zero.
-87-
<PAGE>
The Applicable Margin shall be adjusted five Business Days after receipt of the
annual or quarterly Officer's Compliance Certificate, delivered pursuant to
Section 6.1. At any time that such annual or quarterly Officer's Compliance
Certificate is required to be delivered pursuant to said Section 6.1 and is not
so delivered, then the Applicable Margin shall be the highest rate specified for
the subject Tranche of Loan until the Officer's Compliance Certificate is so
delivered.
"Assignment and Acceptance" shall have the meaning ascribed to such
term in Section 12.9.
"Assumed Indebtedness" means Indebtedness incurred by a Person which
is not a Borrower and which (a) is existing at the time such Person (or assets
of such Person) is acquired by a Borrower and (b) is assumed by a Borrower in
connection with such Acquisition, other than Indebtedness incurred by the
original obligor in connection with, or in contemplation of, such Acquisition.
"Available RC Commitment" means, as of any date, the difference
between (a) and (b) where (a) is the amount of the RC Commitment on such date
and (b) is the sum of (i) the aggregate outstanding principal amount of all RC
Loans on such date, (ii) the face amount of all outstanding Letters of Credit on
such date, (iii) the aggregate unpaid amount of all Drawings under Letters of
Credit as of such date and (iv) the aggregate outstanding principal amount of
all Swing Loans on such date.
"Bank Tax" means (i) any Tax based on or measured by net income of a
Lender Party, any franchise Tax and any doing business Tax imposed upon any
Lender Party by any jurisdiction (or any political subdivision thereof) in which
such Lender Party or any lending office of a Lender Party is located and (ii)
for the purposes of Section 1.13, any other Tax imposed by a jurisdiction other
than the United States or a political subdivision thereof that would not have
been imposed but for a present or former connection between such Lender Party or
lending office (as the case may be) and such jurisdiction.
"Borrowers" has the meaning ascribed to such term in the preamble
hereto. It is the intent of the parties (and a covenant of the Borrowers herein)
that each Person which is now or hereafter becomes a direct and indirect
Subsidiary of Genesis other than the Excluded Subsidiaries shall at all times
after becoming a Subsidiary of Genesis be a "Borrower" pursuant to the terms of
this Agreement.
"Business Day" means any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania, the State of New
York or other day on which banking institutions are authorized or obligated to
close in the city in which the Administrative Agent's Domestic Lending Office is
located or, as applicable, in the city in which the Issuer's Domestic Lending
Office is located provided, however, that whether or not expressly stated in
this Agreement or other Loan Documents, when "Business Day" is used with respect
to any LIBO Rate Loan, such Business Day must also be a Eurodollar Business Day.
"Capital Expenditures", with respect to any Person, means, for any
period, all expenditures (whether paid in cash or accrued as liabilities) of
such Person during such period which are, or should be, classified as capital
expenditures in accordance with GAAP.
-88-
<PAGE>
"Capitalized Lease" means 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.
"Cash Equivalent Investments" means 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
$1,000,000,000.00 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 Services;
(iii) commercial paper of companies, banks, trust companies or national banking
associations (in each case excluding Genesis 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 $1,000,000,000.00 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, means (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, and (v) income taxes, all as
adjusted for changes in accrued management fees under the Multicare Management
Agreement, in each case for such period.
"CERCLA" means 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" means the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be amended
from time to time.
"Change of Control" means the occurrence of any of the following
events:
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 as
amended), 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,
except that a Person shall be deemed to be the "beneficial owner" of
all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of
-89-
<PAGE>
time, upon the happening of an event or otherwise), 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, or
under Section 5.10 of the 1996 Subordinated Note Indenture if then
in effect, from paying as a "restricted payment" (as defined in such
indentures), 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
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" means
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 1996 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.
"Closing Date" means the date that the initial Loans are made
hereunder.
-90-
<PAGE>
"COBRA Violation" means any violation of the "continuation coverage
requirements" of "group health plans" of former ss.162(k) of the Code (as in
effect for tax years beginning on or before December 31, 1988) and of ss.4980B
of the Code (as in effect for tax years beginning on or after January 1, 1989)
and Part 6 of Subtitle B of Title I of ERISA.
"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, and the Treasury regulations thereunder.
"Collateral" means (a) the cash collateral account, if any, in
respect of Letters of Credit from time to time and (b) the collateral subject
to, or purported to be subject to, the Liens of the Pledge Agreement, from time
to time.
"Collateral Agency Agreement" means the Third Amended and Restated
Collateral Agency Agreement, dated as of the date hereof, among the Borrowers,
the Administrative Agent, Mellon as SLF Agent (as defined therein) Mellon as
Collateral Agent as same may be amended, modified, supplemented or restated from
time to time consistent with the provisions hereof.
"Collateral Agent" has the meaning assigned to that term in the
Collateral Agency Agreement.
"Commitment" means, with respect to any Lender, the obligation of
such Lender to make Loans pursuant to the terms of this Agreement and, with
respect to the Issuer, to issue Letters of Credit. "Commitment" means, with
respect to all Lender Parties, the sum of each Lender Party's Commitment.
"Contingent Reimbursement Obligation" means the contingent
obligation of the Borrowers to reimburse the Issuer for any Drawings that may be
made under an outstanding Letter of Credit, whenever issued. Without limiting
the generality of the foregoing, the amount of all Contingent Reimbursement
Obligations at any time shall be the aggregate amount available to be drawn
under outstanding Letters of Credit at such time.
"Controlled Group" means a group of employers, of which any Borrower
is a member and which group constitutes:
(a) A controlled group of corporations (as defined inss.414(b)
of the Code);
(b) Trades or businesses (whether or not incorporated) which
are under common control (as defined in ss.414(c) of the Code);
(c) Trades or businesses (whether or not incorporated) which
constitute an affiliated service group (as defined in ss.414(m) of the Code); or
(d) Any other entity required to be aggregated with any
Borrower pursuant to ss.414(o) of the Code.
-91-
<PAGE>
"Cypress" means The Cypress Group L.L.C., a Delaware limited
liability company and (a) any Subsidiary thereof and (b) any other Affiliate
thereof reasonably acceptable to the Administrative Agent. Without limiting the
generality of the foregoing, "Cypress" shall include Cypress Associates L.P.,
Cypress Offshore Partners L.P., Cypress Merchant Banking Partners L.P., Cypress
Advisors Inc.
"Default" means any event or condition which with notice, passage of
time or both, would constitute an Event of Default.
"Default Rate" means, with respect to any amounts payable hereunder
or under the other Loan Documents, a rate equal to the sum of (a) two percent
(2%) per annum plus (b) the interest rate otherwise in effect with respect to
such amounts or, if no such rate is otherwise in effect with respect to such
amounts, a rate equal to the sum of (i) the Prime Rate plus (ii) the highest
Applicable Margin thereon plus (iii) two percent (2%).
"Defined Benefit Pension Plan" means a defined benefit plan (other
than a Multiemployer Plan) as defined in ss.3(35) of ERISA which is maintained
by any Borrower or any member of its Controlled Group.
"Defined Contribution Plan" means an individual account plan (other
than a Multiemployer Plan) as defined in ss.3(34) of ERISA which is maintained
by any Borrower or any member of its Controlled Group.
"Designated Acquiror" has the meaning ascribed to such term in
Section 8.5 above.
"Dollar," "Dollars" and the symbol "$" means lawful money of the
United States of America.
"Domestic Lending Office" means, with respect to any Lender or the
Issuer, the branch or office of such Lender or the Issuer, as the case may be,
designated, from time to time, by such Person in a notice to the Administrative
Agent and Genesis.
"Drawing" means (a) any amount disbursed by the Issuer pursuant to
the terms of a Letter of Credit or (b) as the context may require, the
obligation of the Borrowers to reimburse the Issuer for such disbursement.
"EBITDA" means Net Income before Interest Expense, provision for
income taxes, depreciation and amortization as adjusted on a pro forma basis for
the transactions contemplated by the Multicare Management Agreement.
"Eligible Institution" means (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a commercial bank organized under the laws of the United States,
or any State thereof, and having a combined capital and surplus of at least
$1,000,000,000.00; (iv) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $1,000,000,000.00; (v) a commercial bank
organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development (the OECD) or has
concluded special lending arrangements with the International Monetary Fund
associated with its
-92-
<PAGE>
General Arrangements to Borrow or under the laws of a political subdivision of
any such country, and having a combined capital and surplus of at least
$1,000,000,000.00, so long as such bank is acting through a branch or agency
located in the United States; and (vi) a finance company, insurance company or
other financial institution or fund (whether a corporation, partnership, trust
or other entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having a combined
capital and surplus or total assets of at least $500,000,000.00; and (vii) with
respect to any Lender that is a fund, any other fund with assets in excess of
$100,000,000.00 that invests in bank loans and is managed by the same investment
advisor as such Lender; provided, however, that neither any Loan Party nor any
Affiliate of a Loan Party shall qualify as an Eligible Institution under this
definition.
"Environmental Affiliate" means, 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" means any approval, order, consent,
authorization, certificate, license, permit or validation of, or exemption or
other action by, or filing, recording or registration with, any Governmental
Authority pursuant to or required under any Environmental Law.
"Environmental Claim" means, 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 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" means 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" 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 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.
-93-
<PAGE>
"Environmental Law" 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 (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. "Environmental Law" shall also include any Environmental Approval and
the terms and conditions thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations thereunder.
"Eurodollar Business Day" means any Business Day on which dealings
in Dollar deposits are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (include
dealings in Dollar deposits) in London, England.
"Eurodollar Lending Office" means, with respect to any Lender or the
Issuer, the branch or office of such Lender or the Issuer, as the case may be,
designated by such Person in a notice to the Administrative Agent and Genesis.
"Event of Default" means any of the Events of Default described in
Section 9.1 hereof.
"Excess Cash Flow" means, for any fiscal year of the Borrowers, the
amount, if any, by which Net Cash Provided by Operations for such fiscal year
exceeds the sum of (a) the aggregate principal amount of Total Funded
Indebtedness incurred consistently with the terms of this Agreement, and
scheduled to have been repaid or prepaid during such fiscal year and (b) the
amount of any Investments made pursuant to Section 8.3(h).
"Excluded Subsidiaries" means, subject to Section 6.10(b), the
entities listed on Schedule 11.1 attached hereto and, whether or not the same
would otherwise be Subsidiaries of Genesis, the Multicare Group and, after the
Closing Date, each Subsidiary of any Excluded Subsidiary.
"Existing Credit Agreement" has the meaning set forth in the
recitals hereof.
"Federal Funds Rate" for any day means the rate per annum determined
by the Administrative 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.
"Fixed Charge Coverage Ratio" means, as of any date of
determination, the result of:
-94-
<PAGE>
(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, income taxes 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 on Total
Funded Indebtedness for the four fiscal quarters ending on, or
most recently prior to, such date of determination.
"GAAP" has the meaning set forth in Section 11.3 below.
"Genesis" has the meaning ascribed to such term in the preamble
hereto.
"Genesis ElderCare Acquisition Corp." means the Delaware corporation
of that name, formerly Waltz Acquisition Corp.
"Genesis ElderCare Corp." means the Delaware corporation of that
name, formerly Waltz Corp.
"Genesis Eldercare Credit Agreement" has the meaning specified in
Section 4.1(s).
"Governmental Authority" means 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" means, 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.
"Health Care Business" means any healthcare related business
including any facility, unit, operation or business supplying health care
services, supplies or products, including long-term care, rehabilitation
therapy, specialized health care, health care management, and pharmacies.
"Indebtedness" of any Person means (without duplication):
-95-
<PAGE>
(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;
(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 lesser of (i) the fair market value of the asset
subject to such Lien and (ii) the amount of such Indebtedness;
(e) 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);
(f) 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;
(g) all obligations of such Person with respect to acceptances
or similar obligations issued for the account of such Person;
(h) 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;
(i) 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;
(j) all Guaranties of such Person; and
(k) 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
-96-
<PAGE>
conducted and subject to such reserves or other appropriate provisions as may be
required by GAAP.
"Indemnified Parties" means the Lender Parties and their respective
Affiliates and (without duplication) the directors, trustees, officers,
employees, attorneys and agents of each of the foregoing.
"Interest Expense" means, 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 (excluding any
obligations under any Synthetic Leases) plus (b) the net amount accrued under
any Interest Rate Hedging Agreements (or less the net amount receivable
thereunder) during such period.
"Interest Period" means with respect to any LIBO Rate Loan, (a)
initially, the period commencing on the borrowing or conversion date, as the
case may be, and ending one, two, three or six months thereafter as selected by
the Borrowers pursuant to Section 1.8 above and (b) thereafter, each period
commencing on the day after the last day of the preceding Interest Period and
ending one, two, three or six months thereafter, as selected by the Borrowers
pursuant to Section 1.8 above provided, however, if any such Interest Period
would otherwise end on a day which is not a Eurodollar Business Day, such
Interest Period shall be extended to the next succeeding Eurodollar Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Eurodollar Business Day and provided, further, if any such
Interest Period begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period (as may be the case
with an Interest Period commencing at the end of a calendar month) the Interest
Period shall end on the last Eurodollar Business Day of the relevant calendar
month.
"Interest Rate Hedging Agreement" means any rate swap, cap or collar
agreement with a term of at least three years or such shorter term as may be
acceptable to the Administrative Agent to which any or all of the Borrowers are
party and which is on terms and conditions satisfactory to the Administrative
Agent.
"Investments" has the meaning set forth in Section 8.3 above.
"Investors' Subordination Agreement" has the meaning ascribed to
such term in Section 4.1 above.
"Issuer" has the meaning ascribed to such term in the preamble
hereto.
"JCAHO" - Joint Commission on Accreditation of Healthcare
Organizations.
"Joinder Effective Date" means the date that any Joining Subsidiary
becomes a Borrower hereunder pursuant to Section 6.10 above.
"Joinder Supplement" has the meaning set forth in Schedule 6.10
hereto.
"Joining Subsidiary" has the meaning set forth in Section 6.10
hereof.
-97-
<PAGE>
"Law" means any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lender" has the meaning ascribed to such term in the preamble
hereto and shall include the Swing Loan Lender.
"Lender Parties" means, collectively, the Lenders, the Issuer, and
the Agents.
"Letter of Credit" means (i) any letter of credit issued by the
Issuer pursuant to Article 3 hereof or (ii) any letter of credit issued under
the Existing Credit Agreement and outstanding on the Closing Date.
"Letter of Credit Participation" means, with respect to any RC
Lender, the participation interest of such Lender in any Letter of Credit
acquired pursuant to Article 3 above. The amount of the Letter of Credit
Participation of an RC Lender in any Letter of Credit shall be deemed to be the
amount equal to such RC Lender's pro rata share (determined on the basis of the
RC Commitments at such time) of the sum of (a) the aggregate unpaid amount of
all Drawings thereunder at such time and (b) the amount of any Contingent
Reimbursement Obligations with respect thereto at such time.
"LIBO Rate" means the rate per annum determined by the
Administrative 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 Interest Period) determined in good faith by the Administrative
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 a.m., London time, two Eurodollar
Business Days prior to the first day of the applicable Interest Period for
delivery on the first day of such Interest Period in similar amounts and
maturities as the proposed LIBO Rate Loan by (b) a number equal to 1.0 minus the
Reserve Percentage. "Reserve Percentage" for any day means the percentage
(expressed as a decimal, rounded upward to the nearest 1/100 of 1%), as
determined in good faith by the Administrative 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 LIBO Rate shall
be adjusted automatically as of the effective date of each change in the Reserve
Percentage.
"LIBO Rate Loan" means a Loan bearing interest at the per annum rate
of the LIBO Rate plus Applicable Margin.
"Licenses" means any and all licenses, including provisional
licenses, certificates of need, JCAHO and/or other accreditations, permits,
franchises, rights to conduct business, approvals by a Governmental Authority or
otherwise, consents, qualifications, operating authority, and/or any other
authorizations.
"Lien" means any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including
-98-
<PAGE>
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.
"Limitation" means a revocation, suspension, termination,
impairment, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement and/or loss of any other rights.
"Loans" means, collectively, the Swing Loans, the Tranche A Term
Loans, the Tranche B Term Loans, the Tranche C Term Loans and the RC Loans. A
"Loan" means any of the Loans.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Investors' Subordination Agreement, the Pledge Agreement, the
Collateral Agency Agreement, 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, restated or supplemented from time to time.
"Loan Obligations" means 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 whether such obligations are direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising (specifically including obligations arising or accruing after
the commencement of any bankruptcy, insolvency or similar proceeding with
respect to any Loan Party, or which would have accrued but for the commencement
of such proceeding even if the claim is not allowed in such proceeding under
applicable law).
"Loan Parties" means 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 Pledge Agreement or is a Guarantor of any Loan
Obligations.
"Management Agreement" means any agreement pursuant to which a
Person (or group of Persons) manages the business of another Person (or group of
Persons).
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, condition (financial or otherwise), properties or
prospects of Genesis or of the Borrowers, 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. Without
limiting the generality of the foregoing, as used in connection with any
provisions respecting the ownership or operation of any Health Care Business,
Material Adverse Effect may include, among other things, any loss or suspension
of a License or Reimbursement Approval for any material nursing home or other
material Health Care Business or material group of nursing homes or other
material group of Health Care Businesses of the Borrowers or any event,
occurrence or matter or series thereof giving rise to a reasonable probability
of any of the foregoing consequences.
-99-
<PAGE>
"Maturity Date" means the latest of the RC Maturity Date, the
Tranche A Maturity Date, the Tranche B Maturity Date or the Tranche C Maturity
Date or, as the context may require, the applicable maturity date for a
specified Tranche of Loan.
"Mellon" means Mellon Bank, N.A., a national banking association,
and any successor or assign thereof.
"Merger Agreement" means the Agreement and Plan of Merger, dated as
of June 16, 1997, among Genesis ElderCare Corp., Genesis ElderCare Acquisition
Corp. and Multicare.
"Multicare" means The Multicare Companies, Inc., a Delaware
corporation.
"Multicare Credit Agreement" means the long-term credit agreement,
dated as of the date hereof, providing for borrowings substantially
contemporaneously with the merger of Genesis ElderCare Acquisition Corp. into
Multicare, among Multicare, the Subsidiaries of Multicare referred to therein,
Mellon as administrative agent, and the other agents and lenders referred to
therein as such agreement may be amended, modified, restated or supplemented
from time to time consistent with the terms hereof.
"Multicare Group" means, collectively, Genesis ElderCare Corp.,
Genesis ElderCare Acquisition Corp., Multicare (including the survivor of any
merger between Genesis ElderCare Acquisition Corp. and Multicare) and/or any of
Multicare's Subsidiaries from time to time.
"Multicare Management Agreement" has the meaning ascribed to such
term in paragraph (g) of Section 4.1 above.
"Multiemployer Plan" means such term in ss.4001(a)(3) of ERISA.
"Nazem" means Nazem, Inc., a Delaware corporation and (a) any
Subsidiary thereof and (b) any other Affiliate thereof reasonably acceptable to
the Administrative Agent. Without limiting the generality of the foregoing,
"Nazem" includes Genesis ElderCare Portfolio K, L.P.
"Net Cash Proceeds" means, with respect to any transaction involving
a Borrower, 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) that are attributable to or
secured by the properties that are the subject of a sale, assignment or other
disposition which is part of the transaction, (b) reasonable brokerage
commissions and other reasonable fees and expenses (including reasonable fees
and expenses of legal counsel and investment bankers) related to such
transaction and (c) all taxes actually paid or estimated in good faith to be or
become payable as a result of such transaction.
"Net Cash Provided by Operations" means for any period, the Net
Income of the Borrowers on a consolidated basis for such period plus
amortization and depreciation expense of the Borrowers for such period plus cash
extraordinary gains (other than from a disposition) less Capital Expenditures of
the Borrowers for such period (to the extent
-100-
<PAGE>
permitted by the terms of this Agreement), less increases in working capital (or
plus decreases in working capital) of the Borrowers during such period.
"Net Income" means, with respect to any Person, for any period the
net earnings (or loss) after taxes of such Person for such period less
extraordinary gains plus extraordinary non-cash losses.
"Newly Developed Facilities" has the meaning ascribed to such term
in Section 8.1 above.
"1995 Subordinated Note Indenture" means 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,
restated or supplemented from time to time in accordance with the terms of this
Agreement.
"1995 Subordinated Notes" means Genesis' 9-3/4% Senior Subordinated
Notes issued pursuant to the 1995 Subordinated Note Indenture in the original
aggregate principal amount of $120,000,000.00.
"1996 Subordinated Note Indenture" means the Indenture, dated as of
October 7, 1996, between Genesis and First Union National Bank, as Trustee,
relating to the 1996 Subordinated Notes, as such Indenture may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of this Agreement.
"1996 Subordinated Notes" means Genesis' 9 1/4% Senior Subordinated
Notes issued pursuant to the 1996 Subordinated Note Indenture, in the original
aggregate principal amount of $125,000,000.00.
"Non-U.S. Lender" means any Lender that is not a U.S. Person.
"Notes" means, collectively, the Swing Loan Note, the Tranche A Term
Notes, and the RC Notes. A "Note" means any of the Notes.
"Officer's Compliance Certificate" means a certificate, as of a
specified date, of the chief financial officer or controller of Genesis in
substantially the form of Exhibit G hereto as to each of the following: (a) the
absence of any Event of Default or 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 Article 7 and the financial
limitations set forth in Sections 8.1(g), 8.2(f), 8.3(h), 8.4(d), 8.5(g) and
8.7(c).
"One Time Disposition" has the meaning ascribed to such term in
Section 8.5 above.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
-101-
<PAGE>
"Pension Plan" means a pension plan (as defined in ss.3(2) of ERISA)
which is subject to Part 3 of Subtitle B of Title I of ERISA or subject to
ss.412 of the Code and maintained by any Borrower or any member of its
Controlled Group.
"Permitted Liens" has the meaning set forth in Section 8.2 above.
"Person" means an individual, corporation, partnership, trust,
unincorporated association, limited liability company, joint venture,
joint-stock company, Governmental Authority or any other entity.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) as defined in ss.3(3) of ERISA which is either (1) maintained by any
Borrower or any member of its Controlled Group, or (2) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which any Borrower or any member of its
Controlled Group is then making or accruing an obligation to make contributions
or has ever been obligated to make contributions.
"Pledge Agreement" has the meaning ascribed to such term in Section
4.1 hereof.
"Premises" has the meaning ascribed to such term in Section 12.12
hereof.
"Prime Rate" means the greater of (A) the interest rate per annum
announced from time to time by the Administrative Agent as its prime rate or (B)
the Federal Funds Rate plus .50%. The Prime Rate may be greater or less than
other interest rates charged by the Administrative Agent to other borrowers.
"Prime Rate Loan" means any Loan bearing interest at the Prime Rate
plus the Applicable Margin.
"Prohibited Transaction" has the meaning given to such term in
ss.406 of ERISA or ss.4975(c) of the Code.
"Put/Call Agreement" means the Put/Call Agreement dated as of the
date hereof, among Genesis, TPG and Cypress.
"Qualifying Interest Rate Hedging Agreements" means such Interest
Rate Hedging Agreements as may be entered into from time to time pursuant to
Section 6.12 above between any or all of the Borrowers, on the one hand, and any
Lender Party, on the other hand.
"Quarterly Payment Date" means the last Business Day of each
December, March, June and September.
"RC Commitment" means, with respect to any RC Lender, (i) the amount
set forth opposite such Lender's name under the heading "RC Commitment" on
Schedule 1.1 hereto or, in the case of a Lender that becomes a Lender pursuant
to an assignment, the amount of the assignor's RC Commitment assigned to such
Lender, in either case as the same may be reduced from time to time pursuant to
Section 1.7 above or increased or
-102-
<PAGE>
reduced from time to time pursuant to assignments in accordance with Section
12.9 below or (ii) as the context may require, the obligation of such Lender to
make RC Loans in an aggregate unpaid principal amount not exceeding such amount;
and "RC Commitment" means with respect to all RC Lenders, the sum of each RC
Lender's RC Commitment.
"RC Lender" means (i) any Lender with an "RC Commitment" designated
on Schedule 1.1 hereto and (ii) any Person that is assigned any or all of the
rights or obligations of an RC Lender with respect to its RC Commitment or RC
Loans, from time to time, pursuant to Section 12.9.
"RC Loan" has the meaning ascribed to such term in Section 1.1 of
this Agreement.
"RC Maturity Date" means September 30, 2003.
"RC Note" means each promissory note of the Borrowers issued to an
RC Lender relating to such Lender's RC Loans and RC Commitments substantially in
the form of Exhibit A-1 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,
restated or supplemented from time to time.
"Register" has the meaning ascribed to such term in Section 10.8
hereof.
"Registered Lender" has the meaning ascribed to such term in Section
1.14 hereof.
"Registered Note" has the meaning ascribed to such term in Section
1.14 hereof.
"Regulatory Change" means any applicable law, interpretation,
directive, request or guideline (whether or not having the force of law), or any
change therein or in the administration or enforcement thereof, that becomes
effective or is implemented or first required or expected to be complied with
after the Agreement Date (including any applicable law that shall have become
such as the result of any act of omission of the Borrowers or any of their
Affiliates, without regard to when such applicable law shall have been enacted
or implemented), whether the same is (i) the result of an enactment by a
government or any agency or political subdivision thereof, a determination of a
court or regulatory authority or otherwise or (ii) enacted, adopted, issued or
proposed before or after the Agreement Date, including any such that imposes,
increases or modifies any Tax, reserve requirement, insurance charge, special
deposit requirement, assessment or capital adequacy requirement, but excluding
any such that imposes, increases or modifies any Bank Tax.
"Reimbursement Approvals" means, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations (including JCAHO
accreditation) and/or any other agreements with or approvals by organizations
and Governmental Authorities.
-103-
<PAGE>
"Rental Expense" means, with respect to any Person for any period,
the aggregate rental obligations of such Person, payable in respect of any
leases (including Synthetic Leases but excluding Capitalized 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).
"Required Lenders" means, as of any date, Lenders otherwise eligible
to vote pursuant to the terms of this Agreement holding, in the aggregate, at
least 51% of the aggregate outstanding Loans, participations in Letters of
Credit and available Commitments so eligible to vote.
"Responsible Officer" of a Person means the President, the
Secretary, the Chief Executive Officer, any Vice President, the Controller, the
Treasurer or the Chief Financial Officer of such Person.
"Restricted Subsidiaries" means all direct and indirect Subsidiaries
of Genesis at any time other than Excluded Subsidiaries.
"Secured Parties" has the meaning ascribed to such term in the
Pledge Agreement.
"Short-Term Multicare Credit Agreement" has the meaning ascribed to
such term in Section 4.1 above.
"Subsidiary" of a Person at any time means:
(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;
(c) any partnership, limited liability company, 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; or
(d) any entity which is consolidated with such Person for
financial reporting purposes.
-104-
<PAGE>
"Swing Loan" means an amount advanced by the Swing Loan Lender
pursuant to Section 1.1(c) hereof.
"Swing Loan Lender" means Mellon, in its capacity as such.
"Swing Loan Note" means the promissory note of the Borrowers issued
to the Swing Loan Lender, in substantially the form of Exhibit A-3 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 in part, in
each case as the same may be amended, modified, restated or supplemented from
time to time.
"Synthetic Lease" means any lease (other than a Capitalized 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" means the $80,000,000 Synthetic Lease
facility evidenced by that certain Amended and Restated Participation Agreement
dated as of October 7, 1996, as amended by that certain Amendment to Amended and
Restated Participation Agreement dated as of January 31, 1997, that certain
Second Amendment to Amended and Restated Participation Agreement dated as of
March 7, 1997, and that certain Third Amendment to Amended and Restated
Participation Agreement and Amendment to Other Operative Documents dated as of
even date herewith (as the same may be further amended, modified or supplemented
from time to time, the "Participation Agreement") and other Operative Documents
(as defined in the Participation Agreement).
"Tax" means any federal, state, local or foreign tax assessment or
other governmental charge or levy (including any withholding tax) upon a Person
or upon its assets, revenues, income or profits.
"Tax Sharing Agreement" has the meaning ascribed to such term in
Section 4.1 hereof.
"Tender Offer" means Genesis ElderCare Acquisition Corp.'s offer to
purchase the outstanding common shares of Multicare as contained in its "Offer
to Purchase for Cash All Outstanding Shares of Common Stock of the Multicare
Companies," dated June 20, 1997, as extended from time to time.
"Term Loans" means collectively the Tranche A Term Loans, the
Tranche B Term Loans and the Tranche C Term Loans.
"Third Party Claims" has the meaning set forth in Section 12.12
hereof.
"Third Party Payor Arrangements" means any and all arrangements with
Medicare, Medicaid, CHAMPUS, and any other Governmental Authority, or
quasi-public agency, Blue Cross, Blue Shield, any and all managed care plans and
organizations, including but not limited to HMOs and preferred provider
organizations, private commercial insurance companies, employee assistance
programs and/or any other third party
-105-
<PAGE>
arrangements, plans or programs for payment or reimbursement in connection with
health care services, products or supplies.
"Total Funded Indebtedness" means the aggregate amount of
consolidated Indebtedness (including the current portion thereof) of Genesis and
its Restricted Subsidiaries (including all Indebtedness consisting of
Capitalized Lease Obligations, Synthetic Leases, Guaranties and letter of credit
reimbursement obligations).
"TPG" means TPG Partners II, L.P., a Delaware limited partnership
and (a) any Subsidiary thereof and (b) any other Affiliate thereof reasonably
acceptable to the Administrative Agent. Without limiting the generality of the
foregoing, "TPG" includes TPG Parallel II, L.P., TPG Investors II, L.P., TPG
Coinvestment, L.P.
"Tranche" means the designation of a Loan as an RC Loan, a Tranche A
Term Loan, a Tranche B Term Loan or a Tranche C Term Loan and the designation of
the related Commitment as an RC Commitment, a Tranche A Commitment, a Tranche B
Commitment or a Tranche C Commitment, as applicable.
"Tranche A Commitment" means, (1) with respect to any Tranche A
Lender, (a) at any time on or prior to the Closing Date, (i) the amount set
forth opposite such Lender's name under the heading "Tranche A Commitment" on
Schedule 1.1 hereto or, in the case of a Lender that becomes a Lender pursuant
to an assignment, the amount of the assignor's Tranche A Commitment assigned to
such Lender, in either case as the same may be increased or reduced from time to
time pursuant to assignments in accordance with Section 12.9 or (ii) as the
context may require, the obligation of such Lender to make Tranche A Loans in an
aggregate unpaid principal amount not exceeding such amount, and (b) thereafter,
zero and (2) with respect to all Tranche A Lenders, the sum of each Lender's
Tranche A Commitment.
"Tranche A Lender" means (a) any Lender with a "Tranche A
Commitment" designated on Schedule 1.1 hereto and (b) any Person that is
assigned any or all of the rights or obligations of a Tranche A Lender with
respect to its Tranche A Commitment or Tranche A Term Loans, from time to time,
pursuant to Section 12.9.
"Tranche A Maturity Date" means September 30, 2003.
"Tranche A Term Loan" has the meaning ascribed to that term in
Section 1.1 of this Agreement.
"Tranche A Term Note" means each promissory note of the Borrowers
issued to a Tranche A Lender relating to such Lender's Tranche A Loans and
Tranche A Commitment, substantially in the form of Exhibit A-2 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, restated or supplemented from
time to time.
"Tranche B Commitment" means, (1) with respect to any Tranche B
Lender, (a) at any time on or prior to the Closing Date, (i) the amount set
forth opposite such
-106-
<PAGE>
Lender's name under the heading "Tranche B Commitment" on Schedule 1.1 hereto
or, in the case of a Lender that becomes a Lender pursuant to an assignment, the
amount of the assignor's Tranche B Commitment assigned to such Lender, in either
case as the same may be increased or reduced from time to time pursuant to
assignments in accordance with Section 12.9 or (ii) as the context may require,
the obligation of such Lender to make Tranche B Term Loans in an aggregate
unpaid principal amount not exceeding such amount, and (b) thereafter, zero and
(2) with respect to all Tranche B Lenders, the sum of each Lender's Tranche B
Commitment.
"Tranche B Lender" means (i) any Lender with a "Tranche B
Commitment" designated on Schedule 1.1 hereto and (ii) any Person that is
assigned any or all of the rights or obligations of a Tranche B Lender with
respect to its Tranche B Commitment or Tranche B Term Loans, from time to time,
pursuant to Section 12.9.
"Tranche B Maturity Date" means September 30, 2004.
"Tranche B Opt-Out Lender" has the meaning ascribed to such term in
Section 1.5 hereof.
"Tranche B Term Loan" has the meaning ascribed to that term in
Section 1.1 of this Agreement.
"Tranche C Commitment" means (1) with respect to any Tranche C
Lender, (a) at any time on or prior to the Closing Date, (i) the amount set
forth opposite such Lender's name under the heading "Tranche C Commitment" on
Schedule 1.1 hereto or, in the case of a Lender that becomes a Lender pursuant
to an assignment, the amount of the assignor's Tranche C Commitment assigned to
such Lender, in either case as the same may be increased or reduced from time to
time pursuant to assignments in accordance with Section 12.9 or (ii) as the
context may require, the obligation of such Lender to make Tranche C Term Loans
in an aggregate unpaid principal amount not exceeding such amount, and (b)
thereafter, zero and (2) with respect to all Tranche C Lenders the sum of each
Lender's Tranche C Commitment.
"Tranche C Lender" means (i) any Lender with a "Tranche C
Commitment" designated on Schedule 1.1 hereto and (ii) any Person that is
assigned any or all of the rights or obligations of a Tranche C Lender with
respect to its Tranche C Commitment or Tranche C Term Loans, from time to time,
pursuant to Section 12.9.
"Tranche C Maturity Date" means June 1, 2005.
"Tranche C Opt-Out Lender" has the meaning ascribed to such term in
Section 1.5 above.
"Tranche C Term Loan" has the meaning ascribed to that term in
Section 1.1 of this Agreement.
"Transaction Documents" means each of the material documents as the
same exist on the Closing Date respecting (i) the Tender Offer, (ii) the
proposed merger between Genesis ElderCare Acquisition Corp. and Multicare, (iii)
the relationship between Genesis,
-107-
<PAGE>
Cypress, Nazem and TPG and the rights and obligations relating thereto and (iv)
related matters including the Put/Call Agreement, the Stockholders Agreement
respecting Genesis ElderCare Corp., the Merger Agreement and the Multicare
Management Agreement.
"Type" means with respect to Loans, any of the following, each of
which shall be deemed to be a different "Type" of Loan: Prime Rate Loans, LIBO
Rate Loans having a one-month Interest Period commencing on a specified date,
LIBO Rate Loans having a two-month Interest Period commencing on a specified
date, LIBO Rate Loans having a three-month Interest Period and LIBO Rate Loans
having a six-month Interest Period commencing on a specified date.
"United States Person" has the meaning ascribed to such term in
Section 1.13 hereof.
"Withdrawal Liability" has the meaning given to such term in ss.4201
of ERISA.
11.2 CONSTRUCTION. In this Agreement and each other Loan Document, unless
the context otherwise clearly requires,
(a) references to the plural include the singular, the singular the
plural and the part the whole;
(b) "or" has the inclusive meaning represented by the phrase
"and/or;"
(c) 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;
(d) 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;
(e) 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 whether or not stated; and
(f) references 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 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
-108-
<PAGE>
of financial projections, it is understood that the projections shall be made in
good faith, consistent with the Loan Documents and based on Genesis' reasonable
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.
11.3 ACCOUNTING PRINCIPLES.
(a) As used herein, "GAAP" shall mean generally accepted accounting
principles (other than as set forth herein 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, 1996 and for the fiscal year then ended. When the word
"consolidated" is used in this Agreement, it shall be used in a manner
consistent with generally accepted accounting principles in the United States
except that such principles relating to what entities shall be consolidated
shall be superseded by any terms of this Agreement which designate what entities
shall be consolidated for purposes relating hereto.
(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.
ARTICLE 12
MISCELLANEOUS
12.1 NOTICES. Unless otherwise expressly provided under this Agreement all
notices, requests, demands, directions and other communications (collectively
"notices") given to or made upon any party under the provisions of this
Agreement (and unless otherwise specified, in each other Loan Document) shall be
by telephone (immediately confirmed in writing) or in writing (including
facsimile communication) and if in writing shall be delivered by hand,
nationally recognized overnight courier or U.S. mail or sent by facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages of this Agreement or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly provided in this Agreement, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective unless otherwise expressly
provided, telephonic notices must be confirmed in writing no later than the next
day by letter or facsimile, (d) if given by U.S. mail, the day after such
communication is deposited in the mails with overnight first class postage
prepaid, return receipt requested, and (e) if given by any other means
(including by air courier), when delivered; provided, further, that notices to
the Administrative Agent shall not be effective
-109-
<PAGE>
until received. Any Lender giving any notice to the Borrowers shall
simultaneously send a copy of such notice to the Administrative Agent, and the
Administrative Agent shall promptly notify the other Lenders of the receipt by
it of any such notice. Except as otherwise provided in this Agreement, in the
event of a discrepancy between any telephonic or written notice, the written
notice shall control.
12.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT. 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 except as expressly provided
otherwise (e.g., certain fee agreements and fee arrangements set forth in the
commitment letter relating hereto and indemnification obligations under the
Existing Credit Agreement). This Agreement and the other Loan Documents
represent the entire agreement between the parties to this Agreement with
respect to the transactions contemplated hereby or thereby and, except as
expressly provided herein or in the other Loan Documents, shall not be affected
by reference to any other documents.
12.3 SEVERABILITY. Every provision of this Agreement and each of the other
Loan Documents is intended to be severable, and if any term or provision of this
Agreement or any of the other Loan Documents shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction. 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 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.
12.4 DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
affect the meaning or construction of any of the provisions of this Agreement.
12.5 GOVERNING LAW. This Agreement and the rights and obligations of the
parties under this Agreement and under the other Loan Documents shall be
construed in accordance with and shall be governed by the laws of the
Commonwealth of Pennsylvania.
12.6 NON-MERGER OF REMEDIES. The covenants and obligations of the
Borrowers and the rights and remedies of the Administrative Agent and other
Lender Parties hereunder and under the other Loan Documents shall not merge with
or be extinguished by the entry of a judgment hereunder or thereunder, and such
covenants, obligations, rights and remedies shall survive any entry of a
judgment until payment in full of the Loan Obligations and termination of the
Commitment. All obligations under the Loan Documents shall
-110-
<PAGE>
continue to apply with respect to and during the collection of amounts due under
the Loan Documents or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and in any workout, restructuring or in connection
with the protection, preservation, exercise or enforcement of any of the terms
of this Agreement or of any rights under this Agreement or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings. Without limiting the generality of the foregoing, post-judgment
interest rate shall be the interest rate provided in paragraph (d) of Section
1.8 (Default Rate) above.
12.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES. No course of dealing and no
delay or failure of the Administrative Agent or any other Lender Party 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
Administrative 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 Administrative 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 12.8 below shall be effective
only as to such specific default and shall not apply to any subsequent default.
12.8 AMENDMENTS; WAIVERS. Any term, covenant, agreement or condition of
any Loan Document to which the Lenders (or the Administrative Agent) are party
may be amended, and any right under the Loan Documents may be waived, if, but
only if, such amendment or waiver is in writing and is signed by the Required
Lenders (or by the Administrative Agent at the direction of the Required
Lenders); provided, however, if the rights and duties of the Administrative
Agent are affected thereby, such amendment or waiver must be executed by the
Administrative Agent; and provided, further, that any amendment or waiver of the
terms of Article 3 hereof or any other amendment or waiver that relates to
Letters of Credit or rights or obligations relating thereto or the rights or
obligations of the Issuer must also be executed by the Issuer; and provided,
further, that no such amendment or waiver shall be effective unless in writing
and signed by each Lender referred to below, if it would
(a) increase such Lender's Commitment or the outstanding
amount of such Lender's Loans or Letters of Credit Participations; or
(b) extend the final maturity of any Loan held by such Lender
or the time of any scheduled principal payment of any Loan of such Lender;
or
(c) decrease the rate of interest or amount of fees due to
such Lender or decrease the principal amount in respect of any Loan of
such Lender or extend the time of payment of interest or fees due to such
Lender, provided that the
-111-
<PAGE>
written consent of the Required Lenders, rather than the consent of all
Lenders, shall be sufficient to waive imposition of the Default Rate; or
(d) reduce or waive any payment owing to such Lender in
respect to any unreimbursed Drawings; or
(e) change the number of Lenders which are required to consent
to any proposed action under this Agreement before such action may be
taken under this Agreement if such change could cause such Lender to lose
its right to participate in such consent;
and provided, further, that no such amendment or waiver shall be effective
unless in writing and signed by all the Lenders if it would
(i) amend the definition of "Required Lenders" or
(ii) release any Borrower of its Obligations or release
any guaranty or collateral security granted pursuant to the Loan
Documents;
provided, however, the Administrative Agent may (or may direct the
Collateral Agent to), without the consent of any Person, release any
Borrower, guarantor or collateral security granted pursuant to the
Loan Documents, (1) as a court of competent jurisdiction may direct,
or (2) in connection with a disposition permitted under Section 8.5
above (other than a disposition to another Borrower) or as may be
otherwise provided under the Loan Documents or (3) release of record
any security interest which was granted pursuant to the Existing
Credit Agreement or predecessor thereto and provided, further, that
no amendment or waiver of any terms of this Agreement or any other
Loan Document shall be made without the consent of such Secured
Parties as are required by the terms of the Collateral Agency
Agreement, and provided, further, that for purposes of determining
whether "all Lenders," "the Required Lenders" or "any Lender" has
consented to any amendment or waiver, no effect shall be given to
the determination of any Lender who has lost its right to vote
pursuant to Sections 1.3(c), 1.3(e)(ii) or 1.6(e) above. Without
limiting the generality of the foregoing, the Administrative Agent
is authorized and directed to take such action as it deems necessary
or desirable (including, without limitation, the execution and
filing of UCC-3 termination statements or the giving of direction to
another Person to do the same) to release any security interest
referred to in the proviso to this clause (ii),
Further, the Administrative Agent and the Lenders may amend or modify the
provisions of Article 10 hereof (except for Section 10.9 (Successor
Administrative Agent) and paragraph (b) of Section 10.12 (Other Agents)) and
Article 10A hereof without the need for any consent or approval from the
Borrowers, it being acknowledged that the Borrowers are not third party
beneficiaries of the provisions of said Article 10 (except for Section 10.9
(Successor Administrative Agent) and paragraph (b) of Section 10.9 (Successor
Administrative Agent)) or Article 10A; and without the consent of any Lenders,
the Administrative Agent may enter into amendments and modifications to this
Agreement and the other Loan Documents as
-112-
<PAGE>
necessary or desirable to cure any ambiguities herein or therein or to add
additional Borrowers or add additional Collateral.
Reference is also made to Article 10A of the Multicare Credit Agreement
which affects the right of the parties hereto to amend certain provisions set
forth in Section 12.9 below without the consent of certain Lenders party
thereto; accordingly, when amending Section 12.9 below, consideration shall be
given to the provisions of said Section 10A of the Multicare Credit Agreement.
Finally, reference is also made to Section 2.5 of the Collateral Agency
Agreement which affects the right of the parties hereto to amend Articles 6, 7
and 8; accordingly, when amending those Articles, consideration shall be given
to such provisions in the Collateral Agency Agreement.
12.9 SUCCESSORS AND ASSIGNS
(a) Assignments by the Borrowers. Without the prior written consent
of all of the Lenders, no Borrower may assign any of its rights or delegate any
of its duties or obligations under this Agreement or any other Loan Document.
(b) Participations. Any Lender or the Issuer may sell participations
to one or more Eligible Institutions of all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment); provided, however, that, with respect to any Lender,
(i) such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties to this
Agreement for the performance of such obligations, (iii) all amounts payable by
the Borrowers under this Agreement shall be determined as if such transferor
Lender had not sold such participation and no participant shall be entitled to
receive any greater amount pursuant to this Agreement than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such participant had no
such transfer occurred, (iv) such participant shall agree to be bound by the
provisions of this Agreement and the other Loan Documents, (v) with respect to
any sale of a participation in any Tranche hereunder, such Lender shall
contemporaneously sell to the same participant a proportionately equal amount of
its interest in the same Tranche under the Multicare Credit Agreement and (vi)
the Borrowers, the Administrative Agent and the other Lenders shall continue to
deal solely and directly with such transferor Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole rights and responsibility vis-a-vis the Borrowers to enforce the
obligations of the Borrowers relating to the Loans and Letters of Credit
including the right to approve any amendment, modification or waiver of any
provision of this Agreement (except that such Lender may give its participants
the right to direct such Lender to approve or disapprove any amendment,
modification or waiver which would require such Lender's consent under clause
(a) (b), (c), of the preceding Section 12.8).
(c) Assignments by Lenders. Each Lender and the Issuer may assign to
one or more Eligible Institutions all or a portion of its interest, rights and
obligations under this Agreement (including all or a portion of its Commitment)
and the other Loan Documents; provided, however, that with respect to any
assignment,
-113-
<PAGE>
(i) unless the assignee is (prior to the effective time of the
assignment) an existing Lender or the Issuer or an Affiliate of an existing
Lender or the Issuer, the Administrative Agent and, if no Event of Default has
occurred and is continuing, Genesis (on behalf of the Borrowers) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld),
(ii) the parties to each such assignment shall execute and
deliver to the Administrative Agent and, unless an Event of Default has occurred
and is continuing, Genesis (on behalf of the Borrowers), for their acceptance,
an Assignment and Acceptance Agreement in substantially the form attached hereto
as Exhibit I (an "Assignment and Acceptance"), together with (A) any Note
subject to such assignment and (B) a processing and recordation fee of $3,500.00
(or such lesser amount as is required for the Administrative Agent to receive an
aggregate amount equal to $3,500.00 under this Agreement and the Multicare
Credit Agreement in respect of such transfer),
(iii) no Lender may make a partial assignment if the amount of
its portion of the Commitment and (without duplication) the outstanding Loans
and Letter of Credit Participations, together with the amount of its interest
under the Multicare Credit Agreement assigned in accordance with clause (v)
below, is, or after giving effect to the proposed assignment would be, less than
Ten Million Dollars ($10,000,000.00),
(iv) unless the assignee is (prior to the effective time of
the assignment) the Issuer or a Lender hereunder, the aggregate amount of any
interest so sold to any assignee pursuant to any partial assignment hereunder,
together with the aggregate amount so sold to such assignee in accordance with
clause (v) below, may not be less than Ten Million Dollars ($10,000,000.00), and
(v) with respect to any assignment of an interest in any
Tranche hereunder, the assignor Lender shall contemporaneously assign to the
same assignee a proportionately equal amount of its interest in the same Tranche
under the Multicare Credit Agreement.
The requirements set forth in paragraphs (iii) and (iv) above and the
requirement as to an assignee being an Eligible Institution shall not apply to
certain assignments approved by the Administrative Agent and Genesis (on behalf
of the Borrowers) prior to the Agreement Date. "Partial assignment" as used in
clauses (iii) and (iv) above means any assignment of a Lender's rights and
obligations hereunder except an assignment of all of such Lender's rights and
obligations such that after the assignment such Lender shall have no Commitment
and no interest in any Loans or Letters of Credit hereunder. Upon compliance
with clauses (i) through (v) above, from and after the effective date specified
in the relevant Assignment and Acceptance, (1) the assignee shall be a party to
this Agreement and the other Loan Documents, and to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement and under the other Loan Documents and (2) the assigning Lender
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement and the other Loan Documents.
(d) Procedures Respecting Assignment. Upon their receipt of an
Assignment and Acceptance executed by the assignor and the assignee, subject to
the conditions set forth in the preceding paragraph (c), the Administrative
Agent and (unless an
-114-
<PAGE>
Event of Default shall have occurred and be continuing) Genesis (on behalf of
the Borrowers) shall accept such Assignment and Acceptance. If the subject
assignment is of an interest in the Tranche A Commitment and Tranche A Term Loan
and/or RC Commitment and RC Loans, within thirty (30) days after such Assignment
and Acceptance is signed and accepted by all parties and made effective, the
Borrowers, at their own expense, shall execute and deliver to the Administrative
Agent new Notes in exchange for the surrendered Notes, each to the order of such
assignee in an amount equal to its portion of the Commitment and Loans assigned
to it pursuant to such Assignment and Acceptance and new Notes to the order of
the assigning Lender in an amount equal to the Commitment and Loans retained by
it. Such Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the date of such
surrendered Notes (each assignee shall confirm in the Assignment and Acceptance
that, notwithstanding the date of the new Notes made in favor of such assignee,
such assignee shall have no right to, or interest in, any fees or interest which
shall have accrued on the Loans prior to the effective date of the Assignment
and Acceptance). Cancelled or replaced Notes shall be returned to the Borrowers
upon the execution of such new Notes.
(e) Assignments to Federal Reserve Bank. Notwithstanding any of the
terms of this Section 12.9 without the consent of the Administrative Agent and
the Borrowers, (i) any Lender may assign all or any portion of its rights to
payments in connection with this Agreement to a Federal Reserve Bank as
collateral in accordance with Regulation A of the Board of Governors of the
Federal Reserve System and (ii) in the case of any Lender that is a fund, any
such Lender may collaterally assign or pledge any portion of its Loans (other
than RC Loans) and its Notes (other than RC Notes) to its trustee (if such
trustee is an Eligible Institution) in support of its obligations to such
trustee, provided, however, that before any other transfer may be made to such
trustee (whether as a result of such collateral assignment or pledge or
otherwise) the conditions of paragraphs (c) and (d) above must be satisfied.
Such assignment shall not affect any other rights or any obligations of the
assigning Lender.
12.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE PAGES. Any Loan
Document may be executed in one or more counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. Delivery of a photocopy or telecopy of an executed counterpart
of a signature page to any Loan Document shall be as effective as delivery of a
manually executed counterpart of such Loan Document.
12.11 MAXIMUM LAWFUL INTEREST RATE. Notwithstanding any provision
contained in this Agreement or the Notes or any other Loan Document, 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 payment
by the Borrowers includes interest in excess of such a maximum amount, each
Lender shall apply such excess to the reduction of the unpaid principal amount
due pursuant to this Agreement and the Notes, or if none is due, to the other
Loan Obligations, if any, and then such excess shall be refunded to Genesis (on
behalf of the Borrowers).
-115-
<PAGE>
12.12 INDEMNIFICATION.
(a) Whether or not any fundings are made under this Agreement, the
Borrowers jointly and severally shall unconditionally upon demand, pay or
reimburse the Administrative Agent and other Lender Parties for, and indemnify
and save the Administrative Agent, the other Lender Parties and their respective
Affiliates, officers, directors, employees, agents, attorneys, shareholders and
consultants (collectively, "Indemnitees") harmless 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 Indemnitee in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may at any time be imposed on, asserted against or incurred
by such Indemnitee 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 Existing Credit
Agreement or any "Loan Document" referred to therein, the Tender Offer, any
Acquisition or transaction from time to time contemplated hereby or by any other
Loan Document, 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, any transaction contemplated by the Transaction Documents but excluding
any such losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements that the Borrower proves were
the result solely of the gross negligence or willful misconduct of such
Indemnitee, as finally determined by a court of competent jurisdiction. If and
to the extent that the foregoing obligations of the Borrowers under this
paragraph (a), 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.
(b) Without limiting the generality of the foregoing, the Borrowers
jointly and severally hereby indemnify and agree to defend and hold harmless
each Indemnitee, from and against any and all claims, actions, causes of action,
liabilities, penalties, fines, damages, judgments, losses, suits, expenses,
legal or administrative proceedings, interest, costs and expenses (including
court costs and attorneys', consultants' and experts' fees) arising out of or in
any way relating to: (i) the use, handling, management, production, treatment,
processing, storage, transfer, transportation, disposal, release or threat of
release of any Environmental Concern Material by or on behalf of, any Borrower
or any of its Environmental Affiliates; (ii) the presence of Environmental
Concern Materials on, about, beneath or arising from any premises owned or
occupied by any Borrower or any of its Environmental Affiliates (herein
collectively, the "Premises"); (iii) the failure of any Borrower or
Environmental Affiliate of a Borrower or any occupant of any Premises to comply
with the Environmental Laws; (iv) any Borrower's breach of any of the
representations, warranties and covenants contained herein or in any Loan
Documents; (v) Regulatory Actions (as hereinafter defined) and Third Party
Claims (as hereinafter defined); or (vi) the imposition or recording of a Lien
against any Premises in connection with any release at, on or from any Premises
or any activities undertaken on or occurring at any Premises, or arising from
such Premises or pursuant to any Environmental Law. The Borrowers' indemnity and
defense obligations under this section shall include, whether foreseeable or
unforeseeable, any and all costs related to any remedial action. "Regulatory
Action" means any notice of violation, citation, complaint, request for
information, order,
-116-
<PAGE>
directive, compliance schedule, notice of claim, consent decree, action,
litigation or proceeding brought or instituted by any governmental authority
under or in connection with any Environmental Law involving any Borrower or any
occupant of any of the Premises or involving any of the Premises or any
activities undertaken on or occurring at any Premises. "Third Party Claims"
means claims by a party (other than a party to this Agreement and other than
Regulatory Actions) based on negligence, trespass, strict liability, nuisance,
toxic tort or detriment to human health or welfare due to Environmental Concern
Materials on, about, beneath or arising from any Premises or in any way related
to any alleged violation of any Environmental Laws or any activities undertaken
on or occurring at any Premises.
(c) The indemnities contained herein shall survive repayment of the
Loan Obligations, termination of the Commitment and satisfaction, release, and
discharge of the Loan Documents, whether through full payment of the Loans,
foreclosure, deed in lieu of foreclosure or otherwise.
(d) The foregoing amounts are in addition to any other amounts which
may be due and payable to the Administrative Agent and/or the Lenders under this
Agreement. A certification by the Administrative Agent or a Lender hereunder of
the amount of liabilities, losses, costs, expenses, claims and/or charges shall
be conclusive, absent manifest error.
12.13 EXPENSES
Whether or not there shall be any funding hereunder, the Borrowers
agree, jointly and severally, to pay promptly or cause to be paid promptly and
to hold harmless
(i) with respect to matters relating to clause (1) of this paragraph
(i), the Agents, and, with respect to clauses (2) and (3) of this paragraph (i),
the Administrative Agent (and after an Event of Default and for the period in
which the same shall continue, each Lender Party) 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 it from time to time
arising from or relating to (1) the negotiation, preparation, execution and
delivery of this Agreement and the other Loan Documents, (2) the administration
and performance of this Agreement and the other Loan Documents, and (3) any
requested amendments, modifications, supplements, waivers or consents (whether
or not ultimately entered into or granted) to this Agreement or any other Loan
Document;
(ii) the Administrative Agent (and, with respect to clause (4) of
this paragraph (ii) after an Event of Default and for the period in which the
same shall continue, each Lender Party) 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 it from time to time arising from
or relating to the enforcement or preservation of rights under, or
administration of, this Agreement or any other Loan Document (including but not
limited to any such costs or expenses arising from or relating to (1) the
creation, perfection or protection of any Lien on any Collateral, (2) the
protection, collection, lease, sale, taking possession of, preservation
-117-
<PAGE>
of, or realization on, any Collateral, including advances for storage, insurance
premiums, transportation charges, taxes, filing fees and the like, (3)
collection or enforcement of an outstanding Loan Obligation, and (4) any
litigation, proceeding, dispute, work-out, restructuring or rescheduling related
in any way to this Agreement or the other Loan Documents); and
(iii) each Lender Party against liability for 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.
12.14 MAXIMUM AMOUNT OF JOINT AND SEVERAL LIABILITY. To the extent that
applicable Law otherwise would render the full amount of the joint and several
obligations of any Subsidiary of Genesis 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, provided, however, that each
Borrower's obligations hereunder and under the other Loan Documents shall be
presumptively valid and enforceable to their fullest extent in accordance with
the terms hereof or thereof, as if this Section 12.14 were not a part of this
Agreement.
12.15 AUTHORIZATION OF GENESIS BY OTHER BORROWERS.
(a) 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 is coupled with an
interest and shall be irrevocable, and the Administrative Agent and each Lender
Party may rely on any notice, request, information supplied by Genesis, every
document executed by Genesis, every agreement made by Genesis or other action
taken by Genesis in respect of the Borrowers or any thereof as if the same were
supplied, made or taken 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.
(b) 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 and Letters of Credit
hereunder. Genesis and, subject only to the terms of the preceding paragraph
(a), 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 Letter of Credit.
12.16 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitment hereunder and the Loan Obligations owing to it, the Administrative
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
-118-
<PAGE>
the Administrative Agent, and the terms "Lender," "Issuer," "Holders of Notes"
and like terms shall include the Administrative Agent in its individual capacity
as such. The Administrative 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 "Administrative Agent" for other financing vehicles,
issue letters of credit on behalf of, and engage in any other business with, (a)
any Loan Party or any stockholder, Subsidiary or Affiliate of any Loan Party or
(b) any other Person, whether such other Person may be engaged in any conflict
or dispute with any Loan Party or any Lender Party or otherwise, as though the
Administrative Agent were not the Administrative Agent hereunder.
12.17 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 Person or
any collateral or other direct or indirect security for any of the Loan
Obligations. Without limiting the generality of the foregoing, each Borrower
acknowledges and agrees that the Administrative Agent or other Lender Party may
commence an action against such Borrower whether or not any action is brought
against any other Borrower or against any collateral and it shall be no defense
to any action brought against any Borrower that the Lender Parties have failed
to bring an action against any other Loan Party or any Collateral.
12.18 SET-OFF. The Borrowers hereby agree that, to the fullest extent
permitted by Law, if any Loan Obligation 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 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 12.18. The rights
provided by this Section 12.18 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.
12.19 SHARING OF COLLECTIONS. The Lender Parties hereby agree among
themselves that if any Lender Party shall receive (by voluntary payment,
realization upon security, charging of accounts, set-off or from any other
source) any amount on account of the Loan Obligations in greater proportion than
any such amount received by any other Lender Party (based on the relative amount
of each such Lender Party's interest in the Loan Obligations), then the Lender
Party receiving such proportionately greater payment shall notify each other
Lender Party and the Administrative Agent of such receipt, and equitable
adjustment will be made in the manner stated in this Section 12.19 so that, in
effect, all such
-119-
<PAGE>
excess amounts will be shared ratably among all of the Lender Parties. The
Lender Party 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 Lender Parties a participation in the applicable Loan
Obligations owed to such other Lender Parties in such amount as shall result in
a ratable sharing by all Lender Parties of such excess amount (and to such
extent the receiving Lender Party shall be a participant). If all or any portion
of such excess amount is thereafter recovered from the Lender Party 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 Party making such purchase. The
Borrowers hereby consent to and confirm the foregoing arrangements. Each
participant shall be bound by this Section 12.19 as fully as if it were a Lender
hereunder.
12.20 OTHER LOAN DOCUMENTS. Each Lender acknowledges that on signing this
Agreement is bound by the terms of the Collateral Agency Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, each Lender
party to a Qualifying Interest Rate Hedging Agreement acknowledges that it is
familiar with the provisions set forth in Section 2.3 of the Collateral Agency
Agreement.
12.21 CERTAIN BORROWER ACKNOWLEDGEMENTS. Each Borrower hereby acknowledges
that neither the Administrative Agent nor any other Lender Party has any
fiduciary relationship with or fiduciary duty to any Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent and the Other Lender Parties on
the one hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor.
12.22 CERTAIN LENDER PARTY ACKNOWLEDGEMENTS. Each Lender Party
acknowledges that it has no right to any interest in any capital stock of
Multicare in connection with this Agreement and the other Loan Document and,
should that right otherwise arise hereunder or under the other Loan Documents,
it is hereby waived.
12.23 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER OF JURY TRIAL.
(a) Consent to Jurisdiction. For the purpose of enforcing payment
and performance of the Loan Documents, including, any payment under the Notes
and performance of other obligations under the Loan Documents, or in any other
matter relating to, or arising out of, the Loan Documents, each of the Borrowers
hereby consents to the jurisdiction and venue of the courts of the Commonwealth
of Pennsylvania or of any federal court located in such state, waive personal
service of any and all process upon it and consents that all such service of
process be made by certified or registered mail directed to Genesis (on behalf
of the applicable Borrowers) at the address provided for in Section 12.1 and
service so made shall be deemed to be completed upon actual receipt or execution
of a receipt by any Person at such address. Each of the Borrowers hereby waives
the right to contest the jurisdiction and venue of the courts located in the
Commonwealth of Pennsylvania on the ground of inconvenience or otherwise and,
further, waives any right to bring any action or proceeding against (a) the
Administrative Agent in any court outside the Commonwealth of Pennsylvania, or
(b) any other Lender other than in a state within the
-120-
<PAGE>
United States designated by such Lender. The provisions of this Section 12.23
shall not limit or otherwise affect the right of the Administrative Agent or any
other Lender Party to institute and conduct an action in any other appropriate
manner, jurisdiction or court.
(b) WAIVER OF JURY TRIAL; DAMAGES. NEITHER ANY LENDER PARTY NOR ANY
LOAN PARTY, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE
FOREGOING SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF
THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT, OR INVOLVING ANY COLLATERAL OR ANY
GUARANTY RELATING TO THE INDEBTEDNESS HEREUNDER OR THE RELATIONSHIP BETWEEN OR
AMONG SUCH PERSONS OR ANY OF THEM. NO SUCH PERSON WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES
ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS
SECTION 12.23 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS
AGREEMENT (i) CERTIFIES THAT NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER
PARTY NOR ANY REPRESENTATIVE OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR ANY
LENDER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE
AGENT OR SUCH LENDER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH (b) OF SECTION 12.23.
THE PROVISIONS OF THIS SECTION 12.23 HAVE BEEN FULLY DISCLOSED TO THE PARTIES
AND THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION 12.23 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
-121-
<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.
BORROWERS:
Genesis: GENESIS HEALTH VENTURES, INC., a
Pennsylvania corporation
By /s/ Ira C. Gubernick
---------------------------------
Name: Ira C. Gubernick
Title: General
Counsel-Corporate 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
Subsidiaries:
BREVARD MERIDIAN LIMITED EASTON MERIDIAN LIMITED
PARTNERSHIP, PARTNERSHIP,
a Maryland limited partnership a Maryland limited partnership
By: Meridian Healthcare, Inc., By: Meridian Health, Inc.,
a Pennsylvania corporation, a Pennsylvania corporation,
its sole general partner its sole general partner
CATONSVILLE MERIDIAN LIMITED EDELLA STREET ASSOCIATES,
PARTNERSHIP, a Pennsylvania limited partnership
a Maryland limited partnership By: Genesis Health Ventures of
By: Meridian Health, Inc., Clarks Summit, Inc., its sole
a Pennsylvania corporation, general partner
one of its general partners
-122-
<PAGE>
GENESIS PROPERTIES LIMITED MERIDIAN PERRING LIMITED
PARTNERSHIP, PARTNERSHIP
a Pennsylvania limited partnership a Maryland limited partnership
By: Genesis Health Ventures By: Meridian Healthcare, Inc.,
of Arlington, Inc., its sole a Pennsylvania corporation,
general partner its general partner
GREENSPRING MERIDIAN LIMITED MERIDIAN VALLEY LIMITED
PARTNERSHIP, PARTNERSHIP
a Maryland limited partnership a Maryland limited partnership
By: Meridian Healthcare, Inc., By: Meridian Healthcare, Inc.,
a Pennsylvania corporation, a Pennsylvania corporation,
its sole general partner its general partner
HALLMARK HEALTHCARE LIMITED MERIDIAN VALLEY VIEW LIMITED
PARTNERSHIP, PARTNERSHIP
a Maryland limited partnership a Maryland limited partnership
By: Pharmacy Equities, Inc., By: Meridian Healthcare, Inc.,
a Pennsylvania corporation a Pennsylvania corporation,
its general partner its general partner
HAMMONDS LANE MERIDIAN LIMITED MILLVILLE MERIDIAN LIMITED
PARTNERSHIP, PARTNERSHIP,
a Maryland limited partnership a Maryland limited partnership
By: Meridian Healthcare, Inc., By: Meridian Healthcare, Inc.,
a Pennsylvania corporation, a Pennsylvania corporation,
one of its general partners its sole general partner
MERIDIAN/CONSTELLATION LIMITED PHILADELPHIA AVENUE ASSOCIATES, a
PARTNERSHIP Pennsylvania limited partnership
a Maryland limited partnership By: Philadelphia Avenue Corp.,
By: Meridian Healthcare, Inc., a Pennsylvania corporation, its
a Pennsylvania corporation, sole general partner
its general partner
RIVER STREET ASSOCIATES, a
MERIDIAN EDGEWOOD LIMITED Pennsylvania limited partnership
PARTNERSHIP By: Genesis Health Ventures of
a Maryland limited partnership Wilkes-Barre, Inc.,
By: Meridian Healthcare, Inc., its sole general partner
a Pennsylvania corporation,
its general partner
/s/ ICG
------------------
Initials of Signor
-123-
<PAGE>
SEMINOLE MERIDIAN LIMITED GENESIS PROPERTIES OF DELAWARE
PARTNERSHIP, LTD. PARTNERSHIP, L.P.,
a Maryland limited partnership a Delaware limited partnership
By: Meridian Health, Inc., By: Genesis Properties of Delaware
a Pennsylvania corporation, Corporation, a general partner
its sole general partner
McKERLEY HEALTH FACILITIES, a
STATE STREET ASSOCIATES, L. P., a New Hampshire general partnership
Pennsylvania limited partnership By: Meridian Health, Inc., a
By: State Street Associates, Inc., Pennsylvania corporation, and
a Pennsylvania corporation, Meridian Healthcare, Inc., a
its sole general partner Pennsylvania corporation, its
general partners
THERAPY CARE SYSTEMS, L.P. a
Pennsylvania limited partnership GENESIS HEALTH VENTURES OF WEST
By: Genesis Eldercare VIRGINIA LIMITED PARTNERSHIP,
Rehabilitation Services, Inc., a Pennsylvania limited partnership
a Pennsylvania corporation, By: Genesis Health Ventures of West
its sole general partner Virginia, Inc., a Pennsylvania
corporation, its general partner
VOLUSIA MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a By: /s/ Ira C. Gubernick
Pennsylvania corporation, its sole -------------------------------
general partner On behalf of each of the foregoing
as General Counsel-Corporate and
Secretary of the general partner
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
-124-
<PAGE>
GENESIS HEALTH VENTURES OF GENESIS HEALTH VENTURES OF
ARLINGTON, INC., POINT PLEASANT, INC.
a Pennsylvania corporation a Pennsylvania corporation
GENESIS HEALTH VENTURES OF GENESIS IMMEDIATE MED
BLOOMFIELD, INC., CENTER, INC.,
a Pennsylvania corporation a Pennsylvania corporation
GENESIS HEALTH VENTURES OF GENESIS ELDERCARE HOME CARE
CLARKS SUMMIT, INC., SERVICES, INC. (f/k/a HEALTHCARE
a Pennsylvania corporation SERVICES NETWORK, INC.)
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
MASSACHUSETTS, INC., GENESIS ELDERCARE PHYSICIAN
a Pennsylvania corporation SERVICES, INC., (f/k/a GENESIS
PHYSICIAN SERVICES, INC.)
GENESIS HEALTH VENTURES OF a Pennsylvania corporation
NAUGATUCK, INC.,
a Pennsylvania corporation HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
SALISBURY, INC., KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation a Pennsylvania corporation
GENESIS HEALTH VENTURES OF MERIDIAN HEALTH, INC.,
WAYNE, INC., a Pennsylvania corporation
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.,
GENESIS HEALTH VENTURES OF a Pennsylvania corporation
WEST VIRGINIA, INC.,
a Pennsylvania corporation PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WINDSOR, INC., GENESIS ELDERCARE STAFFING
a Pennsylvania corporation SERVICES, INC. (f/k/a STAFF
REPLACEMENT SERVICES, INC.)
GENESIS HEALTH VENTURES OF a Pennsylvania corporation
INDIANA, INC.,
a Pennsylvania corporation STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
NEW GARDEN, INC.
a Pennsylvania corporation
/s/ ICG
------------------
Initials of Signor
-125-
<PAGE>
SUBURBAN MEDICAL SERVICES, INC. GENESIS HOLDINGS, INC.,
a Pennsylvania corporation a Delaware corporation
GENESIS ELDERCARE REHABILITATION GENESIS PROPERTIES OF DELAWARE
SERVICES, INC., (f/k/a TEAM CORPORATION,
REHABILITATION, INC.) a Delaware corporation
a Pennsylvania corporation
HILLTOP HEALTH CARE CENTER, INC.,
THERAPY CARE, INC., a Delaware corporation
a Pennsylvania corporation
KEYSTONE NURSING HOME, INC.,
THE TIDEWATER HEALTHCARE a Delaware corporation
SHARED SERVICES GROUP, INC.,
a Pennsylvania corporation LINCOLN NURSING HOME, INC.,
a Delaware corporation
WYNCOTE HEALTHCARE CORP.
a Pennsylvania corporation McKERLEY HEALTH CARE CENTERS, INC.,
a New Hampshire corporation
ASCO HEALTHCARE, INC.,
a Maryland corporation WAYSIDE NURSING HOME, INC.,
a Delaware corporation
ACCUMED, INC.,
a New Hampshire corporation PROFESSIONAL PHARMACY SERVICES,
INC., a Maryland Corporation
BRINTON MANOR, INC.,
a Delaware corporation MEDICAL SERVICES GROUP, INC.,
a Maryland Corporation
CONCORD HEALTHCARE
CORPORATION, NEIGHBORCARE PHARMACIES, INC.,
a Delaware corporation a Maryland Corporation
CRYSTAL CITY NURSING CENTER, DERBY NURSING CENTER CORPORATION,
INC., a Connecticut Corporation
a Maryland corporation
GENESIS ELDERCARE NATIONAL
EASTERN MEDICAL SUPPLIES, INC., CENTERS, INC., (f/k/a NATIONAL HEALTH
a Maryland corporation CARE AFFILIATES, INC.)
a Florida Corporation
GENESIS HEALTH SERVICES
CORPORATION,
a Delaware corporation
GENESIS HEALTHCARE CENTERS
HOLDINGS, INC.,
a Delaware corporation
/s/ ICG
------------------
Initials of Signor
-126-
<PAGE>
GENESIS ELDERCARE NETWORK GERIMED CORP.
SERVICES, INC., (f/k/a GENESIS a Pennsylvania corporation
MANAGEMENT RESOURCES, INC.) (f/k/a
TOTAL CARE SYSTEMS, INC.) GMS INSURANCE SERVICES, INC.
a Pennsylvania Corporation a Pennsylvania corporation
GENESIS ELDERCARE HOSPITALITY
SERVICES, INC. (f/k/a HCHS, INC.)
GENESIS ELDERCARE PROPERTIES, a Pennsylvania corporation
INC.,
a Pennsylvania Corporation GENESIS ELDERCARE TRANSPORTATION
SERVICES, INC. (f/k/a HSS-PARA
VERSALINK, INC., a Delaware Corporation TRANSIT, INC.
a Pennsylvania corporation
GERIATRIC & MEDICAL COMPANIES,
INC. INNOVATIVE PHARMACY SERVICES, INC.
a Delaware corporation a New Jersey corporation
GERIATRIC AND MEDICAL SERVICES, LIFE SUPPORT MEDICAL, INC.
INC. a Pennsylvania corporation
a New Jersey corporation
LIFE SUPPORT MEDICAL EQUIPMENT, INC.
GERIATRIC AND MEDICAL a Pennsylvania corporation
INVESTMENTS CORP.
a Delaware corporation METRO PHARMACEUTICALS, INC.
a Pennsylvania corporation
BURLINGTON WOODS CONVALESCENT
CENTER, INC. NETWORK AMBULANCE SERVICES, INC.
a New Jersey corporation (f/k/a REGIONAL AMBULANCE SERVICES,
INC.) (f/k/a LIFE SUPPORT AMBULANCE,
CRESTVIEW CONVALESCENT HOME, INC.)
INC. a Pennsylvania corporation
a Pennsylvania corporation
UNITED HEALTH CARE SERVICES, INC.
CRESTVIEW NORTH, INC. a Pennsylvania corporation
a Pennsylvania corporation
VALLEY MEDICAL SERVICES, INC.
GENESIS ELDERCARE DIAGNOSTICS, a Pennsylvania corporation
INC.
