EXHIBIT 10.5
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (the "Amendment") dated as of
January 19, 1999 by and among Mariner Health Group, Inc., a Delaware
corporation (the "Borrower"), PNC Bank, National Association, Bank Austria
Creditanstalt Corporate Finance, Inc., (formerly known as Creditanstalt AG,
formerly known as Creditanstalt Bankverein), First Union National Bank (as
successor by merger to First Union National Bank of North Carolina), Mellon
Bank, N.A., Toronto Dominion (New York), Inc., Bankers Trust Company, Credit
Lyonnais New York Branch, AmSouth Bank, Bank of Tokyo-Mitsubishi Trust Company,
The Fuji Bank, Limited New York Branch, SunTrust Bank, Central Florida, N.A.,
Bank One Kentucky, NA, Fleet National Bank, Comerica Bank, The First National
Bank of Chicago, The Industrial Bank of Japan, Limited, New York Branch, The
Long-Term Credit Bank of Japan, Ltd. New York Branch and Xxxxx Bank N.A.
(collectively, the "Banks"), and PNC Bank, National Association, in its capacity
as administrative agent for the Banks (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to that certain Credit
Agreement dated as of December 23, 1998, as amended (the "Credit Agreement"),
pursuant to which the Banks provided a $210,000,000 term loan facility to the
Borrower;
WHEREAS, the Borrower, the Banks and the Agents (as hereinafter
defined) desire to amend and restate the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. Definitions.
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Defined terms used herein unless otherwise defined herein shall have
the meanings ascribed to them in the Credit Agreement as amended by this
Amendment.
2. Amendment and Restatement of Credit Agreement and Related Matters.
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(a) Articles I through XI. The parties hereto do hereby
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consent to the amendment and restatement of the recitals and Articles I through
XI to the Credit Agreement as set forth on Exhibit 1 hereto.
---------
(b) Exhibits. Each of the exhibits listed below is hereby
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amended and restated to read as set forth on the exhibit attached hereto bearing
the same numerical reference as the original exhibit.
EXHIBIT 8.03(d) COMPLIANCE CERTIFICATE
(c) Schedules. Schedule 6.01(a) and (c) is hereby amended and
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restated to read as set forth on the schedule attached hereto bearing the same
numerical reference as the original schedule. Schedule 6.01(aa) Part II
[Indebtedness Related to Subsidiary Owned Facilities] is hereby amended by
deleting the words "December 1998" on the third line [Facility - Bonifay] in the
column titled "COF Lender Maturity" and inserting in lieu thereof the words
"March 2000".
3. Conditions of Effectiveness of Amendment and Restatement of
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Credit Agreement and Related Matters. The effectiveness of the Amendment and
------------------------------------
Restatement of the Credit Agreement and the effectiveness of the other matters
set forth in Section 2 hereof are expressly conditioned upon satisfaction of
each of the following conditions precedent:
(a) Representations and Warranties; No Defaults. The
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representations and warranties of the Borrower contained in Article VI of the
Credit Agreement shall be true and accurate on the date hereof (taking into
account the information contained in the Schedules to the Credit Agreement) with
the same effect as though such representations and warranties had been made on
and as of such date (except representations and warranties which relate solely
to an earlier date or time, which representations and warranties shall be true
and correct on and as of the specific dates or times referred to therein), and
the Loan Parties shall have performed and complied with all covenants and
conditions under the Loan Documents and hereof; no Event of Default or Potential
Default under the Credit Agreement and the other Loan Documents shall have
occurred and be continuing or shall exist; and an Authorized Officer shall have
delivered to the Administrative Agent for the benefit of each Bank a duly
executed certificate dated the date hereof certifying as to the items in this
Section 3(a).
(b) Organization, Authorization and Incumbency. There shall be
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delivered to the Administrative Agent for the benefit of each Bank a
certificate, dated as of the date hereof and signed by the Secretary or an
Assistant Secretary of each Loan Party, certifying as appropriate as to:
(i) all action taken by such Loan Party in connection with
this Amendment and the other Loan Documents;
(ii) the names of the officer or officers authorized to
sign this Amendment and the other documents executed
and delivered in connection herewith and described in
this Section 3 and the true signatures of such officer
or officers and, in the case of the Borrower,
specifying the Authorized Officers permitted to act on
behalf of the Borrower for
-2-
purposes of the Loan Documents and the true signatures
of such officers, on which the Agents and each Bank
may conclusively rely; and
(iii) copies of its organizational documents, including its
certificate of incorporation and bylaws if it is a
corporation, its certificate of partnership and
partnership agreement if it is a partnership, and its
certificate of organization and limited liability
company operating agreement if it is a limited
liability company, in each case as in effect on the
date hereof, certified by the appropriate state
official where such documents are filed in a state
office together with certificates from the appropriate
state officials as to the continued existence and good
standing of each of the Loan Parties in each state
where organized; provided that each of the Loan
Parties may, in lieu of delivering copies of the
foregoing organizational documents and good standing
certificates, certify that the organizational
documents and good standing certificates previously
delivered by the Loan Parties to the Administrative
Agent remain in effect and have not been amended.
(c) Opinions of Counsel. There shall be delivered to the
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Administrative Agent for the benefit of each Bank a written opinion dated the
date hereof of Powell, Goldstein, Xxxxxx & Xxxxxx LLP, counsel to the Loan
Parties, with such opinion to be in form and substance satisfactory to the
Agents.
(d) Fees and Expenses. The Borrower shall pay or cause to be
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paid to the Administrative Agent for itself and for the account of the Banks to
the extent not previously paid (i) on the effective date hereof, the fees set
forth in that certain agreement dated December 3, 1998, between the Borrower and
the Agents regarding the arrangement fees of the Agents, (ii) on the date
hereof, the fees (the "Amendment Fee") payable to each Bank, as set forth on
Exhibit 2 hereto, and (iii) all other costs and expenses accrued through the
date hereof and the costs and expenses of the Agents and the Banks including,
without limitation, reasonable fees of the Administrative Agent's counsel in
connection with this Amendment.
(e) Consents. All consents required to effectuate the
--- --------
transactions contemplated hereby shall have been obtained unless provided in
Section 8.01(p) of the Credit Agreement and copies thereof shall have been
delivered to the Administrative Agent for the benefit of the Banks.
(f) Material Adverse Change. On the date hereof there shall
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have been no Material Adverse Change in the Historical Statements and since
September 30, 1998, no Material Adverse Change in the Borrower, or any of its
Subsidiaries shall have occurred. On the
-3-
date hereof and since September 30, 1998, there shall have been no material
change in the management of the Loan Parties.
(g) Legal Details; Counterparts. All legal details and
--- ---------------------------
proceedings in connection with the transactions contemplated by this Amendment
shall be in form and substance satisfactory to the Agents, the Administrative
Agent shall have received from the Borrower and the Required Banks an executed
original of this Amendment and the Administrative Agent shall have received all
such other counterpart originals or certified or other copies of such documents
and proceedings in connection with such transactions, in form and substance
satisfactory to the Agents.
4. Force and Effect. Except as otherwise expressly modified by this
-- ----------------
Amendment, the Credit Agreement and the other Loan Documents are hereby ratified
and confirmed and shall remain in full force and effect after the date hereof.
5. Governing Law. This Amendment shall be deemed to be a contract
-- -------------
under the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the internal laws of
the Commonwealth of Pennsylvania without regard to its conflict of laws
principles.
6. Effective Date; Certification of the Borrower. This Amendment
-- ---------------------------------------------
shall be dated as of and shall be binding, effective and enforceable upon the
date of (i) satisfaction of all conditions set forth in Section 3 hereof and
(ii) receipt by the Administrative Agent of duly executed original counterparts
of this Amendment from the Borrower, the Agents and the Required Banks, and from
and after such date this Amendment shall be binding upon the Borrower, each Bank
and the Agents, and their respective successors and assigns permitted by the
Credit Agreement. The Borrower by executing this Amendment, hereby certifies
that this Amendment has been duly executed and that as of the date hereof no
Event of Default or Potential Default exists under the Credit Agreement or the
other Loan Documents.
7. No Novation. This Amendment amends and restates the Credit
-- -----------
Agreement, but is not intended to constitute, and does not constitute, a
novation or satisfaction of the Obligations of the Loan Parties under the Credit
Agreement.
[INTENTIONALLY BLANK]
[SIGNATURE PAGES OMITTED]
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XXXXX XX XXXXXXX
XXXXXX XX XXXXXX
Xx the _____ day of ___________, 1999 personally appeared
___________________, as the __________ President of SunTrust Bank, Central
Florida, N.A., and before me executed the attached AMENDMENT NO. 1 dated as of
_____________, 1999 to the Credit Agreement between Mariner Health Group, Inc.,
with SunTrust Bank, Central Florida, N.A., as Lender.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal, in the
state and county aforesaid.
_________________________________________________________________
Signature of Notary Public, State of ____________________________
_________________________________________________________________
(Print, Type or Stamp Commissioned Name of Notary Public)
Personally known __________; OR Produced Identification _________
Type of identification produced:_________________________________
_________________________________________________________________
Exhibit 1
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Amendment and Restatement of Credit Agreement and Related Matters
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Exhibit 2
---------
Bank Fee
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First Union National Bank $12,554.35
PNC Bank, National Association 10,271.74
Bank One, Kentucky, NA/The First National Bank of Chicago 8,559.78
Mellon Bank, N.A. 7,418.48
Credit Lyonnais New York Branch 7,418.48
Bankers Trust Company 7,418.48
Toronto Dominion (New York), Inc. 7,418.48
Bank of Tokyo-Mitsubishi Trust Company 5,135.87
AmSouth Bank 5,135.87
The Industrial Bank of Japan, Limited, New York Branch 5,135.87
Bank Austria Creditanstalt Corporate Finance, Inc. 4,565.22
The Long-Term Credit Bank of Japan, Ltd. New York Branch 3,423.91
Xxxxxx Guaranty and Trust Company of New York 3,423.91
SunTrust Bank, Central Florida, N.A. 3,423.91
1/8/99
$210,000,000 TERM LOAN FACILITY
CREDIT AGREEMENT
by and among
MARINER HEALTH GROUP, INC.
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
and
FIRST UNION NATIONAL BANK, as Syndication Agent
Dated as of December 23, 1998
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions......................................................................................1
1.02 Construction............................................................................................30
1.03 Accounting Principles...................................................................................30
ARTICLE II
TERM LOAN FACILITY
2.01 Term Loan Commitments...................................................................................31
(a) Term Loan Commitments..........................................................................31
2.02 Nature of Banks' Obligations With Respect to Term Loans.................................................31
2.03 Loan Requests...........................................................................................32
2.04 Term Note...............................................................................................32
2.05 Use of Proceeds.........................................................................................32
ARTICLE III
[Intentionally Omitted]..........................................................................................32
ARTICLE IV
INTEREST RATES
4.01 Interest Rate Options...................................................................................32
(a) Interest Rate Options.........................................................................33
(b) ..............................................................................................34
(c) Rate Quotations...............................................................................34
4.02 Interest Periods........................................................................................34
4.03 Interest After Default..................................................................................35
4.04 Euro-Rate Unascertainable...............................................................................35
4.05 Selection of Interest Rate Options......................................................................36
(i)
ARTICLE V
PAYMENTS
5.01 Payments................................................................................................36
5.02 Pro Rata Treatment of Banks.............................................................................37
5.03 Interest Payment Dates..................................................................................37
5.04 Voluntary Prepayments...................................................................................37
5.05 Mandatory Prepayments...................................................................................38
(a) Sale of Assets................................................................................38
(b) Application Among Interest Rate Options.......................................................39
5.06 Additional Compensation in Certain Circumstances........................................................39
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc...................................................................39
(b) Indemnity.....................................................................................40
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties..........................................................................41
(a) Organization and Qualification................................................................41
(b) [Intentionally Omitted].......................................................................41
(c) Excluded Entities; Subsidiaries...............................................................41
(d) Power and Authority...........................................................................42
(e) Validity and Binding Effect...................................................................42
(f) No Conflict...................................................................................42
(g) Litigation....................................................................................42
(h) Title to Properties...........................................................................42
(i) Financial Statements..........................................................................43
(j) Margin Stock..................................................................................43
(k) Full Disclosure...............................................................................44
(l) Taxes.........................................................................................44
(m) Consents and Approvals........................................................................44
(n) Compliance With Instruments...................................................................45
(o) Patents, Trademarks, Copyrights, Etc..........................................................45
(p) Security Interests in the Collateral..........................................................45
(q) First Mortgage Liens..........................................................................46
(r) Status of the Pledged Collateral..............................................................46
(s) Insurance.....................................................................................46
(t) Compliance with Laws..........................................................................46
(u) Material Contracts, Licenses, Permits and Approvals...........................................46
(v) Investment Companies; Public Utility Holding Company..........................................47
(ii)
(w) Plans and Benefit Arrangements................................................................48
(x) Employment Matters............................................................................49
(y) Employment Matters Employment Matters.........................................................49
(z) Senior Debt Status............................................................................50
(aa) Matters Regarding Leased Facilities and Certain Indebtedness of Subsidiaries..................51
(bb) Mortgage and Leasehold Mortgage Liens.........................................................52
(cc) Affiliate Transactions........................................................................52
(dd) Year 2000.....................................................................................52
(ee) Solvency......................................................................................52
6.02 Updates to Schedules....................................................................................53
ARTICLE VII
CONDITIONS OF LENDING
7.01 Loans...................................................................................................53
(a) Officer's Certificate.........................................................................53
(b) Secretary's Certificate.......................................................................53
(c) Delivery of Loan Documents....................................................................54
(d) Opinion of Counsel............................................................................54
(e) Legal Details.................................................................................54
(f) Payment of Fees...............................................................................55
(g) Environmental Audit...........................................................................55
(h) Consents......................................................................................55
(i) Officer's Certificate Regarding MACs..........................................................55
(j) No Violation of Laws..........................................................................55
(k) No Actions or Proceedings.....................................................................55
(l) Insurance Policies; Certificates of Insurance; Endorsements...................................55
(m) Title Certificate.............................................................................56
(n) Filing........................................................................................56
(o) Amendment No. 18 to the Revolving Credit Agreement............................................56
(p) Lien and Judgment Searches....................................................................56
(q) UCC Financing Statements......................................................................56
(r) Closing Certificate...........................................................................56
(s) Projections...................................................................................57
(t) Indenture Certificate.........................................................................57
ARTICLE VIII
COVENANTS
8.01 Affirmative Covenants...................................................................................57
(a) Preservation of Existence, Etc................................................................57
(b) Payment of Liabilities, Including Taxes, Etc..................................................57
(c) Maintenance of Insurance......................................................................58
(iii)
(d) Maintenance of Properties and Leases..........................................................58
(e) Maintenance of Patents, Trademarks, Etc.......................................................58
(f) Visitation Rights.............................................................................59
(g) Keeping of Records and Books of Account.......................................................59
(h) Plans and Benefit Arrangements................................................................59
(i) Compliance With Laws..........................................................................59
(j) Use of Proceeds...............................................................................59
(k) [Intentionally Omitted].......................................................................59
(l) Subordination of Intercompany Loans, Other Loans and Advances to the Borrower.................59
(m) Approval of Financial Statements in Permitted Acquisitions; Notice of Permitted
Acquisition...................................................................................60
(n) [Intentionally Omitted].......................................................................61
(o) [Intentionally Omitted].......................................................................61
(p) Further Assurances............................................................................61
(q) Certain Owned Facilities - Termination of Liens; Intercreditor Agreements.....................61
(r) Certain Leased Facilities - Termination of Liens; Intercreditor Agreements; Trustee
Agreements....................................................................................62
8.02 Negative Covenants......................................................................................63
(a) Indebtedness..................................................................................63
(b) Liens.........................................................................................64
(c) Guaranties....................................................................................65
(d) Loans and Investments.........................................................................65
(e) Amounts Paid by the Borrower to MPN; Dividends and Related Distributions......................66
(f) Liquidations, Mergers, Consolidations, Acquisitions...........................................68
(g) Dispositions of Assets or Subsidiaries........................................................69
(h) Affiliate Transactions........................................................................71
(i) Subsidiary, Partnerships and Joint Ventures...................................................71
(j) Continuation of or Change in Business.........................................................71
(k) Plans and Benefit Arrangements................................................................71
(l) Fiscal Year...................................................................................72
(m) Issuance of Stock.............................................................................72
(n) [Intentionally Omitted].......................................................................73
(o) [Intentionally Omitted].......................................................................73
(p) [Intentionally Omitted].......................................................................73
(q) Minimum Fixed Charge Coverage Ratio...........................................................73
(r) Maximum Leverage Ratio........................................................................73
(s) Minimum Consolidated Cash Flow from Operations................................................73
(t) Minimum Net Worth.............................................................................73
(u) Senior Indebtedness to Cash Flow From Operations Ratio........................................74
(v) Incurrence of Indebtedness Permitted by the Indenture.........................................74
(w) Maximum Amount of Certain Expenditures of the Borrower........................................74
(x) Negative Pledges..............................................................................75
(iv)
(y) Prohibition of Defeasance of Subordinated Notes...............................................76
8.03 Reporting Requirements..................................................................................76
(a) [Intentionally Omitted].......................................................................76
(b) Quarterly Financial Statements................................................................76
(c) Annual Financial Statements...................................................................76
(d) Certificate of the Borrower...................................................................77
(e) Notice of Default.............................................................................77
(f) Notice of Litigation..........................................................................77
(g) Certain Events................................................................................77
(h) Budgets, Forecasts, Other Reports and Information.............................................77
(i) Notices Regarding Plans and Benefit Arrangements..............................................78
(j) Notices With Respect to Indenture.............................................................79
ARTICLE IX
DEFAULT
9.01 Events of Default.......................................................................................80
9.02 Consequences of Event of Default........................................................................83
9.03 Notice of Sale..........................................................................................86
ARTICLE X
THE AGENT
10.01 Appointment.............................................................................................86
10.02 Delegation of Duties....................................................................................86
10.03 Nature of Duties; Independent Credit Investigation......................................................86
10.04 Actions in Discretion of Agents; Instructions From the Banks............................................87
10.05 Reimbursement and Indemnification of Agents by the Borrower.............................................87
10.06 Exculpatory Provisions..................................................................................88
10.07 Reimbursement and Indemnification of Agents by Banks....................................................88
10.08 Reliance by Agents......................................................................................89
10.09 Notice of Default.......................................................................................89
10.10 Notices.................................................................................................89
10.11 Banks in Their Individual Capacities....................................................................89
(v)
10.12 Holders of Notes........................................................................................90
10.13 Equalization of Banks...................................................................................90
10.14 Successor Agents........................................................................................90
10.15 Administrative Agent's Fee..............................................................................91
10.16 Availability of Funds...................................................................................91
10.17 Calculations............................................................................................91
10.18 Beneficiaries...........................................................................................91
10.19 Holding of Loan Documents...............................................................................92
ARTICLE XI
MISCELLANEOUS
11.01 Modifications, Amendments or Waivers....................................................................92
11.02 No Implied Waivers; Cumulative Remedies; Writing Required...............................................93
11.03 Reimbursement and Indemnification of Banks by the Borrower; Taxes.......................................93
11.04 Holidays................................................................................................94
11.05 Funding by Branch, Subsidiary or Affiliate..............................................................94
(a) Notional Funding..............................................................................94
(b) Actual Funding................................................................................94
11.06 Notices.................................................................................................95
11.07 Severability............................................................................................95
11.08 Governing Law...........................................................................................95
11.09 Prior Understanding.....................................................................................95
11.10 Duration; Survival......................................................................................95
11.11 Successors and Assigns..................................................................................96
11.12 Confidentiality.........................................................................................97
11.13 Counterparts............................................................................................97
11.14 Agent's or Bank's Consent...............................................................................97
(vi)
11.15 Exceptions..............................................................................................97
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL..................................................................97
11.17 Tax Withholding Clause..................................................................................98
11.18 Appointment of Collateral Agent.........................................................................98
(vii)
SCHEDULES
SCHEDULE 1.01(C) COMMITMENTS OF BANKS
SCHEDULE 1.01(P) PERMITTED LIENS
SCHEDULES 6.01(a) QUALIFICATIONS TO DO BUSINESS, SUBSIDIARIES AND
and 6.01(c) EXCLUDED ENTITIES
SCHEDULE 6.01(u) MATERIAL CONTRACTS
SCHEDULE 6.01(y) ENVIRONMENTAL DISCLOSURES
SCHEDULE 6.01(z) CERTAIN DISCLOSURES REGARDING OTHER DEBT OF THE BORROWER
SCHEDULE 6.01(aa) OWNED AND LEASED REAL PROPERTY OF THE LOAN PARTIES; MATTERS REGARDING CERTAIN
LEASED FACILITIES AND INDEBTEDNESS OF CERTAIN SUBSIDIARIES
SCHEDULE 6.01(cc) CERTAIN AFFILIATE TRANSACTIONS
SCHEDULE 8.01(1) CERTAIN DISCLOSURES REGARDING SUBORDINATION OF INDEBTEDNESS
SCHEDULE 8.02(a) PERMITTED INDEBTEDNESS
SCHEDULE 8.02(c) CERTAIN GUARANTEES
SCHEDULE 8.02(d) RESTRICTED INVESTMENTS
SCHEDULE 8.02(x) EXISTING NEGATIVE PLEDGE COVENANTS
(viii)
EXHIBITS
EXHIBIT 1.01(A) ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.01(C) CONDITIONS FOR INCURRENCE OF CERTAIN LIENS AND CERTAIN INDEBTEDNESS
EXHIBIT 1.01(C)(1) COLLATERAL SHARING AGREEMENT
EXHIBIT 1.01(F) FIRST MORTGAGE
EXHIBIT 1.01(G) GUARANTY AND SURETYSHIP AGREEMENT
EXHIBIT 1.01(I) INDEMNITY
EXHIBIT 1.01(P) PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
EXHIBIT 1.01(S)(1) SECURITY AGREEMENT
EXHIBIT 1.01(S) SUBORDINATION AGREEMENT (Intercompany)
EXHIBIT 1.01(T) TERM NOTE
EXHIBIT 2.05 LOAN REQUEST
EXHIBIT 8.01(l) TERMS OF CERTAIN SUBORDINATED INDEBTEDNESS
EXHIBIT 8.01(m)(i) ACQUISITION APPROVAL CERTIFICATE
EXHIBIT 8.01(m)(ii) ACQUISITION NOTICE CERTIFICATE
EXHIBIT 8.03(d) COMPLIANCE CERTIFICATE
(ix)
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of December 23, 1998,as amended and
is made by and among MARINER HEALTH GROUP, INC., a Delaware corporation (the
"Borrower"), the BANKS (as hereinafter defined), FIRST UNION NATIONAL BANK, in
its capacity as syndication agent (hereinafter referred to in such capacity as
the "Syndication Agent"), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
administrative agent for the Banks under this Agreement (hereinafter referred to
in such capacity as the "Administrative Agent").
WITNESSETH:
WHEREAS, the Borrower has requested that the Agents and the Banks
provide a $210,000,000 term loan facility to the Borrower (the "Term Loan
Facility'); and
WHEREAS, the Borrower has requested the amendment of certain
covenants; and
WHEREAS, the Banks are willing to agree to the foregoing subject to
the terms and conditions hereafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
1.01 Certain Definitions. In addition to words and terms defined
-------------------
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context hereof clearly requires
otherwise:
Acquisition Approval Certificate shall have the meaning set forth
--------------------------------
in Section 8.01(m)(i).
Acquisition Income Reporting Period shall mean the period during
-----------------------------------
which Borrower shall measure Consolidated Cash Flow from Operations pursuant to
Section 8.01(m) for purposes of computing Borrower's leverage ratio and its
other financial covenants on the date on which Borrower makes any Permitted
Acquisition, which period shall be either:
(1) the four fiscal quarters ending immediately before the date
of such Permitted Acquisition (the "Immediately Preceding Four Quarters") if
such Permitted Acquisition occurs after the Delivery Date for the financial
statements of Borrower for such Immediately Preceding Four Quarters, or
(2) the four fiscal quarters ending one quarter period prior to
the end of the Immediately Preceding Four Quarters (the "Second Preceding Four
Quarters") if
such Permitted Acquisition occurs before the Delivery Date for the financial
statements of Borrower for the Immediately Preceding Four Quarters.
Acquisition Notice Certificate shall have the meaning given to
------------------------------
such term in Section 8.01(m)(ii).
Acquisition Reporting Certification shall mean any Permitted
-----------------------------------
Acquisition with respect to which Borrower delivers or is required to deliver
either an Acquisition Notice Certificate or an Acquisition Approval Certificate
pursuant to Section 8.01(m).
Adjusted Net Income shall mean for any period of determination an
-------------------
amount equal to the net income (loss) of the Borrower and its Subsidiaries for
such period determined and consolidated in accordance with GAAP; provided,
however, that there shall not be included in such Adjusted Net Income any non-
recurring items related to costs and expenses incurred in connection with
acquisitions and dispositions of assets, merger transactions or other business
combinations, any extraordinary gain or loss, the cumulative effect of a change
in accounting principles and costs related to the discharge of legal judgments
or settlement costs related to the settlement of a bona fide dispute between the
Borrower or any of its Subsidiaries and any other Person.
Adjusted Total Indebtedness shall mean, as of any date of
---------------------------
determination, Total Indebtedness, less, the aggregate amount of the sum without
duplication, of the following items (a), (b),(c) and (d): (a) the outstanding
principal amount of the Subordinated Notes, (b) the outstanding principal amount
of Permitted Subordinated Indebtedness which refinances or is used to purchase
Subordinated Notes, (c) the outstanding principal amount of the Revolving Credit
Loans, up to an aggregate of $25 million, the proceeds of which have been used
to purchase the Designated Portion of the Subordinated Notes (directly or
indirectly, including as permitted by Sections 8.02(d)(vii) or 8.02(e)(vii)),
and (d) the outstanding principal amount of Indebtedness permitted pursuant to
Section 8.02(a)(iv) of the Revolving Credit Agreement. Notwithstanding the
foregoing, it is expressly agreed that Total Indebtedness shall, in no event, be
reduced by more than $150,000,000 with respect to the aggregate amount of items
(a), (b) and (c) described in the previous sentence.
Administrative Agent shall mean PNC Bank, National Association, in its
--------------------
capacity as administrative agent for the Banks under this Agreement and its
successors in such capacity.
Administrative Agent's Fee shall have the meaning assigned to that
--------------------------
term in Section 10.15 hereof.
Affiliate as to any person shall mean any other person (i) which
---------
directly or indirectly controls, is controlled by, or is under common control
with such person, (ii) which beneficially owns or holds 50% or more of any class
of the voting stock of the Borrower, or (iii) 50% or more of the voting stock
(or in the case of a person which is not an individual or a corporation, 50% or
more of the equity interest) of which is beneficially owned or held, directly or
indirectly, by the Borrower. Control, as used herein, shall mean the
possession, directly or
2
indirectly, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting securities, by
contract or otherwise, including the power to elect a majority of the directors
or trustees of a corporation or trust, as the case may be.
Agents shall mean collectively the Administrative Agent and the
------
Syndication Agent, and Agent shall mean any one of the Agents, individually.
Agreement shall mean this Credit Agreement as the same may be
---------
supplemented, amended, modified or restated from time to time including all
schedules and exhibits hereto.
Ansonia shall mean Mariner Health Care of Southern Connecticut, a
-------
corporation organized and existing under the laws of the State of Connecticut.
Applicable Percentage Over Euro-Rate shall have the meaning
------------------------------------
assigned to such term in Section 4.01(a)(ii).
Approved Charges shall mean, for any period of determination, the
----------------
following charges, determined and consolidated in accordance with GAAP, to
Consolidated Net Income:
(i) charges for Medicare Recoupment (taken or to be taken with
respect to fiscal years 1996, 1997, or 1998 and relating to Medicare's
disallowance of costs under related party rules), not to exceed for the Borrower
and its Subsidiaries on a consolidated basis, $50,000,000 in the aggregate for
the period commencing on the Closing Date through and including the Expiration
Date;
(ii) charges to increase accounts receivable reserves (solely
for the purpose of achieving consistency of accounts receivable reserve levels
of the Borrower and its Subsidiaries with the policies of MPN), not to exceed
for the Borrower and its Subsidiaries on a consolidated basis, $25,000,000 in
the aggregate for the period commencing on the Closing Date through and
including the Expiration Date;
(iii) non-recurring cash charges for employee related costs of
the Borrower including, without limitation, relocation and recruitment costs,
retention bonuses, severance payments to employees of the Borrower, reasonable
and customary transaction fees, including without limitation, legal and other
professional fees, paid or to be paid following the Seventeenth Amendment
Effective Date, all as related to the Eighteenth Amendment to the Revolving
Credit Agreement or the Paragon Acquisition, not to exceed for the Borrower and
its Subsidiaries on a consolidated basis $13,000,000 and other cash charges of a
similar nature which shall have been approved in writing by the Agents prior to
the taking of such charge; and
(iv) subject to the prior written approval of the Required
Banks, other cash charges (recurring or nonrecurring), extraordinary items, or
non-recurring expenses incurred in connection with any Permitted Acquisition.
3
Assignment and Assumption Agreement shall mean an Assignment and
-----------------------------------
Assumption Agreement by and among a Purchasing Bank, the Transferor Bank and the
Administrative Agent, as agent and on behalf of the remaining Banks,
substantially in the form of Exhibit 1.01(A) hereto.
---------------
Authorized Officer shall mean with respect to each Loan Party those
------------------
persons designated by written notice to the Administrative Agent from the
Borrower, authorized to execute notices, reports and other documents required
hereunder. The Borrower may amend such list of persons from time to time by
giving written notice of such amendment to the Administrative Agent.
Bank shall mean the financial institutions named on Schedule
---- --------
1.01(R)(2) hereto and their respective successors and assigns as permitted
----------
hereunder, each of which is referred to herein as a Bank.
----
Base Rate shall mean the greater of (i) the interest rate per annum
---------
announced from time to time by the Administrative Agent at its Principal Office
as its then prime rate, which rate may not necessarily be the lowest rate then
being charged commercial borrowers by the Administrative Agent, or (ii) the
Federal Funds Effective Rate plus one-half percent (0.5%) per annum.
Base Rate Option shall mean the Term Loan Base Rate Option.
----------------
Benefit Arrangement shall mean at any time an "employee benefit plan,"
-------------------
within the meaning of Section 3(3) of ERISA, which is neither a Plan or a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to, by any member of the ERISA Group.
Borrower shall mean Mariner Health Group, Inc., a corporation
--------
organized and existing under the laws of the State of Delaware.
Borrowing Date shall mean, with respect to any Loan, the date for the
--------------
making thereof or the renewal thereof or conversion thereof to the same or a
different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans outstanding
-----------------
as follows: (i) any loan to which a Euro-Rate Option applies which becomes
subject to the same Interest Rate Option under the same Loan Request by the
Borrower and which have the same Interest Period shall constitute one Borrowing
Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute
one Borrowing Tranche.
Business Day shall mean (i) with respect to matters relating to the
------------
Euro-Rate Option, a day on which banks in the London interbank market are
dealing in U.S. Dollar deposits and on which commercial banks are open for
domestic and international business in Pittsburgh, Pennsylvania and New York,
New York, and (ii) with respect to any other matter, a
4
day on which commercial banks are open for business in Pittsburgh, Pennsylvania
and New York, New York.
Capital Stock shall mean any and all shares, interests, participations
-------------
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
Change in Ownership shall mean the occurrence of any of the following:
-------------------
(i) if, from and after the Seventeenth Amendment Effective Date, any person or
group within the meaning of Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") excluding the Permitted Investors,
shall at any time designate or obtain the right to designate a percentage (the
"Third Party Board Percentage") equal to 25% or more of the members of the Board
of Directors of MPN unless at such time the percentage of the members of the
------
Board of Directors of MPN designated by the Permitted Investors is greater than
the Third Party Board Percentage; (ii) any "person" or "group" (as such terms
are defined above), excluding the Permitted Investors, shall at any time become,
or obtain rights (whether by means of warrants, options or otherwise) to become,
the "beneficial owner" (as defined in Rule 13(d)3 and 13(d)5 under the Exchange
Act), directly or indirectly, of a percentage (the "Third Party Stock
Percentage") equal to 33-1/3% or more of the Voting Stock of MPN unless at such
------
time the percentage of outstanding Voting Stock of MPN beneficially owned by the
Permitted Investors (determined on a fully diluted basis) is equal to or greater
than the Third Party Stock Percentage, provided, that for the purposes of this
--------
clause (ii), Voting Stock that a Permitted Investor has the power to vote in its
sole discretion pursuant to contract or proxy shall be deemed to be beneficially
owned by such Permitted Investor and not by any other "person" or "group"; (iii)
a Specified Change of Control shall occur; or (iv) MPN shall cease to own,
directly or indirectly, one hundred percent (100%) of all Voting Stock of the
Borrower.