(f/k/a DIVERSIFIED DIAGNOSTICS, INC.) VALLEY TRANSPORT AMBULANCE
a Pennsylvania corporation SERVICE, INC.
a Pennsylvania corporation
GMC MEDICAL CONSULTING
SERVICES, INC.
a Pennsylvania corporation
/s/ ICG
------------------
Initials of Signor
-127-
<PAGE>
VILLAS REALTY & INVESTMENT, INC. GOVERNOR'S HOUSE NURSING HOME,
a Pennsylvania corporation INC., a Delaware corporation
WEISENFLUH AMBULANCE SERVICE, HEALTH CONCEPTS AND SERVICES, INC.,
INC. a Maryland corporation
a Pennsylvania corporation
INNOVATIVE HEALTH CARE MARKETING,
GENESIS ELDERCARE ADULT DAY INC., a Pennsylvania corporation
HEALTH SERVICES, INC., a Pennsylvania
corporation KNOLLWOOD NURSING HOME, INC.
a Delaware corporation
GENESIS ELDERCARE HOME HEALTH
SERVICES - SOUTHERN, INC., a MANOR MANAGEMENT CORPORATION OF
Pennsylvania corporation GEORGIAN MANOR, INC., a
Pennsylvania corporation
GENESIS ELDERCARE MANAGEMENT
SERVICES, INC. McKERLEY HEALTH CARE CENTER-
(f/k/a BLUEFIELD MANOR, INC.) CONCORD, INC., a New Hampshire
a Delaware corporation corporation
CARECARD, INC. MERIDIAN HEALTHCARE INVESTMENTS,
a Maryland corporation INC., a Maryland corporation
CAREFLEET, INC. PHARMACY EQUITIES, INC., a
a Pennsylvania corporation Pennsylvania corporation
CHELTENHAM LTC MANAGEMENT, PROSPECT PARK LTC MANAGEMENT,
INC. INC.,
a Pennsylvania corporation a Pennsylvania corporation
EASTERN REHAB SERVICES, INC., WALNUT LTC MANAGEMENT, INC., a
a Maryland corporation Pennsylvania corporation
EIDOS, INC., WEST PHILADELPHIA LTC MANAGEMENT,
a Florida corporation INC., a Pennsylvania corporation
GMC LEASING CORPORATION, TRANSPORT SERVICES, INC.,
a Delaware corporation a Maryland corporation
GMS MANAGEMENT, INC.,
a Pennsylvania corporation
GMS MANAGEMENT-TUCKER, INC.,
a Pennsylvania corporation
/s/ ICG
------------------
Initials of Signor
-128-
<PAGE>
YORK LTC MANAGEMENT INC., a
Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION
MANAGEMENT SERVICES, INC.
(f/k/a ROBINDALE MEDICAL SERVICES,
INC.) a Pennsylvania
corporation
By: /s/ Ira C. Gubernick
---------------------------------
On behalf of each of the foregoing
as General Counsel-Corporate 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
-129-
<PAGE>
[PAGES 130-138 INTENTIONALLY OMITTED]
-130-
<PAGE>
AGENTS, ISSUER AND LENDERS:
MELLON BANK, N.A., as a Lender,
as Issuer and as Administrative Agent
By /s/ Barbara J. Bauswald
--------------------------------
Name: Barbara J. Bauswald
Title: Vice President
Address for notices:
street address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, Pennsylvania 19106
mailing address:
AIM 199-5220
P.O. Box 7899
Philadelphia, Pennsylvania 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, Pennsylvania 19462
Attention: Barbara J. Hauswald
Vice President
Telephone: 610-941-8412
Facsimile: 610-941-4136
-139-
<PAGE>
With a copy for notices respecting
assignments to:
MELLON BANK, N.A.
One Mellon Bank Center
45th Floor
Pittsburgh, PA 15258-0001
Attention: Dean Hazelton
Telephone: 412-236-0316
Facsimile: 412-234-4612
-140-
<PAGE>
CITICORP USA INC., as a Lender and as
Syndication Agent
By /s/ Margaret A. Brown
--------------------------------
Name: Margaret A. Brown
Title: Managing Director
Address for notices:
399 Park Avenue
8th Floor, Zone 6
New York, NY 10043
Attention: Margaret A. Brown
Telephone: 212-559-0501
Facsimile: 212-793-0289
-141-
<PAGE>
FIRST UNION NATIONAL BANK, as a Lender and
as Documentation Agent
By /s/ Joseph H. Towell
--------------------------------
Name: Joseph H. Towell
Title: Senior Vice President
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
-142-
<PAGE>
NATIONSBANK, N.A., as a Lender and as a
Syndication Agent
By /s/ Scott S. Ward
-------------------------------
Name: Scott S. Ward
Title: Senior Vice President
Address for notices:
101 North Tryon Street
15th Floor
Charlotte, NC 28255
NC1-001-15-11
Attention: Jacquetta Banks
Telephone: 704-388-1111
Facsimile: 704-386-8694
With a copy to
100 North Tryon Street
8th Floor
Charlotte, NC 28255
NC1-007-0813
Attention: Scott Ward
Telephone: 704-388-7839
Facsimile: 704-388-6002
-143-
<PAGE>
CORESTATES BANK, N.A.
By /s/ Jennifer W. Leibowitz
-------------------------------
Name: Jennifer W. Leibowitz
Title: Vice President
Address for notices:
CoreStates Bank, N.A.
1339 Chestnut Street
F.C. 1-8-3-22
P.O. Box 7618
Philadelphia, PA 19101-7618
Attention: Jennifer Leibowitz
Telephone: (215) 786-3972
Facsimile: (215) 973-2738
-144-
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Farboud Tavangar
-------------------------------
Name: Farboud Tavangar
Title: First Vice President
Address for notices:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Evan S. Wasser
Telephone: (212) 261-7685
Facsimile: (212) 261-3440
-145-
<PAGE>
FLEET NATIONAL BANK
By /s/ Ginger Stolzenthaler
-------------------------------
Name: Ginger Stolzenthaler
Title: Senior Vice President
Address for notices:
Fleet National Bank
75 State Street
MA BO F04A
Boston, MA 02109
Attention: Ginger Stolzenthaler
Telephone: (617) 346-1647
Facsimile: (617) 346-1634
-146-
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By /s/ Takuya Honjo
-------------------------------
Name: Takuya Honjo
Title: Senior Vice President
Address for notices:
The Industrial Bank of Japan, Limited
1251 Avenue of the Americas
New York, NY 10020
Attention: Ken Takehisa
Telephone: (212) 282-3321
Facsimile: (212) 282-4490
-147-
<PAGE>
NATIONAL WESTMINSTER BANK Plc
By /s/ Andrew Weinberg
-------------------------------
Name: Andrew S. Weinberg
Title: Vice President
Address for notices:
National Westminster Bank Plc
175 Water Street, 26th Floor
New York, NY 10038
Attention: Andrew Weinberg
Phone: (212) 602-4438
Facsimile: (212) 602-4506
with a copy to:
Gleacher NatWest Inc.
660 Madison Avenue, 17th Floor
New York, NY 10021
Attention: Field Smith
Telephone: (212) 418-4525
Facsimile: (212) 418-4598
-148-
<PAGE>
THE SAKURA BANK, LIMITED
By /s/ Yoshikazu Nagura
-------------------------------
Name: Yoshikazu Nagura
Title: Vice President
Address for notices:
The Sakura Bank, Limited
277 Park Avenue, 45th Floor
New York, NY 10172
Attention: Philip Schubert
Telephone: (212) 756-6945
Facsimile: (212) 888-7651
-149-
<PAGE>
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ Edward S. Han
-------------------------------
Name: Edward S. Han
Title: Vice President
Address for notices:
Bank of America National Trust
& Savings Associations
555 S. Flower Street, 11th Floor
Los Angeles, CA 90071
Attention: Lucy Nixon
Telephone: (213) 228-9716
Facsimile: (213) 228-2756
-150-
<PAGE>
BANQUE PARIBAS
By /s/ David R. Laffey
-------------------------------
Name: David R. Laffey
Title: Director
By /s/ Brett I. Mehlman
-------------------------------
Name: Brett I. Mehlman
Title: Vice President
Address for notices:
Banque Paribas
787 Seventh Avenue
New York, NY 10019
Attention: David R. Laffey
Telephone: (212) 841-2116
Facsimile: (212) 841-2292
-151-
<PAGE>
BANK OF MONTREAL
By /s/ Peter Konigsmann
-------------------------------
Name: Peter Konigsmann
Title: Director
Address for notices:
Bank of Montreal
115 South LaSalle Street
Chicago, IL 60603
Attention: Peter Konigsmann
Telephone: (312) 750-8704
Facsimile: (312) 750-3834
-152-
<PAGE>
BANKBOSTON, N.A.
By /s/ Charles C. Woodard
-------------------------------
Name: Charles C. Woodard
Title: Managing Director
Address for notices:
BankBoston, N.A.
100 Federal Street, 01-19-03
Boston, MA 02110
Attention: Marilyn Fenollosa
Telephone: (617) 434-7684
Facsimile: (617) 434-7980
-153-
<PAGE>
THE BANK OF NEW YORK
By /s/ Peter H. Abdill
-------------------------------
Name: Peter H. Abdill
Title: Vice President
Address for notices:
The Bank of New York
One Wall Street, 21st Floor
New York, NY 10286
Attention: Walter C. Parelli
Telephone: (212) 635-6820
Facsimile: (212) 635-7978
-154-
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By /s/ J. Beckwith
-------------------------------
Name: J. Beckwith
Title: Vice President
Address for notices:
Bank of Tokyo-Mitsubishi Trust Company
1251 Avenue of the Americas, 12th Floor
New York, NY 10020-1104
Attention: Ned Komar
Telephone: (212) 782-4584
Facsimile: (212) 782-4935
-155-
<PAGE>
CRESTAR BANK
By /s/ Leesa McShane
-------------------------------
Name: Leesa McShane
Title: Vice President
Address for Notices:
Crestar Bank
120 E. Baltimore Street, 25th Floor
Baltimore, MD 21202
Attention: Leesa McShane
Telephone: (410) 986-1672
Facsimile: (410) 986-1670
-156-
<PAGE>
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH
By /s/ Andrew P. Nesi
-------------------------------
Name: Andrew P. Nesi
Title: Vice President
By /s/ Felix K. Comacho
-------------------------------
Name: Felix K. Comacho
Title: Assistant Treasurer
Address for notices:
Dresdner Bank AG, New York
75 Wall Street, 25th Floor
New York, NY 10005-2889
Attention: Felix K. Camacho
Telephone: (212) 429-3007
Facsimile: (212) 429-2129
-157-
<PAGE>
FINOVA CAPITAL CORPORATION
By /s/ Dan Scanlan
-------------------------------
Name: Dan Scanlan
Title:
Address for notices:
Finova Capital Corporation
311 S. Wacker, Suite 4400
Chicago, IL 60606
Attention: Dan Scanlan
Telephone: (312) 322-3539
Facsimile: (312) 322-3553
-158-
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By /s/ Teiji Teramoto
-------------------------------
Name: Teiji Teramoto
Title: Vice President and Manager
Address for notices:
The Fuji Bank, Limited,
New York Branch
Two World Trade Center
New York, NY 10048
Attention: Anh Nguyen
Telephone: (212) 898-2088
Facsimile: (212) 898-2399
-159-
<PAGE>
KEY CORPORATE CAPITAL INC.
By /s/ Angela Mago
-------------------------------
Name: Angela Mago
Title: Vice President
Address for notices:
Key Corporate Capital Inc.
c/o Key Bank, N.A.
127 Public Square
Cleveland, OH 44114
Attention: Angela Mago
OH-01-27-0605
Telephone: (216) 689-3247
Facsimile: (216) 689-5970
-160-
<PAGE>
KREDIETBANK N.V.
By /s/ Armen Karozichian
-------------------------------
Name: Armen Karozichian
Title: Vice President
By /s/ Robert Shauffer
-------------------------------
Name: Robert Shauffer
Title: Vice President
Address for notices:
Kredietbank N.V.
125 W. 55th Street
New York, NY 10021
Attention: Armen Karozichian
Telephone: (212) 541-0717
Facsimile: (212) 541-0793
-161-
<PAGE>
FIRST NATIONAL BANK OF MARYLAND
By /s/ Robert H. Hauver
-------------------------------
Name: Robert H. Hauver
Title: Vice President
Address for notices:
First National Bank of Maryland
25 S. Charles Street, 18th Floor
Baltimore, MD 21201
Attention: Robert H. Hauver
Telephone: (410) 244-4246
Facsimile: (410) 244-4388
-162-
<PAGE>
NATEXIS BANQUE BFCE
By /s/ Kevin Dooley
-------------------------------
Name: Kevin Dooley
Title: Vice President
By /s/ William O. Maier
-------------------------------
Name: William O. Maier
Title: Vice President
Address for notices:
Natexis Banque BFCE
645 Fifth Avenue, 20th Floor
New York, NY 10022
Attention: Frank Madden
Telephone: (212) 872-5180
Facsimile: (212) 872-5045
-163-
<PAGE>
ROYAL BANK OF CANADA
By /s/ Marion A. Patterson
-------------------------------
Name: Marion A. Patterson
Title: Senior Manager
Address for notices:
Royal Bank of Canada
Financial Square, 23rd Floor
New York, NY 10005-3531
Attention: Jim Rankin, Manager
Telephone: (212) 428-6204
Facsimile: (212) 428-2372
-164-
<PAGE>
NATIONAL CITY BANK OF
PENNSYLVANIA
By /s/ Debra W. Riefner
-------------------------------
Name: Debra W. Riefner
Title: Vice President
Address for notices:
National City Bank of Pennsylvania
20 Stanwix Street
Pittsburgh, PA 15222
Loc. 46-25-191
Attention: Debra W. Riefner
Telephone: (412) 644-8880
Facsimile: (412) 471-4883
-165-
<PAGE>
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By /s/ Toshihiro Hayashi
-------------------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
Address for notices:
The Mitsubishi Trust and Banking
Corporation
520 Madison Avenue, 26th Floor
New York, NY 10022
Attention: Clifford A. Teller
Telephone: (212) 891-8269
Facsimile: (212) 644-6825 or
(212) 593-4691
-166-
<PAGE>
THE SANWA BANK, LIMITED
By /s/ Christian Kambour
-------------------------------
Name: Christian Kambour
Title: Vice President
Address for notices:
The Sanwa Bank, Limited
55 E. 52nd Street
New York, NY 10055
Attention: Christian Kambour
Telephone: (212) 339-6232
Facsimile: (212) 754-1304
-167-
<PAGE>
THE SUMITOMO BANK, LIMITED
By /s/ J. Wade Bell
-------------------------------
Name: J. Wade Bell
Title: Vice President
By /s/ Michael J. Fox
-------------------------------
Name: Michael J. Fox
Title: Vice President and Manager
Address for notices:
The Sumitomo Bank, Limited
One Liberty Place
1650 Market Street, Suite 2860
Philadelphia, PA 19103
Attention: J. Wade Bell
Telephone: (215) 636-4440
Facsimile: (215) 636-4446
-168-
<PAGE>
TORONTO DOMINION (NEW YORK), INC.
By /s/ Jorge A. Garcia
-------------------------------
Name: Jorge A. Garcia
Title: Mgr. Cr. Admin.
Address for notices:
The Toronto-Dominion Bank
909 Fannin, Suite 1700
Houston, Texas 77010
Attention: Jorge A. Garcia
Telephone: (713) 653-8242
Facsimile: (713) 951-9921
-169-
<PAGE>
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By /s/ Nobotu Kubora
-------------------------------
Name: Nobotu Kubora
Title: Deputy General Manager
Address for notices:
The Long-Term Credit Bank of Japan, Ltd.
165 Broadway
New York, NY 10006
Attention: Junicchi Ebihara
Telephone: (212) 335-4477
Facsimile: (212) 608-2371
-170-
<PAGE>
SUMMIT BANK
By /s/ James P. Andersen
-------------------------------
Name: James P. Andersen
Title: Vice President and Regional
Manager
Address for notices:
Summit Bank
250 Moore Street, 2nd Floor
Hackensack, NJ 07601
Attention: James P. Andersen
Telephone: (201) 646-6317
Facsimile: (201) 646-9497
-171-
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By /s/ Ronald Wolinsky
-------------------------------
Name: Ronald Wolinsky
Title: Vice President and Group Leader
Address for notices:
The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, 48th Floor
New York, NY 10048
Attention: Takayuki Kumagai
Telephone: (212) 432-6651
Facsimile: (212) 488-8955
-172-
<PAGE>
CREDITANSTALT CORPORATE
FINANCE, INC.
By /s/ Clifford L. Wells
-------------------------------
Name: Clifford L. Wells
Title: Vice President
By /s/ Fiona McKone
-------------------------------
Name: Fiona McKone
Title: Senior Associate
Address for notices:
Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Greenwich, CT 06830
Attention: Fiona McKone
Telephone: (203) 861-6590
Facsimile: (203) 861-0297
-173-
<PAGE>
CREDIT SUISSE FIRST BOSTON
By /s/ Robert B. Potter
-------------------------------
Name: Robert B. Potter
Title: Vice President
By /s/ Christian Bourqui
-------------------------------
Name: Christian Bourqui
Title: Associate
Address for notices:
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010
Attention: Robert B. Potter
Telephone: (212) 325-9154
Facsimile: (212) 325-8319
-174-
<PAGE>
FIRST NATIONAL BANK OF CHICAGO
By /s/ Patricia S. Carpen
-------------------------------
Name: Patricia S. Carpen
Title: Assistant Vice President
Address for notices:
First National Bank of Chicago
1 First National Plaza
Chicago, IL 60670
Attention: Tom Harkless
Telephone: (312) 732-2478
Facsimile: (312) 732-2016
-175-
<PAGE>
SCOTIABANC, INC.
By /s/ Dana Maloney
-------------------------------
Name: Dana Maloney
Title: Relationship Manager
Address for notices:
ScotiaBanc, Inc.
600 Peachtree Street NE
Suite 2700
Atlanta, GA 30308
Attention: Dana Maloney
Telephone: (404) 877-1524
Facsimile: (404) 888-8998
-176-
<PAGE>
COMMERZBANK AG, NEW YORK
BRANCH
By /s/ Mary F. Harold
-------------------------------
Name: Mary F. Harold
Title: Vice President
By /s/ G. Rod McWalters
-------------------------------
Name: G. Rod McWalters
Title: Vice President
Address for notices:
Commerzbank AG, New York Branch
2 World Financial Center
New York, NY 10281-1050
Attention: Mary Harold
Telephone: (212) 266-7509
Facsimile: (212) 266-7374
-177-
<PAGE>
CIBC INC.
By /s/ Timothy E. Doyle
-------------------------------
Name: Timothy E. Doyle
Title: Manager Director, CIBC Wood
Gundy Securities Corp.,
as Agent
Address for notices:
CIBC Inc.
425 Lexington Avenue, 8th Floor
New York, NY 10025
Attention: Tim Doyle
Telephone: (212) 856-3650
Facsimile: (212) 856-3558
-178-
<PAGE>
AMSOUTH BANK
By /s/ J. Ken DiFatta
-------------------------------
Name: J. Ken DiFatta
Title: Commercial Banking Officer
Address for notices:
AmSouth Bank
1900 5th Ave. N. AST7FL
Birmingham, AL 35203
Attention: Ken DiFatta
Telephone: (205) 801-0358
Facsimile: (205) 326-4790
-179-
<PAGE>
PFL LIFE INSURANCE
COMPANY
By /s/ Gregory W. Theobald
-------------------------------
Name: Gregory W. Theobald
Title: VP & Asst. Secretary
Address for notices:
PFL Life Insurance Company
c/o Aegon USA Investment
Management, Inc.
4333 Edgewood Road, NE
Cedar Rapids, IA 52499
Attention: John Bailey, Securities
Analyst
Telephone: (319) 369-2811
Facsimile: (319) 369-2666
-180-
<PAGE>
PEOPLES INTERNAL BOND FUND
By /s/ Kirk W. Buese
-------------------------------
Name: Kirk W. Buese
Title: Second Vice President-Investments
Address for notices:
Peoples Internal Bond Fund
c/o Aegon USA Investment
Management, Inc.
4333 Edgewood Road, NE
Cedar Rapids, IA 52499
Attention: John Bailey, Securities
Analyst
Telephone: (319) 369-2811
Facsimile: (319) 369-2666
-181-
<PAGE>
ALLSTATE INSURANCE COMPANY
By
-------------------------------
Name:
By
-------------------------------
Name:
Its Authorized Signatories
Address for notices:
Allstate Insurance Company
3075 Sanders Road, STE G3A
Northbrook, IL 60062-3092
Attention: Jane Nelson
Telephone: (847) 402-8383
Facsimile: (847) 402-3092
-182-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-183-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-184-
<PAGE>
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management, Inc., as attorney in fact
By /s/ Christopher A. Bondy
-------------------------------
Christopher A. Bondy, Vice President
Address for notices:
Floating Rate Portfolio
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas, 27th Floor
New York, NY 10036
Attention: Christopher A. Bondy
Telephone: (212) 278-9673
Facsimile: (212) 278-9619
-185-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-186-
<PAGE>
PRIME INCOME TRUST
By /s/ Rafael Scolari
-------------------------------
Name: Rafael Scolari
Title: Senior Vice President
Address for notices:
Prime Income Trust
c/o Dean Witter Intercapital, Inc.
72nd Floor
Two World Trade Center
New York, NY 10048
Attention: Louis A. Pistecchia
Telephone: (212) 392-5845
Facsimile: (212) 392-5345
-187-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-188-
<PAGE>
DEEPROCK & COMPANY
By: Eaton Vance Management
as Investment Advisor
By /s/ Scott H. Page
-------------------------------
Name: Scott H. Page
Title: Vice President and Portfolio
Mgr.
Address for notices:
Deeprock & Company
c/o Eaton Vance Management
24 Federal Street
6th Floor
Boston, MA 02110
Attention: David Lochiatto
Telephone: (617) 348-0195
Facsimile: (617) 695-9594
-189-
<PAGE>
ING HIGH INCOME PRINCIPAL
PRESERVATION OFFERING, L.P.
By /s/ Kathleen A. Lenarcic
-------------------------------
Name: Kathleen A. Lenarcic
Title: Vice President & Portfolio Manager
Address for notices:
Ing High Income Principal Preservation
Offering, L.P.
c/o Ing Capital Advisors, Inc.
333 S. Grand Avenue, Suite 4250
Los Angeles, CA 90071
Attention: Kathleen Lenarcic
Telephone: (213) 346-3971
Facsimile: (213) 346-3995
-190-
<PAGE>
KZH-ING-1 CORPORATION
By /s/ Virginia R. Conway
-------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH-ING-1 Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-191-
<PAGE>
MASSACHUSETTS MUTUAL LIFE
INSURANCE CO.
By /s/ Kathleen Lynch
-------------------------------
Name: Kathleen Lynch
Title: Manager Director
Address for notices:
Massachusetts Mutual Life Insurance Co.
1295 State Street
Springfield, MA 01111
Attention: John Wheeler, Managing
Director
Telephone: (413) 744-6228
Facsimile: (413) 744-6127
-192-
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By /s/ R. Douglas Henderson
-------------------------------
Name: R. Douglas Henderson
Title: Authorized Signatory
Address for notices:
Merrill Lynch Senior Floating Rate
Fund, Inc.
c/o Merrill Lynch Asset Management
800 Scudders Mill Road - Area 1B
Plainsboro, NJ 08536
Attention: Jill Montanye
Telephone: (609) 282-3102
Facsimile: (609) 282-3542
-193-
<PAGE>
METROPOLITAN LIFE INSURANCE
COMPANY
By /s/ James R. Dingler
-------------------------------
Name: James R. Dingler
Title: Assistant Vice President
Address for notices:
Metropolitan Life Insurance Company
334 Madison Avenue
Convent Station, NJ 07961-0633
Attention: James Dingler
Asst. Vice President
Telephone: (201) 254-3206
Facsimile: (201) 254-3050
-194-
<PAGE>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By /s/ Richard A. Strait
-------------------------------
Name: Richard A. Strait
Title: Vice President
Address for notices:
The Northwestern Mutual Life Insurance
Company
720 E. Wisconsin Avenue
Milwaukee, WI 53202
Attention: David A. Barras
Associate Director
Telephone: (414) 299-1618
Facsimile: (414) 299-7124
-195-
<PAGE>
NEW YORK LIFE INSURANCE
AND ANNUITY CORPORATION
By: New York Life Insurance Company
By /s/ Andrew H. Steuerman
-------------------------------
Name: Andrew H. Steuerman
Title: Investment Manager
Address for notices:
New York Life Insurance and Annuity
Corporation
c/o New York Life Insurance Company
51 Madison Avenue, Room 206
New York, NY 10010
Attention: Elise Chowdhry
Telephone: (212) 576-7830
Facsimile: (212) 447-4122
-196-
<PAGE>
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
Its General Partner
By: Oak Hill Securities MGP, Inc.,
Its General Partner
By /s/ Glenn R. August
-------------------------------
Name: Glenn R. August
Title: President
Address for notices:
Oak Hill Securities Fund, L.P.
c/o Oak Hill Partners, Inc.
65 East 55th Street - 32nd Floor
New York, NY 10022
Attention: Scott D. Krase, Vice
President
Telephone: (212) 326-1551
Facsimile: (212) 593-3596
-197-
<PAGE>
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (A Unit of The Chase
Manhattan Bank)
By /s/ Andrew D. Gordon
-------------------------------
Name: Andrew D. Gordon
Title: Managing Director
Address for notices:
Octagon Credit Investors Loan Portfolio
(A Unit of The Chase Manhattan Bank)
c/o Octagon Credit Investors
380 Madison Avenue, 12th Floor
New York, NY 10017
Attention: James P. Ferguson
Managing Director
Telephone: (212) 622-3070
Facsimile: (212) 622-3797
-198-
<PAGE>
PARIBAS CAPITAL FUNDING LLC
By /s/ Eric A. Green
-------------------------------
Name: Eric A. Green
Title: Director
Address for notices:
Paribas Capital Funding LLC
787 Seventh Avenue, 32nd Floor
New York, NY 10019
Attention: Michael Weinberg
Telephone: (212) 841-2544
Facsimile: (212) 841-2144
with a copy to:
State Street Bank & Trust Co.
Corporate Trust Dept.
Attn: Richard Wagman
Amy Molisse
Phone: (617) 664-5410
Fax: (617) 664-5366(67)(68)
-199-
<PAGE>
PILGRIM AMERICA PRIME RATE
TRUST
By /s/ Michael S. Bacevich
-------------------------------
Name: Michael S. Bacevich
Title: Vice President
Address for notices:
Pilgrim America Prime Rate Trust
c/o Pilgrim America Investments, Inc.
Two Renaissance Square
40 North Central Avenue, Suite 1200
Phoenix, AZ 85004-3444
Attention: Michael Bacevich,
Vice President
Telephone: (602) 417-8258
Facsimile: (602) 417-8327
-200-
<PAGE>
ROYALTON COMPANY
By: Pacific Investment Management
Company, as its Investment Advisor
By /s/ Raymond Kennedy
-------------------------------
Name: Raymond Kennedy
Title: Vice President
Address for notices:
Royalton Company
c/o Pacific Investment Management Co.
840 Newport Center Drive
Newport Beach, CA 92658
Attention: Richard Weil/Raymond Kennedy
Telephone: (714) 717-7213 (Richard)
(714) 717-7363 (Raymond)
Facsimile: (714) 640-3419
-201-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-202-
<PAGE>
NORTHERN LIFE INSURANCE
COMPANY
By /s/ James V. Wittich
-------------------------------
Name: James V. Wittich
Title: Assistant Treasurer
Address for notices:
Northern Life Insurance Company
c/o Reliastar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121
Attention: Tim Warrick, Vice President
Telephone: (612) 372-5258
Facsimile: (612) 372-5368
-203-
<PAGE>
KZH - SOLEIL CORPORATION
By /s/ Virginia R. Conway
-------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH - Soleil Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-204-
<PAGE>
KZH HOLDING CORPORATION III
By /s/ Virginia R. Conway
-------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH Holding Corporation III
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-205-
<PAGE>
KZH-CRESCENT CORPORATION
By /s/ Virginia R. Conway
-------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH-Crescent Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-206-
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
-------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
Address for notices:
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Jeffrey Maillet
Telephone: (630) 684-6438
Facsimile: (630) 684-6740 or 6741
-207-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-208-
<PAGE>
CONTINENTAL ASSURANCE COMPANY
Separate Account (E)
By: TCW Asset Management Company as
attorney-in-fact
By /s/ Mark L. Gold
-------------------------------
Name: Mark L. Gold
Title: Managing Director
By /s/ Justin L. Driscoll
-------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
Address for notices:
Continental Assurance Company
c/o TCW Asset Management Company
200 Park Avenue, Suite 2200
New York, NY 10166-0228
Attention: Mark L. Gold/Justin L. Driscoll
Telephone: (212) 297-4137
Facsimile: (212) 297-4159
Please Copy All Rate Set Notices To:
Elaine Nagos
Trust Company of the West
200 Park Avenue
New York, NY 10166
Telephone: (213) 244-0830
Facsimile: (213) 244-0485
-209-
<PAGE>
CIBC INC.
By /s/ Elizabeth S. Schreiber
-------------------------------
Name: Elizabeth S. Schreiber
Title: Director CIBC Wood Gundy
Securities Corp., as Agent
Address for notices:
CIBC Inc.
c/o Canadian Imperial Bank of Commerce
425 Lexington Avenue, 7th Floor
New York, NY 10025
Attention: William Swenson
Telephone: (212) 856-3935
Facsimile: (212) 856-3799
-210-
<PAGE>
MORGAN STANLEY SENIOR FUNDING,
INC.
By /s/ Christopher A. Pucillo
-------------------------------
Name: Christopher A. Pucillo
Title: Vice President
Address for notices:
MORGAN STANLEY SENIOR FUNDING,
INC.
1585 Broadway, 10th Floor
New York, New York 10036
Attention: James Morgan
Telephone: (212) 761-4866
Facsimile: (212) 761-0592
-211-
<PAGE>
CRESCENT/MACH I PARTNERS, L.P.
by: TCW Asset Management Company,
its Investment Manager
By /s/ Justin L. Driscoll
-------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
Address for notices:
Crescent/Mach I Partners L.P.
c/o State Street Bank & Trust Co.
Two International Place
Boston, MA 02110
Attention: Jackie Kilroy
Telephone: (617) 664-5477
Facsimile: (617) 664-5366
-212-
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By /s/ Andrew H. Steuerman
-------------------------------
Name: Andrew H. Steuerman
Title: Investment Manager
Address for notices:
New York Life Insurance and
Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
Room 206
New York, New York 10010
Attention: Elise Chowdhry
Telephone: (212) 576-7830
Facsimile: (212) 447-4122
-213-
<PAGE>
SCHEDULE 6.10
JOINDER OF BORROWERS
1. Joinder Supplement. Genesis (on behalf of itself and the other
Borrowers) and each Joining Subsidiary shall execute and deliver to the
Administrative Agent, with an executed counterpart for each Lender Party, an
agreement in substantially the form attached to this Agreement as Exhibit H (a
"Joinder Supplement") as to becoming a party hereto and to the relevant Loan
Documents.
2. Notes. Each Joining Subsidiary and each existing Borrower shall
execute and deliver to the Administrative Agent a replacement Note or Allonge
for each Tranche A Lender and each RC Lender, as necessary.
3. Collateral. Each applicable Borrower and each applicable Joining
Subsidiary shall deliver to the Administrative Agent (1) certificates and
instruments representing the stock certificates and other instruments to be
pledged pursuant to the Pledge Agreement accompanied by duly executed
instruments of transfer or assignments in blank to the extent required by the
Pledge Agreement 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 Administrative 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 (or by each existing
Borrower in the collateral comprised of equity of any Joining Subsidiaries)
under and pursuant to the Pledge Agreement.
4. Lien Searches. For each Joining Subsidiary which is acquired by a
Borrower pursuant to an Acquisition, each Joining Subsidiary shall deliver to
the Administrative Agent such evidence of recent searches of Uniform Commercial
Code, tax, judgment records and other appropriate registers as the
Administrative Agent shall request.
5. Corporate or Partnership Proceedings. Each Joining Subsidiary
shall deliver to the Administrative Agent, with an executed counterpart for each
Lender Party, certificates by the Secretary or Assistant Secretary of each
Joining Subsidiary (or general partner thereof), dated as of the Joinder
Effective Date (as defined below) as to the incumbency and signatures of the
respective officers of such Joining Subsidiary who are authorized to sign Loan
Documents, together with (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. 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
-214-
<PAGE>
such Joining Subsidiary in its state of incorporation or organization and each
state in which such Joining Subsidiary does business.
6. Legal Opinions of Counsel. The Borrowers and each Joining
Subsidiary collectively shall cause to be delivered to the Administrative Agent,
with an executed counterpart for each Lender Party, an opinion or opinions
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 such matters as may be requested by the Administrative Agent, all in form and
substance satisfactory to the Administrative Agent.
7. 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.
8. Additional Matters. The Borrowers and each Joining Subsidiary
shall deliver, or cause to be delivered, to the Administrative Agent such other
revised schedules, certificates, opinions, instruments and other documents
(including those relating to licensing) as may be requested by the
Administrative Agent. All such schedules, certificates, opinions, instruments
and other documents shall be satisfactory in form and substance to the
Administrative Agent.
-215-
<PAGE>
SCHEDULE 8.4
ACQUISITION CONDITIONS
1. Notice. Not later than 15 Business Days before the consummation
of a proposed Acquisition, Genesis (on behalf of the Borrowers) shall have
delivered to each Lender Party a notice of the proposed Acquisition, together
with the following:
(1) copies of audited financial statements of the entity to be
acquired (the "Target") for its last three fiscal years (to the extent
that such audited statements are available, or, to the extent such audited
statements are not so available, unaudited statements for as much of such
period as is available);
(2) copies of the interim financial statements of the Target
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 (1) but no later than five (5)
Business Days prior to the date of the proposed Acquisition); and
(5) revisions to the most recent financial projections
delivered to the Lender Parties by Genesis, which revisions shall take
into account the projected financial condition and results of operations
of the Target for the period covered by such projections.
2. Other Information. In addition, Genesis (on behalf of the
Borrowers) shall have delivered to the Administrative Agent (and with respect to
the information referred to in paragraph (2) below, the requesting Lender Party)
the following:
(1) copies of any agreements entered into or proposed to be
entered into by such Borrower in connection with such Acquisition; and
(2) such other information about the Target or such
Acquisition as any Lender Party may reasonably request.
3. Board Approval. The board of directors (or equivalent governing
body) of the Target shall have approved such Acquisition.
-216-
<PAGE>
4. Line of Business. Not less than 75% of the Target's revenues
during its most recently completed fiscal year shall have been derived from
lines of business which are, at the time of the Acquisition, among the principal
lines of business of any of the Borrowers.
5. No Default. No Event of Default or Default shall have occurred
and be continuing before, or after giving effect to, the consummation of the
Acquisition.
6. Limitations on Mergers and Consolidations. If any merger is
effected in connection with the Acquisition, a Borrower (including an entity
that becomes a Borrower consistent with the provisions of this Agreement) shall
be the surviving entity in the merger. No consolidation shall be permitted in
connection with any Acquisition.
7. Joinder to Loan Documents. The Borrowers shall cause any new
(direct or indirect) Subsidiary of Genesis which is created or acquired as a
direct or indirect result of, or in connection with, such Acquisition, to become
a Borrower hereunder pursuant to and in accordance with the terms of Section
6.10 of this Agreement and shall cause the ownership interests therein to be
pledged under the Pledge Agreement.
8. Arm's Length. The Acquisition shall be made in good faith in an
arm's-length transaction to a Person which is not an Affiliate of any Borrower,
except as otherwise agreed to by the Required Lenders. Without limiting the
generality of the foregoing, the total consideration paid for the Acquisition
shall be no greater than the fair market value of the subject assets (including
intangible assets).
9. 1995 and 1996 Indentures. The Acquisition shall not be prohibited
by or result in a default or breach under the terms of the 1995 Subordinated
Note Indenture or 1996 Subordinated Note Indenture.
-217-
<PAGE>
SCHEDULE 8.5(g)
DISPOSITION CONDITIONS
1. Notice. Genesis (on behalf of the Borrowers) shall have given
each Lender Party at least 5 days prior written notice of any transfer (as
defined in Section 8.5 of this Agreement), together with an Officer's Compliance
Certificate showing pro forma compliance with the financial covenants referred
to therein (including the financial tests set forth in paragraph (g) of Section
8.5) after giving effect to such transfer.
2. Arm's Length. The transfer shall be made in good faith in an
arm's-length transaction to a Person which is not an Affiliate of any Borrower,
except as otherwise agreed to by the Required Lenders. Without limiting the
generality of the foregoing, the total consideration for the transfer shall be
at least equal to the fair market value of the subject assets (including
intangible assets).
3. Transfer of Equity of a Borrower. In the event that any shares of
capital stock, partnership interests or other ownership interests of a Borrower
are to be disposed of or otherwise transferred in such transaction each of the
following additional conditions shall be met:
(a) 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
(b) The Administrative Agent shall have received such
replacement Notes, certificates, opinions, documents and/or instruments it
shall reasonably request.
4. 1995 and 1996 Indenture. The disposition shall not be prohibited
by or result in a default or breach or mandatory prepayment under the terms of
the 1995 Subordinated Note Indenture or the 1996 Subordinated Note Indenture.
-218-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of October 9, 1997
by and among
THE MULTICARE COMPANIES, INC. and
CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
THE FINANCIAL INSTITUTIONS IDENTIFIED HEREIN, AS LENDERS,
MELLON BANK, N.A., AS ISSUER OF LETTERS OF CREDIT,
MELLON BANK, N.A., AS ADMINISTRATIVE AGENT,
CITICORP USA, INC., AS SYNDICATION AGENT,
FIRST UNION NATIONAL BANK, AS DOCUMENTATION AGENT
NATIONSBANK, N.A., AS SYNDICATION AGENT, and
OTHER AGENTS IDENTIFIED HEREIN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
CREDIT FACILITY............................................................ 2
1.1 COMMITMENT TO LEND............................................. 2
1.2 JOINT AND SEVERAL OBLIGATIONS.................................. 3
1.3 MANNER OF BORROWING............................................ 3
1.4 SCHEDULED REPAYMENTS........................................... 6
1.5 VOLUNTARY PREPAYMENTS AND UNSCHEDULED,
MANDATORY PREPAYMENTS........................................ 9
1.6 PAYMENTS BY THE BORROWERS IN GENERAL........................... 13
1.7 REDUCTIONS OF RC COMMITMENT.................................... 15
1.8 INTEREST....................................................... 15
1.9 FEES........................................................... 17
1.10 COMPUTATION OF INTEREST AND FEES............................... 18
1.11 PROMISSORY NOTES; RECORDS OF ACCOUNT........................... 18
1.12 PRO RATA TREATMENT............................................. 19
1.13 TAXES ON PAYMENTS.............................................. 19
1.14 REGISTERED NOTES AND LOANS..................................... 21
ARTICLE 2
YIELD PROTECTION AND BREAKAGE INDEMNITY.................................... 23
2.1 MANDATORY SUSPENSION AND CONVERSION OF LIBO RATE
LOANS........................................................ 23
2.2 REGULATORY CHANGES............................................. 24
2.3 CAPITAL AND RESERVE REQUIREMENTS............................... 25
2.4 BREAKAGE....................................................... 25
2.5 DETERMINATIONS................................................. 25
2.6 REPLACEMENT OF LENDERS......................................... 26
2.7 CHANGE OF LENDING OFFICE....................................... 26
ARTICLE 3
LETTERS OF CREDIT.......................................................... 28
3.1 ISSUANCE OF LETTERS OF CREDIT.................................. 28
ARTICLE 4
-i-
<PAGE>
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS................................................................ 33
4.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND
INITIAL FUNDING............................................... 33
4.2 CONDITIONS TO EACH LOAN AND ISSUANCE OF EACH LETTER
OF CREDIT..................................................... 38
ARTICLE 5
REPRESENTATIONS AND WARRANTIES.............................................. 40
5.1 REPRESENTATIONS................................................. 40
5.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE......................... 48
ARTICLE 6
AFFIRMATIVE COVENANTS....................................................... 49
6.1 REPORTING REQUIREMENTS.......................................... 49
6.2 MAINTENANCE OF EXISTENCE........................................ 54
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES
AND OTHER PROPERTY.............................................. 54
6.4 MAINTENANCE OF RECORDS; FISCAL YEAR............................. 55
6.5 COMPLIANCE WITH LAWS....................................... 55
6.6 ERISA........................................................... 55
6.7 RIGHT OF INSPECTION............................................. 56
6.8 INSURANCE....................................................... 57
6.9 PAYMENT OF TAXES AND OTHER CHARGES.............................. 57
6.10 SUBSIDIARIES TO BE BORROWERS.................................... 57
6.11 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS................... 58
6.12 INTEREST RATE HEDGING AGREEMENTS................................ 58
6.13 CORPORATE SEPARATENESS.......................................... 58
6.14 TRANSACTIONS WITH AFFILIATES.................................... 59
6.15 CASH PROCEEDS OF EQUITY OF SURETY............................... 59
6.16 CAPITAL STOCK................................................... 59
6.17 USE OF PROCEEDS................................................. 59
6.18 CERTAIN DISPOSITIONS............................................ 59
ARTICLE 7
FINANCIAL COVENANTS......................................................... 60
7.1 CERTAIN FINANCIAL COVENANTS..................................... 60
7.2 CALCULATION OF FINANCIAL COVENANTS.............................. 61
ARTICLE 8
-ii-
<PAGE>
NEGATIVE COVENANTS......................................................... 62
8.1 INDEBTEDNESS................................................... 62
8.2 LIENS.......................................................... 64
8.3 LOANS, ADVANCES AND INVESTMENTS................................ 65
8.4 ACQUISITIONS, ETC.............................................. 66
8.5 DISPOSITIONS................................................... 67
8.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP
INTERESTS.................................................... 68
8.7 LEASES......................................................... 69
8.8 DIVIDENDS AND RELATED DISTRIBUTIONS............................ 69
8.9 CONSOLIDATED TAX RETURN........................................ 69
8.10 LIMITATION ON PAYMENTS, PREPAYMENTS,
DEFEASEMENT AND OTHER ACTION WITH RESPECT TO
CERTAIN DEBT OBLIGATIONS..................................... 70
8.11 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS............... 70
8.12 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS................... 71
8.13 LIMITATIONS ON MERGERS, ETC.................................... 71
8.14 AVOIDANCE OF OTHER CONFLICTS................................... 71
8.15 CAPITAL EXPENDITURES........................................... 71
8.16 MANAGEMENT FEE................................................. 71
ARTICLE 9
DEFAULTS................................................................... 73
9.1 "EVENTS OF DEFAULT............................................. 73
9.2 CONSEQUENCES OF AN EVENT OF DEFAULT............................ 76
9.3 APPLICATION OF PROCEEDS........................................ 77
ARTICLE 10
THE ADMINISTRATIVE AGENT................................................... 79
10.1 APPOINTMENT.................................................... 79
10.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES................ 79
10.3 EXERCISE OF POWERS............................................. 80
10.4 GENERAL EXCULPATORY PROVISIONS................................. 80
10.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT..................... 81
10.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE
AGENT OR OTHER LENDERS....................................... 82
10.7 INDEMNIFICATION................................................ 82
10.8 REGISTER....................................................... 83
10.9 SUCCESSOR ADMINISTRATIVE AGENT................................. 83
10.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL
AGENT........................................................ 83
10.11 CALCULATIONS................................................... 84
-iii-
<PAGE>
10.12 OTHER AGENTS.................................................. 84
10.13 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY............... 84
ARTICLE 10A
SPECIAL INTERCREDITOR PROVISIONS........................................... 86
10A.1 SPECIAL PROVISIONS APPLICABLE TO LENDER PARTIES AS
PARTIES TO THE GENESIS CREDIT AGREEMENT..................... 86
ARTICLE 10B
SPECIAL INTER-BORROWER PROVISIONS.......................................... 87
10B.1 CERTAIN BORROWER ACKNOWLEDGEMENTS............................. 87
10B.2 CERTAIN INTER-BORROWER AGREEMENTS............................. 87
10B.3 RECORDS....................................................... 88
ARTICLE 11
DEFINITIONS; CONSTRUCTION.................................................. 89
11.1 CERTAIN DEFINITIONS........................................... 89
11.2 CONSTRUCTION..................................................112
11.3 ACCOUNTING PRINCIPLES.........................................113
ARTICLE 12
MISCELLANEOUS..............................................................114
12.1 NOTICES.......................................................114
12.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT........................114
12.3 SEVERABILITY..................................................114
12.4 DESCRIPTIVE HEADINGS..........................................115
12.5 GOVERNING LAW.................................................115
12.6 NON-MERGER OF REMEDIES........................................115
12.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES........................115
12.8 AMENDMENTS; WAIVERS...........................................116
12.9 SUCCESSORS AND ASSIGNS........................................117
12.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE
PAGES.......................................................119
12.11 MAXIMUM LAWFUL INTEREST RATE..................................119
12.12 INDEMNIFICATION...............................................120
12.13 EXPENSES......................................................121
12.14 MAXIMUM AMOUNT OF JOINT AND SEVERAL LIABILITY.................122
12.15 AUTHORIZATION OF MULTICARE BY OTHER BORROWERS.................122
12.16 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY...............123
12.17 CERTAIN WAIVERS BY BORROWERS..................................123
-iv-
<PAGE>
12.18 SET-OFF.......................................................123
12.19 SHARING OF COLLECTIONS........................................124
12.20 OTHER LOAN DOCUMENTS..........................................124
12.21 CERTAIN BORROWER ACKNOWLEDGEMENTS.............................124
12.22 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER
OF JURY TRIAL...............................................124
LIST OF SCHEDULES..........................................................253
LIST OF EXHIBITS...........................................................254
SCHEDULE 6.10..............................................................255
SCHEDULE 8.4...............................................................257
SCHEDULE 8.5(h)............................................................259
-v-
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October 9, 1997, by and among
THE MULTICARE COMPANIES, INC., a Delaware corporation (together with its
successors, "Multicare"), the Subsidiaries of Multicare referred to on the
signature pages hereto and such other Subsidiaries of Multicare which may from
time to time become Borrowers hereunder in accordance with the provisions hereof
(collectively with Multicare, the "Borrowers"), the Lenders referred to on the
signature pages hereto (together with other lenders parties hereto from time to
time pursuant to Section 12.9 below and 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 for itself and for the other Agents, the
Lenders and the Issuer hereunder (in such capacity, together with its successors
and assigns in such capacity, the "Administrative Agent"), and CITICORP USA,
INC., a Delaware corporation, as Syndication Agent, NATIONSBANK, N.A., a
national banking association, as Syndication Agent, and FIRST UNION NATIONAL
BANK, a national banking association, as Documentation Agent. Certain terms used
herein are defined in Article 11 below.
W I T N E S S E T H T H A T
WHEREAS, Acquisition Corp. has acquired (or will be acquiring
simultaneously with the execution of this Agreement) all of the shares of common
stock of Multicare and has merged into, or simultaneously with the execution of
this Agreement will merge into, Multicare, with Multicare being the surviving
entity; and
WHEREAS, Multicare has requested that the Lenders extend the Loans
to the Borrowers for the purposes described herein; and
WHEREAS, as more particularly set forth in the Pledge Agreement,
certain collateral securing the obligations hereunder is to be shared with
certain creditors party to the Qualifying Interest Rate Hedging Agreement (as
such term is defined in Article 11 below).
WHEREAS, the Lenders have agreed to extend the Loans to the
Borrowers on the terms and conditions described herein; and
WHEREAS, ALL OBLIGATIONS HEREUNDER AND UNDER EACH AGREEMENT AND
INSTRUMENT DELIVERED IN CONNECTION HEREWITH FROM TIME TO TIME ARE "SENIOR
INDEBTEDNESS" AND ARE HEREBY DESIGNATED BY MULTICARE AS "DESIGNATED SENIOR
INDEBTEDNESS" WITHIN THE MEANING OF THE 1997 SUBORDINATED NOTE INDENTURE.
<PAGE>
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
CREDIT FACILITY
1.1 COMMITMENT TO LEND.
(a) Term Loans.
(i) Tranche A Term Loans. Upon the terms and subject to the
conditions of this Agreement, each Tranche A Lender agrees to make, on the
Closing Date, a Loan (a "Tranche A Term Loan") to the Borrowers in the amount of
such Lender's Tranche A Commitment. The total amount of the Tranche A Commitment
of all Tranche A Lenders on the Agreement Date is $200,000,000.00.
(ii) Tranche B Term Loans. Upon the terms and subject to the
conditions of this Agreement, each Tranche B Lender agrees to make, on the
Closing Date, a Loan (a "Tranche B Term Loan") to the Borrowers in the amount of
such Lender's Tranche B Commitment. The total amount of the Tranche B Commitment
of all Tranche B Lenders on the Agreement Date is $150,000,000.00.
(iii) Tranche C Term Loans. Upon the terms and subject to the
conditions of this Agreement, each Tranche C Lender agrees to make, on the
Closing Date, a Loan (a "Tranche C Term Loan") to the Borrowers in the amount of
such Lender's Tranche C Commitment. The total amount of the Tranche C Commitment
of all Tranche C Lenders on the Agreement Date is $50,000,000.00.
(b) Revolving Credit Loans. Upon the terms and subject to the
conditions of this Agreement, each RC Lender agrees to make, from time to time
during the period from and including the Closing Date to but excluding the RC
Maturity Date, one or more Loans ("RC Loans") to the Borrowers in an aggregate
unpaid principal amount not exceeding at any time such Lender's RC Commitment at
such time; provided, however, that the Borrowers shall not request, and the
Lenders shall have no obligation to make, any RC Loans at any time in excess of
the Available RC Commitment. The total amount of the RC Commitment of all RC
Lenders on the Agreement Date is $125,000,000.00.
(c) Swing Loans. Upon the terms and subject to the conditions of
this Agreement, the Swing Loan Lender agrees to make, from time to time, from
and including the Closing Date to but excluding the RC Maturity Date, one or
more Swing Loans to the
-2-
<PAGE>
Borrowers, in an aggregate unpaid principal amount not exceeding at any time
$10,000,000.00, provided however that no Swing Loan shall be made at any time in
an amount in excess of the Available RC Commitment. Each Swing Loan shall be in
a principal amount equal to $500,000.00 or an integral multiple thereof and
shall be made and maintained as a Prime Rate Loan unless a fixed rate shall be
agreed upon by the Swing Loan Lender and Multicare (on behalf of the Borrowers).
All Swing Loans shall be disbursed by the Swing Loan Lender in Dollars in funds
immediately available to Multicare (on behalf of the Borrowers) by crediting an
account of Multicare at the Swing Loan Lender's Domestic Lending Office, or in
such other manner as may have been specified in the applicable notice of
borrowing and as shall be acceptable to the Swing Loan Lender.
1.2 JOINT AND SEVERAL OBLIGATIONS.
WHETHER OR NOT EXPRESSLY STATED HEREIN OR IN ANY OTHER LOAN
DOCUMENT, ALL OBLIGATIONS OF THE BORROWERS (OR OF ANY BORROWER) HEREUNDER AND
UNDER EACH OTHER LOAN DOCUMENT (WHETHER IN CONNECTION WITH LOANS, LETTERS OF
CREDIT OR OTHER OBLIGATIONS) ARE JOINT AND SEVERAL OBLIGATIONS OF ALL BORROWERS.
1.3 MANNER OF BORROWING.
(a) Notice of Borrowing. Except for requests for Swing Loans which
shall be governed by paragraph (e) below, Multicare (on behalf of the Borrowers)
shall give the Administrative Agent notice (which shall be irrevocable), in the
case of Prime Rate Loans, no later than 11:00 a.m. (Philadelphia, Pennsylvania
time) one Business Day prior to the requested date for the making of such Loans
and, in the case of LIBO Rate Loans, 11:00 a.m. (Philadelphia, Pennsylvania,
time) three Business Days before the requested date for the making of such
Loans. Each such notice shall be in the form of Exhibit B hereto and shall
specify (i) whether the requested Loans are to be Tranche A Term Loans, Tranche
B Term Loans, Tranche C Term Loans or RC Loans, (ii) the requested date for the
making of such Loans which date shall be a Business Day, (iii) the Type or Types
of Loans requested and (iv) the amount of each such Type of Loan, which amount
shall be $5,000,000.00 or any integral multiple of $1,000,000.00 in excess
thereof (except that in the case of RC Loans, the amount of the requested Loan
may be less if the amount requested is equal to the total Available RC
Commitment). Upon receipt of any such notice, the Administrative Agent shall
promptly notify each applicable Lender of the contents thereof and of the amount
and Type of each Loan to be made by such Lender on the requested date specified
therein.
(b) Funding by Lenders. Not later than 12:00 noon (Philadelphia,
Pennsylvania time) on each requested date for the making of Loans (other than
Swing Loans), each Lender shall make available to the Administrative Agent, in
Dollars in funds immediately available to the Administrative Agent at the office
designated by the Administrative Agent, the Loans to be made by such Lender on
such date, provided however
-3-
<PAGE>
that if a Lender does not receive timely notice from the Administrative Agent as
set forth in paragraph (a) above, such Lender shall fund the required amount
promptly upon receipt of such notice. The obligations of the Lenders hereunder
are several; accordingly, any Lender's failure to make any Loan to be made by it
on the requested date therefor shall not relieve any other Lender of its
obligation to make any Loan to be made by it on such date, but the latter shall
not be liable for the former's failure.
(c) Permitted Assumption as to Funding. Unless the Administrative
Agent shall have received notice from a Lender prior to 11:00 a.m.
(Philadelphia, Pennsylvania time) on the requested date for the making of any
Loan (other than a Swing Loan) that such Lender will not make available to the
Administrative Agent the Loan requested to be made by it on such date, the
Administrative Agent may assume that such Lender has made such Loan available.
The Administrative Agent in its sole discretion and in reliance upon such
assumption, may make available to the Borrowers on the requested date a
corresponding amount on behalf of such Lender. If and to the extent such Lender
shall not have made available to the Administrative Agent the Loans requested to
be made by such Lender on such date and the Administrative Agent shall have so
made available to the Borrowers a corresponding amount on behalf of such Lender,
(i) such Lender shall, on demand, pay to the Administrative Agent such
corresponding amount together with interest thereon, for each day from the date
such amount shall have been so made available by the Administrative Agent to the
Borrowers until the date such amount shall have been paid in full to the
Administrative Agent, at the Federal Funds Rate until (and including) the third
Business Day after demand is made and thereafter at the Prime Rate, and (ii) the
Administrative Agent shall be entitled to all interest payable by Borrowers on
such amount for the period commencing on the date such amount was advanced by
the Administrative Agent to but not including the date on which such amount is
received by the Administrative Agent from such Lender. Moreover, any Lender that
shall have failed to make available the required amount shall not be entitled to
vote on such matters as Lenders or Required Lenders are otherwise entitled to
vote on or consent to or approve under this Agreement and the other Loan
Documents until such amount with interest is paid in full to the Administrative
Agent by such Lender. Without limiting any obligations of any Lender pursuant to
this paragraph (c), if such Lender does not pay such corresponding amount
promptly upon the Administrative Agent's demand therefor, the Administrative
Agent shall notify Multicare (on behalf of the Borrowers) and the Borrowers
shall promptly repay such corresponding amount to the Administrative Agent
together with accrued interest thereon at the applicable rate or rates on such
Loans.
(d) Disbursements of Funds to Borrowers. All amounts made available
to the Administrative Agent in accordance with paragraph (b) above shall be
disbursed by the Administrative Agent promptly but in any event not later than
4:00 p.m. (Philadelphia, Pennsylvania time) on the requested date therefor in
Dollars, in funds immediately available to the Borrowers by crediting such
amount to an account of Multicare at the Administrative Agent's Domestic Lending
Office or in such other manner as may be agreed to by Multicare and the
Administrative Agent.
-4-
<PAGE>
(e) Special Provisions Respecting Swing Loans.
(i) Request for Borrowing. Multicare (on behalf of the Borrowers)
shall give the Swing Loan Lender notice (which shall be irrevocable) of a
request for a Swing Loan (with a copy to the Administrative Agent) no later than
12:00 noon (Philadelphia, Pennsylvania time) on the day such Loan is requested;
if such notice is received later than 12:00 noon (Philadelphia, Pennsylvania
time), then the request shall be deemed to be a request for a Swing Loan to be
made on the next Business Day. The Swing Loan Lender shall provide prompt notice
to the Administrative Agent of the making of any Swing Loans to the Borrowers.
(ii) Participation by RC Lenders. Upon demand made to all of the RC
Lenders by the Swing Loan Lender, which demand may be made before or after a
Default (including a Default arising under Section 9.1(m) (Insolvency,
Bankruptcy, Etc.)), and before or after the maturity date of the subject Swing
Loans but subject to the provisions of paragraph (iv) below, each RC Lender
(other than the Swing Loan Lender) shall promptly, irrevocably and
unconditionally purchase from the Swing Loan Lender, without recourse or
warranty, an undivided interest and participation in the Swing Loans then
outstanding. Each RC Lender shall effect such purchase by paying to the Swing
Loan Lender, without reduction or deduction of any kind, including reductions or
deductions for set-off, recoupment or counterclaim, in Dollars immediately
available to the Swing Loan Lender at the Swing Loan Lender's Domestic Lending
Office, an amount equal to such RC Lender's pro rata share of the principal
amount of all Swing Loans then outstanding. Each RC Lender's pro rata share of
the Swing Loans shall be based on the amount of such RC Lender's pro rata share
of the total RC Commitment. Thereafter, the RC Lenders' respective interests in
such Swing Loans, and the remaining interest of the Swing Loan Lender in such
Swing Loans, shall in all respects be treated as RC Loans under this Agreement,
except that subject to Section 1.8(d) (Default Rate) such Swing Loans shall
continue to bear interest at the rate specified for such Swing Loans until such
Swing Loans are due and payable and such Swing Loans shall be due and payable by
the Borrowers on the dates referred to in Section 1.4(e). If any RC Lender does
not pay any amount which it is required to pay promptly upon the Swing Loan
Lender's demand therefor, (i) the Swing Loan Lender shall be entitled to recover
such amount on demand from such RC Lender, together with interest thereon, at
the Federal Funds Rate for the first three Business Days, and thereafter at the
Prime Rate, for each day from the date of such demand, if made prior to 2:00
p.m. (Philadelphia, Pennsylvania time) on any Business Day, or, if made at any
later time, from the next Business Day following the date of such demand, until
the date such amount is paid in full to the Swing Loan Lender by such RC Lender
and (ii) the Swing Loan Lender shall be entitled to all interest payable by the
Borrowers on such amount until the date on which such amount is received by the
Swing Loan Lender from such RC Lender. Moreover, any RC Lender that shall fail
to make available the required amount shall not be entitled to vote on or
consent to or approve any matter under this Agreement and the other Loan
Documents until such amount with interest is paid in full to the Swing Loan
Lender by such RC Lender. Without limiting any obligations of any RC Lender
pursuant to this paragraph (ii), if such RC Lender does not pay
-5-
<PAGE>
such corresponding amount promptly upon the Swing Loan Lender's demand therefor,
the Swing Loan Lender shall notify Multicare (on behalf of the Borrowers) and
the Borrowers shall promptly repay such corresponding amount to the Swing Loan
Lender together with accrued interest thereon at the applicable rate on such
Swing Loans.
(iii) No Set-off, Etc. Subject only to the limitations set forth in
the following paragraph (iv), the obligations of each RC Lender to make
available to the Swing Loan Lender the amounts set forth in the preceding
paragraph (ii) shall be absolute, unconditional and irrevocable under any and
all circumstances without reduction for any set-off or counterclaim of any
nature whatsoever and may not be terminated, suspended or delayed for any reason
whatsoever, shall not be subject to qualification or exception and shall be made
in accordance with the terms of this Agreement.
(iv) Certain Limitations. No RC Lender shall be obligated to
purchase a participation in any Swing Loan if such RC Lender proves that (A) the
Swing Loan Lender did not in good faith believe that the conditions specified in
clauses (i), (iii), and (iv) of Section 4.2(a) were satisfied at the time such
Swing Loan was made (unless such condition was waived in accordance with the
terms of this Agreement) or (B) such RC Lender had actual knowledge that any
such condition had not been satisfied and notified the Swing Loan Lender in a
writing received by the Swing Loan Lender at least one Business Day prior to the
time that it made such Swing Loan that the Swing Loan Lender was not authorized
to make such Swing Loan and stating with specificity the reason therefor.
1.4 SCHEDULED REPAYMENTS.
(a) Tranche A Term Loans. The Tranche A Term Loans shall mature and
become due and payable and shall be repaid by the Borrowers in quarterly
installments, payable on successive Quarterly Payment Dates commencing on the
first Quarterly Payment Date after the Closing Date and ending on the Tranche A
Maturity Date (whether or not such date would otherwise be a Quarterly Payment
Date). Each such installment shall be in an amount equal to one quarter of the
amount set forth below for the applicable year, provided that the final
installment shall be in an amount equal to the aggregate amount of the Tranche A
Term Loans then outstanding.
Year Ending Amount (Assuming Full Percent of
----------- $200,000,000.00 is Borrowed Tranche A Term Loan
and Not Otherwise Prepaid) -------------------
---------------------------
September 30, 1998 $24,000,000.00 12%
September 30, 1999 $28,000,000.00 14%
September 30, 2000 $32,000,000.00 16%
September 30, 2001 $36,000,000.00 18%
-6-
<PAGE>
Year Ending Amount (Assuming Full Percent of
----------- $200,000,000.00 is Borrowed Tranche A Term Loan
and Not Otherwise Prepaid) -------------------
---------------------------
September 30, 2002 $40,000,000.00 20%
September 30, 2003 $40,000,000.00 20%
In the event that less than the full amount of the Tranche A Term Loans is
advanced, the amount of each annual repayment will be equal to the amount
actually advanced multiplied by the applicable percentage shown above as such
amount may be further reduced pursuant to Section 1.5 below.
(b) Tranche B Term Loans. The Tranche B Term Loans shall mature and
become due and payable and shall be repaid by the Borrowers in quarterly
installments, payable on successive Quarterly Payment Dates commencing with the
first Quarterly Payment Date after the Closing Date and ending with the Tranche
B Maturity Date (whether or not such date would otherwise be a Quarterly Payment
Date). Each such installment shall be in an amount equal to one quarter of the
amount set forth below for the applicable year, provided that the final
installment shall be in an amount equal to the aggregate amount of Tranche B
Term Loans then outstanding.
Year Ending Amount (Assuming Full Percent of
----------- $150,000,000.00 is Borrowed Tranche B Term Loan
and Not Otherwise Prepaid) -------------------
---------------------------
September 30, 1998 $1,500,000.00 1%
September 30, 1999 $1,500,000.00 1%
September 30, 2000 $1,500,000.00 1%
September 30, 2001 $1,500,000.00 1%
September 30, 2002 $1,500,000.00 1%
September 30, 2003 $1,500,000.00 1%
September 30, 2004 $141,000,000.00 94%
In the event that less than the full amount of the Tranche B Term Loans is
advanced, the amount of each annual repayment will be equal to the amount
actually advanced multiplied by the applicable percentage shown above, as such
amount may be further reduced pursuant to Section 1.5 below.
(c) Tranche C Term Loans. The Tranche C Term Loans shall mature and
become due and payable and shall be repaid by the Borrowers in quarterly
installments, payable on each successive March 1, June 1, September 1 and
December 1 commencing with December 1, 1997 and ending with the Tranche C
Maturity Date (whether or not such date
-7-
<PAGE>
would otherwise be a date specified above in this paragraph (c)). Each such
installment shall be in an amount equal to one quarter (except that for the year
ending June 1, 1998 each such installment shall be in an amount equal to one
third) of the amount set forth below for the applicable year, provided that the
final installment shall be in an amount equal to the aggregate amount of Tranche
C Term Loans then outstanding.
Year Ending Amount (Assuming Full Percent of
----------- $50,000,000.00 is Borrowed Tranche C Term Loan
and Not Otherwise Prepaid) -------------------
---------------------------
June 1, 1998 $ 500,000.00 1%
June 1, 1999 $ 500,000.00 1%
June 1, 2000 $ 500,000.00 1%
June 1, 2001 $ 500,000.00 1%
June 1, 2002 $ 500,000.00 1%
June 1, 2003 $ 500,000.00 1%
June 1, 2004 $ 500,000.00 1%
June 1, 2005 $46,500,000.00 93%
In the event that less than the full amount of the Tranche C Term Loans is
advanced, the amount of each annual repayment will be equal to the amount
actually advanced multiplied by the applicable percentage shown above, as such
amount may be further reduced pursuant to Section 1.5 below.
(d) RC Loans. The aggregate outstanding principal amount of the RC
Loans shall mature and become due and payable, and shall be repaid by the
Borrowers, on the RC Maturity Date.
(e) Swing Loans. The Borrowers shall repay each Swing Loan no later
than 3:00 p.m. (Philadelphia, Pennsylvania time) on the date specified in the
notice of borrowing delivered under Section 1.3(e) (which shall be a date not
later than the earlier of (A) the fifth Business Day after the date on which
such Swing Loan is to be made and (B) the RC Maturity Date). The Swing Loan
Lender shall provide prompt notice to the Administrative Agent of any repayment
of Swing Loans by the Borrowers.
(f) Letters of Credit. The Borrowers shall reimburse the Issuer,
through the Administrative Agent, for each Drawing under a Letter of Credit on
the date determined with respect to such Drawing in the manner set forth in
Article 3 below. In addition, the Borrowers shall fund the cash collateral
account securing Letter of Credit obligations in the
-8-
<PAGE>
manner set forth in Article 3 below.
1.5 VOLUNTARY PREPAYMENTS AND UNSCHEDULED, MANDATORY
PREPAYMENTS.
(a) Optional Prepayments. The Borrowers may, at any time and from
time to time, prepay the Loans in whole or in part, without premium or penalty
(but with any payment required under Section 2.4 (Breakage)), except that any
optional partial prepayment (other than a prepayment of all outstanding RC
Loans) shall be in an aggregate principal amount of $5,000,000.00 or any
integral multiple of $1,000,000.00 in excess thereof except that a Swing Loan
(prior to the time that the Swing Loan Lender makes a demand under Section
1.3(e)(ii)) may be prepaid in an aggregate principal amount of $500,000.00 or
any integral multiple thereof. Amounts to be so prepaid shall irrevocably be due
and payable on the date specified in the applicable notice of prepayment
delivered pursuant to paragraph (c) of this Section 1.5 together with interest
thereon as provided in Section 1.8 (Interest) and together with any payment
required under Section 2.4 (Breakage).
(b) Mandatory Prepayments.
(i) Excess Cash Flow. For each fiscal year of the Borrowers
commencing with the fiscal year ending December 31, 1998, upon the earlier of
(A) the date on which the Administrative Agent receives the annual financial
statements specified in Section 6.1 hereof and (B) the date by which the
Borrowers are required to provide such financial statements, the Borrowers shall
prepay a portion of the Loans in an amount equal to fifty percent (50%) of the
Excess Cash Flow for such fiscal year.
(ii) Net Proceeds of Dispositions. No more than five (5)
Business Days after the date of any sale, assignment, transfer or other
disposition after the Agreement Date by any Borrower of any assets (other than
pursuant to paragraphs (a), (b), (c) or (e) of Section 8.5 below) whether now
owned or hereafter acquired (collectively, a "disposition of assets"),
Multicare, on behalf of the Borrowers, shall notify the Administrative Agent in
writing that such disposition of assets has occurred, the date of such event and
the amount of the Net Cash Proceeds received in connection therewith. The
Administrative Agent shall promptly forward a copy of such notice to each Lender
Party. In the event that the Borrowers sell, assign, transfer or otherwise
dispose of the assets identified on Schedule 8.5(d) or in Section 6.18 hereof,
then on or before the day of such sale, Multicare, on behalf of the Borrowers,
shall give written notice of prepayment to the Administrative Agent and shall
repay the Loans in an amount equal to the amount of such Net Cash Proceeds. In
the case of a disposition of assets other than those identified on Schedule
8.5(d) or in Section 6.18 hereof, in the event that the Borrowers have not,
within 364 days after the date of any such disposition of assets, reinvested all
of the corresponding Net Cash Proceeds in their business pursuant to an
Acquisition in property or assets (other than current assets) of a nature or
type or that are used in a business (or in a company having property and assets
of a nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of the Borrowers on the
date of such Acquisition, which is permitted by Section 8.4 (and so state in
reasonable detail in a certificate delivered by Multicare (on their behalf) to
the Administrative Agent), then, Multicare, on behalf of the Borrowers, shall
give written notice of prepayment to the Administrative Agent at least five
-9-
<PAGE>
(5) days prior to the date of the subject prepayment, and on or before the 364th
day following such sale shall repay the Loans in an amount equal to the amount
of such Net Cash Proceeds not so reinvested. Notwithstanding anything to the
contrary contained in this Agreement, in the event there occurs a disposition of
assets which would otherwise result in a mandatory prepayment under the 1997
Subordinated Notes to the extent the Borrowers are not otherwise required to
make a mandatory prepayment hereunder, the Borrowers shall be obligated to make
a mandatory prepayment hereunder in an amount not less than the amount, and at a
time not later than such time, necessary to avoid any required prepayment under
the 1997 Subordinated Notes and the 1997 Subordinated Note Indenture.
(iii) Net Proceeds of Sales of Capital Stock or Issuance of
Debt. Within five (5) days of (1) the sale or issuance of any capital stock or
debt securities of any Borrower (other than a sale to a Borrower), or (2) equity
contributed by Surety raised from Persons other than Cypress, TPG, Nazem or
Genesis in respect of common stock, the Borrowers shall prepay a portion of the
Loans in an amount equal to the amount of the Net Cash Proceeds of such sale of
stock or debt securities or equity contribution.
(c) Application and Timing of Prepayments.
(i) Notice. Subject to the provisions of the last sentence of
this paragraph (i), the Borrowers shall give the Administrative Agent notice of
each prepayment of Loans, which notice, in the case of a prepayment of Prime
Rate Loans, shall be given no later than 11:00 a.m. (Philadelphia, Pennsylvania
time) three (3) Business Days before and, in the case of a prepayment of LIBO
Rate Loans, no later than 11:00 A.M. (Philadelphia, Pennsylvania, time) five (5)
Business Days before, the date of such prepayment. Each such notice of
prepayment shall be in the form of Exhibit C hereto and shall specify (i) the
date such prepayment is to be made and (ii) whether the Loans to be prepaid are
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, RC Loans, or
Swing Loans (consistent with the provisions of this Agreement), (iii) the amount
and Type and, in the case of any LIBO Rate Loan, the last day of the applicable
Interest Period for the Loan to be prepaid, (iv) whether the prepayment is a
voluntary prepayment pursuant to paragraph (a) of this Section 1.5 or a
mandatory prepayment pursuant to paragraph (b) of this Section 1.5 and (v) if a
mandatory prepayment, the reason therefor. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each applicable Lender of the
contents thereof. Notwithstanding the foregoing, if the Borrowers wish to make a
prepayment of Swing Loans only, they may prepay such Swing Loans by giving the
Swing Loan Lender and the Administrative Agent written notice no later than
12:00 noon (Philadelphia time) one Business Day prior to the date of such
prepayment or as otherwise agreed to by Multicare (on behalf of the Borrowers)
and the Swing Loan Lender.
(ii) Timing and Application of Voluntary Prepayments and
Mandatory Prepayments from a Disposition Described in Section 6.18. Any
voluntary prepayments pursuant to paragraph (a) of this Section 1.5 or mandatory
prepayment resulting from a disposition of assets described in Section 6.18
shall be applied in the following order:
(1) First, prepayments shall be applied against the RC
Loans and Swing Loans but with no corresponding reduction in
the amount of the RC Commitment unless otherwise specified by
Multicare (on behalf of the Borrowers) and shall be applied
among the RC Loans and Swing
-10-
<PAGE>
Loans at the time outstanding on a pro rata basis in
accordance with the relative aggregate principal amounts
thereof held by each applicable Lender.
(2) Second, (subject to the terms of paragraph (d) below
(Tranche B/Tranche C Opt-Out)) prepayments shall be applied
against the Term Loans and shall be applied among the Tranche
A Term Loans, the Tranche B Term Loans and the Tranche C Term
Loans at the time outstanding on a pro rata basis in
accordance with the relative aggregate principal amounts
thereof held by each applicable Lender. Prepayments of the
various Term Loans shall be applied to each of the respective
remaining installments thereof set forth in Section 1.4 on a
pro rata basis in accordance with the relative amounts
thereof.
Any excess shall be applied to any other amounts owing in respect of the Loan
Obligations or deposited in the Letter of Credit cash collateral account if
required under Article 3 below and, if all such Loan Obligations have been then
paid in full and the amount of outstanding Letters of Credit is less than the
sum of the amount in the cash collateral account (as required) and the Available
RC Commitment, then any excess amount shall be returned to Multicare (on behalf
of the Borrowers) or as otherwise required by applicable Law.
(iii) Timing and Application of Mandatory Prepayments from the
Disposition of Assets Identified on Schedule 8.5(d). Any mandatory prepayments
pursuant to paragraph (b) of this Section 1.5 resulting from the disposition of
assets identified on Schedule 8.5(d) shall be applied in the following order:
(1) First, prepayments shall be applied against the
Tranche A Term Loan, on a pro rata basis in accordance with
the relative aggregate principal amounts held by each
applicable Lender. Prepayments of the Tranche A Term Loan
shall be applied to each of the respective remaining
installments thereof set forth in Section 1.4 on a pro rata
basis in accordance with the relative amounts thereof.
(2) Second, (subject to the terms of paragraph (d) below
(Tranche B/Tranche C Opt-Out)) prepayments shall be applied
against the Tranche B Term Loans and the Tranche C Term Loans
at the time outstanding on a pro rata basis in accordance with
the relative aggregate principal amounts thereof held by each
applicable Lender. Prepayments of the Tranche B Term Loans and
the Tranche C Term Loans shall be applied to each of the
respective remaining installments thereof set forth in Section
1.4 on a pro rata basis in accordance with the relative
amounts thereof.
(3) Third, prepayments shall be applied against the RC
Loans and Swing Loans with a corresponding reduction in the
amount of the RC Commitment and shall be applied among the RC
Loans and the Swing Loans at the time outstanding on a pro
rata basis in accordance with the relative aggregate principal
amount thereof held by each applicable Lender.
-11-
<PAGE>
Prepayments shall be applied to any other amounts owing in respect of the Loan
Obligations or deposited in the Letter of Credit cash collateral account and, if
all such Loan Obligations have been paid in full and the amount of outstanding
Letters of Credit is less than the sum of the amount in the cash collateral
account and the Available RC Commitment, then any excess shall be returned to
Multicare (on behalf of the Borrowers) or as otherwise required by applicable
law.
(iv) Timing and Application of Other Mandatory Prepayments.
Other than mandatory prepayments resulting from the disposition of assets
identified on Schedule 8.5(d) or from the disposition of assets described in
Section 6.18, any mandatory prepayments pursuant to paragraph (b) of this
Section 1.5 shall be applied in the following order:
(1) First, (subject to the terms of paragraph (d) below
(Tranche B/Tranche C Opt-Out)) prepayments shall be applied
against the Term Loans and shall be applied among the Tranche
A Term Loans, the Tranche B Term Loans and the Tranche C Term
Loans at the time outstanding on a pro rata basis in
accordance with the relative aggregate principal amounts
thereof held by each applicable Lender. Prepayments of the
various Term Loans shall be applied to each of the respective
remaining installments thereof set forth in Section 1.4 on a
pro rata basis in accordance with the relative amounts
thereof.
(2) Second, prepayments shall be applied against the RC
Loans and Swing Loans with a corresponding reduction in the
amount of the RC Commitment and shall be applied among the RC
Loans and the Swing Loans at the time outstanding on a pro
rata basis in accordance with the relative aggregate principal
amount thereof held by each applicable Lender provided,
however, the Borrowers need not prepay the RC Loans to the
extent that there would be, after giving effect to the
reduction in the amount of the RC Commitment (which commitment
reduction is unaffected by the terms of this proviso),
sufficient Available RC Commitment to reborrow such amounts.
The preceding proviso shall not apply to prepayments in
respect of Net Cash Proceeds of dispositions.
Any excess shall be applied to any other amounts owing in respect of the Loan
Obligations or deposited in the Letter of Credit cash collateral account and, if
all such Loan Obligations have been paid in full and the amount of outstanding
Letters of Credit is less than the sum of the amount in the cash collateral
account and the Available RC Commitment, then any excess amount shall be
returned to Multicare (on behalf of the Borrowers) or as otherwise required by
applicable Law.
(d) Tranche B/Tranche C Opt-Out. With respect to any prepayment of
the Tranche B Term Loans or Tranche C Term Loans, the Administrative Agent shall
ratably pay the Tranche B Lenders or Tranche C Lenders, as the case may be, as
required under paragraph (c) of this Section 1.5, unless the Administrative
Agent shall have received written notice from any Tranche B Lender or Tranche C
Lender, as the case may be, not later than 11:00 a.m. two (2) Business Days
prior to the date of such prepayment, that such Tranche B
-12-
<PAGE>
Lender or Tranche C Lender, as the case may be, elects not to receive any
prepayment under this paragraph (d) (a "Tranche B Opt-Out Lender" or "Tranche C
Opt-Out Lender", as applicable). Any prepayment which would have been remitted
to a Tranche B Opt-Out Lender or Tranche C Opt-Out Lender but for its election
to not receive such prepayment, shall be paid ratably to the remaining Lender
Parties in the order and as provided in paragraph (c) of this Section 1.5;
provided, however, that notwithstanding the foregoing provisions of this
paragraph (d), Tranche B Lenders and Tranche C Lenders must accept any
prepayment made pursuant to this Section 1.5 on any date on which the Tranche A
Term Loans have been paid in full (or are to be concurrently paid in full).
(e) Certain Provisions Respecting Prepayments Generally. Prepayments
shall be subject to the interest payment provisions, as applicable, set forth in
Section 1.8 and the breakage indemnity provisions, as applicable, set forth in
Section 2.4 below.
1.6 PAYMENTS BY THE BORROWERS IN GENERAL.
(a) Time, Place and Manner. All payments due to the Administrative
Agent under the Loan Documents shall be made to the Administrative Agent at the
office designated by the Administrative Agent on the signature pages hereto or
to such other Person or at such other address as the Administrative Agent may
designate by written notice to Multicare on behalf of the Borrowers. All
payments due to any Lender under the Loan Documents, whether made to the
Administrative Agent or directly to a Lender or the Issuer, shall be made for
the account of, in the case of payments in respect of LIBO Rate Loans, such
Lender's or Issuer's Eurodollar Lending Office and, in the case of all other
payments, such Lender's or Issuer's Domestic Lending Office. Except as otherwise
set forth in this Agreement, a payment shall not be deemed to have been made on
any day unless such payment has been received by the required Person, at the
required place of payment, in Dollars in funds immediately available to such
Person, no later than 1:00 p.m. (Philadelphia, Pennsylvania time) on such day;
provided, however, that the failure of the Borrowers to make any such payment by
such time shall not constitute a Default hereunder so long as such payment is
received no later than 3:00 p.m. (Philadelphia, Pennsylvania time) on such day,
but any such payment received later than 1:00 p.m. (Philadelphia, Pennsylvania
time) on such day shall be deemed to have been made on the next Business Day for
the purpose of calculating interest on the amount paid, provided further, that
any such payment made with the proceeds of Loans shall be deemed to have been
made on the date of the making of such Loans, so long as such proceeds are
immediately so applied and are not otherwise disbursed to the Borrowers.
(b) No Reductions. All payments due to the Administrative Agent, the
Issuer or any Lender under this Agreement and the other Loan Documents, shall be
made by the Borrowers without any reduction or deduction whatsoever, including
any reduction or deduction for any charge, set-off, holdback, recoupment or
counterclaim (whether sounding in tort, contract or otherwise).
(c) Authorization to Charge Accounts. The Borrowers hereby authorize
each Lender Party, each participant and each Affiliate of each Lender Party if
and to the extent any amount payable by the Borrowers under the Loan Documents
(whether payable to such Person or to any other Lender Party) is not otherwise
paid when due, to charge such amount
-13-
<PAGE>
against any or all of the demand deposit or other accounts of any Borrower with
such Person (whether maintained at a branch or office located within or without
the United States), with the Borrowers remaining jointly and severally liable
for any deficiency. The Person so charging any such account shall give the
relevant Borrower prompt notice thereof, but any failure to give or delay in
giving such notice shall not affect such Person's right to effect such charge.
Such charging of accounts shall be subject to the provisions of Section 12.19
hereof.
(d) Extension of Payment Dates if Not a Business Day. Whenever any
payment to the Administrative Agent, the Issuer or any Lender under the Loan
Documents would otherwise be due (except by reason of acceleration) on a day
that is not a Business Day, such payment shall instead be due on the next
succeeding Business Day unless, in the case of a payment of the principal of
LIBO Rate Loans, such extension would cause payment to be due in the next
succeeding calendar month, in which case such due date shall be advanced to the
next preceding Eurodollar Business Day. If the due date for any payment under
the Loan Documents is extended (whether by operation of any Loan Document,
applicable Law or otherwise), such payment shall bear interest for such extended
time at the rate of interest applicable hereunder.
(e) Disbursement of Payments to Lenders and Issuer. The
Administrative Agent shall promptly distribute to each applicable Lender Party
its ratable share of each payment received by the Administrative Agent under the
Loan Documents for the account of such Lender Party by crediting an account of
such Lender Party at the Administrative Agent's office or by wire transfer to an
account of such Lender Party at an office of any other commercial bank located
in the United States or at any Federal Reserve Bank designated by such Person.
Unless the Administrative Agent shall have received notice from Multicare (on
behalf of the Borrowers) prior to the date on which any payment is due to any
Lender Parties under the Loan Documents that the Borrowers will not make such
payment in full, the Administrative Agent may assume that the Borrowers have
made such payment in full to the Administrative Agent on such date and the
Administrative Agent, in its sole discretion may, in reliance upon such
assumption, cause to be distributed to each applicable Lender Party on such due
date, a corresponding amount with respect to the amount then due to such Person.
If and to the extent that the Borrowers shall not have so made such payment in
full to the Administrative Agent, and the Administrative Agent shall have so
distributed to such Lender or Lenders or the Issuer a corresponding amount, such
Lender Parties shall, on demand, repay to the Administrative Agent the amount so
distributed together with interest thereon, for each day from the date such
amount is distributed to such Lender Party until the date the such Person repays
such amount to the Administrative Agent, at the Federal Funds Rate until (and
including) the third Business Day after demand is made and thereafter at the
Prime Rate. Moreover, any Lender Party that shall have failed to make available
the required amount shall not be entitled to vote on such matters as Lenders or
Required Lenders are otherwise entitled to vote on or consent to or approve
under this Agreement and the other Loan Documents until such amount with
interest is paid in full to the Administrative Agent by such Lender. Nothing in
this Section 1.6 shall relieve the Borrowers from any payment obligations.
-14-
<PAGE>
(f) Breakage Costs on LIBO Rate Loans. Any repayment or prepayment
of a LIBO Rate Loan made on a day other than the last day of the applicable
Interest Period therefor shall be subject to payments in respect of breakage
costs as required to be paid in respect thereof pursuant to Section 2.4 below.
1.7 REDUCTIONS OF RC COMMITMENT.
(a) Optional Reductions. The Borrowers may reduce the RC Commitment
by giving the Administrative Agent notice (which shall be irrevocable) thereof
no later than 11:00 a.m. (Philadelphia, Pennsylvania, time) on the third
Business Day before the requested date of such reduction, provided, that each
partial reduction thereof shall be in an amount equal to $10,000,000.00 or any
integral multiple of $5,000,000.00 in excess thereof and, provided, further,
that no reduction shall reduce the RC Commitment to an amount less than the sum
of (i) the aggregate of the principal amount of all Swing Loans outstanding on
such date (after giving effect to any repayment of Swing Loans made on or prior
to such date), (ii) the aggregate of the principal amount of all RC Loans
outstanding on such date (after giving effect to any repayment or prepayment of
RC Loans made on or prior to such date), (iii) the aggregate amount of the
Contingent Reimbursement Obligations and (iv) the aggregate amount of all
unreimbursed Drawings. Upon receipt of any such notice, the Administrative Agent
shall promptly notify each RC Lender of the contents thereof and the amount
(based on a pro rata reduction to each RC Lender's Commitment) to which such RC
Lender's RC Commitment is to be reduced.
(b) Mandatory Reductions. At the time of any mandatory prepayment of
RC Loans pursuant to Section 1.5, the RC Commitment shall be reduced to the
extent required by said Section 1.5.
(c) No Reinstatement of RC Commitment. All reductions of the RC
Commitment are permanent and the RC Commitment cannot be restored without the
written consent of all RC Lenders.
1.8 INTEREST.
(a) Interest Rates in General. Except for Swing Loans which shall
bear the interest rate specified in Section 1.1(c) above, subject to the terms
and conditions of this Agreement, each Loan shall, at the option of the
Borrowers, bear interest on the outstanding principal amount thereof until paid
in full at a rate per annum equal to (i) the Prime Rate as in effect from time
to time or (ii) the applicable LIBO Rate for a specified Interest Period plus in
the case of both (i) and (ii) the Applicable Margin, if any.
(b) Election of LIBO Rate. Unless otherwise designated by the
Borrowers as a LIBO Rate Loan in accordance with this paragraph (b), each Loan
(other than a Swing Loan which is subject to Section 1.1(c) above) shall be
deemed to be a Prime Rate Loan as more fully set forth below.
(i) Prime Rate Unless Otherwise Designated. Prime Rate Loans
shall continue as Prime Rate Loans unless and until such Loans are converted
into Loans of
-15-
<PAGE>
another Type. LIBO Rate Loans for any Interest Period shall continue as Loans of
such Type until the end of the then current Interest Period therefor, at which
time they shall be automatically converted into Prime Rate Loans unless
Multicare (on behalf of the Borrowers) shall have given the Administrative Agent
notice in accordance with clause (ii) below requesting that such Loans continue
as LIBO Rate Loans for another Interest Period of a specified duration.
(ii) Election of LIBO Rate. To elect a LIBO Rate, Multicare
(on behalf of the Borrowers) shall give the Administrative Agent notice (which
shall be irrevocable) no later than 11:00 a.m. (Philadelphia, Pennsylvania,
time) three (3) Eurodollar Business Days before the requested date of the
funding, conversion or continuation which date shall be a Eurodollar Business
Day. Each such notice shall be in the form of Exhibit D hereto and shall specify
(A) the requested date of such funding, conversion or continuation, (B) whether
the subject Loan is a new advance or an existing Loan that is to be converted or
continued, (C) in the case of any LIBO Rate Loan being continued, the last day
of the current Interest Period, (D) whether such Loan is to be a Tranche A Term
Loan, Tranche B Term Loan, Tranche C Term Loan or an RC Loan and (E) the amount
of, and the desired Interest Period for, the Loan subject to such LIBO Rate
election provided that the Borrowers shall not be entitled to select an Interest
Period for any Loan which shall end on a date later than the Maturity Date
applicable to such Loan. Upon receipt of any such notice, the Administrative
Agent shall promptly notify each applicable Lender of the contents thereof.
(iii) LIBO Rate Suspended During Event of Default.
Notwithstanding anything to the contrary contained in clauses (i) or (ii) of
this paragraph (b), so long as an Event of Default shall have occurred and be
continuing, the Administrative Agent may (and, at the request of the Required
Lenders, shall) notify Multicare (on behalf of the Borrowers) that Loans may
only be converted into or continued upon the expiration of the applicable
current Interest Period therefor as Prime Rate Loans or Loans of such specified
Types as shall be acceptable to the Required Lenders. Thereafter, until no Event
of Default shall continue to exist, Loans may not be converted into or continued
as Loans of any Type other than Prime Rate Loans or one or more of such
specified Types.
(iv) Limitation on Types of Loans. Notwithstanding anything to
the contrary contained in this Agreement, the Borrowers shall borrow, prepay,
convert and continue Loans in a manner such that (A) unless otherwise agreed to
by the Administrative Agent, the aggregate principal amount of LIBO Rate Loans
of the same Type shall, at all times, be not less than $10,000,000.00 and (B)
there shall be, at any one time, no more than the number of Interest Periods
specified below in effect for each Tranche:
Maximum No. of
Interest Periods Tranche
---------------- -------
five (5) RC Loans
three (3) Tranche A
three (3) Tranche B
three (3) Tranche C
(v) Flexibility as to Source. Each Lender may fund LIBO Rate
Loans from any source that such Lender deems (in its sole discretion)
appropriate without
-16-
<PAGE>
loss of any rights hereunder.
(c) Interest Payment Dates. Interest shall be payable, (i) in the
case of Prime Rate Loans, quarterly in arrears on each Quarterly Payment Date,
(ii) in the case of LIBO Rate Loans, on the last day of each applicable Interest
Period (and, in the case of any LIBO Rate Loan having an Interest Period longer
than three months, on each three month anniversary of the first day of such
Interest Period) and (iii) in the case of any Loan (including Swing Loans), when
such Loan shall be due (whether at maturity, upon mandatory prepayment, by
reason of notice of prepayment or acceleration or otherwise) or converted, but
only to the extent then accrued on the amount then so due or converted.
(d) Default Rate. At any time that an Event of Default shall have
occurred and shall be continuing, any amount payable hereunder and under each
other Loan Document shall bear interest (whether before or after judgment),
payable on demand, at a rate per annum equal to the applicable Default Rate.
1.9 FEES.
(a) Commitment Fees. The Borrowers shall pay to the Administrative
Agent, for the account of each RC Lender, a commitment fee on the daily unused
amount of such RC Lender's RC Commitment for each day from and including the
Closing Date to but excluding the RC Maturity Date. The rate per annum shall
initially be equal to .50% of such unused amount but shall be adjusted five (5)
Business Days following delivery of the annual Officer's Compliance Certificate
for the year ending December 31, 1997 pursuant to Section 6.1 below and
thereafter shall be readjusted on the fifth (5th) Business Day following
delivery of such quarterly or annual Officer's Compliance Certificates. At any
time that such annual or quarterly Officer's Compliance Certificate to be
delivered pursuant to said Section 6.1 and is not so delivered, then the
Commitment Fee shall be based on the highest percentage set forth below in this
section 1.9(a). The adjustments in the rate shall be based on the Adjusted Total
Debt/Cash Flow Ratio as set forth in the chart below. The commitment fee shall
be payable in arrears (i) on successive Quarterly Payment Dates beginning with
the first Quarterly Payment Date after the Closing Date, (ii) on the date of any
reduction of the RC Commitment (to the extent accrued and unpaid on the amount
of such reduction) and (iii) on the RC Maturity Date.
Adjusted Total Commitment
Debt/Cash Flow Ratio Fee
-------------------- ----------
less than 3.5 .25%
greater than or equal
to 3.5 but less than 4.5 .3125%
greater than or equal
to 4.5 but less than 5.0 .375%
greater than or equal
to 5.0 .50%
-17-
<PAGE>
(b) Letter of Credit Fees. The Borrowers shall pay to the
Administrative Agent, for the respective accounts of the RC Lenders, a letter of
credit commission on the daily aggregate amount of the Contingent Reimbursement
Obligations under each Letter of Credit at a rate per annum equal to the
Applicable Margin that would be applicable to RC Loans that are LIBO Rate Loans
at such time. In addition, the Borrowers shall pay to the Administrative Agent,
for the sole account of the Issuer, a Letter of Credit fronting fee on the daily
aggregate amount of the Contingent Reimbursement Obligations under each Letter
of Credit at a rate per annum equal to .10%. Such fees shall be payable in
arrears on successive Quarterly Payment Dates and at the expiration or other
termination of each Letter of Credit. In addition, the Borrowers shall pay to
the Administrative Agent, for the benefit of the Issuer, the Issuer's standard
posted charges for such matters as opening, negotiation and transfer.
(c) Other Fees. The Borrowers shall pay to the Administrative Agent
for the respective accounts of the Administrative Agent, the Issuer, the Lenders
and/or the other Agents as the case may be, such other fees as have been or may
be agreed to in writing by the Borrowers or by Acquisition Corp. in connection
with the commitment to enter into this Agreement (including any facility fees
referred to in any commitment letters) and the transactions contemplated by this
Agreement.
1.10 COMPUTATION OF INTEREST AND FEES. Interest calculated on the basis of
the LIBO Rate or the Federal Funds Rate shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed. Commitment fees,
letter of credit fees and interest calculated on the basis of the Prime Rate
shall be computed on the basis of a year of 365 or 366 days, as applicable, and
paid for the actual number of days elapsed. Interest, commitment fees and letter
of credit fees for any period shall be calculated from and including the first
day thereof to but excluding the last day thereof.
1.11 PROMISSORY NOTES; RECORDS OF ACCOUNT. Each Lender's Loans and the
Borrowers' joint and several obligations to repay such Loans with interest in
accordance with the terms of this Agreement shall be evidenced by this
Agreement, the Register and other records of the Administrative Agent and such
Lender and, in the case of Tranche A Term Loans, a single Tranche A Term Note
payable to the order of such Lender, in the case of RC Loans, a single RC Note
payable to the order of such Lender and, in the case of Swing Loans, a single
Swing Loan Note payable to the order of the Swing Loan Lender. The records of
each Lender shall be prima facie evidence of such Lender's Loans and, in each
case, of accrued interest thereon and all payments made in respect thereto. Each
Lender's participation in Letters of Credit shall be evidenced by this
Agreement, the records of such Lender and the Issuer and the Letters of Credit.
In the event that there is any dispute concerning the amount of any such
obligations, the amount of each Lender's Commitment with respect to RC Loans,
Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans and the
amount of outstanding Loan Obligations of each and every Type shall at all times
be ascertained from the records of the Administrative Agent, including without
limitation, the Register, all of which shall be conclusive absent manifest error
except that the outstanding face amount of any Letters of Credit, the amount of
any unpaid Drawings, the amount of unpaid interest accrued thereon and fees
relating to Letters of Credit shall at all times be ascertained from the records
of the Issuer which shall be
-18-
<PAGE>
conclusive absent manifest error and the outstanding amount of any Swing Loans
and the amount of unpaid interest thereon shall at all times be ascertained from
the records of the Swing Loan Lender, which shall be conclusive absent manifest
error.
1.12 PRO RATA TREATMENT. Except to the extent otherwise provided herein,
(a) Tranche A Term Loans shall be made by, and principal, interest and fees in
respect thereof shall be paid or repaid to, the Tranche A Lenders pro rata in
accordance with their respective Tranche A Commitments and interest in Tranche A
Loans; (b) Tranche B Term Loans shall be made by, and principal, interest and
fees in respect thereof shall be paid or repaid to, the Tranche B Lenders pro
rata in accordance with their respective Tranche B Commitments and interest in
Tranche B Loans; (c) Tranche C Term Loans shall be made by, and principal,
interest and fees in respect thereof shall be paid or repaid to, the Tranche C
Lenders pro rata in accordance with their respective Tranche C Commitments and
interest in Tranche C Loans; and (d) RC Loans shall be made by, and principal,
interest and fees in respect thereof shall be paid or repaid to, the RC Lenders
pro rata in accordance with their respective RC Commitments and interest in RC
Loans. Each participation of obligations in respect to Letters of Credit and
Swing Loans shall be allocated among, and each reimbursement of Drawings under
Letters of Credit or letter of credit commissions shall be made for the account
of, the RC Lenders pro rata in accordance with their respective amounts of RC
Commitments.
1.13 TAXES ON PAYMENTS.
(a) Taxes Payable by the Borrowers. If any Tax is required to be
withheld or deducted from, or is otherwise payable by the Borrowers in
connection with, any payment due to the Administrative Agent, the Issuer or any
Lender that is not a "United States Person" (as such term is defined in Section
7701(a)(30) of the Code), the Borrowers (i) shall, if required, withhold or
deduct the amount of such Tax from such payment and, in any case, pay such Tax
to the appropriate taxing authority in accordance with applicable Law and (ii)
except in the case of any Bank Tax, shall pay the Issuer, to such Lender or the
Administrative Agent such additional amounts as may be necessary so that the net
amount received by such Person with respect to such payment, after withholding
or deducting all Taxes required to be withheld or deducted, is equal to the full
amount payable hereunder. If any Tax is withheld or deducted from, or is
otherwise payable by the Borrowers in connection with, any payment due to the
Issuer, any Lender or the Administrative Agent hereunder, the Borrowers shall
furnish to such Person the original or a certified copy of a receipt (if any)
for such Tax from the applicable taxing authority or other evidence of payment
thereof satisfactory to such Person within 30 days after the date of such
payment (or, if such receipt shall not have been made available by such taxing
authority within such time, the Borrowers shall use reasonable efforts to
promptly obtain and furnish such receipt). If the Borrowers fail to pay any such
Taxes when due to the appropriate taxing authority or fail to remit to the
Issuer, any Lender or the Administrative Agent the required receipts or other
evidence of payment thereof satisfactory to such Person, the Borrowers shall
indemnify such person for any Taxes, interest, penalties or additions to Tax
that may become payable by such Person as a result of any such failure.
(b) Taxes Payable by the Issuer, any Lender or the Administrative
Agent. The Borrowers shall, promptly upon request by the Issuer, any Lender or
the Administrative
-19-
<PAGE>
Agent that is not a United States Person, pay to such Person an amount equal to
(i) all Taxes (other than Bank Taxes and without duplication of amounts paid
pursuant to the preceding paragraph (a)) payable by such Person with respect to
any payment due to such Person hereunder and (ii) all Taxes (other than Bank
Taxes) payable by such Person as a result of payments made by the Borrowers
(whether made to a taxing authority or to such Person pursuant to the preceding
paragraph (a) or this paragraph (b)).
(c) Credits and Deductions. If the Issuer, any Lender or the
Administrative Agent is, in its sole opinion, able to apply for any refund,
offset, credit, deduction or other reduction in Taxes by reason of any payment
made by the Borrowers under the preceding paragraph (a) or (b), the Issuer, such
Lender or the Administrative Agent, as the case may be, shall use reasonable
efforts to obtain such refund, offset, credit, deduction or other reduction and,
upon receipt thereof, will pay to the Borrowers such amount, not exceeding the
increased amount paid by the Borrowers, as is equal to the net after-tax value
to the Issuer, such Lender or the Administrative Agent, in its sole opinion, of
such part of such refund, offset, credit, deduction or other reduction as it
considers to be allocable to such payment by the Borrowers, having regard to all
of such Person's dealings giving rise to similar refunds, offsets, credits,
deductions or other reductions in relation to the same tax period and to the
cost of obtaining the same; provided, however, that if such Person has made a
payment to the Borrowers pursuant to this paragraph (c) and the applicable
refund, offset, credit, deduction or other reduction in Tax is subsequently
disallowed, the Borrowers shall, promptly upon request by the Issuer, the
Administrative Agent or such Lender refund to such Person that portion of such
payment determined by such Person, in its sole opinion, relating to such
disallowance; and provided, further that (i) the Issuer, the Administrative
Agent or such Lender, as the case may be, shall not be obligated to disclose to
the Borrowers any information regarding its Tax affairs or computations and (ii)
nothing in this paragraph (c) shall interfere with the right of such Person to
arrange its Tax affairs as it deems appropriate.
(d) Exemption from U.S. Withholding Taxes. Each Lender that is not a
United States Person shall submit to the Borrowers and the Administrative Agent,
on or before the fifth day prior to the first Quarterly Payment Date occurring
after the Closing Date (or, in the case of a Person that is not a United States
Person and that became a Lender by assignment, promptly upon such assignment),
two duly completed and signed copies of either (A) Form 1001 of the United
States Internal Revenue Service entitling such Lender to a complete exemption
from withholding on all amounts to be received by such Lender pursuant to this
Agreement and the Loans, (B) Form 4224 of the United States Internal Revenue
Service relating to all amounts to be received by such Lender pursuant to this
Agreement and the Loans or (C) in the case of a Lender Party that is claiming an
exemption from United States withholding tax under Section 871(h) or 881(c) of
the Internal Revenue Code with respect to payments of "portfolio interest" two
accurate and complete signed original Forms W-8 (or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender Party is
exempt from or is entitled to a reduced rate of United States withholding tax on
payments under this Agreement or the Notes) and, if such Lender Party delivers
such Forms W-8 (or successor form), two signed certificates that such Lender
Party is not (1) a "bank" for purposes of Section 881(c) of the Internal Revenue
Code, (2) is not a 10% shareholder (within the meaning of Section 871(h)(3)(B)
of the Internal Revenue Code) of the Borrower and (3) is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Internal Revenue Code), as appropriate,
-20-
<PAGE>
Each such Lender shall, from time to time after submitting either such Form,
submit to the Borrowers and the Administrative Agent such additional duly
completed and signed copies of one or the other such Forms (or any successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) as may be (A) requested in writing by the Borrowers or the
Administrative Agent and (B) appropriate under the circumstances and under then
current United States law or regulations to avoid or reduce United States
withholding taxes on payments in respect of all amounts to be received by such
Lender pursuant to this Agreement or the Loans. Upon the request of the
Borrowers or the Administrative Agent, each Lender that is a United States
Person shall submit to the Borrowers and the Administrative Agent a certificate
to the effect that it is a United States Person.
(e) Obligations under this Section 1.13 shall survive payment of the
Loans.
1.14 REGISTERED NOTES AND LOANS.
(a) Request for Registration. Any Lender may request the Borrowers
(through the Administrative Agent), and the Borrowers agree thereupon, to
register such Loans as provided in Section 1.14(c) and, if such Lender is
otherwise entitled to a Note hereunder, to issue such Lender's Note, evidencing
such Loans, or to exchange such Note for a new Note, registered as provided in
Section 1.14(c) (a "Registered Note"). A Registered Note may not be exchanged
for a Note that is not in registered form. A Registered Note shall be deemed to
be and shall be a Note for all purposes of this Agreement and the other Loan
Documents.
(b) Delivery of Tax Forms. Each Non-U.S. Lender that requests or
holds a Registered Note pursuant to Section 1.14(a) or registers its Loans
pursuant to Section 1.14(a) (a "Registered Lender") (or, if such Registered
Lender is not the beneficial owner thereof, such beneficial owner) shall deliver
to Multicare (on behalf of the Borrowers) (with a copy to the Administrative
Agent) prior to or at the time such Non-U.S. Lender becomes a Registered Lender,
the applicable form described in Section 1.13(d) (or such successor and related
forms as may from time to time be adopted by the relevant taxing authorities of
the United States) together with an annual certificate stating that such
Registered Lender or beneficial owner, as the case may be, is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and is not otherwise
described in Section 881(c)(3) of the Code. Each Registered Lender or beneficial
owner, as the case may be, shall promptly notify Multicare (on behalf of the
Borrowers) (with a copy to the Administrative Agent) if at any time such
Registered Lender or beneficial owner, as the case may be, determines that it is
no longer in a position to provide such previously delivered certificate to the
Borrowers (or any other form of certification adopted by the relevant taxing
authorities of the United States for such purposes).
(c) Registration of Loans. The Administrative Agent, acting, for
this purpose, as agent of the Borrowers, shall, upon request of any Registered
Lender, enter in the Register the name, address and taxpayer identification
number (if provided) of the Registered Lender or beneficial owner, as the case
may be. In addition to the requirements of Section 12.9 (Successors and
Assigns), a Registered Note and the Loans evidenced thereby (or such Loans
pending delivery of such Registered Note) or any other Loans registered pursuant
to Section 1.14(a) above may be assigned or otherwise transferred in
-21-
<PAGE>
whole or in part only by registration of such assignment or transfer of such
Registered Note and/or the Loans so registered on the Register (and each such
Registered Note shall expressly so provide). Any assignment or transfer of all
or part of such Loans and such Registered Note shall be registered on the
Register only upon compliance with the provisions of Section 12.9 and, in the
case of Registered Notes, surrender for registration of assignment or transfer
of the Registered Note evidencing such Loans, duly endorsed by (or accompanied
by a written instrument of assignment or transfer fully executed by) the
Registered Lender thereof, and thereupon one or more new Registered Notes in the
same aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s) and, if less than all of such Registered Notes is thereby being
assigned or transferred, the assignor or transferor.
-22-
<PAGE>
ARTICLE 2
YIELD PROTECTION AND BREAKAGE INDEMNITY
2.1 MANDATORY SUSPENSION AND CONVERSION OF LIBO RATE LOANS. Any Lender's
obligations to make, continue or convert into LIBO Rate Loans of any Type shall
be suspended, all such Lender's outstanding Loans of such Type shall be
converted into Prime Rate Loans on the last day of their applicable Interest
Periods (or, in the case of clause (c) below, on the last day such Lender may
lawfully continue to maintain Loans of such Type if earlier, or, in the case of
clause (d) below, on the day determined by such Lender to be the last Business
Day before the effective date of the applicable restriction), and all pending
requests for the making or continuation of or conversion into Loans of such Type
by such Lender shall be deemed requests for Prime Rate Loans, if:
(a) on or prior to the date required for the determination of a LIBO
Rate for any Interest Period, the Administrative Agent determines that for any
reason appropriate information is not available to it for purposes of
determining the LIBO Rate for such Interest Period;
(b) on or prior to the first day of any Interest Period for a LIBO
Rate Loan, the Required Lenders have informed the Administrative Agent of their
determination that the LIBO Rate as determined by the Administrative Agent for
such Interest Period would not accurately reflect the cost to such Lenders of
making, continuing or converting into a LIBO Rate Loan for such Interest Period;
(c) at any time such Lender determines that any Regulatory Change
makes it unlawful or impracticable for such Lender or its applicable Eurodollar
Lending Office to make, continue or convert into a LIBO Rate Loan of such Type,
or to comply with its obligations hereunder in respect thereof; or
(d) such Lender notifies the Administrative Agent of its
determination that (i) by reason of any Regulatory Change, such Lender or its
applicable Eurodollar Lending Office is restricted, directly or indirectly, in
the amount that it may hold of (A) a category of liabilities that includes
deposits by reference to which, or on the basis of which, the interest rate
applicable to LIBO Rate Loans of such Type is directly or indirectly determined
or (B) the category of assets that includes LIBO Rate Loans of such Type and
(ii) in connection therewith, such Lender has elected not to make available
hereunder LIBO Rate Loans of such Type.
If, as a result of this Section 2.1, any Loan of any Lender that would otherwise
be made or maintained as or converted into a LIBO Rate Loan for any Interest
Period is instead made or maintained as or converted into a Prime Rate Loan,
then, unless the corresponding Loan of each of the other Lenders is also to be
made or maintained as or converted into a Prime Rate Loan, such Loan shall be
treated as being a LIBO Rate Loan of such Type for such Interest Period for all
purposes of this Agreement (including the timing, application and proration
among the Lenders of interest payments, conversions and prepayments) except for
the calculation of the interest rate borne by such Loan. The Administrative
Agent shall promptly notify Multicare (on behalf of the Borrowers) and each
Lender of the existence or occurrence
-23-
<PAGE>
of any condition or circumstance specified in clause (a) or (b) above, and each
Lender shall promptly notify Multicare (on behalf of the Borrowers) and the
Administrative Agent of the existence, occurrence or termination of any
condition or circumstance specified in clause (c) or (d) above applicable to
such Lender's Loans, but the failure by the Administrative Agent or such Lender
to give any such notice shall not affect such Lender's rights hereunder.
2.2 REGULATORY CHANGES. If in the determination of any Lender or, in the
case of any Letter of Credit or Drawing, the Issuer, (a) any Regulatory Change
shall directly or indirectly
(i) reduce the amount of any sum received or receivable by (A)
such Lender with respect to any LIBO Rate Loan or Letter of Credit
Participation or the return to be earned by such Lender on any LIBO Rate
Loan or Letter of Credit Participation, or (B) the Issuer with respect to
any Letter of Credit or Drawing,
(ii) impose a cost on (A) such Lender or any Affiliate of such
Lender that is attributable to the making or maintaining of, or such
Lender's commitment to make or acquire, any LIBO Rate Loan, or Letter of
Credit Participation or (B) the Issuer or any of its Affiliates that is
attributable to the issuance or maintaining of, or the commitment to
issue, any Letter of Credit or the making or maintaining of any Drawing,
(iii) require (A) such Lender or any Affiliate of such Lender
to make any payment on or calculated by reference to any amount received
by such Lender in respect of its LIBO Rate Loans or its obligations to
make LIBO Rate Loans or (B) the Issuer or any of its Affiliates to make
any payment on or calculated by reference to any amount received by the
Issuer or any of its Affiliates in respect of any Letter of Credit, or its
commitment to issue any Letter of Credit or Drawing, or
(iv) reduce, or have the effect of reducing, the rate of
return on any capital (A) such Lender or any Affiliate of such Lender is
required to maintain on account of any LIBO Rate Loan or Letter of Credit
Participation or such Lender's commitment to make any LIBO Rate Loan or
Letter of Credit Participation, or (B) the Issuer or of any of its
Affiliates is required to maintain on account of any Letter of Credit or
Drawing or the Issuer's commitment to issue any Letter of Credit.
and (b) such reduction, increased cost or payment shall not be fully compensated
for by an adjustment in the applicable rates of interest payable under the Loan
Documents, then the Borrowers shall pay to such Lender or the Issuer such
additional amounts as such Lender or the Issuer determines will fully compensate
it for such reduction, increased cost or payment. Such additional amounts shall
be payable, in the case of those applicable to prior periods, within 15 Business
Days after request for such payment by such Lender or the Issuer, as the case
may be, accompanied by the certificate described in Section 2.5 and, in the case
of those applicable to future periods, on the dates specified, or determined in
accordance with a method specified, by such Lender or the Issuer, as the case
may be, provided that the Borrowers shall not be liable for any amount payable
with respect to any period more than 90 days before the date of such request or
certificate, or, if earlier the retroactive effective date of the Regulatory
Change if such Regulatory Change occurs during such 90-day period.
-24-
<PAGE>
2.3 CAPITAL AND RESERVE REQUIREMENTS. If, in the determination of any
Lender, or the Issuer, such Lender, the Issuer or any Affiliate thereof is
required, under applicable Law (including Regulation D), or interpretations,
directives, requests and governmental or regulatory guidelines (whether or not
having the force of law), to maintain capital or deposit any reserve on account
of any Loan, any Letter of Credit (whether drawn or undrawn) or any commitment
to make any Loan or issue any Letter of Credit, then, upon request by such
Lender or the Issuer, the Borrowers shall pay to such Lender or the Issuer, as
the case may be, such additional amounts as such Person determines will fully
compensate it for any reduction in the rate of return on the capital that such
Lender, the Issuer or such Affiliate thereof is so required to maintain. Such
additional amounts shall be payable, in the case of those applicable to prior
periods, within 15 Business Days after request by such Lender or the Issuer, as
the case may be, for such payment accompanied by the certificate described in
Section 2.5 (provided that the Borrowers shall not be liable for any amount
payable with respect to any period more than 90 days before the date of such
request or certificate, or, if earlier, the retroactive effective date of such
determination if made during such 90-day period), and, in the case of those
relating to future periods, on the dates specified, or determined in accordance
with a method specified, by such Lender or the Issuer, as the case may be.
2.4 BREAKAGE. The Borrowers shall pay to each Lender, upon request, such
amount as such Lender reasonably determines is necessary to compensate it for
any loss, cost or expense (excluding loss of the Applicable Margin) incurred by
it as a result of (a) any payment, prepayment or conversion of a LIBO Rate Loan
on a date other than the last day of an Interest Period for such LIBO Rate Loan
or (b) a LIBO Rate Loan for any reason not being made or converted, or any
payment of principal thereof or interest thereon not being made, on the date
therefor determined in accordance with the applicable provisions of this
Agreement. At the election of such Lender, and without limiting the generality
of the foregoing, but without duplication, such compensation on account of
losses may include an amount equal to the excess of (i) the interest that would
have been received from the Borrowers under this Agreement (excluding the
Applicable Margin) during the remainder of the applicable Interest Period over
(ii) the interest component of the return that such Lender determines it could
have obtained had it placed such amount on deposit in the interbank Dollar
market for a period equal to such remaining portion of the Interest Period.
2.5 DETERMINATIONS. In making the determinations contemplated by this
Article 2, each Lender and the Issuer shall make such estimates, assumptions,
allocations and the like that such Person in good faith determines to be
appropriate, and such Person's selection thereof in accordance with this Section
2.5, and the determinations made by such Person on the basis thereof, shall be
final, binding and conclusive upon the Borrowers, except, in the case of such
determinations, for manifest errors. Each Lender and the Issuer shall furnish to
the Borrowers, at the time of any request for compensation under Section 2.2 or
2.3, a certificate outlining in reasonable detail the computation of any amounts
claimed by it under this Article 2 and the assumptions underlying such
computations, which shall include a statement of an officer of such Person
certifying that such request for compensation is being made pursuant to a policy
adopted by such Person to seek such compensation generally from customers
similar to the Borrowers and having similar provisions in agreements with
-25-
<PAGE>
such Person.
2.6 REPLACEMENT OF LENDERS. If any Lender requests compensation pursuant
to Sections 1.13 (Taxes on Payments), 2.2 (Regulatory Changes) or 2.3 (Capital
and Reserve Requirements), or such Lender's obligation to make or continue Loans
as LIBO Rate Loans shall be suspended pursuant to Section 2.1 (Mandatory
Suspension and Conversion of LIBO Rate Loans) or such Lender has defaulted on
its obligations to make or participate in Loans pursuant to Section 1.3 (Manner
of Borrowing), Multicare (on behalf of the Borrowers), upon three Business Days'
notice, may require that such Lender transfer all of its right, title and
interest under this Agreement, such Lender's Notes, if any, and the other Loan
Documents to any Eligible Institution identified by Multicare (on behalf of the
Borrowers) subject to
(a) the consent of the Administrative Agent (which consent shall not
be unreasonably withheld),
(b) satisfaction of the other conditions specified in Section 12.9
below (Successors and Assigns),
(c) the agreement of the proposed transferee to assume all of the
obligations of such Lender hereunder and under the other Loan Documents for
consideration equal to the outstanding principal amount of such Lender's Loans,
unreimbursed Drawings payable to the transferor, interest thereon to the date of
such transfer, and all other amounts payable hereunder to such Lender to the
date of transfer,
(d) such transferor Lender shall have been paid on or prior to the
date of such transfer all fees and other amounts payable to such transferor
hereunder including those amounts payable under said Sections 1.13, 2.2 or 2.3,
as applicable (and including any fees accrued hereunder and any amounts that
would be payable under Section 2.4 (Breakage) as if all of such Lender's Loans
and share of unreimbursed Drawings were being prepaid in full on such date) or
arrangements satisfactory to the transferor Lender shall have been made for such
payments, and
(e) satisfaction of the condition that if the Lender being replaced
has requested compensation pursuant to Sections 1.13, 2.2 or 2.3, the proposed
transferee's aggregate requested compensation, if any, pursuant to Sections
1.13, 2.2 or 2.3 with respect to such replaced Lender's Loans is lower than that
of the Lender replaced.
Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements of the Borrowers contained in Sections 1.13 (Taxes on
Payments), 2.2 (Regulatory Changes), 2.3 (Capital and Reserve Requirements), 2.4
(Breakage), 12.12 (Indemnification) and 12.13 (Expenses) (without duplication of
any payments made to such Lender by the Borrowers or the proposed transferee)
shall survive for the benefit of any Lender replaced under this Section 2.6 with
respect to the time prior to such replacement.
2.7 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of Sections 1.13 (Taxes on Payments),
-26-
<PAGE>
2.1 (Mandatory Suspension and Conversion of LIBO Rate Loans), 2.2 (Regulatory
Changes) or 2.3 (Capital and Reserve Requirements) with respect to such Lender,
it will, if requested by the Borrowers, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
office for any Loans affected by such event, provided that such designation is
made on such terms that such Lender and its lending office suffer no material
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such Section.
Nothing in this Section 2.7 shall affect or postpone any of the obligations of
the Borrowers or the right of any Lender provided in Section 1.13 (Taxes on
Payments), 2.1 (Mandatory Suspension and Conversion of LIBO Rate Loans), 2.2
(Regulatory Changes) or 2.3 (Capital and Reserve Requirements).
-27-
<PAGE>
ARTICLE 3
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT.
(a) In General. Upon the terms and subject to the conditions of this
Agreement, the Issuer shall, from time to time, from the Closing Date to the
date which is 90 days prior to the RC Maturity Date, issue one or more Letters
of Credit for the account of any Borrower, provided that (i) the sum of the
Contingent Reimbursement Obligations (after giving effect to the requested
Letter of Credit) plus the aggregate unpaid amount of all Drawings under Letters
of Credit shall not exceed $15,000,000.00 and provided, further, that the face
amount of the Letter of Credit so requested shall not exceed the Available RC
Commitment at such time. Each Letter of Credit shall be in a form and shall
contain such terms as shall be reasonably satisfactory to the Issuer. Letters of
Credit shall be issued only on a Business Day, and shall be used for the general
corporate purposes of the Borrowers or for such other purposes as shall be
acceptable to the Issuer in its sole discretion.
(b) Terms. Each Letter of Credit shall be denominated only in
Dollars and shall expire on or before the first anniversary of the issuance
thereof and in any event not later than the fifth Business Day preceding the RC
Maturity Date. No Letter of Credit shall 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. All other
extensions and renewals are also at the sole discretion of the Issuer. Any
extension of the expiry date of a Letter of Credit to a date beyond the first
anniversary of the issuance thereof shall constitute an "issuance" of such
Letter of Credit for all purposes hereof.
(c) Form of Request. The Borrowers shall request the issuance of a
Letter of Credit by furnishing to the Administrative Agent and the Issuer, at
least five Business Days before the requested date of such issuance (or at such
later time as shall be acceptable to the Issuer), such notice thereof as shall
be reasonably satisfactory to the Issuer to which shall be attached a
certificate of the chief financial officer or other Responsible Officer of
Multicare representing that Multicare is, and after giving effect to the
additional Indebtedness will be, in compliance with Section 4.03 of the 1997
Subordinated Note Indenture, that the obligations with respect to such Letter of
Credit constitute "Senior Indebtedness" and "Designated Senior Indebtedness" as
defined in the 1997 Subordinated Note Indenture, and as to such other matters as
required by Section 4.2 below.
(d) Participation by RC Lenders. Upon the date of issuance of a
Letter of Credit, the Issuer shall be deemed to have granted to each RC Lender
(other than the Issuer), and each RC Lender (other than the Issuer) shall be
deemed to have acquired from the Issuer without further action by any party
hereto, a participation in such Letter of Credit and any Drawings that may at
any time be made thereunder, to the extent of such Lender's pro rata share of
the RC Commitment.
(e) Notice of Drawings. The Issuer shall promptly notify Multicare
(on behalf of the Borrowers) of its receipt of each Drawing request with respect
to a Letter of Credit, stating the date and amount of the Drawing requested
thereby and the date and
-28-
<PAGE>
amount of each Drawing disbursed pursuant to such request. The failure of the
Issuer to give, or delay in giving, any such notice shall not release or
diminish the obligations hereunder of the Borrowers in respect of such Drawing.
(f) Reimbursement of Drawings by Borrowers. If at any time Multicare
(on the behalf of the Borrowers) receives notice of a Drawing, the Borrowers
shall reimburse such Drawing by paying to the Issuer in immediately available
funds the amount of the payment made by the Issuer with respect to such Drawing,
together with interest thereon at a rate per annum equal to the Prime Rate from
the day that the Drawing is made until the day such reimbursement is made if
such Drawing is not reimbursed on the day the Drawing is made. Such
reimbursement shall be made by the Borrowers to the Issuer no later than one (1)
Business Day following the date that Multicare (on behalf of Borrowers) receives
the relevant notice of Drawing if such notice is received on or prior to 10:00
a.m. (Philadelphia, Pennsylvania time) and no later than two (2) Business Days
following the date that Multicare receives the relevant notice of Drawing if
such notice is received after 10:00 a.m. (Philadelphia, Pennsylvania time). If
the Borrowers shall fail to make any payment required by this paragraph (f) at
the time specified, and if at such time, there shall be any Available RC
Commitment, the Administrative Agent may (but is not obligated to) assume that
the Borrowers intend to use the proceeds of RC Loans to make such payment. In
reliance on such assumption, the Administrative Agent may (but is not obligated
to) notify the RC Lenders (and Multicare (on behalf of the Borrowers)) that
notwithstanding the Borrowers' failure to provide notice pursuant to Section 1.3
above, such notice is deemed given pursuant to this paragraph (f) requesting an
RC Loan bearing interest at the Prime Rate in an amount sufficient to make the
payments required by this paragraph (f). Such notice from the Administrative
Agent shall be treated by the Lenders in the same manner as a notice from the
Borrowers under Section 1.3 above. The Administrative Agent may, at the
direction of the Issuer, apply the proceeds of such Loans to satisfy the
requirements of this paragraph (f).
(g) Obligations of RC Lenders to Issuer. In the event that the
Borrowers shall fail to make any payment when due pursuant to the preceding
paragraph (f) and for so long as such failure shall be continuing, the Issuer
may give notice of such failure to the Administrative Agent and each RC Lender,
which notice shall include, in the case of an RC Lender, the amount of such RC
Lender's interest in such Drawing, whereupon each such RC Lender (other than the
Issuer) shall promptly remit such amount to the Administrative Agent for the
account of the Issuer as provided in this paragraph (g). Each RC Lender (other
than the Issuer) shall, in the event it receives such notice from the Issuer at
or before 12:00 noon (Philadelphia, Pennsylvania time) on any Business Day, fund
its participation in any unreimbursed Drawing by remitting to the Administrative
Agent, no later than 2:00 p.m. (Philadelphia, Pennsylvania time) on such day, in
immediately available funds its share of the reimbursement obligations in
respect of each Drawing. In the event that the Administrative Agent receives
such funds from an RC Lender at or before 2:00 p.m. (Philadelphia, Pennsylvania
time) on any day, the Administrative Agent shall make available the amount
thereof to the Issuer, in immediately available funds no later than 4:00 p.m.
(Philadelphia, Pennsylvania time) on that same day. Any amount payable by an RC
Lender to the Administrative Agent for the account of the Issuer under this
paragraph (g), and any amount payable by the Administrative Agent to the Issuer
under this paragraph (g), shall bear interest for each day from the date due
(and including such day if paid after 2:00 p.m. (Philadelphia, Pennsylvania
time) in the case of any such payment by an RC Lender to the Administrative
Agent, or 4:00 p.m. (Philadelphia, Pennsylvania time), in the case of any such
payment by
-29-
<PAGE>
the Administrative Agent to the Issuer, on such day) until the date it is
received by the Issuer at a rate equal to the Federal Funds Rate until (and
including) the third Business Day after the date due and thereafter at the Prime
Rate. Moreover, any Lender that shall have failed to make available the required
amount shall not be entitled to vote on such matters as Lenders or Required
Lender are otherwise entitled to vote on or consent to or approve under this
Agreement and the other Loan Documents until such amount with interest is paid
in full to the Administrative Agent by such Lender. Each RC Lender shall, upon
the demand of the Issuer, reimburse the Issuer, through the Administrative Agent
to the extent that the Issuer has not been reimbursed by the Borrowers after
demand therefor, for the reasonable costs and expenses (including reasonable
legal fees) incurred by it (other than as a result of its willful misconduct or
gross negligence as finally determined by a court of competent jurisdiction) in
connection with the collection of amounts due under, the administration of, and
the preservation and enforcement of any rights conferred by, the Letters of
Credit or the performance of the Issuer's obligations under this Agreement in
respect thereof on a pro rata basis relative to such RC Lender's pro rata share
of the RC Commitment (as of the time such costs and expenses are incurred). The
Issuer shall refund through the Administrative Agent any costs and expenses
reimbursed by such RC Lender that are subsequently recovered from the Borrowers
in an amount equal to such RC Lender's ratable share thereof.
(h) Cash Collateral. It is intended that at all times that the
Borrowers shall have contingent or other obligations (including obligations in
respect of fees) relating to Letters of Credit, there shall be sufficient
availability under the RC Commitment to reimburse the Issuer (and the RC
Lenders) out of proceeds of RC Loans. Accordingly, in the event that there
shall, at any time, be insufficient availability under the RC Commitment (after
giving effect to all outstanding Swing Loans and RC Loans) to do so (whether
because the amount of the RC Commitment is reduced pursuant to a mandatory
reduction or is terminated at maturity, upon acceleration or otherwise or
because the amount of outstanding RC Loans, Swing Loans and such Letter of
Credit obligations exceeds the amount of the RC Commitment for any other
reason), the Borrowers shall forthwith pay to the Administrative Agent an amount
equal to the aggregate face value of all outstanding Letters of Credit plus the
aggregate amount of all unreimbursed Drawings plus the amount of all fees or
other obligations in respect of Letters of Credit to the extent of such excess.
Such amount shall be maintained by the Administrative Agent in an
interest-bearing cash collateral account in the name of and for the benefit of
the Issuer and the RC Lenders to secure such payment obligations of the
Borrowers until such time as all outstanding Letters of Credit have expired or
been cancelled and all amounts in respect thereof have been paid in full. Upon
receipt of a notice from the Issuer that there are unreimbursed Drawings or
other amounts due in respect of such Letters of Credit (which notice shall set
forth the amount of such unreimbursed Drawings or other obligations) the
Administrative Agent shall promptly disburse from the cash collateral account
the amount specified in the notice and shall pay such amount to the Issuer and
RC Lenders ratably in accordance with the respective amounts owing to each such
Person, first, for fees and indemnities until the same are paid in full and,
second, for unreimbursed Drawings. The Administrative Agent and the Issuer may
rely on their records as to any amounts so owing and shall be fully protected in
doing so. Such records shall be conclusive, absent manifest error. At any time
that the RC Commitment again becomes available for reimbursement of Drawings
under outstanding Letters of Credit such that (i) the sum of the RC Commitment
at that time and the amount in the cash collateral account exceeds (ii) the sum
of all outstanding RC Loans and Swing Loans, the face amount of all outstanding
Letters of Credit and the amount of all unreimbursed
-30-
<PAGE>
Drawings, then, upon written request of Multicare (on behalf of the Borrowers)
(which request shall (A) represent that there exists no Default or Event of
Default and (B) specify the amount of such excess), the Administrative Agent
shall release such excess amount to the Borrowers from the cash collateral
account. 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 in full in cash, all
Commitments have terminated and all Letters of Credit have expired, promptly
following demand by Multicare (on behalf of the Borrowers) the Administrative
Agent shall release to the Borrowers all remaining funds in the Letter of Credit
cash collateral account.
(i) Obligations Absolute. The obligation of each Borrower and each
RC Lender to make available to the Issuer the amounts set forth in this Article
3 shall be absolute, unconditional and irrevocable under any and all
circumstances without reduction for any set-off or counterclaim of any nature
whatsoever, and may not be terminated, suspended or delayed for any reason
whatsoever, shall not be subject to any qualification or exception and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which any Borrower may have at any time against a beneficiary named
in a Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Administrative
Agent, the Issuer, any RC Lender or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between such Borrower and the beneficiary named in
any such Letter of Credit);
(iii) any draft, certificate or any 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;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default or Event of Default.
(j) Limitations on Liability; Protection of Issuer, Administrative
Agent and Lenders.
(i) Limitation on Liability of Lender Parties. Without
affecting any rights any Lender Party may have under applicable Law, each of the
Borrowers agrees that none of the RC Lenders, the Issuer, the Administrative
Agent or their respective officers or directors shall be liable or responsible
for, and the obligations of the Borrowers to the RC Lenders, the Issuer and the
Administrative Agent hereunder shall not in any manner be affected by: (A) the
use that may be made of any Letter of Credit or the proceeds thereof by
-31-
<PAGE>
the beneficiary thereof or any other Person or any acts or omissions of such
beneficiary or any other Person; (B) the validity, sufficiency or genuineness of
documents presented in connection with any Drawing, or of any endorsements
thereon, even if such documents should, in fact, prove to be in any or all
respects, invalid, insufficient, fraudulent or forged; or (C) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit or any other action taken or omitted to be taken by any Person under
or in connection with any Letter of Credit, except that the Borrowers shall have
a claim against the Issuer and the Issuer shall be liable to the Borrowers, in
each case to the extent and only to the extent of any damages suffered by the
Borrowers that they prove are caused by the Issuer's willful misconduct or gross
negligence. In furtherance and not in limitation of the foregoing, in
determining whether to pay under any Letter of Credit, the Issuer shall not have
any obligation relative to the other Lenders other than to determine that any
documents required to be delivered under such Letter of Credit appear to have
been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit, regardless of any notice or information
to the contrary. Any action taken or omitted to be taken by the Issuer under or
in connection with any Letter of Credit (if taken or omitted in the absence of
gross negligence or willful misconduct, as finally determined by a court of
competent jurisdiction) shall not create for the Issuer any resulting liability
to any Borrower or any Lender.
(ii) Indemnification and Expenses. In addition to any other
amounts payable under this Agreement, the Borrowers agree jointly and severally
to protect, indemnify, pay and hold the Issuer and each RC Lender harmless from
and against any and all claims, costs, charges and expenses (including
reasonable attorneys' fees) which the Issuer may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of, or payment of any
drawing under, any Letter of Credit, other than as a result of the gross
negligence or willful misconduct of the Issuer as finally determined by a court
of competent jurisdiction or (B) the failure of the Issuer to honor a Drawing
under any Letter of Credit as a result of any act or omission of any present or
future government or Governmental Authority.
(iii) Issuer Not Responsible. In furtherance of the foregoing
limitations on liability, the Issuer shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the issuance of Letters of Credit; (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part; (C) errors, omissions,
interruptions, or delays in transmissions or delivery of any messages, by mail,
cable, telecopy, telex or otherwise, whether or not in cipher, except for
damages proven to be caused by the Issuer's gross negligence or willful
misconduct; (D) the misapplication by the beneficiary of any Letter of Credit or
the proceeds of any drawing under such Letter of Credit; or (E) any consequence
arising from causes beyond the control of the Issuer, including any governmental
acts.
-32-
<PAGE>
ARTICLE 4
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND FUNDINGS
4.1 CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND INITIAL FUNDING. The
effectiveness of this Agreement, the obligation of the Lenders to make the
initial Loans hereunder and the obligation of the Issuer to issue Letters of
Credit hereunder are subject to the fulfillment of the following conditions on
or before that date which is 120 days after the closing with respect to the
Tender Offer (unless such date is extended in writing by the Agents in their
sole discretion), in each case to the satisfaction of the Agents and, to the
extent specified below, to the satisfaction of each Lender (each Lender upon
making its initial Loan hereunder being deemed to have waived or found
satisfactory all such conditions so specified).
(a) Secretary's Certificates. The Borrowers shall have delivered, or
caused to be delivered, a certificate of the Secretary or an Assistant Secretary
(or general partner, as applicable) of each of the Borrowers and Surety, with
specimen signatures of the authorized signatories to the Loan Documents, and to
which shall be attached copies of the following, as applicable: articles or
certificate of incorporation (each of which shall be certified as of a recent
date by the Secretary of State of the state of such Borrower's or Surety's
incorporation), certificates of formation (each of which shall be certified as
of a recent date by the Secretary of State of the state of such Borrower's or
Surety's formation), operating agreements, management agreements, bylaws,
partnership agreements, resolutions and shareholder agreements.
(b) Good Standing Certificates. The Borrowers shall have delivered,
or caused to be delivered, a good standing or subsistence certificate, as the
case may be, issued as of a recent date with respect to each Borrower (and each
corporate, limited liability company or limited partnership, general partner of
Borrowers that are partnerships) and Surety, (i) issued by the Secretary of
State or other appropriate official of the jurisdiction of formation of such
Person and (ii) issued by the Secretary of State or other appropriate official
of each jurisdiction where it is required to qualify to do business and, if any
such certificate is dated more than twenty-one (21) days prior to the Closing
Date, a confirmation (which may be provided by a reputable corporate service) of
the information in such certificate.
(c) The Notes. The Borrowers shall have delivered to the
Administrative Agent for distribution to each of the RC Lenders, the Tranche A
Lenders and the Swing Loan Lender the applicable Notes referred to in Section
1.11.
(d) Lien Searches. The Borrowers shall have delivered to the
Administrative Agent Uniform Commercial Code, tax, and judgment lien searches of
the Borrowers and Surety, in such form, as of such date and with such content as
are acceptable to the Administrative Agent.
-33-
<PAGE>
(e) Pledge Agreement. The Borrowers and GENESIS ELDERCARE CORP. (the
"Surety") shall each have executed and delivered Pledge Agreements whereby the
Administrative Agent shall receive a first priority security interest for the
benefit of the Lender Parties in all of the equity interests in each of the
direct and indirect Restricted Subsidiaries of Multicare, the stock of Multicare
and all inter-Borrower notes (collectively, as such agreements are amended,
modified, restated or supplemented from time to time in accordance with the
terms hereof and thereof, the "Pledge Agreement") in substantially the form
annexed to this Agreement as Exhibit E (together with the stock certificates,
assignment powers, Uniform Commercial Code financing statements (in proper form
for filing in the appropriate offices to perfect the security interest of the
Administrative Agent, for the benefit of the Secured Parties, in the Collateral
granted under the Pledge Agreement) and other items required thereunder to the
extent that such items were not previously delivered to the Administrative
Agent).
(f) Guaranty. The Borrowers shall have caused to be delivered to the
Administrative Agent for the benefit of the Lender Parties a Guaranty and
Suretyship Agreement in substantially the form annexed hereto as Exhibit F (the
"Suretyship Agreement") duly executed by the Surety, whereby the Surety
guarantees and becomes surety for all of the Borrowers' obligations hereunder
and under the other Loan Documents.
(g) Multicare Management Agreement. Prior to or substantially
contemporaneously with the initial funding hereunder, GENESIS HEALTH VENTURES,
INC. ("Genesis") (and/or one or more of its Subsidiaries) shall have entered
into a Management Agreement with the Surety (the "Multicare Management
Agreement") under which Genesis (and/or such Subsidiaries) will provide
management services to the Borrowers (or Surety). The Multicare Management
Agreement shall be on terms and conditions satisfactory to the Agents. As a
further condition, Genesis, Multicare and the Agents shall enter into the
Multicare Management Subordination Agreement.
(h) Other Transaction Documents; Tender Offer. (i) The Borrowers
shall have delivered to each of the Agents and any Lender that so requests, each
of the other Transaction Documents certified by a Responsible Officer of
Multicare as being a true and correct copy of such Transaction Document as in
full force and effect on the Closing Date. (ii) The Tender Offer shall have
closed with the purchase of at least a majority of the common stock of Multicare
having been purchased for $28 per share and the other transactions contemplated
by the Transaction Documents to have occurred on or before the Closing Date
shall have taken place in strict compliance with the terms of said Transaction
Documents, subject only to such modifications as are acceptable to the Agents.
There shall be no legal impediment to the merger of Acquisition Corp. into
Multicare under Section 253 or 251, as the case may be, of the Delaware General
Corporation Law on the terms set forth in the Merger Agreement and the
restrictions in Section 203 of the Delaware General Corporation Law and any
other impediment under Delaware law shall be inapplicable to the acquisition of
the shares of Multicare by Acquisition Corp. and the proposed merger pursuant to
the terms of the Merger Agreement.
(i) Acquisition and Merger. The Borrowers shall have provided the
Agents with evidence that simultaneously with the closing hereunder, Acquisition
Corp. will merge with Multicare, with Multicare being the surviving entity in
accordance with the terms of the Merger Agreement and in compliance with all
applicable Laws, and that
-34-
<PAGE>
simultaneously with the closing hereunder, Surety will own 100% of the capital
stock of such surviving entity.
(j) Opinions of Counsel. (i) The Borrowers shall have delivered
favorable opinions of counsel, dated as of the Closing Date, from:
(1) Blank, Rome, Comisky & McCauley, counsel to the Borrowers,
as to the absence of conflicts with other financing agreements and other
material agreements of the Borrowers, the status of the Loan Obligations as
"Senior Indebtedness" and "Designated Senior Indebtedness" within the meaning of
the 1997 Subordinated Note Indenture, and compliance with Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System, the perfection of
security interests under the Pledge Agreement, issuance of capital stock of the
Borrowers, the due organization of the Borrowers and Surety, the due
authorization of the transactions referred to herein, the enforceability of the
Loan Documents, and such other matters as the Agents may reasonably request, in
form and substance satisfactory to the Agents; and
(2) Local counsel to the Borrowers in the States of
Massachusetts, West Virginia, New Jersey, Ohio, Pennsylvania, Wisconsin,
Connecticut, Illinois, Rhode Island, Vermont and Virginia as to certain health
care matters and such other matters as the Agents may reasonably request, in
form and substance satisfactory to the Agents.
(ii) Drinker Biddle & Reath LLP, special counsel to the
Administrative Agent shall have delivered to the Administrative Agent a
favorable opinion of counsel, dated as of the Closing Date, as to such matters
as the Administrative Agent shall reasonably request.
(k) Solvency Opinion. The Borrowers shall have delivered letters
from their chief financial officers and from a nationally recognized appraisal
firm, valuation consultant or investment banking firm satisfactory to the Agents
each of which shall be in form and substance satisfactory to the Agents,
attesting to the solvency of the Borrowers, taken as a whole, after giving
effect to the transactions referred to herein (including the making of the
initial Loans and the acquisition of Multicare and its Subsidiaries by
Acquisition Corp.).
(l) Officers Certificate Regarding Senior Subordinated 12-1/2% Notes
and Convertible 7% Subordinated Debentures. Multicare, on behalf of Borrowers
shall have delivered a certificate dated the Closing Date signed by a
Responsible Officer detailing as of the Closing Date the amount of Multicare's
Convertible 7% Subordinated Debentures remaining outstanding and the maximum
amount necessary to redeem and retire all such Debentures by no later than March
16, 1998; and the amount of Multicare's Senior Subordinated 12-1/2% Notes
remaining outstanding and the maximum amount necessary to redeem and retire all
such Notes by no later than January 2, 1998.
(m) Consents and Approvals. All material corporate, governmental,
judicial and third party consents and approvals necessary in connection with
this Agreement and the other Loan Documents, the Tender Offer and the related
transactions (including consents and approvals required under or referred to in
the Merger Agreement) shall have been obtained and, as applicable, become final
orders (without imposition of any conditions that are not acceptable to the
Lenders) and shall remain in full force and effect and, to the extent
-35-
<PAGE>
requested by any Agent, copies thereof shall have been delivered to the
Administrative Agent. Without limiting the generality of the foregoing, all
appropriate filings shall have been made under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the applicable waiting periods
relating thereto shall have expired or been terminated without requests for
additional information from the reviewing agencies.
(n) Financial Statements; Projections.
(i) Financial Statements. The Borrowers shall have delivered,
or caused to be delivered, to the Administrative Agent, the Issuer
and the Lenders at least three (3) Business Days prior to the
Closing Date each of the following:
(x) a consolidated income statement of Multicare and its
consolidated Subsidiaries for the twelve calendar month period
ending on June 30, 1997, adjusted, on a pro forma basis to the
beginning of the period (as required for the financial
covenants) to reflect the consummation of all of the
transactions set forth in the Transaction Documents and all
Acquisitions and dispositions which shall have occurred within
said twelve month period as if such transactions, Acquisitions
and dispositions had occurred on the first day of such period,
which statement shall be supplemented by information
separating out and explaining all pro forma adjustments made
thereto; and
(y) a consolidated balance sheet of Multicare and its
consolidated Subsidiaries as of June 30, 1997, reflecting, on
a pro forma basis, the consummation of all transactions set
forth in the Transaction Documents including all borrowings in
connection therewith and all borrowings otherwise contemplated
hereunder, the application of all proceeds of such borrowings
and the amount of all outstanding Indebtedness after giving
effect to the foregoing, which balance sheet shall be
supplemented by information separating out and explaining all
pro forma adjustments made thereto;
each of which statements shall be (1) in form acceptable to the Agents, (2)
accompanied by explanatory notes acceptable to the Agents and (3) certified by
the chief financial officer of Acquisition Corp. to fairly present on a pro
forma basis the financial condition and results of operations as at the date, or
for the period, indicated.
(ii) Projections. Multicare on behalf of the Borrowers shall
have delivered to each Lender projections respecting the
consolidated financial condition and results of operations of
Multicare and its consolidated Subsidiaries for the period
commencing on January 1, 1997 and ending on December 31, 2002, which
projections shall be in reasonable detail, shall reflect the
consummation of the transactions contemplated hereby and the
Transaction Documents including the making of the initial Loans and
shall be accompanied by a written statement of the assumptions and
estimates underlying such projections.
-36-
<PAGE>
(o) Officer's Compliance Certificate. Multicare on behalf of the
Borrowers shall have delivered an Officer's Compliance Certificate, dated as of
the Closing Date, as to the truth of the representations and warranties herein
and in the other Loan Documents and the absence of any Default (in each case,
both before and after giving effect to the initial Loans). The Officer's
Compliance Certificate shall demonstrate that EBITDA of the Borrowers for the
twelve calendar month period ending June 30, 1997 (after making all adjustments
referred to in paragraph (n) above) is no less than $118,000,000.00 and Total
Funded Indebtedness of the Borrowers is not more than $760,000,000.00. The
Officer's Compliance Certificate delivered pursuant to this paragraph (o) shall
include a reconciliation of the financial information set forth thereon
respecting Multicare and its Restricted Subsidiaries and that set forth on the
financial statements for Multicare and its consolidated subsidiaries.
(p) Repayment of Predecessor Indebtedness. The Borrowers shall have
delivered to the Administrative Agent evidence that, prior to or substantially
simultaneously with the making of the initial Loans, (a) all Indebtedness of the
Borrowers other than that expressly permitted under Section 8.1 (Indebtedness)
below will be repaid, (b) all commitments to lend in respect of such
Indebtedness shall have been effectively terminated and (c) all collateral held
in connection therewith shall have been released (or undertakings to release
such collateral upon receipt of specified funds shall have been duly made) and
UCC-3 termination statements and all other documents necessary in the
determination of the Administrative Agent to effectively terminate of record all
security interests related to such Indebtedness shall have been duly executed by
the proper parties and shall have been delivered to the Administrative Agent (or
undertakings to do so upon receipt of specified funds shall have been furnished
to the Administrative Agent).
(q) Insurance. The Borrowers shall have delivered to the
Administrative Agent evidence of the insurance required by Section 6.8 below.
(r) Fees and Expenses. The Borrowers shall have paid the fees
required to be paid to the Agents and the Lenders on or before the Closing Date
and the fees and disbursements of counsel for the Agents in connection with the
negotiation, preparation, execution and delivery of the Loan Documents and the
making of the initial Loans.
(s) Closing of Genesis Credit Facilities. All conditions to the
initial funding under the Third Amended and Restated Credit Agreement, dated as
of the date hereof, among Genesis, certain of its Subsidiaries, Mellon as
administrative agent, and certain other agents and lenders referred to therein
(the "Genesis Credit Agreement") shall have been satisfied.
(t) Investment in Surety. Genesis shall have acquired approximately
44% of the common stock of Surety for a purchase price of at least
$325,000,000.00, Cypress, Nazem and TPG, collectively, shall have paid at least
$420,000,000.00 for the remainder of the common stock of Surety, and all of the
proceeds of the sale of such common stock shall have been contributed by the
Surety to Acquisition Corp.
(u) Acquisition and Merger. The Borrowers shall have submitted to
the Agents evidence satisfactory to the Agents that the total amount paid by
Acquisition Corp. to acquire the common stock of Multicare and by Acquisition
Corp. or Multicare to complete
-37-
<PAGE>
the merger of Acquisition Corp. into Multicare, including without limitation
consulting, severance and other payments to employees of Multicare,
non-competition, amounts provided to refinance existing indebtedness of
Multicare and all amounts of assumed indebtedness has not and will not exceed
$1,533,000,000.00 in the aggregate.
(v) 1997 Subordinated Note Indenture. The 1997 Subordinated Note
Indenture with terms and conditions satisfactory to the Agents in their sole
discretion, shall have been executed by the parties thereto, and Acquisition
Corp. shall have received at least $250,000,000.00 in gross proceeds from the
sale of the 1997 Subordinated Note and the net proceeds from such issuance shall
have been released to the Borrower from the escrow in which they were deposited.
(w) Tax Sharing Agreement. The Borrowers shall have delivered a copy
of the Tax Sharing Agreement duly executed by the Borrowers, the Surety and the
Excluded Subsidiaries (the "Tax Sharing Agreement"), limiting, as between the
parties thereto, the tax liabilities of the Borrowers in connection with a
consolidated tax filing (which may include as part of the consolidated group for
tax purposes the Borrowers, the Surety and the Excluded Subsidiaries), to the
amount of tax liabilities that the Borrowers would have incurred had they filed
separately. The Tax Sharing Agreement shall be certified as such by a
Responsible Officer of Multicare.
4.2 CONDITIONS TO EACH LOAN AND ISSUANCE OF EACH LETTER OF CREDIT.
(a) Conditions. The obligation of the Lenders to make any Loans,
including the initial Loans and the obligation of the Issuer to issue any
Letters of Credit are subject to fulfillment of each of the following
conditions, in each case, unless otherwise specified, to the satisfaction of the
Administrative Agent:
(i) Absence of Default. There shall not, either prior to or
after giving effect to each such Loan or Letter of Credit, as the case may be,
exist an Event of Default or a Default.
(ii) Borrowing Notice/L.C. Request. In connection with any
request for Loans (other than Swing Loans), the Administrative Agent shall have
received a borrowing notice as required by Section 1.3 above; in connection with
any request for the issuance of a Letter of Credit, the Issuer and the
Administrative Agent shall have received a Letter of Credit request as required
by Section 3.1 above; and in connection with any request for any Swing Loans,
the Swing Loan Lender and the Administrative Agent shall have received a Swing
Loan request as required by Section 1.3(e).
(iii) Truth of Representations. The representations and
warranties of the Borrowers and each other Loan Party made in this Agreement and
each other Loan Document shall be true and correct in all material respects as
of the date each such Loan is made or Letter of Credit issued (both immediately
prior to and after giving effect to said Loan or Letter of Credit) as if made on
and as of such date.