Class A Excluded Entities shall mean collectively those Excluded
-------------------------
Entities which have not incurred any Restricted Indebtedness nor are subject to
or bound by the terms of any agreement with respect to Restricted Indebtedness,
and Class A Excluded Entity shall mean separately any Class A Excluded Entity.
-----------------------
Closing Date shall mean December 23, 1998.
------------
Collateral Agent shall mean PNC Bank National Association in its
----------------
capacity as the collateral agent under the Collateral Sharing Agreement and its
successors, and its assigns in such capacity.
Collateral shall mean the Pledge Collateral, the UCC Collateral, the
----------
Intellectual Property Collateral, all of the collateral (consisting of real or
personal property) under the First Mortgages, the Mortgages and the Leasehold
Mortgages and any other collateral security in which any of the Loan Parties may
hereafter grant a security interest or other lien to the Administrative Agent or
the Collateral Agent, as the case may be, for the benefit of the Banks as
security for their obligations under the Loan Documents.
5
Collateral Sharing Agreement shall mean the Collateral Sharing
----------------------------
Agreement among the Administrative Agent, the Loan Parties, the Revolving Credit
Loan Parties, the Revolving Agent and the Collateral Agent, substantially in the
form of Exhibit 1.01(C)(1).
-------------------
Combined Commitment shall mean, as to any Bank, as of any date of
-------------------
determination, the aggregate of its Revolving Credit Commitment (if any) and its
Term Loan Commitment.
Commitment shall mean as to any Bank its Term Loan Commitment and
----------
Commitments shall mean the aggregate of the Term Loan Commitments of all of the
-----------
Banks.
Compliance Certificate shall have the meaning set forth in
----------------------
Section 8.03(d).
Conditions for Incurrence of Certain Liens and Certain Indebtedness
-------------------------------------------------------------------
shall mean those conditions set forth on Exhibit 1.01(C).
---------------
Consolidated Cash Flow from Operations for any period of determination
--------------------------------------
shall mean the difference between the amounts determined under the following
clauses (i) and (ii): (i) the sum, without duplication, of (X) the sum of
Consolidated Net Income, depreciation, amortization, Approved Charges, other
non-cash charges to Consolidated Net Income (including, without limitation,
ordinary course reserves with respect to bad debts arising out of ordinary
course accounts receivable), interest expense, and income tax expense of the
Borrower and its Restricted Subsidiaries for such period determined in
accordance with GAAP, plus (Y) the sum of the Consolidated Cash Flow from
Operations Adjustment Amount for all Class A Excluded Entities, minus (ii) non-
cash credits to net income of the Borrower and its Restricted Subsidiaries for
such period determined in accordance with GAAP, subject to the adjustments
described in this definition below.
If the Loan Parties make a Permitted Acquisition and the Banks approve
of the historical and pro forma financial statements of the business acquired in
such Permitted Acquisition pursuant to Section 8.01(m) hereof, Consolidated Cash
Flow from Operations shall be adjusted as set forth in paragraphs (A) and (B)
below. The adjustments in Paragraphs (A) and (B) below shall apply to
computations of the ratios in Sections 2.01, 2.03, 4.01(a), 8.02(f), 8.02(q),
8.02(r), 8.02(s) and 8.02(u) on the date of such Permitted Acquisition and at
the end of each of the four fiscal quarters after such Permitted Acquisition.
(The adjustments described in Paragraph (A) below shall not apply to
computations of such ratios made as of the end of the fiscal quarter immediately
preceding the date of such Permitted Acquisition.)
(A) Consolidated Cash Flow from Operations for periods prior
to such Permitted Acquisition shall include (i) the sum of net income,
depreciation, amortization, other non-cash charges to net income, interest
expense and income tax expense of the acquired business, plus the adjustment, if
any pursuant to clause (B) below, minus (ii) non-cash credits to net income of
such business, in each case as determined in accordance with GAAP; and
6
(B) To the extent, in the determination of net income of the
acquired business utilized in clause (A) above, deductions were taken in respect
of rental expense pursuant to operating leases in accordance with GAAP and
following the consummation of a Permitted Acquisition the Borrower appropriately
amends such leases so that, in accordance with GAAP, such rental expense
pursuant to operating leases may properly be treated as rental expense pursuant
to capital leases (and the Borrower treats such leases as capital leases for
periods following the consummation by the Borrower of such Permitted
Acquisition) then, such net income for purposes of clause (A) above shall be
increased by the deductions taken in respect of rental expense pursuant to such
operating leases during the period of determination.
Consolidated Cash Flow from Operations Adjustment Amount shall mean,
--------------------------------------------------------
for each Class A Excluded Entity, for any period of determination, the amount
equal to the product of (A) a percentage, as determined by the Administrative
Agent in its reasonable discretion, multiplied by (B) the difference between (i)
the sum of net income, depreciation, amortization, other non-cash charges to
such net income, interest expense and income tax expense of such Class A
Excluded Entity for such period, as determined in accordance with GAAP, minus
(ii) non-cash credits to net income of such Class A Excluded Entity for such
period, as determined in accordance with GAAP. In determining the applicable
percentage under clause (A) above, the Administrative Agent shall review with
the Borrower the constituent documents of each Excluded Entity, including
without limitation, partnership agreements, shareholder agreements and other
relevant documents which the Borrower agrees to provide as the Administrative
Agent may reasonably request, and the Administrative Agent shall also review the
equity ownership interests of the Loan Parties in each Excluded Entity and the
actual cash flow available to be distributed to the Loan Parties from the
operations of each Excluded Entity.
Consolidated Net Income shall mean for any period of determination an
-----------------------
amount equal to the net income of the Borrower and its Restricted Subsidiaries
for such period determined in accordance with GAAP, but without regard to net
income attributable to Excluded Entities.
Consolidated Net Worth shall mean as of any date of determination
----------------------
total stockholders' equity of the Borrower and its Subsidiaries as of such date
determined and consolidated in accordance with GAAP.
Contamination shall mean the presence or release or threat of release
-------------
of Regulated Substances in, on, under or emanating to or from the Property,
which pursuant to Environmental Laws requires notification or reporting to an
Official Body, or which pursuant to Environmental Laws requires the
identification, investigation, cleanup, removal, remediation, containment,
control, abatement of or other response action or which otherwise constitutes a
violation of Environmental Laws.
Control Investment Affiliate shall mean as to any Person, any other
----------------------------
Person which (a) directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity
7
or debt investments in one or more companies. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.
Corporate Shares shall have the meaning assigned to that term in
----------------
Section 6.01(c).
Corporate Subsidiaries shall mean collectively the Subsidiaries of
----------------------
Borrower which are corporations, and Corporate Subsidiary shall mean
--------------------
individually any of them.
Delivery Date shall mean the date which is the earlier of (i) the date
-------------
on which the Borrower delivers its consolidated financial statements to the
Administrative Agent and the Banks pursuant to Sections 8.03(b) and (c), or (ii)
one Business Day following the date on which such financial statements are due
to be delivered pursuant to such Sections.
Designated Portion of the Subordinated Notes shall mean, as of any
--------------------------------------------
date of determination, that portion of the Subordinated Notes, held by
NationsBank, N.A., pursuant to the LMS Swap Agreement.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful
----------------------------- -
money of the United States of America.
Drawing Date shall have the meaning assigned to that term in
------------
Section 2.09(d).
Eighteenth Amendment to Revolving Credit Agreement shall mean that
--------------------------------------------------
certain Amendment No. 18 to Revolving Credit Agreement, dated December 23, 1998
among Borrower, the Banks and the Agents.
Eighteenth Amendment Effective Date shall mean December 23, 1998.
-----------------------------------
Environmental Complaint shall mean any written complaint by any Person
-----------------------
or Official Body setting forth a cause of action for personal injury or property
damage, natural resource damage, contribution or indemnity for response costs,
civil or administrative penalties, criminal fines or penalties, or declaratory
or equitable relief arising under any Environmental Law or any order, notice of
violation, citation, subpoena, request for information or other written notice
or demand of any type issued by an Official Body pursuant to any Environmental
Law.
Environmental Law shall mean all federal, state, local and foreign
-----------------
Laws and any consent decrees, settlement agreements, judgments, orders,
directives, policies or programs issued by or entered into with an Official Body
pertaining or relating to: (i) pollution or pollution control; (ii) protection
of human health or the environment; (iii) employee safety in the workplace; (iv)
the management, presence, use, generation, processing, extraction, treatment,
recycling, refining, reclamation, labeling, transport, storage, collection,
distribution, disposal or release or threat of release of Regulated Substances;
(v) the presence of Contamination; (vi) the
8
protection of endangered or threatened species; and (vii) the protection of
Environmentally Sensitive Areas.
Environmentally Sensitive Area shall mean (i) any wetland as defined
------------------------------
by applicable Environmental Law; (ii) any area designated as a coastal zone
pursuant to applicable Laws, including Environmental Law; (iii) any area of
historic or archeological significance or scenic area as defined or designated
by applicable Laws, including Environmental Law; (iv) habitats of endangered
species or threatened species as designated by applicable Laws, including
Environmental Law; or (v) a floodplain or other flood hazard area as defined
pursuant to any applicable Laws.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
-----
as the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
ERISA Group shall mean, at any time, the Borrower and all members of a
-----------
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Borrower, are treated as a single employer under Section 414 of the Internal
Revenue Code.
Euro-Rate shall mean with respect to the Loans comprising any
---------
Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period,
the interest rate per annum determined by the Administrative Agent by dividing
(the resulting quotient rounded upward to the nearest 1/100 of 1% per annum) (i)
the rate of interest determined by the Administrative Agent in accordance with
its usual procedures (which determination shall be conclusive absent manifest
error) to be the "offered" eurodollar rate as quoted by Exco-Xxxxxx Incorporated
(or appropriate successor or, if Exco-Xxxxxx or its successor ceases to provide
such quotes, a comparable replacement as determined by the Administrative Agent)
as evidenced on Dow Xxxxx Markets Service (formerly known as Telerate) display
page 4756 (or such other display page on the Dow Xxxxx Markets Service system as
may replace Dow Xxxxx Markets Service display page 4756), two (2) Business Days
prior to the first day of such Interest Period for an amount comparable to such
Borrowing Tranche and having a borrowing date and maturity comparable to such
Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:
Dow Xxxxx Markets Service page 4756 as quoted by Exco-Xxxxxx,
Euro-Rate = (or appropriate successor)
--------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option outstanding
on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Administrative Agent shall give prompt notice to the
Borrower of the Euro-Rate as determined or adjusted in accordance herewith,
which determination shall be conclusive absent manifest error.
Euro-Rate Option shall mean the Term Loan Euro-Rate Option.
----------------
9
Euro-Rate Reserve Percentage shall mean the maximum percentage
----------------------------
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined
by the Administrative Agent (which determination shall be conclusive absent
manifest error) which is in effect during any relevant period, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as "Eurocurrency Liabilities") of a
member bank in such System.
Event of Default shall mean any of the Events of Default
----------------
described in Section 9.01 of this Agreement.
Excluded Entities shall mean (i) any partnership, corporation or
-----------------
limited liability company which is neither MPN nor a MPN Subsidiary nor a
Subsidiary of any Loan Party and with respect to which a Loan Party has made a
Restricted Investment permitted by Section 8.02(d)(iv), and (ii) any
Unrestricted Subsidiary of the Borrower which the Borrower has designated as one
of the Excluded Entities and with respect to which a Loan Party has made a
Restricted Investment permitted by Section 8.02(d)(iv), and Excluded Entity
---------------
shall mean separately any Excluded Entity.
Expiration Date shall mean, with respect to the Commitments,
---------------
January 3, 2000.
Facility Purchase Option shall mean an option provided by a Lessor
------------------------
Lender or Owned Facility Lender in an Intercreditor Agreement giving the
Administrative Agent or the Banks the right to purchase the Lessor Indebtedness
or Owned Facility Indebtedness from such Lessor Lender or Owned Facility Lender
upon certain events of default relating to such Indebtedness.
FAS 121 shall mean Financial Accounting Standard No. 121 promulgated
-------
by the Financial Accounting Standards Board, as in effect from time to time.
Federal Funds Effective Rate for any day shall mean the rate per annum
----------------------------
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) 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, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day of which such rate was announced.
First Mortgages shall mean the First Mortgages in substantially the
---------------
form of Exhibit 1.01(F) with respect to all owned real property of the Loan
---------------
Parties (other than owned
10
real property subject to a Mortgage as of the Eighteenth Amendment Effective
Date), executed and delivered by the applicable Loan Party to the Collateral
Agent for the benefit of the Banks.
Fixed Charge Coverage Ratio shall have the meaning set forth in
---------------------------
Section 8.02(q).
GAAP shall mean generally accepted accounting principles as are in
----
effect on the Closing Date, subject to the provisions of Section 1.03 hereof,
and applied on a consistent basis (except for changes in application in which
the Borrower's independent certified public accountants concur) both as to
classification of items and amounts.
Guaranty of any person shall mean any obligation of such person
--------
guaranteeing or in effect guaranteeing any liability or obligation of any other
person in any manner, whether directly or indirectly, including, without
limiting the generality of the foregoing, any agreement to indemnify or hold
harmless any other person, any performance bond or other suretyship arrangement
and any other form of assurance against loss, except endorsement of negotiable
or other instruments for deposit or collection in the ordinary course of
business.
Guaranty Agreements shall mean collectively the Guaranty and
-------------------
Suretyship Agreements, in substantially the form attached hereto as Exhibit
-------
1.01(G) executed and delivered by the Subsidiaries of Borrower to the
-------
Administrative Agent for the benefit of the Banks, and Guaranty Agreement shall
------------------
mean separately any Guaranty Agreement.
Historical Statements shall have the meaning given to such term
---------------------
in Section 6.01(i)(i).
Indebtedness shall mean as to any person at any time, any and all
------------
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such person for or in respect of: (i) borrowed money, including,
without limitation the Subordinated Notes, (ii) amounts raised under or
liabilities in respect of any note purchase or acceptance credit facility, (iii)
reimbursement obligations under any letter of credit, currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
protection agreement, (iv) any other transaction (including without limitation
forward sale or purchase agreements, capitalized (not operating) leases required
under GAAP to be disclosed as a liability on the Loan Party's balance sheet and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such person to finance its operations or capital
requirements (but not including the deferred portion of any Restricted
Investment in an Excluded Entity if such amount is to be paid from available
cash flow from operations of the Borrower and its Subsidiaries and also not
including trade payables and accrued expenses incurred in the ordinary course of
business which are not represented by a promissory note, instrument or other
evidence of indebtedness and which are not more than ninety (90) days past due
(unless such past due indebtedness is being disputed in good faith and an
appropriate reserve has been established with respect to such indebtedness in
accordance with GAAP)), provided that, for purposes of this clause (iv) the
phrase "other evidence of indebtedness" shall not include any ordinary course
11
evidence of trade accounts payable of the Borrower or any Subsidiary such as
purchase orders or invoices, or (v) any Guaranty of Indebtedness for borrowed
money.
Indenture shall mean that certain Indenture dated April 4, 1996,
---------
between the Borrower and State Street Bank and Trust Company, as trustee, in
respect of the Subordinated Notes, as the same may be amended, modified,
supplemented or restated from time to time in accordance with this Agreement.
Indemnity shall mean the Indemnity Agreement substantially in the form
---------
of Exhibit 1.01(I) among the Banks, the Collateral Agent, certain of the Loan
---------------
Parties, certain of the Revolving Credit Loan Parties and the Revolving Credit
Banks relating to possible environmental liabilities associated with any of the
Property.
Insolvency Proceedings shall mean, with respect to any Person, (a) a
----------------------
case, action or proceeding with respect to such Person (i) before any court or
any other Official Body under any bankruptcy, insolvency, reorganization or
other, similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party or otherwise relating to the
liquidation, dissolution, winding-up or relief of such Person, or (b) any
general assignment for the benefit of creditors, composition, marshaling of
assets for creditors, or other, similar arrangement in respect of such Person's
creditors generally or any substantial portion of its creditors; undertaken
under any Law.
Intellectual Property Collateral shall mean all of the property
--------------------------------
described in the Patent, Trademark and Copyright Security Agreement.
Intercreditor Agreements shall mean collectively, as of any date of
------------------------
determination, each Intercreditor Agreement entered into between the Collateral
Agent and a Lessor Lender, each Intercreditor Agreement entered into between the
Collateral Agent and an Owned Facility Lender, each Intercreditor Agreement
entered into as required by Section 8.02(d)(iv), and each other Intercreditor
Agreement entered into between the Collateral Agent and any other Person, as
required pursuant to this Agreement, and Intercreditor Agreement shall mean,
-----------------------
individually, any of the Intercreditor Agreements.
Interest Payment Date shall mean each date specified for the
---------------------
payment of interest in Section 5.03.
Interest Period shall have the meaning assigned to such term in
---------------
Section 4.02.
Interest Rate Option shall mean any Euro-Rate Option or Base Rate
--------------------
Option.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as
---------------------
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
12
Labor Contractors shall have the meaning assigned to that term in
-----------------
Section 6.01(u).
Law shall mean any law (including common law), constitution, statute,
---
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
Leased Facilities shall mean collectively all health care facilities
-----------------
leased by a Subsidiary of Borrower, as lessee, and Leased Facility shall mean
---------------
any of the Leased Facilities, individually.
Leasehold Mortgages shall mean collectively, as of any date of
-------------------
determination, each Leasehold Mortgage granted by a Subsidiary Lessee in favor
of the Collateral Agent for the benefit of the Banks with respect to the Leased
Facility leased by such Subsidiary Lessee, and Leasehold Mortgage shall mean
------------------
individually any of the Leasehold Mortgages, all in form and substance
satisfactory to the Administrative Agent, notwithstanding any provisions of this
Agreement to the contrary.
Lessor shall mean with respect to a Leased Facility, the person which
------
owns such facility and leases such facility to a Subsidiary Lessee.
Lessor Indebtedness shall mean Indebtedness of a Lessor either secured
-------------------
by the assets of or related to the Leased Facility owned by such Lessor or which
includes restrictive covenants or other provisions related or applicable to such
Leased Facility.
Lessor Lender shall mean, with respect to any Lessor
-------------
Indebtedness, the obligee thereof.
Lien shall mean any mortgage, deed of trust, pledge, lien, security
----
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including but not
limited to any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or capitalized lease intended as, or having the
effect of, security and any filed financing statement or other notice of any of
the foregoing (whether or not a lien or other encumbrance is created or exists
at the time of the filing).
LMS Swap Agreement shall mean that certain Confirmation for U.S.
------------------
Dollar Total Return Swap Transaction to be subject to 1992 Master Swap Agreement
dated September 21, 1998, between NationsBank, N.A. and MPN, as amended,
together with that certain Guaranty dated as of September 21, 1998 given by the
Borrower and certain of its Subsidiaries in favor of NationsBank, N.A. with
respect thereto.
Loan Documents shall mean this Agreement, the Collateral Sharing
--------------
Agreement, the First Mortgages, the Notes, the Guaranty Agreements, the Pledge
Agreements, the Mortgages, the Leasehold Mortgages, the Intercreditor
Agreements, the Subordination Agreement (Intercompany), the Indemnity, the
Patent, Trademark and Copyright Security
13
Agreement, the Security Agreement and any other instruments, certificates or
documents delivered or contemplated to be delivered hereunder or thereunder or
in connection herewith or therewith, as the same may have previously been or in
the future be supplemented or amended from time to time in accordance herewith
or therewith, and Loan Document shall mean any of the Loan Documents. It is
-------------
expressly agreed that: (i) any First Mortgage, Pledge Agreement, Mortgage,
Leasehold Mortgage, Intercreditor Agreement, Security Agreement or Patent,
Trademark and Copyright Security Agreement required to be entered into by a Loan
Party as debtor, pledgor, or mortgagor on or after the Closing Date shall,
unless otherwise required by the Administrative Agent, name the Collateral
Agent, as secured party, mortgagee, grantee, pledgee or similar designation, as
the case may be, for the ratable benefit of the Banks and (on a pari passu
basis) the Revolving Credit Banks, and (ii) any Loan Party formed or acquired on
or after the Closing Date shall execute and deliver a joinder to the Collateral
Sharing Agreement in form and substance satisfactory to the Administrative
Agent.
Loan Parties shall mean the Borrower and its Subsidiaries, other than
------------
those Subsidiaries which are permitted Excluded Entities.
Loan Request shall mean a request to select, convert to or renew a
------------
Euro-Rate Option in accordance with Section 4.02 hereof.
Loans shall mean collectively and Loan shall mean separately all
----- ----
Term Loans or any Term Loan.
Make Whole Amount shall mean the amount payable to NationsBank, N.A.
-----------------
pursuant to Section 4.B. of the LMS Swap Agreement equal to the lesser of (i)
$25,000,000 or (ii) the amount equal to the difference between $47,100,000 and
the price obtained by NationsBank, N.A. upon the sale of the Designated Portion
of the Subordinated Notes to a Person other than MPN, or the Borrower or any of
their respective Affiliates.
Mariner Maryland shall mean Mariner Health Care of Baltimore, Inc., a
----------------
corporation organized and existing under the laws of the Commonwealth of
Massachusetts.
Mariner Nashville shall mean Mariner Health Care of Nashville, Inc., a
-----------------
Delaware corporation, a Subsidiary of the Borrower and the successor by merger
to Convalescent Services Inc., a Georgia corporation.
Material Adverse Change shall mean any set of circumstances or events
-----------------------
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document, (b) is or could reasonably be expected to be material and
adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Borrower and its Subsidiaries taken as a whole,
(c) impairs materially or could reasonably be expected to impair materially the
ability of the Borrower or any of its Subsidiaries to duly and punctually pay or
perform its Indebtedness, or (d) impairs materially or could reasonably be
expected to impair materially the ability of any Agent or any of the Banks, to
the extent permitted, to enforce their legal remedies pursuant to this Agreement
or any other Loan Document.
14
Material Subsidiary shall mean any Subsidiary the revenue or net
-------------------
income of which represented more than five percent (5%) of the Borrower's
consolidated revenues or consolidated net income during the preceding four (4)
fiscal quarters.
Member Interests shall have the meaning assigned to that term in
----------------
Section 6.01(c).
Month, with respect to an Interest Period under the Euro-Rate Option,
-----
shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any
Interest Period with respect to Loans subject to a Euro-Rate Option begins on a
day of a calendar month for which there is no numerically corresponding day in
the month in which such Interest Period is to end, the final month of such
Interest Period shall be deemed to end on the last Business Day of such final
month.
Mortgages shall mean collectively, as of any date of determination,
---------
the second lien Mortgages granted by a Subsidiary Owner in favor of the
Collateral Agent) for the benefit of the Banks with respect to the Owned
Facility of such Subsidiary Owner, and Mortgage shall mean individually any of
--------
the Mortgages, all in form and substance satisfactory to the Administrative
Agent.
MPN shall mean Mariner Post-Acute Network, Inc., a corporation
---
organized and existing under the laws of the State of Delaware and formerly
known as Paragon Health Network, Inc., together with its successors and assigns.
MPN Credit Agreement shall mean that certain Credit Agreement dated as
--------------------
of November 4, 1997, by and among MPN, as borrower, the lenders party thereto as
lenders, The Chase Manhattan Bank, as administrative agent, swing line lender
and letter of credit bank, and NationsBank, N.A., as documentation agent, as the
same may be amended, supplemented, restated or replaced from time to time.
MPN Subsidiary shall mean any Subsidiary of MPN other than the
--------------
Borrower or any Subsidiary of the Borrower.
Multiemployer Plan shall mean any employee benefit plan which is a
------------------
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.
Multiple Employer Plan shall mean a Plan which has two or more
----------------------
contributing sponsors (including the borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
NBG shall mean NationsBank of Georgia, N.A.
---
15
NBT shall mean NationsBank of Tennessee, N.A.
---
Net Sale Proceeds shall mean, with respect to any transaction, an
-----------------
amount equal to the cash proceeds received by the Borrower or any of its
Subsidiaries from or in respect of such transaction (including, when received,
any cash proceeds received as income or other cash proceeds of any non-cash
proceeds of such transaction), less (x) any expenses or charges (including
commissions, fees and taxes paid or payable) reasonably incurred by such Person
in respect of such transaction, (y) any Indebtedness pertaining to the assets
involved in such transaction which is required to be repaid or prepaid by the
Borrower or any of its Subsidiaries from the proceeds of such transaction as a
result of such transaction and (z) any amounts considered appropriate by the
chief financial officer of the Borrower to provide reserves in accordance with
GAAP for payment of indemnities or liabilities that may be incurred in
connection with such sale or disposition. For purposes of this definition, if
taxes or other expenses payable in connection with the sale or other disposition
of any asset are not known as of the date of such sale or other disposition,
then such fees, commissions, expenses or taxes shall be estimated in good faith
by the chief financial officer of the Borrower and such estimated amounts shall
be deducted. At such time as any reserved amount described in clause (y) above
is no longer required to be held in reserve, the balance thereof, after payment
of the related liabilities or indemnities, shall be used to make a mandatory
prepayment of the Loans or the Revolving Credit Loans (as applicable) in
accordance with Section 5.05.
Non-Disturbance Agreements shall mean collectively, as of any date of
--------------------------
determination, the non-disturbance agreements executed by a Lessor Lender and
the applicable Subsidiary Lessee, each providing in part that the Lessor Lender
shall recognize the rights of the Subsidiary Lessee which is lessee of the
Leased Facility so financed by such Lessor Lender should such Lessor Lender
foreclose upon such Leased Facility.
Notes shall mean the Term Notes.
-----
Obligations shall mean all obligations from time to time of any Loan
-----------
Party to any Bank, Agent or the Administrative Agent from time to time arising
under or in connection with or related to or evidenced by or secured by this
Agreement or any other Loan Document, whether such obligations are direct or
indirect, otherwise secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising (specifically including but not limited to
obligations arising or accruing after the commencement of any bankruptcy,
insolvency reorganization or similar proceedings with respect to any Loan Party,
or which would have arisen or accrued but for the commencement of such
proceeding, even if the claim for such obligation is not allowed in such
proceeding under applicable Law). Without limitation of the foregoing, such
obligations include (i) the principal amount of the Loans, interest, letter of
credit reimbursement obligations, and fees, indemnities or expenses under or in
connection with any Loan Document and all refinancings or refundings thereof;
and (ii) all obligations arising from any extensions of credit under or in
connection with the Loan Documents from time to time, regardless of whether any
such extensions of credit are in excess of the amount committed under or
contemplated by the Loan Documents or are made in circumstances in which any
condition to extension of credit is not satisfied. Obligations shall
16
remain such notwithstanding any assignment or transfer or any subsequent
assignment or transfer of any of the Obligations or any interest therein.
Official Body shall mean any national, federal, state, local or other
-------------
government or political subdivision thereof or any agency, authority, board,
bureau, central bank, commission, department or instrumentality of any
government or political subdivision thereof, or any court, tribunal, grand jury
or arbitrator, in each case whether foreign or domestic.
Owned Facilities shall mean all health care facilities acquired by a
----------------
Subsidiary of the Borrower (or the health care facilities which are owned by a
person which is acquired by a Loan Party and such person thereby becomes a
Subsidiary of the Borrower), which facilities (as of the date of acquisition by
a Loan Party or the date the owner of such facility becomes a Subsidiary of the
Borrower) have outstanding Indebtedness payable to a lender, other than
Indebtedness payable to the Banks pursuant to the Loan Documents or payable to
the lenders under the Revolving Credit Loan Documents, and Owned Facility shall
--------------
mean any Owned Facilities, individually.
Owned Facility Indebtedness shall mean with respect to an Owned
---------------------------
Facility, the Indebtedness of the Subsidiary Owner thereof payable to a lender
other than the Banks under this Agreement or other than the lenders under the
Revolving Credit Agreement, which Indebtedness is secured by the assets of such
Owned Facility.
Owned Facility Lender shall mean with respect to a Subsidiary Owner,
---------------------
the obligee of the Owned Facility Indebtedness payable by such Subsidiary Owner.
Paragon Acquisition shall mean the merger of Paragon Acquisition Sub
-------------------
with and into the Borrower, with the Borrower being the surviving corporation,
whereupon the shareholders of the Borrower received shares of MPN common stock
in exchange for their outstanding shares of the Borrower's capital stock, and
the Borrower became a wholly-owned subsidiary of MPN, all pursuant to the
Paragon Merger Agreement.
Paragon Acquisition Sub shall mean Paragon Acquisition Sub, Inc., a
-----------------------
Delaware corporation and a wholly-owned Subsidiary of MPN.
Paragon Merger Agreement shall mean the Agreement and Plan of Merger,
------------------------
dated as of April 13, 1998, among MPN, Paragon Acquisition Sub and the Borrower,
as amended, supplemented, restated or otherwise modified from time to time.
Paragon Senior Subordinated Note Indenture shall mean that certain
------------------------------------------
Indenture, dated November 4, 1997, with MPN as issuer and IBJ Xxxxxxxx Bank &
Trust Company as trustee, with respect to the issuance by MPN of its 9 1/2%
Senior Subordinated Notes due 2007 and its 10 1/2% Senior Subordinated Discount
Notes due 2007.
Partnership Interest shall have the meaning given to such term in
--------------------
Section 6.01(c).
17
Partnership Subsidiaries shall mean collectively the Subsidiaries of
------------------------
Borrower which are general or limited partnerships and Partnership Subsidiary
----------------------
shall mean individually any of them.
Patent, Trademark and Copyright Security Agreement shall mean the
--------------------------------------------------
Patent, Trademark and Copyright Security Agreement in substantially the form of
Exhibit 1.01(P) executed and delivered by each of the Loan Parties to the
---------------
Collateral Agent for the benefit of the Banks.
PBGC shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Acquisition shall mean any merger, consolidation or
---------------------
acquisition after the Closing Date described in and permitted under clause (iii)
or (iv) of Section 8.02(f).
Permitted Distribution Amount shall mean:
-----------------------------
(A) for any Subsidiary (the "Payor Subsidiary"), other than those
Subsidiaries listed in (B) below, the permitted amount of distributions to be
made by the Payor Subsidiary which shall equal the applicable amount so that the
ratio of the following (x) to (y) shall be at least equal to or greater than 2.0
to 1.0: (x) the sum of (i) net income, plus (ii) to the extent deducted in
determining net income for the applicable period of determination under the
preceding clause (i), interest expense, income tax expense, depreciation,
amortization, operating lease expense, and expense in respect of capital leases
of the Payor Subsidiary, plus (iii) capital expenditures, all for the Payor
Subsidiary, as determined in accordance with GAAP, for the four fiscal quarters
of the Payor Subsidiary immediately preceding the date of the proposed
distribution, to (y) the sum of (i) all payments of principal and other amounts
due in respect of Indebtedness (without limitation, prepayment fees, penalties
or other amounts) of the Payor Subsidiary during the fiscal quarter when the
proposed distribution shall be made and the following three fiscal quarters,
plus (ii) the sum of the amounts in respect of income tax expense, operating
lease expense, expense in respect of capital leases, and capital expenditures
under clauses (x)(ii) and (iii) above for the Payor Subsidiary for the four
fiscal quarters immediately preceding the date of the proposed distribution,
plus (iii) the aggregate amount of the proposed distribution by the Payor
Subsidiary; and
(B) for each of Mariner Health of Forest Hills, LLC, Mariner
Health of Bel Air, LLC, Tampa Health Properties, LTD (Bay-to-Bay), Westbury
Associates, New Hanover/Mariner Health, LLC (Wilmington), and Global Healthcare
Center -Bethesda, LLC, the permitted amount of distributions to be made by each
of them shall equal the amount permitted to be made in accordance with the
distribution provisions of their respective joint venture agreement, limited
liability company agreement, partnership agreement or similar agreement in
effect on the Sixteenth Amendment Effective Date (a copy of which has been
delivered to the Administrative Agent), and no amendment shall be made to such
provisions regarding distributions in such joint venture agreements, limited
liability company agreements, partnership agreements or similar agreements
following the Sixteenth Amendment Effective Date without the prior written
approval of the Administrative Agent unless any distributions by
18
such Subsidiary are permitted by the provisions of clause (A) above and
distributions by such Subsidiary are otherwise in compliance with Section
8.02(e).