(iv) No Violations of Law. Neither the making of, nor use of
-38-
<PAGE>
proceeds of, such Loans nor the issuance of, or use of the proceeds of, such
Letters of Credit shall conflict with, or cause any Borrower to violate any Law.
(v) Compliance with Indenture Covenants. Neither the making of
such Loans nor the issuance of such Letters of Credit shall violate the terms of
the 1995 Subordinated Note Indenture or the 1996 Subordinated Note Indenture, if
and when applicable as set forth in Section 5.1(w), or the 1997 Subordinated
Note Indenture and Multicare shall deliver a certificate of its chief financial
officer or controller representing that, both before and after giving effect to
such additional Indebtedness, Multicare is in compliance with the financial
covenants set forth in Section 4.03 of the 1997 Subordinated Note Indenture and
that such Loans or Letters of Credit as the case may be constitute "Senior
Indebtedness" and "Designated Senior Indebtedness" as defined in the 1997
Subordinated Note Indenture and, if applicable as set forth in Section 5.1(w),
the 1995 Subordinated Note Indenture and the 1996 Subordinated Note Indenture.
(vi) Additional Information. The Lenders shall have received
such additional information and documentation as the Lenders may reasonably
request.
(b) Deemed Representation and Warranty. The request for, and
acceptance of, any Loan (including any Swing Loan) or Letter of Credit by any
Borrowers shall be deemed a representation and warranty by the Borrowers that
the conditions specified in clauses (i), (iii) and (iv) of the preceding
paragraph (a) have been satisfied.
-39-
<PAGE>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS. The Borrowers hereby jointly and severally represent
and warrant to each Lender Party as follows:
(a) Status of Borrowers. Each Borrower is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each Borrower has the power and authority to own its property and
to transact the business in which it is engaged or presently proposes to engage.
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 any failures to maintain such
qualifications which, individually or in the aggregate, could not have a
Material Adverse Effect. Schedule 5.1(a) hereto sets forth for each Borrower, as
of the Closing Date, (i) whether it is a corporation, limited partnership or
general partnership, (ii) the jurisdiction of its organization, and (iii) the
jurisdictions in which it is qualified to do business as a foreign corporation
or a foreign partnership, as the case may be, except where the failure to
maintain such qualification could not, individually or in the aggregate, have a
Material Adverse Effect. Each direct and indirect Subsidiary of Multicare, other
than the Excluded Subsidiaries, is a Borrower hereunder and is designated as
such on the signature pages hereto (or, after the Closing Date, on signature
pages of a Joinder Supplement hereto). The states in which any Borrowers operate
Health Care Businesses are Massachusetts, West Virginia, New Jersey, Ohio,
Pennsylvania, Wisconsin, Connecticut, Illinois, Rhode Island, Vermont and
Virginia.
(b) Capitalization of Borrowers. Schedule 5.1(b) hereto sets forth
(i) for each corporate Borrower, (A) the authorized capitalization, (B) the
names of the owners (indicating whether they are Borrowers) of the outstanding
capital stock, (C) the number and class of shares issued to each such owner and
(D) the percentage of outstanding shares of each class of capital stock owned by
each such owner, and (ii) for each Borrower which is a partnership, (A) the
names of the owners (indicating whether they are Borrowers) of the outstanding
equity thereof and (B) the percentage ownership interest of, and type of equity
issued to, each such owner. The outstanding equity of each Borrower has been
duly authorized and validly issued. All capital stock is fully paid and
nonassessable. Each Borrower owns beneficially and of record and has good title
to all equity indicated as being owned by it on said Schedule 5.1(b), free and
clear of any Lien, except for Liens in favor of the Administrative Agent, as
agent for the benefit of the Secured Parties, as contemplated by the Loan
Documents and other Permitted Liens. There are no options, warrants, calls, or
similar rights relating to equity of the Borrowers. No Excluded Subsidiary has
any equity interest in any Borrower.
(c) Authorization, Execution and Binding Effect of Loan Documents.
Each Borrower has the 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 (as the case may be) proceedings on its part. This Agreement and
each other Loan Document has been duly and
-40-
<PAGE>
validly executed and delivered by each Loan Party listed on the signature pages
hereto or thereto, as the case may be. This Agreement and each other Loan
Document constitutes the legal, valid and binding obligation of each Loan Party
purporting to be a party hereto or thereto, as the case may be, enforceable
against such Person in accordance with its terms, except as the enforceability
hereof of 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.
(d) Security. The Pledge Agreement creates in favor of the
Administrative Agent for the benefit of the Secured Parties a legal, valid and
enforceable Lien on all right, title and interest of each Borrower in the
Collateral described therein, and the Administrative Agent has (or, upon the
filing of the UCC-1 financing statements delivered by the Borrowers on the
Closing Date, will have), for the benefit of the Secured Parties, a fully
perfected and continuing first priority Lien on all of the right, title and
interest of each Borrower in the Collateral described in the Pledge Agreement,
subject to no Liens other than Permitted Liens.
(e) Governmental Approvals and Filings; Absence of Conflicts. No
approval, order, consent, authorization, exemption or other action by, or
filing, recording or registration with, or notice to, any Governmental Authority
or other Person is necessary in connection with, the execution and delivery of
any Loan Document by any Loan Party, or in connection with the performance of
the terms hereof or thereof by such Person, other than the filing of Uniform
Commercial Code financing and continuation statements as referred to in the
Pledge Agreement. No Loan Party is subject to any Law which purports to restrict
or regulate its ability to borrow money, obtain credit or provide a guarantee or
other form of credit support as a consequence of the nature of the business
conducted by such Loan Party. Neither the execution and delivery of this
Agreement or any other Loan Document by any Loan Party, nor the performance of
or compliance with the terms and conditions hereof or thereof (including the
execution, delivery and performance of the Transaction Documents) by any Loan
Party does or will
(i) violate or conflict with any Law or any judgment, decree,
or order of a court or Governmental Authority or any settlement
agreement,
(ii) violate, conflict with or result in a breach of any term
or condition of, or constitute a default under, or cause an
acceleration of, or result in the creation or imposition of any Lien
upon any of property of any Loan Party (except for any Lien in favor
of the Administrative Agent pursuant to the Pledge Agreement) under
or in connection with,
(x) its articles or certificate of incorporation,
bylaws, partnership agreement or operating agreement (or other
constituent documents),
(y) any agreement or instrument creating, evidencing or
securing any Indebtedness in the aggregate amount of
$250,000.00 or more to which any Loan Party is a party or by
which it or any of its properties (now owned or hereafter
acquired) may be subject or bound, or
-41-
<PAGE>
(z) any other agreement or instrument or arrangement to
which it is a party or by which it or any of its properties
(now owned or hereafter acquired) may be subject or bound,
except, in the case of the foregoing clause (z), for matters that,
individually or in the aggregate, could not have a Material Adverse
Effect, or
(iii) result in a Limitation on any Licenses applicable to the
operations or properties of any Borrower, or adversely affect the
ability of any Borrower to participate in any Third Party Payor
Arrangement.
Except to the extent that the failure to obtain the same could not have a
Material Adverse Effect, no approval, order, consent of, authorization,
exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority or other Person is necessary in connection
with the Tender Offer and merger of Acquisition Corp. into Multicare except such
consents as are listed on Schedule 5.1(e) hereto all of which have been obtained
and are in full force and effect.
(f) Financial Statements. Multicare has heretofore furnished to the
Administrative Agent and each Lender consolidated balance sheets of Multicare
and its consolidated Subsidiaries as of December 31, 1996 and December 31, 1995
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 Multicare,
who delivered an unqualified opinion in respect thereof. Such financial
statements (including the notes thereto) present fairly the financial condition
of Multicare 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. Multicare has heretofore
furnished to the Administrative Agent, the Issuer and each Lender interim
consolidated balance sheets of Multicare and its consolidated Subsidiaries as of
the first two fiscal quarters of the fiscal year beginning January 1, 1997,
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), as well as
those financial statements delivered pursuant to paragraph (n) of Section 4.1
above, present fairly the financial condition of Multicare and its consolidated
Subsidiaries as of the date specified and the results of their operations and
their cash flows for the fiscal periods specified, all in conformity with GAAP,
subject to normal and recurring year-end audit adjustments, except that such
financial statements do not contain all of the footnote disclosures required by
GAAP. There are no material liabilities of the Borrowers except as disclosed on
such financial statements. Schedule 8.1 hereto sets forth, as of the Closing
Date, all Indebtedness (and commitments for Indebtedness) of the Borrowers.
(g) Projections. The projections delivered pursuant to paragraph (n)
of Section 4.1 above and the assumptions and estimates referred to therein are,
as of the Closing Date, reasonable, are made in good faith, are consistent with
the Loan Documents and represent the Borrowers' best judgment as to such
matters. Nothing has come to the attention of any Borrower which would lead such
Borrower to believe that such projections will not be attained or exceeded
provided, however, that nothing contained in this paragraph (g) shall constitute
a representation or warranty that such future financial performance or
-42-
<PAGE>
results of operations will in fact be achieved.
(h) Absence of Material Adverse Change. Since December 31, 1996,
there has been no material adverse change in the business, operations, condition
(financial or otherwise), properties or prospects of the Borrowers taken as a
whole or the industry served by the Borrowers.
(i) Title to Property. Each Borrower has good and marketable title
to all property owned or purported to be owned by it, including but not limited
to all property reflected in the most recent balance sheets delivered to the
Lenders pursuant to this Agreement (except such property as was sold or
otherwise disposed of in accordance with Section 8.5 (Dispositions) below)
subject to no Liens except Permitted Liens. Schedule 8.2 hereto sets forth, as
of the Closing Date, all Liens on property of the Borrowers.
(j) Solvency. The present fair saleable value of the assets of the
Borrowers, taken as a whole, after giving effect to all the transactions
contemplated by the Loan Documents and the funding of the Loans and the issuance
of the Letters of Credit hereunder exceeds the amount that will be required to
be paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of Borrowers, taken as a whole, as they mature.
Multicare does not intend to, nor does Multicare believe that it will, incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be received by Multicare, and of amounts to be
payable on or in respect of debt of Multicare). The property of each Borrower
does not constitute unreasonably small capital for such Borrower to carry out
its business as now conducted and as proposed to be conducted including the
capital needs of such Borrower. The cash available to each Borrower after taking
into account all other anticipated uses of the cash of such Borrower, is
anticipated to be sufficient to pay all such amounts on or in respect of debt of
such Borrower when such amounts are required to be paid.
(k) Accurate and Complete Disclosure. The information heretofore,
contemporaneously or hereafter provided in writing by or on behalf of any
Borrower to any Lender Party pursuant to or in connection with this Agreement or
any other Loan Document 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 Lender Party) and does not or will not (as the
case may be) omit to state any material fact necessary to make such information
not misleading at such time in light of the circumstances in which it was
provided.
(l) Legal and Administrative Proceedings. There is no action, suit,
litigation or proceeding pending, or to the knowledge of the Borrowers,
threatened nor, to the knowledge of the Borrowers, is there any investigation
pending or threatened, in any court or before any arbitrator or Governmental
Authority or any payor appeals bodies respecting or relating to any Borrowers
(or any officer or director thereof) or any property of any Borrowers that,
individually or in the aggregate, (i) could have a material adverse effect on
the business, condition (financial or otherwise), operations, properties or
prospects of the Borrowers taken as a whole or (ii) could materially adversely
affect the Lenders' rights and remedies hereunder or under the other Loan
Documents, this Agreement or other Loan Documents or the ability of the
Borrowers to perform their obligations hereunder or thereunder.
-43-
<PAGE>
(m) Absence of Violations and Conflicts. No Borrower is in violation
of, in default under, or is subject to any contingent liability on account of
any violation of or conflict with: (i) any Law; (ii) its articles or certificate
of incorporation, bylaws, partnership agreement, operating agreement (or other
constituent documents); or (iii) any financing agreement or other instrument or
arrangement to which it is a 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 (i) or (iii) above for matters that, individually or in the aggregate,
could not have a Material Adverse Effect.
(n) Operation of Health Care Facilities.
(i) Except where the failure to possess the same, either
individually or in the aggregate, could not have a Material Adverse Effect, each
Borrower possesses all Licenses and Reimbursement Approvals necessary to operate
its Health Care Businesses substantially as now operated and as presently
proposed to be operated. No Borrower is in material violation of the terms of
its Licenses and Reimbursement Approvals.
(ii) Except for Limitations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
there is no threatened or pending Limitation of any material License or
Reimbursement Approval relating to the operation of any of Borrowers' Health
Care Businesses.
(iii) Except where the failure to file the same, either
individually or in the aggregate, could not have a Material Adverse Effect, each
of the Borrowers has caused there to be accurately prepared and filed (or
obtained extensions for) all applicable cost reports with respect to any and all
Third Party Payor Arrangements that are material to conduct its Health Care
Businesses substantially as now conducted.
(iv) No Borrower is subject to any claim (including any claim
for overpayment), litigation, proceeding or other action or, to any Borrower's
knowledge, investigation relating to a claim or action by any Governmental
Authority except matters that, if adversely decided, individually or in the
aggregate, could not have a Material Adverse Effect.
(v) Each of the Borrowers participates in an internal
comprehensive compliance program respecting compliance with all Laws affecting
the types of businesses carried on by Borrowers (including health care Laws) and
has made such program available for review by any Lender, upon request.
(vi) Each of the foregoing statements in this paragraph (n)
are also true as applied to Persons managed by any Borrower to the extent that
the failure of any such statement to be true (as applied to any Person managed
by a Borrower) could have a Material Adverse Effect.
(o) Management Agreements. Schedule 5.1(o) sets forth as of the
Closing Date, a complete and correct list of all Management Agreements relating
to (i) the operation and management by a Person that is not a Borrower of each
health care facility owned by a Borrower and (ii) the operation and management
by a Borrower of each health care facility owned by a Person that is not a
Borrower. As of the Closing Date, each such Management
-44-
<PAGE>
Agreement is in full force and effect subject to no material default.
(p) Health Care Business. Schedule 5.1(p) sets forth, as of the
Closing Date, a complete and correct list of all Health Care Businesses owned or
operated by the Borrowers and the locations thereof indicating which such Health
Care Businesses are operated but not owned.
(q) Leased Properties. Schedule 5.1(q) identifies all properties
leased by any Borrower as of the Closing Date. As of the Closing Date, all
leases relating to such leased properties are in full force and effect subject
to no material default. Such leases comply with the provisions of Section 8.7
below.
(r) Intellectual Property. 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 computer programs and software), processes, data bases and other
rights (collectively, "intellectual property"), free from burdensome
restrictions, necessary to own and operate its properties and to carry on its
business as presently conducted and presently planned to be conducted without
conflict with the rights of others. No Borrower is in material violation of the
rights of others with respect to any intellectual property.
(s) Employee Benefits/ERISA.
(i) The Borrowers and the members of their Controlled
Groups maintain only those Defined Benefit Pension Plans, Defined
Contribution Plans and other Plans listed on Schedule 5.1(s)
attached hereto and contribute to only those Multiemployer Plans
listed on Schedule 5.1(s) attached hereto.
(ii) Each Defined Benefit Plan and Defined Contribution
Plan, as most recently amended, including amendments to any trust
agreement, group annuity, or insurance contracts, or other governing
instrument, is the subject of a favorable determination letter by
the Internal Revenue Service with respect to its qualification under
ss.401(a) of the Code.
(iii) All Plans comply, both in form and in operation,
with the requirements of the Code and ERISA.
(iv) There is not now, and has not been, any material
violation of the Code or ERISA with respect to the filing of
applicable reports, documents, and notices regarding any Plan with
the Secretary of Labor, the Secretary of the Treasury, the PBGC or
any other governmental entity or the furnishing of such documents to
the participants or beneficiaries of any Plan. Borrowers have
furnished to the Lenders copies of the most recent annual report,
audited financial statements, and other reports filed with the
Secretary of Labor, the Secretary of the Treasury, the PBGC or any
other governmental entity with respect to each Plan.
(v) All Pension Plans, as of the date hereof, meet the
-45-
<PAGE>
minimum funding standards of ss.412 of the Code and ss.302 of ERISA
without regard to any funding waiver. Borrowers and the members of
their Controlled Group have, as of the date hereof, made all
contributions or payments to or under Pension Plans required by the
terms of any such Plan or any contract or agreement.
(vi) No Material liability to the PBGC has been, or is
expected by any Borrower or any member of its Controlled Group to
be, incurred by the Borrower or any member of its Controlled Group.
(vii) No Defined Benefit Pension Plan has any Amount of
Unfunded Benefit Liabilities except as listed on Schedule 5.1(s)
which, in the aggregate, do not exceed $500,000.00.
(viii) No trust was established in connection with any
Defined Benefit Pension Plan pursuant to ss.4049 of ERISA (as in
effect on December 17, 1987) and no liabilities (whether or not such
liability is being litigated) have been asserted against any
borrower or any member of its Controlled Group in connection with
any such Defined Benefit pension Plan by the PBGC or by a trustee
appointed pursuant to ss.4042(b) or (c) of ERISA, and no lien has
been attached and no person has threatened to attach a lien on any
property of any Borrower or any member of its Controlled Group as a
result of any failure to comply with the Code or ERISA.
(ix) No Prohibited Transaction has occurred with respect
to any Plan.
(x) No Reportable Event has occurred with respect to any
Defined Benefit Plan.
(xi) No Borrower or any member of its Controlled Group
has any unfunded liabilities of unfunded and uninsured "employee
welfare benefit plans" (as defined in ss.3(1) of ERISA).
(xii) There is not now, and has not been, any COBRA
Violation with respect to any Plan to which such continuation
coverage requirements apply which has a material adverse effect,
directly or indirectly, on the financial condition of any of the
Borrowers.
(xiii) Borrowers and the members of their Controlled
Group have established only those irrevocable trusts the assets of
which remain subject to the general creditors of Borrowers and/or
members of their Controlled Group (sometimes referred to as "rabbi
trusts") listed on Schedule 5.1(s) attached hereto and have
furnished to the Lenders copies of each such "rabbi trust."
(xiv) If any Borrower or any member of its Controlled
Group were obligated to pay the entire potential Withdrawal
Liabilities for which any of them would be liable if each of them
were to withdraw from the
-46-
<PAGE>
Multiemployer Plans to which any of them makes contributions, such
obligations would not be in excess of $500,000.00.
(xv) Borrowers and the members of their Controlled Group
have complied with the requirements of ss.515 of ERISA with respect
to Multiemployer Plans.
(t) Environmental Matters.
(i) Each Borrower and each of its respective
Environmental Affiliates is and has been, in full compliance with
all applicable Environmental Laws, except for matters which,
individually or in the aggregate, could not have a Material Adverse
Effect. There are no circumstances that may prevent or interfere
with such full compliance now or in the future.
(ii) Each Borrower and each of its 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, in the
future, except for matters which, individually or in the aggregate,
could not have a Material Adverse Effect.
(iii) 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 Environmental Affiliates of Borrowers) that could form the
basis of any Environmental Claim against any Borrower or any such
Environmental Affiliates, except for matters which, if adversely
decided, individually or in the aggregate, could not have a Material
Adverse Effect.
(iv) No facility or property now or previously owned,
operated or leased by any Borrower or any of their respective
Environmental Affiliates is an Environmental Cleanup Site. No
Borrower and none of their respective Environmental Affiliates has
directly transported or disposed of or arranged for the
transportation or disposal 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.
(u) Margin Regulations. No proceeds of any Loan hereunder will be
used for the purpose of purchasing 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 purchasing or carrying any "margin stock". Neither the making of any
Loan or issuance of any Letter of Credit nor any
-47-
<PAGE>
use of proceeds of the foregoing 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.
(v) 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.
(w) Subordinated Notes. Multicare hereby confirms that the Loan
Obligations are "Senior Indebtedness" and hereby designates the Loan Obligations
as "Designated Senior Indebtedness" under the 1997 Subordinated Note Indenture.
All of the Loan Obligations constitute and will constitute "Senior Indebtedness"
and "Designated Senior Indebtedness" within the meaning ascribed to such terms
in such indentures. The subordination provisions therein are enforceable against
the respective issuers thereunder and the holders, from time to time, of the
1997 Subordinated Notes. The respective issuers are not in default under any
such indenture. From the time that the Put/Call Agreement is exercised and
Genesis owns 100% of the capital stock of Surety or at any other time that any
financial or other covenants of the 1995 Subordinated Note Indenture or the 1996
Subordinated Note Indenture may apply to Multicare and its Subsidiaries, the
foregoing statements shall be equally applicable with regard to the 1995
Subordinated Note Indenture and 1996 Subordinated Note Indenture.
(x) Certain Documents and Transactions. Each of the Transaction
Documents (including the Multicare Management Agreement), and the Tax Sharing
Agreement are in full force and effect and no amendments, modifications or
supplements have been made to any such documents as the same were delivered to
the Agents pursuant to Article 4 above except (i) such amendments, modifications
or supplements to Transaction Documents as could not reasonably be expected to
have an adverse effect on any Borrower (including the condition (financial or
otherwise), properties or prospects of such Borrower), the Loan Documents or any
Lender Parties and (ii) supplements or amendments to the Tax Sharing Agreement
necessary to join any other Subsidiaries of Multicare which may hereafter be
consolidated with Multicare for tax purposes. There exists no default under any
such agreements except for immaterial breaches.
(y) Labor Matters. There are no existing, or, to the best of
Borrowers' knowledge, threatened or contemplated, strikes, slowdowns, picketing
or work stoppages by any employees against any Borrower, any lockouts by any
Borrower of any of its employees or any labor trouble or other occurrence, event
or condition of a similar character which individually or in the aggregate,
could have a Material Adverse Effect.
5.2 REPRESENTATIONS AND WARRANTIES ABSOLUTE. The representations and
warranties of the Borrowers set forth in this Article 5 are unaffected by any
prior or subsequent investigation by, or knowledge of, any Agent, the Issuer, or
any Lender.
-48-
<PAGE>
ARTICLE 6
AFFIRMATIVE COVENANTS
So long as any Loan Obligation shall remain unpaid or any Lender
shall have any Commitment under this Agreement, each of the Borrowers shall
comply with the following covenants.
6.1 REPORTING REQUIREMENTS.
(a) Annual Financial Statements. As soon as practicable, and in any
event within 90 days after the close of each fiscal year of Multicare, Multicare
(on behalf of the Borrowers) shall furnish to the Administrative Agent, the
Issuer and each Lender, audited
(i) consolidated statements of income, cash flows and changes
in stockholders' equity of Surety, Multicare and its consolidated
Subsidiaries (the "Multicare Group") for such fiscal year and a
consolidated balance sheet of such Persons as of the close of such
fiscal year. If at any time the Cash Flow of the Excluded
Subsidiaries in the aggregate exceeds 3% of the Cash Flow of
Multicare and its consolidated Subsidiaries, Multicare on behalf of
the Borrowers shall furnish statements of income, cash flows and
changes in stockholders equity of the Borrowers on a consolidated
basis, for such fiscal year and a balance sheet of such Persons, on
a consolidated basis, as of the close of such fiscal year, in lieu
of the requirements of the preceding sentence; and
(ii) statements of income, cash flows and changes in
stockholders equity of Genesis and its Subsidiaries (including the
Multicare Group), on a consolidated basis, for such fiscal year and
a balance sheet of Genesis and its Subsidiaries, on a consolidated
basis, as of the close of such fiscal year,
and with respect to all of the foregoing financial statements
referred to above setting forth the appropriate footnotes, 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 unqualified opinion in form
and substance satisfactory to the Administrative Agent of
independent certified public accountants of recognized national
standing selected by the Borrowers and satisfactory to the
Administrative Agent.
(b) Quarterly Financial Statements. As soon as practicable, and in
any event within 45 days after the close of each fiscal quarter of each fiscal
year of Multicare, Multicare, on behalf of the Borrowers, shall furnish to the
Administrative Agent, the Issuer and each Lender, the following unaudited
financial statements:
(i) consolidated statements of income, cash flows and changes
in stockholders' equity of the Multicare Group for such fiscal
quarter and the applicable year to date period, and a consolidated
balance sheet of such
-49-
<PAGE>
Persons as of the close of such fiscal quarter. If at any time the
Cash Flow of the Excluded Subsidiaries in the aggregate exceeds 3%
of the Cash Flow of Surety, Multicare and its Subsidiaries,
Multicare, on behalf of the Borrowers shall furnish statements of
income, cash flows and changes in stockholders equity of the
Borrowers on a consolidated basis, for such fiscal quarter and
applicable year-to-date period, in lieu of the requirements of the
preceding sentence; and
(ii) statement of income, cash flows and changes in
stockholders' equity for Genesis and its Subsidiaries (including the
Multicare Group), on a consolidated basis, for such fiscal quarter,
together with the applicable year to date period and a balance sheet
of such Persons on a consolidated basis as of the end of such fiscal
quarter.
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 of the prior fiscal year end). Such financial statements
shall be certified by the chief financial officer or other
Responsible Officer of Multicare and Surety, as appropriate, 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) Quarterly Compliance Certificates. Surety and Multicare, on
behalf of the Borrowers, shall deliver to the Administrative Agent, the Issuer
and each Lender, an Officer's Compliance Certificate concurrently with the
delivery of the financial statements referred to in paragraph (a) of this
Section 6.1 (with respect to the fiscal year) and paragraph (b) of this Section
6.1 (with respect to the first three fiscal quarters). Each such Officer's
Compliance Certificate shall include among other things referred to therein the
calculations necessary to demonstrate the Borrowers' compliance with the
covenants set forth in Article 7 hereof. In addition, the Officers' Compliance
Certificate shall show the calculations necessary to confirm compliance with the
financial covenants set forth in Section 4.03 of the 1997 Subordinated Note
Indenture. The Officer's Compliance Certificate delivered pursuant to this
paragraph (c) shall include a reconciliation of the financial information set
forth thereon respecting Multicare and its Restricted Subsidiaries and that set
forth on the financial statements for Multicare and its consolidated
Subsidiaries.
(d) Other Information To Be Delivered Annually. Multicare, on behalf
of the Borrowers, shall deliver to the Administrative Agent, the Issuer and each
Lender, the following: (i) annually, within one hundred twenty (120) days of the
end of Multicare's fiscal year, an accountants' management letter respecting
Multicare and its consolidated Subsidiaries, provided by independent certified
public accountants satisfactory to the Administrative Agent, and (ii) annually,
no later than ninety (90) days prior to the commencement of each fiscal year of
Multicare's, an annual budget respecting Multicare and its consolidated
Subsidiaries, setting forth in reasonable detail, expected sources and uses of
funds, for the fiscal year then beginning in form and substance satisfactory to
the
-50-
<PAGE>
Administrative Agent.
(e) SEC Filings and Other Disclosure. Promptly upon their becoming
available to any Borrower or Surety but no later than ten Business Days after
the same are filed with the Securities Exchange Commission or any securities
exchange, Multicare, on behalf of the Borrowers, shall deliver to the
Administrative Agent, 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 of its Affiliates shall file with the Securities and
Exchange Commission or any securities exchange, (ii) all reports, proxy
statements, financial statements and other information distributed by any
Borrower or any of its Affiliates to its stockholders, bondholders or the
financial community generally, (iii) all accountants' management letters (not
otherwise delivered pursuant to the preceding paragraph (d)) and all other
reports submitted by accountants in connection with any audit of any Borrower or
the Surety, and (iv) copies of all compliance certificates and notices delivered
to or from the trustees under the 1997 Subordinated Note Indenture.
(f) Notice of Certain Events. Promptly upon any Borrower becoming
aware of any of the following, such Borrower or Multicare, on behalf of the
Borrowers, shall give the Administrative Agent notice thereof, together with a
written statement setting forth the details thereof and any action with respect
thereto taken or proposed to be taken by any Borrower:
(i) Loss of Licenses or Reimbursement Approvals. Any actual
Limitation (other than in the ordinary course of business) or any
threatened Limitation (to the extent that it individually or in the
aggregate with all other actual or threatened Limitations is
material) of any License or Reimbursement Approval relating to the
operation of a Health Care Business or, if the same individually or
in the aggregate could have a Material Adverse Effect, any
Limitation of any License or Reimbursement Approval of any Person
managed by any Borrower;
(ii) Default. Any Event of Default or Default;
(iii) Material Adverse Change. Any material adverse change in
the business, operations or condition (financial or otherwise), or
prospects of any Borrower;
(iv) Material Litigation. Any pending or threatened action,
suit, proceeding or investigation by or before any Governmental
Authority against or affecting any Borrower (or any officer or
director thereof) or any property of any Borrower, except for
matters that if adversely decided, individually or in the aggregate,
could not have a Material Adverse Effect;
(v) Breach or Termination of Certain Agreements. Any breach,
claimed breach, termination or purported or threatened termination
(including a copy of any notice of termination) of (A) the Multicare
Management Agreement, (B) any other Transaction Document (except a
termination in accordance with its terms), (C) any other Management
Agreement except in the ordinary course of business, (D) the 1997
Subordinated Note Indenture, if
-51-
<PAGE>
and when applicable as set forth in Section 5.1(w), the 1995
Subordinated Note Indenture and/or, the 1996 Subordinated Note
Indenture (including a copy of any notice of default delivered
thereunder) or (E) any other agreement or instrument material to the
business, operations, condition (financial or otherwise) or
prospects of Multicare and its Restricted Subsidiaries taken as a
whole.
(vi) ERISA.
(A) any taxes, penalties, interest charges and other
financial obligations in excess of $250,000.00 that have been
assessed or otherwise imposed, or which any Borrower has
reason to believe may be assessed or otherwise imposed in
excess of $250,000.00, against any Borrower or any member of
its Controlled Group by the Internal Revenue Service, the
PBGC, the Department of Labor or any other governmental entity
with respect to any Plan or Multiemployer Plan;
(B) any application for a waiver by a Borrower or any
member of its Controlled Group of the minimum funding standard
under ss.412 of the Code with respect to a Pension Plan;
(C) the adoption of any Plan, including but not limited
to a Defined Benefit Pension Plan, or any obligation to
contribute to any Multiemployer Plan by a Borrower or any
member of its Controlled Group;
(D) any Prohibited Transaction with respect to a Plan.
(E) (1) that any Reportable Event has or will occur with
respect to any Defined Benefit Pension Plan maintained by any
Borrower or any member of its Controlled Group, (2) that any
Defined Benefit Pension Plan maintained by any Borrower or any
member of its Controlled Group is to be terminated in
"distress termination" (within the meaning of ss.4041(c) of
ERISA), (3) that the PBGC has instituted or will institute
proceedings under Title IV of ERISA to terminate any Defined
Benefit Pension Plan maintained by any Borrower or any member
of its Controlled Group, (4) that any Borrower has incurred
Withdrawal Liability from a Multiemployer Plan maintained by
it or any member of its Controlled Group, (5) that any
Multiemployer Plan to which any Borrower or any member of its
Controlled Group has made contributions is or will be in
Reorganization, or (6) that any other condition exists with
respect to a Defined Benefit Pension Plan or Multiemployer
Plan which presents a material risk of termination of any such
Plan, Borrowers will furnish a statement to the Lenders
setting forth the details of such Reportable Event, distress
termination, termination proceedings, Withdrawal Liability,
Reorganization or condition, and the action that Borrowers
propose to take with respect thereto, together with a copy of
any notice of such Reportable Event or distress termination
given to the PBGC, or a copy of any notice of
-52-
<PAGE>
termination proceedings, Withdrawal Liability or
Reorganization received by such Borrower or any member of its
Controlled Group.
(F) any default by Borrower or any member of its
Controlled Group (as defined in ss.4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan required by reason
of its withdrawal (as defined in ss.4203 or ss.4205 of ERISA).
(G) any action brought against Borrower or any member of
its Controlled Group under ss.502 of ERISA with respect to its
failure to comply with ss.519 of ERISA.
(vii) Environmental. Any Environmental Claim pending or
threatened against any Borrower or any of its 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 of its 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.
(g) Other ERISA Information. The Borrowers shall deliver to the
Administrative Agent, copies of the following:
(A) Promptly after the filing thereof with the Secretary
of Labor, the Secretary of the Treasury, the PBGC or any other
governmental entity, copies of each annual report, each
audited financial statement and any other report so filed with
respect to each Plan.
(B) As soon as possible (and in any event within five
days) after the receipt by any Borrower or any member of its
Controlled Group of a demand letter from the PBGC notifying
any Borrower or any member of its Controlled Group of the
final decision finding liability and the date by which such
liability must be paid, Borrowers will furnish to the Lenders
a copy of such letter together with a statement to the Lenders
setting forth the action which Borrowers propose to take with
respect thereto.
(C) Borrowers will furnish to the Lenders as soon as
possible after receipt thereof a copy of any notice that any
Borrower or any member of its Controlled Group receives from
the PBGC, the Internal Revenue Service, the Department of
Labor or any other governmental entity or the sponsor of any
Multiemployer Plan that sets forth or proposes any action to
be taken or determination made by the PBGC, the Internal
Revenue Service, the Department of Labor or any other
governmental entity or the sponsor of any Multiemployer Plan
with
-53-
<PAGE>
respect to any Plan.
(h) Amendments to Transaction Documents. Multicare (on behalf of the
Borrowers) shall furnish the Administrative Agent copies or drafts of all
proposed amendments, modifications or waivers to any Transaction Documents (1)
in the case of any amendments, modifications or waivers requiring the consent of
the Required Lenders at least 20 Business Days prior to the effective date
thereof and (2) in all other cases, at least 5 Business Days prior to the
effective date thereof.
(i) Notice of Non-Renewal of Management Agreement. Multicare, on
behalf of the Borrowers shall give the Administrative Agent written notice
promptly upon receipt of delivery of any notice of non-renewal or termination
delivered under or relating to the Multicare Management Agreement. The
Administrative Agent shall promptly give each Lender a copy of any notice
delivered pursuant to this paragraph (i).
(j) Notices under Indenture. Multicare, on behalf of the Borrowers
shall furnish to the Administrative Agent copies of all notices, reports,
certificates or other material delivered to or by the trustee or any other party
under the 1997 Subordinated Note Indenture, promptly upon receipt thereof.
(k) Other Information. In addition, the Borrowers will promptly
furnish, and cause Surety to furnish, to the Administrative Agent such other
information as any Lender Party, through the Administrative Agent, may
reasonably request including information submitted by the Borrowers or the
Surety to any Governmental Authority and the Administrative Agent will furnish
such information to the requesting Lender Party.
6.2 MAINTENANCE OF EXISTENCE. Each Borrower shall preserve and maintain,
and shall cause Surety to preserve and maintain, its corporate or partnership
existence, as the case may be, and good standing in the jurisdiction of its
organization provided, however, upon giving written notice to the Administrative
Agent, the Borrowers may dissolve any Subsidiary if (a) such Subsidiary is not
(either individually or in the aggregate with all other entities dissolved
pursuant to this proviso) a material Borrower (or material Borrowers) and (b)
Multicare determines that it is in the best interest of the Borrowers, taken as
a whole, that such Subsidiary be dissolved. Multicare and (to the extent that
any failure to qualify or remain qualified could have a Material Adverse Effect)
each Restricted Subsidiary shall qualify and remain qualified as a foreign
corporation or partnership in each jurisdiction in which such qualification is
required, provided, however nothing in this Section 6.2 shall prohibit any sales
or other dispositions permitted under Section 8.5 or Section 8.13.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES AND OTHER PROPERTY.
(a) Type of Business. Each Borrower shall continue to engage in the
business of the same general type as conducted by the Borrowers on the Closing
Date and not engage in any other type of business without the consent of the
Required Lenders.
-54-
<PAGE>
(b) Healthcare and Regulatory Rights. Except where the failure to
take any of the following actions, individually or in the aggregate, could not
have a Material Adverse Effect, each Borrower shall (i) maintain in effect all
Licenses and Reimbursement Approvals necessary or appropriate to own and operate
all Health Care Businesses which it owns or operates and (ii) obtain all
Licenses and Reimbursement Approvals necessary or appropriate to own and operate
all Health Care Businesses which it acquires and (iii) continue its
participation in any and all Third Party Payor Arrangements. Except where such
failure to so comply (together with all other failures from time to time by the
same or other Borrowers), could not reasonably be expected to have a Material
Adverse Effect, each Borrower shall comply with any and all rules, regulations,
standard procedures and decrees necessary to maintain its participation in any
such Third Party Payor Arrangements and prepare and file all applicable cost
reports with respect to all Third Party Payors Arrangements to the extent
required. Each Borrower shall use its best efforts to cause each Person managed
by it to obtain and maintain its Licenses and Reimbursement Approvals necessary
for the conduct of its business and to continue its participation in Third Party
Payor Arrangements and comply with all rules, regulations, standard procedures
and decrees relating thereto to the extent that the failure to do so could have
a Material Adverse Effect.
(c) Maintenance of Property. Each Borrower shall maintain, keep and
preserve all of its property necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted
(except for sales and other dispositions of property permitted under Section 8.5
below (Dispositions)). Without limiting the generality of the foregoing, each
Borrower shall maintain in full force and effect each lease, Management
Agreement and other material agreement used or useful in its business, subject
to no material default except where the loss of, or default under, such lease,
Management Agreement or other agreement (i) could not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect or (ii) is
not otherwise prohibited by the terms of this Agreement.
6.4 MAINTENANCE OF RECORDS; FISCAL YEAR. Each Borrower shall keep adequate
records and books of account, in which complete entries will be made in
accordance with historical practice and GAAP, reflecting all financial
transactions of the Borrowers. Each Borrower shall maintain, and shall cause the
Surety to maintain, a fiscal year end of December 31.
6.5 COMPLIANCE WITH LAWS. Each Borrower shall comply (and maintain
procedures to assure compliance) in all material respects with all applicable
Laws (including environmental and health care Laws) and all judgments, decrees
or orders of any court or Governmental Authority and all settlement agreements.
Without limiting the generality of the foregoing, each of the Borrowers shall
maintain in full force and effect an internal compliance program respecting
compliance with all Laws affecting the types of businesses carried on by the
Borrowers (including healthcare Laws) and make such program available for review
by any Lender, upon request.
6.6 ERISA.
-55-
<PAGE>
(a) Each Borrower will, and will cause each member of its Controlled
Group, to comply in all material respects with the provisions of ERISA and the
Code with respect to any Plan both in form and in operation.
(b) Each Borrower will cause to be made all contributions required
to avoid any Accumulated Funding Deficiency, whether or not waived, with respect
to any Pension Plan.
(c) No Borrower will adopt or permit the adoption by any member of
its Controlled Group of any Defined Benefit Pension Plan which would result in
any Amount of Unfunded Benefit Liabilities in excess of $500,000.00.
(d) No Borrower will acquire, or permit the acquisition by any
member of its Controlled Group of, any trade or business which has incurred
either directly or indirectly any Amount of Unfunded Benefit Liabilities under
any Defined Benefit Pension Plan in excess of $500,000.00.
(e) The Borrowers will not permit with respect to any Plan, any
Prohibited Transaction or Prohibited Transactions under ERISA or the Code
resulting in liability of any Borrower or any member of its Controlled Group
which together with any other liabilities subject to this paragraph (e) would in
the aggregate be in excess of $500,000.00, unless such Borrower or any member of
its Controlled Group will be contesting in good faith and by appropriate
proceedings any such matter and measures are available and are being taken which
have the effect of preventing the seizure of property of such Borrower or any
member of its Controlled Group pending the outcome of such contest.
(f) No Borrower will withdraw, or permit any member of its
Controlled Group to withdraw, from any Multiemployer Plan to which any of them
may hereafter contribute if the Withdrawal Liability which would thereupon be
incurred would have a material adverse effect, directly or indirectly, on the
financial condition of any of the Borrowers.
(g) No Borrower will permit any unfunded liabilities of unfunded and
uninsured "employee welfare benefit plans" (as defined in ss.3(1) of ERISA) of
any Borrower and of any member of its Controlled Group in excess of $500,000.00
in the aggregate with all other liabilities subject to this paragraph (g).
(h) No Borrower will, or will permit any member of its Controlled
Group to, cause or suffer to exist a COBRA Violation with respect to any Plan to
which such continuation coverage requirements apply if the violation(s) could
result in a liability in excess of $500,000.00 in the aggregate.
6.7 RIGHT OF INSPECTION. Each Borrower shall, at any reasonable time and
from time to time, and upon reasonable advance notice (but no advance notice
shall be required if a Default or an Event of Default shall then exist), permit
the Administrative Agent, the Issuer or any Lender or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit and inspect the properties of, any
Borrower, and to discuss the affairs, finances and accounts of such
-56-
<PAGE>
Borrower with any of its officers, directors and independent accountants.
6.8 INSURANCE. Each Borrower shall 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, 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. The Borrowers
shall have the Administrative Agent named to receive certificates evidencing
such insurance annually at least thirty days prior to the anniversary date of
such insurance policies and any other time requested by the Administrative
Agent.
6.9 PAYMENT OF TAXES AND OTHER CHARGES. Each Borrower shall
(a) on or prior to the date on which penalties attach thereto, pay
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, pay 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 need not pay or discharge any such tax, assessment,
charge or claim so long as (x) the validity thereof is being contested in good
faith and by appropriate proceedings diligently conducted and (y) such reserves
or other appropriate provisions as may be required by GAAP shall have been made
therefor.
6.10 SUBSIDIARIES TO BE BORROWERS.
(a) Each Borrower shall cause all of its Subsidiaries, other than
Excluded Subsidiaries, at all times to be Borrowers hereunder (by signing
Joinder Supplements hereto, executing Notes or allonges thereto and taking such
other action as the Administrative Agent may reasonably request) and cause all
the capital stock or other equity interests in such Subsidiaries owned by
Borrowers, other than capital stock or other equity interests in Excluded
Subsidiaries, and all notes or other rights to receive payment from another
Borrower to be pledged to the Administrative Agent for the benefit of the
Secured Parties pursuant to the Pledge Agreement. Without limiting the
generality of the foregoing, when the Borrowers are required, in connection with
an Acquisition or otherwise, to cause one or more (direct or indirect)
Subsidiaries of Multicare (each, a "Joining Subsidiary") to become Borrowers
hereunder, then the Borrowers and each such Joining Subsidiary shall take the
actions set forth on Schedule 6.10, in the case of the formation of a new
Subsidiary, promptly upon such formation, and in the case of the acquisition of
an entity which shall become a Subsidiary, no later than the date of the
consummation of the relevant Acquisition.
(b) With the prior written consent of the Administrative Agent,
Multicare (on behalf of the Borrowers) may from time to time redesignate one or
more Subsidiaries
-57-
<PAGE>
which are designated as Excluded Subsidiaries on Schedule 11.1 to be Borrowers
and Restricted Subsidiaries hereunder, Pledgors under the Pledge Agreement and
comparable parties under the other Loan Documents (and not Excluded
Subsidiaries). Thereupon and upon satisfaction of the requirements set forth in
paragraph (a) above for Joining Subsidiaries, such redesignated Subsidiaries
shall be Borrowers hereunder, Pledgors under the Pledge Agreement and comparable
parties to the other Loan Documents. The Administrative Agent shall give the
Lenders notice of any such redesignation.
6.11 PRESERVATION OF STATUS AS SENIOR INDEBTEDNESS. The Borrowers shall
comply with the terms of the 1997 Subordinated Note Indenture. Each Borrower
shall promptly take or cause Genesis to take, as appropriate, all action
necessary or requested by the Administrative Agent at any time to protect,
preserve and give effect to the status of the Loan Obligations as "Senior
Indebtedness" and "Designated Senior Indebtedness" within the meaning of the
1995 Subordinated Note Indenture and the 1996 Subordinated Note Indenture, if
and when applicable to Multicare or the other Borrowers as set forth in Section
5.1(w), and the 1997 Subordinated Note Indenture.
6.12 INTEREST RATE HEDGING AGREEMENTS. At all times from and after ninety
(90) days after the Closing Date, the Borrowers shall maintain one or more
Interest Rate Hedging Agreements to the extent necessary to ensure that at all
times at least fifty percent (50%) of the Total Funded Indebtedness of the
Borrowers effectively bears, or is capped at, a fixed interest rate provided,
however, that no Borrower shall enter into any rate swap, cap or collar
agreement which is not an Interest Rate Hedging Agreement.
6.13 CORPORATE SEPARATENESS. Each Borrower shall observe all requirements
necessary to cause it to be treated as a separate legal entity for all purposes
under applicable corporate law. Without limiting the foregoing requirement, each
Borrower specifically shall (i) maintain and cause each Excluded Subsidiary to
maintain separate corporate and financial records and observing all corporate
formalities; (ii) maintain, and cause each Excluded Subsidiary to maintain,
capitalization adequate to meet its business needs; (iii) cause all reports,
filings and public information to refer to such Borrower or Excluded Subsidiary,
as the case may be, as a separate company (and not a division of each other);
and (iv) otherwise conduct and cause each Excluded Subsidiary to conduct, its
dealings with third parties in its own name and as a separate and independent
entity. Without limiting the generality of the foregoing, except as expressly
permitted or required elsewhere by this Agreement or unless specifically agreed
to by the Required Lenders, no Borrower may enter into any merger or other
combination with or transfer assets to any of the Genesis Group or any Excluded
Subsidiary, or make any loan to, advance to, or other investment in any of the
Genesis Group or any Excluded Subsidiary, or guarantee any Indebtedness or
otherwise be liable for obligations of any of the Genesis Group or any Excluded
Subsidiary, provided, nothing in this Section 6.13 shall prohibit the execution
and delivery of the Multicare Management Agreement or the Tax Sharing Agreement,
or the transactions contemplated thereby. Notwithstanding the foregoing, the
Borrowers may make such Investments in, borrow money from, and carry on other
transactions with, Excluded Subsidiaries on an arm's length basis to the extent
that this Agreement permits the Borrowers to carry on such activities with
unrelated third parties.
-58-
<PAGE>
6.14 TRANSACTIONS WITH AFFILIATES. Each Borrower shall effect all
transactions with Affiliates (excluding transactions with other Borrowers) on a
basis at least as favorable to such Borrower as would at the time be obtainable
for a comparable transaction on an arm's length dealing with an unrelated third
party, except that this Section 6.14 shall not apply to (a) the Tax Sharing
Agreement, (b) the Transaction Documents, or (c) transaction fees and expenses
payable to Genesis, Cypress and TPG within seven days of the Closing Date, to
the extent such are permitted by the 1997 Subordinated Note Indenture.
6.15 CASH PROCEEDS OF EQUITY OF SURETY. The Borrowers shall cause the
Surety to contribute to Multicare any cash proceeds of equity or other capital
contributions raised by Surety.
6.16 CAPITAL STOCK. The Capital Stock of Multicare shall be owned at all
times by Surety, subject to no Liens, except those in favor of the
Administrative Agent for the benefit of the Secured Parties pursuant to the
terms of the Pledge Agreement. At no time shall any equity interest in any
Restricted Subsidiary be owned by any Excluded Subsidiary.
6.17 USE OF PROCEEDS. The Borrowers will apply the proceeds of the Loans
only (i) to refinance all of the existing Indebtedness of Multicare and its
Subsidiaries (including without limitation Indebtedness acquired by Multicare as
a result of its merger with Acquisition Corp.) except Indebtedness identified on
Schedule 8.1 hereto, (ii) to fund working capital and Capital Expenditure needs,
subject to the other limitations set forth in this Agreement, (iii) to fund
interest and principal payments on the Loans and other permitted Indebtedness,
(iv) to pay (as a result of the merger of Acquisition Corp. into Multicare) the
consideration to former shareholders of Multicare who did not tender their
shares in the Tender Offer, (v) to pay transaction costs resulting from the
Tender Offer and the merger of Acquisition Corp. into Multicare, and (vi) for
general corporate purposes.
6.18 CERTAIN DISPOSITIONS. On or before December 31, 1997, the Borrowers
shall sell to Genesis and/or one or more of its Subsidiaries (other than Surety
or Multicare or any Subsidiary of either of them) their contract therapy
business for a cash purchase price of approximately $24,000,000.00 and their
institutional pharmacy business for a cash purchase price of approximately
$50,000,000.00, each on terms and conditions satisfactory to the Agents.
-59-
<PAGE>
ARTICLE 7
FINANCIAL COVENANTS
7.1 CERTAIN FINANCIAL COVENANTS. So long as any Loan Obligations shall
remain unpaid or any Lender has any Commitment under this Agreement, the
Borrowers shall comply with the following 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
------ -----
9/30/97 through 6/30/99 1.20
7/01/99 through 9/30/01 1.25
10/01/01 through 9/30/02 1.30
10/01/02 and thereafter 1.35
(b) Consolidated Net Worth. The total amount of stockholders' equity
of Multicare and the Restricted Subsidiaries, on a consolidated basis, at any
date of determination after the Agreement Date shall be not less than the sum of
(i) Six Hundred Eighty Five Million Dollars ($685,000,000.00)
plus
(ii) an amount equal to the sum of:
(A) an amount equal to the net proceeds of all
equity offerings of Surety on a cumulative basis
commencing on the Agreement Date through such date of
determination, plus
(B) 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 Multicare and its
Restricted Subsidiaries, on a consolidated basis, for
the period commencing on the first day of the fiscal
quarter in which the Agreement Date occurs through the
last day of the fiscal quarter ending on, or most
recently prior to, such date of determination, plus
(C) any reduction in the amount of debt of
Multicare and its Restricted Subsidiaries as a result of
the conversion of convertible debt securities into
equity (excluding Multicare's Convertible Subordinated
7% Debentures).
(c) Adjusted Total Debt/Cash Flow. The Adjusted Total Debt/Cash Flow
Ratio shall be not greater than the ratios set forth below during the periods
indicated below:
-60-
<PAGE>
Period Ratio
------ -----
9/30/97 through 9/30/98 6.50
10/01/98 through 9/30/99 5.75
10/01/99 through 9/30/00 5.25
10/01/00 and thereafter 4.50
(d) Adjusted Senior Debt/Cash Flow. The Adjusted Senior Debt/Cash
Flow Ratio shall be not greater than the ratios set forth below during the
periods indicated below:
Period Ratio
------ -----
9/30/97 through 9/30/98 4.50
10/01/98 through 9/30/99 4.00
10/01/99 and thereafter 3.50
7.2 CALCULATION OF FINANCIAL COVENANTS. The financial covenants set forth
in this Article 7 shall be maintained continuously and 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 Multicare or any of its Restricted Subsidiaries and that is
permitted under Section 8.4 hereof (Acquisitions Etc.) the financial covenants
set forth in this Article 7 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 that
will no longer be incurred after the Acquisition, to the extent demonstrated by
Multicare to the satisfaction of the Administrative 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
Multicare to the satisfaction of the Administrative Agent. Following the
effective date of any disposition that is effected by Multicare or any of its
Restricted Subsidiaries and that is permitted under Section 8.5 hereof
(Dispositions), the financial covenants set forth in this Article 7 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. Following the Closing Date,
the financial covenants set forth in this Article 7 shall be computed on a pro
forma basis as if all transactions in connection with the Transaction Documents
had been consummated, including as if the Multicare Management Agreement had
been in effect since the first day of the earliest of the four fiscal quarters
ended on, or most recently prior to, the Closing Date. Unless otherwise agreed
to by the Required Lenders, the financial condition and results of operations of
the Excluded Subsidiaries shall not be combined with those of the Borrowers for
purposes of calculating the financial covenants set forth in this Article 7.
-61-
<PAGE>
ARTICLE 8
NEGATIVE COVENANTS
So long as any Loan Obligations shall remain unpaid or any Lender or the
Issuer shall have any Commitment under this Agreement, each of the Borrowers
shall comply with the following covenants.
8.1 INDEBTEDNESS. No Borrower shall, nor shall any Borrower permit Surety
to, at any time, create, incur, assume or suffer to exist any Indebtedness
(including any Guaranties, Capitalized Leases or Assumed Indebtedness), except:
(a) Indebtedness to the Lender Parties pursuant to this Agreement
and the other Loan Documents;
(b) Indebtedness constituting intercompany (i.e. inter-Borrower)
loans and advances evidenced by promissory notes duly pledged to the
Administrative Agent for the benefit of the Secured Parties pursuant to the
terms of the Pledge Agreement;
(c) Obligations of Multicare under Interest Rate Hedging Agreements
entered into pursuant to Section 6.12 hereof;
(d) Indebtedness (including the indebtedness under the 1997
Subordinated Notes) existing on the Closing Date acceptable to the Agents and
described on Schedule 8.1 hereto, which sets forth certain Indebtedness in a
principal amount not exceeding $300,000,000.00; and any extensions, renewals,
refinancing of the same so long as such extensions, renewals and refinancing (i)
are in a principal amount no greater than the amount the Indebtedness so
extended, renewed or refinanced, (ii) have maturity dates (and amortization
schedules) no earlier than the debt being refinanced, (iii) are incurred
pursuant to agreements or instruments which do not prohibit the Indebtedness or
Liens created pursuant to the Loan Documents or otherwise conflict with the
terms of the Loan Documents or contain terms and conditions which are more
onerous than the terms and conditions in the existing agreements and
instruments, (iv) are not made at a time that a Default or Event of Default has
occurred and is continuing or would be caused thereby, and (v) in the case of
any extension, renewal or refinancing of the 1997 Subordinated Notes, or, if and
when applicable as set forth in Section 5.1(w), the 1995 Subordinated Notes or
the 1996 Subordinated Notes, has subordination provisions at least as favorable
to the senior lenders as those set forth in the agreement refinanced or extended
and generally be in terms acceptable to the Administrative Agent;
(e) With respect to the Borrowers (but not the Surety) other
Indebtedness incurred from time to time, in an aggregate outstanding principal
amount not to exceed Fifteen Million Dollars ($15,000,000.00) at any time so
long as such Indebtedness is incurred pursuant to agreements or instruments
which do not cause a Default or Event of Default hereunder, which contain terms
and conditions no more onerous than the terms and conditions hereof and which do
not mature, or have principal amortization prior to, the Maturity Date;
-62-
<PAGE>
(f) With respect to the Borrowers (but not the Surety), Indebtedness
in an aggregate amount not to exceed $20,000,000.00 incurred to finance the
construction of the assisted living facilities identified on Schedule 8.1(f)
attached hereto, provided that the Borrowers' obligations with respect to such
Indebtedness shall be terminated in connection with the disposition of such
facilities, as contemplated in Section 8.5 (Disposition) hereto.
(g) Provided that the terms of this Agreement and the consummation
of the transactions contemplated hereby and by the Transaction Documents are
consistent with, and do not cause a default under, Multicare's Convertible
Subordinated 7% Debentures or the Indenture under which they were issued,
Indebtedness evidenced by Multicare's Convertible Subordinated 7% Debentures in
the original principal amount of $86,250,000.00 of which no more than
$39,424,000.00 in principal amount shall remain outstanding as of the Closing
Date, provided that the Borrowers shall cause all such Indebtedness to be
redeemed or converted, and all shares of stock received on conversion or
redeemed, by no later than March 16, 1998, at an aggregate cost to the Borrowers
(including amounts expended prior to, on and after the Closing Date) not to
exceed $122,000,000.00 plus interest to the date of redemption;
(h) Provided that the terms of this Agreement and the consummation
of the transactions contemplated hereby and by the Transaction Documents are
consistent with, and do not cause a default under, Multicare's Senior
Subordinated 12-1/2% Notes on the Indenture under which they were issued,
Indebtedness evidenced by Multicare's Senior Subordinated 12-1/2% Notes in the
original principal amount of $100,000,000.00, of which no more than $75,000.00
in principal amount shall remain outstanding as of the Closing Date provided
that the Borrowers shall cause all such Indebtedness to be repaid by no later
than January 2, 1998, at an aggregate cost to the Borrowers (including amounts
expended prior to, on and after the Closing Date) not to exceed $26,000,000.00
plus interest through the redemption date;
provided, however, that all Indebtedness incurred pursuant to paragraph (e)
above shall be subject to the following: (i) it shall be incurred on terms which
do not prohibit the Indebtedness created pursuant to the Loan Documents, or
otherwise conflict with the terms hereof or the other Loan Documents; (ii) at
the time such Indebtedness is incurred, no Default or Event of Default shall
have occurred and be continuing or shall be caused or created thereby; (iii)
prior to the incurrence of such Indebtedness, Multicare (on behalf of the
Borrowers) shall deliver to the Administrative Agent a certificate of a
Responsible Officer of Multicare (A) stating the amount of such Indebtedness,
(B) containing a representation that such Indebtedness was incurred in
compliance with the provisions of this Section 8.1 and showing calculations
thereof, and (C) containing a representation that such Indebtedness was incurred
in compliance with the financial covenants set forth herein, in Section 5.9 of
the 1995 Subordinated Note Indenture and in Section 5.9 of the 1996 Subordinated
Note Indenture, if and when applicable to Multicare as set forth in Section
5.1(w), and the 1997 Subordinated Note Indenture and showing calculations
thereof; (iv) the terms of the instruments and agreements respecting such
Indebtedness shall be no more restrictive than the terms of this Agreement; and
(v) the instruments and agreements respecting such Indebtedness shall not
contain provisions that would violate the terms of Section 8.12 (Limitation on
Certain Restrictive Provisions) below.
-63-
<PAGE>
8.2 LIENS. No Borrower shall, nor shall any Borrower permit Surety to, at
any time create, incur, assume or suffer to exist any Lien on any of its assets
or assets of the Surety (now owned or hereafter acquired), except for the
following ("Permitted Liens"):
(a) Liens pursuant to the Loan Documents;
(b) Liens acceptable to the Agents and existing on the Closing Date
securing obligations existing on the Closing Date, which Liens and obligations
are listed on Schedule 8.2 hereto (and any extension, renewal and replacement
Liens upon the same property theretofore subject to a listed Lien, provided that
(i) 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 and (ii) such replacement Liens are incurred pursuant to
agreements or instruments which do not prohibit the Liens or Indebtedness
created pursuant to the Loan Documents or otherwise conflict with the terms of
the Loan Documents);
(c) Liens arising from taxes, assessments, charges or claims
described in Section 6.9 hereof to the extent permitted by said Section 6.9,
provided that the aggregate amount secured by all Liens described in this clause
(c) shall not at any time exceed $500,000.00;
(d) Liens existing on real estate and equipment acquired by any
Borrower in an Acquisition permitted under Section 8.4 hereof so long as any
such Lien secures only the corresponding Assumed Indebtedness permitted under
clause (e) of Section 8.1, above;
(e) With respect to the Borrowers (but not the Surety) other (i)
purchase money Liens encumbering only the property purchased with the proceeds
from the corresponding Indebtedness, and (ii) Capitalized Leases, in each case
securing Indebtedness permitted under clause (e) of Section 8.1 above;
(f) Other Liens (other than on Collateral) securing Indebtedness
incurred pursuant to paragraph (f) of Section 8.1 above in an amount not to
exceed $20,000,000.00 in the aggregate;
(g) Liens in respect of property or assets of the Borrowers imposed
by law which were incurred in the ordinary course of business, such as
carriers', warehousemen's and mechanics' Liens, statutory landlord's Liens, and
other similar Liens arising in the ordinary course of business, and (i) which do
not in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the business of
the Borrowers taken as a whole or (ii) which are being contested in good faith
by appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such lien and that
adequate reserves have been set aside on the applicable Borrower's books to
protect against an adverse result;
(h) Liens arising from judgments, decrees or attachments and Liens
securing appeal bonds arising from judgments, in each case in circumstances not
constituting an Event of Default under Section 9.1(g);
-64-
<PAGE>
(i) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money); and
(j) easements, rights-of-way, restrictions, minor defects or
irregularities in title to real property and other similar charges or
encumbrances on real property not interfering in any material respect with the
ordinary conduct of the business of the Borrowers taken as a whole or the value
or salability of the assets so encumbered or affecting their use for their
intended purposes;
provided, however, that no Lien permitted under clauses (d), (e) or (f) above
shall be created at any time, if there shall exist, either before or after
giving effect to such transaction, a Default or an Event of Default. "Permitted
Liens" shall in no event include any Lien imposed by, or required to be granted
pursuant to, ERISA or any Environmental Law.
8.3 LOANS, ADVANCES AND INVESTMENTS. No Borrower shall, nor shall any
Borrower permit Surety to, at any time (i) make or suffer to exist 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 (collectively, "Investments") any other
Person, except:
(a) receivables owing to such 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 to
subcontractors or suppliers under usual and customary terms in the ordinary
course of business;
(b) (i) loans or advances from Multicare to a wholly-owned
Restricted Subsidiary of Multicare or (ii) loans from a wholly-owned Restricted
Subsidiary of Multicare to Multicare or another wholly-owned Restricted
Subsidiary of Multicare, provided, however, all such loans and advances shall be
evidenced by promissory notes duly pledged to the Administrative Agent for the
benefit of the Secured Parties pursuant to the Pledge Agreement;
(c) the capital stock or other ownership interests in other
Borrowers duly pledged to the Administrative Agent, for the benefit of the
Secured Parties;
(d) Cash Equivalent Investments;
(e) Acquisitions permitted under Section 8.4 (Acquisitions, Etc.)
below;
(f) the Surety's initial Investment in the capital stock of
Acquisition Corp.;
-65-
<PAGE>
(g) the capital stock or other ownership interests in the Excluded
Subsidiaries existing on the Closing Date and set forth on Schedule 11.1 hereto;
(h) Investments existing on the Closing Date in an amount not
greater than $20,050,000.00 which are listed on Schedule 8.3 hereto; and
(i) With respect to the Borrowers (but not the Surety) other
Investments not covered by clauses (a) through (h) of this Section 8.3 provided,
that
(1) at the time that any Investment is made, the aggregate
amount (which shall include all existing amounts and all new
commitments therefor) of all Investments pursuant to this paragraph
(i) shall not exceed $15,000,000.00; and
(2) no Default or Event of Default shall then exist either
before or after giving effect to such transaction.
Investments referred to in paragraph (h) which are existing on the Closing Date
and the amount of each such Investment are listed on Schedule 8.3 hereto. On or
before (if practicable) but in any event within 5 days after any Investment is
made pursuant to the preceding paragraph (i), Multicare (on behalf of the
Borrowers) shall deliver to the Administrative Agent a supplement to Schedule
8.3 showing the proposed Investment, together with a certificate of a
Responsible Officer of Multicare stating that such Investment was made in
compliance with this Section 8.3 and in compliance with the provisions of the
1997 Subordinated Note Indenture. The "amount" of any Investment referred to in
this Section 8.3 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.
8.4 ACQUISITIONS, ETC. No Borrower shall engage, or permit the Surety to
engage, in any Acquisition (other than an acquisition of assets in the ordinary
course of business) except:
(a) A Borrower may merge with or into Multicare or any direct or
indirect wholly-owned Restricted Subsidiary of Multicare, provided that
(i) if Multicare is a party to the merger, it is the surviving entity and
(ii) if Multicare is not a party to the merger, a wholly-owned Restricted
Subsidiary of Multicare is the surviving entity and provided, further,
that no Event of Default or Default shall occur and be continuing before
or after giving effect to such transaction; and
(b) So long as no Default or Event of Default has occurred or would
exist after giving effect to such Acquisition, any Borrower may make an
Acquisition not covered by clause (a) of this Section 8.4, provided,
however, that (i) the Acquisition Cost of all Acquisitions made pursuant
to this paragraph (b) does not exceed $15,000,000.00 in any fiscal year,
provided, that if the Adjusted Total Debt/Cash Flow Ratio is, and has been
for two consecutive fiscal quarters, less than or equal to 4.5 to 1.0,
then the Acquisition Cost of all Acquisitions pursuant to this paragraph
(b)
-66-
<PAGE>
shall not exceed $25,000,000.00 in any fiscal year and (ii) the
"Acquisition Conditions" set forth on Schedule 8.4 hereto shall have been
satisfied.
8.5 DISPOSITIONS. No Borrower shall, or shall permit Surety to, sell,
convey, assign, lease as lessor, transfer, abandon or otherwise dispose of
(collectively, for purposes of this Section 8.5, "transfer"), voluntarily or
involuntarily, any of its assets, except:
(a) A Borrower may sell inventory in the ordinary course of
business;
(b) A Borrower may dispose of equipment which is obsolete or no
longer useful in its business;
(c) A Borrower may transfer its properties to Multicare or a
wholly-owned Restricted Subsidiary of Multicare so long as no Event of
Default or Default shall exist either before or after giving effect to
such transfer;
(d) Subject to mandatory prepayment provisions set forth above, the
Borrowers may transfer at any time the facilities identified on Schedule
8.5(d) located in the states of Ohio, Wisconsin or Illinois (i) for a cash
price or (ii) in connection with a swap of assets of the same type and
generating cash flow at approximately the same level, or greater, than the
facilities identified in Schedule 8.5(d) being transferred, as certified
by a Responsible Officer of Multicare, on behalf of the Borrowers, in
writing prior to such transfer with such detail and supporting financing
information as the Administrative Agent may require; provided that in the
case of either (i) or (ii) above the Board of Directors of Multicare
determines that the fair market value in either case is equal to the fair
market value in an arm's length transaction with an unrelated third party
and such transfer is on such terms as are (A) reflective of market
conditions at the time of sale, (B) consistent with the terms of this
Agreement, and (C) satisfactory to the Administrative Agent.
(e) The Borrowers may grant Liens permitted under Section 8.2
(Liens);
(f) Subject to mandatory prepayment provisions set forth above, the
Borrowers shall make the dispositions described in Section 6.18 above;
(g) Subject to mandatory prepayment provisions set forth above, the
Borrowers may transfer the assisted living facilities described in
Schedule 8.1(f) attached hereto to a Person who is not a Borrower for a
sales price at least sufficient to repay any Indebtedness associated
therewith provided that the Cash Flow for the immediately preceding four
fiscal quarters for such facilities (and if such facilities have not been
in operation for four fiscal quarters, then such Cash Flow for the period
since operations commenced on an annualized basis) does not exceed 15% of
the associated Indebtedness;
(h) Subject to mandatory prepayment provisions set forth above, so
long as no Default or Event of Default has occurred or would exist after
giving effect to such transfer, a Borrower may transfer other assets
(including ownership interests in Restricted Subsidiaries) provided,
however, that (i) the "Disposition Conditions" set
-67-
<PAGE>
forth on Schedule 8.5(h) hereto shall have been satisfied and (ii) 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 pursuant
to this paragraph (h) at any time after the Closing 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
5% of the total assets of Multicare 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 paragraph (h) at any time after the Closing
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
5% of the Cash Flow of Multicare 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.
(i) Subject to mandatory prepayment provisions set forth
above, so long as no Default or Event of Default has
occurred or would exist after giving effect to such
transfer, any Borrower may transfer its interests in
Excluded Subsidiaries.
8.6 ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP INTERESTS. The
Borrowers shall not, and shall not permit the Surety to, create, acquire,
dispose of, or change any interest in any Restricted Subsidiary except as
follows:
(a) Restricted Subsidiaries of Borrowers (or any interest therein)
may be created or acquired in connection with an Acquisition to the extent
permitted under Section 8.4 above (Acquisitions, Etc.);
(b) Restricted Subsidiaries of Borrowers (or any interest therein)
may be created or acquired in connection with an Investment to the extent
permitted under Section 8.3 above (Loans, Advances and Investments);
(c) Restricted Subsidiaries of Borrowers may be created as
wholly-owned direct or indirect Restricted Subsidiaries of Multicare for
other purposes consistent with the terms of this Agreement; and
(d) Restricted Subsidiaries (or any interest therein) may be
disposed of pursuant to the provisions of Section 8.5 above
(Dispositions);
-68-
<PAGE>
provided, however, that with respect to Restricted Subsidiaries created or
acquired in accordance with paragraphs (a), (b) or (c) above, they shall become
"Borrowers" hereunder and corresponding parties to the other Loan Documents,
their equity owned by Borrowers shall be pledged to the Administrative Agent,
for the benefit of the Secured Parties, pursuant to the Pledge Agreement (all as
more fully set forth in Section 6.10 above) and they shall become parties to the
Tax Sharing Agreement.
8.7 LEASES. The Borrowers shall not, and shall not permit the Surety to,
at any time, enter into or suffer to remain in effect any lease, as lessee, of
any property, except:
(a) Leases (including subleases) by Multicare or a wholly-owned
Restricted Subsidiary of Multicare as lessor (or sublessor) to Multicare
or another wholly-owned Restricted Subsidiary of Multicare as lessee (or
sublessee);
(b) Capitalized Leases permitted under Section 8.1 above; and
(c) Other leases which are not Capitalized Leases or Synthetic
Leases but only to the extent that the aggregate Rental Expense of the
Surety, the Borrowers with respect to all such other leases does not
exceed (i) during the fiscal year ending December 31, 1997, $15,000,000.00
and (ii) during each fiscal year thereafter, an amount equal to the amount
permitted in the preceding year plus an additional $2,000,000.00 (e.g.,
$17,000,000.00 in the fiscal year ending December 31, 1998.)
8.8 DIVIDENDS AND RELATED DISTRIBUTIONS. Except for dividends from
Multicare to Surety in an amount necessary to permit Surety to pay its taxes and
general corporate operating expenses of the type typically incurred by a
corporation whose only assets are the stock of operating companies with no other
business activity, Multicare shall not, and the Borrowers shall not permit the
Surety to, (a) declare or pay any dividends, (b) purchase, redeem, retire or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or (c) make any distribution of assets to its stockholders as such
whether in cash, assets or obligations of Multicare or the Surety, (d) allocate
or otherwise set apart any sum for the payment of any dividend or distribution
on, or for the purchase, redemption or retirement of, any shares of its capital
stock, or (e) make any other distribution by return of capital or otherwise in
respect of any shares of its capital stock except that Multicare and the Surety
may each declare and pay dividends and make distributions payable solely in its
common stock, or options, warrants or other rights to purchase common stock,
provided that any such stock, warrants, options or other rights (other than such
as are issued by Surety to Cypress, Nazem or TPG) are pledged to the
Administrative Agent for the benefit of the Secured Parties pursuant to the
Pledge Agreement.
8.9 CONSOLIDATED TAX RETURN. No Borrower shall (a) file or consent to the
filing of any consolidated income tax return with any Person other than other
Borrowers or other Persons party to the Tax Sharing Agreement or (b) become
party to any tax sharing or tax allocation agreement with any other Person other
than the Tax Sharing Agreement. From and after the effective date of the Tax
Sharing Agreement (which shall be on or about the Closing 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 (a) joinder of
-69-
<PAGE>
additional Subsidiaries of Multicare, from time to time, such that at all times
all Subsidiaries of Multicare shall be parties thereto, and (b) such amendments
or modifications which, individually or in the aggregate, could not reasonably
be expected to have an adverse effect on the Borrowers taken as a whole
(including the business, operations, condition, financial or otherwise,
properties or prospects of the Borrowers), the Loan Documents or any Lender
Party.
8.10 LIMITATION ON PAYMENTS, PREPAYMENTS, DEFEASEMENT AND OTHER ACTION
WITH RESPECT TO CERTAIN DEBT OBLIGATIONS. No Borrower shall, and no Borrower
shall permit Surety to, directly or indirectly, pay, prepay, purchase, defease,
redeem, retire, acquire, or otherwise make any payment (on account of principal,
interest, premium or otherwise) in respect of any obligation under, or evidenced
by the 1997 Subordinated Note Indenture (or cause or allow any event or
condition to exist which would require any payment, prepayment, purchase,
defeasance, redemption, retirement, acquisition or other payment of any such
obligation) except that a Borrower may make cash interest 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
applicable thereto. No Borrower shall, and no Borrower shall permit Surety to,
amend, modify or supplement the terms or provisions contained in the
aforementioned debt agreements or any agreement or instrument evidencing,
relating or applicable thereto. No Borrower shall, and no Borrower shall permit
Surety to, take or omit to take any action under or in connection with, any such
agreement or instrument, which would violate or impair the subordination
provisions thereof. No Borrower will, and no Borrower shall permit Surety to,
make or give any notice that it shall make any voluntary or optional payment or
prepayment or redemption or acquisition for value of, or will refund, refinance
or exchange any Indebtedness (excluding Loan Obligations) if at such time any
Default or Event of Default has occurred and is continuing or would be directly
or indirectly caused as a result thereof. No Loan Party shall designate any of
its Indebtedness as "Designated Senior Indebtedness" for purposes of the 1997
Subordinated Note Indenture except Indebtedness incurred pursuant to this
Agreement, the other Loan Documents, or Qualifying Interest Rate Hedging
Agreements.
8.11 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS.
(a) Constituent Documents. No Borrower shall, or permit the Surety
to, amend, modify or supplement its articles or certificate of
incorporation, bylaws, partnership agreement or other constituent
documents (i) if a Material Adverse Effect could result from such
amendment, modification or supplement or (ii) if such amendment,
modification or waiver could reasonably be expected to materially
adversely affect the rights or interests of the Agents, the Issuer or the
Lenders.
(b) Transaction Documents. No Borrower shall or permit the Surety
to, amend, modify or supplement any Transaction Document, except for such
amendments, modifications or supplements which could not reasonably be
expected to have an adverse effect on the Borrowers taken as a whole
(including the condition (financial or otherwise), properties or prospects
of the Borrowers), the Loan Documents or any Lender Party.
-70-
<PAGE>
8.12 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS. No Borrower shall, or
shall permit the Surety to, enter into, or remain a party to, any agreement or
instrument which would impose any restriction: (a) on the right of such Person
from time to time to declare and pay dividends or take similar actions with
respect to capital stock owned by such Person or pay any Indebtedness,
obligations or liabilities from time to time owed to another Borrower; or (b)
that would prohibit the grant of any Lien upon any of its properties (now owned
or hereafter acquired) to secure any senior Indebtedness except for restrictions
in agreements respecting Permitted Liens to the extent that the prohibition
applies only to property subject to the Permitted Lien; or (c) would prohibit,
or require the consent of any Person to, any amendment, modification or
supplement to any of the Loan Documents except: (i) restrictions set forth in
the Loan Documents; (ii) legal restrictions of general applicability; and (iii)
restrictions pursuant to the 1997 Subordinated Note Indenture.
8.13 LIMITATIONS ON MERGERS, ETC. No Borrower shall, or permit the Surety
to, merge or consolidate with or into any Person, except (a) mergers of any
Borrower with Multicare where Multicare is the survivor, (b) mergers of any
Restricted Subsidiary of Multicare with any wholly-owned Restricted Subsidiary
of Multicare where such wholly-owned Restricted Subsidiary is the survivor, (c)
any merger pursuant to an Acquisition permitted under Section 8.4 above
(Acquisitions, Etc.) or (d) any merger pursuant to a transfer permitted under
Section 8.5 above (Dispositions).
8.14 AVOIDANCE OF OTHER CONFLICTS. No Borrower shall, or permit the Surety
to, violate or conflict with, be in default under, or be or remain subject to
any liability (contingent or otherwise) on account of any violation or conflict
with (a) its articles or certificate of incorporation, bylaws or partnership
agreement (or other constituent documents), or (b) any agreement or instrument
to which it is party or by which any of its properties (now owned or hereafter
acquired) may be subject or bound, except, with respect to clause (b), for
matters that could not, individually or in the aggregate, have a Material
Adverse Effect.
8.15 CAPITAL EXPENDITURES. No Borrower shall make or commit to make any
Capital Expenditure if, after giving effect to such Capital Expenditure, the
aggregate amount of all Capital Expenditures of the Borrowers incurred (i)
during the fiscal year ending December 31, 1997, would exceed $45,000,000.00,
and (ii) during any fiscal year thereafter, would exceed $35,000,000.00.
8.16 MANAGEMENT FEE. The Borrowers shall not pay management fees under the
Multicare Management Agreement in any fiscal year in an amount less than
$23,900,000.00, or in excess of 6% of the consolidated net revenue of the
Borrowers. All such management fees shall be subordinated to the obligations of
the Borrowers hereunder in accordance with the terms contained in the Multicare
Management Subordination Agreement as in effect on the date hereof. Such
management fees may be accrued but not paid except that such fees may be paid to
the extent they do not exceed in any fiscal year the greater of (a) 4% of the
consolidated net revenue of the Borrowers, and (b) $23,900,000.00. To the
-71-
<PAGE>
extent such management fees in any fiscal year (including the payment in such
year of accrued management fees) would exceed the amount specified in the
preceding sentence, such excess amount shall be payable only to the extent that,
both before and after giving effect to such payment, (i) there exists no Event
of Default or Default, (ii) Borrower's Fixed Charge Coverage Ratio shall be not
less than 1.4 for the two most recent completed fiscal quarters of the
Borrowers, and (iii) the Adjusted Total Debt/Cash Flow Ratio for the two most
recently completed fiscal quarters of the Borrowers shall be less than 4.00. No
Borrower shall agree, or permit Surety to agree, with any Person (other than the
Lender Parties) to withhold, defer or change the amount or timing of payments
under the Multicare Management Agreement.
-72-
<PAGE>
ARTICLE 9
DEFAULTS
9.1 "EVENTS OF DEFAULT." An Event of Default means any one of the
following events (whatever the reason for such Event of Default, whether it
shall be voluntary or involuntary and whether it shall be by action or inaction,
by operation of law, pursuant to a court order or any rule or regulation of any
Governmental Authority or otherwise):
(a) Failure to Pay Principal or Reimburse Drawings. The Borrowers
shall fail to make any payment of the principal of any Loan on the date when the
same shall become due and payable, whether at stated maturity or at a date fixed
for any installment or prepayment thereof or otherwise; or the Borrowers shall
fail to make any reimbursement of any Drawing under a Letter of Credit or shall
fail to deposit any amount into the cash collateral account, in either case, at
the times and in the amounts specified in Article 3 above.
(b) Failure to Pay Interest, Fees and Other Amounts. The Borrowers
shall fail to make any payment of interest on any Loan or shall fail to pay any
fees or any other amounts owing hereunder or under any other Loan Documents
(other than as specified in paragraph (a) above) on the dates when such
interest, fees or other amounts shall become due and payable and such failure
continues for more than three (3) Business Days.
(c) Covenant Defaults. (i) There shall occur a default in the due
performance or observance of any term, covenant or agreement to be performed or
observed pursuant to any of Sections 6.1(f)(ii), 6.2, 6.3, 6.7, 6.10, 6.11, 6.14
or 6.17 or any Section of Article 7 or any Section of Article 8.
(ii) There shall occur any default in the due performance or
observance of any term, covenant or agreement to be performed or observed
pursuant to the provisions of this Agreement (other than as provided in
paragraph (a) or paragraph (b) above or subparagraph (i) of this paragraph (c))
and, if capable of being remedied, such default shall continue unremedied for
thirty (30) days after any Borrower becomes aware, or should in the exercise of
reasonable diligence have become aware, of such default.
(d) Misrepresentation. Any representation or warranty made or deemed
made by any Loan Party in or 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.
(e) Subordinated Debentures. Any "Event of Default" (or similar
term) as defined in the 1997 Subordinated Note Indenture and any other
subordinated indentures to which any Borrower may from time to time be party
shall have occurred and be continuing; or, any term or provision of the
subordination provisions contained in any such 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 1997 Subordinated Note or other subordinated note or other
subordinated obligations (or any trustee or agent on behalf of such holder)
shall terminate,
-73-
<PAGE>
repudiate, declare voidable or void or otherwise contest any term or provision
of such subordination provisions; or Multicare shall make, or shall be required
to make or to offer to make, any defeasance, redemption or purchase of 1997
Subordinated Notes under the 1997 Subordinated Note Indenture or Multicare shall
make, or shall be required to make or offer to make, any defeasance, redemption
or purchase of subordinated notes under any similar provision, if any, under any
such other subordinated indentures or other subordinated obligations.
(f) Other Cross-Defaults. (i) Any Loan Party shall fail to pay, in
accordance with its terms and when due and payable, any Indebtedness (other than
Indebtedness referred in paragraph (a) or (e) above) under, or arising out of
any Qualifying Interest Rate Hedging Agreement or an agreement or instrument (or
group or series of related agreements or instruments) which evidences
outstanding Indebtedness in excess of $5,000,000.00; (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; (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 (iv) a default by any Loan Party shall be continuing
under any other instrument or agreement (whether or not relating to
Indebtedness) binding upon such Person, except a default that, together with all
other such defaults under this clause (iv), could not have a Material Adverse
Effect.
(g) Judgments and Executions. One or more judgments for the payment
of money shall have been entered against any Loan Party or Loan Parties which
judgment or judgments, to the extent not paid or fully covered by insurance,
exceed $1,000,000.00 in the aggregate, and such judgment or judgments shall have
remained undischarged and unstayed for a period of 30 consecutive days; or one
or more writs or warrants of attachment, garnishment, execution, distraint or
similar process or any attachment (prejudgment or otherwise) of assets exceeding
in value the aggregate amount of $1,000,000.00 shall have been issued against
any Loan Party or Loan Parties or any of its or their respective properties.
(h) Invalidity or Noncompliance With Loan Documents. Any of the Loan
Parties shall fail to perform any of its obligations under any of the Loan
Documents (after taking into account any applicable cure period set forth in
such agreements), or the validity of this Agreement or any of the other Loan
Documents, or the subordination provisions of any other instrument or document
intended by the parties hereto to benefit the Lender Parties, shall have been
challenged or disaffirmed by or on behalf of any of the Loan Parties, or any of
the Loan Documents shall cease to be in full force and effect (other than
pursuant to its terms) or, other than as a direct result of any action or
inaction of a Lender Party, any Liens created or intended to be created by any
of the Loan Documents shall at any time cease to be valid and perfected subject
to no equal or prior Liens except Permitted Liens.
(i) Material Adverse Effect. The Required Lenders shall have
determined in good faith that an event or condition has occurred which could
have a Material Adverse Effect.
-74-
<PAGE>
(j) 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 Borrower or any Loan Party or any of their respective Environmental
Affiliates, and the Required Lenders shall determine in good faith (which
determination shall be conclusive) that such event(s) or condition(s),
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) the existence of
any pending or threatened Environmental Claim against any such Person, or the
existence of any past or present acts, omissions, events or circumstances that
could form the basis of any Environmental Claim against any such Person.
(k) Change of Control. A Change of Control shall have occurred; or a
"Change in Control" (as defined in the 1997 Subordinated Note Indenture) shall
have occurred.
(l) Subsidiaries as Loan Parties. Any direct or indirect Subsidiary
of Multicare, other than Excluded Subsidiaries, shall fail to be, or shall cease
to be, or fail to become, a Borrower hereunder; or the equity of any such Person
owned by any Borrower or of Multicare shall cease to be, or fail to be, pledged
under the Pledge Agreement.
(m) Insolvency, Bankruptcy, Etc. Any Loan Party shall make an
assignment for the benefit of creditors or a composition with creditors, shall
generally not be paying its debts as they mature, shall admit its inability to
pay its debts as they mature, shall file a petition in bankruptcy, shall be
adjudicated insolvent or bankrupt, shall petition or apply to any tribunal for
the appointment of any receiver, custodian, liquidator or trustee of or for it
or any substantial part of its property or assets, shall commence any proceeding
relating to it under any bankruptcy, reorganization, arrangement, readjustment
of debt, receivership, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or there shall be commenced
against such Loan Party, any such proceeding and the same shall not be dismissed
within thirty (30) days or an order, judgment or decree approving the petition
in any such proceeding shall be entered against such Loan Party; or any Loan
Party shall by any act or failure to act indicate its consent to, approval of or
acquiescence in, any such proceeding or any appointment of any receiver,
custodian, liquidator or trustee of or for it or for any substantial part of its
property or assets, or shall suffer the appointment of any receiver, liquidator
or trustee, or shall take any corporate action for the purpose of effecting any
of the foregoing; or any court of competent jurisdiction shall assume
jurisdiction with respect to any such proceeding and the same shall not be
dismissed within thirty (30) days or a receiver or a trustee or other officer or
representative of a court or of creditors, or any court, governmental office or
agency, shall, under color of legal authority, take and hold possession of any
substantial part of the property or assets of such Loan Party and shall not have
relinquished possession within thirty (30) days, or such Loan Party shall have
concealed, removed, or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors, or any of them,
or any Loan Party shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its property through legal proceedings or
distraint.
(n) Termination of Multicare Management Agreement or other
Transaction Documents. Except as permitted by the Required Lenders, (i) the
Multicare Management Agreement shall cease to be in full force and effect or
there shall be any breach by any party
-75-
<PAGE>
thereto or a default thereunder, or an amendment, modification or supplement
thereto not permitted by the terms of this Agreement or any notice of
non-renewal or termination thereunder shall have been delivered by any party
thereto, or (ii) any other Transaction Document shall cease to be in full force
and effect (other than by its terms) or there shall be any material breach by
any party thereto or a default thereunder or any such document shall be amended,
modified, restated or supplemented in a manner not expressly permitted by the
terms of this Agreement or (iii) any other Management Agreement of any Borrower
shall be terminated or cease to be renewed or extended or shall be amended,
modified, restated or supplemented if such termination, failure to renew or
extend or amendment, modification, restatement or supplement (either singly or
collectively with all other such events relating to other Management Agreements)
could have a Material Adverse Effect.
(o) Loss of Licenses, Reimbursement Approvals, Etc. There shall be a
Limitation of one or more Licenses or Reimbursement Approvals of any Borrower or
Borrowers or Persons managed by a Borrower or Borrowers and the Required Lenders
shall determine in good faith that such Limitation, individually or collectively
all such Limitations could reasonably be expected to have a Material Adverse
Effect.
9.2 CONSEQUENCES OF AN EVENT OF DEFAULT.
(a) Events of Default in General. If an Event of Default
(other than one specified in paragraph (m) of Section 9.1 (Insolvency,
Bankruptcy, Etc.) hereof) shall occur and be continuing or shall exist, then, in
addition to all other rights and remedies which the Administrative Agent or any
other 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 Administrative Agent may, (and upon the written
request of the Required Lenders, shall), by notice to Multicare (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 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 notice they will pay) to
the Administrative Agent cash for deposit to the credit of the
Letter of Credit collateral account in accordance with Article 3
hereof.
(iv) Take (or direct the Collateral Agent to take) any and all
actions permitted under the Pledge Agreement or other Loan
Documents.
-76-
<PAGE>
(v) Exercise such other remedies as may be available to the
Lender Parties under applicable Law.
(b) Automatic Acceleration; Certain Bankruptcy-Related Events.
If an Event of Default specified in paragraph (m) of Section 9.1 (Insolvency,
Bankruptcy, Etc.) hereof shall occur or exist, then, in addition to all other
rights and remedies which any Lender Party 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 those referred to in
clause (iii) of the preceding paragraph (a), 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 Administrative Agent may, (and upon the written request of the
Required Lenders), shall, by notice to Multicare (on behalf of the Borrowers),
do one or more of the following: (i) take any and all actions permitted under
the Pledge Agreement or any other Loan Document or (ii) exercise such other
remedies as may be available to the Lender Parties under applicable Law.
(c) Equitable Remedies. It is agreed that, in addition to all
other rights hereunder or under Law, the Administrative Agent shall have the
right to institute proceedings in equity or other appropriate proceedings for
the specific performance of any covenant or agreement made in any of the Loan
Documents or for an injunction against the violation of any of the terms of any
of the Loan Documents or in aid of the exercise of any power granted in any of
the Loan Documents or by Law or otherwise.
9.3 APPLICATION OF PROCEEDS. After the occurrence of an Event of Default
and acceleration of the Loans, any amounts received on account of Loan
Obligations shall be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Loan Obligations
constituting fees, indemnities, expenses and other amounts due to the
Administrative Agent in its capacity as such;
Second, to payment of that portion of the Loan Obligations
constituting fees, indemnities (other than those paid pursuant to the
preceding clause First) due to the Lender Parties, ratably among them in
proportion to the amounts described in this clause Second due to them;
Third, to payment of that portion of the Loan Obligations
constituting accrued and unpaid interest on Loans and accrued and unpaid
interest on Drawings, ratably among the Lender Parties 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 or unreimbursed Drawings
ratably among the Lender Parties in proportion to the respective amounts
described in this clause Fourth due to them;
-77-
<PAGE>
Fifth, to be deposited in such cash collateral account, if any, as
may be required under Article 3 above;
Sixth, to payment of all other Loan Obligations, ratably among the
Lender Parties 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 indefeasibly paid in full and all of the Letters of Credit shall have
terminated (or funds equal to the amount of any contingent liabilities in
respect thereof shall have been deposited in the Letter of Credit cash
collateral account), to Multicare (on behalf of the Borrowers) or as
otherwise required by Law.
-78-
<PAGE>
ARTICLE 10 - THE ADMINISTRATIVE AGENT
10.1 APPOINTMENT. Subject to the provisions of the second sentence of
Section 10.9 below, each Lender Party hereby irrevocably appoints Mellon to act
as Administrative Agent for such Lender Party under this Agreement and the other
Loan Documents. Each Lender Party hereby irrevocably authorizes the
Administrative 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 Administrative Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto. Mellon hereby agrees to
act as Administrative 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 10.9 hereof. Each Lender Party hereby
irrevocably authorizes the Administrative 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 Administrative Agent. Each Lender Party agrees
that the rights and remedies granted to the Administrative Agent under the Loan
Documents shall be exercised exclusively by the Administrative Agent (or a
Person designated by the Administrative Agent), and that no Lender shall have
any right individually to exercise any such right or remedy, except to the
extent, if any, expressly provided herein or therein.
10.2 GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES. Notwithstanding
anything to the contrary elsewhere in this Agreement or in any other Loan
Document:
(a) The Administrative 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 Administrative Agent shall be read into this Agreement or any
other Loan Document or shall otherwise exist.
(b) The duties and responsibilities of the Administrative Agent
under this Agreement and the other Loan Documents shall be mechanical and
administrative in nature, and the Administrative Agent shall not have a
fiduciary relationship with respect to any Lender Party.
(c) The Administrative Agent's relationship with and to the Lender
Parties is governed exclusively by the terms of this Agreement and the
other Loan Documents. The Administrative Agent does not assume, and shall
not at any time be deemed to have, any relationship of agency or trust
with or for, any Lender Party or any other Person or (except only as
expressly provided in this Agreement and the other Loan Documents) any
other duty or responsibility to such Lender Party or other Person.
(d) The Administrative Agent shall be under no obligation to take
any action hereunder or under any other Loan Document if the
Administrative 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
-79-
<PAGE>
Administrative Agent to qualify to do business in any jurisdiction where
it is not then so qualified.
(e) The authority of the Administrative Agent to request information
from the Borrowers or take any other voluntary action hereunder shall
impose no duty of any kind on the Administrative Agent to make such
request or take any such action.
(f) The Administrative Agent shall have no duty to inquire whether
any Interest Rate Hedging Agreement conforms to the terms and limitations
of this Agreement and shall have no duty to inquire as to whether the
Borrowers maintain any Interest Rate Hedging Agreements.
10.3 EXERCISE OF POWERS. The Administrative Agent shall take any action of
the type specified in this Agreement or any other Loan Document as being within
the Administrative 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 direction, the Administrative 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 that 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 Administrative 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 each Lender Party (whether
or not it so consented). The Administrative Agent shall not have any liability
to any Person as a result of any action or inaction in conformity with this
Section 10.3.
10.4 GENERAL EXCULPATORY PROVISIONS. Notwithstanding anything to the
contrary elsewhere in this Agreement or any other Loan Document:
(a) The Administrative 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 or
other) damages suffered by a Person and only to the extent that such Person
proves that such damages were caused by the Administrative Agent's own gross
negligence or willful misconduct.
(b) The Administrative Agent shall not be responsible for (i) the
execution, delivery, effectiveness, enforceability, genuineness, validity or
adequacy of any Loan Document, (ii) any recital, representation, warranty,
document, certificate, report or statement in, provided for in, or received
under or in connection with, any Loan Document, (iii) any failure of any Loan
Party, any Lender or the Issuer to perform any of their respective obligations
under any 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 Loan Document or otherwise from time to time, (v) caring for, protecting,
insuring, or paying any taxes, charges or assessments with respect to any
Collateral, or (vi) the enforceability of any subordination.
-80-
<PAGE>
(c) The Administrative 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 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
(even if the Administrative Agent knows or should know that some event or
condition exists or fails to exist), or (iii) except to the extent set forth in
Section 10.5(f) below, the existence of any Event of Default or Default.
(d) The Administrative 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, whether obtained under or in connection with this
Agreement or otherwise, except for such notices, reports and other information
expressly required by this Agreement or any other Loan Document to be furnished
by the Administrative Agent to such Lender Party.
10.5 ADMINISTRATION BY THE ADMINISTRATIVE AGENT.
(a) The Administrative 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 Administrative Agent shall not have any duty to verify the identity or
authority of any Person giving such notice or other communication.
(b) The Administrative Agent may consult with legal counsel
(including in-house counsel for the Administrative 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 Administrative 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 Administrative 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 Administrative Agent in accordance with the
requirements of this Agreement or any other Loan Document. Whenever the
Administrative 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 Administrative 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 Administrative 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 which may be imposed on,
incurred
-81-
<PAGE>
by or asserted against the Administrative Agent by reason of taking or
continuing to take any such action.
(e) The Administrative Agent may perform any of its duties under
this Agreement or any other Loan Document by or through agents or
attorneys-in-fact. The Administrative 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 Administrative Agent shall not be deemed to have any
knowledge or notice of the occurrence of any Event of Default or Default unless
the Administrative Agent has received notice from a Lender Party or a Borrower
referring to this Agreement, describing such Event of Default or Default, and
stating that such notice is a "notice of default." If the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to each Lender Party.
10.6 LENDER PARTIES NOT RELYING ON ADMINISTRATIVE AGENT OR OTHER LENDERS.
Each Lender Party acknowledges as follows: (a) neither the Administrative Agent
nor any other Lender Party has made any representations or warranties to it, and
no act taken hereafter by the Administrative Agent or any other Lender Party
shall be deemed to constitute any representation or warranty by the
Administrative Agent or such other Lender Party to it; (b) it has, independently
and without reliance upon the Administrative 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 Administrative 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.
10.7 INDEMNIFICATION. Each Lender agrees to reimburse and indemnify each
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 share of
(without duplication) the Commitment, the Loans and Letter of Credit
Participations, 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 such Agent or such other Person in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Agent or such other Person shall be designated a
party thereto) that may at any time be imposed on, incurred by or asserted
against such 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
Tender Offer, any 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, 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 that
such Lender Party proves were the result of the gross negligence or
-82-
<PAGE>
willful misconduct of such Agent or such other Person. Payments under this
Section 10.7 shall be due and payable on demand.
10.8 REGISTER. The Administrative Agent shall maintain at its address
referred to in Section 12.1 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans and stated interest thereon owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrowers, the Agents and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by Multicare on behalf of the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
10.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign
at any time by giving 30 days' prior written notice thereof to the other Lender
Parties and Multicare on behalf of the Borrowers. The Administrative Agent may
be removed by the Required Lenders at any time for cause by such Required
Lenders giving 30 days' prior written notice thereof to the Administrative
Agent, the other Lender Parties and Multicare on behalf of the Borrowers. Upon
any such resignation or removal, the Required Lenders shall have the right to
appoint a successor Administrative Agent with (so long as no Default or Event of
Default shall have occurred and then be continuing) the consent of Multicare on
behalf of the Borrowers whose consent shall not be unreasonably withheld or
delayed. If no successor Administrative 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 Administrative Agent
may (but shall not be required to) appoint a successor Administrative Agent.
Each successor Administrative Agent shall be a Lender if any Lender shall at the
time be willing to become the successor Administrative Agent, and if no Lender
shall then be so willing, then such successor Administrative Agent shall be an
Eligible Institution. Upon the acceptance by a successor Administrative Agent of
its appointment as Administrative Agent hereunder, such successor Administrative
Agent shall thereupon succeed to and become vested with all the properties,
rights, powers, privileges and duties of the former Administrative Agent in its
capacity as such, without further act, deed or conveyance. Upon the effective
date of resignation or removal of a retiring Administrative Agent, such
Administrative 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
Administrative Agent under this Agreement. If and so long as no successor
Administrative Agent shall have been appointed, then any notice or other
communication required or permitted to be given by the Administrative Agent
shall be sufficiently given if given by the Required Lenders, all notices or
other communications required or permitted to be given to the Administrative
Agent shall be given to each Lender, and all payments to be made to the
Administrative Agent shall be made directly to the Loan Party or Lender Party
for whose account such payment is made.
10.10 ADDITIONAL ADMINISTRATIVE AGENTS; COLLATERAL AGENT. If the
Administrative Agent shall from time to time deem it necessary or advisable, for
its
-83-
<PAGE>
own protection in the performance of its duties hereunder or in the interest of
the Lender Parties, the Administrative 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 Administrative Agent, to constitute one or more
other Persons designated by the Administrative Agent, to act as
co-Administrative Agent or agent with respect to any part of the Collateral,
with such powers of the Administrative Agent as may be provided in such
supplemental agreement, and to vest in such other Person as such co-Agent or
separate agent, as the case may be, any properties, rights, powers, privileges
and duties of the Administrative Agent under this Agreement or any other Loan
Document.
10.11 CALCULATIONS. The Administrative 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 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.
10.12 OTHER AGENTS.
(a) In General. The title "Syndication Agent" given to Citicorp USA, Inc.
and NationsBank, N.A. in this Agreement and the title "Documentation Agent"
given to First Union National Bank in this Agreement are solely for
identification purposes and imply no rights in favor of such Person and no
responsibility by such Person except such rights or obligations of "Agents"
(including the right to make certain determinations) as are expressly stated
herein. No such Agent shall be liable for any act or failure to act on its part
except for that which the claimant proves constitutes the gross negligence or
willful misconduct of such Agent.
(b) Successor Agents. Any Syndication Agent and the Documentation Agent
may resign at any time and such Agents may be removed at any time for cause by
the other Agents and Multicare in which event, Multicare (on behalf of the
Borrowers) if no Default or Event of Default shall then exist, and the
Administrative Agent may (in their sole discretion) appoint a successor Agent.
10.13 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitment hereunder and the Loan Obligations owing to it, the Administrative
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 Administrative Agent, and the terms "Lender", "Holder of Notes" and like
terms shall include the Administrative Agent in its individual capacity as such.
The Administrative 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 "Administrative Agent" for other financing
-84-
<PAGE>
vehicles, issue letters of credit on behalf of, and engage in any other business
with, (a) any Loan Party or any stockholder, Subsidiary or Affiliate of any Loan
Party or (b) any other Person, whether such other Person may be engaged in any
conflict or dispute with any Loan Party or any Lender Party or otherwise, as
though the Administrative Agent were not the Administrative Agent hereunder.
-85-
<PAGE>
ARTICLE 10A
SPECIAL INTERCREDITOR PROVISIONS
10A.1 SPECIAL PROVISIONS APPLICABLE TO LENDER PARTIES AS PARTIES TO
THE GENESIS CREDIT AGREEMENT. There are certain understandings about the Genesis
Credit Agreement which the Lenders have relied upon in entering into this
Agreement and wish to confirm in an intercreditor agreement with the parties to
the Genesis Credit Agreement. Because each of the Lenders hereunder is also a
"Lender" under the Genesis Credit Agreement, this provision (and a corresponding
provision in the Genesis Credit Agreement) shall take the place of a separate
agreement and shall serve as a intercreditor agreement among the lenders party
to this Agreement and the lenders party to the Genesis Credit Agreement.
Accordingly, each of the Lenders hereunder, in its capacity as a "Lender" under
the Genesis Credit Agreement, agree, so long as it remains a party to the
Genesis Credit Agreement, that without the written consent of the Required
Lenders, the parties to the Genesis Credit Agreement will not amend, modify,
supplement or restate the assignment provisions of the Genesis Credit Agreement
(currently set forth in Section 12.9 of the Genesis Credit Agreement ) which
require that assignments or participations of any lender's rights and
obligations thereunder be made concurrent with a like assignment or
participation of such lender's rights and obligations hereunder.
-86-
<PAGE>
ARTICLE 10B
SPECIAL INTER-BORROWER PROVISIONS
10B.1 CERTAIN BORROWER ACKNOWLEDGEMENTS.
(a) Each Borrower acknowledges that it will enjoy significant
benefits from the business conducted by the other Borrowers because of, inter
alia, their combined ability to bargain with other Persons including without
limitation their ability to receive the credit facilities on favorable terms
granted by this Agreement and other Loan Documents which would not have been
available to an individual Borrower acting alone. Each Borrower has determined
that it is in its best interest to procure credit facilities which each Borrower
may utilize directly and which receive the credit support of the other Borrowers
as contemplated by this Agreement and the other Loan Documents.
(b) The Lenders have advised the Borrowers that they are unwilling
to enter into this Agreement and the other Loan Documents and make available the
credit facilities extended hereby to any Borrower unless each Borrower agrees,
among other things, to be jointly and severally liable for the due and proper
payment of the obligations of each other Borrower under this Agreement and other
Loan Documents. Each Borrower has determined that it is in its best interest and
in pursuit of its purposes that it so induce the Lenders to extend credit
pursuant to this Agreement and the other documents executed in connection
herewith (i) because of the desirability to each Borrower of the credit
facilities, the interest rates and the modes of borrowing available hereunder,
(ii) because each Borrower may engage in transactions jointly with other
Borrowers and (iii) because each Borrower may require, from time to time, access
to funds under this Agreement for the purposes herein set forth.
(c) Each Borrower has determined that it has and, after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents (including, without limitation, the inter-Borrower arrangement set
forth in this Article 10(B) will have, assets having a fair saleable value in
excess of the amount required to pay its probable liability on its existing
debts as they fall due for payment and that the sum of its debts is not and will
not then be greater than all of its property at a fair valuation, that such
Borrower has, and will have, access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature and that the value of the benefits to
be derived by such Borrower from the access to funds under this Agreement
(including, without limitation, the inter-Borrower arrangement set forth in this
Section 10B) is reasonably equivalent to the obligations undertaken pursuant
hereto.
10B.2 CERTAIN INTER-BORROWER AGREEMENTS.
(a) Subject to paragraph (b) below, each Borrower as indemnitor
shall indemnify the other Borrowers as indemnitees for all Loan Obligations
incurred by the indemnitee Borrowers for Loans advanced to, or Letters of Credit
issued for the account of, the indemnitor Borrower.
-87-
<PAGE>
(b) The rights and obligations of the Borrowers pursuant to
paragraph (a) above shall be subordinated in all respects to the rights of the
Administrative Agent and the other Lender Parties with respect to the Loan
Obligations and, accordingly, each Borrower agrees that it shall not make any
payment or receive any payment pursuant to the preceding paragraph (a) at any
time a Default has occurred and is continuing or would be caused thereby. Each
Borrower agrees that in the event it receives any payment described by or in
violation of this paragraph (b), it shall accept such payment as agent of the
Administrative Agent, for the benefit of the Lender Parties, and hold the same
in trust on behalf of and for the benefit of the Administrative Agent, for the
benefit of the Lender Parties.
10B.3 RECORDS. Multicare (on behalf of each Borrower) shall maintain
records specifying (a) all Loan Obligations incurred by each Borrower, (b) the
date of such incurrence, (c) the date and amount of any payments made in respect
of such Loan Obligations and (d) all inter-Borrower obligations pursuant to
paragraph 10B.2 above. Multicare shall make copies of such records available to
the Administrative Agent, upon request.
-88-
<PAGE>
ARTICLE 11
DEFINITIONS; CONSTRUCTION
11.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings, (terms defined in the singular to have a
correlative meaning when used in the plural) unless the context hereof otherwise
clearly requires:
"Accumulated Funding Deficiency" has the meaning given to such term
in ss.4001(a)(18) of ERISA.
"Acquisition" means any acquisition by one or more of the Borrowers,
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 Corp." means Genesis Eldercare Acquisition Corp., a
Delaware corporation.
"Acquisition Cost" means, 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
(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 Senior Debt/Cash Flow Ratio" means as of any date of
determination:
(a) Adjusted Senior Debt as of such date of determination
divided by
(b) Cash Flow of Multicare and its Restricted Subsidiaries, on
a consolidated basis, for the four fiscal quarters ending on,
or most recently prior to, such date of determination.
"Adjusted Senior Debt" means, as of any date of determination, the
result of:
(a) Adjusted Total Indebtedness, as of such date of
determination
less
(b) the sum of (i) Indebtedness which is evidenced by the 1997
Subordinated Notes, and (ii) 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 Administrative Agent.
-89-
<PAGE>
"Adjusted Total Debt/Cash Flow Ratio" means, as of any date of
determination, the ratio of:
(a) Adjusted Total Indebtedness as of such date of
determination
divided by
(b) Cash Flow of Multicare and its Restricted Subsidiaries, on
a consolidated basis, for the four fiscal quarters ended on,
or most recently prior to, such date of determination.
"Adjusted Total Indebtedness" means, as of any date of
determination, the sum of:
(a) Total Funded Indebtedness as of such date of determination
plus
(b) the product of (i) the amount of Rental Expense of
Multicare and its Restricted Subsidiaries, on a consolidated
basis, for the four fiscal quarters ended on, or most recently
prior to, such date of determination multiplied by (ii) eight
(8).
"Administrative Agent" has the meaning ascribed to such term in the
preamble of this Agreement.
"Affiliate" of a Person means (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). Excluded Subsidiaries
may be "Affiliates" of Multicare.
"Agents" means collectively the Administrative Agent, Citicorp USA,
Inc., and NationsBank, N.A., each as a Syndication Agent, and First Union
National Bank, as Documentation Agent.
"Agreement" means this Credit Agreement as the same may be amended,
modified, restated or supplemented from time to time in accordance with its
terms.
"Agreement Date" means the date first-above written.
-90-
<PAGE>
"Amount of Unfunded Benefit Liabilities" has the meaning given to
such term in ss.4001(a)(18) of ERISA.
"Applicable Margin" means a marginal rate of interest which is added
to the LIBO Rate or Prime Rate, as the case may be, to determine the effective
rate of interest on Loans and other payments as specified in the Loan Documents.
Until the Officer's Compliance Certificate for the fiscal year ended December
31, 1997 is delivered to the Administrative Agent and Lenders pursuant to
Section 6.1 above, the Applicable Margin (a) for LIBO Rate Loans shall be the
following: 2.5% for any RC Loans or Tranche A Term Loans; 2.75% for any Tranche
B Term Loans; and 3.0% for any Tranche C Term Loan, and (b) for Prime Rate Loans
shall be .75% for RC Loans and Tranche A Loans, shall be 1.0% for Tranche B
Loans and shall be 1.25% for Tranche C Loans. Thereafter, the Applicable Margin
shall be determined in the following manner:
(a) For any RC Loans or Tranche A Term Loans, the Applicable Margin
shall be the percentage amount set forth below under the caption
"Applicable Margin for RC Loans and Tranche A Term Loans" opposite the
relevant Adjusted Total Debt/Cash Flow Ratio:
Adjusted Total Applicable Margin for RC Loans
Debt/Cash Flow Ratio and Tranche A Term Loans
-------------------- ------------------------------
Prime Rate Loans LIBO Rate Loans
---------------- ---------------
below 3.0 0 .75%
>= 3.0 < 3.5 0 1.00%
>= 3.5 < 4.0 0 1.25%
>= 4.0 < 4.5 0 1.50%
>= 4.5 < 5.0 0 1.75%
>= 5.0 < 5.5 .25% 2.00%
>= 5.5 < 6.0 .50% 2.25%
>= 6.0 .75% 2.50%
(b) For any Tranche B Term Loans, the Applicable Margin for LIBO
Rate Loans shall be 2.75%, provided, however, that any time that the
Adjusted Total Debt/Cash Flow Ratio is less than 4.5 to 1.0, the
Applicable Margin for Tranche B Term Loans shall be 2.5%. The Applicable
Margin for Tranche B Term Loans which are Prime Rate Loans shall be 1.0%
provided, however, that at any time that the Adjusted Total Debt/Cash Flow
Ratio is less than 4.5 to 1.0 the Applicable Margin for Tranche B Loans
which are Prime Rate Loans shall be .75%.
(c) For any Tranche C Term Loans, the Applicable Margin for LIBO
Rate Loans shall be 3.0%, provided, however, that any time that the
Adjusted Total Debt/Cash Flow Ratio is less than 4.5 to 1.0, the
Applicable Margin for Tranche C Term Loans shall be 2.75%. The Applicable
Margin for Tranche C Term Loans which are Prime Rate Loans shall be 1.25%
provided, however, that at any time that the Adjusted Total Debt/Cash Flow
Ratio is less than 4.5 to 1.0 the Applicable Margin for Tranche C Loans
which are Prime Rate Loans shall be 1.00%.
(d) The Applicable Margin for Swing Loans at all times shall be
zero.
-91-
<PAGE>
The Applicable Margin shall be adjusted five Business Days after receipt of the
annual or quarterly Officer's Compliance Certificate, delivered pursuant to
Section 6.1. At any time that such annual or quarterly Officer's Compliance
Certificate is required to be delivered pursuant to said Section 6.1 and is not
so delivered, then the Applicable Margin shall be the highest rate specified for
the subject Tranche or Loan until the Officer's Compliance Certificate is so
delivered.
"Assignment and Acceptance" shall have the meaning ascribed to such
term in Section 12.9.
"Assumed Indebtedness" means Indebtedness incurred by a Person which
is not a Borrower and which (a) is existing at the time such Person (or assets
of such Person) is acquired by a Borrower and (b) is assumed by a Borrower in
connection with such Acquisition, other than Indebtedness incurred by the
original obligor in connection with, or in contemplation of, such Acquisition.
"Available RC Commitment" means, as of any date, the difference
between (a) and (b) where (a) is the amount of the RC Commitment on such date
and (b) is the sum of (i) the aggregate outstanding principal amount of all RC
Loans on such date, (ii) the face amount of all outstanding Letters of Credit on
such date, (iii) the aggregate unpaid amount of all Drawings under Letters of
Credit as of such date, (iv) the aggregate outstanding principal amount of all
Swing Loans on such date, (v) the maximum amount necessary to redeem by March
16, 1998, all shares of stock issuable on conversion of Multicare's Convertible
Subordinated 7% Debentures outstanding on the date of determination of
"Available RC Commitment," and (vi) the maximum amount (including principal,
interest, premiums and fees, if any) necessary to repay by January 2, 1998, all
of Multicare's Senior Subordinated 12-1/2% Notes outstanding on the date of
determination of "Available RC Commitment." For purposes of clauses (v) and (vi)
the phrase "outstanding on the date of determination of "Available RC
Commitment" shall initially be determined with reference to the Officers
Certificate delivered by Multicare pursuant to Section 4.1(l) hereof and
thereafter shall be determined with reference to updated Officer's Certificates
(in the form and with the same level of detail as the Officer's Certificate
delivered pursuant to Section 4.1(l) above) which Multicare may deliver to the
Administrative Agent from time to time, provided that Multicare shall deliver
not more than four (4) such updated Officer's Certificates hereunder.
"Bank Tax" means (i) any Tax based on or measured by net income of a
Lender Party, any franchise Tax and any doing business Tax imposed upon any
Lender Party by any jurisdiction (or any political subdivision thereof) in which
such Lender Party or any lending office of a Lender Party is located and (ii)
for the purposes of Section 1.13, any other Tax imposed by a jurisdiction other
than the United States or a political subdivision thereof that would not have
been imposed but for a present or former connection between such Lender Party or
lending office (as the case may be) and such jurisdiction.
"Borrowers" has the meaning ascribed to such term in the preamble
hereto. It is the intent of the parties (and a covenant of the Borrowers herein)
that each Person which is now or hereafter becomes a direct or indirect
Subsidiary of Multicare, other than Excluded Subsidiaries, shall at all times
after becoming a Subsidiary of Multicare be a "Borrower" pursuant to the terms
of this Agreement.
-92-
<PAGE>
"Business Day" means any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania, the State of New
York or other day on which banking institutions are authorized or obligated to
close in the city in which the Administrative Agent's Domestic Lending Office is
located or, as applicable, in the city in which the Issuer's Domestic Lending
Office is located, provided, however, that whether or not expressly stated in
this Agreement or other Loan Documents, when "Business Day" is used with respect
to any LIBO Rate Loan, such Business Day must also be a Eurodollar Business Day.
"Capital Expenditures", with respect to any Person, means, for any
period, all expenditures (whether paid in cash or accrued as liabilities) of
such Person during such period which are, or should be, classified as capital
expenditures in accordance with GAAP.
"Capitalized Lease" means 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.
"Capitalized Lease Obligation" of any Person at any time means 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.
"Cash Equivalent Investments" means 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
$1,000,000,000.00 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 Services;
(iii) commercial paper of companies, banks, trust companies or national banking
associations (in each case excluding Multicare 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 Services;
and (iv) repurchase agreements with any financial institution having combined
capital and surplus of not less than $1,000,000,000.00 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, means (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 and, (v) income taxes, all as
adjusted for changes in accrued management fees under the Multicare Management
Agreement, in each case for such period.
"CERCLA" means 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.
-93-
<PAGE>
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be amended
from time to time.
"Change of Control" means the occurrence of any of the following
events:
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) other than a Permitted Holder (as hereinafter defined), 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 except that a Person
shall be deemed a "beneficial owner" of all securities that such
Person has a right to acquire, whether such right is exercisable
immediately or only after the passage of time, upon the happening of
an event or otherwise), directly or indirectly, of more than, on a
fully diluted basis, 35% of the total Voting Stock of the Surety
(and all rights and options to purchase such Voting Stock) if such
"beneficial ownership" is greater than the amount of voting power of
the Voting Stock of the Surety (and all rights and options to
purchase such Voting Stock) held by Genesis and its Affiliates on
such date;
(b) TPG, Cypress, Nazem and Genesis, collectively, shall cease
to own beneficially and of record at least 51% of the shares of each
class of capital stock of Surety (and all rights and options to
purchase such shares of capital stock) subject to no Liens;
(c) if Surety at any time fails to own beneficially and of
record 100% of the capital stock of Multicare (and all rights and
option to purchase such shares of capital stock);
(d) if Multicare at any time fails to own beneficially and of
record 100% of the capital stock of all the Borrowers (subject to
any permitted disposition pursuant to Section 8.5 hereof);
(e) if Surety, Multicare or any other Loan Party 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 Surety, Multicare or
any other Loan Party, in any such event pursuant to a transaction in
which the outstanding Voting Stock of Surety, Multicare or any other
Loan Party is changed into or exchanged for cash, securities or
other property, other than any such transaction where (i) the
outstanding Voting Stock of Surety, Multicare or any other Loan
Party 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 such party would not be prohibited, under the 1995
Subordinated Note Indenture, or the 1996 Subordinated Note
Indenture, to the extent either is applicable as set forth in
Section 5.1(w), or the 1997 Subordinated Note Indenture if then in
effect from paying as a "restricted payment" (as defined in such
indentures), and (ii) the
-94-
<PAGE>
holders of the Voting Stock of Surety, Multicare or any other Loan
Party, as the case may be, 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;
(f) if during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of Surety, Multicare or any other Loan Party (together
with any new directors whose election by any such Board of Directors
or whose nomination for election by the stockholders of such company
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 constitute a majority of such
Board of Directors then in office except in the case of a change in
the composition of the Board of Directors of Multicare, approved by
Genesis in connection with its acquisition of the common stock of
Surety held by Cypress, Nazem and TPG); or
(g) Surety, Multicare or any other Loan Party 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
the 1996 Subordinated Notes, the extent either is applicable as set forth in
Section 5.1(w), or the 1997 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; (C) "Board of
Directors" of a company shall mean the board of directors of such company or the
executive committee of such company; and (D) "Permitted Holder" shall mean (i)
Genesis, Cypress and TPG, in the case of Surety, (ii) Surety in the case of
Multicare, and (iii) Multicare in the case of its Subsidiaries.
"Closing Date" means the date that the initial Loans are made
hereunder.
"COBRA Violation" means any violation of the "continuation coverage
requirements" of "group health plans" of former ss.162(k) of the Code (as in
effect for tax years beginning on or before December 31, 1988) and of ss.4980B
of the Code (as in effect for tax years beginning on or after January 1, 1989)
and Part 6 of Subtitle B of Title I of ERISA.
-95-
<PAGE>
"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, and the Treasury regulations thereunder.
"Collateral" means (a) the cash collateral account, if any, in
respect of Letters of Credit from time to time and (b) the collateral subject
to, or purported to be subject to, the Liens of the Pledge Agreement, from time
to time.
"Commitment" means, with respect to any Lender, the obligation of
such Lender to make Loans pursuant to the terms of this Agreement and, with
respect to the Issuer, to issue Letters of Credit. "Commitment" means, with
respect to all Lender Parties, the sum of each Lender Party's Commitment.
"Contingent Reimbursement Obligation" means the contingent
obligation of the Borrowers to reimburse the Issuer for any Drawings that may be
made under an outstanding Letter of Credit, whenever issued. Without limiting
the generality of the foregoing, the amount of all Contingent Reimbursement
Obligations at any time shall be the aggregate amount available to be drawn
under outstanding Letters of Credit at such time.
"Controlled Group" means a group of employers, of which any Borrower
is a member and which group constitutes:
(a) A controlled group of corporations (as defined inss.414(b)
of the Code);
(b) Trades or businesses (whether or not incorporated) which
are under common control (as defined in ss.414(c) of the Code);
(c) Trades or businesses (whether or not incorporated) which
constitute an affiliated service group (as defined in ss.414(m) of the Code); or
(d) Any other entity required to be aggregated with any
Borrower pursuant to ss.414(o) of the Code.
"Cypress" means The Cypress Group L.L.C., a Delaware limited
liability company and (a) any Subsidiary thereof and (b) any other Affiliate
thereof reasonably acceptable to the Administrative Agent. Without limiting the
generality of the foregoing, "Cypress" shall include Cypress Associates L.P.,
Cypress Offshore Partners L.P., Cypress Merchant Banking Partners L.P., and
Cypress Advisors Inc.
"Default" means any event or condition which with notice, passage of
time or both, would constitute an Event of Default.
"Default Rate" means, with respect to any amounts payable hereunder
or under the other Loan Documents, a rate equal to the sum of (a) two percent
(2%) per annum plus (b) the interest rate otherwise in effect with respect to
such amounts or, if no such rate is otherwise in effect with respect to such
amounts, a rate equal to the sum of (i) the Prime Rate plus (ii) the highest
Applicable Margin thereon plus (iii) two percent (2%).
-96-
<PAGE>
"Defined Benefit Pension Plan" means a defined benefit plan (other
than a Multiemployer Plan) as defined in ss.3(35) of ERISA which is maintained
by any Borrower or any member of its Controlled Group.
"Defined Contribution Plan" means an individual account plan (other
than a Multiemployer Plan) as defined in ss.3(34) of ERISA which is maintained
by any Borrower or any member of its Controlled Group.
"Dollar," "Dollars" and the symbol "$" means lawful money of the
United States of America.
"Domestic Lending Office" means, with respect to any Lender or the
Issuer (i) the branch or office of such Lender or the Issuer, as the case may be
designated, from time to time, by such Person in a notice to the Administrative
Agent and Multicare.
"Drawing" means (a) any amount disbursed by the Issuer pursuant to
the terms of a Letter of Credit or (b) as the context may require, the
obligation of the Borrowers to reimburse the Issuer for such disbursement.
"EBITDA" means Net Income before Interest Expense, provision for
income taxes, depreciation and amortization, as adjusted on a pro forma basis
for the transactions contemplated by the Multicare Management Agreement.
"Eligible Institution" means (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a commercial bank organized under the laws of the United States,
or any State thereof, and having a combined capital and surplus of at least
$1,000,000,000.00; (iv) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $1,000,000,000.00; (v) a commercial bank
organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow or under the laws of a political subdivision of
any such country, and having a combined capital and surplus of at least
$1,000,000,000.00, so long as such bank is acting through a branch or agency
located in the United States; and (vi) a finance company, insurance company or
other financial institution or fund (whether a corporation, partnership, trust
or other entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having a combined
capital and surplus or total assets of at least $500,000,000.00 and (vii) with
respect to any Lender that is a fund, any other fund with assets in excess of
$100,000,000.00 that invests in bank loans and is managed by the same investment
advisor as such Lender; provided, however, that neither any Loan Party nor any
Affiliate of a Loan Party shall qualify as an Eligible Institution under this
definition.
"Environmental Affiliate" means, 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" means any approval, order, consent,
authorization, certificate, license, permit or validation of, or exemption or
other action by, or
-97-
<PAGE>
filing, recording or registration with, any Governmental Authority pursuant to
or required under any Environmental Law.
"Environmental Claim" means, 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 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" means 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" 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 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" 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 (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. "Environmental Law" shall also include any Environmental Approval and
the terms and conditions thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations thereunder.
"Eurodollar Business Day" means any Business Day on which dealings
in Dollar deposits are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (include
dealings in Dollar deposits) in London, England.
-98-
<PAGE>
"Eurodollar Lending Office" means, with respect to any Lender or the
Issuer, the branch or office of such Lender or the Issuer, as the case may be,
designated by such Person in a notice to the Administrative Agent and Multicare.
"Event of Default" means any of the Events of Default described in
Section 9.1 hereof.
"Excess Cash Flow" means, for any fiscal year of the Borrowers, the
amount, if any, by which Net Cash Provided by Operations for such fiscal year
exceeds the sum of (a) the aggregate principal amount of Total Funded
Indebtedness incurred consistently with the terms of this Agreement and
scheduled to have been repaid or prepaid during such fiscal year, plus (b) the
amount of any Investments made pursuant to Section 8.3(i).
"Excluded Subsidiaries" means, subject to Section 6.10(b), the
entities listed on Schedule 11.1 attached hereto and, after the Closing Date,
each Subsidiary of any Excluded Subsidiary.
"Federal Funds Rate" for any day means the rate per annum determined
by the Administrative 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.
"Fixed Charge Coverage Ratio" means, as of any date of
determination, the result of:
(a) Cash Flow of Multicare 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, income taxes and Rental
Expense of Multicare 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 on Total
Funded Indebtedness for the four fiscal quarters ending on, or
most recently prior to, such date of determination.
"GAAP" has the meaning set forth in Section 11.3 hereof.
"Genesis" has the meaning ascribed to such term in Section 4.1
hereof.
"Genesis Credit Agreement" has the meaning ascribed to such term in
Section 4.1 hereof.
-99-
<PAGE>
"Genesis Group" means Genesis and its Subsidiaries other than the
Multicare Group.
"Governmental Authority" means 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" means, 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.
"Health Care Business" means any healthcare related business
including any facility, unit, operation, or business supplying health care
services, supplies or products, including long-term care, rehabilitation
therapy, specialized health care, health care management and pharmacies.
"Indebtedness" of any Person means (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;
(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 lesser of (i) the
fair market value of the asset subject to such Lien and (ii) the amount of such
Indebtedness;
(e) 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);
(f) 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;
-100-
<PAGE>
(g) all obligations of such Person with respect to acceptances
or similar obligations issued for the account of such Person;
(h) 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;
(i) 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;
(j) all Guaranties of such Person; and
(k) 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.
"Indemnified Parties" means, collectively, the Lender Parties and
their respective Affiliates and (without duplication) the directors, trustees,
officers, employees, attorneys and agents of each of the foregoing.
"Interest Expense" means, 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 (excluding any
obligations under any Synthetic Leases) plus (b) the net amount accrued under
any Interest Rate Hedging Agreements (or less the net amount receivable
thereunder) during such period.
"Interest Period" means with respect to any LIBO Rate Loan, (a)
initially, the period commencing on the borrowing or conversion date, as the
case may be, and ending one, two, three or six months thereafter as selected by
the Borrowers pursuant to Section 1.8 above and (b) thereafter, each period
commencing on the day after the last day of the preceding Interest Period and
ending one, two, three or six months thereafter, as selected by the Borrower
pursuant to Section 1.8 above provided, however, if any such Interest Period
would otherwise end on a day which is not a Eurodollar Business Day, such
Interest Period shall be extended to the next succeeding Eurodollar Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Eurodollar Business Day and provided, further, if any such
Interest Period begins on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period (as may be the case
with an Interest Period commencing at the end of a calendar month) the Interest
Period shall end on the last Eurodollar Business Day of the relevant calendar
month.
-101-
<PAGE>
"Interest Rate Hedging Agreement" means any rate swap, cap or collar
agreement with a term of at least three years or such shorter term as may be
acceptable to the Administrative Agent to which any or all of the Borrowers are
party and which is on terms and conditions satisfactory to the Administrative
Agent.
"Investments" has the meaning set forth in Section 8.3 hereof.
"Issuer" has the meaning ascribed to such term in the preamble
hereto.
"JCAHO" means Joint Commission on Accreditation of Healthcare
Organizations.
"Joinder Effective Date" means the date that any Joining Subsidiary
becomes a Borrower hereunder pursuant to Section 6.10.
"Joinder Supplement" has the meaning set forth in Schedule 6.10
hereto.
"Joining Subsidiary" has the meaning set forth in Section 6.10
hereof.
"Law" means any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lender" has the meaning ascribed to such term in the preamble
hereto and shall include the Swing Loan Lender.
"Lender Parties" means, collectively, the Lenders, the Issuer and
the Agents.
"Letter of Credit" means any letter of credit issued by the Issuer
pursuant to Article 3 hereof.
"Letter of Credit Participation" means, with respect to any RC
Lender, the participation interest of such Lender in any Letter of Credit
acquired pursuant to Article 3 above. The amount of the Letter of Credit
Participation of an RC Lender in any Letter of Credit shall be deemed to be the
amount equal to such RC Lender's pro rata share (determined on the basis of the
RC Commitments at such time) of the sum of (a) the aggregate unpaid amount of
all Drawings thereunder at such time and (b) the amount of any Contingent
Reimbursement Obligations with respect thereto at such time.
"LIBO Rate" means the rate per annum determined by the
Administrative 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 Interest Period) determined in good faith by the Administrative
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 a.m., London time, two Eurodollar
Business Days prior to the first day of the applicable Interest Period for
delivery on the first day of such Interest Period in similar amounts and
maturities as the proposed LIBO Rate Loan by (b) a number equal to 1.0 minus the
Reserve Percentage. "Reserve Percentage" for any day means the percentage
(expressed as a decimal, rounded
-102-
<PAGE>
upward to the nearest 1/100 of 1%), as determined in good faith by the
Administrative 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 LIBO Rate shall be adjusted automatically as of
the effective date of each change in the Reserve Percentage.
"LIBO Rate Loan" means a Loan bearing interest at the per annum rate
of the LIBO Rate plus Applicable Margin.
"Licenses" means any and all licenses, including provisional
licenses, certificates of need, JCAHO and/or other accreditations, permits,
franchises, rights to conduct business, approvals by a Governmental Authority or
otherwise, consents, qualifications, operating authority, and/or any other
authorizations.
"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.
"Limitation" means a revocation, suspension, termination,
impairment, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement and/or loss of any other rights.
"Loans" means collectively, the Swing Loans, the Tranche A Term
Loans, the Tranche B Term Loans, the Tranche C Term Loans and the RC Loans.
"Loan" means any of the Loans.
"Loan Documents" means this Agreement, the Notes, the Suretyship
Agreement, Letters of Credit, the Pledge Agreement, 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" means 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 whether such obligations are direct or
indirect, absolute or contingent, due or to become due, now or hereafter
arising, (specifically including obligations arising or accruing after the
commencement of any bankruptcy, insolvency, or similar proceeding with respect
to any Loan Party, or which would have accrued but for the commencement of such
proceeding even if the claim is not allowed in such proceeding under applicable
law).
"Loan Parties" means the Borrowers, the Surety and any other Person
who from time to time grants or purports to grant to the Administrative Agent a
Lien on any property pursuant to the Pledge Agreement or is a Guarantor of any
Loan Obligations.
"Management Agreement" means any agreement pursuant to which a
Person (or group of Persons) manages the business of another Person (or group of
Persons).
-103-
<PAGE>
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, condition (financial or otherwise), properties or
prospects of Multicare or of the Borrowers, 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 Administrative Agent or any Lender Party to
enforce any rights or remedies under or in connection with any Loan Document.
Without limiting the generality of the foregoing, as used in connection with any
provisions respecting the ownership or operation of any Health Care Business,
Material Adverse Effect may include, among other things, any loss or suspension
of a License or Reimbursement Approval for any material nursing home or other
material Health Care Business or material group of nursing homes or other
material group of Health Care Businesses of the Borrowers, or any event,
occurrence or matter or series thereof giving rise to a reasonable probability
of any of the foregoing consequences.
"Maturity Date" means the latest of the RC Maturity Date, the
Tranche A Maturity Date, the Tranche B Maturity Date or the Tranche C Maturity
Date or, as the context may require, the applicable maturity date for a
specified Tranche of a Loan.
"Mellon" means Mellon Bank, N.A., a national banking association,
and any successor or assign thereof.
"Merger" means the merger of Acquisition Corp. into Multicare on the
terms stated in the Merger Agreement without any change thereto or waiver of any
provisions thereof not approved by the Required Lenders.
"Merger Agreement" means the Agreement and Plan of Merger dated as
of June 16, 1997, among Multicare, Surety and Acquisition Corp.
"Multicare" has the meaning ascribed to such term in the preamble of
this Agreement.
"Multicare Group" has the meaning ascribed to such term in Section
6.1 hereof.
"Multicare Management Agreement" has the meaning ascribed to such
term in Section 4.1.
"Multicare Management Subordination Agreement" means the
Subordination Agreement among Genesis, Multicare and the Agents dated of even
date herewith whereby Genesis has agreed to subordinate its rights to payments
under the Multicare Management Agreement to the extent and on the terms and
conditions as set forth in the Multicare Management Subordination Agreement,
which such terms and conditions are subject to the Agents' approval.
"Multiemployer Plan" means such term in ss.4001(a)(3) of ERISA.
"Nazem" means Nazem, Inc., a Delaware corporation and (a) any
Subsidiary thereof and (b) any other Affiliate thereof reasonably acceptable to
the Administrative Agent.
-104-
<PAGE>
Without limiting the generality of the foregoing, "Nazem" includes Genesis
ElderCare Portfolio K, L.P.
"Net Cash Proceeds" means, with respect to any transaction involving
a Borrower, 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) that are attributable to or
secured by the properties that are the subject of a sale, assignment or other
disposition which is part of the transaction, (b) reasonable brokerage
commissions and other reasonable fees and expenses (including reasonable fees
and expenses of legal counsel and investment bankers) related to such
transaction, and (c) all taxes actually paid or estimated in good faith to be or
become payable as a result of such transaction.
"Net Cash Provided by Operations" means for any period, the Net
Income of the Borrowers on a consolidated basis for such period plus
amortization and depreciation expense of the Borrowers for such period plus cash
extraordinary gains (other than from a disposition) less Capital Expenditures of
the Borrowers for such period (to the extent permitted by the terms of this
Agreement), less increases in working capital (or plus decreases in working
capital) of the Borrowers during such period.
"Net Income" means, with respect to any Person, for any period the
net earnings (or loss) after taxes of such Person for such period less
extraordinary gains, plus extraordinary non-cash losses.
"1995 Subordinated Note Indenture" means 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,
restated or supplemented from time to time in accordance with the terms of this
Agreement.
"1995 Subordinated Notes" means Genesis' 9-3/4% Senior Subordinated
Notes issued pursuant to the 1995 Subordinated Note Indenture in the original
aggregate principal amount of $120,000,000.00.
"1996 Subordinated Note Indenture" means the Indenture, dated as of
October 7, 1996, between Genesis and First Union National Bank, as Trustee,
relating to the 1996 Subordinated Notes, as such Indenture may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of this Agreement.
"1996 Subordinated Notes" means Genesis' 9 1/4% Senior Subordinated
Notes issued pursuant to the 1996 Subordinated Note Indenture, in the original
aggregate principal amount of $125,000,000.00.
"1997 Subordinated Note Indenture" means the Indenture, dated as of
August 11, 1997 between Acquisition Corp., PNC Bank, National Association as
trustee, and Banque Internationale a Luxembourg, S.A. as paying agent, relating
to the 1997 Subordinated Notes, as such Indenture may be amended, modified or
supplemented from time to time in accordance with the terms of this Agreement.
-105-
<PAGE>
"1997 Subordinated Notes" means Acquisition Corp.'s 9% Senior
Subordinated Note issued pursuant to the 1997 Subordinated Note Indenture, in
the original principal amount of $250,000,000.00.
"Non-U.S. Lender" means any Lender that is not a United States
Person.
"Notes" means, collectively, the Swing Loan Note, the Tranche A Term
Notes, and the RC Notes. A "Note" means any of the Notes.
"Officer's Compliance Certificate" means a certificate, as of a
specified date, of the chief financial officer or controller of Multicare in
substantially the form of Exhibit G hereto as to each of the following: (a) the
absence of any Event of Default or 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 Article 7 and the financial
limitations set forth in Sections 8.1(e), 8.2(e), 8.3(i), 8.4(b), 8.5(h), and
8.7(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a pension plan (as defined in ss.3(2) of ERISA)
which is subject to Part 3 of Subtitle B of Title I of ERISA or subject to
ss.412 of the Code and maintained by any Borrower or any member of its
Controlled Group.
"Permitted Liens" has the meaning set forth in Section 8.2 above.
"Person" means an individual, corporation, partnership, trust,
unincorporated association, limited liability company, joint venture,
joint-stock company, Governmental Authority or any other entity.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) as defined in ss.3(3) of ERISA which is either (1) maintained by any
Borrower or any member of its Controlled Group, or (2) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which any Borrower or any member of its
Controlled Group is then making or accruing an obligation to make contributions
or has ever been obligated to make contributions.
"Pledge Agreement" has the meaning ascribed to such term in Section
4.1 hereof.
"Premises" has the meaning set forth in Section 12.12 hereof.
"Prime Rate" means the greater of (A) the interest rate per annum
announced from time to time by the Administrative Agent as its prime rate or (B)
the Federal Funds Rate plus .50%. The Prime Rate may be greater or less than
other interest rates charged by the Administrative Agent to other borrowers.
-106-
<PAGE>
"Prime Rate Loan" means any Loan bearing interest at the Prime Rate
plus the Applicable Margin.
"Prohibited Transaction" has the meaning given to such term in
ss.406 of ERISA or ss.4975(c) of the Code.
"Qualifying Interest Rate Hedging Agreements" means such Interest
Rate Hedging Agreements as may be entered into from time to time pursuant to
Section 6.12 above between any or all of the Borrowers, on the one hand, and any
Lender Party, on the other hand.
"Quarterly Payment Date" means the last Business Day of each
December, March, June and September.
"RC Commitment" means, with respect to any RC Lender, (i) the amount
set forth opposite such Lender's name under the heading "RC Commitment" on
Schedule 1.1 hereto or, in the case of a Lender that becomes a Lender pursuant
to an assignment, the amount of the assignor's RC Commitment assigned to such
Lender, in either case as the same may be reduced from time to time pursuant to
Section 1.7 above or increased or reduced from time to time pursuant to
assignments in accordance with Section 12.9 below or (ii) as the context may
require, the obligation of such Lender to make RC Loans in an aggregate unpaid
principal amount not exceeding such amount; and "RC Commitment" means with
respect to all RC Lenders, the sum of each RC Lender's RC Commitment.
"RC Lender" means (i) any Lender with an "RC Commitment" designated
on Schedule 1.1 hereto and (ii) any Person that is assigned any or all of the
rights or obligations of an RC Lender with respect to its RC Commitment or RC
Loans, from time to time, pursuant to Section 12.9.
"RC Loans" has the meaning ascribed to such term in Section 1.1 of
this Agreement.
"RC Maturity Date" means September 30, 2003.
"RC Note" means each promissory note of the Borrowers issued to an
RC Lender relating to such Lender's RC Loans and RC Commitments substantially in
the form of Exhibit A-1 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,
restated or supplemented from time to time.
"Register" has the meaning ascribed to such term in Section 10.8
hereof.
"Registered Lender" has the meaning ascribed to such term in Section
1.14 hereof.
"Registered Noteholder" has the meaning ascribed to such term in
Section 1.14 hereof.
-107-
<PAGE>
"Regulatory Change" means any applicable law, interpretation,
directive, request or guideline (whether or not having the force of law), or any
change therein or in the administration or enforcement thereof, that becomes
effective or is implemented or first required or expected to be complied with
after the Agreement Date (including any applicable law that shall have become
such as the result of any act of omission of the Borrowers or any of their
Affiliates, without regard to when such applicable law shall have been enacted
or implemented), whether the same is (i) the result of an enactment by a
government or any agency or political subdivision thereof, a determination of a
court or regulatory authority or otherwise or (ii) enacted, adopted, issued or
proposed before or after the Agreement Date, including any such that imposes,
increases or modifies any Tax, reserve requirement, insurance charge, special
deposit requirement, assessment or capital adequacy requirement, but excluding
any such that imposes, increases or modifies any Bank Tax.
"Reimbursement Approvals" means, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations (including JCAHO
accreditation) and/or any other agreements with or approvals by organizations
and Governmental Authorities.
"Rental Expense" means, with respect to any Person for any period,
the aggregate rental obligations of such Person, payable in respect of any
leases (including Synthetic Leases but excluding Capitalized 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).
"Required Lenders" means, as of any date, Lenders otherwise eligible
to vote pursuant to the terms of this Agreement holding, in the aggregate, at
least 51% of the aggregate outstanding Loans, participations in Letters of
Credit and available Commitments so eligible to vote.
"Responsible Officer" of a Person means the President, the
Secretary, the Chief Executive Officer, any Vice President, the Controller, the
Treasurer or the Chief Financial Officer of such Person.
"Restricted Subsidiaries" means all direct and indirect Subsidiaries
of Multicare at any time, other than Excluded Subsidiaries.
"Secured Parties" has the meaning ascribed to such term in the
Pledge Agreement.
"Subsidiary" of a Person at any time means:
(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;
-108-
<PAGE>
(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;
(c) any partnership, limited liability company, 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; or
(d) any entity which is consolidated with such Person for
financial reporting purposes.
"Surety" has the meaning ascribed to such term in Section 4.1
hereof.
"Suretyship Agreement" has the meaning ascribed to such term in
Section 4.1 hereof.
"Swing Loan" means an amount advanced by the Swing Loan Lender
pursuant to Section 1.1(c) hereof.
"Swing Loan Lender" means Mellon, in its capacity as such.
"Swing Loan Note" means the promissory note of the Borrowers issued
to the Swing Loan Lender in substantially the form of Exhibit A-3 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 in part, in
each case as the same may be amended, modified, restated or supplemented from
time to time.
"Synthetic Lease" means any lease (other than a Capitalized Lease)
wherein the lessee is treated (or purported to be treated) as the owner of the
leased property for income tax purposes.
"Tax" means any federal, state, local or foreign tax assessment or
other governmental charge or levy (including any withholding tax) upon a Person
or upon its assets, revenues, income or profits.
"Tax Sharing Agreement" has the meaning ascribed to such term in
Section 4.1 hereof.
"Tender Offer" means Acquisition Corp.'s offer to purchase the
outstanding common shares of Multicare as contained in its "Offer to Purchase
for Cash All Outstanding Shares of Common Stock of Multicare Companies" dated
June 20, 1997, as extended from time to time.
-109-
<PAGE>
"Term Loans" means collectively the Tranche A Term Loans, the
Tranche B Term Loans and the Tranche C Term Loans.
"Third Party Claims" has the meaning set forth in Section 12.12
hereof.
"Third Party Payor Arrangements" means any and all arrangements with
Medicare, Medicaid, CHAMPUS, and any other Governmental Authority, or
quasi-public agency, Blue Cross, Blue Shield, any and all managed care plans and
organizations, including but not limited to HMOs and preferred provider
organizations, private commercial insurance companies, employee assistance
programs and/or any other third party arrangements, plans or programs for
payment or reimbursement in connection with health care services, products or
supplies.
"Total Funded Indebtedness" means the aggregate amount of
consolidated Indebtedness (including the current portion thereof), of Multicare
and its Restricted Subsidiaries (including all Indebtedness consisting of
Capitalized Lease Obligations, Synthetic Leases, Guaranties and letter of credit
reimbursement obligations).
"TPG" means TPG Partners II, L.P., a Delaware limited partnership
and (a) any Subsidiary thereof and (b) any other Affiliate thereof reasonably
acceptable to the Administrative Agent. Without limiting the generality of the
foregoing, "TPG" includes TPG Parallel II, L.P., TPG Investors II, L.P. and TPG
MC Coinvestment, L.P.
"Tranche" means the designation of a Loan as an RC Loan, a Tranche A
Term Loan, a Tranche B Term Loan or a Tranche C Term Loan and the designation of
the related Commitment as an RC Commitment, a Tranche A Commitment, a Tranche B
Commitment or a Tranche C Commitment as applicable.
"Tranche A Commitment" means, (1) with respect to any Tranche A
Lender, (a) at any time prior to the Closing Date, (i) the amount set forth
opposite such Lender's name under the heading "Tranche A Commitment" on Schedule
1.1 hereto or, in the case of a Lender that becomes a Lender pursuant to an
assignment, the amount of the assignor's Tranche A Commitment assigned to such
Lender, in either case as the same may be increased or reduced from time to time
pursuant to assignments in accordance with Section 12.9 or (ii) as the context
may require, the obligation of such Lender to make Tranche A Loans in an
aggregate unpaid principal amount not exceeding such amount, and (b) thereafter,
zero; and (2) with respect to all Tranche A Lenders, the sum of each Lender's
Tranche A Commitment.
"Tranche A Lender" means (a) any Lender with a "Tranche A
Commitment" designated on Schedule 1.1 hereto and (b) any Person that is
assigned any or all of the rights or obligations of a Tranche A Lender with
respect to its Tranche A Commitment or Tranche A Term Loans, from time to time,
pursuant to Section 12.9.
"Tranche A Maturity Date" means September 30, 2003.
"Tranche A Term Loan" has the meaning ascribed to that term in
Section 1.1 of this Agreement.
-110-
<PAGE>
"Tranche A Term Note" means each promissory note of the Borrowers
issued to a Tranche A Lender relating to such Lender's Tranche A Loans and
Tranche A Commitment substantially in the form of Exhibit A-2 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, restated or supplemented from
time to time.
"Tranche B Commitment" means, (1) with respect to any Tranche B
Lender, (a) at any time prior to the Closing Date, (i) the amount set forth
opposite such Lender's name under the heading "Tranche B Commitment" on Schedule
1.1 hereto or, in the case of a Lender that becomes a Lender pursuant to an
assignment, the amount of the assignor's Tranche B Commitment assigned to such
Lender, in either case as the same may be increased or reduced from time to time
pursuant to assignments in accordance with Section 12.9, or (ii) as the context
may require, the obligation of such Lender to make Tranche B Term Loans in an
aggregate unpaid principal amount not exceeding such amount, and (b) thereafter,
zero; and (2) with respect to all Tranche B Lenders, the sum of each Lender's
Tranche B Commitment.
"Tranche B Lender" means (i) any Lender with a "Tranche B
Commitment" designated on Schedule 1.1 hereto and (ii) any Person that is
assigned any or all of the rights or obligations of a Tranche B Lender with
respect to its Tranche B Commitment or Tranche B Term Loans, from time to time,
pursuant to Section 12.9.
"Tranche B Maturity Date" means September 30, 2004.
"Tranche B Opt-Out Lender" has the meaning ascribed to such term in
Section 1.5 hereof.
"Tranche B Term Loan" has the meaning ascribed to that term in
Section 1.1 of this Agreement.
"Tranche C Commitment" means (1) with respect to any Tranche C
Lender, (a) at any time on or prior to the Closing Date, (i) the amount set
forth opposite such Lender's name under the heading "Tranche C Commitment" on
Schedule 1.1 hereto or, in the case of a Lender that becomes a Lender pursuant
to an assignment, the amount of the assignor's Tranche C Commitment assigned to
such Lender, in either case as the same may be increased or reduced from time to
time pursuant to assignments in accordance with Section 12.9, (ii) as the
context may require, the obligation of such Lender to make Tranche C Term Loans
in an aggregate unpaid principal amount not exceeding such amount, and (b)
thereafter, zero; and (2) with respect to all Tranche C Lenders, the sum of each
Lender's Tranche C Commitment.
"Tranche C Lender" means (i) any Lender with a "Tranche C
Commitment" designated on Schedule 1.1 hereto and (ii) any Person that is
assigned any or all of the rights or obligations of a Tranche C Lender with
respect to its Tranche C Commitment or Tranche C Term Loans, from time to time,
pursuant to Section 12.9.
"Tranche C Maturity Date" means June 1, 2005.
-111-
<PAGE>
"Tranche C Opt-Out Lender" has the meaning ascribed to such term in
Section 1.5 hereof.
"Tranche C Term Loan" has the meaning ascribed to that term in
Section 1.1 of this Agreement.
"Transaction Documents" means each of the material documents as may
exist on the date that the Tender Offer is consummated with such changes thereto
as are permitted by the terms of this Agreement respecting (i) the Tender Offer,
(ii) the proposed merger between the Acquisition Corp. and Multicare, (iii) the
relationship between Genesis, Cypress, Nazem and TPG and the rights and
obligations relating thereto and (iv) related matters including the Put/Call
Agreement and the Stockholders Agreement respecting Surety, the Merger Agreement
and the Multicare Management Agreement.
"Type" means with respect to Loans, any of the following, each of
which shall be deemed to be a different "Type" of Loan: Prime Rate Loans, LIBO
Rate Loans having a one-month Interest Period commencing on a specified date,
LIBO Rate Loans having a two-month Interest Period commencing on a specified
date, LIBO Rate Loans having a three-month Interest Period and LIBO Rate Loans
having a six-month Interest Period commencing on a specified date.
"United States Person" has the meaning ascribed to such term in
Section 1.13 hereof.
"Withdrawal Liability" has the meaning given to such term in ss.4201
of ERISA.
11.2 CONSTRUCTION. In this Agreement and each other Loan Document, unless
the context otherwise clearly requires,
(a) references to the plural include the singular, the singular the
plural and the part the whole;
(b) "or" has the inclusive meaning represented by the phrase
"and/or;"
(c) 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;
(d) 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;
(e) 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 whether or not stated; and
-112-
<PAGE>
(f) references 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 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 Multicare's
reasonable 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.