Permitted General Intangibles shall mean licenses, permits,
-----------------------------
certificates or Medicare/Medicaid reimbursement contracts.
Permitted Investments shall mean:
---------------------
(i) direct obligations of the United States of America or any
agency or instrumentality thereof or obligations backed by the full faith and
credit of the United States of America maturing in twelve months or less from
the date of acquisition;
(ii) commercial paper maturing in 180 days or less rated not
lower than A-1 by Standard & Poor's Corporation or P-1 by Xxxxx'x Investors
Service on the date of acquisition;
(iii) demand deposits, time deposits or certificates of deposit
maturing within one year in commercial banks whose obligations are rated A-1, A
or the equivalent or better by Standard & Poor's Corporation or Xxxxx'x
Investors Service on the date of acquisition;
(iv) publicly traded debt securities or preferred stocks rated
at least A or better by either Standard & Poor's Corporation or by Xxxxx'x
Investors Service which in the aggregate do not have, at any time, a cost basis
under GAAP in excess of $1,000,000;
(v) common stocks, or mutual funds which invest in common
stocks provided that (A) such stocks are of corporations organized and existing
under the laws of the United States of America, (B) such stocks are traded
publicly on a national securities exchange or the "over the counter market", (C)
the Borrower or its Subsidiaries do not have a cost basis in excess of
$15,000,000 in the aggregate in such stocks and mutual funds, (D) the Borrower
or its Subsidiaries invest in such stocks or mutual funds using funds obtained
from sources other than, directly or indirectly, proceeds of Loans hereunder and
(E) the cost basis of the Borrower or its Subsidiaries in such stocks and mutual
funds does not exceed at any time the amount of cash invested in investments
described in clauses (i) through (iv) and (vi) of this definition of Permitted
Investments; and
(vi) investments in money market funds rated AA or AAm-G or
higher by Standard & Poor's Corporation (or equivalent rating) whose net asset
value remains a constant $1.00 per share.
Permitted Investors shall mean Apollo Management L.P., a Delaware
-------------------
limited partnership and its Control Investment Affiliates.
Permitted Leased Facility Liens shall mean, with respect to a
-------------------------------
Subsidiary Lessee, Liens, meeting all of the criteria specified below, solely on
certain of the Permitted General Intangibles of such Subsidiary Lessee, granted
in favor of the Lessor Lender providing
19
financing to the Lessor which is the lessor of such Subsidiary Lessee's Leased
Facility, and such Liens secure the Lessor Indebtedness provided by such Lessor
Lender. Such Liens are permitted under this Agreement and shall be deemed to be
"Permitted Leased Facility Liens" only if the following limitations are
satisfied:
(i) Such Liens must be terminated on or before the earlier of:
(i) the maturity of the Lessor Indebtedness which such Liens secure (without
giving effect to any extension of such maturity after the Sixteenth Amendment
Effective Date, unless the extension of such maturity is otherwise permitted by
and is in accordance with this Agreement) or (ii) any refinancing, replacement
or substitution of such Lessor Indebtedness which such Lien secures;
(ii) Such Subsidiary Lessee shall have granted to the Collateral
Agent (or the Revolving Agent, if granted prior to the Closing Date) perfected
security interests in each of the assets of such Subsidiary Lessee encumbered by
such Liens, and the (or the Revolving Agent, if granted prior to the Closing
Date) Collateral Agent's security interests shall have priority over all other
Liens on such assets, except that they shall be subordinate to the Liens in
favor of the Lessor Lender unless the Lessor Lender is listed on Schedule
6.01(aa) hereto and such Schedule states that such Lessor Lender has refused to
consent to the grant to Collateral Agent of such second Liens;
(iii) The amount of Lessor Indebtedness secured by such Liens may
not be increased after the date such Subsidiary Lessee becomes a Subsidiary of
the Borrower, and any reductions in the amount of such Lessor Indebtedness after
such date shall be permanent; and
(iv) Any termination by such Lessor Lender of such Liens in an
asset after the date such Subsidiary Lessee becomes a Subsidiary of the Borrower
shall be permanent, and no Loan Party shall thereafter grant any new Lien on
assets of any Loan Party in favor of such Lessor Lender.
Permitted Liens shall mean:
---------------
(i) Liens for taxes, assessments, or similar charges, incurred
in the ordinary course of business and which are not yet due and payable;
(ii) Pledges or deposits made in the ordinary course of business
to secure payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age pensions
or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;
20
(iv) Good faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, progress or advance
payments, contracts (other than for the repayment of borrowed money) or leases,
not in excess of the aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business;
(v) Encumbrances consisting of zoning restrictions, easements,
reservations, rights of way or other restrictions on the use of real property,
none of which materially impairs the use of such property as currently used or
the value thereof, and none of which is violated in any material respect by
existing or proposed structures or land use;
(vi) Liens in favor of the Collateral Agent for the benefit of
the Banks and Liens (which are on a pari passu basis with the Liens in favor of
the Banks, or which are subject to the terms of the Collateral Sharing
Agreement) in favor of the Collateral Agent for the benefit of the Revolving
Credit Banks;
(vii) Liens in respect of capital leases as and to the extent
permitted in Section 8.02(p) and Liens in respect of operating leases;
(viii)Any Lien existing on the Closing Date and described on
Schedule 1.01(P) hereto (excluding Permitted Leased Facility Liens and Permitted
----------------
Owned Facility Liens which are addressed in clauses (xi) and (xiii) below)
provided that the principal amount secured thereby is not hereafter increased
and no additional assets become subject to such Lien (other than through after-
acquired property clauses in effect on the date hereof);
(ix) Purchase Money Security Interests or other Liens, provided
that the aggregate amount of loans and deferred payments secured by such
Purchase Money Security Interests or other Liens shall not exceed $15,000,000
(excluding for the purpose of this computation any loans or deferred payments
secured by Liens described on Schedule 1.01(P) hereto);
----------------
(x) The following, (A) if the validity or amount thereof is
being contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and continue to
be stayed or (B) if a final judgment is entered and such judgment is discharged
within thirty (30) days of entry, and in either case they do not materially
affect the Collateral or, in the aggregate, materially impair the ability of any
Loan Party to perform its obligations hereunder or under the other Loan
Documents:
(1) Claims or Liens for taxes, assessments or charges due
and payable and subject to interest or penalty, provided that such
Loan Party maintains such reserves or other appropriate provisions as
shall be required by GAAP and pays all such taxes, assessments or
charges forthwith upon the commencement of proceedings to foreclose
any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title
to, real or personal property other than a material portion of the
Collateral,
21
including any attachment of personal or real property or other legal
process prior to adjudication of a dispute on the merits; or
(3) Claims or Liens of mechanics, materialmen, warehousemen,
carriers, or other statutory nonconsensual Liens;
(xi) Permitted Leased Facility Liens existing as of the Closing
Date which are described on Schedule 6.01(aa) as of such date, and, thereafter
-----------------
subject to the approval of the Required Banks (including without limitation
satisfaction of all applicable conditions set forth on Exhibit 1.01(C)),
---------------
additional Permitted Leased Facility Liens;
(xii) Permitted Owned Facility Liens existing as of the Closing
Date which are described on Schedule 6.01(aa) as of such date, and, thereafter
-----------------
subject to the approval of the Required Banks (including without limitation,
satisfaction of all applicable conditions set forth on Exhibit 1.01(C)),
---------------
additional Permitted Owned Facility Liens;
(xiii)With respect to an Unrestricted Subsidiary which is an
Excluded Entity, Liens securing Indebtedness incurred by such Unrestricted
Subsidiary, provided that the sole assets subject to such Lien are assets of
such Unrestricted Subsidiary or assets of a person other than any Loan Party or
other Unrestricted Subsidiary; and
(xiv) With respect to Facilities subject to First Mortgages, all
matters of record other than any mortgages, deeds of trust, deeds to secure
debt, financing statements, judgment liens or tax liens, in favor of Persons
other than the Collateral Agent, and all matters that would be shown by current
survey of such Facility.
Permitted Owned Facility Liens shall mean, with respect to a
------------------------------
Subsidiary Owner, Liens, meeting all of the criteria specified below, on real
and personal property of such Subsidiary Owner relating to the Owned Facility of
such Subsidiary Owner, granted in favor of the Owned Facility Lender providing
financing with respect to such Owned Facility, and such Liens secure the Owned
Facility Indebtedness provided by such Owned Facility Lender. Such Liens are
permitted under this Agreement and shall be deemed to be "Permitted Owned
Facility Liens" only if the following limitations are satisfied:
(i) Such Liens must be terminated on or before the earlier of:
(i) the maturity of the Owned Facility Indebtedness which such Liens secure
(without giving effect to any extension of such maturity after the Sixteenth
Amendment Effective Date, unless the extension of such maturity is otherwise
permitted by and is in accordance with this Agreement) or (ii) any refinancing,
replacement or substitution of the Owned Facility Indebtedness which such Lien
secures;
(ii) The Subsidiary Owner shall have granted to the Collateral
Agent (or the Revolving Agent if granted prior to the Closing Date) second
priority mortgage liens and security interests in each of the assets which is
encumbered by such Liens;
22
(iii) The amount of Owned Facility Indebtedness secured by such
liens may not be increased after the earlier of the date such Owned Facility was
acquired by a Loan Party or the person owning such facility becomes a Subsidiary
of the Borrower and any reductions in the amount of such Owned Facility
Indebtedness after such date shall be permanent; and
(iv) Any termination by an Owned Facility Lender of such Liens
in an asset after the earlier of the date such Owned Facility was acquired by a
Loan Party or the person owning such facility becomes a Subsidiary of the
Borrower shall be permanent and the Subsidiaries of Borrower may not thereafter
grant any new Lien on assets of any Loan Party in favor of such Owned Facility
Lender.
Permitted Repurchase Amount shall mean:
---------------------------
(i) in the event MPN elects to purchase from NationsBank, N.A.
all or a portion of or any of their respective Affiliates the Designated Portion
of the Subordinated Notes, an aggregate amount not to exceed the lesser of (A)
101% of the face amount of such portion of the Designated Portion of the
Subordinated Notes so purchased, or (B) $25,000,000; or
(ii) in the event that NationsBank, N.A. sells all or a portion
of the Designated Portion of the Subordinated Notes to any Person other than
MPN, the Borrower or any of their respective Affiliates, an aggregate amount not
to exceed the Make Whole Amount.
Permitted Subordinated Indebtedness shall mean Indebtedness of the
-----------------------------------
Borrower in an amount and on terms and conditions (including provisions
subordinating such Indebtedness to the Indebtedness and all other obligations of
the Loan Parties to the Agents and the Banks under the Loan Documents)
satisfactory to the Agents (whose approval will not be unreasonably withheld),
designated by the Agents as "Permitted Subordinated Indebtedness" and which
refinances, in whole or in part, the Subordinated Notes; provided however that,
in addition to the approval of the Agents, the prior written approval of the
Required Banks (which shall not be unreasonably withheld) shall be required for
the Borrower to incur Indebtedness which refinances, in whole or in part, the
Subordinated Notes, if and only if the terms of such new Indebtedness include
any of the following: (x) a provision that amortizes any principal of such new
Indebtedness prior to the Expiration Date, (y) a principal amount of such
Indebtedness in excess of $151.5 million, or (z) any financial covenant which is
more restrictive than any financial covenant contained in this Agreement. It is
expressly agreed that in no event shall proceeds of Loans used to purchase,
directly or indirectly, Subordinated Notes or used to make the dividend
permitted by Section 8.02(e)(vii) be deemed to be "Permitted Subordinated
Indebtedness."
Person shall mean any individual, corporation, partnership,
------
association, joint-stock company, trust, unincorporated organization, joint
venture, government or political subdivision or agency thereof, or any other
entity.
23
Pinnacle shall mean Pinnacle Care Corporation, a corporation organized
--------
and existing under the laws of the State of Delaware.
Plan shall mean at any time an employee pension benefit plan
----
(including a Multiple Employer Plan but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
Pledge Agreements shall mean collectively the Pledge Agreements in
-----------------
executed and delivered by the Borrower to the Collateral Agent for the benefit
of the Banks and executed and delivered by any Subsidiary which owns any equity
ownership interest in another Subsidiary to the Collateral Agent for the benefit
of the Banks all in form and substance satisfactory to the Collateral Agent and
the Administrative Agent, as any such Pledge Agreement may hereinafter be
modified, amended, restated or replaced from time to time, and Pledge Agreement
----------------
shall mean separately any Pledge Agreement.
Pledged Collateral shall have the meaning assigned to that term
------------------
in the respective Pledge Agreements.
PNC Bank shall mean PNC Bank, National Association, a national
--------
banking association, its successors and assigns.
Potential Default shall mean any event or condition which with notice,
-----------------
passage of time or a determination by the Administrative Agent or the Required
Banks, or any combination of the foregoing, would constitute an Event of
Default.
Principal Office shall mean the main banking office of the
----------------
Administrative Agent, 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000.
Prior Security Interest shall mean a valid and enforceable perfected
-----------------------
first priority security interest under the Uniform Commercial Code in the UCC
Collateral and the Pledged Collateral, which in the case of the UCC Collateral
is subject only to Liens for taxes not yet due and payable to the extent such
prospective tax payments are given priority by statute or Purchase Money
Security Interests as permitted hereunder.
Prohibited Transaction shall mean any prohibited transaction as
----------------------
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.
Property shall mean all real property, both owned and leased, of
--------
any Loan Party.
24
Purchase Money Security Interest shall mean Liens upon tangible
--------------------------------
personal property securing loans to a Loan Party or deferred payments by a Loan
Party in either case, for the purchase of such tangible personal property.
Purchase Price shall mean, with respect to any Permitted Acquisition
--------------
by the Loan Parties, the sum of (i) cash paid at closing, (ii) the amount of any
deferred payments, which are not contingent on the financial performance of the
business being acquired, (iii) the projected amount of any deferred payments
which are contingent on the financial performance of the business being acquired
following the acquisition, provided that it shall be assumed for purposes of
such projection that the cash flow and other financial performance of the
acquired business in each year after the acquisition date shall be the same as
the financial performance of such business during the twelve (12) months
preceding such date, (iv) the amount of any debt assumed or guaranteed by any
Loan Party, (v) if the Loan Parties are acquiring stock of another person
(whether by purchase, merger or otherwise) the amount of debt of such person
outstanding after the acquisition, plus (vi) the value of any stock, securities
or other consideration given by any of the Loan Parties in connection therewith.
If the consideration to be paid in connection with a Permitted Acquisition
includes deferred payments which are contingent on the financial performance of
the acquired business after the acquisition, the Loan Parties shall compare the
amount of deferred payments which the Loan Parties actually pay (or which become
ascertainable if the Loan Parties can ascertain the amount of any deferred
payments before paying them) with the amount which the Loan Parties projected
they would pay pursuant to clause (iii) in the preceding sentence. The Purchase
Price in connection with such acquisition shall be deemed to increase by the
amount of such excess for purposes of determining the aggregate Purchase Price
paid by the Loan Parties in connection with Permitted Acquisitions pursuant to
Sections 8.02(f)(iii)(v) and 8.02(f)(iv)(x).
Purchasing Bank shall mean a Bank which becomes a party to this
---------------
Agreement by executing an Assignment and Assumption Agreement.
Qualifying Asset Sale shall have the meaning set forth in Section
---------------------
5.05(a).
Ratable Share shall mean the proportion that a Bank's Commitment
-------------
bears to the Commitments of all of the Banks.
Regulated Substances shall mean, without limitation, any substance,
--------------------
material or waste, regardless of its form or nature, defined under Environmental
Law as a "hazardous substance," "pollutant," "pollution," "contaminant,"
"extremely hazardous substance," "toxic chemical," "toxic substance," "toxic
waste," "hazardous waste," "special handling waste," "industrial waste,"
"residual waste," "solid waste," "municipal waste," "mixed waste," "infectious
waste," "chemotherapeutic waste," "medical waste" or "regulated substance" or
any other material, substance or waste, regardless of its form or nature, which
otherwise is regulated by Environmental Law.
Regulation U shall mean Regulation U, T or X as promulgated by the
------------
Board of Governors of the Federal Reserve System, as amended from time to time.
25
Reimbursement Obligations shall have the meaning assigned to such
-------------------------
term in Section 2.09(d).
Reportable Event means a reportable event described in Section 4043 of
----------------
ERISA and regulations thereunder with respect to a Plan or Multiemployer Plan
and for which the 30-day notice period has not been waived by regulation.
Required Banks shall mean: (i) if there are no Loans, outstanding,
--------------
Banks whose Commitments aggregate at least 51% of the Commitments of all of the
Banks, or (ii) if there are Loans outstanding, any Bank or group of Banks if its
Loans then outstanding aggregates at least 51% of the total principal amount of
all of the Loans then outstanding.
Required Environmental Permits shall mean all permits, licenses,
------------------------------
bonds, consents, programs, approvals or authorizations required under
Environmental Law for the Borrower and/or each of its Subsidiaries to conduct
its operations, maintain the Property or equipment thereon or construct,
maintain, operate or occupy any improvements.
Required Environmental Notices shall mean all notices, reports, plans,
------------------------------
forms or other filings which pursuant to Environmental Law, Required
Environmental Permits or at the request or direction of an Official Body must be
submitted to an Official Body or which otherwise must be maintained with respect
to the Property, Contamination and the operations and activities of the Borrower
and each of its Subsidiaries.
Responsible Officer shall mean, with respect to any Loan Party, the
-------------------
Chief Executive Officer, the Chief Financial Officer or the treasurer thereof.
Restricted Indebtedness shall mean with respect to the Excluded
-----------------------
Entities, Indebtedness secured by any Liens, other than Indebtedness not to
exceed $250,000 in the aggregate for all Excluded Entities secured by Purchase
Money Security Interests.
Restricted Investments shall mean collectively the following with
----------------------
respect to the Excluded Entities: (i) investments or contributions by any of
the Loan Parties directly or indirectly in or to the capital of or other
payments to (except in connection with transactions for fair value in the
ordinary course of business) an Excluded Entity, (ii) loans by any of the Loan
Parties directly or indirectly to an Excluded Entity, (iii) guaranties by any of
the Loan Parties directly or indirectly of the obligations of an Excluded
Entity, or (iv) other obligations, contingent or otherwise, of any of the Loan
Parties to or for the benefit of an Excluded Entity. If the nature of a
Restricted Investment is tangible property then the amount of such Restricted
Investment shall be determined by valuing such property at fair value in
accordance with the past practice of the Loan Parties and such fair values shall
be satisfactory to the Agents, in their sole discretion.
Restricted Subsidiaries shall mean all Subsidiaries of the Borrower
-----------------------
other than the Unrestricted Subsidiaries of the Borrower which as of the date of
determination are Excluded Entities.
26
Revolving Agent shall mean the administrative agent, its successors
---------------
and assigns, under the Revolving Credit Agreement.
Revolving Credit Agreement shall mean that certain Loan Agreement,
--------------------------
dated May 18, 1994 as amended, among the Revolving Credit Borrower, PNC Bank,
National Association, as agent, First Union National Bank, as syndication agent
and the Revolving Credit Banks, providing for a $250,000,000 revolving credit
facility to the Revolving Credit Borrower, as such agreement may from time to
time be amended, restated, modified, supplemented or replaced.
Revolving Credit Banks shall mean the financial institutions signatory
----------------------
from time to time to the Revolving Credit Agreement as "banks" thereunder,
together with their successors and permitted assigns.
Revolving Credit Borrower shall mean Mariner Health Group, Inc., a
-------------------------
Delaware corporation, in its capacity as the borrower under the Revolving Credit
Agreement, together with its successors and permitted assigns in such capacity.
Revolving Credit Commitment shall have the meaning set forth in
---------------------------
the Revolving Credit Agreement.
Revolving Credit Loan Documents shall mean the Revolving Credit Loan
------------------------------- ---------------------
Agreement and all other documents, instruments and agreements now or hereafter
---------
executed and delivered in connection therewith (excluding the Loan Documents),
as the same may be amended, restated, supplemented or replaced from time to
time.
Revolving Credit Loan Parties shall mean, collectively, the Revolving
-----------------------------
Credit Borrower and all guarantors, from time to time, of Indebtedness and other
obligations, under the Revolving Credit Loan Documents.
Security Agreement shall mean the Security Agreement in substantially
------------------
the form of Exhibit 1.01(s)(1) executed and delivered by each of the Loan
------------------
Parties to the Collateral Agent for the benefit of the Banks.
Seventeenth Amendment Effective Date shall mean July 31, 1998.
------------------------------------
Sixteenth Amendment Effective Date shall mean January 2, 1998.
----------------------------------
Solvent shall mean, with respect to any person on a particular date,
-------
that on such date (i) the fair value of the property of such person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such person, (ii) the present fair saleable value of the assets
of such person is not less than the amount that will be required to pay the
probable liability of such person on its debts as they become absolute and
matured, (iii) such person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
27
person's ability to pay as such debts and liabilities mature, and (v) such
person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
Specified Change of Control shall mean a "Change of Control" as
---------------------------
defined in the Paragon Senior Subordinated Note Indenture, as in effect on the
Seventeenth Amendment Effective Date, without regard to any amendments to such
definition subsequent to such date.
Subordinated Indebtedness Incurrence Date shall mean March 28, 1996,
-----------------------------------------
the date of issuance by the Borrower of the Subordinated Notes pursuant to and
in accordance with the Indenture.
Subordinated Notes shall mean the $150 million in original principal
------------------
amount of Subordinated Notes due 2006 issued by the Borrower pursuant to the
Indenture. It is acknowledged that prior to the Exchange Offer, the
Subordinated Notes shall consist of the Series A Securities, and following the
Exchange Offer, the Subordinated Notes shall consist of the Series B Securities
and any Series A Securities which are not exchanged in the Exchange Offer, as
such terms are defined in the Indenture.
Subordination Agreement (Intercompany) shall mean that certain
--------------------------------------
Subordination Agreement (Intercompany) in the form of Exhibit 1.01(S) hereto
---------------
executed and delivered by each Loan Party to the Administrative Agent for the
benefit of the Banks.
Subsidiary of any person at any time shall mean (i) any corporation,
----------
limited liability company or trust of which more than 50% (by number of shares
or number of votes) of the outstanding capital stock, member interests or shares
of beneficial interest normally entitled to vote for the election of one or more
directors or trustees (regardless of any contingency which does or may suspend
or dilute the voting rights) is at such time owned directly or indirectly by
such Person or one or more of such Person's Subsidiaries, or any partnership of
which such Person is a general partner or of which more than 50% of the general
or voting partnership interests is at the time directly or indirectly owned by
such Person or one or more of such Person's Subsidiaries, and (ii) any
corporation, trust, limited liability company, partnership or other entity which
is controlled or capable of being controlled by such Person or one or more of
such Person's Subsidiaries.
Subsidiary Lessee shall mean each Subsidiary of Borrower which is
-----------------
the lessee of a Leased Facility.
Subsidiary Owner shall mean, with respect to an Owned Facility,
----------------
the Subsidiary of Borrower which is the owner thereof.
28
Supermajority Required Banks shall mean: (i) if there are no Loans,
----------------------------
outstanding, Banks whose Commitments aggregate at least 66 and 2/3% of the
Commitments of all of the Banks, or (ii) if there are Loans, outstanding, any
Bank or group of Banks if its Loans, then outstanding aggregates at least 66 and
2/3% of the total principal amount of all of the Loans then outstanding.
Term Loan Base Rate Option shall have the meaning assigned to
--------------------------
that term in Section 4.01(a)(i).
Term Loan Commitment shall mean as to any Bank at any time, the amount
--------------------
initially set forth opposite its name on Schedule 1.01(C) hereto in the column
----------------
labeled "Amount of Commitment for Term Loans," and thereafter to give effect to
the most recent Assignment and Assumption Agreement, as such amount shall be
reduced from time to time pursuant to Sections 2.01 and 2.10 hereof, and Term
----
Loan Commitments shall mean the aggregate Term Loan Commitments of all of the
----------------
Banks.
Term Loan Euro-Rate Option shall have the meaning assigned to
--------------------------
that term in Section 4.01(a)(ii).
Term Loans shall mean collectively and Term Loan shall mean separately
---------- ---------
all Term Loans or any Term Loan made by the Banks or one of the Banks to the
Borrower pursuant to Section 2.01 hereof.
Term Notes shall mean collectively all the Term Notes of the Borrower
----------
in the form of Exhibit 1.01(T) hereto evidencing the Term Loans together with
---------------
all amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part and Term Note shall mean separately any Term Note.
---------
Total Indebtedness shall mean as of any date of determination, without
------------------
duplication, the total Indebtedness of the Borrower and its Subsidiaries.
Transferor Bank shall mean the selling Bank pursuant to an
---------------
Assignment and Assumption Agreement.
Tri-State shall mean Tri-State Health Care, Inc., a West Virginia
---------
corporation, which is a Subsidiary of Pinnacle and the sole general partner of
Seventeenth Street Partnership.
Trustee Agreement shall mean, as of any date of determination,
-----------------
collectively (i) that certain Paying Agency Agreement executed by Mariner
Nashville, PNC Bank, National Association, and certain of the Lessors listed on
Schedule 6.01(aa), in the form of Exhibit 1.01(T) to the Revolving Credit Loan
----------------- ---------------
Agreement providing for the payment by Mariner Nashville to PNC Bank, National
Association, as trustee for Mariner Nashville and such Lessors, of monies due to
such Lessors under the leases between such Lessors and Mariner Nashville, and
the subsequent payment of such monies by PNC Bank to the Lessors; and (ii) in
accordance with the requirements of this Agreement, each other similar
agreement, in form and substance
29
satisfactory to the Administrative Agent relating to certain Subsidiaries of the
Borrower and certain Lessors.
UCC Collateral shall mean the Pledged Collateral, the property of the
--------------
Loan Parties in which security interests are granted under the Security
Agreement, and that portion of the Collateral under the Mortgages, First
Mortgages, and the Leasehold Mortgages which consists of personal property in
which a security interest may be granted under the Uniform Commercial Code.
Uniform Commercial Code shall have the meaning assigned to that
-----------------------
term in Section 6.01(p).
Unrestricted Subsidiary of any person at any time shall mean any
-----------------------
corporation or limited liability company of which more than 50% but less than
80% (by number of shares or number of votes) of the outstanding capital stock or
member interests 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) is at such time owned directly or indirectly by such Person or
one or more of such Person's Subsidiaries, or any partnership of which such
Person is a general partner or of which more than 50% but less than 80% of the
general or voting partnership interests is at the time directly or indirectly
owned by such Person or one or more of such Person's Subsidiaries.
Voting Stock shall mean, with respect to any Person, any class or
------------
series of Capital Stock of such Person that is ordinarily entitled to vote in
the election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
1.02 Construction. Unless the context of this Agreement otherwise
------------
clearly requires, references to the plural include the singular, the singular
the plural and the part the whole, "or" has the inclusive meaning represented by
the phrase "and/or," and "including" has the meaning represented by the phrase
"including without limitation." References in this Agreement to "determination"
of or by any Agent or the Banks shall be deemed to include good faith
calculations by any Agent or the Banks (in the case of quantitative
determinations) and good faith beliefs by any Agent or the Banks (in the case of
qualitative determinations). Whenever any Agent or the Banks are granted the
right herein to act in its or their sole discretion or to grant or withhold
consent such right shall be exercised in good faith. The words "hereof,"
"herein," "hereunder" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
section and other headings contained in this Agreement and the Table of Contents
preceding this Agreement are for reference purposes only and shall not control
or affect the construction of this Agreement or the interpretation thereof in
any respect. Section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
1.03 Accounting Principles. Except as otherwise provided in this
---------------------
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance
30
with GAAP (including principles of consolidation where appropriate), and all
accounting or financial terms shall have the meanings ascribed to such terms by
GAAP. In the event of: (i) any dissolution or liquidation of any Subsidiary
pursuant to Section 8.02(f) of this Agreement, (ii) any consolidation or merger
of any Subsidiary with or into any person (other than the Borrower or another
Subsidiary)pursuant to Section 8.02(f) of this Agreement, or (iii) the sale,
transfer, lease or disposition of assets of the Borrower or any Subsidiary
permitted pursuant to Section 8.02(g)(v) of this Agreement, then, in the case of
any of the foregoing clauses (i), (ii) or (iii), any financial covenant to be
calculated thereunder (including, without limitation, those set forth in Section
4.01, and 8.02(q) through 8.02(u), inclusive) shall be calculated for the period
during which such sale, transfer, lease or other disposition occurs, excluding
all financial items (for example and without limitation, all cash flow,
revenues, expenses, and income) attributable to the assets sold, transferred,
leased or otherwise disposed of. It is expressly agreed that for all periods
ending after the consummation of the Paragon Acquisition, all cash expenses
(other than expenses directly related to the Paragon Acquisition) paid by MPN on
behalf of or for the benefit of the Borrower or any Subsidiary of the Borrower
and reimbursed by the Borrower pursuant to Section 8.02(e)(v) shall be treated
as an expense of the Borrower or such Subsidiary of the Borrower (whether or not
GAAP would require such amount to be included as an expense of the Borrower or
such Subsidiary) for the purpose of determining "net income of the Borrower and
its Subsidiaries in accordance with GAAP" under this Agreement in connection
with the calculation of the applicable financial covenants under this Agreement
(including without limitation in the determination of Consolidated Cash Flow
from Operations, Consolidated Net Income, the numerator of the Fixed Charge
Coverage Ratio in Section 8.02(q) and the calculations set forth in Section
8.02(e)), it being the express intent of the Borrower, the Agents and the Banks
that notwithstanding payment of expenses by MPN on behalf of or for the benefit
of the Borrower or Subsidiaries of the Borrower that consolidated net income of
the Borrower and its Subsidiaries shall continue to be determined after the
consummation of the Paragon Acquisition as if all expenses of the Borrower and
its Subsidiaries are paid by them.
ARTICLE II
TERM LOAN FACILITY
------------------
2.01 Term Loan Commitments.
---------------------
(a) Term Loan Commitments. Subject to the terms and conditions
---------------------
hereof and relying upon the representations and warranties herein set forth,
each Bank severally agrees to make a term loan (the "Term Loan") to the Borrower
on the Closing Date in such principal amount as the Borrower shall request up
to, but not exceeding, such Bank's Term Loan Commitment.
2.02 Nature of Banks' Obligations With Respect to Term Loans. The
-------------------------------------------------------
obligations of each Bank to make a Term Loan to the Borrower shall be in the
proportion that such Bank's Term Loan Commitment bears to the Term Loan
Commitments of all Banks to the Borrower, but each Bank's Term Loan to the
Borrower shall never exceed its Term Loan Commitment. The failure of any Bank
to make a Term Loan shall not relieve any other Bank of its obligations to make
a Term Loan nor shall it impose any additional liability on any other
31
Bank hereunder. The Banks shall have no obligation to make Term Loans hereunder
after the Closing Date. The Term Loan Commitments are not revolving credit
commitments, and the Borrower shall not have the right to borrow, repay and
reborrow the Term Loans.
2.03 Loan Requests. Except as otherwise provided herein, the
-------------
Borrower may from time to time prior to the Expiration Date request the Banks to
renew or convert the Interest Rate Option applicable to existing Loans, by the
delivery to the Administrative Agent, not later than 10:00 A.M. Pittsburgh time
(i) three (3) Business Days prior to the proposed Borrowing Date with respect to
the conversion to or the renewal of the Euro-Rate Option for any Loans; and (ii)
on the Business Day which is the last day of the preceding Interest Period with
respect to the conversion to the Base Rate Option for any Loan, of a duly
completed request therefor substantially in the form of Exhibit 2.05 hereto or a
------------
request by telephone immediately confirmed in writing by letter, facsimile or
telex in such form (each, a "Loan Request"), it being understood that the
Administrative Agent may rely in good faith on the authority of any person
making such telephonic request and purporting to be an Authorized officer. Each
Loan Request shall be irrevocable and shall (i) specify the proposed Borrowing
Date; (ii) specify the aggregate amount of the proposed Loans comprising the
Borrowing Tranche, which shall be in integral multiples of $500,000 and not less
than $5,000,000 for Loans to which the Euro-Rate Option applies and not less
than the lesser of $500,000 or the maximum amount available for Loans to which
the Base Rate Option applies; (iii) specify whether the Euro-Rate Option or Base
Rate Option shall apply to the proposed Loans comprising the Borrowing Tranche;
(iv) specify in the case of Loans to which the Euro-Rate Option applies, an
appropriate Interest Period for the proposed Loans comprising the Borrowing
Tranche; and (v) certify that no Event of Default or Potential Default has
occurred and is continuing.
2.04 Term Note. The obligation of the Borrower to repay the
---------
aggregate unpaid principal amount of the Term Loans made to it by each Bank,
together with interest thereon, shall be evidenced by a promissory note of the
Borrower dated the Closing Date in substantially the form attached hereto as
Exhibit 1.01(T) payable to the order of each Bank in a face amount equal to the
---------------
Commitment of such Bank.
2.05 Use of Proceeds. The proceeds of the Term Loans shall be used
---------------
for general corporate purpose
ARTICLE III
[Intentionally Omitted]
ARTICLE IV
INTEREST RATES
--------------
4.01 Interest Rate Options. The Borrower shall pay interest in
---------------------
respect of the outstanding unpaid principal amount of the Loans as selected by
it from the Base Rate Option or Euro-Rate Option set forth below applicable to
the Loans (it being understood that, subject to the provisions of this
Agreement, the Borrower may select different Interest Rate Options and different
Interest Periods to apply simultaneously to the Loans comprising different
Borrowing Tranches and may convert to or renew one or more Interest Rate Options
with respect to all or any portion of the Loans comprising any Borrowing
32
Tranche; provided that there shall not be at any one time outstanding more than
five (5) Borrowing Tranches in the aggregate among all the Loans accruing
interest at a Euro-Rate Option). The Administrative Agent's determination of a
rate of interest and any change therein shall in the absence of manifest error
be conclusive and binding upon all parties hereto. If at any time the
designated rate applicable to any Loan made by any Bank exceeds such Bank's
highest lawful rate, the rate of interest on such Bank's Loan shall be limited
to such Bank's highest lawful rate.
(a) Interest Rate Options. The Borrower shall have the right
---------------------
to select from the following Interest Rate Options applicable to the Term Loans
for the period commencing on the Closing Date and thereafter:
(i) Base Rate Option: A fluctuating rate per annum
----------------
(computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed) equal to the Base Rate plus the applicable percentage set
forth below, based upon the ratio of (a) Total Indebtedness, to (b) Consolidated
Cash Flow from Operations, such interest rate to change automatically from time
to time effective as of the effective date of each change in the Base Rate.
Ratio of Total Indebtedness to Applicable
Consolidated Cash Flow from Operations Interest Rate
-------------------------------------- -------------
Greater than 5.25 to 1.0 Base Rate plus 1.25%
Greater than 4.75 to 1.0 but less than or Base Rate plus 1.00%
equal to 5.25 to 1.0
Greater than 4.25 to 1.0 but less than or Base Rate plus .75%
equal to 4.75 to 1.0
Greater than 3.75 to 1.0 but less than or Base Rate plus .50%
equal to 4.25 to 1.0
Less than or equal to 3.75 to 1.0 Base Rate plus .25%
(ii) Euro-Rate Option: A fluctuating rate per annum
----------------
(computed on the basis of a year of 360 days and actual days elapsed) equal to
the Euro-Rate plus the applicable percentage (such percentage is sometimes
hereafter referred to as the "Applicable Percentage Over Euro-Rate") set forth
below, based upon the ratio of (a) Total Indebtedness, to (b) Consolidated Cash
Flow from Operations.
Ratio of Total Indebtedness to Applicable
Consolidated Cash Flow from Operations Interest Rate
-------------------------------------- -------------
Greater than 5.25 to 1.0 Euro-Rate plus 2.75%
Greater than 4.75 to 1.0 but less than or Euro-Rate plus 2.50%
equal to 5.25 to 1.0
Greater than 4.25 to 1.0 but less than or Euro-Rate plus 2.25%
33
Ratio of Total Indebtedness to Applicable
Consolidated Cash Flow from Operations Interest Rate
-------------------------------------- -------------
equal to 4.75 to 1.0
Greater than 3.75 to 1.0 but less than or Euro-Rate plus 2.00%
equal to 4.25 to 1.0
Less than or equal to 3.75 to 1.0 Euro-Rate plus 1.75%
(b) The ratios pursuant to clause (a) above shall be computed
on the date of each Acquisition Requiring Certification as more fully set forth
in the third sentence of Section 8.01(m)(i) or the second sentence of Section
8.01(m)(ii), as applicable, and any interest rate adjustment attributable to
such computation shall be effective on the date of such Acquisition Requiring
Certification. If Borrower does not make any Acquisition Requiring Certification
during any fiscal quarter, such ratio shall also be computed as of the end of
such quarter with Consolidated Cash Flow from Operations computed for the four
fiscal quarters then ended and Total Indebtedness computed as of the end of such
fiscal quarter, but any interest adjustments attributable to a change in such
ratio shall be effective (x) with respect to an increase of the applicable
interest rate, as of the Delivery Date for the Borrower's consolidated financial
statements for such quarter and (y) with respect to a decrease of the applicable
interest rate, as of the later of the Delivery Date for such financial
statements and the date on which such financial statements are actually
delivered to the Agents and the Banks.
(c) Rate Quotations. The Borrower may call the
--- ---------------
Administrative Agent on or before the date on which a Loan Request is to be
delivered to receive an indication of the rates then in effect, but it is
acknowledged that such indication shall not be binding on the Agents or the
Banks nor affect the rate of interest which thereafter is actually in effect
when the election is made.
4.02 Interest Periods. At any time when the Borrower shall select,
----------------
convert to or renew a Euro-Rate Option, the Borrower shall notify the
Administrative Agent thereof at least three (3) Business Days prior to the
effective date of such Euro-Rate Option by delivering a Loan Request. The
notice shall specify an interest period (the "Interest Period") during which
such Interest Rate Option shall apply, such periods to be one, two, three or six
months, provided, that the following shall apply to any selection of, renewal of
or conversion to a Euro-Rate Option:
(a) any Interest Period which would otherwise end on a date
which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period which begins on the last day of a
calendar month for which there is no numerically corresponding day in the
subsequent calendar month during which such Interest Period is to end shall end
on the last Business Day of such subsequent month;
34
(c) each Borrowing Tranche of Loans subject to a Euro-Rate
Option shall be in integral multiples of $500,000 and not less than $5,000,000;
(d) the Borrower shall not select, convert to or renew an
Interest Period for any portion of the Loans that would end after the Expiration
Date; and
(e) in the case of the renewal of a Euro-Rate Option at the end
of an Interest Period, the first day of the new Interest Period shall be the
last day of the preceding Interest Period, without duplication in payment of
interest for such day.
4.03 Interest After Default. To the extent permitted by Law, upon
----------------------
the occurrence and during the continuation of an Event of Default, any
principal, interest, fee or other amount payable hereunder shall bear interest
for each day thereafter until paid in full (before and after judgment) at a rate
per annum which shall be equal to two hundred (200) basis points (2% per annum)
above the rate of interest otherwise applicable with respect to such amount or
two hundred (200) basis points (2% per annum) above the Base Rate if no rate of
interest is otherwise applicable, but in no event in excess of the highest rate
permitted under applicable law. The Borrower acknowledges that such increased
interest rate reflects, among other things, the fact that such Loans or other
amounts have become a substantially greater risk given their default status and
that the Banks are entitled to additional compensation for such risk. If an
Event of Default shall occur and be continuing, the Administrative Agent may in
its discretion limit the Borrower to the Base Rate Option.
4.04 Euro-Rate Unascertainable.
-------------------------
(a) If on any date on which a Euro-Rate would otherwise be
determined, the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that:
(i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially and
adversely affects the London interbank market relating to the Euro-Rate, or
(b) if at any time any Bank shall have determined (which
determination shall be conclusive absent manifest error) that:
(i) the making, maintenance or funding of any Loan to
which a Euro-Rate Option applies has been made impracticable or unlawful by
compliance by such Bank in good faith with any Law or any interpretation or
application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not have the force of Law), or
(ii) such Euro-Rate Option will not adequately and fairly
reflect the cost to such Bank of the establishment or maintenance of any such
Loan, or
36
(iii) after making all reasonable efforts that deposits of
the relevant amount in Dollars for the relevant Interest Period for a Loan to
which a Euro-Rate Option applies, respectively, are not available to such Bank
with respect to a proposed Euro-Rate Loan in the London interbank market, in the
case of any event specified in subsection (a) above, then the Administrative
Agent shall promptly so notify the Banks and the Borrower thereof and in the
case of any event specified in subsection (b) above, such Bank shall promptly so
notify the Administrative Agent and endorse a certificate to such notice as to
the specific circumstances of such notice and the Administrative Agent shall
promptly send copies of such notice and certificate to the other Banks and the
Borrower. Upon such date as shall be specified in such notice (which shall not
be earlier than the date such notice is given) the obligation of (A) the Banks
in the case of such notice given by the Administrative Agent or (B) such Bank in
the case of such notice given by such Bank to allow the Borrower to select,
convert to or renew a Euro-Rate Option shall be suspended until the
Administrative Agent shall have later notified the Borrower or such Bank shall
have later notified the Administrative Agent, of the Administrative Agent's or
such Bank's, as the case may be, determination (which determination shall be
conclusive absent manifest error) that the circumstances giving rise to such
previous determination no longer exist. If at any time the Administrative Agent
makes a determination under subsection (a) or (b) of this Section 4.04 and the
Borrower has previously notified the Administrative Agent of its selection of,
conversion to or renewal of a Euro-Rate Option and such Interest Rate Option has
not yet gone into effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Base Rate Option otherwise
available with respect to such Loans. If any Bank notifies the Administrative
Agent of a determination under subsection (b) of this Section 4.04, the Borrower
shall, subject to the Borrower's indemnification obligations under Section
5.06(b), as to any Loan of the Bank to which a Euro-Rate Option applies, on the
date specified in such notice either convert such Loan to the Base Rate Option
otherwise available with respect to such Loan or prepay such Loan in accordance
with Section 5.04 hereof. Absent due notice from the Borrower of conversion or
prepayment such Loan shall automatically be converted to the Base Rate Option
otherwise available with respect to such Loan upon such specified date.
4.05 Selection of Interest Rate Options. If the Borrower fails to
----------------------------------
select a new Interest Period to apply to any Borrowing Tranche of Loans under
the Euro-Rate Option at the expiration of an existing Interest Period applicable
to such Borrowing Tranche in accordance with the provisions of Section 4.02, the
Borrower shall be deemed to have converted such Loan or portion thereof to the
Base Rate Option otherwise available with respect to such Loans, commencing upon
the last day of the existing Interest Period. If an Event of Default shall
occur and be continuing, the Administrative Agent may in its discretion limit
the Borrower to the Base Rate Option hereunder.
ARTICLE V
PAYMENTS
--------
5.01 Payments. All payments and prepayments to be made in respect of
--------
principal, interest, Administrative Agent's Fee or other fees or amounts due
from the Borrower hereunder shall be payable prior to 11:00 A.M. (Pittsburgh
time) on the date when due without
36
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without setoff, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue. Such
payments shall be made to the Administrative Agent at the Principal Office for
the ratable accounts of the Banks with respect to the Loans in U.S. Dollars and
in immediately available funds, and the Administrative Agent shall promptly
distribute such amounts to the Banks in immediately available funds, provided
that in the event payments are received by 11:00 A.M. (Pittsburgh time) by the
Administrative Agent with respect to the Loans and such payments are not
distributed to the Banks on the same day received by the Administrative Agent,
the Administrative Agent shall pay the Banks the Federal Funds Effective Rate
with respect to the amount of such payments for each day held by the
Administrative Agent and not distributed to the Banks. The Administrative
Agent's and each Bank's statement of account, ledger or other relevant record
shall, in the absence of manifest error, be conclusive as the statement of the
amount of principal of and interest on the Loans and other amounts owing under
this Agreement and shall be deemed an "account stated."
5.02 Pro Rata Treatment of Banks. Each borrowing, and each selection
---------------------------
of, conversion to or renewal of any Interest Rate Option and each payment or
prepayment by the Borrower with respect to principal, interest or other fees or
amounts due from the Borrower hereunder to the Banks with respect to the Loans,
shall (except as provided in Section 4.04(b) [Euro-Rate Unascertainable],
5.04(b) [Voluntary Prepayments] or 5.06(a) [Additional Compensation in Certain
Circumstances] hereof) be made in proportion to the Loans outstanding from each
Bank.
5.03 Interest Payment Dates. Interest on Loans to which the Base
----------------------
Rate Option applies shall be due and payable in arrears on the first Business
Day of each April, July, October and January after the date hereof and on the
Expiration Date or upon acceleration of the Notes. Interest on Loans to which a
Euro-Rate Option applies shall be due and payable on the last day of each
Interest Period for those Loans, and if any such Interest Period is longer than
three months, also on the last day of every third month during such period.
5.04 Voluntary Prepayments.
---------------------
(a) The Borrower shall have the right at its option from time
to time to prepay the Loans in whole or part without premium or penalty (except
as provided in subsection (b) below or in Section 5.06 hereof):
(i) at any time with respect to any Loan to which the
Base Rate Option applies,
(ii) on the last day of the applicable Interest Period
with respect to Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any Bank
pursuant to Section 4.04(b) [Euro-Rate Unascertainable] hereof with respect to
any Loan to which a Euro-Rate Option applies.
37
Whenever the Borrower desires to prepay any part of the Loans, it
shall provide a prepayment notice to the Administrative Agent at least one (1)
Business Day prior to the date of prepayment of Loans setting forth the
following information:
(y) the date, which shall be a Business Day, on which the
proposed prepayment is to be made; and
(z) the total principal amount of such prepayment, which
shall not be less than $5,000,000.
All prepayment notices shall be irrevocable. The principal amount of
the Loans for which a prepayment notice is given, together with interest on such
principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made. Except as
provided in Section 4.04(b), if the Borrower prepays a Loan but fails to specify
the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment
shall be applied first to Loans to which the Base Rate Option applies, and then
to Loans to which the Euro-Rate Option applies. Any prepayment hereunder shall
be subject to the Borrower's obligation to indemnify the Banks under Section
5.06(b).
(b) In the event any Bank gives notice under Section 4.04(b)
[Euro-Rate Unascertainable] or Section 5.06(a) [Additional Compensation in
Certain Circumstances] hereof, the Borrower shall have the right, with the
consent of the Administrative Agent, which shall not be unreasonably withheld,
to: (y) prepay the Loans of such Bank, in whole together with all interest
accrued thereon and thereby permanently and irrevocably terminate the Commitment
of such Bank, or (z) replace such Bank, so long as, in the case of (y) or (z),
such replacement or prepayment occurs within ninety (90) days after receipt of
such Bank's notice under Section 4.04(b) or 5.06(a), provided the Borrower shall
also pay to such Bank in the case of either the foregoing (y) or (z) at the time
of such prepayment or replacement any amounts required under Section 5.06 and
accrued Commitment Fees due on such amount and all other costs, fees and any
amounts due to such Bank being prepaid or replaced.
5.05 Mandatory Prepayments.
---------------------
(a) Sale of Assets. It is understood and acknowledged that,
--- --------------
within five (5) Business Days of either any dissolution or winding up in a
transaction or series of related transactions authorized by Section 8.02(f)(ii)
or of any sale of assets or related sales of assets authorized by Section
8.02(g) hereof with Net Sale Proceeds in excess of $1,000,000 (in either case a
"Qualifying Asset Sale"), the Borrower shall make a mandatory prepayment of
principal on the Revolving Credit Loans, together with accrued interest thereon
plus any amounts required under Section 5.06. At such time as the aggregate Net
Sale Proceeds from all Qualifying Asset Sales pursuant to Section 8.02(f)(ii) or
Section 8.02(g) exceed $15,000,000 during the period from and after the Closing
Date through and including the date of determination, then any Net Sale Proceeds
from Qualifying Asset Sales in excess of such amount shall be used 50% to repay
the outstanding Loans and 50% to repay outstanding Indebtedness under the
Revolving Credit Loan Agreement. In addition to the foregoing mandatory
prepayment provisions, in the event
38
that any sale of assets will result in the Borrower or any Subsidiary receiving
"Net Cash Proceeds" which would otherwise become "Excess Proceeds" (as each of
those terms are defined in the Indenture), then at least sixty (60) days prior
to the date any Net Cash Proceeds would become Excess Proceeds under the
Indenture, the Borrower shall give written notice to the Administrative Agent
thereof setting forth the amount of Net Cash Proceeds at issue. Upon the
direction of the Administrative Agent with the consent of the Required Banks,
the Borrower shall make a permanent payment of principal on the Loans in the
amount of said Net Cash Proceeds. To the extent the aggregate principal amount
of Loans then outstanding which bear interest at the Base Rate Option is less
than the principal amount required to be prepaid, the Borrower may elect to
defer the prepayment until the next Interest Payment Date on its Loans that bear
interest at a Euro-Rate Option, by giving written notice to the Administrative
Agent of such election not later than four (4) Business Days after the asset
disposition in question, whereupon the due date of such prepayment shall
automatically be changed to such Interest Payment Date; provided, however, that
Net Cash Proceeds shall, notwithstanding the foregoing, be required to make the
prepayment specified in the prior sentence at least five days prior to the date
such Net Cash Proceeds would become Excess Proceeds under the Indenture.
(b) Application Among Interest Rate Options. All prepayments
--- ---------------------------------------
required pursuant to this Section 5.05 shall first be applied among the Interest
Rate Options to the principal amount of the Loans subject to a Base Rate Option,
then to Loans subject to Euro-Rate Option. In accordance with Section 5.06(b),
the Borrower shall indemnify the Banks for any loss or expense including loss of
margin incurred with respect to any such prepayments applied against Loans
subject to a Euro-Rate Option on any day other than the last day of the
applicable Interest Period.
5.06 Additional Compensation in Certain Circumstances.
------------------------------------------------
(a) Increased Costs or Reduced Return Resulting From Taxes,
--- -------------------------------------------------------
Reserves, Capital Adequacy Requirements, Expenses, Etc. If any Law, guideline
------------------------------------------------------
or interpretation or any change in any Law, guideline or interpretation or
application thereof by any Official Body charged with the interpretation or
administration thereof or compliance with any request or directive (whether or
not having the force of Law) of any central bank or other Official Body:
(i) subjects any Bank to any tax or changes the basis of
taxation with respect to this Agreement, the Notes, the Loans or payments
by the Borrower of principal, interest, or other amounts due from the
Borrower hereunder or under the Notes (except for taxes on the overall net
income of such Bank),
(ii) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against credits or commitments to
extend credit extended by, or assets (funded or contingent) of, deposits
with or for the account of, or other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or contingent) of, or
letters of credit,
39
other credits or commitments to extend credit extended by, any Bank, or (B)
otherwise applicable to the obligations of any Bank under this Agreement,
and the result under any of the foregoing clauses (i), (ii) or (iii) is to
increase the cost to, reduce the income receivable by, or impose any expense
(including loss of margin) upon any Bank with respect to this Agreement, the
Notes or the making, maintenance or funding of any part of the Loans (or, in the
case of any capital adequacy or similar requirement, to have the effect of
reducing the rate of return on any Bank's capital, taking into consideration
such Bank's customary policies with respect to capital adequacy) by an amount
which such Bank in its sole discretion deems to be material, such Bank shall
from time to time notify the Borrower and the Administrative Agent of the amount
determined in good faith (using any averaging and attribution methods employed
in good faith) by such Bank (which determination shall be conclusive absent
manifest error) to be necessary to compensate such Bank for such increase in
cost, reduction of income or additional expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due
and payable by the Borrower to such Bank ten (10) Business Days after such
notice is given.
(b) Indemnity. In addition to the compensation required by
--- ---------
subsection (a) of this Section 5.06, the Borrower shall indemnify each Bank
against all liabilities, losses or expenses (including loss of margin, any loss
or expense incurred in liquidating or employing deposits from third parties and
any loss or expense incurred in connection with funds acquired by a Bank to fund
or maintain Loans subject to the Euro-Rate Option) which such Bank sustains or
incurs as a consequence of any:
(i) payment, prepayment, conversion or renewal of any Loan to
which the Euro-Rate Option applies on a day other than the last day of the
corresponding Euro-Rate Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic and whether or not such payment
or prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any notice relating to Loan
Requests under Section 2.03 or Section 4.02 or prepayments under Section 5.04,
or
(iii) Event of Default by the Borrower in the performance or
observance of any covenant or condition contained in this Agreement or any other
Loan Document, including without limitation any failure of the Borrower to pay
when due (by acceleration or otherwise) any principal, interest, or any other
amount due hereunder.
If any Bank sustains or incurs any such loss or expense it shall from
time to time notify the Borrower of the amount determined in good faith by such
Bank (which determination shall be conclusive absent manifest error and may
include such assumptions, allocations of costs and expenses and averaging or
attribution methods as such Bank shall deem reasonable) to be necessary to
indemnify such Bank for such loss or expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such
40
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans, subject
to the Euro-Rate Option provided for herein (excluding, however, the Applicable
Percentage Over Euro-Rate included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Bank) which would have accrued to
such Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder. Such amount shall be due and payable by the
Borrower to such Bank ten (10) Business Days after such notice is given.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
6.01 Representations and Warranties. The Borrower represents and
------------------------------
warrants to the Agents and each of the Banks as follows:
(a) Organization and Qualification. The Borrower, each
--- ------------------------------
Restricted Subsidiary of the Borrower and each Excluded Entity in which a
Restricted Investment has been made are duly organized, validly existing and in
good standing under the laws of their respective jurisdiction of organization;
the Borrower, each Restricted Subsidiary of the Borrower and each Excluded
Entity in which a Restricted Investment has been made have the power to own or
lease their properties and to engage in the business they presently conduct or
propose to conduct; and the Borrower and each Subsidiary of the Borrower are
duly qualified as a foreign corporation, limited liability company or
partnership and in good standing in each jurisdiction listed on Schedule 6.01(a)
hereto and in all other jurisdictions where the property owned or leased by them
or the nature of the business transacted by them or both makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on the Borrower or any Subsidiary.
(b) [Intentionally Omitted].
---------------------
(c) Excluded Entities; Subsidiaries. Schedule 6.01(c)
--- ------------------------------- ----------------
attached hereto states (i) the name of each of the Borrower's Restricted
Subsidiaries and each Excluded Entity in which a Restricted Investment has been
made, (ii) in the case of each Corporate Subsidiary or Excluded Entity which is
a corporation, its jurisdiction of incorporation, its authorized capital stock,
the issued and outstanding shares (referred to herein as the "Corporate Shares")
and the owners thereof, (iii) in the case of each Partnership Subsidiary or
Excluded Entity which is a partnership, the jurisdiction in which it is
organized, the type of organization (limited or general partnership) and the
owners of its partnership interests (the "Partnership Interests"), and (iv) in
the case of each Subsidiary or Excluded Entity which is a limited liability
company, the jurisdiction in which it is organized, its authorized member
interests, the issued and outstanding member interests (the "Member Interests")
and the owners thereof. The Borrower and each Subsidiary have good and valid
title to all of the Corporate Shares, Partnership Interests or Member Interests
they purport to own, free and clear in each case of any Lien other than under
41
the Loan Documents. All Corporate Shares, Partnership Interests and Member
Interests have been validly issued. All Corporate Shares are fully paid and
nonassessable. There are no options, warrants or other rights outstanding to
purchase any Member Interests, Corporate Shares or Partnership Interests except
as indicated on Schedule 6.01(c).
----------------
(d) Power and Authority. Each Loan Party has full power to
--- -------------------
enter into, execute, delivery and carry out this Agreement, the other Loan
Documents to which it is a party, to incur the Indebtedness contemplated by the
Loan Documents and to perform its obligations under the Loan Documents to which
it is a party and all such actions have been duly authorized by all necessary
proceedings on its part.
(e) Validity and Binding Effect. This Agreement has been duly
--- ---------------------------
executed and delivered by each Loan Party that is a party hereto, and each other
Loan Document, when duly executed and delivered by each Loan Party which is a
party thereto, will have been duly executed and delivered by such Loan Party.
This Agreement and each other Loan Document delivered by the Loan Parties
pursuant to the provisions hereof will constitute legal, valid and binding
obligations of the Loan Parties thereto, enforceable against such Loan Party in
accordance with their respective terms, except to the extent that (i)
enforceability of any of the foregoing Loan Documents may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance or by general equitable principles and (ii) the
exercise by the Banks of their rights with respect to the Collateral would be
subject to the prior approval of health care regulatory authorities.
(f) No Conflict. Neither the execution and delivery of this
--- -----------
Agreement or the other Loan Documents by the Loan Parties nor the consummation
of the transactions herein or therein contemplated or compliance with the terms
and provisions hereof or thereof by them will conflict with, constitute a
default under or result in any breach of (i) the terms and conditions of the
certificate of incorporation, by-laws or other organizational documents of any
Loan Party or (ii) of any Law or of any material agreement or instrument or
order, writ, judgment, injunction or decree to which any Loan Party is a party
or by which it is bound or to which it is subject, or result in the creation of
enforcement of any Lien, charge or encumbrance whatsoever upon any property (now
or hereafter acquired) of any Loan Party (other than Liens granted under the
Loan Documents).
(g) Litigation. Except as previously disclosed to the
--- ----------
Administrative Agent in that certain letter dated January 2, 1996 there are no
actions, suits, proceedings or investigations pending or, to the knowledge of
the Borrower, threatened against the Borrower or any Subsidiary of the Borrower
at law or equity before any Official Body which individually or in the aggregate
would constitute a Material Adverse Change. Neither the Borrower nor any
Subsidiary of the Borrower is in violation of any order, writ, injunction or any
decree of any Official Body which would constitute a Material Adverse Change.
(h) Title to Properties. The Borrower and each Subsidiary of
--- -------------------
the Borrower have good and marketable title to or valid leasehold interest in
all material properties,
42
assets and other rights which they purport to own or lease or which are
reflected as owned or leased on their respective books and records, free and
clear of all Liens and encumbrances except Permitted Liens, and subject to the
term and conditions of the applicable leases. All material leases of real
property are in full force and effect without the necessity for any consent
which has not previously been obtained for the consummation of the transaction
contemplated hereby.
(i) Financial Statements.
--- --------------------
(i) Historical Statements.
--- ---------------------
The Borrower has delivered to the Administrative Agent
copies of its audited consolidated year-end financial statements for and as of
the end of the fiscal years ended December 31, 1996, 1997 and the unaudited
consolidated statements for the fiscal quarters ending on March 31, 1998, June
30, 1998 and September 30, 1998 (collectively the "Historical Statements"). The
Historical Statements were compiled from the books and records maintained by the
Borrower's management, fairly present the consolidated financial condition of
the Loan Parties (which were Loan Parties as of the date of the respective
Historical Statements) as of their dates and the results of operations for the
fiscal periods then ended and have been prepared in accordance with GAAP
consistently applied, subject (in the case of the interim statements) to normal
year-end audit adjustments.
(ii) Accuracy of Financial Statements. Neither the
---- --------------------------------
Borrower nor any Subsidiary of Borrower has any liabilities, contingent or
otherwise, or material forward or long-term commitments that are not disclosed
in the Historical Statements or in the notes thereto or that are required to be
disclosed under GAAP, and except as disclosed therein there are no unrealized or
anticipated losses from any commitments of the Borrower or any Subsidiary which
may cause a Material Adverse Change. Since December 31, 1997, no Material
Adverse Change has occurred; provided, however, that with the written approval
of the Required Banks, express disclosures to the Banks by the Borrower in the
reports provided by the Borrower to the Banks, pursuant to Section 8.03 hereof,
shall be deemed to be an update and an exception to the representation made in
the foregoing portion of this sentence.
(iii) Projections. The Borrower has delivered to the
----- -----------
Administrative Agent financial projections of the Borrower and its Subsidiaries
prepared on a combined pro-forma basis for the two fiscal years ending September
30, 1998 and September 30, 1999 and for the fiscal quarter of October 1 through
December 31, 1999 (the "Financial Projections") derived from various assumptions
of the Borrower's management. The Financial Projections represent a reasonable
range of possible results in light of the history of the business, present and
foreseeable conditions and the intentions of the management of the Borrower. The
Financial Projections accurately reflect the liabilities of the Borrower and its
Subsidiaries upon consummation of the transactions contemplated hereby as of the
Closing Date.
(j) Margin Stock. Neither the Borrower nor any Subsidiary
--- ------------
engages or intends to engage principally, or as one of its important activities,
in the business of extending credit for the purpose, immediately, incidentally
or ultimately, of purchasing or carrying margin stock (within the meaning of
Regulation U). No part of the proceeds of any Loan has been or
43
will be used, immediately, incidentally or ultimately, to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock or to refund Indebtedness originally incurred for such
purpose, or for any purpose which entails a violation of or which is
inconsistent with the provisions of the regulations of the Board of Governors of
the Federal Reserve System.
(k) Full Disclosure. Neither this Agreement nor any other
--- ---------------
Loan Document contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading considered as a whole; provided that any information provided after
the date hereof shall be deemed to supersede any prior inconsistent information.
There is no fact known to the Borrower or any Subsidiary which materially
adversely affects the business, property, assets, financial condition, results
of operations or prospects of the Borrower or any Material Subsidiary, which:
(i) prior to or at the date hereof, has not been set forth in the Agreement or
in the certificates, statements, agreements or other documents furnished in
writing to the Administrative Agent and the Banks in connection with the
transactions contemplated hereby or in the Borrower's public filings with the
Securities and Exchange Commission, or (ii) following the date hereof and with
the written approval of the Required Banks, has not been set forth in other
documents furnished in writing to the Administrative Agent and the Banks.
(l) Taxes. All material federal, state, local and other tax
--- -----
returns required to have been filed with respect to the Borrower or any
Subsidiary have been filed and payment or adequate provision has been made for
the payment of all taxes, fees, assessments and other governmental charges which
have or may become due pursuant to said returns or to assessments received
except to the extent that such taxes, fees, assessments and other charges are
being contested in good faith by appropriate proceedings diligently conducted
and for which such reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made. As of the date hereof, there are no
agreements or waivers extending the statutory period of limitations applicable
to any federal income tax return of the Borrower or any Subsidiary for any
period.
(m) Consents and Approvals. Except as may be disclosed by the
--- ----------------------
Borrower to the Administrative Agent pursuant to Section 8.01(p), no consent,
approval, exemption, order or authorization of, or a registration or filing with
any Official Body or any other person is required by any Law or any agreement in
connection with the execution, delivery and carrying out of this Agreement, or
the other Loan Documents by any Loan Party, all of which have been obtained or
made; provided, however, that it is acknowledged that consent of health care
regulatory authorities issuing any licenses or regulating any health care
facilities may be required if the Administrative Agent on behalf of the Banks
exercises the rights and remedies in respect of the Pledged Collateral and such
exercise of remedies results in or constitutes an assignment of any health care
license issued by a health care regulatory authority or constitutes a change of
control with respect to the ownership of a health care facility.
44
(n) Compliance With Instruments. Neither the Borrower nor any
--- ---------------------------
Subsidiary is in violation of (i) any term of its certificate of incorporation,
by-laws, or other organizational documents or (ii) any material agreement or
instrument to which it is a party or by which it or any of its properties may be
subject or bound where such violation would constitute a Material Adverse
Change.
(o) Patents, Trademarks, Copyrights, Etc. The Borrower and
--- -------------------------------------
each Subsidiary owns or possesses all the material patents, trademarks, service
marks, trade names, copyrights and other intellectual property rights necessary
to own and operate its properties and to carry on its business as presently
conducted and planned to be conducted by the Borrower and each Subsidiary,
without known conflict with the rights of others.