11.3 ACCOUNTING PRINCIPLES.
(a) As used herein, "GAAP" shall mean generally accepted accounting
principles (other than as set forth herein as to consolidation) in the United
States, applied on a basis consistent with the principles used in preparing the
financial statements of Multicare and its consolidated Subsidiaries as of
December 31, 1996 and for the fiscal year then ended. When the word
"consolidated" is used in this Agreement, it shall be used in a manner
consistent with generally accepted accounting principles in the United States
except that such principles relating to what entities shall be consolidated
shall be superseded by any terms of this Agreement which designate what entities
shall be consolidated for purposes relating hereto.
(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.
-113-
<PAGE>
ARTICLE 12
MISCELLANEOUS
12.1 NOTICES. Unless otherwise expressly provided under this Agreement all
notices, requests, demands, directions and other communications (collectively
"notices") given to or made upon any party under the provisions of this
Agreement (and unless otherwise specified, in each other Loan Document) shall be
by telephone (immediately confirmed in writing) or in writing (including
facsimile communication) and if in writing shall be delivered by hand,
nationally recognized overnight courier or U.S. mail or sent by facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages of this Agreement or in accordance with any
subsequent unrevoked written direction from any party to the others. All notices
shall, except as otherwise expressly provided in this Agreement, be effective
(a) in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective unless otherwise expressly
provided, telephonic notices must be confirmed in writing no later than the next
day by letter or facsimile, (d) if given by U.S. mail, the day after such
communication is deposited in the mails with overnight first class postage
prepaid, return receipt requested, and (e) if given by any other means
(including by air courier), when delivered; provided, further, that notices to
the Administrative Agent shall not be effective until received. Any Lender
giving any notice to the Borrowers shall simultaneously send a copy of such
notice to the Administrative Agent, and the Administrative Agent shall promptly
notify the other Lenders of the receipt by it of any such notice. Except as
otherwise provided in this Agreement, in the event of a discrepancy between any
telephonic or written notice, the written notice shall control.
12.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT. 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 except as expressly provided
otherwise (e.g., certain fee agreements and fee arrangements set forth in the
commitment letter relating hereto). This Agreement and the other Loan Documents
represent the entire agreement between the parties to this Agreement with
respect to the transactions contemplated hereby or thereby and, except as
expressly provided herein or in the other Loan Documents, shall not be affected
by reference to any other documents.
12.3 SEVERABILITY. Every provision of this Agreement and each of the other
Loan Documents is intended to be severable, and if any term or provision of this
Agreement or any of the other Loan Documents shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction. 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 necessary, the
offending provision or provisions and to alter
-114-
<PAGE>
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.
12.4 DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
affect the meaning or construction of any of the provisions of this Agreement.
12.5 GOVERNING LAW. This Agreement and the rights and obligations of the
parties under this Agreement and under the other Loan Documents shall be
construed in accordance with and shall be governed by the laws of the
Commonwealth of Pennsylvania.
12.6 NON-MERGER OF REMEDIES. The covenants and obligations of the
Borrowers and the rights and remedies of the Administrative Agent and other
Lender Parties hereunder and under the other Loan Documents shall not merge with
or be extinguished by the entry of a judgment hereunder or thereunder, and such
covenants, obligations, rights and remedies shall survive any entry of a
judgment until payment in full of the Loan Obligations and termination of the
Commitment. All obligations under the Loan Documents shall continue to apply
with respect to and during the collection of amounts due under the Loan
Documents or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and in any workout, restructuring or in connection
with the protection, preservation, exercise or enforcement of any of the terms
of this Agreement or of any rights under this Agreement or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings. Without limiting the generality of the foregoing, post-judgment
interest rate shall be the interest rate provided in paragraph (d) of Section
1.8 (Default Rate) above.
12.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES. No course of dealing and no
delay or failure of the Administrative Agent or any other Lender Party 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
Administrative 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 Administrative 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 12.8 below shall be effective
only as to such specific default and shall not apply to any subsequent default.
-115-
<PAGE>
12.8 AMENDMENTS; WAIVERS. Any term, covenant, agreement or condition of
any Loan Document to which the Lenders (or the Administrative Agent) are party
may be amended, and any right under the Loan Documents may be waived, if, but
only if, such amendment or waiver is in writing and is signed by the Required
Lenders (or by the Administrative Agent at the direction of the Required
Lenders); provided, however, if the rights and duties of the Administrative
Agent are affected thereby, such amendment or waiver must be executed by the
Administrative Agent; and provided, further, that any amendment or waiver of the
terms of Article 3 hereof or any other amendment or waiver that relates to
Letters of Credit or rights or obligations relating thereto or the rights or
obligations of the Issuer must also be executed by the Issuer; and provided,
further, that no such amendment or waiver shall be effective unless in writing
and signed by each Lender referred to below, if it would
(a) increase such Lender's Commitment or the outstanding
amount of such Lender's Loans or Letters of Credit Participations, or
(b) extend the maturity of any Loan held by such Lender, or
the time of any scheduled principal payment of any Loan of such Lender;
(c) decrease the rate of interest or amount of fees due to
such Lender or decrease the principal amount in respect of any Loan of
such Lender or extend the time of payment of interest or fees due to such
Lender, provided that the written consent of the Required Lenders, rather
than the consent of all Lenders, shall be sufficient to waive imposition
of the Default Rate,
(d) reduce or waive any payment owing to such Lender in
respect to any unreimbursed Drawings; or
(e) change the number of Lenders which are required to consent
to any proposed action under this Agreement before such action may be
taken under this Agreement if such change could cause such Lender to lose
its right to participate in such consent;
and provided, further, that no such amendment or waiver shall be effective
unless in writing and signed by all the Lenders if it would
(i) amend the definition of "Required Lenders" or
(ii) release any Borrower of its Obligations or release
any guaranty or collateral security granted pursuant to the Loan
Documents;
provided, however, the Administrative Agent may, without the consent of any
Person, release any Borrower, guarantor or collateral security granted pursuant
to the Loan Documents, (A) as a court of competent jurisdiction may direct, or
(B) in connection with a disposition permitted under Section 8.5 above (other
than a disposition to another Borrower) or as may be otherwise provided under
the Loan Documents and provided further that for purposes of determining
whether" all Lenders", "the Required Lenders" or "any Lender" has consented to
any amendment or waiver, no effect shall be given to the determination of any
Lender who has lost its right to vote pursuant to Sections 1.3(c), 1.3(e)(ii),
or 1.6(e).
-116-
<PAGE>
Without limiting the generality of the foregoing, the Administrative Agent is
authorized and directed to take such action as it deems necessary or desirable
(including, without limitation, the execution and filing of UCC-3 termination
statements or the giving of direction to another Person to do the same) to
release any security interest referred to in the proviso to this clause (ii).
Further, the Administrative Agent and the Lenders may amend or modify the
provisions of Article 10 hereof (except for Section 10.9 (Successor
Administrative Agent) and paragraph (b) of Section 10.12 (Other Agents) and
Article 10A hereof) without the need for any consent or approval from the
Borrowers, it being acknowledged that the Borrowers are not third party
beneficiaries of the provisions of said Article 10 (except for Section 10.9
(Successor Administrative Agent) and paragraph (b) of Section 10.12 (Successor
Agent)) and (y) without the consent of any Lenders, the Administrative Agent may
enter into amendments and modifications to this Agreement and the other Loan
Documents as necessary or desirable to cure any ambiguities herein or therein or
to add additional Borrowers or add additional Collateral. Reference is made to
Article 10A of the Genesis Credit Agreement which affects the right of the
parties hereto to amend certain provisions set forth in Section 12.9 below
without the consent of certain Lenders party thereto; accordingly, when amending
Section 12.9 below, consideration shall be given to the provisions of said
Section 10A of the Genesis Credit Agreement.
12.9 SUCCESSORS AND ASSIGNS
(a) Assignments by the Borrowers. Without the prior written consent
of all of the Lenders, no Borrower may assign any of its rights or delegate any
of its duties or obligations under this Agreement or any other Loan Document.
(b) Participations. Any Lender or the Issuer may sell participations
to one or more Eligible Institutions of all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment); provided, however, that, with respect to any Lender,
(i) such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties to this
Agreement for the performance of such obligations, (iii) all amounts payable by
the Borrowers under this Agreement shall be determined as if such transferor
Lender had not sold such participation and no participant shall be entitled to
receive any greater amount pursuant to this Agreement than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such participant had no
such transfer occurred, (iv) such participant shall agree to be bound by the
provisions of this Agreement and the other Loan Documents, (v) with respect to
any sale of a participation in any Tranche hereunder, such Lender shall
contemporaneously sell to the same participant a proportionately equal amount of
its interest in the same Tranche under the Genesis Credit Agreement, and (vi)
the Borrowers, the Administrative Agent and the other Lenders shall continue to
deal solely and directly with such transferor Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole rights and responsibility vis-a-vis the Borrowers to enforce the
obligations of the Borrowers relating to the Loans and Letters of Credit
including the right to approve any amendment, modification or waiver of any
provision of this Agreement (except that such Lender may give its participants
the right to
-117-
<PAGE>
direct such Lender to approve or disapprove any amendment, modification or
waiver which would require such Lender's consent under clause (a) (b), (c), of
the preceding Section 12.8).
(c) Assignments by Lenders. Each Lender and the Issuer may assign to
one or more Eligible Institutions all or a portion of its interest, rights and
obligations under this Agreement (including all or a portion of its Commitment)
and the other Loan Documents; provided, however, that with respect to any
assignment, (i) unless the assignee is (prior to the effective time of the
assignment) an existing Lender or the Issuer or an Affiliate of an existing
Lender or the Issuer, the Administrative Agent and, if no Event of Default has
occurred and is continuing, Multicare (on behalf of the Borrowers) must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) the parties to each such assignment shall execute
and deliver to the Administrative Agent and, unless an Event of Default has
occurred and is continuing, Multicare (on behalf of the Borrowers), for their
acceptance, an Assignment and Acceptance Agreement in substantially the form
attached hereto as Exhibit H (an "Assignment and Acceptance"), together with (A)
any Note subject to such assignment, and (B) a processing and recordation fee of
$3,500.00, (or such lesser amount as is required for the Administrative Agent to
receive an aggregate amount equal to $3,500.00 under this Agreement and the
Genesis Credit Agreement in respect of such transfer), (iii) no Lender may make
a partial assignment if the amount of its portion of the Commitment and (without
duplication) the outstanding Loans and Letter of Credit Participations, together
with the amount of its interest under the Genesis Credit Agreement assigned in
accordance with clause (v) below, is, or after giving effect to the proposed
assignment would be, less than Ten Million Dollars ($10,000,000.00), (iv) unless
the assignee is (prior to the effective time of the assignment) the Issuer or a
Lender hereunder, the aggregate amount of any interest so sold to any assignee
pursuant to any partial assignment hereunder, together with the aggregate amount
so sold to such assignee in accordance with clause (v) below, may not be less
than Ten Million Dollars ($10,000,000.00), and (v) with respect to any
assignment of an interest in any Tranche hereunder, the assignor shall
contemporaneously assign to the same assignee a proportionately equal amount of
its interest in the same Tranche under the Genesis Credit Agreement.
The requirements set forth in paragraphs (iii) and (iv) above and
the requirements as to an assignee being an Eligible Institution shall not apply
to certain assignments approved by the Administrative Agent and Genesis (on
behalf of the Borrowers) prior to the Agreement Date. "Partial assignment" as
used in clauses (iii) and (iv) above means any assignment of a Lender's rights
and obligations hereunder except an assignment of all of such Lender's rights
and obligations such that after the assignment such Lender shall have no
Commitment and no interest in any Loans or Letters of Credit hereunder. Upon
compliance with clauses (i) through (v) above, from and after the effective date
specified in the relevant Assignment and Acceptance, (1) the assignee shall be a
party to this Agreement and the other Loan Documents and to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and under the other Loan Documents and (2) the assigning
Lender shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement and the other Loan Documents.
-118-
<PAGE>
(d) Procedures Respecting Assignment. Upon their receipt of an
Assignment and Acceptance executed by the assignor and the assignee, subject to
the conditions set forth in the preceding paragraph (c), the Administrative
Agent and (unless an Event of Default shall have occurred and be continuing)
Multicare (on behalf of the Borrowers) shall accept such Assignment and
Acceptance. If the subject assignment is of an interest in the Tranche A
Commitment and Tranche A Term Loan and/or RC Commitment and RC Loans, within
thirty (30) days after such Assignment and Acceptance is signed and accepted by
all parties and made effective, the Borrowers, at their own expense, shall
execute and deliver to the Administrative Agent new Notes in exchange for the
surrendered Notes, each to the order of such assignee in an amount equal to its
portion of the Commitment and Loans, assigned to it pursuant to such Assignment
and Acceptance and new Notes to the order of the assigning Lender in an amount
equal to the Commitment and Loans retained by it. Such Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the date of such surrendered Notes (each
assignee shall confirm in the Assignment and Acceptance that, notwithstanding
the date of the new Notes made in favor of such assignee, such assignee shall
have no right to, or interest in, any fees or interest which shall have accrued
on the Loans prior to the effective date of the Assignment and Acceptance).
Cancelled or replaced Notes shall be returned to the Borrowers upon the
execution of such new Notes.
(e) Assignments to Federal Reserve Bank. Notwithstanding any of the
terms of this Section 12.9, without the consent of the Administrative Agent and
the Borrowers, (i) any Lender may assign all or any portion of its rights to
payments in connection with this Agreement to a Federal Reserve Bank as
collateral in accordance with Regulation A of the Board of Governors of the
Federal Reserve System and (ii) in the case of any Lender that is a fund, any
such Lender may collaterally assign or pledge any portion of its Loans (other
than RC Loans) and its Notes (other than RC Notes) to its trustee (if such
trustee is an Eligible Institution) in support of its obligations to such
trustee, provided, however, that before any other transfer may be made to such
trustee (whether as a result of such collateral assignment or pledge or
otherwise) the conditions of paragraphs (c) and (d) above must be satisfied.
Such assignment shall not affect any other rights or any obligations of the
assigning Lender
12.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE PAGES. Any Loan
Document may be executed in one or more counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. Delivery of a photocopy or telecopy of an executed counterpart
of a signature page to any Loan Document shall be as effective as delivery of a
manually executed counterpart of such Loan Document.
12.11 MAXIMUM LAWFUL INTEREST RATE. Notwithstanding any provision
contained in this Agreement or the Notes or any other Loan Document, 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 payment
by the Borrowers includes interest in excess of such a maximum amount, each
Lender shall apply such excess to the reduction of the unpaid principal amount
due pursuant to this Agreement and the Notes, or if none is due,
-119-
<PAGE>
to the other Loan Obligations, if any, and then such excess shall be refunded to
Multicare (on behalf of the Borrowers).
12.12 INDEMNIFICATION.
(a) Whether or not any fundings are made under this Agreement, the
Borrowers jointly and severally shall unconditionally upon demand, pay or
reimburse the Administrative Agent and other Lender Parties for, and indemnify
and save the Administrative Agent, the other Lender Parties and their respective
Affiliates, officers, directors, employees, agents, attorneys, shareholders and
consultants (collectively, "Indemnitees") harmless 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 Indemnitee in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may at any time be imposed on, asserted against or incurred
by such Indemnitee 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, any Acquisition or
transaction from time to time contemplated hereby or by any other Loan Document,
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, any
transaction contemplated by the Transaction Documents but excluding any such
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements that the Borrower proves were the
result solely of the gross negligence or willful misconduct of such Indemnitee,
as finally determined by a court of competent jurisdiction. If and to the extent
that the foregoing obligations of the Borrowers under this paragraph (a), 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.
(b) Without limiting the generality of the foregoing, the Borrowers
jointly and severally hereby indemnify and agree to defend and hold harmless
each Indemnitee, from and against any and all claims, actions, causes of action,
liabilities, penalties, fines, damages, judgments, losses, suits, expenses,
legal or administrative proceedings, interest, costs and expenses (including
court costs and attorneys', consultants' and experts' fees) arising out of or in
any way relating to: (i) the use, handling, management, production, treatment,
processing, storage, transfer, transportation, disposal, release or threat of
release of any Environmental Concern Material by or on behalf of, any Borrower
or any of its Environmental Affiliates; (ii) the presence of Environmental
Concern Materials on, about, beneath or arising from any premises owned or
occupied by any Borrower or any of its Environmental Affiliates (herein
collectively, the "Premises"); (iii) the failure of any Borrower or
Environmental Affiliate of a Borrower or any occupant of any Premises to comply
with the Environmental Laws; (iv) any Borrower's breach of any of the
representations, warranties and covenants contained herein or in any Loan
Documents; (v) Regulatory Actions (as hereinafter defined) and Third Party
Claims (as hereinafter defined); or (vi) the imposition or recording of a Lien
against any Premises in connection with any release at, on or from any Premises
or any activities undertaken on or occurring at any Premises, or arising from
such Premises or pursuant to any Environmental Law. The
-120-
<PAGE>
Borrowers' indemnity and defense obligations under this section shall include,
whether foreseeable or unforeseeable, any and all costs related to any remedial
action. "Regulatory Action" means any notice of violation, citation, complaint,
request for information, order, directive, compliance schedule, notice of claim,
consent decree, action, litigation or proceeding brought or instituted by any
governmental authority under or in connection with any Environmental Law
involving any Borrower or any occupant of any of the Premises or involving any
of the Premises or any activities undertaken on or occurring at any Premises.
"Third Party Claims" means claims by a party (other than a party to this
Agreement and other than Regulatory Actions) based on negligence, trespass,
strict liability, nuisance, toxic tort or detriment to human health or welfare
due to Environmental Concern Materials on, about, beneath or arising from any
Premises or in any way related to any alleged violation of any Environmental
Laws or any activities undertaken on or occurring at any Premises.
(c) The indemnities contained herein shall survive repayment of the
Loan Obligations, termination of the Commitment and satisfaction, release, and
discharge of the Loan Documents, whether through full payment of the Loans,
foreclosure, deed in lieu of foreclosure or otherwise.
(d) The foregoing amounts are in addition to any other amounts which
may be due and payable to the Administrative Agent and/or the Lenders under this
Agreement. A certification by the Administrative Agent or a Lender hereunder of
the amount of liabilities, losses, costs, expenses, claims and/or charges shall
be conclusive, absent manifest error.
12.13 EXPENSES
Whether or not there shall be any funding hereunder, the Borrowers
agree, jointly and severally, to pay promptly or cause to be paid promptly and
to hold harmless
(i) with respect to matters relating to clause (1) of
this paragraph (i), the Agents, and, with respect to clauses (2) and
(3) of this paragraph (i), the Administrative Agent (and after an
Event of Default, and for the period in which the same shall
continue, each Lender Party) 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 it from time to time arising from or relating to (1) the
negotiation, preparation, execution and delivery of this Agreement
and the other Loan Documents, (2) the administration and performance
of this Agreement and the other Loan Documents, and (3) any
requested amendments, modifications, supplements, waivers or
consents (whether or not ultimately entered into or granted) to this
Agreement or any other Loan Document;
(ii) the Administrative Agent (and, with respect to
clause (4) of this paragraph (ii) after an Event of Default, and for
the period in which the same shall continue, each Lender Party)
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,
-121-
<PAGE>
consulting engineers, appraisers, and all other professional,
accounting, evaluation and consulting costs) incurred by it from
time to time arising from or relating to the enforcement or
preservation of rights under, or administration of, this Agreement
or any other Loan Document (including but not limited to any such
costs or expenses arising from or relating to (1) the creation,
perfection or protection of any Lien on any Collateral, (2) the
protection, collection, lease, sale, taking possession of,
preservation of, or realization on, any Collateral, including
advances for storage, insurance premiums, transportation charges,
taxes, filing fees and the like, (3) collection or enforcement of an
outstanding Loan, Obligation, and (4) any litigation, proceeding,
dispute, work-out, restructuring or rescheduling related in any way
to this Agreement or the other Loan Documents); and
(iii) each Lender Party against liability for 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.
12.14 MAXIMUM AMOUNT OF JOINT AND SEVERAL LIABILITY. To the extent that
applicable Law otherwise would render the full amount of the joint and several
obligations of any Subsidiary of Multicare 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, provided, however, that each
Borrower's obligations hereunder and under the other Loan Documents shall be
presumptively valid and enforceable to their fullest extent in accordance with
the terms hereof or thereof, as if this Section 12.14 were not a part of this
Agreement.
12.15 AUTHORIZATION OF MULTICARE BY OTHER BORROWERS.
(a) Each of the Borrowers hereby irrevocably authorizes Multicare 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 is coupled with an
interest and shall be irrevocable, and the Administrative Agent and each Lender
Party may rely on any notice, request, information supplied by Multicare and
every document executed by Multicare, agreement made by Multicare or other
action taken by Multicare in respect of the Borrowers or any thereof as if the
same were supplied, made or taken 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.
(b) 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 and Letters of Credit
hereunder. Multicare and, subject only to the terms of the preceding paragraph
(a), each of the other Borrowers, shall be
-122-
<PAGE>
jointly and severally liable for all Loan Obligations, regardless of, inter
alia, which Borrower requested (or received the proceeds of) a particular Loan
or Letter of Credit.
12.16 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
Commitment hereunder and the Loan Obligations owing to it, the Administrative
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 Administrative Agent, and the terms "Lender," "Issuer," "Holders of
Notes" and like terms shall include the Administrative Agent in its individual
capacity as such. The Administrative 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 "Administrative Agent" for other
financing vehicles, issue letters of credit on behalf of, and engage in any
other business with, (a) any Loan Party or any stockholder, Subsidiary or
Affiliate of any Loan Party or (b) any other Person, whether such other Person
may be engaged in any conflict or dispute with any Loan Party or any Lender
Party or otherwise, as though the Administrative Agent were not the
Administrative Agent hereunder.
12.17 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 Person or
any collateral or other direct or indirect security for any of the Loan
Obligations. Without limiting the generality of the foregoing, each Borrower
acknowledges and agrees that the Administrative Agent or other Lender Party may
commence an action against such Borrower whether or not any action is brought
against any other Borrower or against any collateral and it shall be no defense
to any action brought against any Borrower that the Lender Parties have failed
to bring an action against any other Loan Party or any Collateral.
12.18 SET-OFF. The Borrowers hereby agree that, to the fullest extent
permitted by Law, if any Loan Obligation 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 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 12.18. The rights
provided by this Section 12.18 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.
-123-
<PAGE>
12.19 SHARING OF COLLECTIONS. The Lender Parties hereby agree among
themselves that if any Lender Party shall receive (by voluntary payment,
realization upon security, charging of accounts, set-off or from any other
source) any amount on account of the Loan Obligations in greater proportion than
any such amount received by any other Lender Party (based on the relative amount
of each such Lender Party's interest in the Loan Obligations), then the Lender
Party receiving such proportionately greater payment shall notify each other
Lender Party and the Administrative Agent of such receipt, and equitable
adjustment will be made in the manner stated in this Section 12.19 so that, in
effect, all such excess amounts will be shared ratably among all of the Lender
Parties. The Lender Party 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 Lender Parties a participation in the applicable
Loan Obligations owed to such other Lender Parties in such amount as shall
result in a ratable sharing by all Lender Parties of such excess amount (and to
such extent the receiving Lender Party shall be a participant). If all or any
portion of such excess amount is thereafter recovered from the Lender Party
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 Party making such
purchase. The Borrowers hereby consent to and confirm the foregoing
arrangements. Each participant shall be bound by this Section 12.19 as fully as
if it were a Lender hereunder.
12.20 OTHER LOAN DOCUMENTS. Each Lender acknowledges that on signing this
Agreement it is bound by the terms of the Loan Documents. Without limiting the
generality of the foregoing, each Lender party to a Qualifying Interest Rate
Hedging Agreement acknowledges that it is familiar with the provisions set forth
in Section 2 of the Pledge Agreement.
12.21 CERTAIN BORROWER ACKNOWLEDGEMENTS. Each Borrower hereby acknowledges
that neither the Administrative Agent nor any other Lender Party has any
fiduciary relationship with, or any fiduciary duty to any Borrower arising out
of or in connection with this Agreement or any of the other Loan Documents and
the relationship between the Administrative Agent and the other Lender Parties,
on the one hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor.
12.22 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER OF JURY TRIAL.
(a) Consent to Jurisdiction. For the purpose of enforcing payment
and performance of the Loan Documents, including, any payment under the Notes
and performance of other obligations under the Loan Documents, or in any other
matter relating to, or arising out of, the Loan Documents, each of the Borrowers
hereby consents to the jurisdiction and venue of the courts of the Commonwealth
of Pennsylvania or of any federal court located in such state, waive personal
service of any and all process upon it and consents that all such service of
process be made by certified or registered mail directed to Multicare (on behalf
of the applicable Borrowers) at the address provided for in Section 12.1 and
service so made shall be deemed to be completed upon actual receipt or execution
of a receipt by any Person at such address. Each of the Borrowers hereby waives
the right to contest the jurisdiction and venue of the courts located in the
Commonwealth of Pennsylvania
-124-
<PAGE>
on the ground of inconvenience or otherwise and, further, waives any right to
bring any action or proceeding against (a) the Administrative Agent in any court
outside the Commonwealth of Pennsylvania, or (b) any other Lender other than in
a state within the United States designated by such Lender. The provisions of
this Section 12.22 shall not limit or otherwise affect the right of the
Administrative Agent or any other Lender Party to institute and conduct an
action in any other appropriate manner, jurisdiction or court.
(b) WAIVER OF JURY TRIAL; DAMAGES. NEITHER ANY LENDER PARTY NOR ANY
LOAN PARTY, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE
FOREGOING SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF
THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT, OR INVOLVING ANY COLLATERAL OR ANY
GUARANTY RELATING TO THE INDEBTEDNESS HEREUNDER OR THE RELATIONSHIP BETWEEN OR
AMONG SUCH PERSONS OR ANY OF THEM. NO SUCH PERSON WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES
ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS
SECTION 12.22 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS
AGREEMENT (i) CERTIFIES THAT NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER
PARTY NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR ANY
LENDER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE
AGENT OR SUCH LENDER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH (b) OF SECTION 12.22.
THE PROVISIONS OF THIS SECTION 12.22 HAVE BEEN FULLY DISCLOSED TO THE PARTIES
AND THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION 12.22 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
-125-
<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.
BORROWERS:
THE MULTICARE COMPANIES, INC., a
Delaware corporation
By /s/ James V. McKeon
_________________________
Name: James V. McKeon
Title: Vice President, Controller
and Assistant Secretary
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
ADS APPLE VALLEY LIMITED PARTNERSHIP, a Massachusetts limited partnership, by:
ADS Apple Valley, Inc. its General Partner
ADS DARTMOUTH GENERAL PARTNERSHIP, a Massachusetts general partnership, by ADS
Dartmouth ALF, Inc. and ADS Senior Housing, Inc., its General Partners
ADS HINGHAM LIMITED PARTNERSHIP, a Massachusetts limited partnership, by ADS
Hingham Nursing Facility, Inc., its General Partner
ADS RECUPERATIVE CENTER LIMITED PARTNERSHIP, a Massachusetts limited
partnership, by ADS Recuperative Center, Inc., its General Partner
CARE 4, L.P., a Delaware limited partnership, by Institutional Health Care
Services, Inc., its General Partner
CARE HAVEN ASSOCIATES LIMITED PARTNERSHIP, a West Virginia limited partnership,
by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its
General Partners
/s/ JVM
---------------------
Initials of Signor
-126-
<PAGE>
CUMBERLAND ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by
Health Resources of Cumberland, Inc., its General Partner
GLENMARK PROPERTIES I, LIMITED PARTNERSHIP, a West Virginia limited partnership,
by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its
General Partners
GROTON ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by
Health Resources of Groton, Inc., its General Partner
MIDDLETOWN (RI) ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited
partnership, by Health Resources of Middletown (R.I.), Inc., its General Partner
POINT PLEASANT HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership,
by Glenmark Associates, Inc., its General Partner
RALEIGH MANOR LIMITED PARTNERSHIP, a West Virginia limited partnership, by
Glenmark Associates, Inc., its General Partner
ROMNEY HEALTH CARE CENTER LIMITED PARTNERSHIP, a West Virginia limited
partnership, by Glenmark Associates, Inc., its General Partner
SISTERVILLE HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by
Glenmark Associates, Inc., its General Partner
TEAYS VALLEY HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by
Glenmark Associates, Inc., its General Partner
THE STRAUS GROUP - HOPKINS HOUSE, L.P., a New Jersey limited partnership, by
Encare of Wyncote, Inc., its General Partner
THE STRAUS GROUP - QUAKERTOWN MANOR, L.P., a New Jersey limited partnership, by
Encare of Quakertown, Inc., its General Partner
WALLINGFORD ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by
Health Resources of Wallingford, Inc., its General Partner
WARWICK ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by
Health Resources of Warwick, Inc., its General Partner
By: /s/ James V. McKeon
__________________________
On behalf of each of the foregoing
as Vice President, Controller
and Assistant Secretary of the General
Partner
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
-127-
<PAGE>
HOLLY MANOR ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by
Encare of Mendham, L.L.C., its General Partner, by Century Care Management,
Inc., its authorized manager
MERCERVILLE ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by
Breyut Convalescent Center, L.L.C., its General Partner, by Century Care
Management, Inc., its authorized manager
POMPTON ASSOCIATES, L.P., a New Jersey limited partnership, by Pompton Corp.,
L.L.C., its General Partner, by Century Care Management, Inc., its authorized
manager
THE STRAUS GROUP - OLD BRIDGE, L.P., a New Jersey limited partnership, by Health
Resources of Emery, L.L.C., its General Partner, by Century Care Management,
Inc., its authorized manager
THE STRAUS GROUP - RIDGEWOOD, L.P., a New Jersey limited partnership, by Health
Resources of Ridgewood, L.L.C., its General Partner, by Century Care Management,
Inc., its authorized manager
By: /s/ James V. McKeon
__________________________
On behalf of each of the foregoing
as Vice President, Controller
and Assistant Secretary of the manager
Address for notices:
149 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
-128-
<PAGE>
ACADEMY NURSING HOME, INC., a Massachusetts corporation
ADS APPLE VALLEY, INC., a Massachusetts corporation
ADS CONSULTING, INC., a Massachusetts corporation
ADS DANVERS ALF, INC., a Delaware corporation
ADS DARTMOUTH ALF, INC., a Delaware corporation
ADS HINGHAM ALF, INC., a Delaware Corporation
ADS HINGHAM NURSING FACILITY, INC., a Massachusetts corporation
ADS HOME HEALTH, INC., a Delaware corporation
ADS MANAGEMENT, INC., a Massachusetts corporation
ADS/MULTICARE, INC., a Delaware corporation
ADS RECUPERATIVE CENTER, INC., a Massachusetts corporation
ADS SENIOR HOUSING, INC., a Massachusetts corporation
ADS VILLAGE MANOR, INC., a Massachusetts corporation
ANR, INC., a Delaware corporation
APPLEWOOD HEALTH RESOURCES, INC., a Delaware corporation
AUTOMATED PROFESSIONAL ACCOUNTS, INC., a West Virginia corporation
BERKS NURSING HOMES, INC., a Pennsylvania corporation
BETHEL HEALTH RESOURCES, INC., a Delaware corporation
BRIGHTWOOD PROPERTY, INC., a West Virginia corporation
CENTURY CARE CONSTRUCTION, INC., a New Jersey corporation
CENTURY CARE MANAGEMENT, INC., a Delaware corporation
CHATEAU VILLAGE HEALTH RESOURCES, INC., a Delaware corporation
CHG INVESTMENT CORP., INC., a Delaware corporation
CHNR-1, INC., a Delaware corporation
COLONIAL HALL HEALTH RESOURCES, INC., a Delaware corporation
COLONIAL HOUSE HEALTH RESOURCES, INC., a Delaware corporation
COMPASS HEALTH SERVICES, INC., a West Virginia corporation
CONCORD HEALTH GROUP, INC., a Delaware corporation
/s/ JVM
--------------------
Initials of Signor
-129-
<PAGE>
CONCORD HOME HEALTH, INC., a Pennsylvania corporation
CONCORD PHARMACY SERVICES, INC., a Pennsylvania corporation
CONCORD REHAB, INC., a Pennsylvania corporation
CONCORD SERVICE CORPORATION, a Pennsylvania corporation
CVNR, INC., a Delaware corporation
DELM NURSING, INC., a Pennsylvania corporation
ELMWOOD HEALTH RESOURCES, INC., a Delaware corporation
ENCARE OF MASSACHUSETTS, INC., a Delaware corporation
ENCARE OF PENNYPACK, INC., a Pennsylvania corporation
ENCARE OF QUAKERTOWN, INC., a Pennsylvania corporation
ENCARE OF WYNCOTE, INC., a Pennsylvania corporation
ENR, INC., a Delaware corporation
GLENMARK ASSOCIATES, INC., a West Virginia corporation
GMA - BRIGHTWOOD, INC., a West Virginia corporation
GMA CONSTRUCTION, INC., a West Virginia corporation
GMA - MADISON, INC., a West Virginia corporation
GMA PARTNERSHIP HOLDING COMPANY, INC., a West Virginia corporation
GMA - UNIONTOWN, INC., a Pennsylvania corporation
HEALTH RESOURCES OF BROADMAN, INC., a Delaware corporation
HEALTH RESOURCES OF CEDAR GROVE, INC., a New Jersey corporation
HEALTH RESOURCES OF COLCHESTER, INC., a Connecticut corporation
HEALTH RESOURCES OF COLUMBUS, INC., a Delaware corporation
HEALTH RESOURCES OF CUMBERLAND, INC., a Delaware corporation
HEALTH RESOURCES OF EATONTOWN, INC., a New Jersey corporation
HEALTH RESOURCES OF FARMINGTON, INC., a Delaware corporation
HEALTH RESOURCES OF GARDNER, INC., a Delaware corporation
/s/ JVM
--------------------
Initials of Signor
-130-
<PAGE>
HEALTH RESOURCES OF GLASTONBURY, INC., a Connecticut corporation
HEALTH RESOURCES OF GROTON, INC., a Delaware corporation
HEALTH RESOURCES OF LAKEVIEW, INC., a New Jersey corporation
HEALTH RESOURCES OF LEMONT, INC., a Delaware corporation
HEALTH RESOURCES OF LYNN, INC., a New Jersey corporation
HEALTH RESOURCES OF KARMENTA AND MADISON, INC., a Delaware corporation
HEALTH RESOURCES OF MARCELLA, INC., a Delaware corporation
HEALTH RESOURCES OF MIDDLETOWN (R.I.), INC., a Delaware corporation
HEALTH RESOURCES OF MORRISTOWN, INC., a New Jersey corporation
HEALTH RESOURCES OF NORFOLK, INC., a Delaware corporation
HEALTH RESOURCES OF NORWALK, INC., a Connecticut corporation
HEALTH RESOURCES OF PENNINGTON, INC., a New Jersey corporation
HEALTH RESOURCES OF ROCKVILLE, INC., a Delaware corporation
HEALTH RESOURCES OF SOUTH BRUNSWICK, INC., a New Jersey corporation
HEALTH RESOURCES OF TROY HILLS, INC., a New Jersey corporation
HEALTH RESOURCES OF WALLINGFORD, INC., a Delaware corporation
HEALTH RESOURCES OF WARWICK, INC., a Delaware corporation
HEALTHCARE REHAB SYSTEMS, INC., a Pennsylvania corporation
HORIZON ASSOCIATES, INC., a West Virginia corporation
HORIZON MEDICAL EQUIPMENT AND SUPPLY, INC., a West Virginia corporation
HORIZON MOBILE, INC., a West Virginia corporation
HORIZON REHABILITATION, INC., a West Virginia corporation
HR OF CHARLESTON, INC., a West Virginia corporation
HRWV Huntington, Inc., a West Virginia corporation
/s/ JVM
--------------------
Initials of Signor
-131-
<PAGE>
INSTITUTIONAL HEALTH CARE SERVICES, INC., a New Jersey corporation
LAKEWOOD HEALTH RESOURCES, INC., a Delaware corporation
LAUREL HEALTH RESOURCES, INC., a Delaware corporation
LEHIGH NURSING HOMES, INC., a Pennsylvania corporation
LWNR, INC., a Delaware corporation
MABRI CONVALESCENT CENTER, INC., a Connecticut corporation
MARKGLEN, INC., a West Virginia corporation
MARSHFIELD HEALTH RESOURCES, INC., a Delaware corporation
MONTGOMERY NURSING HOMES, INC., a Pennsylvania corporation
MULTICARE AMC, INC., a Delaware Corporation
MULTICARE HOME HEALTH OF ILLINOIS, INC., a Delaware corporation
NATIONAL PHARMACY SERVICE, INC., a Pennsylvania corporation
NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC., a Massachusetts corporation
PHC OPERATING CORP., a Delaware corporation
POCAHONTAS CONTINUOUS CARE CENTER, INC., a West Virginia corporation
PRESCOTT NURSING HOME, INC., a Massachusetts corporation
PROGRESSIVE REHABILITATION CENTERS, INC., a Delaware corporation
PROVIDENCE HEALTH CARE, INC., a Delaware corporation
REST HAVEN NURSING HOME, INC, a West Virginia corporation
RIDGELAND HEALTH RESOURCES, INC., a Delaware corporation
RIVER PINES HEALTH RESOURCES, INC., a Delaware corporation
RIVERSHORES HEALTH RESOURCES, INC., a Delaware corporation
RLNR, INC., a Delaware corporation
ROSE HEALTHCARE, INC., a New Jersey corporation
ROSE VIEW MANOR, INC., a Pennsylvania corporation
RSNR, INC., a Delaware corporation
RVNR, INC., a Delaware corporation
SENIOR LIVING VENTURES, INC., a Pennsylvania corporation
/s/ JVM
------------------
Initials of Signor
-132-
<PAGE>
SCHUYLKILL NURSING HOMES, INC., a Pennsylvania corporation
SCHUYLKILL PARTNERSHIP ACQUISITION CORP., a Pennsylvania corporation
SENIOR SOURCE, INC., a Massachusetts corporation
SNOW VALLEY HEALTH RESOURCES, INC., a Delaware corporation
SOLOMONT FAMILY FALL RIVER VENTURE, INC., a Massachusetts corporation
SOLOMONT FAMILY MEDFORD VENTURE, INC., a Massachusetts corporation
STAFFORD CONVALESCENT CENTER, INC., a Delaware corporation
S.T.B. INVESTORS, LTD., a New York corporation
SVNR, INC., a Delaware corporation
THE ADS GROUP, INC., a Massachusetts corporation
TRI-STATE MOBILE MEDICAL SERVICES, INC., a West Virginia corporation
WESTFORD NURSING AND RETIREMENT CENTER, INC., a Massachusetts corporation
WILLOW MANOR NURSING HOME, INC., a Massachusetts corporation
By: /s/ James V. McKeon
_______________________
On behalf of each of the foregoing as Vice
President, Controller and Assistant
Secretary
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
-133-
<PAGE>
BREYUT CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
ENCARE OF MENDHAM, L.L.C., a New Jersey limited liability company, by Century
Care Management, Inc., its authorized manager
HEALTH RESOURCES OF BRIDGETON, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF CINNAMINSON, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF CRANBURY, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF EMERY, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF ENGLEWOOD, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF EWING, L.L.C., a New Jersey limited liability company. by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF FAIR LAWN, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF JACKSON, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF RIDGEWOOD, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
HEALTH RESOURCES OF WEST ORANGE, L.L.C., a New Jersey limited liability company,
by Century Care Management, Inc., its authorized manager
POMPTON CARE, L.L.C., a New Jersey limited liability company, by Century Care
Management, Inc., its authorized manager
ROEPHEL CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by
Century Care Management, Inc., its authorized manager
/s/ JVM
------------------
Initials of Signor
-134-
<PAGE>
TOTAL REHABILITATION CENTER, L.L.C., a New
Jersey limited liability corporation, by
Century Care Management, Inc., its authorized
manager
By: /s/ James V. McKeon
_______________________
On behalf of each of the foregoing
Vice President, Controller
and Assistant Secretary of the manager
Address for notices:
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telephone: (610) 444-6350
Facsimile: (610) 444-3365
-135-
<PAGE>
The Surety hereby joins this Credit Agreement for the purposes of (1)
acknowledging the terms and conditions and receipt of a true, correct and
complete copy hereof, (2) representing and warranting to the Lender Parties that
the representations and warranties contained herein are true and correct, and
(3) agreeing with the Lender Parties to comply with the affirmative, financial
and negative covenants contained herein to the extent they apply, by their
terms, to the Surety.
GENESIS ELDERCARE CORP.
By /s/ James V. McKeon
_______________________
Title:
-136-
<PAGE>
[PAGES 137-177 INTENTIONALLY OMITTED]
-137-
<PAGE>
AGENTS, ISSUER AND LENDERS:
MELLON BANK, N.A., as a Lender,
as Issuer and as Administrative Agent
By /s/ Barbara J. Bauswald
________________________________
Name: Barbara J. Bauswald
Title: Vice President
Address for notices:
street address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, Pennsylvania 19106
mailing address:
AIM 199-5220
P.O. Box 7899
Philadelphia, Pennsylvania 19101-7899
Attention: Linda Sigler,
Loan Administration
Telephone: 215-553-4583
Facsimile: 215-553-4789
-178-
<PAGE>
With a copy to
Plymouth Meeting Executive Campus
610 W. Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
Attention: Barbara J. Hauswald
Vice President
Telephone: 610-941-8412
Facsimile: 610-941-4136
With a copy for notices respecting
assignments to:
MELLON BANK, N.A.
One Mellon Bank Center
45th Floor
Pittsburgh, PA 15258-0001
Attention: Dean Hazelton
Telephone: 412-236-0316
Facsimile: 412-234-4612
-179-
<PAGE>
CITICORP USA INC., as a Lender and as
Syndication Agent
By /s/ Margaret A. Brown
_______________________________
Name: Margaret A. Brown
Title: Managing Director
Address for notices:
399 Park Avenue
8th Floor, Zone 6
New York, NY 10043
Attention: Margaret A. Brown
Telephone: 212-559-0501
Facsimile: 212-793-0289
-180-
<PAGE>
FIRST UNION NATIONAL BANK, as a Lender and
as Documentation Agent
By /s/ Joseph H. Towell
________________________________
Name: Joseph H. Towell
Title: Senior Vice President
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
-181-
<PAGE>
NATIONSBANK, N.A., as a Lender and as a
Syndication Agent
By /s/ Scott S. Ward
_______________________________
Name: Scott S. Ward
Title: Senior Vice President
Address for notices:
101 North Tryon Street
15th Floor
Charlotte, NC 28255
NC1-001-15-11
Attention: Jacquetta Banks
Telephone: 704-388-1111
Facsimile: 704-386-8694
With a copy to
100 North Tryon Street
8th Floor
Charlotte, NC 28255
NC1-007-0813
Attention: Scott Ward
Telephone: 704-388-7839
Facsimile: 704-388-6002
-182-
<PAGE>
CORESTATES BANK, N.A.
By /s/ Jennifer W. Leibowitz
________________________________
Name: Jennifer W. Leibowitz
Title: Vice President
Address for notices:
CoreStates Bank, N.A.
1339 Chestnut Street
F.C. 1-8-3-22
P.O. Box 7618
Philadelphia, PA 19101-7618
Attention: Jennifer Leibowitz
Telephone: (215) 786-3972
Facsimile: (215) 973-2738
-183-
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Farboud Tavangar
________________________________
Name: Farboud Tavangar
Title: First Vice President
Address for notices:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Evan S. Wasser
Telephone: (212) 261-7685
Facsimile: (212) 261-3440
-184-
<PAGE>
FLEET NATIONAL BANK
By /s/ Ginger Stolzenthaler
________________________________
Name: Ginger Stolzenthaler
Title: Senior Vice President
Address for notices:
Fleet National Bank
75 State Street
MA BO F04A
Boston, MA 02109
Attention: Ginger Stolzenthaler
Telephone: (617) 346-1647
Facsimile: (617) 346-1634
-185-
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By /s/ Takuya Honjo
________________________________
Name: Takuya Honjo
Title: Senior Vice President
Address for notices:
The Industrial Bank of Japan, Limited
1251 Avenue of the Americas
New York, NY 10020
Attention: Ken Takehisa
Telephone: (212) 282-3321
Facsimile: (212) 282-4490
-186-
<PAGE>
NATIONAL WESTMINSTER BANK Plc
By /s/ Andrew S. Weinberg
________________________________
Name: Andrew S. Weinberg
Title: Vice President
Address for notices:
National Westminster Bank Plc
175 Water Street, 26th Floor
New York, NY 10038
Attention: Andrew Weinberg
Phone: (212) 602-4438
Facsimile: (212) 602-4506
with a copy to:
Gleacher NatWest Inc.
660 Madison Avenue, 17th Floor
New York, NY 10021
Attention: Field Smith
Telephone: (212) 418-4525
Facsimile: (212) 418-4598
-187-
<PAGE>
THE SAKURA BANK, LIMITED
By /s/ Yoshikazu Nagura
________________________________
Name: Yoshikazu Nagura
Title: Vice President
Address for notices:
The Sakura Bank, Limited
277 Park Avenue, 45th Floor
New York, NY 10172
Attention: Philip Schubert
Telephone: (212) 756-6945
Facsimile: (212) 888-7651
-188-
<PAGE>
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ Edward S. Han
________________________________
Name: Edward S. Han
Title: Vice President
Address for notices:
Bank of America National Trust
& Savings Associations
555 S. Flower Street, 11th Floor
Los Angeles, CA 90071
Attention: Lucy Nixon
Telephone: (213) 228-9716
Facsimile: (213) 228-2756
-189-
<PAGE>
BANQUE PARIBAS
By /s/ David R. Laffey
________________________________
Name: David R. Laffey
Title: Director
By /s/ Brett I. Mehlman
________________________________
Name: Brett I. Mehlman
Title: Director
Address for notices:
Banque Paribas
787 Seventh Avenue
New York, NY 10019
Attention: David R. Laffey
Telephone: (212) 841-2116
Facsimile: (212) 841-2292
-190-
<PAGE>
BANK OF MONTREAL
By /s/ Peter Konigsmann
________________________________
Name: Peter Konigsmann
Title: Director
Address for notices:
Bank of Montreal
115 South LaSalle Street
Chicago, IL 60603
Attention: Peter Konigsmann
Telephone: (312) 750-8704
Facsimile: (312) 750-3834
-191-
<PAGE>
BANKBOSTON, N.A.
By /s/ Charles C. Woodard
________________________________
Name: Charles C. Woodard
Title: Managing Director
Address for notices:
BankBoston, N.A.
100 Federal Street, 01-19-03
Boston, MA 02110
Attention: Marilyn Fenollosa
Telephone: (617) 434-7684
Facsimile: (617) 434-7980
-192-
<PAGE>
THE BANK OF NEW YORK
By /s/ Peter H. Abdill
________________________________
Name: Peter H. Abdill
Title: Vice President
Address for notices:
The Bank of New York
One Wall Street, 21st Floor
New York, NY 10286
Attention: Walter C. Parelli
Telephone: (212) 635-6820
Facsimile: (212) 635-7978
-193-
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By /s/ J. Beckwith
________________________________
Name: J. Beckwith
Title: Vice President
Address for notices:
Bank of Tokyo-Mitsubishi Trust Company
1251 Avenue of the Americas, 12th Floor
New York, NY 10020-1104
Attention: Ned Komar
Telephone: (212) 782-4584
Facsimile: (212) 782-4935
-194-
<PAGE>
CRESTAR BANK
By /s/ Leesa McShane
________________________________
Name: Leesa McShane
Title: Vice President
Address for Notices:
Crestar Bank
120 E. Baltimore Street, 25th Floor
Baltimore, MD 21202
Attention: Leesa McShane
Telephone: (410) 986-1672
Facsimile: (410) 986-1670
-195-
<PAGE>
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH
By /s/ Andrew P. Nesi
_______________________________
Name: Andrew P. Nesi
Title: Vice President
By /s/ Felix K. Camacho
________________________________
Name: Felix K. Camacho
Title: Assistant Treasurer
Address for notices:
Dresdner Bank AG, New York
75 Wall Street, 25th Floor
New York, NY 10005-2889
Attention: Felix K. Camacho
Telephone: (212) 429-3007
Facsimile: (212) 429-2129
-196-
<PAGE>
FINOVA CAPITAL CORPORATION
By /s/ Dan Scanlan
________________________________
Name: Dan Scanlan
Title:
Address for notices:
Finova Capital Corporation
311 S. Wacker, Suite 4400
Chicago, IL 60606
Attention: Dan Scanlan
Telephone: (312) 322-3539
Facsimile: (312) 322-3553
-197-
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK BRANCH
By /s/ Teiji Teramoto
________________________________
Name: Teiji Teramoto
Title: Vice President and Manager
Address for notices:
The Fuji Bank, Limited,
New York Branch
Two World Trade Center
New York, NY 10048
Attention: Anh Nguyen
Telephone: (212) 898-2088
Facsimile: (212) 898-2399
-198-
<PAGE>
KEY CORPORATE CAPITAL INC.
By /s/ Angela Mago
________________________________
Name: Angela Mago
Title: Vice President
Address for notices:
Key Corporate Capital Inc.
c/o Key Bank, N.A.
127 Public Square
Cleveland, OH 44114
Attention: Angela Mago
OH-01-27-0605
Telephone: (216) 689-3247
Facsimile: (216) 689-5970
-199-
<PAGE>
KREDIETBANK N.V.
By Armen Karozichian
________________________________
Name: Armen Karozichian
Title: Vice President
By /s/ Robert Snauffer
________________________________
Name: Robert Snauffer
Title: Vice President
Address for notices:
Kredietbank N.V.
125 W. 55th Street
New York, NY 10021
Attention: Armen Karozichian
Telephone: (212) 541-0717
Facsimile: (212) 541-0793
-200-
<PAGE>
FIRST NATIONAL BANK OF MARYLAND
By /s/ Robert H. Hauver
________________________________
Name: Robert H. Hauver
Title: Vice President
Address for notices:
First National Bank of Maryland
25 S. Charles Street, 18th Floor
Baltimore, MD 21201
Attention: Robert H. Hauver
Telephone: (410) 244-4246
Facsimile: (410) 244-4388
-201-
<PAGE>
NATEXIS BANQUE BFCE
By /s/ Kevin Dooley
________________________________
Name: Kevin Dooley
Title: Vice President
By /s/ William C. Maier
________________________________
Name: William C. Maier
Title: VP - Group Manager
Address for notices:
Natexis Banque BFCE
645 Fifth Avenue, 20th Floor
New York, NY 10022
Attention: Frank Madden
Telephone: (212) 872-5180
Facsimile: (212) 872-5045
-202-
<PAGE>
ROYAL BANK OF CANADA
By /s/ Marion A. Patterson
________________________________
Name: Marion A. Patterson
Title: Senior Manager
Address for notices:
Royal Bank of Canada
Financial Square, 23rd Floor
New York, NY 10005-3531
Attention: Jim Rankin, Manager
Telephone: (212) 428-6204
Facsimile: (212) 428-2372
-203-
<PAGE>
NATIONAL CITY BANK OF PENNSYLVANIA
By /s/ D. W. Riefner
________________________________
Name: D. W. Riefner
Title: Vice President
Address for notices:
National City Bank of Pennsylvania
20 Stanwix Street
Pittsburgh, PA 15222
Loc. 46-25-191
Attention: Debra W. Riefner
Telephone: (412) 644-8880
Facsimile: (412) 471-4883
-204-
<PAGE>
THE MITSUBISHI TRUST AND BANKING CORPORATION
By /s/ Toshihiro Hayashi
________________________________
Name: Toshihiro Hayashi
Title: Senior Vice President
Address for notices:
The Mitsubishi Trust and Banking
Corporation
520 Madison Avenue, 26th Floor
New York, NY 10022
Attention: Clifford A. Teller
Telephone: (212) 891-8269
Facsimile: (212) 644-6825 or
(212) 593-4691
-205-
<PAGE>
THE SANWA BANK, LIMITED
By /s/ Christian Kambour
________________________________
Name: Christian Kambour
Title: Vice President
Address for notices:
The Sanwa Bank, Limited
55 E. 52nd Street
New York, NY 10055
Attention: Christian Kambour
Telephone: (212) 339-6232
Facsimile: (212) 754-1304
-206-
<PAGE>
THE SUMITOMO BANK, LIMITED
By /s/ J. Wade Bell
________________________________
Name: J. Wade Bell
Title: Vice President
By /s/ Michael J. Fox
________________________________
Name: Michael J. Fox
Title: Vice President and Manager
Address for notices:
The Sumitomo Bank, Limited
One Liberty Place
1650 Market Street, Suite 2860
Philadelphia, PA 19103
Attention: J. Wade Bell
Telephone: (215) 636-4440
Facsimile: (215) 636-4446
-207-
<PAGE>
TORONTO DOMINION (NEW YORK), INC.
By /s/ Jorge A. Garcia
________________________________
Name: Jorge A. Garcia
Title: Mgr. Cr. Admin.
Address for notices:
The Toronto-Dominion Bank
909 Fannin, Suite 1700
Houston, Texas 77010
Attention: Jorge A. Garcia
Telephone: (713) 653-8242
Facsimile: (713) 951-9921
-208-
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By /s/ Noboru Kubora
________________________________
Name: Noboru Kubora
Title: Deputy General Manager
Address for notices:
The Long-Term Credit Bank of Japan, Ltd.
165 Broadway
New York, NY 10006
Attention: Junicchi Ebihara
Telephone: (212) 335-4477
Facsimile: (212) 608-2371
-209-
<PAGE>
SUMMIT BANK
By /s/ James P. Andersen
________________________________
Name: James P. Andersen
Title: Vice President and Regional Manager
Address for notices:
Summit Bank
250 Moore Street, 2nd Floor
Hackensack, NJ 07601
Attention: James P. Andersen
Telephone: (201) 646-6317
Facsimile: (201) 646-9497
-210-
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By /s/ Ronald Wolinsky
________________________________
Name: Ronald Wolinsky
Title: Vice President and Group Leader
Address for notices:
The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, 48th Floor
New York, NY 10048
Attention: Takayuki Kumagai
Telephone: (212) 432-6651
Facsimile: (212) 488-8955
-211-
<PAGE>
CREDITANSTALT CORPORATE FINANCE, INC.
By /s/ Clifford L. Wells
________________________________
Name: Clifford L. Wells
Title: Vice President
By /s/ Fiona McKone
_______________________________
Name: Fiona McKone
Title: Senior Associate
Address for notices:
Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Greenwich, CT 06830
Attention: Fiona McKone
Telephone: (203) 861-6590
Facsimile: (203) 861-0297
-212-
<PAGE>
CREDIT SUISSE FIRST BOSTON
By /s/ Robert B. Potter
________________________________
Name: Robert B. Potter
Title: Vice President
By /s/ Christian Bourqui
________________________________
Name: Christian Bourqui
Title: Associate
Address for notices:
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010
Attention: Robert B. Potter
Telephone: (212) 325-9154
Facsimile: (212) 325-8319
-213-
<PAGE>
FIRST NATIONAL BANK OF CHICAGO
By /s/ Patricia S. Carpen
________________________________
Name: Patricia S. Carpen
Title: Assistant Vice President
Address for notices:
First National Bank of Chicago
1 First National Plaza
Chicago, IL 60670
Attention: Tom Harkless
Telephone: (312) 732-2478
Facsimile: (312) 732-2016
-214-
<PAGE>
SCOTIABANC, INC.
By /s/ Dana Maloney
________________________________
Name: Dana Maloney
Title: Relationship Manager
Address for notices:
ScotiaBanc, Inc.
600 Peachtree Street NE
Suite 2700
Atlanta, GA 30308
Attention: Dana Maloney
Telephone: (404) 877-1524
Facsimile: (404) 888-8998
-215-
<PAGE>
COMMERZBANK AG, NEW YORK BRANCH
By /s/ Mary F. Harold
________________________________
Name: Mary F. Harold
Title: Vice President
By /s/ G. Rod McWa
--------------------------------
Name: G. Rod McWa
Title: Vice President
Address for notices:
Commerzbank AG, New York Branch
2 World Financial Center
New York, NY 10281-1050
Attention: Mary Harold
Telephone: (212) 266-7509
Facsimile: (212) 266-7374
-216-
<PAGE>
CIBC INC.
By /s/ Timothy E. Doyle
_________________________________
Name: Timothy E. Doyle
Title: Manager Director, CIBC Wood Gundy
Securities Corp., as Agent
Address for notices:
CIBC Inc.
425 Lexington Avenue, 8th Floor
New York, NY 10025
Attention: Tim Doyle
Telephone: (212) 856-3650
Facsimile: (212) 856-3558
-217-
<PAGE>
AMSOUTH BANK
By /s/ Ken DiFatta
________________________________
Name: Ken DiFatta
Title: Commercial Banking Officer
Address for notices:
AmSouth Bank
1900 5th Ave. N. AST7FL
Birmingham, AL 35203
Attention: Ken DiFatta
Telephone: (205) 801-0358
Facsimile: (205) 326-4790
-218-
<PAGE>
PFL LIFE INSURANCE COMPANY
By /s/ Gregory W. Theodaid
________________________________
Name: Gregory W. Theodaid
Title: VP and Asst. Secretary
Address for notices:
PFL Life Insurance Company
c/o Aegon USA Investment Management, Inc.
4333 Edgewood Road, NE
Cedar Rapids, IA 52499
Attention: John Bailey, Securities Analyst
Telephone: (319) 369-2811
Facsimile: (319) 369-2666
-219-
<PAGE>
PEOPLES INTERNAL BOND FUND
By /s/ Kirk W. Buese
________________________________
Name: Kirk W. Buese
Title: Second Vice President--Investments
Address for notices:
Peoples Internal Bond Fund
c/o Aegon USA Investment Management, Inc.
4333 Edgewood Road, NE
Cedar Rapids, IA 52499
Attention: John Bailey, Securities Analyst
Telephone: (319) 369-2811
Facsimile: (319) 369-2666
-220-
<PAGE>
ALLSTATE INSURANCE COMPANY
By________________________________
Name:
By________________________________
Name:
Its Authorized Signatories
Address for notices:
Allstate Insurance Company
3075 Sanders Road, STE G3A
Northbrook, IL 60062-3092
Attention: Jane Nelson
Telephone: (847) 402-8383
Facsimile: (847) 402-3092
-221-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-222-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-223-
<PAGE>
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management, Inc., as attorney in fact
By /s/ Christopher A. Bondy
________________________________
Christopher A. Bondy, Vice President
Address for notices:
Floating Rate Portfolio
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas, 27th Floor
New York, NY 10036
Attention: Christopher A. Bondy
Telephone: (212) 278-9673
Facsimile: (212) 278-9619
-224-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-225-
<PAGE>
PRIME INCOME TRUST
By /s/ Rafael Scolari
________________________________
Name: Rafael Scolari
Title: Senior Vice President
Address for notices:
Prime Income Trust
c/o Dean Witter Intercapital, Inc.
72nd Floor
Two World Trade Center
New York, NY 10048
Attention: Louis A. Pistecchia
Telephone: (212) 392-5845
Facsimile: (212) 392-5345
-226-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-227-
<PAGE>
DEEPROCK & COMPANY
By: Eaton Vance Management
as Investment Advisor
By /s/ Payson Swaffield
________________________________
Name: Payson Swaffield
Title: Vice President and Portfolio
Manager
Address for notices:
Deeprock & Company
c/o State Street Bank & Trust Company
Corporate Trust Division
One Enterprise Drive
North Quincy, MA 02171
Attention: Patrick McEnroe
Telephone: (617) 664-5367
Facsimile: (617) 664-5366
-228-
<PAGE>
ING HIGH INCOME PRINCIPAL PRESERVATION
OFFERING, L.P.
By /s/ Kathleen A. Lenarcic
________________________________
Name: Kathleen A. Lenarcic
Title: Vice President & Portfolio Manager
Address for notices:
Ing High Income Principal Preservation
Offering, L.P.
c/o Ing Capital Advisors, Inc.
333 S. Grand Avenue, Suite 4250
Los Angeles, CA 90071
Attention: Kathleen Lenarcic
Telephone: (213) 346-3971
Facsimile: (213) 346-3995
-229-
<PAGE>
KZH-ING-1 CORPORATION
By /s/ Virginia R. Conway
________________________________
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH-ING-1 Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-230-
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE CO.
By /s/ Kathleen Lynch
________________________________
Name: Kathleen Lynch
Title: Managing Director
Address for notices:
Massachusetts Mutual Life Insurance Co.
1295 State Street
Springfield, MA 01111
Attention: John Wheeler, Managing Director
Telephone: (413) 744-6228
Facsimile: (413) 744-6127
-231-
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By /s/ R. Douglas Henderson
________________________________
Name: R. Douglas Henderson
Title: Authorized Signatory
Address for notices:
Merrill Lynch Senior Floating Rate Fund, Inc.
c/o Merrill Lynch Asset Management
800 Scudders Mill Road - Area 1B
Plainsboro, NJ 08536
Attention: Jill Montanye
Telephone: (609) 282-3102
Facsimile: (609) 282-3542
-232-
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ James R. Dingler
________________________________
Name: James R. Dingler
Title: Assistant Vice President
Address for notices:
Metropolitan Life Insurance Company
334 Madison Avenue
Convent Station, NJ 07961-0633
Attention: James Dingler
Asst. Vice President
Telephone: (201) 254-3206
Facsimile: (201) 254-3050
-233-
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By /s/ Richard A. Strait
________________________________
Name: Richard A. Strait
Title: Vice President
Address for notices:
The Northwestern Mutual Life Insurance
Company
720 E. Wisconsin Avenue
Milwaukee, WI 53202
Attention: David A. Barras
Associate Director
Telephone: (414) 299-1618
Facsimile: (414) 299-7124
-234-
<PAGE>
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
By: New York Life Insurance Company
By /s/ Steven M. Benevento
________________________________
Name: Steven M. Benevento
Title: Investment Manager
Address for notices:
New York Life Insurance and Annuity
Corporation
c/o New York Life Insurance Company
51 Madison Avenue, Room 206
New York, NY 10010
Attention: Elise Chowdhry
Telephone: (212) 576-7830
Facsimile: (212) 447-4122
-235-
<PAGE>
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.,
Its General Partner
By: Oak Hill Securities MGP, Inc.,
Its General Partner
By /s/ Glenn R. August
________________________________
Name: Glenn R. August
Title: President
Address for notices:
Oak Hill Securities Fund, L.P.
c/o Oak Hill Partners, Inc.
65 East 55th Street - 32nd Floor
New York, NY 10022
Attention: Scott Krase, Vice President
Telephone: (212) 326-1551
Facsimile: (212) 593-3596
-236-
<PAGE>
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO (A
Unit of The Chase Manhattan Bank)
By /s/ Andrew D. Gordon
________________________________
Name: Andrew D. Gordon
Title: Managing Director
Address for notices:
Octagon Credit Investors Loan Portfolio
(A Unit of The Chase Manhattan Bank)
c/o Octagon Credit Investors
380 Madison Avenue, 12th Floor
New York, NY 10017
Attention: James P. Ferguson
Managing Director
Telephone: (212) 622-3070
Facsimile: (212) 622-3797
-237-
<PAGE>
PARIBAS CAPITAL FUNDING LLC
By /s/ Eric Green
________________________________
Name: Eric Green
Title: Director
Address for notices:
Paribas Capital Funding LLC
787 Seventh Avenue, 32nd Floor
New York, NY 10019
Attention: Michael Weinberg
Telephone: (212) 841-2544
Facsimile: (212) 841-2144
with a copy to:
State Street Bank & Trust Co.
Corporate Trust Dept.
Attn: Richard Wagman
Amy Molisse
Phone: (617) 664-5410
Fax: (617) 664-5366(67)(68)
-238-
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By /s/ Michael J. Bachevich
________________________________
Name: Michael J. Bachevich
Title: Vice President
[/R]
Address for notices:
Pilgrim America Prime Rate Trust
c/o Pilgrim America Investments, Inc.
Two Renaissance Square
40 North Central Avenue, Suite 1200
Phoenix, AZ 85004-3444
Attention: Michael Bacevich, Vice President
Telephone: (602) 417-8258
Facsimile: (602) 417-8327
-239-
<PAGE>
ROYALTON COMPANY
By: Pacific Investment Management
Company, as its Investment Advisor
By /s/ Raymond Kennedy
________________________________
Name: Raymond Kennedy
Title: Vice President
Address for notices:
Royalton Company
c/o Pacific Investment Management Co.
840 Newport Center Drive
Newport Beach, CA 92658
Attention: Richard Weil/Raymond Kennedy
Telephone: (714) 717-7213 (Richard)
(714) 717-7363 (Raymond)
Facsimile: (714) 640-3419
-240-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-241-
<PAGE>
NORTHERN LIFE INSURANCE COMPANY
By /s/ James V. Wittich
________________________________
Name: James V. Wittich
Title: Assistant Treasurer
Address for notices:
Northern Life Insurance Company
c/o Reliastar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, MN 55401-2121
Attention: Tim Warrick, Vice President
Telephone: (612) 372-5258
Facsimile: (612) 372-5368
-242-
<PAGE>
KZH - SOLEIL CORPORATION
By /s/ Virginia R. Conway
________________________________
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH - Soleil Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-243-
<PAGE>
KZH HOLDING CORPORATION III
By /s/ Virginia R. Conway
________________________________
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH Holding Corporation III
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-244-
<PAGE>
KZH-CRESCENT CORPORATION
By /s/ Virginia R. Conway
________________________________
Name: Virginia R. Conway
Title: Authorized Agent
Address for notices:
KZH-Crescent Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, NY 10001
Attention: Virginia Conway
Telephone: (212) 946-7575
Facsimile: (212) 946-7776
-245-
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By /s/ Jeffrey W. Maillet
________________________________
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
Address for notices:
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Jeffrey Maillet
Telephone: (630) 684-6438
Facsimile: (630) 684-6740 or 6741
-246-
<PAGE>
[THIS PAGE INTENTIONALLY OMITTED]
-247-
<PAGE>
CONTINENTAL ASSURANCE COMPANY
Separate Account (E)
By: TCW Asset Management Company as
attorney-in-fact
By /s/ Mark L. Gold
________________________________
Name: Mark L. Gold
Title: Managing Director
By /s/ Justin L. Driscoll
________________________________
Name: Justin L. Driscoll
Title: Senior Vice President
Address for notices:
Continental Assurance Company
c/o TCW Asset Management Company
200 Park Avenue, Suite 2200
New York, NY 10166-0228
Attention: Mark L. Gold/Justin L. Driscoll
Telephone: (212) 297-4137
Facsimile: (212) 297-4159
-248-
<PAGE>
CIBC INC.
By /s/ Elizabeth S. Schreiber
________________________________
Name: Elizabeth S. Schreiber
Title: CIBC Wood Gundy Securities Corp.,
as Agent
Address for notices:
CIBC Inc.
c/o Canadian Imperial Bank of Commerce
425 Lexington Avenue, 7th Floor
New York, NY 10025
Attention: William Swenson
Telephone: (212) 856-3935
Facsimile: (212) 856-3799
-249-
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.
By________________________________
Name:
Title:
Address for notices:
MORGAN STANLEY SENIOR FUNDING,
INC.
1585 Broadway, 10th Floor
New York, New York 10036
Attention: James Morgan
Telephone: (212) 761-4866
Facsimile: (212) 761-0592
-250-
<PAGE>
CRESCENT/MACH I PARTNERS, L.P.
by: TCW Asset Management Company,
its Investment Manager
By /s/ Justin L. Driscoll
________________________________
Name: Justin L. Driscoll
Title: Senior Vice President
Address for notices:
Crescent/Mach I Partners L.P.
c/o State Street Bank & Trust Co.
Two International Place
Boston, MA 02110
Attention: Jackie Kilroy
Telephone: (617) 664-5477
Facsimile: (617) 664-5366
Please Copy Rate Set Notices To:
Mark L. Gold/Justin L. Driscoll
Trust Company of the West
200 Park Avenue
New York, NY 10166
Telephone: 212-297-4137
Facsimile: 212-297-4159
-251-
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By /s/ Steven M. Benevento
________________________________
Name: Steven M. Benevento
Title: Investment Manager
Address for notices:
New York Life Insurance and
Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
Room 206
New York, New York 10010
Attention: Elise Chowdhry
Telephone: (212) 576-7830
Facsimile: (212) 447-4122
<PAGE>
LIST OF SCHEDULES
1.1 Lenders' Commitments
4.1(l) Certificate re: Senior Subordinated Notes and Convertible Debentures
5.1(a) Corporate/Partnership Status of Borrowers
5.1(b) Capitalization of Borrowers
5.1(e) Required Consents
5.1(o) Management Agreements
5.1(p) Health Care Businesses
5.1(q) Leased Properties
5.1(s) Defined Contribution Plans, other Plans and Multiemployer Plans
6.10 Adding Borrowers
8.1 Existing Indebtedness
8.1(f) Assisted Living Facilities
8.2 Permitted Liens
8.3 Investments
8.4 Acquisition Conditions
8.5(d) Ohio, Illinois and Wisconsin Operations
8.5(h) Disposition Conditions
11.1 Capital Stock or other Ownership Interests in Excluded Subsidiaries
<PAGE>
LIST OF EXHIBITS
A-1 Form of RC Note
A-2 Form of Tranche A Note
A-3 Form of Swing Loan Note
B Form of Advance Request
C Form of Prepayment Notice
D Form of LIBO Loan Notice
E Form of Pledge Agreement
F Form of Suretyship Agreement
G Form of Officer's Compliance Certificate
H Form of Assignment and Acceptance
I Form of Joinder Supplement
J Form of Multicare Management Subordination Agreement
<PAGE>
SCHEDULE 6.10
JOINDER OF BORROWERS
1. Joinder Supplement. Multicare (on behalf of itself and the other
Borrowers) and each Joining Subsidiary shall execute and deliver to the
Administrative Agent, with an executed counterpart for each Lender Party, an
agreement in substantially the form attached to this Agreement as Exhibit I (a
"Joinder Supplement") as to becoming a party hereto and to the relevant Loan
Documents.
2. Notes. Each Joining Subsidiary and each existing Borrower shall
execute and deliver to the Administrative Agent a replacement Note or Allonge
for each Tranche A Lender and each RC Lender, as necessary.
3. Collateral. Each applicable Borrower and each applicable Joining
Subsidiary shall deliver to the Administrative Agent (1) certificates and
instruments representing the stock certificates and other instruments to be
pledged pursuant to the Pledge Agreement accompanied by duly executed
instruments of transfer or assignments in blank to the extent required by the
Pledge Agreement 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 Administrative Agent, desirable to create or
perfect the Liens granted and created or purported to be granted and created by
each Joining Subsidiary (or by each existing Borrower in the collateral
comprised of equity of any Joining Subsidiaries) under and pursuant to the
Pledge Agreement.
4. Lien Searches. For each Joining Subsidiary which is acquired by a
Borrower pursuant to an Acquisition, each Joining Subsidiary shall deliver to
the Administrative Agent such evidence of recent searches of Uniform Commercial
Code, tax, judgment records and other appropriate registers as the
Administrative Agent shall request.
5. Corporate or Partnership Proceedings. Each Joining Subsidiary
shall deliver to the Administrative Agent, with an executed counterpart for each
Lender Party, certificates by the Secretary or Assistant Secretary of each
Joining Subsidiary (or general partner thereof), dated as of the Joinder
Effective Date (as defined below) as to the incumbency and signatures of the
respective officers of such Joining Subsidiary who are authorized to sign Loan
Documents, together with (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. Each Joining Subsidiary
shall also deliver certificates from
<PAGE>
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.
6. Legal Opinions of Counsel. The Borrowers and each Joining
Subsidiary collectively shall cause to be delivered to the Administrative Agent,
with an executed counterpart for each Lender Party, an opinion or opinions
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 such matters as may be requested by the Administrative Agent, all in form and
substance satisfactory to the Administrative Agent.
7. 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.
8. Additional Matters. The Borrowers and each Joining Subsidiary
shall deliver, or cause to be delivered, to the Administrative Agent such other
revised schedules, certificates, opinions, instruments and other documents
(including those relating to licensing) as may be requested by the
Administrative Agent. All such schedules, certificates, opinions, instruments
and other documents shall be satisfactory in form and substance to the
Administrative Agent.
<PAGE>
SCHEDULE 8.4
ACQUISITION CONDITIONS
1. Notice. Not later than 15 Business Days before the consummation
of a proposed Acquisition, Multicare (on behalf of the Borrowers) shall have
delivered to each Lender Party a notice of the proposed Acquisition, together
with the following:
(1) copies of audited financial statements of the entity to be
acquired (the "Target") for its last three fiscal years (to the extent
that such audited statements are available, or, to the extent such audited
statements are not so available, unaudited statements for as much of such
period as is available);
(2) copies of the interim financial statements of the Target
for the latest fiscal quarter;
(3) a pro forma projected balance sheet of Multicare and its
Restricted Subsidiaries as of the date of, and after giving effect to, the
proposed Acquisition and a pro forma income statement of Multicare 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 (1) but no later than five (5)
Business Days prior to the date of the proposed Acquisition); and
(5) revisions to the most recent financial projections
delivered to the Lender Parties by Multicare, which revisions shall take
into account the projected financial condition and results of operations
of the Target for the period covered by such projections.
2. Other Information. In addition, Multicare (on behalf of the
Borrowers) shall have delivered to the Administrative Agent (and with respect to
the information referred to in paragraph (2) below, the requesting Lender Party)
the following:
(1) copies of any agreements entered into or proposed to be
entered into by such Borrower in connection with such Acquisition; and
(2) such other information about the Target or such
Acquisition as any Lender Party may reasonably request.
<PAGE>
3. Board Approval. The board of directors (or equivalent governing
body) of the Target shall have approved such Acquisition.
4. Line of Business. Not less than 75% of the Target's revenues
during its most recently completed fiscal year shall have been derived from
lines of business which are, at the time of the Acquisition, among the principal
lines of business of any of the Borrowers.
5. No Default. No Event of Default or Default shall have occurred
and be continuing before, or after giving effect to, the consummation of the
Acquisition.
6. Limitations on Mergers and Consolidations. If any merger is
effected in connection with the Acquisition, a Borrower (including an entity
that becomes a Borrower consistent with the provisions of this Agreement) shall
be the surviving entity in the merger. No consolidation shall be permitted in
connection with any Acquisition.
7. Joinder to Loan Documents. The Borrowers shall cause any new
(direct or indirect) Subsidiary of Multicare which is created or acquired as a
direct or indirect result of, or in connection with, such Acquisition, to become
a Borrower hereunder pursuant to and in accordance with the terms of Section
6.10 of this Agreement and shall cause the ownership interests therein to be
pledged under the Pledge Agreement.
8. Arm's Length. The Acquisition shall be made in good faith in an
arm's-length transaction to a Person which is not an Affiliate of any Borrower,
except as otherwise agreed to by the Required Lenders. Without limiting the
generality of the foregoing, the total consideration paid for the Acquisition
shall be no greater than the fair market value of the subject assets (including
intangible assets).
<PAGE>
SCHEDULE 8.5(h)
DISPOSITION CONDITIONS
1. Notice. Multicare (on behalf of the Borrowers) shall have given
each Lender Party at least 5 days prior written notice of any transfer (as
defined in Section 8.5 of this Agreement), together with an Officer's Compliance
Certificate showing pro forma compliance with the financial covenants referred
to therein (including the financial tests set forth in paragraph (h) of Section
8.5) after giving effect to such transfer.
2. Arm's Length. The transfer shall be made in good faith in an
arm's-length transaction to a Person which is not an Affiliate of any Borrower,
except as otherwise agreed to by the Required Lenders. Without limiting the
generality of the foregoing, the total consideration for the transfer shall be
at least equal to the fair market value of the subject assets (including
intangible assets).
3. Transfer of Equity of a Borrower. In the event that any shares of
capital stock, partnership interests or other ownership interests of a Borrower
are to be disposed of or otherwise transferred in such transaction each of the
following additional conditions shall be met:
(a) 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
(b) The Administrative Agent shall have received such
replacement Notes, certificates, opinions, documents and/or instruments it
shall reasonably request.
4. 1997 Subordinated Debt Indenture. The disposition shall not be
prohibited by, result in a default or breach under, or trigger a mandatory
prepayment requirement under the terms of the 1997 Subordinated Debt Indenture.
- --------------------------------------------------------------------------------
PUT/CALL AGREEMENT
Among
The Cypress Group L.L.C.,
TPG Partners II, L.P.,
Nazem, Inc.
And
Genesis Health Ventures, Inc.
Dated
October 9, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.............................. 1
1.1 Certain Defined Terms........................................... 1
ARTICLE II
CALL AND PUT OPTIONS.......................... 13
2.1 Call Option..................................................... 13
2.2 Put Option...................................................... 14
2.3 Call Option Exercise Price...................................... 14
2.4 Put Option Exercise Price....................................... 15
2.5 Additional Amounts.............................................. 15
ARTICLE III
DETERMINATION OF OPTION CONSIDERATION; CERTAIN CONDITIONS....... 16
3.1 Option Consideration............................................ 16
3.2 Conditions to Issuance of Genesis Common Stock.................. 18
ARTICLE IV
REGISTRATION RIGHTS.......................... 20
4.1 Incidental Registration......................................... 20
4.2 Registration on Request......................................... 22
4.3 Registration Procedures......................................... 24
4.4 Indemnification................................................. 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES..................... 31
5.1 Representations and Warranties of the Parties................... 31
5.2 Representations and Warranties of Genesis....................... 31
5.3 Representations and Warranties of the Sponsors.................. 33
ARTICLE VI
ADDITIONAL AGREEMENTS......................... 33
6.1 Further Assurances.............................................. 33
6.2 Transfer of Restricted Securities............................... 33
6.3 Calculation of Parent EBITDAR for the Exit
Relevant Period............................................... 34
6.4 Election of Directors........................................... 36
i
<PAGE>
Page
6.5 Certain Negative Covenants...................................... 36
6.6 Pharmacy........................................................ 37
6.7 Pharmacy Dispositions........................................... 37
6.8 Calculation of EBITDAR.......................................... 38
6.9 Post-Put Exit................................................... 39
ARTICLE VII
CLOSINGS................................ 44
7.1 Payment of the Option Price..................................... 44
7.2 Time and Place of Closing....................................... 44
ARTICLE VIII
MISCELLANEOUS............................. 44
8.1 Notices......................................................... 44
8.2 Severability.................................................... 46
8.3 Entire Agreement................................................ 46
8.4 Amendment and Modification...................................... 46
8.5 Assignment; Binding on Transferees.............................. 46
8.6 Governing Law................................................... 47
8.7 Headings........................................................ 47
8.8 Counterparts.................................................... 47
8.9 Specific Performance; Remedies.................................. 47
8.10 Submission to Jurisdiction; Waivers............................. 50
8.11 Subordination Agreement......................................... 50
8.12 Waivers of Jury Trial........................................... 1
ii
<PAGE>
PUT/CALL AGREEMENT
PUT/CALL AGREEMENT, dated as of October 9, 1997 (this "Agreement"),
among The Cypress Group L.L.C., a Delaware limited liability company
("Cypress"), TPG Partners II, L.P., a Delaware limited partnership ("TPG"),
Nazem, Inc., a Delaware corporation ("Nazem" and, together with Cypress and TPG,
the "Sponsors"), and Genesis Health Ventures, Inc., a Pennsylvania corporation
("Genesis").
WITNESSETH
WHEREAS, pursuant to letter agreements, dated June 15, 1997,
Cypress, TPG and Genesis have agreed to acquire or cause affiliates to acquire
Common Stock, par value $.01 per share (the "Common Stock"), of Genesis
ElderCare Corp. (formerly known as Waltz Corp.), a Delaware corporation (the
"Parent");
WHEREAS, pursuant to a letter agreement, dated August 27, 1997,
Nazem has agreed to cause an affiliate to acquire Common Stock, which, together
with the Common Stock acquired by Cypress, TPG and Genesis, shall, upon the
acquisition thereof, constitute all of the issued and outstanding capital stock
of Parent;
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
June 16, 1997 (the "Merger Agreement"), by and among Parent, Genesis ElderCare
Acquisition Corp. (formerly known as Waltz Acquisition Corp.), a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and The
Multicare Companies, Inc., a Delaware corporation (the "Company"), Merger Sub
shall be merged with and into the Company, following which the Company shall be
the surviving corporation and a wholly owned subsidiary of Parent; and
WHEREAS, the parties hereto desire to enter into this Agreement for
the purpose of setting forth certain agreements regarding rights and obligations
of the parties.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions as hereinafter set forth, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. Capitalized terms used herein and
not otherwise defined herein shall have the following meanings:
<PAGE>
2
"Additional Genesis Contribution" means the amount in U.S. dollars
of each purchase of Common Stock made by Genesis or any of its Affiliates from
Parent following the Closing.
"Additional Sponsor Contribution" means the amount in U.S. dollars
of each purchase of Common Stock made by Sponsors or any of their Affiliates
from Parent following the Closing.
"Adjusted Total Contribution" means Total Contribution less $25
million.
"Affiliate" of any Person means any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person.
"Agreement" is defined in the preamble hereto.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or required
by law to close.
"Call Debt Adjustment" means $31.0 million less the product of
$27,397 and the number of days elapsed between the Exercise Date and the fourth
anniversary of this Agreement.
"Call Option" is defined in Section 2.1.
"Call Option Exercise Price" is defined in Section 2.3.
"Change of Control" shall be deemed to have occurred at such time as
either of the following events shall occur:
(i) Genesis consolidates with or merges into any other corporation,
or conveys, transfers or leases all or substantially all of its assets to
any Person, or any other corporation merges into Genesis, other than, in
any case, a transaction in which the shareholders of Genesis immediately
prior to such transaction own, directly or indirectly, immediately
following such transaction, at least 51% of the combined voting power of
the outstanding voting stock of the corporation resulting from such
transaction in substantially the same proportion as their ownership of the
voting stock of Genesis immediately prior to such transaction; or
(ii) There is a report filed by any Person, including its
Affiliates, other than Genesis or its subsidiaries or employee stock
ownership plans or employee benefit plans of Genesis or its subsidiaries,
on Schedule 13D or 14D-1 (or any successor schedule, form or report)
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), disclosing that such Person (for the purposes of this definition
only, the term "person" shall include a "person" within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor
provision to either of
<PAGE>
3
the foregoing) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 50% or more of the voting power of
Genesis' voting stock then outstanding; provided, however, that a Person
shall not be deemed beneficial owner of, or to own beneficially, (A) any
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates until such
tendered securities are accepted for purchase or exchange thereunder or
(B) any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations under the Exchange Act, and (2) is not also then
reportable on Schedule 13D (or any successor schedule, form or report)
under the Exchange Act.
"Closing" means the consummation of the first acquisition by
Sponsors of shares of Common Stock.
"Closing Date" means the date on which the Closing occurs.
"Common Stock" is defined in the recitals hereto.
"Company" is defined in the recitals hereto.
"Consolidated Interest Expense" means, for any period for any
Person, the amount of interest expense of such entity and its subsidiaries,
including, without limitation, (i) amortization of debt discount, (ii) the
interest portion of any deferred payment obligation and (iii) accrued interest,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income (or Loss)" means, for any period for any
Person, the net income (or loss) of such entity and its subsidiaries for such
period on a consolidated basis, all determined in accordance with GAAP.
"Consolidated Rent Expense" means, for any period for any Person,
the rent expense of such entity and its subsidiaries, including expensed but
excluding capitalized rent expense and amortization of gains from the sale of
properties to ElderTrust, Inc., for such period determined on a consolidated
basis in accordance with GAAP.
"Consolidated SG&A Expense" means, for any period for any Person,
the non-extraordinary sales, general and administrative expenses of such entity
and its subsidiaries determined in accordance with GAAP.
"Consolidated Tax Expense" means, for any period for any Person, the
aggregate of the federal, state, local and
<PAGE>
4
foreign income tax expense of such entity and its subsidiaries for such period
(other than income taxes (either positive or negative) attributable to
extraordinary and non-recurring gains or losses or sales of assets), determined
on a consolidated basis in accordance with GAAP.
"Cypress" is defined in the preamble hereto.
"EBITDAR" means, for any period for any Person other than Parent or
the Pharmacy, the sum of Consolidated Net Income (or Loss) of such Person plus,
to the extent deducted in computing Consolidated Net Income (or Loss) of such
Person, Consolidated Interest Expense of such Person, Consolidated Tax Expense
of such Person, Consolidated Rent Expense of such Person, Consolidated SG&A
Expense of such Person, all depreciation and, without duplication, amortization
and all extraordinary expenses and non-recurring charges of such Person, and
minus 2.75% of the consolidated net revenues of such Person and, to the extent
included in computing Consolidated Net Income (or Loss) of such Person, all
extraordinary income and non-recurring gains of such Person, in each case, for
such period, all as determined in accordance with GAAP. For purposes of
calculating EBITDAR for any Person, to the extent such Person acquires an
interest of less than 100% in another Person (such percentage, the "percentage
investment") after the date hereof, the contribution to EBITDAR of such
investment shall be calculated as the product of the percentage investment and
the EBITDAR of the Person in which the investment is made. Genesis, on the one
hand, and Cypress and TPG, acting jointly on behalf of Sponsors on the other
hand, shall agree to appropriate adjustments to the definition of EBITDAR in
respect of any such future investments to reflect the foregoing.
"Event of Acceleration" means (a) a court having jurisdiction in the
premises shall have entered a decree or order for relief in respect of Genesis
or any of its significant subsidiaries (as defined in Rule 1-02 under Regulation
S-X) in an involuntary case under any applicable bankruptcy, insolvency or other
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of Genesis or such
significant subsidiary or for all or any substantial part of its property, or
ordering the winding-up or liquidation of its affairs, and such decree or order
shall have remained unstayed and in effect for a period of 90 consecutive days;
or
(b) Genesis or any of its significant subsidiaries (as defined in
Rule 1-02 under Regulation S-X) shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official)
<PAGE>
5
of Genesis or such subsidiary or for all or any substantial part of its
property, or shall have made an assignment for the benefit of creditors, or
shall have failed generally to pay its debts as they become due or shall have
taken any corporate action in furtherance of any of the foregoing; or
(c) a Change of Control shall have occurred; or
(d) the payment, declaration or making of an Extraordinary Dividend
or Distribution; Leveraged Recapitalization.
"Excess Value" means the greater of (i) zero or (ii) Total Equity
Value, less Total Hurdle Value, less Total Genesis Contribution.
"Exercise Date" means the date specified for the closing of the
exercise of either of the Options, as set forth in a notice given pursuant to
Section 2.1(b) or 2.2(b), as applicable; provided, that unless the context
otherwise requires, if the Put Option has not been exercised by the date which
is the first day after the sixth anniversary of the Closing Date, Exercise Date
shall mean such date.
"Exit Relevant Period" means the period of twelve full calendar
months ending immediately prior to or coincident with the Notification Date.
"Extraordinary Dividend or Distribution; Leveraged Recapitalization"
means (a) any cash dividend or distribution with respect to Genesis Common Stock
the amount of which, (i) together with the fair market value of all dividends or
other distributions on or with respect to Genesis Common Stock with ex-dividend
dates occurring in the 90 consecutive day period ending on the day immediately
prior to the ex-dividend date with respect to the dividend to which this
definition is being applied and the fair market value of all property used by
Genesis, directly or indirectly, in such 90-day period to repurchase shares of
any class of its capital stock, equals or exceeds on a per share basis 12.5% of
the average of the closing prices of the Genesis Common Stock for the period
beginning on the day immediately following the first such ex-dividend date in
such period and ending on the day immediately prior to the ex-dividend date with
respect to the dividend as to which this definition is being applied (with
closing prices determined as provided in the definition of Market Value and
except that if no other dividend has had an ex-dividend date occurring in such
period, the period for calculating the average of the closing prices of the
Genesis Common Stock shall be the 90 day period ending on the day immediately
prior to the ex-dividend date with respect to the cash dividend as to which this
definition is being applied) or (ii) together with the fair market value of all
dividends or other distributions on or with respect to Genesis Common Stock with
ex-dividend dates occurring in the 365 consecutive day
<PAGE>
6
period ending on the day immediately prior to the ex-dividend date with respect
to the dividend to which this definition is being applied and the fair market
value of all property used by Genesis, directly or indirectly, in such 365-day
period to repurchase shares of any class of its capital stock, equals or exceeds
on a per share basis 25% of the average of the closing prices of the Genesis
Common Stock for the period beginning on the day immediately following the first
such ex-dividend date in such period and ending on the day immediately prior to
the ex-dividend date with respect to the dividend as to which this definition is
being applied (with closing prices determined as provided in the definition of
Market Value and except that if no other dividend has had an ex-dividend date
occurring in such period, the period for calculating the average of the closing
prices of the Genesis Common Stock shall be the 360 day period ending on the day
immediately prior to the ex-dividend date with respect to the cash dividend as
to which this definition is being applied); or
(b) any dividend or distribution of assets, other than cash, with
respect to Genesis Common Stock (including, without limitation, by way of
exchange offer) the fair market value of which, together with the fair market
value of all dividends or distributions on Genesis Common Stock with ex-dividend
dates occurring in the 365 consecutive day period ending on the day immediately
prior to the ex-dividend date with respect to the dividend or distribution to
which this definition is being applied and the fair market value of all property
used by Genesis, directly or indirectly, in such 365 day period to repurchase
shares of any class of its capital stock, equals or exceeds 12.5% of Genesis'
common equity market capitalization at the time of such dividend or
distribution; provided, that the percentage contained in this paragraph (b)
shall be reduced to 0% (y) at any time when Genesis' common equity market
capitalization does not exceed $2 billion or (z) if Genesis' Adjusted Total
Debt/Cash Flow Ratio (as defined in Genesis' credit agreement among Genesis and
Mellon Bank, N.A., Citicorp USA, Inc., First Union National Bank and
NationsBank, N.A. and the lenders identified therein, in the form first
executed) on a pro forma basis after giving effect to the dividend or
distribution would be greater than 5.00:1.00. For purposes of this definition,
fair market value shall be determined and set forth in writing in good faith by
the board of directors of Genesis.
"GAAP" means generally accepted accounting principles, as in effect
in the United States of America on the date hereof and applied on a basis
consistent with the manner in which such principles were applied in the
preparation of the historical financial statements of Genesis.
"Genesis" is defined in the preamble hereto.
"Genesis A Contribution" means the sum of $275 million and the
aggregate amount of any Additional Genesis Contributions,
<PAGE>
7
less an amount ("Genesis Contribution Adjustment") which, if invested at a
compound annual rate of 15.0% on the Closing Date, would equal the amount of
Genesis Returned Capital on the date or dates paid to Genesis or its Affiliates.
"Genesis C Contribution" means $50 million.
"Genesis Common Stock" means the common stock, par value $.02 per
share, of Genesis and shall also include (i) capital stock of Genesis of any
other class (regardless of how denominated) issued to the holders of shares of
Genesis Common Stock upon any reclassification thereof in which the shares of
Genesis Common Stock are converted into a new class of capital stock and (ii)
shares of common stock of any successor or acquiring corporation received by or
distributed to the holders of Genesis Common Stock.
"Genesis Contribution Adjustment" is defined in the definition of
Genesis A Contribution.
"Genesis Returned Capital" is defined in Section 6.7(b).
"Holder" shall mean any Person who owns Registrable Securities.
"HSR Act" is defined in Section 6.1(b).
"Hurdle Profit" means the amount in excess of the Total Sponsor
Contribution necessary to provide a 25% compound annual return on the Total
Sponsor Contribution from and including the Closing Date (or, with respect to
Additional Sponsor Contributions, measured from and including the date on which
each such Additional Sponsor Contribution was made) to but excluding the
Exercise Date. Notwithstanding the foregoing, the required return in respect of
any portion of the measurement period comprising less than an entire year shall
be determined as the product of (i) 0.06849% and (ii) the number of calendar
days in such period.
"Management Agreement" means the Management Agreement, dated as of
October 9, 1997, between Genesis ElderCare Network Services, Inc. and Genesis
ElderCare Corp.
"Management Fee" means the fee payable to Genesis or
one of its affiliates under the Management Agreement.
"Market Value" means the average of the daily closing prices of the
Genesis Common Stock for the 20 trading day period ending on the calendar day
prior to the Exercise Date or such other relevant date of determination, as the
case may be. The closing price for each day shall be the last reported sales
price regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices
<PAGE>
8
regular way, in either case on the New York Stock Exchange, or, if the Genesis
Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the American Stock Exchange, or, if the Genesis Common Stock is not
listed or admitted to trading on the American Stock Exchange, the average of the
closing bid and asked prices of the Genesis Common Stock in the over-the-counter
market as reported on the NASDAQ system of the National Association of
Securities Dealers, Inc. or if the Genesis Common Stock is not so quoted, the
average of the closing bid and asked price of the Genesis Common Stock in the
over-the-counter market as furnished by any nationally recognized New York Stock
Exchange member firm selected by Genesis for such purpose.
"Merger Agreement" is defined in the recitals hereto.
"Merger Sub" is defined in the recitals hereto.
"Nazem" is defined in the preamble hereto.
"Notification Date" means the date notification is given by an
exercising party under either of the Options in accordance with Section 2.1(b)
or 2.2(b), as applicable; provided, that unless the context otherwise requires,
if the Put Option has not been exercised by the date which is the first day
after the sixth anniversary of the Closing Date, Notification Date shall mean
such date.
"Option" means the Call Option or the Put Option, as applicable.
"Option Price" means the Call Option Exercise Price or the Put
Option Exercise Price, as applicable and as determined in accordance with this
Agreement.
"Option Shares" means shares of Genesis Common Stock, if any,
issuable in connection with the exercise of an Option and shares of Genesis
Common Stock, if any, issued pursuant to Section 6.9.
"Parent" is defined in the recitals hereto.
"Parent EBITDAR" means, for any period, the sum of Consolidated Net
Income (or Loss) of Parent plus (i) 2.0% of Net Revenues (as defined in the
Management Agreement), whether paid in cash or accrued (provided that the
management fee under the Management Agreement has been paid or accrued), (ii) to
the extent deducted in computing Consolidated Net Income (or Loss) of Parent,
Consolidated Interest Expense of Parent, Consolidated Tax Expense of Parent,
Consolidated Rent Expense of Parent, all depreciation and, without duplication,
amortization and all extraordinary expenses and non-recurring charges of Parent
and (iii) the product of Pharmacy Percentage Interest multiplied by Pharmacy
EBITDAR and minus, to the extent included in computing Consolidated Net Income
(or Loss) of Parent, all extraordinary
<PAGE>
9
income and non-recurring gains of Parent, in each case, for such period, all as
determined in accordance with GAAP. In the event Parent, directly or indirectly,
has made one or more acquisitions or dispositions (other than dispositions
pursuant to Section 6.1(b)) of stock or assets or investments in any Person
during any period for which Parent EBITDAR is calculated, Parent EBITDAR shall
be calculated for such period on a pro forma basis giving effect to such
acquisition or disposition or investment as if it occurred at the beginning of
such period. For purposes of calculating Parent EBITDAR for any Person, to the
extent such Person acquires an interest of less than 100% in another Person
(such percentage, the "percentage investment") after the date hereof, the
contribution to Parent EBITDAR of such investment shall be calculated as the
product of the percentage investment and the EBITDAR of the Person in which the
investment is made. Genesis, on the one hand, and Cypress and TPG, acting
jointly on behalf of Sponsors on the other hand, shall agree to appropriate
adjustments to the definition of Parent EBITDAR in respect of any such future
investments to reflect the foregoing.
"Person" means any individual, corporation, partnership, joint
venture, trust, business, unincorporated organization or other entity.
"Pharmacy" means the collective reference to the lines of business
described on Annex A hereto as from time to time conducted, directly or
indirectly, by Genesis.
"Pharmacy EBITDAR" means, for any period, the sum of Consolidated
Net Income (or Loss) of the Pharmacy plus, to the extent deducted in computing
Consolidated Net Income (or Loss) of the Pharmacy, Consolidated Interest Expense
of the Pharmacy, Consolidated Tax Expense of the Pharmacy, Consolidated Rent
Expense of the Pharmacy, Consolidated SG&A Expense of the Pharmacy, all
depreciation and, without duplication, amortization and all extraordinary
expenses and non-recurring charges (including, without limitation, start-up
losses) of the Pharmacy, and minus 2.75% of the consolidated net revenues of the
Pharmacy and, to the extent included in computing Consolidated Net Income (or
Loss) of the Pharmacy, all extraordinary income and non-recurring gains of the
Pharmacy, in each case, for such period, all as determined in accordance with
GAAP. In the event that Genesis, directly or indirectly, makes any acquisition
of stock or assets or any investment in any Person that, following such
acquisition or investment, comprises part of the Pharmacy during any period for
which Pharmacy EBITDAR is calculated, Pharmacy EBITDAR shall be calculated for
such period on a pro forma basis giving effect to such acquisition or investment
as if it occurred at the beginning of such period. For purposes of calculating
Pharmacy EBITDAR for any Person, to the extent such Person acquires an interest
of less than 100% in another Person (such percentage, the "percentage
investment") after the date hereof, the contribution to Pharmacy EBITDAR of such
investment shall be calculated as the product of the percentage investment and
the
<PAGE>
10
EBITDAR of the Person in which the investment is made. Genesis, on the one hand,
and Cypress and TPG, acting jointly on behalf of Sponsors on the other hand,
shall agree to appropriate adjustments to the definition of Pharmacy EBITDAR in
respect of any such future investments to reflect the foregoing.
"Pharmacy Percentage Interest" means 24.0%, provided, that in the
event that Genesis, directly or indirectly, makes any acquisition of stock or
assets or any investment in any Person that, following such acquisition or
investment, comprises part of the Pharmacy, Pharmacy Percentage Interest shall
equal (i) the product of (a) the then Pharmacy Percentage Interest and (b)
Pharmacy EBITDAR for the twelve full calendar months ending immediately prior to
or coincident with such acquisition (determined for purposes of this clause (b)
only without giving pro forma effect to the acquisition or investment giving
rise to such recalculation of Pharmacy Percentage Interest), divided by (ii) the
sum of (c) Pharmacy EBITDAR for the twelve full calendar months ending
immediately prior to or coincident with such acquisition, and (d) the EBITDAR
for the twelve calendar months ending immediately prior to or coincident with
such acquisition attributable to the stock or assets acquired or the investment
made, calculated giving pro forma effect to the acquisition or investment;
provided that any such pro forma adjustments shall comply as to form in all
material respects with the accounting requirements of Rule 11-02 of Regulation
S-X and shall be properly applied to the applicable historical amounts.
"Put Debt Adjustment" means $19.8 million less the product of
$35,616 and the number of days elapsed between the Exercise Date and the fifth
anniversary of this Agreement.
"Put Option" is defined in Section 2.2.
"Put Option Exercise Price" is defined in Section 2.4.
"Registrable Securities" means (i) any Genesis Common Stock issued
pursuant to Section 3.1 or Section 6.9 and (ii) any securities issued or
distributed in respect of such Genesis Common Stock by way of transfer,
substitution, stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation, liquidation or other
reorganization. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (w) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (x) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (y) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by Genesis and subsequent disposition of them shall not
require registration or qualification of them under the
<PAGE>
11
Securities Act or any state securities or blue sky law then in force or (z) they
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with Sections 3.1, 4.1, 4.2 and 4.3 of this
Agreement, including, without limitation, (i) all SEC and securities exchange or
National Association of Securities Dealers, Inc. registration and filing fees,
(ii) all fees and expenses of complying with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities), (iii) all printing,
messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange pursuant to Section 4.3(h), (v) the fees and disbursements of counsel
for Genesis and of its independent public accountants, including the expenses of
any special audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements of one
counsel, other than Genesis' counsel, selected by the holders of a majority of
the Registrable Securities being registered to represent all holders of the
Registrable Securities being registered in connection with each such
registration (it being understood that any such holder may, at its own expense,
retain separate counsel to represent it in connection with such registration),
(vii) any fees and disbursements of underwriters customarily paid by the issuers
or sellers of securities, and the reasonable fees and expenses of any special
experts retained in connection with the requested registration, but excluding
underwriting discounts and commissions and transfer taxes, if any, and (viii)
subject to Sections 4.1(b) and 4.2(b), all underwriting discounts and
commissions or other brokers' commissions charged in connection with the sale of
Registrable Securities.
"Restricted Securities" means (i) Genesis Common Stock issued
pursuant to Section 3.1 or Section 6.9 and (ii) any securities issued or
distributed in respect of any such Genesis Common Stock by way of transfer,
substitutions stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation, liquidation or other
reorganization. As to any particular Restricted Securities, such securities will
cease to be Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) become eligible for sale by the holder thereof
pursuant to Rule 144 or (c) been otherwise transferred and new certificates for
them not bearing any restrictive legend have been delivered by Genesis and
subsequent disposition of them shall not require registration or qualification
under the Securities Act or any state securities or blue sky law then in force.
Whenever any particular securities cease to be Restricted Securities, the holder
thereof will be entitled to receive from
<PAGE>
12
Genesis, without expense, new securities of like tenor not bearing any
restrictive legend.
"SEC" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, and the
rules and regulations promulgated thereunder, as the same may be amended from
time to time.
"Sponsor A Contribution" means the sum of $270 million and the
aggregate amount of Additional Sponsor Contributions, less an amount ("Sponsor
Contribution Adjustment") which, if invested at a compound annual rate of 32.0%
on the Closing Date, would equal the amount of Sponsor Returned Capital on the
date or dates paid to Sponsors.
"Sponsor B Contribution" means $110 million.
"Sponsor Contribution Adjustment" is defined in the definition of
Sponsor A Contribution.
"Sponsor D Contribution" means $40 million.
"Sponsor Liquidity Right" is defined in Section 3.1.
"Sponsor Liquidity Right Sale" is defined in Section 3.1.
"Sponsor Returned Capital" is defined in Section 6.7(b).
"Sponsors" is defined in the preamble hereto.
"Stockholders Agreement" means the Stockholders Agreement, dated
October 9, 1997, among Cypress, Genesis, Merger Sub, Nazem, Parent, and TPG.
"Total A Contribution" means the sum of (a) Sponsor A Contribution
and (b) Genesis A Contribution.
"Total Call Enterprise Value" means the product of (a) 12 multiplied
by (b) Parent EBITDAR for the Exit Relevant Period.
"Total Contribution" means the sum of Total Sponsor Contribution and
Total Genesis Contribution.
"Total Equity Value" as of the Exercise Date (each of the following
shall be determined as of the Exercise Date except for Total Call Enterprise
Value and Total Put Enterprise Value, which shall be determined in accordance
with the definition thereof) means the excess, if any, of (i) Total Call
Enterprise Value, if the calculation is being made in respect of the
<PAGE>
13
exercise of the Call Option, or Total Put Enterprise Value, if the calculation
is being made in respect of the exercise of the Put Option, over (ii) the sum of
(a) the aggregate outstanding principal amount (including accrued but unpaid
interest thereon) of Parent's consolidated total indebtedness, plus the accrued
but unpaid portion of the Management Fee, less (b) the aggregate amount of
Parent's consolidated total cash, cash equivalents, any other marketable
securities, plus (c) the product of (y) 8 and (z) Consolidated Rent Expense for
the Exit Relevant Period, plus (d) Call Debt Adjustment, if the calculation is
being made in respect of the exercise of the Call Option, or Put Debt
Adjustment, if the calculation is being made in respect of the exercise of the
Put Option.
"Total Genesis Contribution" means the sum of Genesis A Contribution
and Genesis C Contribution.
"Total Hurdle Value" means the sum of Total Sponsor Contribution and
Hurdle Profit.
"Total Put Enterprise Value" means the product of (a) 13 multiplied
by (b) Parent EBITDAR for the Exit Relevant Period.
"Total Sponsor Contribution" means the sum of Sponsor A
Contribution, Sponsor B Contribution and Sponsor D Contribution.
"TPG" is defined in the preamble hereto.
ARTICLE II
CALL AND PUT OPTIONS
Section 2.1 Call Option. (a) On the terms and subject to the
conditions set forth herein, Sponsors, on behalf of themselves and their
Affiliates owning Common Stock, hereby grant to Genesis an irrevocable option
(the "Call Option") exercisable beginning on the first day after the fourth
anniversary of the Closing Date and ending on the 270th day after the fourth
anniversary of the Closing Date, to purchase (and, upon exercise of such Call
Option in accordance herewith, Sponsors irrevocably agree to sell to Genesis or
cause the sale to Genesis of) all, but not less than all, of the Common Stock
owned by them and their Affiliates; provided, that the Call Option shall not be
exercisable at any time while the Put Option is exercisable or following any
exercise of the Put Option. The aggregate purchase price with respect to all the
shares of Common Stock being purchased pursuant to the Call Option shall be
equal to the Call Option Exercise Price. The consideration to be paid for each
share of Common Stock shall equal the Call Option Exercise Price divided by the
aggregate number of shares of Common Stock being purchased; provided, that
Sponsors may reallocate the Call Option Exercise Price among themselves and
their Affiliates to the extent necessary to take into account
<PAGE>
14
differences among them, if any, in making Additional Sponsor Contributions.
(b) Genesis shall give Sponsors written notice of exercise of the
Call Option no less than 120 days prior to the Business Day specified in such
notice for exercise of the Call Option. A notice of exercise of the Call Option
shall irrevocably commit Genesis and Sponsors and their Affiliates owning Common
Stock to the purchase and sale of the Common Stock in accordance with the Call
Option. The closing of the Call Option shall take place as provided in Article
VII.
Section 2.2 Put Option. (a) On the terms and subject to the
conditions set forth herein, Genesis hereby grants to Sponsors and their
Affiliates owning Common Stock an irrevocable option (the "Put Option"),
exercisable beginning on the earlier of (i) the occurrence of an Event of
Acceleration and (ii) the first day after the fifth anniversary of the Closing
Date and ending in either case on the first day after the sixth anniversary of
the Closing Date, to require Genesis to purchase (and, upon exercise of such Put
Option in accordance herewith, Genesis irrevocably agrees to purchase from
Sponsors or their affiliates) all, but not less than all, of the Common Stock
owned by Sponsors or their affiliates; provided, that, Cypress and TPG, acting
jointly on behalf of Sponsors, shall deliver notice of such exercise to Genesis,
it being understood that neither Nazem nor its Affiliates owning Common Stock
shall have any right to participate in the election to exercise the Put Option.
The aggregate purchase price with respect to all the shares of Common Stock
being purchased shall be equal to the Put Option Exercise Price. The
consideration to be paid for each share of Common Stock shall equal the Put
Option Exercise Price divided by the aggregate number of shares of Common Stock
being purchased; provided, that Sponsors may reallocate the Put Option Exercise
Price among themselves and their Affiliates to the extent necessary to take into
account differences among them, if any, in making Additional Sponsor
Contributions.
(b) Cypress and TPG, acting jointly on behalf of Sponsors, shall
give Genesis written notice of exercise of the Put Option no less than 120 days
prior to the Business Day specified in such notice for exercise of the Put
Option. A notice of exercise of the Put Option shall irrevocably commit Genesis
and Sponsors and their Affiliates owning Common Stock to the purchase and sale
of the Common Stock in accordance with the Put Option. The closing of the Put
Option shall take place as provided in Article VII.
Section 2.3 Call Option Exercise Price. The Call Option Exercise
Price shall be determined as of the Exercise Date and shall be equal to:
<PAGE>
15
(i) Total Hurdle Value, if Total Equity Value is equal to or less
than the sum of (a) Total Contribution and (b) Hurdle Profit; or
(ii) the sum of (a) Total Hurdle Value and (b) the product of (i)
Excess Value and (ii) the ratio of the sum of (A) Total Sponsor Contribution and
(B) Sponsor Contribution Adjustment to the sum of (A) Adjusted Total
Contribution, (B) Sponsor Contribution Adjustment and (C) Genesis Contribution
Adjustment, if Total Equity Value is greater than the sum of (y) Total
Contribution and (z) Hurdle Profit.
Section 2.4 Put Option Exercise Price. The Put Option Exercise Price
shall be determined as of the Exercise Date and shall be equal to:
(i) the product of (a) Total Equity Value and (b) the ratio of
Sponsor A Contribution to Total A Contribution, if Total Equity Value is equal
to or less than Total A Contribution;
(ii) Total Equity Value less Genesis A Contribution, if Total Equity
Value is greater than Total A Contribution, but less than or equal to the sum of
(a) Total A Contribution and (b) Sponsor B Contribution;
(iii) the sum of (a) Sponsor A Contribution and (b) Sponsor B
Contribution, if Total Equity Value is greater than the sum of (v) Total A
Contribution and (w) Sponsor B Contribution, but less than or equal to the sum
of (x) Total A Contribution, (y) Sponsor B Contribution and (z) Genesis C
Contribution;
(iv) Total Equity Value less Total Genesis Contribution, if Total
Equity Value is greater than the sum of (a) Total A Contribution, (b) Sponsor B
Contribution and (c) Genesis C Contribution, but less than or equal to the sum
of (d) Total Contribution and (e) Hurdle Profit; or
(v) the sum of (a) Total Hurdle Value and (b) the product of (i)
Excess Value and (ii) the ratio of the sum of (A) Total Sponsor Contribution and
(B) Sponsor Contribution Adjustment to the sum of (A) Adjusted Total
Contribution, (B) Sponsor Contribution Adjustment and (C) Genesis Contribution
Adjustment, if Total Equity Value is greater than the sum of (y) Total
Contribution and (z) Hurdle Profit.
Section 2.5 Additional Amounts. In the event that the Call Option or
the Put Option is exercised as provided above and the closing thereof does not
take place as provided in Section 7.1 (without giving effect to the reference in
Section 7.1 to Section 3.2(i)) other than as a result of the failure of Sponsors
to deliver the Common Stock, duly endorsed for transfer, against payment of the
purchase price therefor, then an amount in addition to the Option Price shall
accrue and be payable to Sponsors equal to the product of (i) that portion of
the Option
<PAGE>
16
Price not paid as of the time and date specified therefor in Section 7.1
(without giving effect to the reference in Section 7.1 to Section 3.2(i)) (until
such amount is paid) and (ii) the greater of (a) a 25% compound annual rate (or,
in respect of any period less than an entire year, the product of (y) 0.06849%
and (z) the number of calendar days elapsed in such period) and (b) the compound
annual rate of return provided by the Option Price on Total Sponsor Contribution
calculated from and including the Closing Date (or, with respect to Additional
Sponsor Contributions, measured from and including the date on which each such
Additional Sponsor Contribution was made) to but excluding the Exercise Date
(or, in respect of any period less than an entire year, the product of (y) such
rate divided by 365 and (z) the number of calendar days elapsed in such period).
Such amount, if any, shall be payable to Sponsors pro rata based on the number
of shares of Common Stock owned by each Sponsor or its Affiliates.
ARTICLE III
DETERMINATION OF OPTION CONSIDERATION; CERTAIN CONDITIONS
Section 3.1 Option Consideration. (a) (i) Subject to Section 3.2,
Genesis may use for payment of the Option Price (either in whole or in part)
payable under the Call Option or the Put Option either cash or Genesis Common
Stock. If Genesis Common Stock is to be issued, Genesis shall notify Sponsors
within 7 days of the Notification Date of the percentage of the Option Price to
be paid in Genesis Common Stock. The number of shares of Genesis Common Stock so
issuable on the Exercise Date will be calculated as follows.
(ii) If Cypress and TPG, acting jointly on behalf of Sponsors,
notify Genesis within 21 days of the Notification Date of Sponsors' desire to
receive cash (either in whole or in part) for payment of the Option Price in
lieu of shares of Genesis Common Stock, then Genesis will use its reasonable
best efforts to effectuate the underwritten sale (the "Sponsor Liquidity Right
Sale") of such number of shares of Genesis Common Stock as would, upon
consummation of such sale, yield net cash proceeds to Sponsors equal to the
portion of the Option Price that would have otherwise been paid in cash if
Genesis had not elected to use Genesis Common Stock for payment of such portion
of the Option Price (such notification together with the sale of Genesis Common
Stock for such purpose being referred to as the "Sponsor Liquidity Right"); it
being understood that Nazem shall not have any right to participate in the
invocation of the Sponsor Liquidity Right. In the Sponsor Liquidity Right Sale,
if any, Cypress and TPG, acting jointly on behalf of Sponsors, shall have the
right to select the managing underwriter (and sole book runner) to manage and
administer the offering, and Genesis shall have the right to select an
additional underwriter. The allocation of underwriting compensation shall favor
the managing
<PAGE>
17
underwriter. In the Sponsor Liquidity Right Sale, if any, Genesis shall only be
obligated, in the exercise of its reasonable best efforts, to sell the largest
number of shares of Genesis Common Stock which can be sold at a price of not
less than 90% of the Market Value of the Genesis Common Stock determined at the
time of the pricing of the Sponsor Liquidity Right Sale. Genesis shall use its
reasonable best efforts to cause the Sponsor Liquidity Right Sale, if any, to be
consummated by such time so that the proceeds therefrom shall be available for
the closing of the Put Option or the Call Option, as the case may be, in
accordance with the provisions of Article VII hereof (without giving effect to
the reference in Section 7.1 to Section 3.2(i)). In the event that the net cash
proceeds from the Sponsor Liquidity Right Sale, if any, are insufficient or,
solely because Genesis has been unable in the exercise of its reasonable best
efforts to consummate timely a Sponsor Liquidity Right Sale, unavailable to pay
the portion of the Option Price that would have otherwise been paid in cash to
Sponsors or their Affiliates, Genesis will issue to Sponsors or their Affiliates
shares of Genesis Common Stock in payment of the balance or all of the Option
Price, as the case may be. The number of shares so issuable in respect of the
non-cash portion of the Option Price will be equal to the dollar amount of the
non-cash portion of the Option Price divided by the lesser of (a) the average of
the daily closing prices of the Genesis Common Stock for the 10 trading day
period commencing 5 trading days prior to the closing of the Sponsor Liquidity
Right Sale (with closing prices determined as provided in the definition of
Market Value) and (b) the public offering price of the Genesis Common Stock in
the Sponsor Liquidity Right Sale or, if there is no Sponsor Liquidity Right
Sale, divided by the Market Value of the Genesis Common Stock.
(iii) Genesis shall bear all Registration Expenses in connection
with such issuance and sale (including the entire amount of any and all
underwriters' discounts and commissions) and provide customary and appropriate
undertakings (including indemnification of Sponsors and their Affiliates to the
same extent provided in Section 4.4) in connection with such issuance and sale.
(b) If Cypress and TPG, on behalf of Sponsors, do not invoke the
Sponsor Liquidity Right as described in paragraph (a) above with respect to the
entire portion of the Option Price payable in Genesis Common Stock, the number
of shares issuable in respect of the non-cash portion of the Option Price will
be equal to the dollar amount of the non-cash portion of the Option Price
divided by the Market Value of the Genesis Common Stock.
(c) Genesis agrees (i) to make an appropriate public announcement no
later than 5 trading days prior to the 20 trading day periods referred to in the
definition of Market Value with regard to the pending issuance of Genesis Common
Stock in the Sponsor Liquidity Right Sale, if any, and/or the issuance of
<PAGE>
18
Genesis Common Stock issuable in respect of the non-cash portion of the Option
Price, if any, and (ii) during the period commencing at the beginning of such 20
trading day period and through the later of the date of issuance of the Genesis
Common Stock in the Sponsor Liquidity Right Sale and the date of issuance of the
Genesis Common Stock issuable in respect of the non-cash portion of the Option
Price, not to take any corporate action (other than the declaration or payment
of a regular dividend, consistent with past practice) in respect of (A)
combining or splitting the outstanding shares of Genesis Common Stock, including
combining its outstanding shares into a smaller number of shares or issuing
rights, warrants or dividends payable in additional shares of Genesis Common
Stock to stockholders of record on a date prior to the date of issuance or (B)
directly or indirectly, through the use of derivative securities or otherwise,
purchasing shares of Genesis Common Stock.
Section 3.2 Conditions to Issuance of Genesis Common Stock. The
ability of Genesis to issue Genesis Common Stock in lieu of paying the Option
Price in cash is subject to the satisfaction of each of the following
conditions, which conditions may be waived by Cypress and TPG, acting jointly on
behalf of Sponsors, in their sole discretion:
(a) The Option Shares shall have been or shall be, prior to
issuance, duly authorized and, when the Option Shares are issued,
delivered and paid for, such shares, shall be validly issued and
outstanding, fully paid and nonassessable shares of capital stock of
Genesis, with no personal liability attached to the ownership thereof; and
the holders of the outstanding stock shall not be entitled to preemptive
or other rights to subscribe for such shares.
(b) The issuance of the Option Shares shall not conflict with the
terms of the certificate of incorporation or bylaws of Genesis.
(c) No consent, approval or authorization of, or filing,
registration or qualification with, any court, governmental,
administrative or judicial authority or regulatory body shall be, as of
the date of issuance thereof, required on the part of Genesis for the
valid authorization, issuance, sale and delivery of the Option Shares.
(d) Genesis shall have used its reasonable best efforts to cause the
Option Shares, on or prior to the issuance thereof, to be eligible for
trading on the principal United States securities exchange on which the
Genesis Common Stock is then traded or on the NASDAQ National Market
System, as the case may be.
(e) The issuance of Option Shares shall not cause any rights under
any rights plan (poison pill) of Genesis or any
<PAGE>
19
of its subsidiaries to issue or become exercisable or result in any other
adverse consequence to Sponsors or their Affiliates owning Common Stock
under any rights plan of Genesis.
(f) Sponsors shall have received a certificate, dated the applicable
issue date and signed by an executive officer of Genesis, certifying that
the conditions set forth in Sections 3.2(a) and 3.2(b) are satisfied on
and as of such date.
(g) Genesis shall have provided Sponsors with a legal opinion, dated
the date of the issuance of the Option Shares, from counsel reasonably
satisfactory to Cypress and TPG with respect to matters customarily
covered in connection with the issuance of shares to a private investor,
and such opinion shall be reasonably satisfactory in form and substance to
Cypress and TPG.
(h) The receipt of the Option Shares by Sponsors or their Affiliates
shall not have been enjoined (temporarily or permanently) as of the date
of the issuance thereof or be prohibited by any applicable law or
governmental regulation.
(i) None of the Events of Acceleration described in clause (a), (b)
or (c) of the definition thereof shall have occurred as of the
Notification Date or the date of the Issuance of the Option Shares.
Notwithstanding anything to the contrary, the parties acknowledge and
agree that in the event that (i) the Option Price is not payable by
issuance of Genesis Common Stock solely as a result of the occurrence of
an Event of Acceleration described in clause (c) of the definition
thereof, (ii) the payment of the Option Price in cash would cause a
default under any indebtedness of Genesis existing or contemplated by an
executed commitment letter on the date of this Agreement and (iii) there
shall not have been any full or partial waiver under such indebtedness of
any provision restricting, or requiring prepayment as a result of, a
Change of Control or any amendment of any such provision having the effect
of a full or partial waiver thereof, then the closing of the Option shall
be postponed with respect to the minimum number of whole shares of Common
Stock such that the payment of the Option Price in cash for the balance of
the shares of Common Stock would not cause such a default. Thereafter and
from time to time, the closing with respect to the shares of Common Stock
not then purchased shall take place as promptly as possible to the extent
that the purchase thereof for cash will not cause a default under any such
indebtedness. Genesis agrees to use its reasonable best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all
things necessary to permit the closing under the Option to take place as
promptly as possible with respect to all of the shares of Common Stock.
The parties acknowledge and agree
<PAGE>
20
that from time to time Cypress and TPG, acting jointly on behalf of
Sponsors, may waive the condition contained in this paragraph (i) with
respect to the purchase of all or a portion of the share of Common Stock
not then purchased.
ARTICLE IV
REGISTRATION RIGHTS
Section 4.1 Incidental Registration. (a) Right to Include
Registrable Securities. Each time Genesis proposes to register Genesis Common
Stock under the Securities Act (other than a registration on Form S-4 or S-8, or
any successor or other forms promulgated for similar purposes), whether or not
for sale for its own account, pursuant to a registration statement on which it
is permissible to register Registrable Securities for sale to the public under
the Securities Act, it will give prompt written notice to all Holders, if any,
of its intention to do so and of the Holders' rights under this Section 4.1(a).
Upon the written request of any Holder made within 15 days after the receipt of
any such notice (which request shall specify the Registrable Securities intended
to be disposed of by such Holder), Genesis will use its best efforts to effect
the registration under the Securities Act of all Registrable Securities which
Genesis has been so requested to register by the Holders thereof; provided, that
(i) if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, Genesis shall determine for any reason not
to proceed with the proposed registration, Genesis may, at its election, give
written notice of such determination to each Holder and thereupon shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), and (ii) if such registration involves an
underwritten offering by Genesis (underwritten, at least in part, by Persons who
are not Affiliates of Genesis), all Holders requesting to have Registrable
Securities included in Genesis' registration must sell their Registrable
Securities to such underwriters who shall have been selected by Genesis on the
same terms and conditions as apply to Genesis, with such differences, including
any with respect to indemnification and contribution, as may be customary or
appropriate in combined primary and secondary offerings. If a proposed
registration pursuant to this Section 4.1(a) involves such an underwritten
public offering, any Holder making a request under this Section 4.1(a) in
connection with such registration may elect in writing, prior to the effective
date of the registration statement filed in connection with such registration,
to withdraw such request and not to have such securities registered in
connection with such registration.
<PAGE>
21
(b) Expenses. Genesis will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to Section 4.1(a), regardless of whether such registration statement becomes
effective; provided, that each holder of Genesis Common Stock issued pursuant to
Section 3.1 as to which there is no attempt to exercise the Sponsor Liquidity
Right shall pay all underwriting discounts and commissions relating to the sale
or disposition of such Holder's Registrable Securities pursuant to a
registration statement effected pursuant to this Section 4.1(a).
(c) Priority in Incidental Registrations. If a registration pursuant
to this Section 4.1 involves an underwritten offering by Genesis (as described
in Section 4.1(a)(ii)) and the managing underwriter with respect to such
offering advises Genesis in writing that, in its opinion, the number of
securities (including all Registrable Securities) which Genesis, the Holders and
any other persons intend to include in such registration exceeds the largest
number of securities which can be sold in such offering without having an
adverse effect on the offering of securities as contemplated by Genesis
(including the price at which Genesis proposes to sell such securities), then
Genesis will include in such registration (i) first, all the securities Genesis
proposes to sell for its own account and (ii) second, (A) the number of shares
of Registrable Securities which the Holders have requested to be included in
such registration and (B) the number of shares of securities as to which the
holders thereof have, as of the date of this Agreement, the right to include in
such registration and which the holders thereof have requested to be included in
such registration, in each case which, in the opinion of such managing
underwriter, can be sold without having the adverse effect referred to above. If
the number of shares of Registrable Securities which the Holders have requested
to be included in such registration and the number of shares of such other
securities which the holders thereof have requested to be included in such
registration are accordingly reduced, such reduced number of Registrable
Securities and such other securities shall be allocated pro rata among the
holders thereof on the basis of the relative number of shares of Registrable
Securities or such other securities then held by each such holder; provided,
that any shares thereby allocated to any such holder that exceed such holder's
request will be reallocated among the remaining requesting holders in like
manner.
(d) Custody Agreement and Power of Attorney. Upon Genesis' request,
any Holder will execute and deliver a custody agreement and power of attorney in
form and substance reasonably satisfactory to Genesis with respect to the shares
of Genesis Common Stock to be registered pursuant to this Section 4.1 (a
"Custody Agreement and Power of Attorney"). The Custody Agreement and Power of
Attorney will provide, among other things, that the Holder will deliver to and
deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates representing such shares of Genesis Common Stock
<PAGE>
22
(duly endorsed in blank by the registered owner or owners thereof or accompanied
by duly executed stock powers in blank) and irrevocably appoint said custodian
and attorney-in-fact as the Holder's agent and attorney-in-fact with full power
and authority to act under the Custody Agreement and Power of Attorney on the
Holder's behalf with respect to the matters specified therein.
(e) Other Agreements. Each Holder shall execute such other
agreements as Genesis may reasonably request to further accomplish the purposes
of this Section 4.1.
Section 4.2 Registration on Request. (a) Request by Holders. Upon
the written request of Cypress and TPG, acting jointly (or in the event that
only one of Cypress and TPG then owns Registrable Securities, then such Person),
or the written request of any Holder or Holders of outstanding Registrable
Securities designated for such purpose in writing by Cypress and TPG, acting
jointly, requesting that Genesis effect the registration under the Securities
Act of all or part of such Holders' or Holder's Registrable Securities (which
Registrable Securities requested to be registered have an aggregate Market Value
as of the date of such request of not less than $10 million), and specifying the
intended method of disposition thereof, Genesis will promptly give written
notice of such requested registration to all other Holders, and thereupon will,
as expeditiously as possible, use its best efforts to effect the registration
under the Securities Act of:
(i) the Registrable Securities which Genesis has been so requested
to register by such Holders or Holder; and
(ii) all other Registrable Securities which Genesis has been
requested to register by any other Holder thereof by written request given
to Genesis within 30 days after the giving of such written notice by
Genesis (which request shall specify the intended method of disposition of
such Registrable Securities),
so as to permit the disposition (in accordance with the Holders' intended method
thereof) of the Registrable Securities so to be registered; provided, that
Genesis shall not be obligated to file a registration statement relating to any
registration request under this Section 4.2(a) (i) within a period of six months
after the effective date of any other registration statement relating to (A) any
registration request under this Section 4.2(a) or (B) any registration of
Registrable Securities effected under Section 4.1, or (ii) if three registration
statements relating to registration requests under this Section 4.2(a) have
previously been filed and declared effective by the SEC.
(b) Expenses. Genesis will pay all Registration Expenses in
connection with the first three registrations of Registrable Securities pursuant
to this Section 4.2 upon the written request of any of the Holders; provided,
that each Holder
<PAGE>
23
of Genesis Common Stock issued pursuant to Section 3.1 as to which there is no
attempt to exercise the Sponsor Liquidity Right shall pay the underwriting
discounts and commissions relating to the sale or disposition of such Holder's
Registrable Securities pursuant to a registration statement effected pursuant to
this Section 4.2. All expenses for any subsequent registrations of Registrable
Securities pursuant to this Section 4.2 shall be paid pro rata by all Persons
(including the Holders and Genesis) participating in such registration on the
basis of the relative number of shares of Genesis Common Stock of each such
Person included in such registration.
(c) Effective Registration Statement. A registration requested
pursuant to this Section 4.2 will not be deemed to have been effected unless it
has become effective; provided, that if, within the period ending on the earlier
to occur of (i) 180 days after the applicable registration statement has become
effective, or (ii) the date on which the distribution of the Registrable
Securities covered thereby has been completed, the offering of Registrable
Securities pursuant to such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court, such registration will be deemed not to have been effected.
(d) Selection of Underwriters. If a requested registration pursuant
to this Section 4.2 involves an underwritten offering, Cypress and TPG, acting
jointly (or in the event that only one of Cypress and TPG then intends to sell
Registrable Securities in such underwritten offering, then such Person) shall
have the right to select the investment banker or bankers and managers to
administer the offering; provided, however, that in the event that neither
Cypress nor TPG then owns Registrable securities, the Holders of a majority of
the Registrable securities requested to be involved in such registration shall
have the right to select the investment banker or bankers and managers to
administer the offering; and, provided, further, that such investment banker or
bankers and managers shall be reasonably satisfactory to Genesis.
(e) Priority in Requested Registrations. If a requested registration
pursuant to this Section 4.2 involves an underwritten offering and the managing
underwriter advises Genesis in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of Genesis which are not Registrable Securities) exceeds the largest number of
securities which can be sold in such offering, Genesis will include in such
registration only the Registrable Securities requested to be included in such
registration. In the event that the number of Registrable Securities requested
to be included in such registration exceeds the number which, in the opinion of
such managing underwriter, can be sold, the number of such Registrable
Securities to be included in such registration shall be allocated pro rata among
all requesting Holders on the basis of the relative number of
<PAGE>
24
shares of Registrable Securities then held by each such Holder; provided, that
any shares thereby allocated to any such Holder that exceed such Holder's
request shall be reallocated among the remaining requesting Holders in like
manner. In the event that the number of Registrable Securities requested to be
included in such registration is less than the number which, in the opinion of
the managing underwriter, can be sold, Genesis may include in such registration
the securities Genesis or other Persons propose to sell up to the number of
securities that, in the opinion of the managing underwriter, can be sold.
Section 4.3 Registration Procedures. If and whenever, Genesis is
required to use its best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Agreement,
Genesis will, as expeditiously as possible:
(a) prepare and, if the registration is pursuant to notice given
under Section 4.2(a), in any event within 45 days after the giving of
notice pursuant to Section 4.2(a), file with the SEC a registration
statement with respect to such Registrable Securities on any form for
which Genesis then qualifies or which counsel for Genesis shall deem
appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of
distribution thereof, and use its best efforts to cause such registration
statement to become and remain effective; provided, however, that Genesis
may discontinue any registration of its securities which is being effected
pursuant to Section 4.2 at any time prior to the effective date of the
registration statement relating thereto;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period of 180 days or such lesser period of time as
Genesis or any Holder may be required under the Securities Act to deliver
a prospectus in connection with any sale of Registrable Securities, and to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition
by the Holder or Holders thereof set forth in such registration statement;
provided, that before filing a registration statement or prospectus, or
any amendments or supplements thereto, Genesis will furnish to the Holders
and their counsel copies of all documents proposed to be filed, which
documents will be subject to the review of such counsel and will not be
filed if such counsel reasonably objects;
<PAGE>
25
(c) furnish to each Holder of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus and
prospectus supplement, as applicable), in conformity with the requirements
of the Securities Act, and such other documents as such Holder may
reasonably request in order to facilitate the disposition of the
Registrable Securities by such Holder;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such Holder, except that Genesis shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this Section 4.3(d),
it would not be obligated to be so qualified, to subject itself to
taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
enable the Holder or Holders thereof to consummate the disposition of such
Registrable Securities;
(f) notify each Holder of any such Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 4.3(b), of Genesis' becoming aware
that the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such Holder, prepare and furnish to
such Holder a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
<PAGE>
26
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations promulgated thereunder;
(h) (A) use its best efforts to cause all such Registrable
Securities to be listed on any securities exchange on which the Genesis
Common Stock is then listed, if such Registrable Securities are not
already so listed and if such listing is then permitted under the rules of
such exchange and (B) provide a transfer agent and registrar for such
Registrable Securities covered by such registration statement no later
than the effective date of such registration statement;
(i) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of a
majority of shares of such Registrable Securities or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities, including making appropriate members of
senior management of Genesis available for customary participation in a
"road show" presentation to potential investors;
(j) obtain a "cold comfort" letter or letters from Genesis'
independent public accountants in customary form and covering matters of
the type customarily covered by "cold comfort" letters as the Holder or
Holders of a majority of the shares of such Registrable Securities shall
reasonably request (provided that Registrable Securities constitute at
least 25% of the securities covered by such registration statement); and
(k) make available for inspection by representatives of the Holders
of the Registrable Securities covered by such registration statement, by
any underwriter participating in any disposition to be effected pursuant
to such registration statement and by any attorney, accountant or other
agent retained by such Holders or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of Genesis, and cause all of Genesis' officers, directors and employees to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement.
Genesis may require each Holder of Registrable Securities as to
which any registration is being effected to furnish Genesis with such
information regarding such Holder and
<PAGE>
27
pertinent to the disclosure requirements relating to the registration and the
distribution of such securities as Genesis may from time to time reasonably
request in writing.
Each Holder of Registrable Securities, upon receipt of any notice
from Genesis of the happening of any event of the kind described in Section
4.3(f), shall forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 4.3(f), and, if so directed by Genesis, such
Holder shall deliver to Genesis (at Genesis' expense) all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event Genesis shall give any such notice, the period mentioned in
Section 4.3(b) shall be extended by the number of days during the period from
the date of the giving of such notice pursuant to Section 4.3(f) and through the
date when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 4.3(f).
Section 4.4 Indemnification. (a) Indemnification by Genesis. In the
event of any registration of any securities of Genesis under the Securities Act
pursuant to Section 4.1 or 4.2, Genesis hereby indemnifies and agrees to hold
harmless, to the extent permitted by law, each Holder of Registrable Securities
covered by such registration statement, each affiliate of such Holder and their
respective directors and officers or general and limited partners (and the
directors, officers, affiliates and controlling Persons thereof), each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such Holder or any such
underwriter within the meaning of the Securities Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages or
liabilities, joint or several, and expenses to which such Indemnified Party may
become subject under the Securities Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof, whether or not such Indemnified Party is a party thereto) arise
out of or are based upon (a) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto, or
(b) any omission or alleged omission to state therein a material fact necessary
to make the statements made, in the light of the circumstances under which they
were made, not misleading, and Genesis will reimburse such Indemnified Party for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that
<PAGE>
28
Genesis shall not be liable to any Indemnified Party in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, in any such preliminary, final or summary prospectus, or
any amendment or supplement thereto in reliance upon and in conformity with
written information with respect to such Indemnified Party furnished to Genesis
by such Indemnified Party for use in the preparation thereof; and provided,
further, that Genesis will not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 4.4(a) with
respect to any preliminary prospectus or the final prospectus or the final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such underwriter or controlling
Person results from the fact that such underwriter sold Registrable Securities
to a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final prospectus (including any
documents incorporated by reference therein) or of the final prospectus as then
amended or supplemented (including any documents incorporated by reference
therein), whichever is most recent, if Genesis has previously furnished copies
thereof to such underwriter. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Holder or
any Indemnified Party and shall survive the transfer of such securities by such
Holder.
(b) Indemnification by the Holders and Underwriters. Genesis may
require, as a condition to including any Registrable Securities in any
registration statement filed in accordance with Section 4.1 or 4.2 herein, that
Genesis shall have received an undertaking reasonably satisfactory to it from
the Holder of such Registrable Securities or any underwriter to indemnify and
hold harmless (in the same manner and to the same extent as set forth in Section
4.4(a)) Genesis, all other prospective Holders or any underwriter, as the case
may be, and any of their respective affiliates, directors, officers and
controlling Persons, with respect to any statement in or omission or alleged
omission from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement, if such statement
or omission or alleged omission was made in reliance upon and in conformity with
written information with respect to such Holder or underwriter furnished to
Genesis by such Holder or underwriter expressly for use in the preparation of
such registration statement, preliminary, final or summary prospectus or
amendment or supplement, or a document incorporated by reference into any of the
foregoing. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of Genesis or any of the Holders, or any
of their respective affiliates, directors, officers or controlling
<PAGE>
29
Persons and shall survive the transfer of such securities by such Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 4.4, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Sections 4.4(a) or 4.4(b), except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party will be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. If, the
indemnified party has been advised by counsel that having common counsel would
result in a conflict of interest between the interests of such indemnified and
indemnifying parties, then such indemnified party may employ separate counsel
reasonably acceptable to the indemnifying party to represent or defend such
indemnified party in such action, it being understood, however, that the
indemnifying party shall not be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties (and not more than one separate firm of local counsel at any time for
all such indemnified parties) in such action. No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified
in this Section 4.4 (with appropriate modifications) shall be given by Genesis
and each Holder of Registrable Securities with respect to any required
registration or other qualification of securities under any federal or state law
or regulation or governmental authority other than the Securities Act.
<PAGE>
30
(e) Contribution. If recovery is not available under the foregoing
indemnification provisions of this Section 4 for any reason other than as
expressly specified therein, the parties entitled to indemnification by the
terms thereof shall be entitled to contribution to liabilities and expenses
except to the extent that contribution is not permitted under Section 11(f) of
the Securities Act. In determining the amount of contribution to which the
respective parties are entitled, there shall be considered the relative benefits
received by each party from the offering of the Registrable Securities (taking
into account the portion of the proceeds realized by each), the parties'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
misstatement or omission and any other equitable considerations appropriate
under the circumstances. The amount paid or payable by a party under this
Section 4.4 as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(f) Non-Exclusivity. The obligations of the parties under this
Section 4 shall be in addition to any liability which any party may otherwise
have to any other party.
(g) Rule 144. Genesis covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if Genesis is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, Genesis will deliver to such Holder a written statement
as to whether it has complied with such requirements.
<PAGE>
31
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Parties. Each of
Cypress, TPG, Nazem and Genesis represents and warrants as follows:
(a) This Agreement has been duly executed and delivered by such
Person and constitutes the legal, valid and binding obligation of such Person,
enforceable against such Person in accordance with the terms hereof except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and by
general principles of equity and indemnification may be limited under federal
and state securities laws; and
(b) The execution and delivery of this Agreement by such Person does
not, and the performance by it and its Affiliates of its and their obligations
under this Agreement will not, violate, conflict with or constitute a breach of,
or a default under, any material agreement, indenture or instrument to which
such Person is a party or which is binding on such Person, and will not result
in the creation of any lien on, or security interest in, any of the assets of
such Person.
Section 5.2 Representations and Warranties of Genesis. Genesis
represents and warrants to the Sponsors as follows:
(a) The Option Shares have been or will be, prior to issuance, duly
authorized and, when the Option Shares are issued, delivered and paid for, such
shares, will be validly issued and outstanding, fully paid and nonassessable
shares of capital stock of Genesis, free and clear of all liens, claims and
restrictions other than those created by the recipient, with no personal
liability attached to the ownership thereof; and the holders of the outstanding
stock are not entitled to preemptive or other rights to subscribe for such
shares.
(b) Neither the issuance of the Option Shares nor the sale of the
Option Shares in connection with the exercise of the Sponsor Liquidity Right or
the Exit Deficit Liquidity Right nor the consummation of any other of the
transactions contemplated in this Agreement, nor the fulfillment of the terms of
this Agreement, will conflict with, result in a breach of or constitute a
default under the terms of the certificate of incorporation or bylaws of Genesis
or of any material agreement, indenture or instrument to which Genesis is a
party or is bound, or any order or regulation applicable to Genesis of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over Genesis.
<PAGE>
32
(c) No consent, approval or authorization of, or filing,
registration or qualification with, any court, governmental, administrative or
judicial authority or regulatory body (i) is required on the part of Genesis for
the execution, delivery and performance of this Agreement, other than those
which have been duly obtained or made or will be required in connection with
Article IV hereof (which will be timely obtained or made) or (ii) will be (as of
the Exercise Date) required on the part of Genesis for the valid authorization,
issuance, sale and delivery of the Option Shares.
(d) As of the Exercise Date and as of each subsequent date on which
shares of Common Stock are acquired by Genesis from Sponsors or their
Affiliates, there will be no action or proceeding or investigation pending or,
to the best knowledge of Genesis, threatened against Genesis or any of its
subsidiaries which, if determined adversely could adversely affect the
consummation of the transactions contemplated by this Agreement. There are no
actions or proceedings challenging or seeking to restrain, materially limit or
prohibit the consummation of the transactions contemplated hereby.
(e) The Option Shares, on the date of the issuance thereof, will be
eligible for trading on the principal United States securities exchange on which
the Genesis Common Stock is then traded or on the NASDAQ National Market System,
as the case may be.
(f) None of the execution and delivery of this Agreement or
transactions contemplated by this Agreement, including, without limitation, the
receipt of Option Shares by Sponsors or their Affiliates and the issuance of
Option Shares by Genesis, shall cause any rights under any rights plan (poison
pill) of Genesis or any of its subsidiaries to issue or become exercisable or
result in any other adverse consequence to Sponsors or their Affiliates owning
Common Stock under any rights plan of Genesis.
(g) No state takeover statute or similar statute or regulation
applies, purports to apply or will, following the occurrence of any event
contemplated hereby or otherwise, apply to the transactions contemplated by this
Agreement, including, without limitation, the receipt of Option Shares by
Sponsors or their Affiliates and the issuance of Option Shares by Genesis, and
no provision of the certificate of incorporation, by-laws or other governing
documents of Genesis will, following the occurrence of any event contemplated
hereby or otherwise, restrict or impair the ability of Sponsors or their
Affiliates or any subsequent transferee to vote or otherwise exercise the rights
of a stockholder with respect to Option Shares or otherwise obtain the benefits
of this Agreement.
<PAGE>
33
Section 5.3 Representations and Warranties of the Sponsors. Each of
the Sponsors represents and warrants to Genesis as follows:
(a) On the Exercise Date, such Person and its Affiliates, if any,
owing Common Stock will have good and valid title to the shares of Common Stock
owned by it, free and clear of all liens, encumbrances, equities and claims.
(b) No consent, approval or authorization of, or filing,
registration or qualification with, any court, governmental, administrative or
judicial authority or regulatory body will be, as of the Exercise Date, required
on the part of such Person or any of its Affiliates owning Common Stock for the
valid sale and delivery of the Common Stock to Genesis as contemplated herein.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Further Assurances. (a) Subject to the terms and
conditions hereof, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, reasonably promptly the transactions contemplated
by this Agreement.
(b) Promptly following the Notification Date, each of the parties
hereto shall prepare and file all applications and other notices required in
connection with, and use their best efforts to obtain promptly and comply with
all conditions contained in, all necessary regulatory approvals and any other
consent, approval or other actions by, or notice to or registration or filing
with, any governmental or administrative agency or authority required or
necessary to be made, obtained or complied with, as the case may be, by any
party hereto in connection with the performance of the transactions contemplated
by this Agreement, including without limitation any premerger notifications
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"). Genesis agrees (i) to enter into with the Federal Trade Commission and/or
the Department of Justice such decrees, consent orders and/or hold separate
undertakings and (ii) to effectuate any divestitures, in each case involving
assets or operations of either the Company or Genesis or its Affiliates or both,
as may be necessary in order to enable Genesis to purchase, as soon as
practicable following the Notification Date and in any event no later than the
Exercise Date, the Common Stock.
Section 6.2 Transfer of Restricted Securities. Restricted Securities
are transferable pursuant to (i) public
<PAGE>
34
offerings registered under the Securities Act, (ii) Rule 144 and (iii) subject
to the conditions specified below in this Section 6.2, any other legally
available means of transfer. In connection with the transfer of any Restricted
Securities (other than a transfer described in clause (i) or (ii) above), the
transferor will deliver written notice to Genesis describing in reasonable
detail the transfer or proposed transfer, together with an opinion of counsel
reasonably satisfactory to Genesis to the effect that such transfer of
Restricted Securities may be effected without registration of such Restricted
Shares under the Securities Act. In addition, if the transferor of the
Restricted Securities delivers to Genesis an opinion of such counsel that no
subsequent transfer of such Restricted Securities will require registration
under the Securities Act, Genesis will promptly upon such contemplated transfer
deliver new certificates for such Restricted Securities which do not bear any
restrictive legend. If Genesis is not required to deliver new certificates for
such Restricted Securities not bearing such a legend, the holder thereof will
not transfer the same until the prospective transferee has confirmed to the
Company in writing its agreement to be bound by the conditions contained in this
Section 6.2.
Section 6.3 Calculation of Parent EBITDAR for the Exit Relevant
Period; Confirmation of Total Equity Value; Access to Information; Resolution of
Disputes. (a) As promptly as practicable following the Notification Date, the
parties shall cause the chief financial officer of Parent to calculate Parent
EBITDAR for the Exit Relevant Period and provide to the parties, no later than
30 days after the Notification Date, his written certification of his
calculation of such amount in reasonable detail. Unless the amount so calculated
is disputed by written notice within 30 days of its being so certified, it shall
be final and binding on the parties in calculating Total Call Enterprise Value
or Total Put Enterprise Value, as the case may be. If such amount is so disputed
by written notice as aforesaid, such dispute shall be resolved in accordance
with paragraph (e) below, and the resolution process thereby provided shall
determine Parent EBITDAR for the Exit Relevant Period, which amount shall be
final and binding on the parties in calculating Total Call Enterprise Value or
Total Put Enterprise Value, as the case may be.
(b) Each of Cypress and TPG shall have 30 days following the
Exercise Date to provide written notice of a dispute over the calculation of
Total Equity Value (including, without limitation, the calculation of any
component thereof) used in determining the Option Price. If such amount is
disputed by written notice as aforesaid, such dispute shall be resolved in
accordance with paragraph (e) below, and the resolution process thereby provided
shall determine Total Equity Value, which amount shall be final and binding on
the parties in calculating the Option price. Cypress and TPG shall not initiate
a dispute of the calculation of Total Equity Value after such 30-day period.
<PAGE>
35
(c) In the event that the calculation of Total Equity Value as
determined through the resolution process provided in paragraph (e) below is
different from the calculation of Total Equity Value used in determining the
Option Price, the parties shall cause the chief financial officer of Parent to
recalculate the Option Price accordingly. In the event that the Option Price as
so recalculated is greater that the amount of the Option Price previously
calculated, Genesis shall as promptly as practicable, but in any event within 5
Business Days, pay to Sponsors the difference. In the event that all of the
Option Price paid was paid in cash, such adjustment shall be made in cash in
immediately available funds. In the event that any portion of the Option Price
paid was paid in shares of Genesis Common Stock, such adjustment shall be made
in shares of Genesis Common Stock; provided, that Genesis in making a payment to
Sponsors pursuant to this paragraph (c), shall be required to use cash to the
extent that the conditions set forth in Section 3.2 are not satisfied with
respect to such issuance of Genesis Common Stock. The number of shares of
Genesis Common Stock to be transferred in respect of an adjustment pursuant to
this paragraph (c), if any, shall equal the dollar amount of the adjustment to
be paid in shares of Genesis Common Stock divided by the lesser of (i) the
Market Value of the Genesis Common Stock, (ii) the average daily closing prices
of the Genesis Common Stock for the 10 trading day period commencing 5 trading
days prior to the closing of the Sponsor Liquidity Right Sale, if any (with
closing prices determined as provided in the definition of market Value), and
(iii) the public offering price of the Genesis Common Stock in the Sponsor
Liquidity Right Sale, if any.