(p) Security Interests in the Collateral. The Liens and
--- ------------------------------------
security interests granted to the Collateral Agent for the benefit of the Banks
pursuant to the Pledge Agreements, the Patent, Trademark and Copyright Security
Agreement, the Security Agreement, the First Mortgages, the Mortgages and
Leasehold Mortgages in the UCC Collateral constitute, and will continue to
constitute, Prior Security Interests under the Uniform Commercial Code as in
effect in each applicable jurisdiction (the "Uniform Commercial Code") or valid
first priority Liens under other applicable Law entitled to all the rights,
benefits and priorities provided by the Uniform Commercial Code or such Law to
the fullest extent permitted by applicable law, except that the security
interests in the Collateral under the Mortgages and Leasehold Mortgages may be
subordinated to the security interests granted to certain of the Lessor Lenders
or Owned Facility Lenders, as indicated on Schedule 6.01(aa) and, except in the
case of the Collateral other than Pledged Collateral, subject to Permitted
Liens. Upon the filing of financing statements relating to said security
interests in each office and in each jurisdiction where required in order to
perfect the security interests described above, recordation of the Patent,
Trademark and Copyright Security Agreement in the United States Patent and
Trademark Office (and, to the extent of any Collateral consisting of copyrights,
in the United States Copyright Office), and taking possession of the stock
certificates or certificates of ownership of member interests in a limited
liability company, as the case may be, evidencing the Pledged Collateral which
constitutes stock of a corporation or certificated member interests of a limited
liability company, as the case may be, all such action as is necessary or
advisable to establish such rights of the Collateral Agent will have been taken,
and there will be upon execution and delivery of the Patent, Trademark and
Copyright Security Agreement, the Security Agreement, the First Mortgages, the
Pledge Agreements, Mortgages and Leasehold Mortgages, such filings, and such
taking of possession no necessity for any further action in order to preserve,
protect and continue such rights, except for maintaining possession of such
certificates and filing continuation statements with respect to such financing
statements within six (6) months prior to each five-year anniversary of the
filing of such financing statements. Any expenses in connection with each such
action have been or will be paid by the Borrower. It is acknowledged that the
exercise by the Banks of their rights and remedies in respect of the Pledged
Collateral which would result in or constitute any assignment of any license
issued by a health care regulatory authority or any change of control with
respect to a health care facility may be subject to the prior approval of such
health care regulatory authorities.
45
(q) First Mortgage Liens. The Liens granted to the Collateral
--- --------------------
Agent for the benefit of the Banks pursuant to the First Mortgages constitute a
valid first priority Lien under applicable law, subject only to Permitted Liens.
All such action as will be necessary or advisable to establish such Lien of the
Collateral Agent and its priority as described in the preceding sentence will be
taken at or prior to the time required for such purpose, and there will be as of
the date of execution and delivery of the First Mortgages not necessity for any
further action in order to protect, preserve and continue such Lien and such
priority.
(r) Status of the Pledged Collateral. All the shares of
--- --------------------------------
capital stock, partnership interests, or member interests in a limited liability
company, as the case may be, included in the Pledged Collateral to be pledged
pursuant to the Pledge Agreements are or will be upon issuance duly authorized
and validly issued. All shares of capital stock included in the Pledged
Collateral are or will be upon issuance fully paid and nonassessable. All of the
Pledged Collateral is owned beneficially and of record by the pledgor free and
clear of any Lien or restriction on transfer, except as otherwise provided in
the Pledge Agreements and except as the right of the Collateral Agent and the
Banks to dispose of the Pledged Collateral may be limited by the Securities Act
of 1933, as amended, and the regulations promulgated by the Securities and
Exchange Commission thereunder and by applicable state securities laws. Except
as otherwise disclosed to the Banks, in writing, there are no shareholder or
other agreements or understandings with respect to the Pledged Collateral.
(s) Insurance. The insurance policies and bonds to which the
--- ---------
Borrower or any Subsidiary is a party provide adequate coverage from reputable
and financially sound insurers in amounts sufficient to insure the assets and
risks of the Borrower and its Subsidiaries in accordance with prudent business
practice in the industry of the Borrower and its Subsidiaries, including self-
insurance to the extent customary, and such policies and bonds are valid and in
full force and effect.
(t) Compliance with Laws. The Borrower and its Subsidiaries
--- --------------------
are in compliance in all material respects with all applicable Laws (other than
Environmental Laws which are specifically addressed in subsection (y)) in all
jurisdictions in which the Borrower or any Subsidiary is presently or will be
doing business except where the failure to do so would not constitute a Material
Adverse Change.
(u) Material Contracts, Licenses, Permits and Approvals.
--- ---------------------------------------------------
(A) As of the date hereof, Schedule 6.01(u) hereto lists
----------------
the following contracts relating to the business operations of the Borrower and
its Subsidiaries: (i) all employee benefit plans, employment agreements where
the compensation paid by the Borrower or any Subsidiary exceeds $250,000 in any
fiscal year, collective bargaining agreements and labor contracts (the "Labor
Contracts"), (ii) all written provider or similar agreements (the "Provider
Agreements") pursuant to which the Borrower and its Subsidiaries have received
or may claim any entitlement to receive reimbursement from or as a result of (1)
Medicaid, Medicare or Blue Cross programs, or (2) any other public or private
reimbursement programs where the payments received by the Borrower or any
Subsidiary
46
exceeded or are expected to exceed $6,000,000 in the current fiscal year, (iii)
all leases of real property where the payments made by the Borrower or any
Subsidiary in the current fiscal year exceed or are expected to exceed $250,000,
(iv) any contract or series of contracts with the same person for the furnishing
or purchase of machinery, equipment, goods or services, where the payments made
by the Borrower or any Subsidiary exceeded or are expected to exceed $1,000,000
in the aggregate in the current fiscal year; (v) all management contracts
pursuant to which the Borrower or a Subsidiary provides management services to
any other person where the payments received or expected to be received by the
Borrower or any Subsidiary exceed $500,000 in the current fiscal year; and (vi)
all other material contracts filed as exhibits to any report filed by the
Borrower with the SEC during the past twelve months. All contracts listed on
Schedule 6.01(u) and any Provider Agreements which provide for annual payments
in excess of $6,000,000 which are not listed on Schedule 6.01(u) are valid,
binding and enforceable upon the Borrower or its Subsidiaries, as the case may
be, and, to the best knowledge of the Borrower, each of the other parties
thereto in accordance with their respective terms and there is no default
thereunder, to the knowledge of the Borrower and of its Subsidiaries, with
respect to parties other than the Borrower or any of its Subsidiaries. There are
no patient care agreements with patients or any other person or organization
which deviate in such a material respect from the standard patient care forms
used by the Borrower or any of its Subsidiaries as to constitute a Material
Adverse Change.
(B) Except as set forth on Schedule 6.01(u), the Borrower
----------------
and each of its Subsidiaries has all material accreditations, authorizations,
approvals, certificates of need, consents, licenses, permits and qualifications
(collectively, "Approvals") required (i) for them to construct, acquire, own,
manage, lease and/or operate their facilities and services, (ii) for them to
receive payment and reimbursement from any patient or third party payor, to the
extent in the case of (i) and (ii) such Approvals are presently required. The
Borrower and each of its Subsidiaries have all other material Approvals required
for the lawful operation of their businesses. All material Approvals of the
Borrower and each of its Subsidiaries are in full force and effect and have not
been amended or otherwise modified (except for modifications which would not
have a material adverse effect upon the Borrower or any Subsidiary) rescinded,
revoked or assigned, and no notice has been received of any violation of
applicable Laws or any refusal to renew any Approval which could reasonably be
expected to cause any of such Approvals to be modified, rescinded or revoked
(except for modifications, rescissions or revocations which would not have a
material adverse effect upon the Borrower and its Subsidiaries taken as a
whole). The continuation, validity and effectiveness of all such Approvals will
be in no way be adversely affected by the transactions contemplated by this
Agreement. Neither the Borrower nor any of its Subsidiaries knows of any reason
why any of them will not be able to maintain all material Approvals necessary or
appropriate to construct, own, lease, manage and operate all of their facilities
and to otherwise conduct their businesses as now conducted and presently
proposed to be conducted. There are no deficiencies to the conditions for
participation by the Borrower or any Subsidiary in any Medicare, Medicaid or
other reimbursement programs which would preclude such participation.
(v) Investment Companies; Public Utility Holding Company. The
--- ----------------------------------------------------
Borrower is not an "investment company" registered or required to be registered
under the
47
Investment Company Act of 1940 or under the "control" of an "investment company"
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control." The Borrower is not
a "holding company" nor a "subsidiary" or "affiliate" of any Person that is a
"holding company" as those terms are defined in the Public Utility Holding
Company Act of 1935.
(w) Plans and Benefit Arrangements.
--- ------------------------------
(i) The Borrower and each member of the ERISA Group are
in compliance in all material respects with any applicable provisions of ERISA
with respect to all Benefit Arrangements, Plans and Multiemployer Plans. There
has been no Prohibited Transaction with respect to any Benefit Arrangement or
any Plan or, to the best knowledge of the Borrower, with respect to any
Multiemployer Plan or Multiple Employer Plan, which could result in any material
liability of the Borrower or any other member of the ERISA Group. The Borrower
and all members of the ERISA Group have made when due any and all payments
required to be made under any agreement relating to a Multiemployer Plan or a
Multiple Employer Plan or any law pertaining thereto. With respect to each Plan
and Multiemployer Plan, the Borrower and each member of the ERISA Group (i) have
fulfilled in all material respects their obligations under the minimum funding
standards of ERISA, (ii) have not incurred any liability to the PBGC and (iii)
have not had asserted against them any penalty for failure to fulfill the
minimum funding requirements of ERISA.
(ii) To the best of the Borrower's knowledge, each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits
thereunder when due.
(iii) Neither the Borrower nor any other member of the
ERISA Group has instituted or intends to institute proceedings to terminate any
Plan.
(iv) No event requiring notice to the PBGC under Section
302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with
respect to any Plan, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to be made to
any Plan.
(v) The aggregate actuarial present value of all benefit
liabilities (whether or not vested) under each Plan, determined on a plan
termination basis, as disclosed in, and as of the date of, the most recent
actuarial report for such Plan, does not exceed the aggregate fair market value
of the assets of such Plan by an amount in excess of $250,000.
(vi) Neither the Borrower nor any other member of the
ERISA Group has incurred or reasonably expects to incur any material withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any other member of the ERISA Group has been notified
by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan
or Multiple Employer Plan has been terminated within the meaning of Title IV of
ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan or
Multiple Employer Plan is reasonably expected to be reorganized or terminated,
within the meaning of Title IV of ERISA.
48
(vii) To the extent that any Benefit Arrangement is
insured, the Borrower and all members of the ERISA Group have paid when due all
premiums required to be paid for all periods. To the extent that any Benefit
Arrangement is funded other than with insurance, the Borrower and all members of
the ERISA Group have made when due all contributions required to be paid for all
periods.
(x) Employment Matters. The Borrower and each of its
--- ------------------
Subsidiaries are in compliance with the Labor Contracts and all applicable
federal, state and local labor and employment Laws including, but not limited
to, those related to equal employment opportunity and affirmative action, labor
relations, minimum wage, overtime, child labor, medical insurance continuation,
worker adjustment and relocation notices, immigration controls and worker and
unemployment compensation, where the failure to comply would constitute a
Material Adverse Change. There are no outstanding grievances, arbitration awards
or appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at
facilities of the Borrower or any of its Subsidiaries which in any case would
constitute a Material Adverse Change. The Borrower has delivered to the
Administrative Agent true and correct copies of each of the Labor Contracts in
effect as of the date hereof.
(y) Employment Matters Employment Matters. Except as
--- -------------------------------------
disclosed on Schedule 6.01(y) hereto and except for matters which would not
----------------
exceed $5,000,000 in the aggregate:
(i) Neither Borrower nor any of its Subsidiaries has
received any Environmental Complaint, whether directed or issued to Borrower or
any of its Subsidiaries or relating or pertaining to any prior owner, operator
or occupant of the Property.
(ii) To the knowledge of Borrower and each of its
Subsidiaries, no activity of the Borrower or any of its Subsidiaries at the
Property is being or has been conducted in violation of any Environmental Law or
Required Environmental Permit and to the knowledge of Borrower and each of its
Subsidiaries no activity of any prior owner, operator or occupant of the
Property was conducted in violation of any Environmental Law.
(iii) To the knowledge of Borrower and each of its
Subsidiaries, there are no Regulated Substances present on, in, under or
emanating from, or emanating to, the Property or any portion thereof which
result in Contamination.
(iv) To the knowledge of Borrower and each of its
Subsidiaries, Borrower and each of its Subsidiaries have all Required
Environmental Permits and all such Required Environmental Permits are in full
force and effect.
(v) To the knowledge of Borrower and each of its
Subsidiaries, Borrower and each of its Subsidiaries have submitted all Required
Environmental Notices which they are required to submit to an Official Body and
Borrower and each of its Subsidiaries maintain all Required Environmental
Notices which they are required to maintain.
49
(vi) To the knowledge of Borrower and each of its
Subsidiaries, no structures, improvements, equipment, fixtures, impoundments,
pits, lagoons or aboveground or underground storage tanks located on the
Property contain or use, except in compliance with Environmental Law and
Required Environmental Permits, Regulated Substances or otherwise are operated
or maintained except in compliance with Environmental Law and Required
Environmental Permits. To the knowledge of Borrower and each of its
Subsidiaries, no structures improvements, equipment, fixtures, impoundments,
pits, lagoons or aboveground or underground storage tanks of prior owners,
operators or occupants of the Property contained or used, except in compliance
with Environmental Law, Regulated Substances or otherwise were operated or
maintained by any such prior owner, operator or occupant except in compliance
with Environmental Law.
(vii) To the knowledge of Borrower and each of its
Subsidiaries, no facility or site to which Borrower or any of its Subsidiaries,
either directly or indirectly by a third party, has sent Regulated Substances
for storage, treatment, disposal or other management has been or is being
operated in violation of Environmental Law or pursuant to Environmental Law is
identified or proposed to be identified on any list of contaminated properties
or other properties which pursuant to Environmental Law are the subject of an
investigation, cleanup, removal, remediation or other response action by an
Official Body.
(viii) To the knowledge of Borrower and each of its
Subsidiaries, no portion of the Property is identified or proposed to be
identified on any list of contaminated properties or other properties which
pursuant to Environmental Law are the subject of an investigation or remediation
action by an Official Body, nor to Borrower's or any of its Subsidiary's
knowledge is any property adjoining or in the proximity of the Property
identified or proposed to be identified on any such lists.
(ix) To the knowledge of Borrower and each of its
Subsidiaries, no portion of the Property constitutes an Environmentally
Sensitive Area.
(x) No lien or other encumbrance authorized by
Environmental Law exists against the Property and neither Borrower nor any of
its Subsidiaries has reason to believe that such a lien or encumbrance may be
imposed.
(xi) To the knowledge of Borrower and each of its
Subsidiaries, there has been no material change in the environmental condition
(including but not limited to the presence of Contamination or the presence of
Regulated Substances in violation of Environmental Law) of any Property as
described in any Phase I Environmental Site Assessment report or similar report
regarding the environmental condition of such Property or the Borrower's or its
Subsidiaries' compliance with Environmental Law a copy of which Borrower has
provided to Agent, except for such changes which would result in the improvement
of the environmental condition of any such Property or the Borrower's or its
Subsidiaries compliance with Environmental Law.
(z) Senior Debt Status. The obligations of the Borrower
--- ------------------
under this Agreement and the Notes and the obligations of the Subsidiaries of
Borrower under the
50
Guaranties do rank and will rank at least pari passu in priority of payment with
----------
all other Indebtedness of the Borrower or such Subsidiaries, as the case may be,
except Indebtedness of the Borrower or its Subsidiaries to the extent secured by
Permitted Liens. The obligations of the Borrower under this Agreement and the
Notes do not conflict with or violate the terms of the Indenture and the Loans
made under this Agreement to the Borrower constitute "Designated Senior
Indebtedness" as such term is defined in the Indenture. There is no Lien upon or
with respect to any of the properties or income of the Borrower or any of its
Subsidiaries which secures Indebtedness or other obligations of any person
except for Permitted Liens.
(aa) Matters Regarding Leased Facilities and Certain
---- -----------------------------------------------
Indebtedness of Subsidiaries.
----------------------------
(i) Indebtedness Related to Leased Facilities.
--- -----------------------------------------
Schedule 6.01(aa) describes each Leased Facility and with respect thereto: (1)
the Subsidiary Lessee which is the lessee thereof; (2) the Lessor thereof; (3)
the amount of Lessor Indebtedness secured by any assets of such Leased Facility;
(4) the Lessor Lender which is the obligee under such Lessor Indebtedness; (5)
any assets of the Subsidiary Lessee leasing such Leased Facility which relate to
such facility in which such Subsidiary Lessee has granted Liens in favor of the
Lessor (it is acknowledged that the Lessor has assigned such Liens to the Lessor
Lender) or Lessor Lender and confirmation that such Liens are Permitted Leased
Facility Liens and Permitted Liens; (6) the original maturity date of such
Lessor Indebtedness, without giving effect to subsequent amendments unless
permitted by this Agreement; (7) whether a Facility Purchase Option has been
granted as part of an Intercreditor Agreement between the Collateral Agent and
the Lessor Lender with respect to such Leased Facility; (8) whether the Lessor
Lender and Lessor have consented to the grant by the Subsidiary Lessee of a
Leasehold Mortgage, in favor of the Collateral Agent for the benefit of the
Banks and Liens on the assets of such Subsidiary Lessee (such Liens to be second
in priority to the Liens granted by such Subsidiary Lessee to such Lessor Lender
in such assets if such Subsidiary granted Liens in such assets to such Lessor
Lender) with respect to such Leased Facility; (9) whether the applicable Lessor
Lender has agreed to release its liens in the assets of the applicable
Subsidiary Lessee leasing such Leased Facility related to such facility; (10)
whether the applicable Lessor Lender has entered into a Non-Disturbance
Agreement; (11) whether the applicable Lessor Lender has entered into an
Intercreditor Agreement with the Collateral Agent; and (12) whether the
applicable Lessor Lender has entered into a Trustee Agreement with the
Collateral Agent.
(ii) Indebtedness Related to Subsidiary Owned Facilities.
---- ---------------------------------------------------
Schedule 6.01(aa) describes each Owned Facility and with respect thereto: (1)
-----------------
the Subsidiary Owner; (2) the amount of the Owned Facility Indebtedness, secured
by any assets of such Owned Facility; (3) the Owned Facility lender which is the
obligee under such Owned Facility Indebtedness; (4) the assets of the Subsidiary
Owner relating to such Owned Facility in which the Subsidiary Owner has granted
Liens in favor of such Owned Facility Lender and confirmation that such Liens
are Permitted Owned Facility Liens and Permitted Liens; (5) the original
maturity date of such Owned Facility Indebtedness, without giving effect to
subsequent amendments unless permitted by this Agreement; (6) whether a Facility
Purchase Option has been granted as part of an Intercreditor Agreement between
the Collateral Agent and the Owned
51
Facility Lender with respect to such Owned Facility; (7) whether the Owned
Facility Lender has consented to the grant by the Subsidiary Owner of a
Mortgage, in favor of the Collateral Agent for the benefit of the Banks and
Liens on the assets of such Subsidiary Owner (such Liens to be second in
priority to the Liens granted by such Subsidiary Owner to such Owned Facility
Lender in such assets if such Subsidiary Owner granted Liens in such assets to
such Owned Facility Lender) with respect to such Owned Facility; and (8) whether
the applicable Owned Facility Lender entered into an Intercreditor Agreement
with the Collateral Agent.
(iii) Other matters regarding Owned and Leased Real
----- ---------------------------------------------
Property. In addition to the Owned Facilities and the Leased Facilities,
-------- -----------------
Schedule 6.01(aa) sets forth a true and complete list of all other Property of
the Borrower and all other Property of each Subsidiary of the Borrower.
(bb) Mortgage and Leasehold Mortgage Liens. The Liens granted
---- -------------------------------------
to the Collateral Agent for the benefit of the Banks pursuant to the Mortgages
and the Leasehold Mortgages constitute valid Liens under applicable law having
priority over all other Liens except that if otherwise permitted by this
Agreement they may be subordinate to Liens in favor of the Owned Facility
Lenders and Lessor Lenders, as the case may be, and Schedule 6.01(aa) indicates
-----------------
if such Liens are subordinated. All such action as will be necessary or
advisable to establish such Liens of the Collateral Agent and its priority as
described in the preceding sentence will be taken at or prior to the time
required for such purpose, and there will be as of the date of execution and
delivery of the Mortgages and Leasehold Mortgages no necessity for any further
action in order to protect, preserve and continue such Liens and such priority.
Notwithstanding any provision of this Agreement to the contrary, to the extent a
Loan Party is required to execute and deliver an Intercreditor Agreement,
Leasehold Mortgage or Mortgage, as required by this Agreement, on or after the
Closing Date, such agreement shall be entered into by such Loan Party with the
Collateral Agent for the ratable benefit of the Banks and on a pari passu basis,
the Revolving Credit Loan Banks unless otherwise required by the Administrative
Agent.
(cc) Affiliate Transactions. Schedule 6.01(cc) hereto sets
---- ---------------------- -----------------
forth a true and complete list of all transactions between the Borrower or any
Subsidiary of the Borrower and MPN or any Affiliate of MPN.
(dd) Year 2000. The Borrower and its Subsidiaries have
---- ---------
reviewed the areas within their business and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the risk that certain computer applications used by the Borrower
or its Subsidiaries (or any of their respective material suppliers, customers or
vendors) may be unable to recognize and perform properly date-sensitive
functions involving dates prior to and after December 31, 1999 (the "Year 2000
Problem"). The Year 2000 Problem will not result in any Material Adverse Change.
(ee) Solvency. The Borrower and each other Loan Party is
---- --------
Solvent. As of the Closing Date and after giving effect to the transactions
contemplated by the Loan Documents and the Term Loan Documents, including all
Loans made under the Loan Documents and the Term Loan Documents, the Liens
granted by the Borrower and each other Loan Party in
52
connection therewith and the payment of all fees related thereto, the Borrower
and each other Loan Party will be Solvent.
6.02 Updates to Schedules. Should any of the information or
--------------------
disclosures provided on any of the Schedules attached hereto (other than
Schedules relating solely to representations and warranties made solely as of
the date expressly specified therein, which representations and warranties shall
be true and correct as of such specified date) become outdated or incorrect in
any material respect, the Borrower shall promptly provide the Administrative
Agent in writing with such revisions or updates to such Schedule as may be
necessary or appropriate to update or correct the same; provided, however that
no Schedule shall be deemed to have been amended, modified or superseded by any
such correction or update that would disclose the occurrence of an event or
condition which constitutes a Potential Default or Event of Default, nor shall
any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Required Banks, in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule.
ARTICLE VII
CONDITIONS OF LENDING
---------------------
The obligation of each Bank to make the Term Loans hereunder is
subject to the performance by the Borrower of its obligations to be performed
hereunder at or prior to the making of the Term Loans to the satisfaction of the
following conditions:
7.01 Loans.
-----
On the Closing Date:
(a) Officer's Certificate. The representations and warranties
--- ---------------------
of each of the Borrower contained in Article VI and in each of the other Loan
Documents shall be true and accurate on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date (except representations and warranties which relate solely to an
earlier date or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein), and all
conditions precedent herein and therein to the making of the Term Loans shall
have been satisfied, no Event of Default or Potential Default shall have
occurred and be continuing or shall exist; and there shall be delivered to the
Administrative Agent for the benefit of each Bank a certificate of each of the
Loan Parties, dated the Closing Date and signed by a Responsible Officer of each
of the Loan Parties, to each such effect.
(b) Secretary's Certificate. There shall be delivered to the
--- -----------------------
Administrative Agent for the benefit of each Bank a certificate dated the
Closing Date and signed by the Secretary or an Assistant Secretary of each of
the Loan Parties, certifying as appropriate as to:
53
(i) all action taken by each Loan Party in connection
with this Agreement and the other Loan Documents;
(i) the names of the officer or officers authorized to
sign this Agreement and the other Loan Documents and the true signatures of such
officer or officers and specifying the Authorized Officers permitted to act on
behalf of each Loan Party for purposes of this Agreement and the true signatures
of such officers, on which the Administrative Agent and each Bank may
conclusively rely; and
(ii) copies of its organizational documents, including
its certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, and limited liability company
agreement as in effect on the Closing Date certified by the appropriate state
official where such documents are filed in a state office together with
certificates from the appropriate state officials as to the continued existence
and good standing of each Loan Party in each state where organized or qualified
to do business; provided that each of the Loan Parties other than the Borrower
may, in lieu of delivering copies of the foregoing organizational documents and
good standing certificates, certify that such Loan Party is in good standing as
of the date hereof and that the organizational documents previously delivered by
the Loan Parties to the Administrative Agent remain in effect and have not been
amended.
(c) Delivery of Loan Documents. The Collateral Sharing
--- --------------------------
Agreement, Guaranty Agreement, Indemnity, First Mortgages, Notes, Patent,
Trademark and Security Agreement, Pledge Agreements, Intercompany Subordination
Agreement and Security Agreement shall have been duly executed and delivered to
the Collateral Agent for the benefit of the Banks, together with all appropriate
financing statements and (to the extent not previously delivered to the
Collateral Agent) appropriate stock powers and certificates evidencing the
Shares, the Partnership Interests and the LLC Interests.
(d) Opinion of Counsel. There shall be delivered to the
--- ------------------
Administrative Agent for the benefit of each Bank a written opinion of Powell,
Goldstein, Xxxxxx & Xxxxxx LLP, counsel for the Loan Parties (who may rely on
the opinions of such other counsel as may be acceptable to the Agent), dated the
Closing Date and in form and substance satisfactory to the Agent and its
counsel:
(i) as to the matters set forth in Exhibit 7.1.4; and
-------------
(ii) as to such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request.
(e) Legal Details. All legal details and proceedings in
--- -------------
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be in form and substance satisfactory to the Agents and
counsel for the Administrative Agent, and the Administrative Agent shall have
received all such other counterpart originals or certified or other copies of
such documents and proceedings in connection with such transactions, in form and
54
substance satisfactory to the Agents and said counsel, as the Agents or said
counsel may reasonably request.
(f) Payment of Fees. The Borrower shall have paid or caused
--- ---------------
to be paid to the Administrative Agent for itself and for the account of the
Banks to the extent not previously paid all fees accrued through the Closing
Date and the costs and expenses for which the Agents and the Banks are entitled
to be reimbursed.
(g) Environmental Audit. The Loan Parties shall cause to be
--- -------------------
delivered to the Administrative Agent a copy of all existing environmental audit
reports with respect to the skilled nursing facilities subject to the First
Mortgages. The environmental condition of the Loan Parties' and their
Subsidiaries' assets, as substantiated by such audit, shall be reasonably
satisfactory to the Administrative Agent in all respects.
(h) Consents. All material consents required to effectuate
--- --------
the transactions contemplated hereby as set forth on Schedule 6.01(m)(2) shall
have been obtained.
(i) Officer's Certificate Regarding MACs. Since September 30,
--- ------------------------------------
1998, no Material Adverse Change in the Borrower, or any of its Subsidiaries
shall have occurred; prior to the Closing Date, there shall have been no
material change in the management of any Loan Party or Subsidiary of any Loan
Party not previously disclosed to the Agents; and there shall have been
delivered to the Administrative Agent for the benefit of each Bank a certificate
dated the Closing Date and signed by a Responsible Officer of each Loan Party to
each such effect.
(j) No Violation of Laws. The making of the Loans and the
--- --------------------
issuance of the Letters of Credit shall not contravene any Law applicable to any
Loan Party or any of the Banks.
(k) No Actions or Proceedings. No action, proceeding,
--- -------------------------
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of, this Agreement, the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby or which, in the Administrative Agent's reasonable discretion, would
make it inadvisable to consummate the transactions contemplated by this
Agreement or any of the other Loan Documents.
(l) Insurance Policies; Certificates of Insurance;
--- ----------------------------------------------
Endorsements. The Loan Parties shall have delivered evidence acceptable to the
------------
Administrative Agent that adequate insurance in compliance with Section 8.01(c)
[Maintenance of Insurance] is in full force and effect and that all premiums
then due thereon have been paid, together with a certified copy of each Loan
Party's casualty insurance policy or policies evidencing coverage satisfactory
to the Administrative Agent, with additional insured, mortgagee and lender loss
payable special endorsements attached thereto in form and substance satisfactory
to the Administrative Agent and its counsel naming the Administrative Agent as
additional insured, mortgagee and lender loss payee.
55
(m) Title Certificate. The Loan Parties shall deliver title
--- -----------------
insurance certificates to the Collateral Agent for the benefit of the Banks,
issued by a title insurance company acceptable to the Administrative Agent and
certifying the name of the record owner, all existing mortgages, judgment liens
and tax liens encumbering the skilled nursing facilities subject to the First
Mortgages and a true and correct and complete legal description of the
applicable Loan Parties' fee simple title to all such owned real property of the
Loan Parties, as the case may be, and all improvements and all appurtenances
thereto.
(n) Filing. The Administrative Agent shall have received (1)
--- ------
a deposit sufficient for payment of all taxes, filing fees, recording fees or
similar charges required by any governmental authority for recordation or filing
necessary to perfect the Lien of the Collateral Agent for the benefit of the
Banks on the Collateral (or other arrangements with respect to such taxes, fees
and charges shall have been made by the Borrower to the satisfaction of the
Administrative Agent); and (2) evidence in a form acceptable to the
Administrative Agent that upon such recordation or filing and payment of such
taxes, filing fees, recording fees or similar charges, such Liens will
constitute a Prior Security Interest in favor of the Collateral Agent for the
benefit of the Banks in the case of the UCC Collateral, in the case of the First
Mortgages a valid and perfected first priority Lien.
(o) Amendment No. 18 to the Revolving Credit Agreement.
--- --------------------------------------------------
Simultaneously with the closing and effectiveness of this Agreement, the closing
of Amendment No. 18 to the Revolving Credit Agreement shall have occurred, and
the documentation of the revolving credit facility shall be satisfactory in form
and substance to the Agents.
(p) Lien and Judgment Searches. Borrower shall have delivered
--- --------------------------
to the Administrative Agent the results of a lien and judgment search
satisfactory in scope, form and substance to the Administrative Agent evidencing
that no Liens exist on the assets of the Borrower or any Subsidiary of the
Borrower, except for Permitted Liens.
(q) UCC Financing Statements. The Loan Parties shall have
--- ------------------------
delivered to the Administrative Agent all UCC-1 financing statements necessary
to perfect the Collateral Agent's Prior Security Interest in the Collateral.
(r) Closing Certificate. There shall be delivered to the
--- -------------------
Administrative Agent for the benefit of each Bank a certificate, dated as of the
date hereof and signed by a Responsible Officer of the Borrower, certifying as
to compliance with all financial covenants in the Credit Agreement and
containing calculations in sufficient detail to demonstrate such compliance.
Calculation of such pro-forma compliance shall be based upon the consolidated
balance sheet and income statement of the Borrower and its Subsidiaries as of
September 30, 1998 for the four quarters then ended and shall give effect to all
outstanding Indebtedness of the Loan Parties after giving effect to the closing
of this Agreement, the Revolving Credit Loan outstanding on the date hereof and
the making of the Loans hereunder. Such pro-forma covenants shall establish the
levels of interest rates and other fees hereunder, effective as of the date
hereof provided that, notwithstanding the above, until the next Delivery Date
following the
56
Closing Date, for the purpose of establishing the levels of interest rates, the
applicable interest rate shall be deemed to be Euro-Rate plus 2.25% and Base
Rate plus .75%.
(s) Projections. The Borrower shall have delivered to the
--- -----------
Administrative Agent financial projections of the Borrower and its Subsidiaries
prepared on a combined pro-forma basis for the two fiscal years ending September
30, 1998 and September 30, 1999 and for the fiscal quarter of October 1 through
December 31, 1999 (the "Financial Projections") derived from various assumptions
of the Borrower's management. The Borrower represents and warrants, by execution
of this Agreement, that: (i) the Financial Projections represent a reasonable
range of possible results in light of the history of the business, present and
foreseeable conditions and the intentions of the management of the Borrower, and
(ii) the Financial Projections accurately reflect the liabilities of the
Borrower and its Subsidiaries upon consummation of the transactions contemplated
by this Agreement, all outstanding loans under the Revolving Credit Agreement
and Indebtedness of the Borrower hereunder as of the Closing Date.
(t) Indenture Certificate. There shall be delivered to the
--- ---------------------
Administrative Agent for the benefit of each Bank a certificate, dated as of the
date hereof and signed by a Responsible Officer of the Borrower, (i) certifying
as to compliance with Section 1008 of the Indenture after giving effect to the
amount of loans outstanding under the Revolving Credit Agreement on the date
hereof and the $210,000,000 Term Loan hereunder to be made on the date hereof
and (ii) representing and warranting to the Agents and each of the Banks that
the Term Loans made on the date hereof or hereafter made to the Borrower under
the Revolving Credit Agreement will constitute "Designated Senior Indebtedness"
as such term is defined in the Indenture.
ARTICLE VIII
COVENANTS
---------
8.01 Affirmative Covenants. The Borrower covenants and agrees that
---------------------
until payment in full of the Loans and interest thereon, satisfaction of all of
the Borrower's other obligations hereunder and termination of the Commitments,
the Borrower shall comply at all times with the following affirmative covenants:
(a) Preservation of Existence, Etc. The Borrower shall, and
--- -------------------------------
shall cause each of its Subsidiaries to, maintain its corporate existence and
its qualification to do business as a foreign corporation and good standing in
each jurisdiction in which its ownership or lease of property or the nature of
its business makes such qualification necessary, except where the failure to be
so qualified or in such good standing would not constitute a Material Adverse
Change.
(b) Payment of Liabilities, Including Taxes, Etc. The
--- ---------------------------------------------
Borrower shall, and shall cause each of its Subsidiaries to, duly pay and
discharge all liabilities to which it is subject or which are asserted against
it, promptly as and when the same shall become due and payable, including all
taxes, assessments and governmental charges upon it or any of its properties,
assets, income or profits, prior to the date on which penalties attach thereto,
except to
57
the extent that such liabilities, including taxes, assessments or charges, are
being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made, but only to the
extent that failure to discharge any such liabilities would not result in any
additional liability which would adversely affect to a material extent the
financial condition of the Borrower and its Subsidiaries taken as a whole and
which would affect the Collateral.
(c) Maintenance of Insurance. The Borrower shall, and shall
--- ------------------------
cause each of its Subsidiaries to, insure its properties and assets against loss
or damage by fire and such other insurable hazards as such assets are commonly
insured (including fire, extended coverage, property damage, worker's
compensation, public liability and business interruption insurance) and against
other risks (including errors and omissions) in such amounts as similar
properties and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially sound
insurers, including self-insurance to the extent customary. At the request of
the Administrative Agent, the Borrower shall deliver to the Administrative Agent
certificates of insurance signed by the Borrower's independent insurance broker
describing and certifying as to the existence of the insurance on the Collateral
required to be maintained by this Agreement and other Loan Documents and a
summary schedule indicating all insurance then in force with respect to the
Borrower. Such policies of insurance shall contain special endorsements, which
shall (i) specify the Collateral Agent as additional insured, mortgagee and
lender loss payee as its interests may appear, regardless of any breach or
violation by the Borrower or its applicable subsidiary of any warranties,
declarations or conditions contained in such policies, (ii) provide, except in
the case of public liability insurance and workmen's compensation insurance,
that all insurance proceeds shall be adjusted and payable in accordance with the
terms of the applicable Mortgage or First Mortgage, and (iii) provide that no
cancellation of such policies shall be effective until at least thirty (30) days
after receipt by the Administrative Agent of written notice of such cancellation
or change. Any monies received by the Administrative Agent or Collateral Agent
constituting insurance proceeds or condemnation proceeds (pursuant to the
Mortgage or First Mortgage) shall be applied in accordance with the terms of the
applicable Mortgage or First Mortgage. The insurance requirements set forth
herein may be satisfied through blanket insurance obtained and maintained by
MPN.
(d) Maintenance of Properties and Leases. The Borrower shall,
--- ------------------------------------
and shall cause each of its Subsidiaries to, maintain in good repair, working
order and condition (ordinary wear and tear excepted) in accordance with the
general practice of other businesses of similar character and size, all of those
properties useful or necessary to its business, and from time to time, the
Borrower will make or cause to be made all appropriate repairs, renewals or
replacements thereof.
(e) Maintenance of Patents, Trademarks, Etc. The Borrower
--- ----------------------------------------
shall, and shall cause each of its Subsidiaries to, maintain in full force and
effect all patents, trademarks, trade names, copyrights, licenses, franchises,
permits and other authorizations necessary for the ownership and operation of
its properties and business if the failure so to maintain the same would
constitute a Material Adverse Change.
58
(f) Visitation Rights. The Borrower shall, and shall cause
--- -----------------
each of its Subsidiaries to, permit any of the officers or authorized employees
or representatives of any Agent or any of the Banks to visit and inspect any of
its properties and to examine and make excerpts from its books and records and
discuss its business affairs, finances and accounts with its officers, all in
such detail and at such times during normal business hours and as often as any
of the Banks may reasonably request, provided that each Bank shall provide the
Borrower and the Administrative Agent with reasonable notice prior to any visit
or inspection. In the event any Bank desires to conduct an audit of the
Borrower, such Bank shall make a reasonable effort to conduct such audit
contemporaneously with any audit to be performed by the Administrative Agent.
(g) Keeping of Records and Books of Account. The Borrower
--- ---------------------------------------
shall, and shall cause each of its Subsidiaries to, maintain and keep proper
books of record and account which enable the Borrower and its Subsidiaries to
issue financial statements in accordance with GAAP and as otherwise required by
applicable Laws of any Official Body having jurisdiction over the Borrower or
any of its Subsidiaries, and which accurately and fairly reflect the
transactions and dispositions of assets of the Borrower or such Subsidiary.
(h) Plans and Benefit Arrangements. The Borrower shall, and
--- ------------------------------
shall cause each member of the ERISA Group to, comply with ERISA, the Internal
Revenue Code and other applicable Laws applicable to Plans and Benefit
Arrangements except where such failure, alone or in conjunction with any other
failure, would not result in a Material Adverse Change. Without limiting the
generality of the foregoing, the Borrower shall cause all of its Plans and all
Plans maintained by any member of the ERISA Group to be funded in accordance
with the minimum funding requirements of ERISA and shall make, and cause each
member of the ERISA Group to make, in a timely manner, all contributions due to
Plans, Benefit Arrangements and Multiemployer Plans.
(i) Compliance With Laws. The Borrower shall, and shall
--- --------------------
cause each of its Subsidiaries to, comply with all applicable Laws, including
all Environmental Laws, in all respects provided that it shall not be deemed to
be a violation of this Section 8.01(i) if any failure to comply with any Law
would not result in fines, penalties, other similar liabilities or injunctive
relief which in the aggregate would constitute a Material Adverse Change.
(j) Use of Proceeds. The Borrower will use the proceeds of
--- ---------------
the Loans only for lawful purposes in accordance with Section 2.05 hereof as
applicable and such uses shall not contravene any applicable Law or any other
provision hereof.
(k) [Intentionally Omitted].
--- -----------------------
(l) Subordination of Intercompany Loans, Other Loans and
--- ----------------------------------------------------
Advances to the Borrower. Except for Indebtedness described on Schedule 8.01(l),
the Borrower shall cause any intercompany Indebtedness, and shall cause any
other Indebtedness, loans or advances owed by any Loan Party to any other person
(other than a Loan Party) to be subordinated to the Loan Parties' obligations
under the Loan Documents on the terms set forth in Exhibit 8.01(l), with such
revisions thereto as are reasonably satisfactory to the Agents.
59
(m) Approval of Financial Statements in Permitted Acquisitions;
--- -----------------------------------------------------------
Notice of Permitted Acquisition.
-----------------------------------
(i) Approval of Financial Statements. The Borrower shall
--- --------------------------------
deliver to the Banks a certificate in the form of Exhibit 8.01(m)(i) hereof (the
------------------
"Acquisition Approval Certificate") before making a Permitted Acquisition if
they desire that the cash flow of the business to be acquired during periods
prior to the acquisition shall be included when they compute Cash Flow from
Operations under this Agreement. The Borrower shall attach to such Acquisition
Approval Certificate copies of the historical financial statements of the
business to be acquired including the annual and interim balance sheets and
income statements for at least three (3) fiscal years prior to the Permitted
Acquisition and pro forma statements which shall include a combined balance
sheet as of the acquisition date and cash flow statements for the preceding
year. The pro forma statements shall set forth: (1) Consolidated Cash Flow from
Operations of the Loan Parties and the acquired business, adjusted in accordance
with clause (A) of the definition of Consolidated Cash Flow from Operations, for
the Acquisition Income Reporting Period in connection with such Permitted
Acquisition, and (2) Total Indebtedness on the date of the Permitted Acquisition
after giving effect to the acquisition and all outstanding Indebtedness on such
date, and (3) the ratio of the amount in clause (2) to the amount in clause (1),
which ratio shall not exceed (A) 5.75 to 1.0 from the Eighteenth Amendment
Effective Date through and including June 30, 1999; and (B) 5.50 to 1.0 from
July 1, 1999 and thereafter. The Acquisition Approval Certificate shall confirm
the accuracy of the foregoing computations and that, after giving effect to the
Permitted Acquisition and all outstanding Indebtedness on the date thereof, no
Event of Default shall exist and the Loan Parties shall be in compliance with
all of their covenants hereunder, assuming, for purposes of Borrower's financial
covenants, that all items of income, expense and cash flow are reported for the
Acquisition Income Reporting Period and that all balance sheet items (such as
Indebtedness) are measured on the date of such Permitted Acquisition. The Loan
Parties may make the Permitted Acquisition prior to receiving the Required
Banks' approval of Borrower's Acquisition Approval Certificate with respect
thereto; provided that the Loan Parties may not, until they have received such
approval, include the cash flow of the business to be acquired for periods prior
to the acquisition in their net income when they compute Consolidated Cash Flow
from Operations. The Banks shall use their best efforts to respond to the
Borrower's request for approval of each Acquisition Approval Certificate within
two (2) Business Days following the Banks' receipt of such certificate and shall
not unreasonably withhold or delay such approval.
(ii) Notice. The Borrower shall deliver to the Banks a
---- ------
notice in the form of Exhibit 8.01(m)(ii) (the "Acquisition Notice Certificate")
-------------------
at least two (2) Business Days before making any Permitted Acquisition except
for: (1) a Permitted Acquisition described in Section 8.01(m)(i) with respect to
which the Borrower is delivering an Acquisition Approval Certificate, or (2) a
Permitted Acquisition if the Purchase Price in connection therewith is less than
$2,500,000. The Acquisition Notice Certificate shall set forth the ratio of (1)
Consolidated Cash Flow From Operations (excluding the cash flow of the acquired
business) for the Acquisition Income Reporting Period in connection with such
Permitted Acquisition, and (2) Total Indebtedness on the date of the Permitted
Acquisition after giving effect to the acquisition and all outstanding
Indebtedness on such date, which ratio shall not exceed (A) 5.75
60
to 1.0 from the Eighteenth Amendment Effective Date through and including June
30, 1999; and (B) 5.50 to 1.0 from July 1, 1999 and thereafter. The Acquisition
Notice Certificate also shall confirm that, after giving effect to the Permitted
Acquisition and all outstanding Indebtedness on the date thereof, no Event of
Default shall exist and the Loan Parties shall be in compliance with all of
their covenants hereunder, assuming, for purposes of Borrower's financial
covenants, that all items of income, expense and cash flow are reported for the
Acquisition Income Reporting Period and that all balance sheet items (such as
Indebtedness) are measured on the date of such Permitted Acquisition.
(iii) Additional Information. With respect to any
----- ----------------------
Acquisition Approval Certificate or Acquisition Notice Certificate, the Borrower
shall provide to the Banks, as the Banks may reasonably request detailed
calculations and information supporting the financial calculations therein and
the financial statements attached thereto.
(n) [Intentionally Omitted].
--- -----------------------
(o) [Intentionally Omitted].
--- -----------------------
(p) Further Assurances. Each Loan Party shall, from time to
--- ------------------
time, at its expense, faithfully preserve and protect the Collateral Agent's
Lien on or perfected security interest in the Collateral as a continuing first
priority perfected Lien, subject only to Permitted Liens, and shall do such
other acts and things as the Administrative Agent or the Collateral Agent, as
the case may be, in its sole discretion may deem necessary or advisable from
time to time in order to preserve, perfect and protect the Liens granted under
the Loan Documents and to exercise and enforce its respective rights and
remedies thereunder with respect to the Collateral. The Loan Parties shall (i)
provide to the Administrative Agent and the Collateral Agent within thirty (30)
days of the Closing Date a list of all material contracts or agreements which by
their terms do not permit the grant of a security interest therein; (ii) use
commercial reasonable best efforts to obtain within ninety (90) days of the
Closing Date any consents or approvals of security interests in any such
contract or agreement granted to the Administrative Agent or the Collateral
Agent; (iii) to the extent any such consent or approval is obtained and upon
receipt thereof, promptly deliver to the Administrative Agent and the Collateral
Agent any original of such consent or approval obtained or such other evidence
in a form satisfactory to the Administrative Agent and the Collateral Agent of
any such consent or approval obtained.
(q) Certain Owned Facilities - Termination of Liens;
--- ------------------------------------------------
Intercreditor Agreements.
------------------------
The Borrower shall:
(i) Cause any Lien securing any Owned Facility
Indebtedness to be terminated on or before the earlier of: the maturity of such
Owned Facility Indebtedness (without giving effect to any extension of such
maturity after the Sixteenth Amendment Effective Date, unless such extension of
maturity is otherwise approved in accordance with this Agreement) or any
refinancing, replacement or substitution of such Owned Facility
61
Indebtedness, unless, in the case of a refinancing, such refinancing is
otherwise approved in accordance with this Agreement;
(ii) Not permit the amount of Owned Facility Indebtedness
secured by Liens in favor of an Owned Facility Lender to exceed the amount of
such Owned Facility Indebtedness existing on the Sixteenth Amendment Effective
Date;
(iii) Cause each Subsidiary Owner to not xxxxx x Xxxx on
any asset of such Subsidiary Owner if the Owned Facility Lender has previously
terminated its Liens or has never obtained a Lien on such asset; and
(iv) Cause each Owned Facility Lender and any other
person which loans money to any Subsidiary Owner relating to any of the Owned
Facilities (whether by assignment of the Owned Facility Indebtedness or
otherwise), on the date of such loan or lien to execute and deliver to the
Collateral Agent an Intercreditor Agreement and Borrower shall deliver or cause
to be delivered to Administrative Agent a true and correct copy of the original
of each Intercreditor Agreement within one (1) Business Day after such agreement
has been executed. The Borrower shall use its best efforts to obtain an
Intercreditor Agreement.
(r) Certain Leased Facilities - Termination of Liens;
--- -------------------------------------------------
Intercreditor Agreements; Trustee Agreements.
--------------------------------------------
The Borrower shall:
(i) Cause any Lien securing any Lessor Indebtedness to
be terminated on or before the earlier of: (i) the maturity of such Lessor
Indebtedness (without giving effect to any extension of such maturity after the
Sixteenth Amendment Effective Date unless such extension of maturity is
otherwise approved in accordance with this Agreement) or (ii) any refinancing,
replacement or substitution of such Lessor Indebtedness unless, in the case of a
refinancing, such refinancing is otherwise approved in accordance with this
Agreement;
(ii) Not consent to an increase in the amount of Lessor
Indebtedness secured by Liens in favor of the Lessor Lenders in excess of the
amount of such Indebtedness existing on the Sixteenth Amendment Effective Date;
and
(iii) Not permit any Subsidiary Lessee to xxxxx x Xxxx on
any asset of such Subsidiary Lessee (except as otherwise permitted by this
Agreement) if the applicable Lessor or Lessor Lender has previously terminated
its Liens or has never obtained a Lien on such asset;
(iv) Deliver to the Administrative Agent for the benefit
of the Banks an Intercreditor Agreement with respect each Lessor Lender and, if
reasonably requested by the Administrative Agent, a Non-Disturbance Agreement.
Each Non-Disturbance Agreement shall be satisfactory, in form and substance to
the Agents. Borrower shall deliver or cause to be delivered to Administrative
Agent a true and correct copy of each Non-Disturbance Agreement
62
and the original of each Intercreditor Agreement within one (1) Business Day
after such agreement has been executed pursuant to the preceding sentence. The
Borrower shall use its best efforts to obtain each Intercreditor Agreement as is
reasonably satisfactory, in form and substance, to the Administrative Agent; and
(v) Cause if reasonably requested by the Administrative
Agent, each Lessor listed on Schedule 6.01(aa) to execute and deliver to the
-----------------
Administrative Agent a Trustee Agreement; provided, however, that if, with
respect to Leased Facilities leased by Loan Parties prior to the Closing Date,
following the Closing Date the Loan Parties are otherwise in compliance with all
requirements under this Agreement relating to Lessor Indebtedness, Leased
Facilities and Permitted Leased Facility Liens, then no additional Trustee
Agreements will be required with respect to such Leased Facilities so long as
the lease of such facility continues following the Closing Date on terms and
conditions identical to those in effect prior to the Closing Date. Each Trustee
Agreement shall be satisfactory, in form and substance to the Administrative
Agent.
8.02 Negative Covenants. The Borrower covenants and agrees that
------------------
until payment in full of the Loans and interest thereon, satisfaction of all of
the Borrower's other obligations hereunder and termination of the Commitments,
the Borrower shall comply with the following negative covenants:
(a) Indebtedness. Subject to Section 8.02(v), the Borrower
--- ------------
shall not, and shall not permit any of its Restricted Subsidiaries to, at any
time create, incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as of the Closing Date as set
forth on Schedule 8.02(a) hereto (including, subject to the other provisions of
----------------
this Agreement, any refinancings, extensions or renewals thereof provided that:
(i) there is no increase in the principal amount thereof, or (ii) unless the
Administrative Agent has provided prior written approval, there is no
acceleration of the amortization from that existing on the Sixteenth Amendment
Effective Date or other significant change in the default or remedy provisions
thereof adverse to any Loan Party or to any Bank unless otherwise specified on
Schedule 8.02(a)); provided further that the Owned Facility Indebtedness and
----------------
Lessor Indebtedness are also subject to the covenants and limitations described
in Sections 8.01(q) and (r) and any refinancing, extension or renewal of any
Owned Facility Indebtedness or Lessor Indebtedness is also subject to
satisfaction of the conditions set forth in Exhibit 1.01(C) hereto;
---------------
(iii) Capitalized leases existing as of September 30, 1998
and as and to the extent permitted under Section 8.02(w);
(iv) Indebtedness which is subordinated in accordance
with the provisions of Section 8.01(1);
63
(v) Indebtedness secured by Purchase Money Security
Interests permitted under Section 8.02(b);
(vi) Indebtedness of a Loan Party to the Borrower or to a
wholly-owned Subsidiary of the Borrower;
(vii) the Subordinated Notes, provided that neither the
subordination provisions contained in the Indenture nor Section 1008 [Limitation
on Indebtedness] of the Indenture shall be amended after the Subordinated
Indebtedness Incurrence Date and provided further that the Indenture is not
otherwise amended after the Subordinated Indebtedness Incurrence Date if the
effect thereof would (i) accelerate the due date or increase the amount of any
payment due from the Borrower thereunder, (ii) change the rate at which interest
is charged thereunder, or (iii) impose material restrictions or obligations on
the Borrower or the other Loan Parties which are not imposed thereunder on the
Closing Date or add any term thereto which is less favorable in any material
respect to the Loan Parties than the terms of the Indenture on the Subordinated
Indebtedness Incurrence Date or which is more restrictive to any of the Loan
Parties than the terms of the Credit Agreement;
(viii) Guaranties which constitute Indebtedness as
permitted pursuant to Section 8.02(c);
(ix) Indebtedness not exceeding $500,000 of the Borrower
to First Union National Bank (f.k.a. CoreStates Bank, N.A.) in respect of an
overnight unsecured overdraft facility at any time;
(x) Owned Facility Indebtedness incurred after the
Closing Date, if the principal amount of and other terms and conditions with
respect to such Owned Facility Indebtedness are acceptable to the Required
Banks, (including, without limitation, satisfaction of all conditions set forth
on Exhibit 1.01(C)); provided, that all Owned Facility Indebtedness is subject
---------------
to the covenants and limitations set forth in Section 8.01(q);
(xi) the Permitted Subordinated Indebtedness;
(xii) Indebtedness under the Revolving Credit Loan
Agreement; and
(xiii) Indebtedness not otherwise permitted under clauses
(i) through (xii) of this Section 8.02(a), provided that the aggregate amount of
Indebtedness outstanding pursuant to this paragraph and Indebtedness outstanding
pursuant to Section 8.02(a)(v) shall not at any time exceed $15,000,000.
(b) Liens. The Borrower shall not, and shall not permit any
--- -----
of the other Loan Parties or Unrestricted Subsidiary which is an Excluded Entity
with respect to which Restricted Investments have been made as permitted
pursuant to Section 8.02(d)(iv) to, at any time create, incur, assume or suffer
to exist any Lien on any of its or their property or assets,
64
tangible or intangible, now owned or hereafter acquired, or agree or become
liable to do so, except Permitted Liens.
(c) Guaranties. Except as described in Schedule 8.02(c), the
--- ---------- ----------------
Borrower shall not, and shall not permit any of the other Loan Parties to, at
any time, directly or indirectly, become or be liable in respect of any Guaranty
except: (i) Guaranties of any obligation or liability of another Loan Party that
is permitted under the other provisions of this Agreement, (ii) Guaranties which
are not required by GAAP to be disclosed in the Borrower's audited consolidated
financial statements (including the footnotes thereto), (iii) Guaranties of
Indebtedness incurred as part of a permitted Restricted Investment pursuant to
Section 8.02(d)(iv), (iv) Guaranties which are subordinated on terms reasonably
acceptable to the Administrative Agent, and (v) Guaranties of Indebtedness under
the Revolving Credit Loan Agreement.
(d) Loans and Investments. The Borrower shall not, and shall
--- ---------------------
not permit any of the other Loan Parties, to, at any time make or suffer to
remain outstanding any loan or advance to, or purchase, acquire or own any
stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) in, or any other investment or interest in, or make any
capital contribution to, any other person, or agree, become or remain liable to
do any of the foregoing, except:
(i) trade credit extended on usual and customary terms
in the ordinary course of business;
(ii) advances to employees to meet expenses incurred by
such employees in the ordinary course of business;
(iii) Permitted Investments;
(iv) Restricted Investments made prior to the Closing
Date as set forth on Schedule 8.02(d) and, subject to Section 8.02(w),
----------------
Restricted Investments made on or after the Closing Date; provided that with
respect to any Restricted Investment, the Borrower is in compliance with all of
the following: (i) the Excluded Entity in which a Restricted Investment is or
has been made is engaged in a business which is ancillary and related to the
business of the Loan Parties; (ii) the Loan Party that makes or made the
Restricted Investment is either a shareholder, member or partner of the Excluded
Entity in which the Restricted Investment was made; (iii) the stock, equity
interests in a limited liability company or partnership interests owned by a
Loan Party in the Excluded Entity in which the Restricted Investment is or has
been made are pledged to the Collateral Agent on a first priority basis for the
benefit of the Banks; (iv) to the extent that any Excluded Entity incurs
Indebtedness payable to any person other than a Loan Party (the "Third Party
Lender") in excess of $5,000,000, prior to incurring such Indebtedness, the
Borrower shall use commercially reasonable best efforts to cause the Third Party
Lender to enter into an intercreditor agreement with the Collateral Agent on
behalf of the Banks, in form and substance satisfactory to the Administrative
Agent and the Collateral Agent in its sole discretion with respect to the
Indebtedness of such Excluded Entity payable to the Third Party Lender and any
Indebtedness of such Excluded Entity payable to either the Banks or any Loan
65
Party; and (v) to the extent that any individual Restricted Investment exceeds
$7,500,000 or any series of related Restricted Investments in the aggregate
exceeds $7,500,000 prior to making any such Restricted Investment, the Borrower
obtained the written approval of the Required Banks;
(v) loans, advances and investments in Restricted
Subsidiaries;
(vi) loans and advances in the aggregate not to exceed
$8,000,000 at any time outstanding to officers and senior management of the Loan
Parties, so long as each such advance is on terms and conditions reasonably
satisfactory to the Agents and so long as the Borrower gives five (5) Business
Days' prior notice to the Administrative Agent of each loan or advance and the
recipient of each loan or advance is reasonably satisfactory to the Agents; and
(vii) either the purchase by the Borrower from
NationsBank, N.A. of up to $25,000,000 in original principal amount of the
Subordinated Notes held, as of the Closing Date, by NationsBank, N.A. at a
purchase price not to exceed the lesser of (A) 101% of the face amount of such
portion of the Designated Portion of the Subordinated Notes so purchased or (B)
$25,000,000, or the payment by the Borrower to NationsBank, N.A. of the Make
--
Whole Amount in the event that NationsBank, N.A. sells all or a portion of the
Designated Portion of the Subordinated Notes to any Person other than MPN, the
Borrower or any of their respective Affiliates.
(e) Amounts Paid by the Borrower to MPN; Dividends and
--- --------------------------------------------------
Related Distributions. The Borrower shall not, and shall not permit any of its
---------------------
Subsidiaries to, make or pay, or agree to become or remain liable to make or
pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of their
respective shares of capital stock or partnership interests, as the case may be,
or on account of the purchase, redemption, retirement or acquisition of their
respective shares of capital stock (or warrants, options or rights therefor) or
partnership interests, as the case may be, except (i) dividends or distributions
in respect of a partnership interest or capital stock payable by any Subsidiary
to the Borrower or any other Restricted Subsidiary, (ii) dividends payable by
the Borrower solely in shares of capital stock of the Borrower, (iii) up to the
Permitted Distribution Amount of distributions per year payable in the aggregate
by any Subsidiary of the Borrower which is a limited liability company or
partnership to non-Affiliate members of such limited liability company or non-
Affiliate limited partners of such partnership, so long as after giving effect
thereto no Event of Default or Potential Default has occurred and is continuing
and so long as at least five (5) Business Days prior to the making of any such
distribution the Borrower provides written notice to the Administrative Agent,
together with a detailed calculation, certified by a Responsible Officer of
Borrower, setting forth in detail the relevant Subsidiary's compliance with the
ratio set forth in clause (A) of the definition of Permitted Distribution Amount
or, as the case may be, such Subsidiary's compliance with clause (B) of the
definition of Permitted Distribution Amount, in either case with respect to the
proposed distribution as of the date of the making thereof, (iv) so long as no
Event of Default or Potential Default exists and is continuing after giving
effect thereto, a one-time dividend by the Borrower to MPN payable on such date
as the Borrower elects (so long as at least seven (7) days prior to such
payment, the Borrower has
66
delivered to the Administrative Agent a certification that after giving effect
to such dividend or distribution no Event of Default or Potential Default exists
and is continuing and that the Borrower is in pro-forma compliance with the
financial covenants set forth in Section 8.02(r) [Maximum Leverage Ratio] and
Section 8.02(u) [Senior Indebtedness to Cash Flow from Operations Ratio], with
such certification setting forth a detailed calculation of the Borrower's pro-
forma compliance with such financial covenants), in an amount not exceeding, as
of the date of payment, the Adjusted Net Income of the Borrower and its
Subsidiaries determined in accordance with GAAP for the most recent twelve
fiscal calendar months prior to such date of payment; (v) amounts payable by the
Borrower to MPN as reimbursement of ordinary course business expenses of the
Borrower paid by MPN on behalf of the Borrower; (vi) during periods prior to the
effectiveness of the Eighteenth Amendment, dividends or distributions by the
Borrower to MPN not to exceed in the aggregate $25 million to reimburse MPN for
costs and expenses incurred in connection with the Paragon Acquisition and (vii)
dividends or intercompany loans by the Borrower to MPN, not to exceed the
Permitted Repurchase Amount, so long as after giving effect thereto no Event of
Default or Potential Default exists and is continuing, and the Borrower is in
pro-forma compliance with the financial covenants set forth in Sections 8.02
(q), (r), (s), (t) and (u) (as certified by a Responsible Officer of the
Borrower to the Agent at least seven (7) days prior to the making of such
dividend or distribution). It is expressly agreed that in the event MPN or an
Affiliate of MPN elects to purchase the Designated Portion of the Subordinated
Notes as permitted by the LMS Swap Agreement, following such purchase either MPN
or an Affiliate of MPN shall be the holder of the Subordinated Notes so
purchased until the indefeasible payment in cash in full of the Loans or if MPN
or an Affiliate of MPN sells or otherwise transfers such Subordinated Notes (in
which case such sale or transfer shall be solely for cash proceeds), such
proceeds thereof (net of customary commissions and net of taxes directly related
to such sale) shall be used to make a mandatory prepayment of the Revolving
Credit Loans pursuant to Section 5.05(b) of the Revolving Credit Agreement.
For purposes of this Section 8.02(e) and the demonstration
of pro forma compliance with the financial covenants set forth in Sections
8.02(q), (r), (s), (t) and (u):
(i) Consolidated Net Worth, Adjusted Total Indebtedness
and Total Indebtedness shall be calculated as of each date of determination
(after giving effect, without duplication, to each dividend or distribution and
each purchase or redemption of the Borrower's stock or the Subordinated Notes,
as applicable);
(ii) Consolidated Cash Flow from Operations and
Consolidated Net Income shall be calculated as of each date of determination
(after giving effect to each dividend or distribution and each purchase or
redemption of the Borrower's stock) based upon the four fiscal quarters most
recently then ended for which a Compliance Certificate has been delivered to the
Administrative Agent; and
(iii) the denominator (set forth in clause (y) of Section
8.02(q)) of the Fixed Charge Coverage Ratio shall be determined after giving
effect, without duplication, to each dividend or distribution and each purchase
or redemption of the Borrower's stock or the Subordinated Notes, as applicable,
including taking into account Indebtedness of the Loan
67
Parties after the making of such dividends, distributions, purchases and
redemptions for purposes of the pro forma determination of interest expense and
of current maturities of long-term Indebtedness.
(f) Liquidations, Mergers, Consolidations, Acquisitions. The
--- ---------------------------------------------------
Borrower shall not, and shall not permit any of the other Loan Parties to,
dissolve, liquidate or wind-up its affairs, or become a party to any merger or
consolidation, or acquire by purchase, lease or otherwise all or substantially
all of the assets or capital stock of any other person, provided that:
(i) any wholly owned Subsidiary of the Borrower may
consolidate or merge into the Borrower (so long as the Borrower is the survivor)
or any other wholly owned Subsidiary of the Borrower;
(ii) a Subsidiary of the Borrower that is not a Material
Subsidiary may be dissolved, liquidated or wound up provided that from the date
of this Agreement through the Expiration Date, the total assets of the non-
Material Subsidiaries which so dissolve, liquidate or wind up shall not exceed
$25,000,000 in the aggregate;
(iii) subject to Section 8.02(w), the Borrower or a
Restricted Subsidiary of the Borrower may acquire all of the capital stock of
another corporation so long as (u) the assets of such acquired corporation are
pledged to the Collateral Agent for the benefit of the Banks on a first priority
perfected basis pursuant to a Security Agreement, First Mortgage and other Loan
Documents, as applicable and such acquired corporation, simultaneous with the
acquisition thereof by a Loan Party, executes and delivers to the Administrative
Agent for the benefit of the Banks a Guaranty Agreement and to the Collateral
Agent for the benefit of the Banks a Pledge Agreement in form and substance
satisfactory to the Administrative Agent, and also delivers to the
Administrative Agent such opinions of counsel and other documents in connection
therewith as the Administrative Agent may reasonably request, (v) all of the
issued and outstanding capital stock of such acquired corporation owned by a
Loan Party is pledged to the Collateral Agent for the benefit of the Banks
pursuant to a Pledge Agreement in form and substance satisfactory to the
Administrative Agent, (w) after giving effect to such proposed acquisition, no
Event of Default shall have occurred and be continuing, (x) after giving effect
to such proposed acquisition (and without limiting the generality of the
preceding clause (iii)(w)), the Borrower is in compliance with the Leverage
Ratio set forth in Section 8.02(r) and the Borrower demonstrates such compliance
pursuant to Section 8.01(m) (if Section 8.01(m) requires such demonstration of
compliance), and (y) in the case of a merger involving the Borrower, the
Borrower shall be the survivor of such merger, and in the case of a merger
involving any Restricted Subsidiary the survivor of such merger shall be either
such Restricted Subsidiary or a person which, effective upon consummation of
such merger shall have become a Restricted Subsidiary of the Borrower, shall
have joined this Agreement and the other Loan Documents as a Loan Party
(including, without limitation, execution and delivery of a Guaranty Agreement
substantially in the form of Exhibit 1.01(G)), shall have delivered such
---------------
opinions of counsel and other documents as the Administrative Agent may
reasonably request, whose equity interests shall have been pledged to the
Collateral Agent for the benefit of the Banks on a first
68
priority perfected basis pursuant to a Pledge Agreement and whose assets shall
have been pledged to the Collateral Agent for the benefit of the Banks on a
first priority perfected basis pursuant to a Security Agreement, First Mortgage
and other Loan Documents, as applicable; and
(iv) subject to Section 8.02(w), the Borrower or any
Restricted Subsidiary may merge or consolidate with, or acquire all or
substantially all of the assets of another person so long as (y) after giving
effect to such proposed acquisition, merger or consolidation the Borrower or a
Restricted Subsidiary of the Borrower is the survivor entity, all of the assets
acquired pursuant to such merger are pledged pursuant to a Security Agreement,
First Mortgage and other Loan Documents on a first priority perfected basis, and
no Event of Default shall have occurred and be continuing; and (z) after giving
effect to such proposed acquisition, merger or consolidation, the Borrower is in
compliance with the Leverage Ratio set forth in Section 8.02(r) and the Borrower
demonstrates such compliance pursuant to Section 8.01(m) (if Section 8.01(m)
requires such demonstration of compliance).