(d) Each of Cypress, TPG and Genesis and their respective
representatives shall have full access to the books and records of Parent and
its subsidiaries in connection with any calculation of Parent EBITDAR
(including, without limitation, any component thereof) for the Exit Relevant
Period and Total Equity Value. The parties hereby agree to cause Parent to
instruct all auditors to make their work papers available for review in this
regard, and hereby waive any objection with respect thereto. The fees and
expenses of the parties' representatives shall be paid by Parent.
(e) In the event Cypress or TPG disputes any amount calculated by
the chief financial officer of Parent (including, without limitation, any
component of Parent EBITDAR, Pharmacy EBITDAR or the calculation of Total Equity
Value) and gives timely notice of such dispute as described above, the parties
shall negotiate in good faith as promptly as practicable. In the event such
dispute is not resolved within 14 days of the giving of notice of such dispute,
Cypress, TPG and Genesis shall promptly engage as "Arbitrator" a "big five"
accounting firm (which shall not be the then principal auditors of The Cypress
Group L.L.C., TPG GenPar II, L.P. or Genesis) to reach a final determination of
the amount whose calculation is in dispute. The Arbitrator shall render its
decision within 21 days of its
<PAGE>
36
engagement for such purpose. The fees and expenses of the Arbitrator shall be
paid by Parent.
(f) By way of illustration, the "Illustrative Scenarios" attached to
this Agreement as Annex B reflect the distribution order in a call or put
scenario pursuant to the formula described herein.
Section 6.4 Election of Directors. If, as a result of the issuance
of shares of Genesis Common Stock to Sponsors or their Affiliates pursuant to
this Agreement Sponsors or their Affiliates obtain beneficial ownership of at
least 20% of the outstanding shares of Genesis Common Stock, and for so long
thereafter as Sponsors or their Affiliates hold beneficial ownership of at least
20% of the outstanding shares of Genesis Common Stock, then Cypress and TPG,
acting jointly on behalf of Sponsors, shall be entitled to designate such number
of directors on the Board of Directors of Genesis as shall represent a
percentage of the outstanding shares of Genesis Common Stock owned by Sponsors
and their Affiliates. To the extent legally practicable, such new directorships
shall be created in classes which most recently have been elected. Genesis and
its Board of Directors shall take all actions necessary to cause such designees
to be elected or appointed to the Board of Directors of Genesis (including,
without limitation, increasing the size of the Board of Directors of Genesis
and/or removing directors).
Section 6.5 Certain Negative Covenants. Until the earlier to occur
of (i) the closing with respect to all of the shares of Common Stock under
either of the Options and (ii) the disposition by Sponsors and their Affiliates
owning Common Stock of all Common Stock held by them and (iii), with respect to
paragraphs (a) and (c) below only, the second day after the sixth anniversary of
the Closing Date, without the prior written consent of Cypress and TPG, neither
Genesis nor any of its Subsidiaries will:
(a) Merge or consolidate or otherwise combine with or into any other
person (other than a merger, consolidation or combination between
Subsidiaries of Genesis or between any Subsidiary and Genesis where
Genesis is the surviving entity), unless the surviving entity agrees to
comply with the obligations of Genesis under this Agreement.
(b) Amend, modify, supplement or otherwise change any of the terms
of Genesis' certificate of incorporation, shareholder rights agreement, or
other constituent document in a manner that would be adverse to Sponsors
(other than an amendment, modification or supplement or other change which
would affect Sponsors the same as other shareholders of Genesis).
<PAGE>
37
(c) Enter into any agreement or take any action that would
materially impair Genesis' ability to perform its obligations under this
Agreement.
Section 6.6 Pharmacy. Until the earlier to occur of (i) the closing
with respect to all of the shares of Common Stock under either of the Options
and (ii) the second day after the sixth anniversary of the Closing Date without
exercise of either Option,
(a) Genesis shall as soon as reasonably practicable after they are
prepared, provide to Sponsors such budgets and financial reports relating
to the Pharmacy as Genesis provides to its management; Genesis shall also
furnish or arrange for the preparation of such other reports and
information regarding the Pharmacy as Sponsors may from time to time
reasonably request.
(b) neither Genesis nor any of its Subsidiaries shall enter into any
transaction relating to the Pharmacy with an Affiliate of Genesis other
than on competitive, arm's-length terms.
Section 6.7 Pharmacy Dispositions. (a) Without the prior written
consent of Cypress and TPG, acting jointly, Genesis may not, at any time prior
to the second day after the sixth anniversary of the Closing Date, sell,
transfer, dispose of or otherwise transfer any interest in the Pharmacy unless:
(i) Genesis shall not be prohibited or restricted in any manner
whatsoever from complying with its obligations under paragraph (b) below
(including, without limitation, by any agreement, indenture or instrument
to which Genesis or any of its Subsidiaries is a party or which is binding
on Genesis or any of its Subsidiaries);
(ii) the aggregate of the EBITDAR attributable to the interest being
sold, transferred or disposed of and the EBITDAR attributable to any
interest previously sold, transferred or disposed of pursuant to this
Section 6.7, in each case for the twelve full calendar months ending
immediately prior to or coincident with the applicable sale, transfer or
disposition, would be less than 15% of Pharmacy EBITDAR for the twelve
full calendar months ending immediately prior to or coincident with the
sale, transfer or disposition as to which the calculation is being
performed;
(iii) the aggregate of the fair equity market value of the interest
being sold, transferred or disposed of and the fair equity market value of
any interest previously sold, transferred or disposed of pursuant to this
Section 6.7 would be less than 15% of the fair equity market value of
<PAGE>
38
the Pharmacy determined immediately prior to the sale, transfer or
disposition as to which the calculation is being performed (for purposes
of this clause (iii), fair equity market value shall be determined and set
forth in writing in good faith by the board directors of Genesis); and
(iv) the sale, transfer or disposition is to a Person other than an
Affiliate of Genesis in an arm's-length transaction.
(b) If Genesis shall sell, transfer or dispose of any interest in
the Pharmacy, it shall, concurrently with such sale, transfer or disposition,
pay to Sponsors in cash in immediately available funds an amount equal to the
product of (x) the ratio of Total Sponsor Contribution plus Sponsor Contribution
Adjustment to the sum of Adjusted Total Contribution plus Sponsor Contribution
Adjustment plus Genesis Contribution Adjustment and (y) the greater of (i) the
product of (A) Pharmacy Percentage Interest and (B) the fair market value (as
determined and set forth in writing in good faith by the board of directors of
Genesis) of the consideration received by Genesis (including, without
limitation, by the relief of indebtedness) in such sale, transfer or disposition
and (ii) the product of (A) Pharmacy Percentage Interest, (B) 12.5 and (C) the
EBITDAR attributable to the interest in the Pharmacy being sold, transferred or
disposed of for the twelve full calendar months ending immediately prior to or
coincident with such sale, transfer or disposition. Any amounts payable to
Sponsors pursuant to this paragraph (b) shall be paid to Sponsors pro rata based
on the number of shares of Common Stock held by each Sponsor or its Affiliates.
The aggregate of all amounts paid to Sponsors pursuant to this paragraph (b) is
referred to herein as "Sponsor Returned Capital". As used herein, "Genesis
Returned Capital" means (i) the greater of (a) the product of (A) Pharmacy
Percentage Interest and (B) the fair market value of the consideration received
by Genesis (including, without limitation, by the relief of Indebtedness) in any
sale, transfer or disposition referred to above and (b) the product of (A)
Pharmacy Percentage Interest, (B) 12.5 and (C) the EBITDAR attributable to the
interest in the Pharmacy being sold, transferred or disposed of for the twelve
full calendar months ending immediately prior to or coincident with such sale,
transfer or disposition, less (ii) Sponsor Returned Capital.
Section 6.8 Calculation of EBITDAR. Any time EBITDAR of any Person
other than Parent or the Pharmacy is required to be calculated for purposes of
this Agreement (including, without limitation, in connection with any
calculation of Parent EBITDAR), Genesis shall provide to Cypress and TPG a
written calculation thereof in reasonable detail, which written calculation
shall be certified by Genesis' Chief Financial Officer as being a correct
calculation of EBITDAR of such Person in all material respects. In connection
with any such calculation relating to any Affiliate of Genesis, Cypress and
<PAGE>
39
TPG, at Sponsors' expense (which Sponsors shall share among themselves pro rata
based upon their holdings of Common Stock), may engage any individuals of their
choice from Genesis' then-current independent auditing firm or KPMG Peat Marwick
to confirm such calculation. In this regard, Genesis shall not object to such
auditors having full access to the books and records of Genesis or to such
auditors' use of such firm's work papers for such purpose. In connection with
any such calculation relating to a Person which is not an Affiliate of Genesis,
Genesis shall use its reasonable best efforts to provide Cypress and TPG and
their representatives with such access to the books and records of the Person
for which the calculation of EBITDAR is being made as Cypress and TPG may
request to confirm such calculation. Unless the amount so calculated is disputed
by written notice within 30 days of its being certified, it shall be final and
binding on the parties. If such amount is so disputed by written notice as
aforesaid, such dispute shall be resolved in accordance with Section 6.3(e), and
the resolution process thereby provided shall determine such calculation.
Section 6.9 Post-Put Exit. (a) If, at any time on or after the first
day after the sixth anniversary of the Closing Date, the Put Option has not been
exercised, and Cypress and TPG or their Affiliates owning Common Stock desire to
sell any or all of the shares of Common Stock owned by them (the "Post-Put Exit
Stock"), Cypress and TPG or their Affiliates owning Common Stock may do so
subject to the terms and conditions of this Section 6.9. If the Put Option has
not been exercised by the first day after the sixth anniversary of the Closing
Date and no Event of Acceleration has occurred, Cypress and TPG agree, on behalf
of themselves and their Affiliates owning Common Stock, to use their reasonable
best efforts to sell all of the Common Stock owned by them as promptly as
practicable; provided, that Cypress and TPG shall not be obligated to sell any
Common Stock at a price less than that which Cypress and TPG reasonably believe
to be the fair market value thereof.
(b) Prior to any sale referred to in paragraph (a) above, Cypress
and TPG shall reduce to writing the terms pursuant to which they desire to sell
such shares of Common Stock (the "Transfer Offer"). Cypress and TPG shall
provide the Transfer Offer to Genesis and Nazem. The Transfer Offer shall
identify the Post-Put Exit Stock, the amount and type (which shall be cash or
stock of the buyer but not a combination thereof) of consideration sought for
the Post-Put Exit Stock and all other material terms and conditions of the
Transfer Offer. The Transfer Offer shall contain an irrevocable offer to sell
the Transfer Stock to Genesis for the amount and type of consideration and upon
the same terms and conditions as those set forth in the Transfer Offer. Upon
receipt of the Transfer Offer, Genesis shall have the irrevocable right and
option (the "Right of First Offer"), exercisable as provided below, to accept
the Transfer Offer for all shares of the Transfer Stock; provided, that Genesis
may not purchase less than all of the Transfer Stock
<PAGE>
40
unless Cypress and TPG shall have consented thereto; and, provided, further,
that if Genesis shall exercise its right to purchase the Transfer Stock, it
shall be obligated to purchase from the Affiliate of Nazem owning Common Stock,
and the Affiliate of Nazem owning Common Stock shall be required to sell to
Genesis, upon the terms and conditions contained in the Transfer Offer, the same
proportion of its shares of Common Stock as Genesis has agreed to acquire from
Cypress and TPG. If Genesis desires to exercise its Right of First Offer, it
shall provide Sponsors with an irrevocable written notice of acceptance which
shall be binding on Sponsors and their Affiliates owning Common Stock and
Genesis. The notice of acceptance must be provided to Sponsors within thirty
(30) days after the date the Transfer Notice is given (the "Notice Period").
(c) The closing of the purchase of the Transfer Stock pursuant to
the Right of First Offer, if exercised, shall take place at the principal office
of Cypress within thirty (30) days after the expiration of the Notice Period (or
as soon thereafter as practicable in the event any required governmental
consents shall not have been obtained). At such closing, Genesis shall deliver
the amount and type of consideration specified in the Transfer Offer against
delivery of certificates representing the shares of Common Stock being
purchased, duly endorsed in blank or accompanied by duly executed stock powers.
(d) If Genesis has not elected to exercise the Right of First Offer
within the Notice Period, Cypress and TPG shall have ninety (90) days from the
end of the Notice Period to enter into an agreement (subject to customary
conditions) (the "Third Party Agreement") to sell any or all of the Transfer
Stock to any third party on terms not materially more favorable to such third
party than were contained in the Transfer Offer. Cypress, TPG and Genesis agree
that in the event that the Transfer Offer specifies cash as the type of
consideration sought and Genesis elects not to exercise its Right of First
Offer, Cypress and TPG and their Affiliates owning Common Stock shall be
entitled to sell the Post-Put Exit Stock to a third party for cash or a
combination of cash and stock of such third party, provided, that (i) in either
case, the amount of cash shall be at least equal to the amount of cash specified
in the Transfer Offer, (ii) any consideration in the form of stock shall be
stock listed and admitted to trading on a national securities exchange or traded
on a publicly reported over-the-counter market and (iii) if any part of such
consideration shall be stock, Genesis would not, if participating in such sale
pursuant to the last sentence of this paragraph, be obligated to accept less
cash than it would have received if the sale were made solely in cash in the
amount specified in the Transfer Offer. Cypress, TPG and Genesis further agree
that in the event that the Transfer Offer specifies stock of the buyer as the
type of consideration sought and Genesis elects not to exercise its Right of
First Offer, Cypress and TPG and their Affiliates owning Common Stock shall be
entitled to sell the Post-Put Exit Stock to a third party for
<PAGE>
41
cash, stock of such third party or a combination thereof; provided, that (i) in
the case of a combination, either the amount of cash or the value of the stock
of the third party as of the date of the Third Party Agreement shall be at least
equal to the value of the amount of stock specified in the Transfer Offer as of
the date of the Transfer Offer and (ii) any consideration in the form of stock
shall be stock listed and admitted to trading on a national securities exchange
or traded on a publicly reported over-the-counter market. In respect of any
transaction pursuant to this paragraph (d), Cypress and TPG shall have with
respect to Genesis and Nazem's Affiliate owning Common Stock the drag-along
rights set forth in Section 8.9(c) and (d), and Genesis and Nazem's Affiliate
owning Common Stock shall have the tag-along rights set forth in Sections 8.9(e)
and (f).
(e) Notwithstanding the provisions of this Section 6.9, in any sale
of Common Stock pursuant to this Section 6.9 which includes the transfer of
Common Stock owned by Genesis, the aggregate proceeds shall be distributed among
Sponsors, on the one hand, and Genesis, on the other hand, as contemplated by
the formula for the Put Option Exercise Price calculated as if the Notification
Date and the Exercise Date occurred on the first day after the sixth anniversary
of the Closing Date, adjusted for the percentage of the stock of Parent sold.
Following any sale by Sponsors or their Affiliates of shares of Common Stock
pursuant to this Section 6.9 (regardless of whether any such sale includes the
transfer of Common Stock owned by Genesis), Genesis shall pay to the selling
Sponsors, as provided below, the excess, if any, of (i) the Put Option Exercise
Price calculated as if the Notification Date and the Exercise date occurred the
first day after the sixth anniversary of the Closing Date, adjusted for the
percentage of the stock of Parent sold over (ii) the proceeds to such Sponsors
or their Affiliates (the "Exit Deficit").
(f) Genesis may use for payment of the Exit Deficit (either in whole
or in part) either cash in immediately available funds or Genesis Common Stock.
Notwithstanding the foregoing, Genesis in making a payment to Sponsors of the
Exit Deficit shall be required to use cash in immediately available funds to the
extent that the conditions set forth in Section 3.2 are not satisfied with
respect to any such issuance of Genesis Common Stock; provided, that the
condition set forth in Section 3.2(i) by reference to clause (c) of the
definition of Events of Acceleration (and no other condition) shall cease to be
a condition to the use by Genesis of Genesis Common Stock to make payment of the
Exit Deficit on the day after the seventh anniversary of the Closing Date;
provided, that such condition shall continue to apply until the Exit Deficit has
been satisfied in full in accordance with the terms hereof unless the
transaction giving rise to the Exit Deficit shall not have been consummated by
the date which is 6 months after the day after the seventh anniversary of the
Closing Date, in which case, such condition shall cease to be a condition at
such time. If Genesis Common Stock is to be issued, Genesis shall notify
Sponsors
<PAGE>
42
within 7 days of the sale of Common Stock giving rise to the Exit Deficit. If
Genesis elects to pay any part of the Exit Deficit in cash in immediately
available funds, such payment shall be made on the last day of the 7 day period
referred to above. If Genesis elects to issue shares of Genesis Common Stock to
pay any part of the Exit Deficit, such shares shall be issuable as set forth
below.
(g) If Cypress and TPG, acting jointly on behalf of Sponsors, notify
Genesis within 21 days of the sale of the Common Stock giving rise to the Exit
Deficit of Sponsors' desire to receive cash (either in whole or in part) for
payment of the Exit Deficit in lieu of shares of Genesis Common Stock, then
Genesis will use its reasonable best efforts to effectuate the underwritten sale
(the "Exit Deficit Liquidity Right Sale") of such number of shares of Genesis
Common Stock as would, upon consummation of such sale, yield net cash proceeds
to Sponsors equal to the portion of the Exit Deficit that would have otherwise
been paid in cash if Genesis had not elected to use Genesis Common Stock for
payment of such portion of the Exit Deficit (such notification together with the
sale of Genesis Common Stock for such purpose being referred to as the "Exit
Deficit Liquidity Right"); it being understood that Nazem shall not have any
right to participate in the invocation of the Exit Deficit Liquidity Right. In
the Exit Deficit Liquidity Right Sale, if any, Cypress and TPG, acting jointly
on behalf of Sponsors, shall have the right to select the managing underwriter
(and sole book runner) to manage and administer the offering, and Genesis shall
have the right to select an additional underwriter. The allocation of
underwriting compensation shall favor the managing underwriter. In the Exit
Deficit Liquidity Right Sale, if any, Genesis shall only be obligated, in the
exercise of its reasonable best efforts, to sell the largest number of shares of
Genesis Common Stock which can be sold at a price of not less than 90% of the
Market Value of the Genesis Common Stock determined at the time of the pricing
of the Exit Deficit Liquidity Right Sale. Genesis shall use its reasonable best
efforts to cause the Exit Deficit Liquidity Right Sale, if any, to be
consummated within 120 days of the Sponsors' exercise of the Exit Deficit
Liquidity Right. In the event that the net cash proceeds from the Exit Deficit
Liquidity Right Sale, if any, are insufficient or, solely because Genesis has
been unable in the exercise of its reasonable best efforts to consummate timely
a Exit Deficit Liquidity Right Sale, unavailable to pay the portion of the Exit
Deficit that would have otherwise been paid in cash to Sponsors or their
Affiliates, Genesis will issue to Sponsors or their Affiliates shares of Genesis
Common Stock in payment of the balance or all of the Exit Deficit, as the case
may be. The number of shares so issuable in respect of the non-cash portion of
the Exit Deficit will be equal to the dollar amount of the non-cash portion of
the Exit Deficit divided by the lesser of (a) the average of the daily closing
prices of the Genesis Common Stock for the 10 trading day period commencing 5
trading days prior to the closing of the Exit Deficit Liquidity Right Sale
<PAGE>
43
(with closing prices determined as provided in the definition of Market Value)
and (b) the public offering price of the Genesis Common Stock in the Exit
Deficit Liquidity Right Sale or, if there is no Exit Deficit Liquidity Sale, the
average of the daily closing prices of the Genesis Common Stock for the 10
trading day period ending on the last day of the 120 day period referred to
above.
(h) Genesis shall bear all Registration Expenses in connection with
such issuance and sale (including the entire amount of any and all underwriters'
discounts and commissions) and provide customary and appropriate undertakings
(including indemnification of Sponsors and their Affiliates to the same extent
provided in Section 4.4) in connection with such issuance and sale.
(i) If Cypress and TPG, on behalf of Sponsors, do not invoke the
Exit Deficit Liquidity Right with respect to the entire portion of the Exit
Deficit payable in Genesis Common Stock, the number of shares issuable in
respect of the non-cash portion of the Exit Deficit will be equal to the dollar
amount of the non-cash portion of the Exit Deficit divided by the Market Value
of the Genesis Common Stock determined as of the date of the issuance thereof,
and such shares shall be issued 30 days following the sale of the Common Stock
giving rise to the Exit Deficit.
(j) Genesis agrees (i) to make an appropriate public announcement no
later than 5 trading days prior to the 20 trading day periods referred to in the
definition of Market Value with regard to the pending issuance of Genesis Common
Stock in the Exit Deficit Liquidity Right Sale, if any, and/or the issuance of
Genesis Common Stock issuable in respect of the non-cash portion of the Exit
Deficit, if any, and (ii) during the period commencing at the beginning of such
20 trading day period and through the later of the date of issuance of the
Genesis Common Stock in the Exit Deficit Liquidity Right Sale and the date of
issuance of the Genesis Common Stock issuable in respect of the non-cash portion
of the Exit Deficit, not to take any corporate action (other than the
declaration or payment of a regular dividend, consistent with past practice) in
respect of (A) combining or splitting the outstanding shares of Genesis Common
Stock, including combining its outstanding shares into a smaller number of
shares or issuing rights, warrants or dividends payable in additional shares of
Genesis Common Stock to stockholders of record on a date prior to the date of
issuance or (B) directly or indirectly, through the use of derivative securities
or otherwise, purchasing shares of Genesis Common Stock.
<PAGE>
44
ARTICLE VII
CLOSINGS
Section 7.1 Payment of the Option Price. Subject to Section 3.2(i),
the closing of the purchase of Common Stock pursuant to the exercise of an
Option as provided in Sections 2.1 and 2.2 shall take place on the Exercise
Date. At the closing, Genesis shall deliver cash in immediately available funds
and/or shares of Genesis Common Stock registered in such names and denominations
as Cypress and TPG, acting on behalf of Sponsors, shall have requested, as the
case may be, against delivery of certificates representing the shares of Common
Stock sold by Sponsors and their Affiliates, duly endorsed in blank or
accompanied by duly executed stock powers.
Section 7.2 Time and Place of Closing. The closing of the purchase
of the Common Stock shall be held at the principal office of Cypress at 10:00
A.M. local time on the date determined pursuant to this Article VII.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. (a) Except as provided in Section 8.3(b), all
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered in person or by telecopier (with a
confirmed receipt thereof), and on the next business day when sent by overnight
courier service, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Cypress, to:
The Cypress Group L.L.C.
65 East 55th Street, 19th Floor
New York, NY 10022
Attention: William L. Spiegel
Telecopier: (212) 705-0199
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esq.
Telecopier: 212-455-2502
<PAGE>
45
(b) if to TPG, to:
TPG Partners II, L.P.
201 Main Street, Suite 2420
Forth Worth, TX 76102
Attention: Karl I. Peterson
Telecopier: 817-871-4010
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Paul Shim, Esq.
Telecopier: 212-225-3999
(c) if to Genesis, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telecopier: 610-444-3365
with a copy to:
Blank Rome Comisky & McCauley
1200 Four Penn Center Plaza
Philadelphia, PA 19103
Attention: Stephen Luongo, Esq.
Telecopier: 215-569-5555
(c) if to Nazem, to:
Nazem, Inc.
645 Madison Avenue
New York, New York 10022
Attention: Fred Nazem
telecopy: 212-371-2150
with a copy to:
Bartoma Corporation, N.V.
Fokkerweg 26
Suite 12
Curacao, Netherlands Antilles
Attention: Marleen Janssen
telecopy: 5999-465-39-07
(b) All notices and other communications to be given to any other
Person hereunder shall be in writing and shall be deemed to have been duly given
when delivered in person, on the next Business Day when sent by overnight
courier service and on
<PAGE>
46
the third Business Day when sent registered or certified mail, return receipt
requested, postage prepaid to such Person at its last known address appearing on
the books of Genesis maintained for such purpose.
Section 8.2 Severability. In the event any provision hereof is held
void or unenforceable by any court, then such provision shall be severable and
shall not affect the remaining provisions hereof.
Section 8.3 Entire Agreement. This Agreement (including the
exhibits, documents or instruments referred to herein) embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and thereof and supersede all prior agreements and understandings,
both written and oral, among the parties, or between any of them, with respect
to the subject matter hereof and thereof.
Section 8.4 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by a written agreement signed by each of
Cypress, TPG and Genesis; provided, however, that neither Cypress nor TPG shall
enter into any amendment of this Agreement that would be materially more adverse
to the rights hereunder of Nazem and its Affiliate owning Common Stock than it
would be to the rights of Cypress and TPG and their respective Affiliates owning
Common Stock; and, provided, further, that Nazem shall have received prior
written notice of any amendment hereto, including a draft of the proposed form
of the amendment a reasonable amount of time under the circumstances prior to
the execution thereof, and a copy of any executed amendment promptly following
the execution thereof. Any failure by a party hereto to comply with any
obligation, agreement or condition herein may be expressly waived in writing by
Cypress, TPG and Genesis, but such waiver or failure to insist upon strict
compliance with such obligation, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any such subsequent or other failure.
Section 8.5 Assignment; Binding on Transferees. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and transferees of Common Stock permitted
under the Stockholders Agreement from and after the effective date hereof.
Cypress and TPG may assign any of their rights and obligations hereunder to any
of their respective Affiliates and, following (i) any failure by Genesis to
satisfy its obligations in respect of the Put Option or (ii) any Event of
Acceleration, to any other Person. Neither Genesis nor Nazem may assign any of
its rights and obligations hereunder to any Person without the written consent
of Cypress and TPG, acting jointly. Nothing in this Agreement other than Section
6.2 shall restrict or otherwise impair the transfer by Sponsors or any
subsequent holder thereof of (i) Genesis Common Stock issued pursuant to
Sections 3.1 or 6.9 or (ii) securities which are issued or distributed in
respect
<PAGE>
47
thereof by way of transfer, substitution, stock dividend or stock split or other
distribution, recapitalization or reclassification, and any such subsequent
holder shall not be a "permitted transferee" for the purposes of the first
sentence of this Section 8.5 but shall be a "Holder" for purposes of this
Agreement.
Section 8.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 8.7 Headings. This article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 8.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 8.9 Specific Performance; Remedies. (a) The parties hereto
each acknowledge that, in view of the uniqueness of the transactions
contemplated hereby, the other parties and, in the case of Genesis, any
subsequent holder of (i) Genesis Common Stock issued pursuant to Section 3.1 or
(ii) securities which are issued or distributed in respect thereof by way of
transfer, substitution, stock dividend or stock split or other distribution,
recapitalization or reclassification, would not have an adequate remedy at law
for money damages if this Agreement has not been performed in accordance with
its terms. Each party therefore agrees that the other parties and, in the case
of Genesis, any such subsequent holders, shall be entitled to specific
performance of the terms hereof. Any such remedy shall be in addition to any
other remedy that may be available at law or in equity.
(b) The parties acknowledge that upon the earlier of (y) an Event of
Acceleration occurring prior to the second day after the sixth anniversary of
the Closing date and (z) the failure by Genesis to honor its obligations under
the Put Option, (i) the Call Option shall not be exercisable as provided in
Section 2.1 of this Agreement, (ii) Cypress and TPG may assign any of their
rights hereunder without any restriction whatsoever as provided in Section 8.5
of this Agreement, (iii) the Stockholders Agreement shall be terminable by
Cypress and TPG in accordance with Section 6.9 thereof and, accordingly, among
other things, all restrictions on transfer of the Common Stock by Cypress and
TPG or their Affiliates shall lapse to the fullest extent permitted by law, (iv)
the Management Agreement shall be terminable by Parent in accordance with
Section 11 thereof and,
<PAGE>
48
upon any such termination, no amounts shall be owing thereunder except amounts
accrued and unpaid at the time of such termination, (v) except as provided in
Sections 8.9(e) and (f) Genesis and Nazem and their Affiliates, if any, who own
Common Stock shall be prohibited from transferring any Common Stock owned by
them without the prior written consent of Cypress and TPG, acting jointly,
notwithstanding the termination of the Stockholders Agreement in accordance with
Section 6.9 thereof, provided, that the restrictions set forth in this clause
(v) shall apply to Nazem and its Affiliate only while Cypress, TPG or their
Affiliates own Common Stock, and (vi) Cypress and TPG, acting jointly, shall
have the right to cause and control the sale or liquidation of Parent.
(c) If, in exercising their rights under clause (vi) in the
preceding paragraph (b), Cypress and TPG receive a bona fide offer from a Person
other than Cypress or TPG or any of their Affiliates (a "Third Party") to
purchase in an arms'-length transaction all or part of the outstanding shares of
common stock of Parent and such offer is accepted by Cypress and TPG, acting
jointly, then Genesis and Nazem agree that they will at the request of Cypress
and TPG transfer or cause the transfer of all or part of the shares of common
stock of Parent owned by them or their Affiliates to such Third Party on the
terms of the offer so accepted by Cypress and TPG, including, without
limitation, the same per share consideration. In any such transaction where less
than all of the outstanding shares of common stock of Parent are to be sold,
such shares to be sold shall be sold by Sponsors or their Affiliates and Genesis
pro rata in proportion to their respective holdings of Common Stock.
(d) Cypress and TPG, acting jointly, shall give notice (the
"Drag-Along Notice") to Genesis and/or Nazem of any proposed transfer as to
which Cypress and TPG propose to exercise their rights set forth in paragraph
(c) above as soon as practicable following the acceptance of the offer referred
to in such paragraph. Genesis and Nazem and Nazem's Affiliate owning Common
Stock shall only have rights and obligations under the preceding paragraph (c)
and this paragraph (d) following their receipt of the Drag-Along Notice. The
Drag-Along Notice shall set forth the number of shares of common stock of Parent
proposed to be so transferred, the name of the proposed transferee, the proposed
amount and form of consideration (and if such consideration consists in part or
in whole of property other than cash, shall provide such information, to the
extent reasonably available to it, relating to such consideration as Genesis and
Nazem and Nazem's Affiliate owning Common Stock may reasonably request) and the
other terms and conditions of the offer. Cypress and TPG, acting jointly, shall
notify Genesis and Nazem at least 20 days in advance of entering into a
definitive agreement in connection with such offer if Genesis and Nazem or their
Affiliates will be required to sign any agreement containing representations,
warranties or indemnities. In any such agreement, Genesis and Nazem and their
Affiliates owning Common Stock will be required
<PAGE>
49
to make the same representations, warranties and indemnities as Cypress and TPG
or their Affiliates owning Common Stock so long as they are made severally and
not jointly. Parent shall pay the fees and expenses of counsel for Sponsors and
Genesis in connection with any transaction referred to in this paragraph.
(e) If, after the earlier to occur of (y) an Event of Acceleration
and (z) the failure by Genesis to honor its obligations under the Put Option,
Cypress and TPG or their Affiliates owning Common Stock propose to transfer
shares of Common Stock owned by them, and Cypress and TPG do not exercise their
rights in the preceding paragraphs (c) and (d), then Nazem's Affiliate owning
Common Stock shall have the right to participate in such transfer on the same
terms and conditions as Cypress and TPG, including, without limitation, the same
per share consideration, and, in connection therewith, to require the proposed
transferee to purchase from it shares of Common Stock. In any such transaction
where less than all of the shares of Common Stock held by Sponsors or their
Affiliates are to be sold, such shares to be sold shall be sold by Sponsors or
their Affiliates pro rata in proportion to their respective holdings of Common
Stock.
(f) Cypress and TPG, acting jointly, shall give notice (the
"Tag-Along Notice") to Nazem of any proposed transfer giving rise to the rights
of Nazem set forth in paragraph (e) above as soon as practicable following their
agreement to enter into such transfer. The Tag-Along Notice shall set forth the
number of shares of common stock of Parent proposed to be so transferred, the
name of the proposed transferee, the proposed amount and form of consideration
(and if such consideration consists in part or in whole of property other than
cash, shall provide such information, to the extent reasonably available to it,
relating to such consideration as Nazem and Nazem's Affiliate owning Common
Stock may reasonably request in order to evaluate such non-cash consideration)
and the other terms and conditions of the offer. If Nazem's Affiliate owning
Common Stock elects to exercise its rights set forth in the preceding paragraph
(e), Nazem's affiliate owning Common Stock shall deliver a notice to Cypress and
TPG to such effect within 20 days of its receipt of the Tag-Along Notice stating
the number of shares of Common Stock that its Affiliate proposes to include in
the transfer. Cypress and TPG, acting jointly, shall notify Nazem at least 20
days in advance of entering into a definitive agreement in connection with such
offer if Nazem or its Affiliate will be required to sign any agreement
containing representations, warranties or indemnities. In any such agreement
Nazem and its Affiliate owning Common Stock will be required to make the same
representations, warranties and indemnities as Cypress and TPG or their
Affiliates owning Common Stock so long as they are made severally and not
jointly. Parent shall pay the fees and expenses of counsel for Sponsors in
connection with any transaction referred to in this paragraph.
<PAGE>
50
(g) Notwithstanding the provisions of Section 8.9(c) and (e), in any
sale or liquidation of all or part of the stock or assets of Parent pursuant to
Section 8.9(b)(vi) which includes the transfer of all or a part of Genesis'
interest in Parent, the aggregate proceeds shall be distributed among Sponsors,
on the one hand, and Genesis, on the other hand, as contemplated by the formula
for the Put Option Exercise Price calculated as if the Notification Date and the
Exercise Date occurred as of the date of the sale, adjusted for the percentage
of the stock or assets of Parent being sold. Following any sale or liquidation
of Sponsors' or their Affiliates' interest in Parent pursuant to this Section
8.9 (regardless of whether any such sale includes the transfer of all or a part
of Genesis' interest in Parent), Genesis shall pay to the selling Sponsors in
cash in immediately available funds upon demand the excess, if any, of (i) the
Put Option Exercise Price calculated as if the Notification Date and the
Exercise Date occurred as of the date of the sale, adjusted for the percentage
of the stock or assets of Parent being sold over (ii) the amount distributed to
Sponsors and their Affiliates.
Section 8.10 Submission to Jurisdiction; Waivers. Each of the
parties hereto hereby irrevocably submits in any legal action or proceeding
relating to or arising out of this Agreement, or for recognition and enforcement
of any judgment in respect thereof, to the jurisdiction of the United States
District Court for the Southern District of New York, and appellate courts
thereof. Each of the parties hereto further (i) consents that any such action or
proceeding may be brought in such court and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding in such court or
that such action or proceeding was brought in an inconvenient court and agrees
not to plead or claim the same; (ii) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
such party at its address set forth in Section 8.2 or at such other address of
which such party shall have given notice pursuant thereto; and (iii) agrees that
nothing herein shall affect the right to effect service of process in any other
manner permitted by law or shall limit the right to sue in any other
jurisdiction.
Section 8.11 Subordination Agreement. THE RIGHTS OF THE SPONSORS
HEREUNDER ARE SUBORDINATED AND LIMITED AS PROVIDED IN THAT CERTAIN SUBORDINATION
AGREEMENT DATED OCTOBER 9, 1997, EXECUTED BY CYPRESS, TPG, NAZEM AND GENESIS IN
FAVOR OF THE SENIOR CREDITORS DESCRIBED THEREIN, WHICH SUBORDINATION AGREEMENT
IS AND SHALL BE BINDING UPON EACH OF THE SPONSORS HEREUNDER, INCLUDING EACH
AFFILIATE OF THE SPONSORS EXECUTING THIS AGREEMENT, AND EACH ASSIGNEE OF ANY OF
THE RIGHTS OF THE SPONSORS OR SUCH AFFILIATES HEREUNDER.
<PAGE>
51
[The next page is numbered S-1.]
<PAGE>
S-1
Section 8.12 WAIVERS OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the date first above written.
THE CYPRESS GROUP L.L.C.
By: /s/ James L. Singleton
______________________________
Name: James L. Singleton
Title: Vice President
TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Karl I. Peterson
______________________________
Name: Karl I. Peterson
Title: Vice President
NAZEM, INC.
By: /s/ Fred Nazem
______________________________
Name: Fred Nazem
Title: Managing Member
GENESIS HEALTH VENTURES, INC.
By: /s/ George V. Hager, Jr.
______________________________
Name: George V. Hager, Jr.
Title: Senior Vice President & CFO
<PAGE>
S-2
The foregoing provisions of this Agreement applicable to Affiliates
of Sponsors owning Common Stock shall be binding upon and inure to the benefit
of the undersigned.
Affiliates of The Cypress Group L.L.C.
CYPRESS MERCHANT BANKING PARTNERS L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ James L. Singleton
________________________
Name: James L. Singleton
Title: Vice Chairman
CYPRESS OFFSHORE PARTNERS L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ David P. Spalding
________________________
Name: David P. Spalding
Title: Vice Chairman
Affiliates of TPG Partners II, L.P.
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Karl I. Peterson
________________________
Name: Karl I. Peterson
Title: Vice President
TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Karl I. Peterson
________________________
Name: Karl I. Peterson
Title: Vice President
TPG MC COINVESTMENT, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Karl I. Peterson
________________________
Name: Karl I. Peterson
Title: Vice President
<PAGE>
S-3
Affiliate of Nazem
Genesis ElderCare Portfolio K, LP
By: Healthworth Associates I, L.L.C.
By: /s/ Fred Nazem
________________________
Name: Fred Nazem
Title: Managing Member
STOCKHOLDERS AGREEMENT
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................................................1
Section 1.1 Certain Defined Terms......................................1
ARTICLE II
BOARD OF DIRECTORS AND OFFICERS........................................4
Section 2.1 Board of Directors.........................................4
Section 2.2 Officers...................................................4
Section 2.3 Operating Committee........................................4
ARTICLE III
RESTRICTIONS ON TRANSFERS OF STOCK.....................................4
Section 3.1 Restrictions on Transfer...................................4
Section 3.2 Offer......................................................4
Section 3.3 Option to Non-Selling Initial Stockholders.................4
Section 3.4 Delivery after Exercise....................................5
Section 3.5 Right to Transfer..........................................5
Section 3.6 Certain Transfers..........................................5
ARTICLE IV
SUPERMAJORITY PROVISIONS...............................................6
Section 4.1 Sale of Stock..............................................6
Section 4.2 Mergers; Dissolution.......................................6
Section 4.3 Acquisitions; Creation of Subsidiaries.....................6
Section 4.4 Transactions With Affiliates or Subsidiaries...............6
Section 4.5 Dividends and Redemptions..................................6
Section 4.6 Loans and Investments......................................7
Section 4.7 Certificate of Incorporation, Bylaws, Stock Agreements.....7
Section 4.8 Material Agreements........................................7
Section 4.9 Business Conducted.........................................7
Section 4.10 Indebtedness..............................................7
Section 4.11 Restrictions on Fundamental Changes; Asset Sales..........7
Section 4.12 Capital Stock of Subsidiaries.............................7
Section 4.13 Subordinated Notes and Senior Loan........................7
Section 4.14 Contracts.................................................7
Section 4.15 Accounting Policies.......................................8
ARTICLE V
OTHER ARRANGEMENTS.....................................................8
Section 5.1 Additional Capital for Cure Event Purposes.................8
Section 5.2 Pre-emptive Rights.........................................8
Section 5.3 Irrevocable Proxy..........................................9
Section 5.4 Access to Information......................................9
-i-
<PAGE>
Page
----
ARTICLE VI
MISCELLANEOUS..........................................................9
Section 6.1 Legend. ..................................................9
Section 6.2 Notices...................................................10
Section 6.3 Severability. ...........................................12
Section 6.4 Entire Agreement..........................................12
Section 6.5 Amendment and Waiver......................................12
Section 6.6 Consent to Specific Performance...........................12
Section 6.7 Assignment; Responsibility for Affiliates.................13
Section 6.8 Variations in Pronouns....................................13
Section 6.9 Term......................................................13
Section 6.10 Governing Law............................................13
Section 6.11 Further Assurances.......................................13
Section 6.12 Headings.................................................13
Section 6.13 Counterparts.............................................13
-ii-
<PAGE>
STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is made and dated this 9th day
of October, 1997 by and among Genesis ElderCare Corp.(formerly known as Waltz
Corp.), a Delaware corporation ("Corporation"), The Cypress Group L.L.C., a
Delaware limited liability company ("Cypress"), TPG Partners II, L.P., a
Delaware limited partnership ("TPG"), Genesis Health Ventures, Inc. a
Pennsylvania corporation ("Genesis"), and Nazem, Inc., a Delaware corporation
("Nazem"). Cypress, TPG and Genesis, and/or, to the extent applicable, their
Affiliates owning Common Stock (as defined below) are sometimes referred to
individually as an "Initial Stockholder" and collectively as the "Initial
Stockholders," and the Initial Stockholders and affiliates of Nazem owning
Common Stock are sometimes referred to individually as a "Stockholder" and
collectively as the "Stockholders."
WITNESSETH
Cypress, TPG, Genesis and Nazem have agreed to acquire or cause their
Affiliates (as defined below) to acquire shares of Common Stock, par value $.01
per share (the "Common Stock"), of Corporation, which Common Stock shall, upon
the issuance thereof, constitute all of the issued and outstanding capital stock
of Corporation.
Pursuant to the Agreement and Plan of Merger, dated as of June 16, 1997
(the "Merger Agreement"), by and among Corporation, Genesis ElderCare
Acquisition Corp. (formerly known as Waltz Acquisition Corp.), a Delaware
corporation, and a wholly owned subsidiary of Corporation ("Acquisition Corp."),
Genesis and The Multicare Companies, Inc., a Delaware corporation ("Multicare"),
Acquisition Corp. shall be merged with and into Multicare, following which
Multicare shall be the surviving corporation and a wholly owned subsidiary of
Corporation (the "Merger").
The parties desire to enter into an agreement which imposes certain
restrictions and obligations on themselves and/or their Affiliates, as
applicable, and on the shares of capital stock of Corporation in order to
promote their mutual interests.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the following meanings:
"Affiliate" of any Person means any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person.
"Asset Sale" means the sale, transfer or other disposition by Corporation
to any Person or by any Subsidiary of Corporation to any Person of (a) any of
the existing or future capital stock of, or partnership or other equity interest
in, any Subsidiary of Corporation or (b) any other Property of
-1-
<PAGE>
Corporation or any of its Subsidiaries, now owned or hereafter acquired, of any
nature whatsoever in any transaction or series of related transactions
(including any or all assets and business of any division or line of business
and further including intangible assets), excluding sales, transfers or other
dispositions of inventory or other Property in the ordinary course of business
of Corporation or any of its Subsidiaries or the trade-in or replacement of
assets in the ordinary course of business of Corporation or any of its
Subsidiaries.
"Board of Directors" means the Board of Directors of Corporation.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the City of New York are required or permitted by law
to close.
"Closing Date" means the date on which the Merger pursuant to the Merger
Agreement occurs.
"GAAP" means generally accepted accounting principles under United States
accounting rules and regulations, consistently applied.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) the deferred purchase price
of assets or services which in accordance with GAAP would be shown as a
liability on the balance sheet of such Person, (c) the face amount of all
letters of credit issued for the account of such Person and all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any lien on any
Property owned by such first Person, whether or not such Indebtedness has been
assumed by such first Person, (e) all capitalized lease obligations of such
Person, (f) all obligations of such Person to pay a specified purchase price for
goods or services whether or not delivered or accepted, i.e., take-or-pay and
similar obligations, (g) all obligations of such Person under interest rate
agreements, (h) all contingent obligations of such Person required to be
reflected on such Person's balance sheet prepared in accordance with GAAP, (i)
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (j) all obligations of such Person upon which interest
charges are customarily paid and (k) current obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of such Person or any warrants, rights or options to acquire such capital
stock (with redeemable preferred stock being valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends); provided, however, that Indebtedness shall not include trade
payables, accrued expenses, accrued dividends, deferred compensation and accrued
income taxes, in each case arising in the ordinary course of business.
"Investments" means (i) any direct or indirect purchase or other
acquisition of any share of capital stock, evidence of Indebtedness or other
security issued by any other Person (including, without limitation, any interest
in any partnership or joint venture), (ii) any loan, advance (other than
advances to employees for travel expenses, drawing accounts and similar
expenditures extended in the ordinary course and consistent with past practice)
or extension of credit (other than accounts receivable created in the ordinary
course) to, or contribution to the capital of, any other Person, including any
guarantee of Indebtedness of any other Person and (iii) any capital contribution
to any other Person; and any of the foregoing shall be considered an Investment
whether such investment
-2-
<PAGE>
is acquired by purchase, exchange, issuance of stock or other securities,
merger, reorganization or any other method.
"Management Agreement" means the Management Agreement dated October 9,
1997 by and between Genesis ElderCare Network Services, Inc. and Corporation.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or other entity or a
country or government or any agency or political subdivision or instrumentality
thereof or of such subdivision.
"Property" means any existing or future interest in any existing or future
property or asset of any kind or nature, whether real, personal or mixed, or
tangible or intangible, now owned or hereafter acquired or created (including
without limitation the capital stock of any Subsidiary).
"Put/Call Agreement" means the "Put/Call Agreement dated October 9, 1997
by and among the Stockholders.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Loan" means, collectively, all obligations of the Corporation,
Acquisition Corp. or any of their respective affiliates or co-borrowers under or
in respect of any or all of (in each case, as amended, modified, restated or
supplemented) (1) the Credit Agreement, dated as of October 9, 1997, by and
among Acquisition Corp., as Borrower, the financial institutions identified
therein as Lenders, Mellon Bank, N.A., as Administrative Agent, and the other
Agents identified therein, (2) the Credit Agreement, dated as of October 9,
1997, by and among The Multicare Companies, Inc. and certain of its direct and
indirect Subsidiaries, as Borrowers, the financial institutions identified
therein as Lenders, Mellon Bank, N.A., as Administrative Agent, Citicorp U.S.A.,
Inc. and NationsBank, N.A., each as a Syndication Agent, and First Union
National Bank, as Documentation Agent; (3) the Credit Agreement, dated as of
October 9, 1997, by and among The Multicare Companies, Inc., certain
Subsidiaries of Multicare, the Lenders referred to therein, Mellon Bank, N.A. as
Issuer of Letters of Credit, Mellon Bank, N.A. as Administrative Agent,
Citibank, N.A. as Syndication Agent, First Union National Bank as Documentation
Agent and Nationsbank N.A. as Syndication Agent; or (4) any other loan or other
agreement in respect of indebtedness issued to replace any of the foregoing.
"Stock" means all shares of all classes of the capital stock of
Corporation now or hereafter owned or held by the Stockholders or any other
Person including, without limitation, the Common Stock.
"Subsidiary" means with respect to any Person at any time, (a) any
corporation more than fifty (50%) percent of whose voting stock is legally and
beneficially owned by such Person or owned by a corporation more than fifty
(50%) percent of whose voting stock is legally and beneficially owned by 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
-3-
<PAGE>
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.
"Subordinated Notes" means the 9% Senior Subordinated Notes due 2007
issued pursuant to the Indenture dated August 11, 1997 by and between
Acquisition Corp., PNC Bank, National Association, as trustee, and Banque
Internationale a Luxembourg S.A., as paying agent.
"Transfer" means to sell, give, transfer, assign, pledge, hypothecate or
otherwise dispose of all or a portion of an interest (legal or equitable) by any
means, direct or indirect, absolute or conditional, voluntary or involuntary,
including, but not limited to, by court order, operation of law, settlement,
exchange, waiver, abandonment, gift, alienation, bequest or disposal, or to
contract or agree to do any of the foregoing.
ARTICLE II
BOARD OF DIRECTORS AND OFFICERS
Section 2.1 Board of Directors. The Board of Directors shall consist of
nine directors. During the term of this Agreement, the Stockholders shall vote
all of their Stock so as always to elect and maintain as directors three persons
nominated by Cypress, three persons nominated by TPG and three persons nominated
by Genesis. In the event of any vacancy on the Board of Directors, the
Stockholders shall vote all of the shares of their Stock for the person
nominated by the Initial Stockholder who was entitled to nominate the director
for whom the vacancy exists.
Section 2.2 Officers. The officers of Corporation shall consist of a
President and Chief Executive Officer, two Vice Presidents, a Treasurer and a
Secretary and such other officers as the President of Corporation may from time
to time establish. The Stockholders agree to adopt, and not change during the
term of this Agreement, an amendment to Corporation's Bylaws providing that
during the term of this Agreement and so long as the Management Agreement is in
effect, one person nominated by Cypress and one person nominated by TPG shall be
elected as such Vice Presidents of the Corporation and such persons nominated by
Genesis shall be elected as all such other officers of Corporation.
Section 2.3 Operating Committee. The Stockholders agree to adopt an
amendment to Corporation's Bylaws providing that the Board of Directors shall
maintain an Operating Committee of the Board of Directors which shall at all
times consist of one nominee of each of Cypress, TPG and Genesis and which shall
perform the functions contemplated by the Management Agreement.
ARTICLE III
RESTRICTIONS ON TRANSFERS OF STOCK
Section 3.1 Restrictions on Transfer. No Stockholder may Transfer Stock
except as provided in the Put/Call Agreement and except a Stockholder may sell
its Stock in strict accordance with the terms and conditions of this Article
III. Any Transfer of Stock in violation of this
-4-
<PAGE>
Agreement shall be void ab initio. No Stockholder may do indirectly, through a
sale of its Stock or other equity interest or otherwise, that which is not
permitted by this Section 3.1.
Section 3.2 Offer. If a Stockholder ("Selling Stockholder") determines to
sell all or any part of its Stock ("Offered Stock"), the Selling Stockholder
must first offer (the "Offer") to sell the Offered Stock to the other Initial
Stockholders ("Non-Selling Initial Stockholders"), in accordance with Section
3.3 herein, by giving written notice ("Notice") to Corporation and the
Non-Selling Initial Stockholders setting forth the proposed terms of such sale
(the "Offer Terms").
Section 3.3 Option to Non-Selling Initial Stockholders. The Non-Selling
Initial Stockholders shall have the option to purchase all, or any part, of the
Offered Stock on the Offer Terms and may exercise their options by giving
written notice of exercise to the Selling Stockholder and the other Non-Selling
Initial Stockholders, within thirty (30) days after the date of the Notice of
the Offer. The notice given by each Non-Selling Initial Stockholder shall state
the maximum number of shares of the Offered Stock which it is willing to
purchase. Each Non-Selling Initial Stockholder shall have the option to purchase
that proportion, rounded to the nearest whole number to eliminate fractional
shares, of the Offered Stock which the number of shares of Stock held by such
Non-Selling Initial Stockholder bears to the number of shares of Stock then held
by all Non-Selling Initial Stockholders; provided however that if Nazem is the
Selling Stockholder, Cypress and TPG shall initially have the right, pro rata as
provided above, to acquire the Offered Stock pursuant to this Section 3.3 and
Genesis will have the right to purchase such Offered Stock not purchased by
Cypress or TPG. If a Non-Selling Initial Stockholder does not exercise its
option to purchase its full proportionate share of the Offered Stock, the
Non-Selling Initial Stockholders who have exercised their options may purchase
the Stock not purchased by such Non-Selling Initial Stockholder in such
proportions as they shall agree upon or, failing such agreement, pro rata as
provided above, by giving written notice of the exercise of their options to the
Selling Stockholder within forty (40) days after the date of the Notice of the
Offer.
Section 3.4 Delivery after Exercise. If the Non-Selling Initial
Stockholders shall have exercised their options to purchase all or any part of
the Offered Stock, closing on the sale of such Offered Stock shall occur, and
all certificates for such Offered Stock (or, if such Offered Stock is subject to
pledge, hypothecation or other encumbrance, evidence of the Selling
Stockholder's rights therein) shall be delivered to the purchaser(s) thereof,
duly endorsed for transfer, at the earlier of fifty (50) days after the date of
the Notice of the Offer or ten (10) days after the exercise of the option to
purchase the Offered Stock (the "Transfer Date") at the then principal office of
Corporation.
Section 3.5 Right to Transfer. If all the Offered Stock is not purchased,
the Selling Stockholder may, for a period of forty-five (45) days following the
final date for acceptance under Section 3.4 herein, enter into a binding
agreement (subject to customary conditions) to sell any balance of the Offered
Stock to a third party ("Third Party Purchaser"); provided, however, that (a)
the proposed sale to the Third Party Purchaser must be unanimously approved by
the Non-Selling Initial Stockholders prior to any offer of the Offered Stock to
a Third Party Purchaser, (b) such Stock is sold to the Third Party Purchaser
upon terms not more favorable to the Third Party Purchaser than the Offer Terms
and (c) the Third Party Purchaser agrees in writing to assume performance of and
to be bound by the terms and conditions of this Agreement as a Stockholder
hereunder and agrees to be bound by the Selling Stockholder's obligations under
the Put/Call Agreement. If the Selling
-5-
<PAGE>
Stockholder wishes to sell its Stock on other than the Offer Terms or has not
sold such Stock on the Offer Terms within that thirty (30) day period, it shall
be obligated to make new offers and re-offers to the Non-Selling Initial
Stockholders, in accordance with subsections 3.3 and 3.4 herein, and to comply
with the provisions of this Section 3.6, before it shall be permitted to offer
to Transfer its Stock, or any part thereof, to any Person.
Section 3.6 Certain Transfers. Notwithstanding any provision of this
Agreement to the contrary: (a) an Initial Stockholder may at any time and from
time to time Transfer all or a portion of its Stock to an Affiliate of such
Initial Stockholder if such Affiliate agrees in writing to assume performance of
and be bound by the terms and conditions of this Agreement and the Put/Call
Agreement to the same extent as the Transferor hereunder and thereunder; (b) TPG
and Cypress (or their Affiliates owning Common Stock) may Transfer Stock to the
other (or Affiliates of the other) if the transferee agrees in writing to assume
performance of and be bound by the terms and conditions of this Agreement and
the Put/Call Agreement to the same extent as the transferor; (c) the limited
partners of TPG and Cypress (or their Affiliates owning Common Stock) may
transfer their limited partnership interests in TPG and Cypress (or their
Affiliates owning Common Stock); (d) Stockholders may Transfer Common Stock as
contemplated by Sections 6.9 and 8.9 of the Put/Call Agreement; (e) the parties
hereto consent to the pledge existing on the date hereof by the limited partner
of the Affiliate of Nazem owning Common Stock of its limited partnership
interest in such Affiliate and agree that such limited partner may transfer such
limited partnership interest to such pledgee or any assignee of such pledgee;
and (f) except as provided in Section 3.5 or this Section 3.6, no Stockholder
may Transfer Stock to another Person without the prior approval of the other
Initial Stockholders.
Section 3.7 Pledge of Common Stock by Genesis. Notwithstanding any of the
provisions of this Agreement to the contrary, nothing in this Agreement shall
restrict or prohibit Genesis, or any Affiliate of Genesis acquiring Common Stock
as herein permitted, (1) from pledging all of its Common Stock to secure any
indebtedness of Genesis or any such Affiliate, or (2) from transferring any such
Common Stock to any such pledgee or any assignee of such pledgee as a result of
such pledge (a "Pledge Transferee"); but each Pledge Transferee (i) shall be
bound by the terms, and shall be entitled to the benefits, of this Agreement to
the same extent as Genesis, (ii) except as hereinafter provided, shall be bound
by the terms and shall be entitled to the benefit of subsections (a) through (d)
and the first sentence of subsection (e) of subsection 6.9 of the Put/Call
Agreement and Section 8.9 of the Put/Call Agreement other than subsection (a) or
the last sentence of subsection (g) of such Section 8.9 to the same extent as
Genesis, and (iii) except as specifically provided in clause (ii) shall have no
obligation or liability with respect to the obligations of Genesis under the
Put/Call Agreement. In connection with the assumption of obligations of Genesis
under the Put/Call Agreement as provided in clause (ii) of the preceding
sentence: (A) each Pledge Transferee shall be bound by the drag-along provisions
of subsections (c) and (d) of Section 8.9 of the Put/Call Agreement, including
such provisions as incorporated by reference in Section 6.9(d) of the Put/Call
Agreement, only if (x) the Board of Directors of Corporation receives a fairness
opinion by a nationally recognized investment banking firm selected by
Corporation stating that the transaction giving rise to such drag-along rights
is fair to the stockholders of Corporation and (y) the consideration to be
received by the Pledge Transferee is paid in cash; (B) each Pledge Transferee
shall be entitled to the tag-along rights granted in favor of Nazem in Section
6.9(d) of the Put/Call Agreement, but only in respect of any sale of Common
Stock solely for cash; and (C) no Pledge
-6-
<PAGE>
Transferee shall have any right of first offer pursuant to Section 6.9 of the
Put/Call Agreement. In connection with any sale of Common Stock to a Third
Party, no Pledge Transferee shall be required to make any representations or
warranties to the Third Party other than customary and reasonable
representations and warranties as to (i) its ownership of Common Stock, (ii) its
authority to transfer such Common Stock, (iii) the absence of conflicts arising
under such Pledge Transferee's constituent documents as a result of such
transfer of Common Stock, (iv) the absence of liens on such Common Stock created
by such Pledge Transferee, and (v) the absence of any requirement on the part of
such Pledge Transferee to obtain any third party consents (other than those
which have been obtained) in connection with such transfer.
ARTICLE IV
SUPERMAJORITY PROVISIONS
The Corporation shall not take any of the following actions without first
obtaining the approval of at least one designee of each of Cypress, TPG and
Genesis to the Board of Directors; provided that such necessary approval shall
not relieve any such director from his or her fiduciary duties to Corporation or
Corporation's Stockholders.
Section 4.1 Sale of Stock. Corporation shall not sell or issue any Stock
except as provided in Section 5.1.
Section 4.2 Mergers; Dissolution. Corporation shall not merge, consolidate
or divide or otherwise combine with or into any other Person, commence a
dissolution or liquidation or commence any bankruptcy, insolvency, or other
similar proceeding.
Section 4.3 Acquisitions; Creation of Subsidiaries. Neither Corporation
nor any of its Subsidiaries shall acquire any or all of the stock, securities or
other Property of any Person in any transaction, other than (i) immaterial
acquisitions in the ordinary course of business consistent with past practice
and (ii) acquisitions of any management or consulting businesses or operations
as contemplated by Section 3.2 of the Management Agreement.
Section 4.4 Transactions With Affiliates or Subsidiaries. Except as
permitted in the Management Agreement or the Senior Loan, neither Corporation
nor any of its Subsidiaries shall enter into any transaction of any kind or
nature with any Affiliate, including, without limitation, the purchase, sale or
exchange of Property, or the loaning or giving of funds to any Affiliate.
Section 4.5 Dividends and Redemptions. Corporation shall not, nor shall it
cause or permit any of its Subsidiaries to, directly or indirectly: (a) declare,
pay, authorize or make any form of dividend or distribution on or with respect
to its capital stock or return any capital, in cash or Property, to its
stockholders, their successors or assigns (except dividends payable to
Corporation by any of its Subsidiaries), (b) redeem, retire, purchase or
otherwise acquire or retire, for any consideration, any of the capital stock of
Corporation or any of its Subsidiaries now or hereafter outstanding or (c) set
aside any funds for any of the purposes set forth in clauses (a) or (b) hereof.
Section 4.6 Loans and Investments. Neither Corporation nor any of its
Subsidiaries shall make or have outstanding Investments in any Person, other
than (i) Investments of Multicare
-7-
<PAGE>
and its subsidiaries existing on the Closing Date (ii) Investments permitted
under the Senior Loan and Subordinated Notes and (iii) acquisitions of any
management or consulting businesses or operations as contemplated by Section 3.2
of the Management Agreement.
Section 4.7 Certificate of Incorporation, Bylaws, Stock Agreements.
Neither Corporation nor any of its Subsidiaries shall amend, modify, supplement
or otherwise change the terms of its certificate of incorporation or bylaws or
any agreement entered into by Corporation or any Subsidiary with respect to its
capital stock or other equity interests.
Section 4.8 Material Agreements. Neither Corporation nor any of its
Subsidiaries shall amend, modify, supplement or otherwise change, or waive
compliance with or consent to a departure from, any of the terms or provisions
of the Senior Loan, the Indenture relating to the Subordinated Notes or any
other Indebtedness of Corporation or such Subsidiaries or any other material
agreement of Corporation or such Subsidiaries except for the termination of the
Management Agreement in accordance with its terms.
Section 4.9 Business Conducted. Neither Corporation nor any of its
Subsidiaries shall engage, directly or indirectly, in any line of business
substantially different from the business con ducted by it or them immediately
prior to the Closing Date, or engage in business or lines of business which are
not reasonably and substantially related thereto.
Section 4.10 Indebtedness. Neither Corporation nor any of its Subsidiaries
shall make any prepayments of any nature whatsoever (or deposit money or other
property for the purpose thereof) on any existing or future long-term
Indebtedness to any Person, except payment on the Senior Loan. Neither
Corporation nor any of its Subsidiaries shall incur any Indebtedness for
borrowed money provided that nothing hereunder will prevent the Corporation from
drawing on lines of credit, revolving credit facilities or other unfunded
portions of Indebtedness approved in accordance with the provisions of this
Agreement and the Management Agreement, including, without limitation, the
Senior Loan.
Section 4.11 Restrictions on Fundamental Changes; Asset Sales. Corporation
shall not, nor shall it cause or permit any of its Subsidiaries to, (a) alter
its or their, as the case may be, corporate, partnership, capital or legal
structure or (b) make or effect any Asset Sale.
Section 4.12 Capital Stock of Subsidiaries. Corporation shall not permit
any of its direct or indirect subsidiaries directly or indirectly to issue any
shares of capital stock to any Person other than Corporation.
Section 4.13 Subordinated Notes and Senior Loan. Corporation shall not,
nor shall it permit any of its Subsidiaries to, take any action or fail to take
any action which constitutes a default under the Subordinated Notes, the Senior
Loan or any other material Indebtedness of Corporation or any of its
Subsidiaries.
Section 4.14 Contracts. Neither Corporation nor any of its Subsidiaries
shall become or be a party to any contract or agreement which materially impairs
such party's ability to perform
-8-
<PAGE>
under or comply with this Agreement, or under any other instrument, agreement or
document to which Corporation or such Subsidiary is a party or by which it is or
may be bound.
Section 4.15 Accounting Policies. Corporation shall not change any
accounting policies (including, without limitation, policies relating to the
maintenance of reserve accounts).
ARTICLE V
OTHER ARRANGEMENTS
Section 5.1 Additional Capital for Cure Event Purposes.
(a) If an additional capital contribution by Corporation to
Acquisition Corp. (or, following the Merger, Multicare) is necessary to either
cure or prevent an event of default under, or breach of any financial covenant
contained in, the Senior Loan or the Subordinated Notes or any other material
Indebtedness of Corporation or any of its Subsidiaries, Corporation, by action
of a majority of the Board of Directors, may sell additional shares of capital
stock of Corporation (with such rights and privileges as the Board of Directors
shall determine) (the "Additional Capital") to provide funds to enable
Corporation to make a capital contribution to Acquisition Corp. (or, following
the Merger, Multicare) to cure such default or breach.
(b) In the event the sale of Additional Capital is approved pursuant
to subparagraph (a) of this Section 5.1, each Stockholder agrees to vote the
shares of Stock of Corporation held by each of them to authorize the filing of
an amendment to Corporation's Articles of Incorporation and to take all such
other actions required in order to authorize and consummate the issuance of
additional shares of capital stock of the Corporation in connection with such
Additional Capital.
Section 5.2 Pre-emptive Rights.
(a) Each Initial Stockholder shall have a pro rata right, based upon
the number of shares of capital stock of Corporation held by them, to
participate in purchases of shares of capital stock sold by Corporation.
Corporation shall give each Initial Stockholder written notice (the "Additional
Capital Notice") to such effect which notice shall contain the terms and
preferences of any shares of capital stock and the terms upon which such shares
are being offered, and each Initial Stockholder shall have the right,
exercisable by written notice to Corporation within ten business days from
receipt of the Additional Capital Notice to purchase such shares. If such
Initial Shareholder elects not to make such a contribution, it shall give
Corporation written notice to such effect and Corporation shall have the right
to sell such Additional Capital, on the terms described in the Additional
Capital Notice, to third parties (provided that such third parties agree in
writing to assume performance of and to be bound by the terms and conditions of
this Agreement as a Stockholder hereunder) or other Initial Stockholders.
(b) Each Initial Stockholder electing to purchase additional shares
pursuant to paragraph (a) of this Section 5.2 shall purchase such shares
simultaneously with the purchase by the
-9-
<PAGE>
other parties electing to purchase such shares and in any event not earlier than
twenty business days from the date the Additional Capital Notice was given (the
"Additional Capital Closing Date").
Section 5.3 Irrevocable Proxy. Nazem hereby agrees to cause its Affiliate
owning Common Stock to grant to Cypress and TPG an irrevocable proxy and power
of attorney substantially in the form of Exhibit A attached hereto.
Section 5.4 Access to Information. Each Stockholder agrees to cause
Corporation to make available to each of the Initial Stockholders and their
representatives full access to the books and records of Corporation and its
subsidiaries and to instruct all outside auditors engaged by Corporation to make
their work papers available to each of the Initial Stockholders and their
representatives.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Legend. Each certificate representing shares of Common Stock
now held or hereafter acquired shall bear the following legend (until such time
as subsequent transfers thereof are no longer restricted in accordance with the
Securities Act or this Agreement):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT (THE "STOCKHOLDERS AGREEMENT") AND PUT/CALL
AGREEMENT ("PUT/CALL AGREEMENT") BOTH DATED AS OF OCTOBER 9, 1997, AMONG,
INTER ALIA, GENESIS ELDERCARE CORP. (THE "COMPANY"), THE CYPRESS GROUP
L.L.C., TPG PARTNERS II, L.P., NAZEM, INC. AND GENESIS HEALTH VENTURES,
INC. A COPY OF THE SHAREHOLDERS AGREEMENT AND PUT/CALL AGREEMENT ARE ON
FILE WITH THE SECRETARY OF THE COMPANY.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE GIVEN, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF
UNLESS SUCH GIFT, SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDERS
AGREEMENT AND THE PUT/CALL AGREEMENT,
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE, AND NO SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH AN OPINION OF
-10-
<PAGE>
COUNSEL WHICH SHALL BE REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT SUCH SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS NOT IN VIOLATION OF THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
Section 6.2 Notices. Notices hereunder shall be given only by personal
delivery, registered or certified mail, return receipt requested, overnight
courier service, or by telecopy (and subsequently confirmed by any other
permitted means hereunder) and shall be deemed transmitted when personally
delivered or deposited in the mail or delivered to a courier service or sent by
telecopy (as the case may be), postage or charges prepaid, and addressed to the
particular party to whom the notice is to be sent as follows:
(a) in the case of Corporation:
Genesis ElderCare Corp.
148 West State Street
Kennett Square, PA 19348
Telecopier No.: 610-444-3365
Attention: Ira C. Gubernick, Esquire
with a copy to:
Blank Rome Comisky & McCauley
One Logan Square
Philadelphia, PA 19103
Telecopier No.: (215) 569-5555
Attention: Stephen E. Luongo, Esquire
(b) in the case of Cypress:
The Cypress Group L.L.C.
65 East 55th Street, 19th Floor
New York, NY 10022
Telecopier No.: (212) 705-0199
Attention: William L. Spiegel
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier No.: (212) 455-2502
Attention: William E. Curbow, Esquire
-11-
<PAGE>
(c) in the case of TPG:
TPG Partners II, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Telecopier No.: (817) 871-4010
Attention: Karl I. Peterson
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Telecopier No.: (212) 225-3999
Attention: Paul T. Shim, Esquire
(d) in the case of Genesis:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, PA 19348
Telecopier No.: 610-444-3365
Attention: Ira C. Gubernick, Esquire
with a copy to:
Blank Rome Comisky & McCauley
One Logan Square
Philadelphia, PA 19103
Telecopier No.: (215) 569-5555
Attention: Stephen E. Luongo, Esquire
(e) in the case of Nazem:
Nazem, Inc.
645 Madison Avenue
New York, NY 10022
Telecopier: (212) 371-2150
Attention: Fred Nazem
-12-
<PAGE>
with a copy to:
Bartoma Corporation, N.V.
Fokkerweg 26
Suite 12
Curacao, Netherlands Antilles
Telecopier: 5999-465-39-07
Attention: Marleen Janssen
or to such address as a party may instruct by notice hereunder.
Section 6.3 Severability. In the event any provision hereof is held void
or unenforceable by any court, then such provision shall be severable and shall
not affect the remaining provisions hereof.
Section 6.4 Entire Agreement. This Agreement, together with the other
agreements referred to herein, is the entire Agreement among the parties, and,
when executed by the parties hereto, supersedes all prior agreements and
communications, either verbal or in writing between the parties hereto with
respect to the subject matter contained herein.
Section 6.5 Amendment and Waiver. This Agreement may not be amended,
modified or supplemented unless consented to in writing by Cypress, TPG and
Genesis. Any failure by a party hereto to comply with any obligation, agreement
or condition herein may be expressly waived in writing by each of Cypress, TPG
and Genesis, but such waiver or failure to insist upon strict compliance with
such obligation, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any such subsequent or other failure.
Section 6.6 Consent to Specific Performance. The parties hereto declare
that it is impossible to measure in money the damages which would accrue to a
party by reason of failure to perform any of the obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the other party has an adequate
remedy at law.
Section 6.7 Assignment; Responsibility for Affiliates. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors. No party may assign to any Person any of
its rights hereunder except in connection with Transfers of Stock permitted by
Sections 3.6 or 3.7. Each of Cypress, TPG, Genesis and Nazem shall cause their
Affiliates who are Stockholders to execute a joinder to, and comply with, the
provisions of, this Agreement and shall be liable for any breach of the
provisions of this Agreement by any of their respective Affiliates who are
Stockholders.
Section 6.8 Variations in Pronouns. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the antecedent person or persons or entity or
entities may require.
-13-
<PAGE>
Section 6.9 Term. This Agreement shall terminate upon the earlier to occur
of (i) consummation of the exercise of the Put Option or the Call Option
pursuant to the Put/Call Agreement, without any default in connection therewith,
or (ii) at TPG's and Cypress's option, acting jointly, upon (a) failure by
Genesis to comply with its obligations under the Put Option, (b) the occurrence
of any Event of Acceleration (as defined in the Put/Call Agreement) occurring
prior to the second day after the sixth anniversary of the Closing date (as
defined on the Put/Call Agreement) or (c) any sale of Common Stock pursuant to
Section 6.9 under the Put/Call Agreement. The transfer restrictions contained in
Article III shall not apply to Nazem or its Affiliate owning Common Stock
following the sale by Cypress, TPG and their Affiliates of all of the Common
Stock owned by them pursuant to Section 6.9. Following any termination of this
Agreement pursuant to clause (ii), (a) Genesis and/or, to the extent applicable,
Affiliates of Genesis who are Stockholders and Affiliates of Nazem who are
Stockholders shall continue to be subject to the provisions contained in Article
III, and (b) for such purposes, "Initial Stockholders" and "Non-Selling Initial
Stockholders" as used in Article III shall be deemed to refer to Cypress and TPG
and/or to the extent applicable, their Affiliates owning Common Stock; provided,
that the restrictions set forth in this sentence shall apply to Genesis and
Affiliates of Nazem only while Cypress, TPG or their Affiliates own Common
Stock.
Section 6.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 6.11 Further Assurances. Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
Section 6.12 Headings. The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the interpretation
of this Agreement.
Section 6.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
-14-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
GENESIS ELDERCARE CORP.
By: /s/ James L. Singleton
-----------------------------------
THE CYPRESS GROUP L.L.C.
By: /s/ James L. Singleton
-----------------------------------
TPG PARTNERS II, L.P.
BY: TPG GenPar II, L.P.
BY: TPG ADVISORS II, INC.
By: /s/ Karl I. Peterson
-----------------------------------
GENESIS HEALTH VENTURES, INC.
By: /s/ George V. Hager, Jr.
-----------------------------------
NAZEM, INC.
By: /s/ Fred Nazem
-----------------------------------
-15-
<PAGE>
The foregoing provisions of this Agreement applicable to Affiliates of
Stockholders owning Common Stock shall be binding upon and inure to the benefit
of the undersigned.
Affiliates of The Cypress Group L.L.C.
CYPRESS MERCHANT BANKING
PARTNERS, L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ James L. Singleton
------------------------------------
Name: James L. Singleton
Title: Vice Chairman
CYPRESS OFFSHORE PARTNERS, L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ David P. Spalding
------------------------------------
Name: David P. Spalding
Title: Vice Chairman
Affiliates of TPG PARTNERS II, L.P.
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Karl I. Peterson
------------------------------------
Name: Karl I. Peterson
Title: Vice President
TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Karl I. Peterson
------------------------------------
Name: Karl I. Peterson
Title: Vice President
[Signatures continued on following page]
-16-
<PAGE>
TPG MC COINVESTMENT, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Karl I. Peterson
------------------------------------
Name: Karl I. Peterson
Title: Vice President
Affiliate of Nazem
GENESIS ELDERCARE PORTFOLIO K. LP
By: Healthworth Associates I, L.L.C.
By: /s/ Fred Nazem
------------------------------------
Name: Fred Nazem
Title: Managing Member
-17-
<PAGE>