For purposes of the preceding clauses (iii)(y) and (iv)(z),
the Leverage Ratio set forth in Section 8.02(r) shall be calculated as follows:
(i) Total Indebtedness shall be determined as of the date of the proposed
acquisition, after giving effect thereto, and (ii) Consolidated Cash Flow from
Operations shall be calculated for the twelve-month period ending on the last
day of the fiscal quarter of the Borrower which precedes such date of
acquisition.
(g) Dispositions of Assets or Subsidiaries. The Borrower
--- --------------------------------------
shall not, and shall not permit any of the other Loan Parties to, sell, convey,
assign, lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any of its properties or assets, tangible or intangible
(including but not limited to sale, assignment, discount or other disposition of
accounts, contract rights, chattel paper, equipment or general intangibles with
or without recourse or of capital stock, shares of beneficial interest or
partnership interests of a Subsidiary of the Borrower), except:
(i) any sale, transfer or lease of assets in the
ordinary course of business which are no longer necessary or required in, or
which are not material to, the conduct of the Borrower's or such Subsidiary's
business, provided that such sales, transfers or leases of assets shall not
exceed in the aggregate for the Borrower and its Subsidiaries $10,000,000 (based
upon fair market value at the time of the sale) for the period from and after
the Eighteenth Amendment Effective Date;
(ii) any sale, transfer or lease of assets by any wholly-
owned Loan Party to the Borrower or any other wholly owned Loan Party (or by the
Borrower to a wholly owned Loan Party);
(iii) any sale, transfer or lease of assets in the
ordinary course of business which are replaced by substitute assets acquired or
leased within the parameters of Section 8.02(w) provided such substitute assets
are subject to the Banks' Prior Security Interest;
69
(iv) any sale or transfer of assets which are obsolete or
no longer used or useful in the business of the Borrower or its Subsidiaries;
provided that such sales, transfers or dispositions shall not exceed, in any
fiscal year, $1,000,000 in the aggregate for the Borrower and its Subsidiaries;
(v) any sale, transfer or lease of assets, other than
those specifically excepted pursuant to clauses (i) through (iv) above, which
either: (A) has aggregate Net Sale Proceeds for the Borrower and its
Subsidiaries for the period from and after the Closing Date which do not exceed
$35,000,000 or (B) is approved by the Required Banks so long as in the case of a
transaction under clause (A) or (B), the Borrower complies with all of the
following: (w) the proceeds received by the applicable Loan Party shall equal
the fair market value of the asset sold, transferred or leased, (x) the proceeds
of such sale, transfer or lease are applied as a mandatory prepayment of the
Loans in accordance with the provisions of Section 5.05 of this Agreement, (y)
after giving effect to such proposed disposition, no Event of Default or
Potential Default shall have occurred and be continuing, and (z) after giving
effect to such proposed disposition (and without limiting the generality of the
foregoing clause (y)), the Borrower is in compliance (and with respect to sales,
transfers or leases of assets which individually or in a series of related
transactions equal or exceed $5,000,000, the Borrower demonstrates such
compliance to the Administrative Agent in detail reasonably satisfactory to the
Administrative Agent by the delivery to the Administrative Agent, at least five
(5) days prior to such transaction of a compliance certificate,) on a pro-forma
basis, after giving effect to such sale, transfer or lease, with the financial
covenants set forth in Sections 8.02(q), (r), (s), (t) and (u); and
(vi) any distribution or dividend permitted under Section
8.02 (e) (iv), (v) (vi), or (vii).
For purposes of this Section 8.02(g) and the demonstration
of pro forma compliance with the financial covenants set forth in Sections
8.02(q), (r), (s), (t) and (u):
(i) Consolidated Net Worth, Adjusted Total Indebtedness
and Total Indebtedness shall be calculated as of each date of determination
(after giving effect to the proposed sale, transfer or lease of assets);
(ii) Consolidated Cash Flow from Operations and
Consolidated Net Income shall be calculated as of each date of determination
based upon the four fiscal quarters most recently then ended for which a
Compliance Certificate has been delivered to the Administrative Agent, but
excluding therefrom all amounts attributable to the assets sold, transferred or
leased; and
(iii) the denominator (set forth in clause (y) of Section
8.02(q)) of the Fixed Charge Coverage Ratio shall be determined after giving
effect to the proposed sale, transfer or lease of assets for purposes of the pro
forma determination of interest expense and of current maturities of long-term
Indebtedness.
70
(h) Affiliate Transactions. The Borrower shall not, and shall
--- ----------------------
not permit any of its Subsidiaries to, enter into or carry out any transaction
with any Affiliate (including, without limitation, purchasing property or
services from or selling property or services) unless such transaction is
entered into in the ordinary course of business upon terms and conditions that
are no less favorable to the Borrower or such Subsidiary than those that would
be available in comparable transactions in arms-length dealings with unrelated
third parties or unless such transaction is not otherwise prohibited by this
Agreement.
(i) Subsidiary, Partnerships and Joint Ventures. The Borrower
--- -------------------------------------------
shall not, and shall not permit any Subsidiary to, own or create directly or
indirectly any Subsidiaries other than those listed in Schedule 6.01(c);
provided, however, that the Borrower or a Restricted Subsidiary may acquire a
Subsidiary pursuant to Section 8.02(f) or form a new Subsidiary so long as (A)
if such Subsidiary is a Restricted Subsidiary it executes and delivers to the
Administrative Agent for the benefit of the Banks a Guaranty Agreement
substantially in the form of Exhibit 1.01(G), and also delivers to the
Administrative Agent such opinions of counsel and other documents as the
Administrative Agent may reasonably request; and (B) all of the issued and
outstanding capital stock or other equity interests of such Subsidiary owned by
a Loan Party are pledged to the Collateral Agent for the benefit of the Banks,
such pledge to be a first priority perfected pledge pursuant to a Pledge
Agreement and all of the assets of such Subsidiary are pledged on a first
priority perfected basis to the Collateral Agent for the benefit of the Banks
pursuant to a Security Agreement, First Mortgage, Leasehold Mortgage and the
other applicable Loan Documents, subject only to Permitted Liens. If Borrower is
forming a new Subsidiary (as opposed to acquiring a Subsidiary) the obligations
set forth in clauses (A) and (B) of the preceding sentence shall arise only at
such time as such new Subsidiary either commences construction of a health care
facility or related health care business, acquires a health care facility or
makes another acquisition permitted under this Agreement or has a net book
value, as determined under GAAP, of at least $250,000. Except for investments
permitted under Section 8.02(d)(iv), neither the Borrower nor any Subsidiary
shall become or agree to become a general or limited partner in any general or
limited partnership or a joint venturer in any joint venture.
(j) Continuation of or Change in Business. The Borrower shall
--- -------------------------------------
not, and shall not permit any Subsidiary to, engage in any business other than
(i) its existing business, substantially as conducted and operated as of the
Closing Date and (ii) related health care businesses.
(k) Plans and Benefit Arrangements. The Borrower shall not,
--- ------------------------------
and shall not permit any of its Subsidiaries to:
(i) fail to satisfy the minimum funding requirements of
ERISA and the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the Internal
Revenue Service with respect to any Plan;
71
(iii) engage in a Prohibited Transaction with any Plan,
Benefit Arrangement or Multiemployer Plan which, alone or in conjunction with
any other circumstances or set of circumstances resulting in liability under
ERISA, would constitute a Material Adverse Change;
(iv) permit the aggregate actuarial present value of all
benefit liabilities (whether or not vested) under each Plan, determined on a
plan termination basis, as disclosed in the most recent actuarial report
completed with respect to such Plan, to exceed, as of any actuarial valuation
date, the fair market value of the assets of such Plan by an amount in excess of
$250,000;
(v) fail to make when due any contribution to any
Multiemployer Plan that the Borrower or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan, or any
Law pertaining thereto;
(vi) withdraw (completely or partially) from any
Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA to
withdraw) from any Multiple Employer Plan, where any such withdrawal is likely
to result in a material liability of Borrower or any member of the ERISA Group;
(vii) terminate, or institute proceedings to terminate,
any Plan, where such termination is likely to result in a material liability to
the Borrower or any member of the ERISA Group;
(viii) make any amendment to any Plan with respect to
which security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make all
disclosures and governmental filings required under ERISA or the Internal
Revenue Code, where such failure is likely to result in a Material Adverse
Change.
(l) Fiscal Year. The Borrower shall not, and shall not
--- -----------
permit any of its Subsidiaries to, change its fiscal year from the twelve-month
period beginning January 1 and ending December 31.
(m) Issuance of Stock. The Borrower shall not permit any of
--- -----------------
its Subsidiaries to issue any additional shares of capital stock, partnership
interests or member interests in a limited liability company or any options,
warrants or other rights in respect thereof; provided, however, than an
Unrestricted Subsidiary which is an Excluded Entity may issue additional capital
stock, partnership interests or member interests in a limited liability company
so long as all such capital stock, partnership interests or member interests in
a limited liability company which are owned, beneficially, of record, or
otherwise, by any Loan Party are pledged to the Banks as a first priority
perfected pledge pursuant to a Pledge Agreement, and provided further that any
Restricted Subsidiary may issue additional capital stock, partnership interests
or member interests in a limited liability company so long as such capital
stock, partnership interests or member interests in a limited liability company
are pledged to the Collateral Agent
72
for the benefit of the Banks (subject only to any pari passu pledge to the
Revolving Credit Banks and the Collateral Sharing Agreement) as a first priority
perfected pledge pursuant to a Pledge Agreement.
(n) [Intentionally Omitted].
--- -----------------------
(o) [Intentionally Omitted].
--- -----------------------
(p) [Intentionally Omitted].
--- -----------------------
(q) Minimum Fixed Charge Coverage Ratio. The Borrower shall
--- -----------------------------------
not at any time permit the ratio (the "Fixed Charge Coverage Ratio") of (x) the
sum of Consolidated Cash Flow from Operations and operating lease expense to (y)
the sum of its interest expense, operating lease expense and current maturities
of long-term Indebtedness (other than the sum of (i) current maturities of
obligations in respect of capital leases, (ii) for fiscal quarters ending on and
after March 31, 1999, current maturities of the Loans; and (iii) for fiscal
quarters ending on and after March 31, 1999 current maturities of Indebtedness
under the Revolving Credit Loan Agreement) in each case determined and
consolidated in accordance with GAAP to be less than 1.85 to 1.0. Such ratio
shall be calculated as of the end of each fiscal quarter. Calculations as of the
end of each fiscal quarter shall be for the four fiscal quarters then ended.
(r) Maximum Leverage Ratio. The Borrower shall not at any
--- ----------------------
time permit the ratio of Total Indebtedness to Consolidated Cash Flow from
Operations to exceed (A) 5.75 to 1.0 from the Closing Date through and including
June 30, 1999; and (B) 5.50 to 1.0 from July 1, 1999 and thereafter. For
purposes of this Section 8.02(r), Total Indebtedness shall be calculated as of
each date of determination and Consolidated Cash Flow from Operations shall be
calculated as of each date of determination for the four fiscal quarters then
ended.
(s) Minimum Consolidated Cash Flow from Operations. The
--- ----------------------------------------------
Borrower shall not at any time permit Consolidated Cash Flow from Operations as
of the end of any fiscal quarter for the four fiscal quarters then ended to be
less than $116,000,000.
(t) Minimum Net Worth. The Borrower shall not at any time
--- -----------------
permit Consolidated Net Worth to be less than the amount under the following
clause (A) reduced by the amount under the following clause (B):
(A) The sum of (i) $323,789,000 plus (ii) fifty percent
(50%) of Consolidated Net Income of the Borrower and its Subsidiaries for each
fiscal quarter in which net income was earned (as opposed to a net loss) during
the period from October 1, 1998 through (and including) the date of
determination, plus (iii) one hundred percent (100%) of all increases in capital
stock and additional paid-in capital from issuances for cash of equity
securities and other equity capital investments on or after October 1, 1998,
plus (iv) one hundred percent (100%) of all increases in capital stock and
additional paid-in capital from issuances of equity securities in connection
with the acquisition of any Subsidiary on or after October 1, 1998 (so long as
the fair market value at the time of acquisition of the Subsidiary so
73
acquired is at least equal to the value of the capital stock or other equity
securities so issued), reduced by
(B) The sum of (i) the amount of any dividend or other
distribution actually paid by the Borrower to MPN on or after October 1, 1998
pursuant to Section 8.02(e)(iv), plus (ii) the amount of any dividend or other
distribution actually paid by the Borrower to MPN on or after October 1, 1998
pursuant to Section 8.02(e)(vi) in respect of costs or expenses incurred by MPN
in connection with the Paragon Acquisition to the extent that the reimbursed
item is not deducted as an expense in the determination of Consolidated Net
Income of the Borrower and its Subsidiaries, plus (iii) the amount of any
dividend paid by the Borrower to MPN pursuant to Section 8.02(e)(vii), not to
exceed the Permitted Repurchase Amount, plus (iv) the amount of any net losses
(determined on a consolidated basis for the Borrower and its Restricted
Subsidiaries in accordance with GAAP) arising solely as a result of charges
described in clauses (i), (ii) or (iii) of the definition of Approved Charges,
plus (v) subject to the prior written approval of the Required Banks, the amount
of any non-cash charges to write-down goodwill in accordance with FAS 121.
(u) Senior Indebtedness to Cash Flow From Operations Ratio.
--- ------------------------------------------------------
The Borrower shall not at any time permit the ratio of (i) Adjusted Total
Indebtedness to (ii) Consolidated Cash Flow from Operations to exceed (A) 4.50
to 1.0 from the Closing Date through and including June 30, 1999; and (B) 4.25
to 1.0 from July 1, 1999 and thereafter. For purposes of this Section 8.02(u),
Adjusted Total Indebtedness shall be calculated as of each date of determination
and Consolidated Cash Flow from Operations shall be calculated as of each date
of determination for the four fiscal quarters then ended.
(v) Incurrence of Indebtedness Permitted by the Indenture.
--- -----------------------------------------------------
So long as any Indebtedness or other obligations (monetary or otherwise) are
outstanding under the Indenture the Borrower shall not, and shall not permit any
of its Subsidiaries to, at any time create, incur, assume or suffer to exist any
Indebtedness unless the incurrence thereof complies with the provisions of
Section 1008. [Limitation on Indebtedness] of the Indenture as in effect on the
Ninth Amendment Effective Date without giving any effect to any grace period
under the Indenture or waiver under the Indenture of any default of such
covenant.
(w) Maximum Amount of Certain Expenditures of the Borrower.
--- ------------------------------------------------------
The Borrower shall not and shall not permit any of its Subsidiaries, during the
period commencing on the Closing Date through and including the Expiration Date,
to make aggregate expenditures in excess of $61,700,000 (the "Designated
Amount") in respect of the following:
(i) acquisitions permitted by clauses (iii) or (iv) of
Section 8.02(f);
(ii) maintenance and replacement capital expenditures and
other capital expenditures;
74
(iii) the purchase by the Borrower of the Subordinated
Notes as permitted by Section 8.02(d)(vii) or the making by the Borrower of the
dividend or distribution permitted by Section 8.02(e)(vii);
(iv) amounts expended for construction of facilities
which are not considered capital expenditures under GAAP and therefore would not
be included under clause (ii) above; and
(v) Restricted Investments made on or after the Closing
Date as permitted by Section 8.02(d)(iv);
At least seven (7) days prior to making any expenditure
specified in clauses (i), (iii) or (v), above, the Borrower shall deliver to the
Administrative Agent, for the benefit of the Banks a detailed certificate
showing Borrower's pro-forma compliance with the financial covenants set forth
in Sections 8.02(q), 8.02(r), 8.02(s), 8.02(t) and 8.02(u), after giving effect
to the proposed expenditure, including, without limitation, the effect of any
cash to be expended or Indebtedness to be incurred in connection therewith. The
Borrower expressly agrees that, notwithstanding the foregoing, at least
$20,000,000 of the Designated Amount shall be designated for expenditures by the
Borrower and its Subsidiaries in the nature of maintenance capital expenditures.
For purposes of this Section 8.02(w) and the demonstration
of pro forma compliance with the financial covenants set forth in Sections
8.02(q), (r), (s), (t) and (u):
(i) Consolidated Net Worth, Adjusted Total Indebtedness
and Total Indebtedness shall be calculated as of each date of determination
after giving effect to the proposed transaction under items (i) through (v)
above (including any Indebtedness incurred in connection therewith);
(ii) Consolidated Cash Flow from Operations and
Consolidated Net Income shall be calculated as of each date of determination
based upon the four fiscal quarters most recently then ended for which a
Compliance Certificate has been delivered to the Administrative Agent and shall
be adjusted to give effect to any transaction under items (ii) through (v) above
but shall only be adjusted to give effect to any acquisition under clause (i)
above only if permitted by Section 8.01(m); and
(iii) the denominator (set forth in clause (y) of Section
8.02(q)) of the Fixed Charge Coverage Ratio shall be determined after giving
effect to the proposed transaction under items (i) through (v) above (including
any Indebtedness incurred in connection therewith) for purposes, without
limitation, of the pro forma determination of interest expense and of current
maturities of long-term Indebtedness.
(x) Negative Pledges. Except as set forth on Schedule 8.02(x),
--- ---------------- ----------------
Borrower shall not and shall not permit any of its Subsidiaries to enter into
any agreement with any person which prohibits the Loan Parties from granting
Liens to the Collateral Agent, the Agents or the Banks.
75
(y) Prohibition of Defeasance of Subordinated Notes. The
--- -----------------------------------------------
Borrower shall not and shall not permit any of its Subsidiaries to make any
payments to the trustee under the Indenture or to any holders of Subordinated
Notes in payment of the defeasance or covenant defeasance of the Subordinated
Notes pursuant to Section 402 or 403 of the Indenture or any similar provision
in any supplement to the Indenture. Nothing in this subsection (y) shall
prohibit the purchase by the Borrower of Subordinated Notes pursuant to Section
8.02(d)(vii) or the refinancing of the Subordinated Notes with Permitted
Subordinated Indebtedness.
8.03 Reporting Requirements. The Borrower covenants and agrees that
----------------------
until payment in full of the Loans and interest thereon, satisfaction of all of
the Borrower's other obligations hereunder and termination of the Commitments,
the Borrower will furnish or cause to be furnished to the Administrative Agent
and each of the Banks:
(a) [Intentionally Omitted].
--- -----------------------
(b) Quarterly Financial Statements. As soon as available and
--- ------------------------------
in any event within forty-five (45) calendar days after the end of each fiscal
quarter in each fiscal year, financial statements of the Borrower, consisting of
a consolidated balance sheet as of the end of such fiscal quarter and related
consolidated statements of income, retained earnings and cash flows for the
fiscal quarter then ended and the fiscal year through that date, all in
reasonable detail and certified by a Responsible Officer of the Borrower as
having been prepared in accordance with GAAP, consistently applied (subject to
normal year-end audit adjustments), and setting forth in comparative form the
respective financial statements for the corresponding date and period in the
previous fiscal year.
(c) Annual Financial Statements. As soon as available and in
--- ---------------------------
any event within ninety (90) days after the end of each fiscal year of the
Borrower, financial statements of the Borrower consisting of a consolidated
balance sheet as of the end of such fiscal year, and related consolidated
statements of income, retained earnings and cash flows for the fiscal year then
ended, all in reasonable detail and setting forth in comparative form the
financial statements as of the end of and for the preceding fiscal year, and
certified by independent certified public accountants of nationally recognized
standing satisfactory to the Administrative Agent. The certificate or report of
accountants shall be free of qualifications (other than any consistency
qualification that may result from a change in the method used to prepare the
financial statements as to which such accountants concur) and shall not include
a statement which indicates the occurrence or existence of any event, condition
or contingency which would materially impair the prospect of payment or
performance of any covenant, agreement or duty of the Borrower or any of its
Subsidiaries under any of the Loan Documents, together with a letter of such
accountants substantially to the effect that, based upon their ordinary and
customary examination of the affairs of the Borrower and its Subsidiaries,
performed in connection with the preparation of such consolidated financial
statements, and in accordance with generally accepted auditing standards, they
are not aware of the existence of any condition or event with constitutes an
Event of Default or Potential Default or, if they are aware of such condition or
event, stating the nature thereof.
76
(d) Certificate of the Borrower. Concurrent with the
--- ---------------------------
financial statements of the Borrower furnished to the Administrative Agent and
to the Banks pursuant to Sections 8.03(b) and 8.03(c) hereof, a certificate of
the Borrower signed by a Responsible Officer in the form of Exhibit 8.03(d)
---------------
hereto (the "Compliance Certificate"), to the effect that, except as described
pursuant to Section 8.03(e) below, (i) the representations and warranties of the
Borrower contained in Article VI hereof are true on and as of the date of such
certificate with the same effect as though such representations and warranties
had been made on and as of such date (except representations and warranties
which expressly relate solely to an earlier date or time) and the Borrower has
performed and complied with all covenants and conditions hereof, (ii) no Event
of Default or Potential Default exists and is continuing on the date of such
certificate, (iii) containing calculations in sufficient detail to demonstrate
compliance as of the date of the financial statements with all financial
covenants contained in Section 8.02 hereof and with the covenant contained in
Section 1008 [Limitation on Indebtedness] of the Indenture with respect to
indebtedness incurred during the period applicable to such compliance
certificate and (iv) setting forth a list of payments summarized by category
only made by the Borrower to MPN as reimbursement of ordinary course business
expenses paid by MPN on behalf of the Borrower during the period applicable to
such certificate and also setting forth all other dividends and distributions to
MPN and all intercompany loans to MPN during such period.
(e) Notice of Default. Promptly after any officer of the
--- -----------------
Borrower has learned of the occurrence of an Event of Default or Potential
Default, a certificate signed by a Responsible Officer of the Borrower, setting
forth the details of such Event of Default or Potential Default and the action
which the Borrower proposes to take with respect thereto.
(f) Notice of Litigation. Promptly after the commencement
--- --------------------
thereof, notice of all actions, suits, proceedings or investigations before or
by any Official Body or any other person against the Borrower which relate to
the Collateral, involve a claim or series of related claims in excess of
$1,000,000 or which if adversely determined would constitute a Material Adverse
Change.
(g) Certain Events. Written notice to the Administrative
--- --------------
Agent (and upon the Administrative Agent's receipt of such notice, the
Administrative Agent shall provide a copy thereof to each Bank) at least thirty
(30) calendar days prior thereto, with respect to any proposed sale or transfer
of assets pursuant to Section 8.02(g)(iii) or (iv).
(h) Budgets, Forecasts, Other Reports and Information.
--- -------------------------------------------------
Promptly upon their becoming available to the Borrower:
(i) [Intentionally Omitted]
(ii) any reports including management letters submitted
to the Borrower by independent accountants in connection with any annual,
interim or special audit,
(iii) any reports, notices or proxy statements generally
distributed by the Borrower to its stockholders on a date no later than the date
supplied to the stockholders,
77
(iv) any regular or periodic reports, including Forms 10-
K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower
with the Securities and Exchange Commission,
(v) a copy of any material order in any proceeding to
which the Borrower or any of its Subsidiaries is a party issued by any Official
Body,
(vi) regular, periodic utilization reports including in
detail reasonably satisfactory to the Administrative Agent for the period of
such reports the patient census, the number of occupied beds, the payment source
(Medicare, Medicaid, private pay or otherwise) for each patient,
(vii) such other reports and information as the Banks may
from time to time reasonably request. The Borrower shall also notify the Banks
promptly of the enactment or adoption of any Law or the occurrence of any other
event which may result in a Material Adverse Change with respect to the Borrower
after the Borrower becomes aware or should reasonably have become aware thereof,
and
(viii) annual reports in detail satisfactory to the
Administrative Agent setting forth the real property owned, leased or managed by
the Borrower or any Subsidiary, to be supplied not later than March 31, 1999
with respect to the fiscal year ended December 31, 1998 and thereafter not later
than ninety (90) days after the commencement of the fiscal year to which any of
the foregoing may be applicable.
(i) Notices Regarding Plans and Benefit Arrangements.
--- ------------------------------------------------
(i) Promptly upon becoming aware of the occurrence thereof, notice (including
the nature of the event and, when known, any action taken or threatened by the
Internal Revenue Service or the PBGC with respect thereto) of:
(A) any Reportable Event with respect to the Borrower or
any member of the ERISA Group,
(B) any Prohibited Transaction which could be subject
the Borrower or any member of the ERISA Group to a material civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Internal Revenue Code in connection with any Plan, Benefit Arrangement or
any trust created thereunder,
(C) any assertion of material withdrawal liability with
respect to any Multiemployer Plan,
(D) any partial or complete withdrawal from a
Multiemployer Plan by the Borrower or any member of the ERISA Group under Title
IV of ERISA (or assertion thereof), where such withdrawal is likely to result in
material withdrawal liability,
78
(E) any cessation of operations (by the Borrower or any
member of the ERISA Group) at a facility in the circumstances described in
Section 4062(e) of ERISA,
(F) withdrawal by the Borrower or any member of the
ERISA Group from a Multiple Employer Plan to which Section 4063 of ERISA
applies,
(G) a failure by the Borrower or any member of the ERISA
Group to make a payment to a Plan required to avoid imposition of a lien under
Section 302(f) of ERISA,
(H) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA, or
(I) any change in the actuarial assumptions or funding
methods used for any Plan, where the effect of such change is to materially
increase the unfunded benefit liability or obligation to make periodic
contributions.
(ii) Promptly after receipt thereof, copies of (a) all
notices received by the Borrower or any member of the ERISA Group of the PBGC's
intent to terminate any Plan administered or maintained by the Borrower or any
member of the ERISA Group, or to have a trustee appointed to administer any such
Plan; and (b) at the request of the Administrative Agent or any Bank each annual
report (IRS Form 5500 series) and all accompanying schedules, the most recent
actuarial reports, the most recent financial information concerning the
financial status of each Plan administered or maintained by the Borrower or any
member of the ERISA Group, and schedules showing the amounts contributed to each
such Plan by or on behalf of the Borrower or any member of the ERISA Group in
which any of their personnel participate or from which such personnel may derive
a benefit, and each Schedule B (Actuarial Information) to the annual report
----------
filed by the Borrower or any member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
(iii) Promptly upon the filing thereof, copies of Form
5310, or any successor or equivalent form to Form 5310, filed with the PBGC in
connection with the termination of any Plan.
(j) Notices With Respect to Indenture. Written notice to the
--- ---------------------------------
Administrative Agent (and upon the Administrative Agent's receipt of each such
notice, the Administrative Agent shall provide a copy thereof to each Bank):
(i) immediately upon the occurrence of a "Default" or an
"Event of Default," as such terms are defined in the Indenture;
(ii) immediately upon a "Change of Control," as such term
is defined in the Indenture;
79
(iii) immediately upon receipt of a "notice of
acceleration" from either the trustee for the Subordinated Notes or the holders
of the Subordinated Notes pursuant to Section 502 of the Indenture or any
similar provision in any supplement to the Indenture;
(iv) simultaneous with the sending thereof, all notices
required to be sent to the trustee or holders of the Subordinated Notes under
the Indenture; and
(v) immediately upon the receipt thereof, all notices
received from the trustee under the Indenture.
ARTICLE IX
DEFAULT
-------
9.01 Events of Default. An Event of Default shall mean the
-----------------
occurrence or existence of any one or more of the following events or conditions
(whatever the reason therefor and whether voluntary, involuntary or effected by
operation of Law):
(a) The Borrower shall fail to pay any principal of any Loan
(including scheduled or mandatory prepayments or the payment due at maturity) or
shall fail to pay any interest on any Loan or any other amount owing hereunder
or under the other Loan Documents after such principal or within three (3)
Business Days after such interest or other amount becomes due in accordance with
the terms hereof or thereof;
(b) Any representation and warranty made at any time by the
Borrower herein or by the Borrower or any of its Subsidiaries in any other Loan
Document, or in any certificate, other instrument or statement furnished
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished
regardless of whether such representation and warranty was qualified as to
Borrower's knowledge or best knowledge;
(c) The Borrower shall default in the observance or performance
of any covenant contained in Section 8.01(f) or Section 8.02 hereof;
(d) The Borrower or any of its Subsidiaries shall default in
the observance or performance of any other covenant, condition or provision
hereof or of any other Loan Document and such default shall continue unremedied
for a period of thirty (30) Business Days after any officer of the Borrower or
any Subsidiary becomes aware of the occurrence thereof (such grace period to be
applicable only in the event such default can be remedied by corrective action
of the Borrower or such Subsidiary as determined by the Administrative Agent in
its sole discretion);
(e) A default or event of default shall occur at any time under
the terms of any agreement involving borrowed money or the extension of credit
or any other Indebtedness under which the Borrower or any of its Subsidiaries
may be obligated as borrower or guarantor in excess of $10,000,000 in aggregate
principal amount, and such breach, default or event of default consists of the
failure to pay (beyond any period of grace permitted with respect
80
thereto, whether waived or not) any indebtedness when due (whether at stated
maturity, by acceleration or otherwise) or if such breach or default permits or
causes the acceleration of any indebtedness (whether or not such right shall
have been waived) or the termination of any commitment to lend;
(f) Any final judgment or orders for the payment of money in
excess of $1,000,000 in the aggregate (not paid or fully covered by insurance)
shall be entered against the Borrower or any of its Subsidiaries by a court
having jurisdiction in the premises which judgment is not discharged, vacated,
bonded or stayed pending appeal within a period of thirty (30) days from the
date of entry;
(g) Any of the Loan Documents shall cease to be legal, valid
and binding agreements enforceable against the party executing the same or such
party's successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with its terms) or shall in any way be challenged or
contested or cease to give or provide the respective Liens, security interests,
rights, titles, interests, remedies, powers or privileges intended to be created
thereby;
(h) The Collateral or any other of the Borrower's or any of its
Subsidiaries' assets are attached, seized, levied upon or subject to a writ or
distress warrant; or such come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors and the same is not cured
within thirty (30) days thereafter;
(i) A notice of lien or assessment in excess of $1,000,000 is
filed of record with respect to all or any part of the Borrower's or any of its
Subsidiaries' assets by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, including, without limitation, the Pension Benefit Guaranty
Corporation, or if any taxes or debts owing at any time or times hereafter to
any one of these becomes payable and the same is not paid within thirty (30)
days after the same becomes payable unless the same is being contested in good
faith in accordance with Section 8.01(b);
(j) The Borrower or any of its Material Subsidiaries ceases to
be solvent or admits in writing its inability to pay its debts of as they
mature;
(k) Any of the following occurs: the Administrative Agent
determines in good faith that the amount of Borrower's liability is likely to
exceed 10% of its Consolidated Net Worth upon the occurrence of (i), (ii), (iii)
or (iv) below: (i) any Reportable Event constitutes grounds for the termination
of any Plan by the PBGC or the appointment of a trustee to administer or
liquidate any Plan, shall have occurred and be continuing; (ii) proceedings
shall have been instituted or other action taken to terminate any Plan or a
termination notice shall have been filed with respect to any Plan; (iii) a
trustee shall be appointed to administer or liquidate any Plan; or (iv) the PBGC
shall give notice of its intent to institute proceedings to terminate any Plan
or Plans or to appoint a trustee to administer or liquidate any Plan; or, with
respect to any of the events specified in (v), (vi), (vii), (viii) or (ix)
below, the Administrative Agent determines in good faith that any such
occurrence could be reasonably likely to materially and adversely affect the
total enterprise represented by the Borrower and the other members of the ERISA
Group;
81
(v) the Borrower or any member of the ERISA Group shall fail to make any
contributions when due to a Plan or a Multiemployer Plan; (vi) the Borrower or
any member of the ERISA Group shall make any amendment to a Plan with respect to
which security is required under Section 307 of ERISA; (vii) the Borrower or any
member of the ERISA Group shall withdraw completely or partially from a
Multiemployer Plan; (viii) the Borrower or any member of the ERISA Group shall
withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a
Multiple Employer Plan; or (ix) any applicable law is adopted, changed or
interpreted by any Official Body with respect to or otherwise affecting one or
more Plans, Multiemployer Plans or Benefit Arrangements;
(l) The Borrower ceases to conduct its business as
contemplated or the Borrower or any of its Material Subsidiaries is enjoined,
restrained or in any way prevented by court order from conducting all or any
material part of its business and such injunction, restraint or other
preventative order is not dismissed within thirty (30) days after the entry
thereof;
(m) A Change of Ownership occurs;
(n) An event of default shall occur at any time under the
terms of the MPN Credit Agreement which causes the acceleration of any
indebtedness thereunder, or an event of default shall occur at any time under
the terms of the Paragon Senior Subordinated Note Indenture which causes the
acceleration of any indebtedness thereunder;
(o) A default or event of default shall occur at any time
under the terms of the Revolving Credit Loan Agreement, and such breach, default
or event of default consists of the failure to pay (beyond any period of grace
permitted with respect thereto, whether waived or not) any indebtedness when due
(whether at stated maturity, by acceleration or otherwise) or if such breach or
default permits or causes the acceleration of any indebtedness (whether or not
such right shall have been waived) or the termination of any commitment to lend;
(p) A proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for relief in
respect of MPN, the Borrower or any Subsidiary of the Borrower in an involuntary
case under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of MPN, the
Borrower, or any Subsidiary of the Borrower for any substantial part of its
property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
sixty (60) consecutive days or such court shall enter a decree or order granting
any of the relief sought in such proceeding; or
(q) MPN, the Borrower, or any Subsidiary of the Borrower
shall commence a voluntary case under any applicable bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect, shall consent to
the entry of an order for relief in an involuntary case under any such law, or
shall consent to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or other similar
official) of itself or for any substantial part of its property or shall make a
general assignment for
82
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any action in furtherance of any of the foregoing.
[PAZ: Do not change # of (p) or (q) - cross ref. Mtg]
9.02 Consequences of Event of Default.
--------------------------------
(a) If an Event of Default specified under subsections (a)
through (o) of Section 9.01 hereof shall occur and be continuing, the Banks
shall be under no further obligation to make Loans hereunder and the
Administrative Agent upon the request of the Required Banks, shall by written
notice to the Borrower, declare the unpaid principal amount of the Notes then
outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Banks hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Administrative Agent for the benefit of each
Bank without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived,; and
(b) If an Event of Default specified under subsections (p) or
(q) of Section 9.01 hereof shall occur, the Banks shall be under no further
obligations to make Loans hereunder and the unpaid principal amount of the Notes
then outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Banks hereunder and thereunder shall be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived; and
(c) If an Event of Default shall occur and be continuing, any
Bank to whom any obligation is owed by any Loan Party hereunder or under any
other Loan Document or any participant of such Bank which has agreed in writing
to be bound by the provisions of Section 10.13 hereof and any branch, subsidiary
or affiliate of such Bank or participant anywhere in the world shall have the
right, in addition to all other rights and remedies available to it, without
notice to such Loan party, to set-off against and apply to the then unpaid
balance of all the Loans and all other obligations of such Loan party hereunder
or under any other Loan Document any debt owing to, and any other fund held in
any manner for the account of, such Loan Party by such Bank or participant or by
such branch, subsidiary or affiliate, including, without limitation, all funds
in all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or hereafter
maintained by such Loan Party for its own account (but not including funds held
in custodian or trust accounts) with such Bank or participant or such branch,
subsidiary or affiliate. Such right shall exist whether or not any Bank or the
Administrative Agent shall have made any demand under this Agreement or any
other Loan Document, whether or not such debt owing to or funds held for the
account of such Loan Party is or are matured or unmatured and regardless of the
existence or adequacy of any Collateral, Guaranty or any other security, right
or remedy available to any Bank or the Administrative Agent; and
(d) If an Event of Default shall occur and be continuing, and
whether or not the Administrative Agent shall have accelerated the maturity of
Loans of the Borrower pursuant to any of the foregoing provisions of this
Section 9.02, the Agents or any Bank, if owed
83
any amount with respect to the Notes, may proceed to protect and enforce its
rights by suit in equity, action at law and/or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Agreement or the Notes, including as permitted by applicable Law the
obtaining of the ex parte appointment of a receiver, and, if such amount shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of the agent or such Bank; and
(e) From and after the date on which the Administrative Agent
has taken any action pursuant to this Section 9.02 and until all obligations of
the Loan Parties have been paid in full, any and all proceeds received by the
Administrative Agent from any sale or other disposition of the Collateral, or
any part thereof, or the exercise of any other remedy by the Administrative
Agent, shall be applied as follows:
(i) first, to reimburse the Administrative Agent and the
Banks for reasonable out-of-pocket costs, expenses and disbursements, including
without limitation reasonable attorneys' fees and legal expenses, incurred by
the Administrative Agent or the Banks in connection with realizing on the
Collateral or collection of any obligations of the Loan Parties under any of the
Loan Documents, including advances made by the Banks or any one of them or the
Administrative Agent for the reasonable maintenance, preservation, protection or
enforcement of, or realization upon, the Collateral, including without
limitation, advances for taxes, insurance, repairs and the like and reasonable
expenses incurred to sell or otherwise realize on, or prepare for sale or other
realization on, any of the Collateral;
(ii) second, to the prepayment of all Indebtedness then
due and unpaid of the Loan Parties to the Banks incurred under this Agreement or
any of the Loan Documents, whether of principal, interest, fees, expenses or
otherwise, in such manner as the Administrative Agent may reasonably determine
in its discretion and with respect to principal, interest, and fees, shall be
made in proportion to the Ratable Share of each Bank; and
(iii) the balance, if any, as required by Law.
(f) In addition to all of the rights and remedies contained in
this Agreement or in any of the other Loan Documents, the Administrative Agent
and the Collateral Agent shall have all of the rights and remedies with respect
to the Collateral of a secured party under the Uniform Commercial Code or other
applicable Law, all of which rights and remedies shall be cumulative and non-
exclusive, to the extent permitted by Law. The Administrative Agent may, and
upon the request of the Required Banks shall (or shall, if applicable cause the
Collateral Agent to), exercise all post-default rights granted to the
Administrative Agent (or Collateral Agent, as the case may be) and the Banks
under the Loan Documents or applicable Law.
(g) Following the occurrence and continuance of an Event of
Default, the Borrower, at its cost and expense (including the cost and expense
of obtaining any of the following referenced consents, approvals, etc.) will
promptly execute and deliver or cause the execution and delivery of all
applications, certificates, instruments, registration statements, and all other
documents and papers the Administrative Agent may request in connection with the
84
obtaining of any consent, approval, registration, qualification, permit,
license, accreditation, or authorization of any other Official Body or other
person necessary or appropriate for the effective exercise of any rights
hereunder or under the other Loan Documents. Without limiting the generality of
the foregoing, the Borrower agrees that in the event the Administrative Agent or
the Collateral Agent on behalf of the Banks shall exercise its rights, hereunder
or pursuant to the other Loan Documents, to sell, transfer, or otherwise dispose
of, or vote, consent, operate, or take any other action in connection with any
of the Collateral, the Borrower shall execute and deliver (or cause to be
executed and delivered) all applications, certificates, assignments, and other
documents that the Administrative Agent requests to facilitate such actions and
shall otherwise promptly, fully, and diligently cooperate with the
Administrative Agent and the Collateral Agent and any other necessary persons in
making any application for the prior consent or approval of any Official Body or
any other person to the exercise by the Administrative Agent or the Collateral
Agent on behalf of the Banks of any of such rights relating to all or any of the
Collateral. Furthermore, because the Borrower agrees that the remedies at law,
of the agent on behalf of the Banks, for failure of the Borrower to comply with
the provisions of Section 8.01(f) and of this Section 9.02(g) would be
inadequate and that any such failure would not be adequately compensable in
damages, the Borrower agrees that the covenants of Sections 8.01(f) and 9.02(g)
may be specifically enforced.
(h) Upon the occurrence and continuance of an Event of Default,
the Administrative Agent may request, without limiting the rights and remedies
of the Administrative Agent on behalf of the Banks otherwise provided hereunder
and under the other Loan Documents, that the Borrower do any of the following:
(i) give the Collateral Agent on behalf of the Banks specific assignments of the
accounts receivable of the Borrower and each Subsidiary after such accounts
receivable come into existence, and schedules of such accounts receivable, the
form and content of such assignment and schedules to be satisfactory to the
Collateral Agent and the Administrative Agent, (ii) immediately notify the
Administrative Agent if any of such accounts receivable arise out of contracts
with the U.S. Government or any department, agency or instrumentality thereof,
and execute any instruments and take any steps required by the Administrative
Agent in order that all moneys due and to become due under such contract shall
be assigned (to the extent permitted by law) to the Collateral Agent on behalf
of the Banks and notice thereof given to the government under the Federal
Assignment of Claims Act, if applicable, or any other applicable law or
regulation; and in order to better secure the Collateral Agent on behalf of the
Banks, in relation to such accounts receivable, and (iii) to the extent
permitted by Law, enter into such lockbox agreements and establish such lockbox
accounts as the Administrative Agent may require, with the local banks in areas
in which the Borrower and its Subsidiaries may be operating (in such cases, all
local lockbox accounts shall be depository transfer accounts entitled "In trust
for PNC Bank, National Association, as Collateral Agent") which shall have
agreed in writing to the Collateral Agent's requirements for the handling of
such accounts and the transfer of account funds to the Collateral Agent on
behalf of the Banks, all at the Borrower's sole expense, and shall direct all
payments from Medicare, Medicaid, Blue Cross and Blue Shield, private payors,
health maintenance organizations, all commercial payors and all other payors due
to the Borrower or any Subsidiary, to such lockbox accounts.
85
9.03 Notice of Sale. Any notice required to be given by the
--------------
Administrative Agent or Collateral Agent of a sale, lease, or other disposition
of the Collateral or any other intended action by the Administrative Agent or
Collateral Agent, if given ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to the relevant Loan
Party.
ARTICLE X
THE AGENT
---------
10.01 Appointment. Each Bank hereby irrevocably designates,
-----------
appoints and authorizes PNC Bank to act as Administrative Agent for such Bank
under this Agreement to execute and deliver or accept on behalf of each of the
Banks the other Loan Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of a Note shall be deemed irrevocably
to authorize, the Administrative Agent to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and any other
instruments and agreements referred to herein, and to exercise such powers and
to perform such duties hereunder as are specifically delegated to or required of
the Agents, the Administrative Agent or any of them by the terms hereof,
together with such powers as are reasonably incidental thereto. PNC Bank agrees
to act as the Administrative Agent on behalf of the Banks to the extent provided
in this Agreement, and each of PNC Bank and First Union National Bank agrees to
act as Agent on behalf of the Banks to the extent provided in this Agreement.
10.02 Delegation of Duties. The Agents and the Administrative Agent
--------------------
may perform any of its duties hereunder by or through agents or employees
(provided such delegation does not constitute a relinquishment of its duties as
Agents and the Administrative Agent) and, subject to Sections 10.05 and 10.06
hereof, shall be entitled to engage and pay for the advice or services of any
attorneys, accountants or other experts concerning all matters pertaining to its
duties hereunder and to rely upon any advice so obtained
10.03 Nature of Duties; Independent Credit Investigation. Neither
--------------------------------------------------
the Agents nor the Administrative Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or otherwise exist. The duties of
the Administrative Agent and of the Agents shall be mechanical and
administrative in nature; neither the Administrative Agent nor the Agents shall
have by reason of this Agreement a fiduciary or trust relationship in respect of
any Bank; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon the Administrative Agent or any Agent
any obligation in respect of this Agreement except as expressly set forth
herein. Without limiting the generality of the foregoing, the use of the term
"Agents" in this Agreement with reference to the Agents or Administrative Agent,
as the case may be, is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Each Bank expressly acknowledges (i) neither the
Administrative Agent nor any Agent has made any representations and warranties
to it and that no act by the Administrative Agent or any Agent
86
hereafter taken, including any review of the affairs of the Loan Parties, shall
be deemed to constitute any representation or warranty by the Administrative
Agent or any Agent to any Bank; (ii) that it has made and will continue to make,
without reliance upon the Administrative Agent or any Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of the Loan Parties in connection with this Agreement and
the making and continuance of the Loans hereunder; and (iii) except as expressly
provided herein, that neither the Administrative Agent nor any Agent shall have
any duty or responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information with respect thereto,
whether coming into its possession before the making of any Loan or at any time
or times thereafter.
10.04 Actions in Discretion of Agents; Instructions From the Banks.
------------------------------------------------------------
The Administrative Agent and each Agent agrees, upon the written request of the
Required Banks, to take or refrain from taking any action of the type specified
as being within the Administrative Agent's or such Agent's rights, powers or
discretion herein, provided that neither the Administrative Agent nor any Agent
--------
shall be required to take any action which exposes the Administrative Agent or
any Agent to personal liability or which is contrary to this Agreement or any
other Loan Document or applicable Law. In the absence of a request by the
Required Banks, the Administrative Agent and each Agent shall have authority, in
its sole discretion, to take or not to take any such action, unless this
Agreement specifically requires the consent of the Required Banks or all of the
Banks. Any action taken or failure to act pursuant to such instructions or
discretion shall be binding on the Banks, subject to Section 10.06 hereof.
Subject to the provisions of Section 10.06, no Bank shall have any right of
action whatsoever against the Administrative Agent or any Agent as a result of
the Administrative Agent or any Agent acting or refraining from acting hereunder
in accordance with the instructions of the Required Banks, or in the absence of
such instructions, in the absolute discretion of the Administrative Agent or the
Agents so long as the Administrative Agent or such Agent is otherwise authorized
to act within its rights and powers as provided in this Agreement.
10.05 Reimbursement and Indemnification of Agents by the Borrower.
-----------------------------------------------------------
The Borrower unconditionally agrees to pay or reimburse the Administrative Agent
and each Agent and save the Administrative Agent and each Agent harmless against
(a) liability for the payment of all reasonable out-of-pocket costs, expenses
and disbursements, including but not limited to reasonable fees and expenses of
counsel, appraisers and environmental consultants, incurred by the
Administrative Agent or any Agent (i) in connection with the development,
negotiation, preparation, execution, performance by a Loan Party or an Excluded
Entity and interpretation of this Agreement and the other Loan Documents, (ii)
relating to any requested amendments, waivers or consents pursuant to the
provisions hereof, (iii) in connection with the enforcement of this Agreement or
any other Loan Document or collection of amounts due hereunder or thereunder 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 (iv) in any workout, restructuring or in connection with the
protection, preservation, exercise or enforcement of any of the terms hereof or
of any rights hereunder or under any other Loan Document or in connection with
any foreclosure, collection or bankruptcy proceedings, and (b) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or
87
disbursements of any kind or nature whatsoever including, without limitation,
all documentary stamp tax, non-recurring intangible personal property tax,
recording or transfer taxes due to any Official Body together with all interest,
fines, penalties, costs or other charges thereon which may be imposed on,
incurred by or asserted against the Administrative Agent or any Agent, in its
capacity as such, in any way relating to or arising out of this Agreement or any
other Loan Documents or any action taken or omitted by the Administrative Agent
or any Agent hereunder or thereunder, provided that the Borrower shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements if the
same results from the Administrative Agent's or any Agent's gross negligence or
willful misconduct, or if the Borrower was not given notice of the subject claim
and the opportunity to participate in the defense thereof, at its expense, or if
the same results from a compromise or settlement agreement entered into without
the consent of the Borrower. In addition, upon the occurrence of an Event of
Default, the Borrower agrees to reimburse and pay all reasonable out-of-pocket
expenses of the Administrative Agent's or any Agent's regular employees and
agents engaged periodically to perform audits of the Borrower's books, records
and business properties.
10.06 Exculpatory Provisions. Neither the Administrative Agent, any
----------------------
Agent nor any of their respective directors, officers, employees, agents,
attorneys or affiliates shall (a) be liable to any Bank for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith including
without limitation pursuant to any Loan Document, unless caused by its or their
own gross negligence or willful misconduct, (b) be responsible in any manner to
any of the Banks for the effectiveness, enforceability, genuineness, validity or
the due execution of this Agreement or any other Loan Documents or for any
recital, representation, warranty, document, certificate, report or statement
herein or made or furnished under or in connection with this Agreement or any
other Loan Documents, unless caused by its or their own gross negligence or
willful misconduct, or (c) be under any obligation to any of the Banks to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions hereof or thereof on the part of the Loan Parties or any
Excluded Entity, or the financial condition of the Loan Parties or any Excluded
Entity, or the existence or possible existence of any Event of Default or
Potential Default, unless caused by its or their own gross negligence or willful
misconduct. Neither the Agent nor any Bank nor any of their respective
directors, officers, employees, agents, attorneys or affiliates shall be liable
to the Loan Parties or any Excluded Entity for consequential damages resulting
from any breach of contract, tort or other wrong in connection with the
negotiation, documentation, administration or collection of the Loans or any of
the Loan Documents.
10.07 Reimbursement and Indemnification of Agents by Banks. Each
----------------------------------------------------
Bank agrees to reimburse and indemnify the Administrative Agent and each Agent
(to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) in proportion of its Ratable Share from and
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent, the Agents, or any of them, in their respective capacities
as such, in any way relating to or arising out of this Agreement or any other
Loan Documents or any action taken or omitted by the
88
Administrative Agent or any Agent hereunder or thereunder, provided that no Bank
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
(a) if the same results from the Administrative Agent's or any Agent's gross
negligence or willful misconduct, or (b) if such Bank was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense, or (c) if the same results from a compromise and settlement
agreement entered into without the consent of such Bank. In addition, each Bank
agrees promptly to reimburse the Administrative Agent and each Agent (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so) in proportion to its Ratable Share for all amounts due and
payable by the Borrower to the Administrative Agent or the Agents in connection
with the periodic audit of the Borrower's books, records and business properties
by the Administrative Agent or the Agents. In the event the Banks reimburse or
indemnify the Administrative Agent or any Agent pursuant to this Section 10.07
and subsequent thereto the Administrative Agent or such Agent is reimbursed or
indemnified by the Borrower with respect to the same matter for which
indemnification or reimbursement was previously made by the Banks, such
Administrative Agent or Agent will promptly refund to the Banks, in accordance
with each Bank's Ratable Share, the duplicative amount.
10.08 Reliance by Agents. The Administrative Agent and each Agent
------------------
shall be entitled to rely upon any writing, telegram, telex or teletype message,
resolution, notice, consent, certificate, letter, cablegram, statement, order or
other document or conversation by telephone or otherwise believed by it to be
genuine and correct and to have been signed, sent or made by the proper person
or persons, and upon the advice and opinions of counsel and other professional
advisers selected by the Administrative Agent or any Agent. The Administrative
Agent and each Agent shall be fully justified in failing or refusing to take any
action hereunder unless it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
10.09 Notice of Default. Neither the Administrative Agent nor any
-----------------
Agent shall be deemed to have knowledge or notice of the occurrence of any
Potential Default or Event of Default unless such person has received written
notice from a Bank or the Borrower referring to this Agreement, describing such
Potential Default or Event of Default and stating that such notice is a "notice
of default."
10.10 Notices. Each of the Administrative Agent and each Agent shall
-------
promptly send to each Bank a copy of all notices received from any Loan Party
pursuant to the provisions of this Agreement or the other Loan Documents
promptly upon receipt thereof. The Administrative Agent shall promptly notify
the Borrower and the other Banks of each change in the Base Rate and the
effective date thereof.
10.11 Banks in Their Individual Capacities. With respect to its
------------------------------------
Commitments and the Loans made by it, the Administrative Agent and each Agent
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not the Administrative Agent or an Agent,
and the term "Banks" shall, unless the context otherwise indicates, include the
Administrative Agent and each Agent in its individual capacity. PNC
89
Bank and its affiliates, First Union National Bank and its affiliates and each
of the Banks and their respective affiliates may, without liability to account,
except as prohibited herein, make Loans to, accept deposits from, discount
drafts for, act as trustee under indentures of, and generally engage in any kind
of banking or trust business with, the Borrower and its affiliates, in the case
of the Administrative Agent or any Agent, as though it were not acting as
Administrative Agent or Agent hereunder and in the case of each Bank, as though
such Bank were not a Bank hereunder.
10.12 Holders of Notes. The Administrative Agent and each Agent may
----------------
deem and treat any payee of any Note as the owner thereof for all purposes
hereof unless and until written notice of the assignment or transfer thereof
shall have been filed with the Administrative Agent and the Agents. Any
request, authority or consent of any person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
10.13 Equalization of Banks. The Banks and the holders of any
---------------------
participations in any Notes agree among themselves that, with respect to all
amounts received by any Bank or any such holder for application on any
obligation hereunder or under any Note or under any such participation, whether
received by voluntary payment, by realization upon security, by the exercise of
the right of set-off or banker's lien, by counterclaim or by any other non-pro
rata source, equitable adjustment will be made in the manner stated in the
following sentence so that, in effect, all such excess amounts shall be shared
ratably among the Banks and such holders in proportion to their interests in
payments under the Notes, except as otherwise provided in Sections [4.04(b),
5.04(b) or 5.06(a)] hereof. The Banks or any such holder receiving any such
amount shall purchase for cash from each of the other Banks an interest in such
Bank's Loans in such amount as shall result in a ratable participation by the
Banks and each such holder in the aggregate unpaid amount under the Notes,
provided that if all or any portion of such excess amount is thereafter
recovered from the Bank or the holder 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 (including
court order) to be paid by the Bank or the holder making such purchase.
10.14 Successor Agents. Any Agent or the Administrative Agent (i)
----------------
may resign as Agent or Administrative Agent, as the case may be, or (ii) shall
resign if such resignation is requested by the Required Banks, in the case of
either (i) or (ii) upon not less than thirty (30) days' prior written notice to
the Borrower and the Banks. If any Agent or the Administrative Agent shall
resign under this Agreement, then either (a) the Required Banks shall appoint
from among the Banks a successor Agent or Administrative Agent, as the case may
be, for the Banks, or (b) if a successor Agent shall not be so appointed and
approved within the thirty (30) day period following the Agent's or the
Administrative Agent's notice to the Banks of its resignation, then the
resigning Administrative Agent or resigning Agent, as the case may be, shall
appoint, with the consent of the Borrower, such consent not to be unreasonably
withheld, a successor Agent who shall serve as Agent, or Administrative Agent,
as the case may be, until such time as the Required Banks appoint a successor
agent. Upon its appointment pursuant to either clause
90
(a) or (b) above, such successor agent shall succeed to the rights, powers and
duties of the agent and the terms "Agent" and "Administrative Agent" shall mean
such successor Agent or Administrative Agent, as the case may be, effective upon
its appointment, and the former Administrative Agent's or Agent's rights, powers
and duties as Agent or Administrative Agent shall be terminated without any
other or further act or deed on the part of such former Agent or Administrative
Agent or any of the parties to this Agreement. After the resignation of any
Administrative Agent or Agent hereunder, the provisions of this Article X shall
inure to the benefit of such former Agent and former Administrative Agent, and
such former Agent and former Administrative Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was the Administrative Agent or an Agent under this
Agreement.
10.15 Administrative Agent's Fee. The Borrower shall pay to the
--------------------------
Administrative Agent a non refundable, annual fee (the "Administrative Agent's
Fee") as set forth in the agreement dated December 3, 1998, between the Borrower
and the Administrative Agent, such fee to be payable in the manner and on the
dates set forth in such letter agreement.
10.16 Availability of Funds. Unless the Administrative Agent shall
---------------------
have been notified by a Bank prior to the date upon which a Loan is to be made
that such Bank does not intend to make available to the Administrative Agent
such Bank's portion of such Loan, the Administrative Agent may assume that such
Bank has made or will make such proceeds available to the Administrative Agent
on such date and the Administrative Agent may, in reliance upon such assumption
(but shall not be required to), make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent shall be entitled to
recover such amount on demand from such Bank (or, if such Bank fails to pay such
amount forthwith upon such demand from the Borrower) together with interest
thereon, in respect of each day during the period commencing on the date such
amount was made available to the Borrower and ending on the date the
Administrative Agent recovers such amount, at a rate per annum equal to the
Federal Funds Effective Rate in respect of the Loan.
10.17 Calculations. In the absence of gross negligence or willful
------------
misconduct, the Administrative Agent shall not be liable for any error in
computing the amount payable to any Bank whether in respect of the Loans, fees
or any other amounts due to the Banks under this Agreement. In the event an
error in computing any amount payable to any Bank is made, the Administrative
Agent, the Borrower and each affected Bank shall, forthwith upon discovery of
such error, make such adjustments as shall be required to correct such error,
and any compensation therefor will be calculated at the Federal Funds Effective
Rate.
10.18 Beneficiaries. Except as expressly provided herein, the
-------------
provisions of this Article X are solely for the benefit of the Administrative
Agent, each Agent and the Banks, and the Borrower shall not have any rights to
rely on or enforce any of the provisions hereof. In performing its functions
and duties under this Agreement, the Administrative Agent and each Agent shall
act solely as agent of the Banks and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for the Borrower.
91
10.19 Holding of Loan Documents. Administrative Agent agrees that all
-------------------------
original Loan Documents retained by it shall be retained for the benefit of the
Banks, and the Administrative Agent shall make available copies of such
documents retained by it upon the reasonable request of any of the Banks.
ARTICLE XI
MISCELLANEOUS
-------------
11.01 Modifications, Amendments or Waivers. With the written consent
------------------------------------
of the Required Banks, the Administrative Agent, acting on behalf of the Banks,
and the Borrower or the other applicable Loan Party may from time to time enter
into written agreements amending or changing any provision of this Agreement or
any other Loan Document or the rights of the Banks or the Borrower or such Loan
Party hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the obligations of the Borrower or such
Loan Party hereunder or thereunder. Any such agreement, waiver or consent made
with such written consent shall be effective to bind all the Loan Parties and
all of the Banks; provided that, no such agreement, waiver or consent may be
made which will:
(a) without the written consent of all Banks, reduce the amount
of the Commitment Fee or any other fees payable to any Bank hereunder, or amend
Sections 5.02 [Pro Rata Treatment of Banks], 10.06 [Exculpatory Provisions] or
10.13 [Equalization of Banks] hereof;
(b) without the written consent of all Banks, whether or not
any Loans are outstanding, extend the time for payment of principal or interest
of any Loan, or reduce the principal amount of or the rate of interest borne by
any Loan;
(c) without the written consent of all Banks, release any
Collateral or other security, if any, for the Borrower's obligations hereunder
(provided that, upon the request by the Borrower and so long as no Potential
Default or Event of Default exists or is continuing as certified by the Borrower
to the Agents and the Banks, with respect to any disposition or sale of assets
which is permitted by Section 8.02(f) or (g), the Administrative Agent is hereby
authorized to release liens on the assets so disposed of or sold and to release
the Guaranty of any Subsidiary sold or disposed of without the consent of any
Bank);
(d) without the written consent of all Banks, release or
terminate any Guaranty Agreement of any Loan Party;
(e) without the written consent of the Supermajority Required
Banks and each Bank whose Combined Commitment equals $25,000,000 or more, amend
Sections 4.01(a) or 8.02(r), or change the definitions or the method of
computing the ratios contained within such foregoing sections;
(f) without the written consent of all Banks, amend Section
11.01 or change the definition of Supermajority Required Banks or the definition
of Required Banks, or
92
change any requirement providing for the Banks, the Supermajority Required Banks
or the Required Banks to authorize the taking of any action hereunder; or
(g) without the written consent of all Banks, extend the
Expiration Date or increase the amount of Commitment of any Bank hereunder.
11.02 No Implied Waivers; Cumulative Remedies; Writing Required. No
---------------------------------------------------------
course of dealing and no delay or failure of the Administrative Agent, any Agent
or any Bank in exercising any right, power or remedy or privilege under this
Agreement or any other Loan Document shall affect any other or future exercise
thereof or operate as a waiver thereof; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power, remedy or privilege preclude any further exercise thereof or of
any other right, power, remedy or privilege. The rights and remedies of the
Administrative Agent, each Agent and the Banks under this Agreement and any
other Loan Documents are cumulative and not exclusive of any rights or remedies
which they would otherwise have. Any waiver, permit, consent or approval of any
kind or character on the part of any Bank of any breach or default under this
Agreement or any such waiver of any provision or condition of this Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing.
11.03 Reimbursement and Indemnification of Banks by the Borrower;
-----------------------------------------------------------
Taxes. The Borrower agrees unconditionally upon demand to pay or reimburse to
-----
each Bank (other than the Administrative Agents and the Agents, as to which the
Borrower's obligations are set forth in Section 9.05) and to save such Bank
harmless against (i) liability for the payment of all reasonable out-of-pocket
costs, expenses and disbursements (including reasonable fees and expenses of
counsel for each Bank except with respect to (a) and (b) below), incurred by
such Bank (a) in connection with the interpretation of this Agreement, and other
instruments and documents to be delivered hereunder, (b) relating to any
requested amendments, waivers or consents pursuant to the provisions hereof, (c)
in connection with the enforcement of this Agreement or any other Loan Document,
or collection of amounts due hereunder or thereunder 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
(d) in any workout, restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, or (ii) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever including, without
limitation, all documentary stamp tax, non-recurring intangible personal
property tax, recording or transfer taxes due to any Official Body together with
all interest, fines, penalties, costs or other charges thereon which may be
imposed on, incurred by or asserted against such Bank, in its capacity as such,
in any way relating to or arising out of this Agreement or any other Loan
Documents or any action taken or omitted by such Bank hereunder or thereunder,
provided that the Borrower shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (A) if the same results from such Bank's gross
negligence or willful misconduct, or (B) if the Borrower was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense, or (C) if the same
93
results from a compromise or settlement agreement entered into without the
consent of the Borrower. The Banks will attempt to minimize the fees and
expenses of legal counsel for the Banks which are subject to reimbursement by
the Borrower hereunder by considering the usage of one law firm to represent the
Banks and the Administrative Agents, and the Agents if appropriate under the
circumstances. The Borrower agrees unconditionally to pay all stamp, document,
transfer, recording or filing taxes or fees and similar impositions now or
hereafter determined by the Administrative Agent, any Agent or any Bank to be
payable in connection with this Agreement or any other Loan Document, and the
Borrower agrees unconditionally to save the Administrative Agent, each Agent and
the Banks harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions.
11.04 Holidays. Whenever any payment or action to be made or taken
--------
hereunder shall be stated to be due on a day which is not a Business Day, such
payment or action shall be made or taken on the next following Business Day
(except as provided in Sections 4.02(a) and (b) with respect to Interest Periods
for Loans subject to a Euro-Rate Option), and such extension of time shall be
included in computing interest or fees, if any, in connection with such payment
or action.
11.05 Funding by Branch, Subsidiary or Affiliate.
------------------------------------------
(a) Notional Funding. Each Bank shall have the right from
--- ----------------
time to time, without notice to the Borrower, to deem any branch, subsidiary or
affiliate (which for the purposes of this Section 11.05 shall mean any
corporation or association which is directly or indirectly controlled by or is
under direct or indirect common control with any corporation or association
which directly or indirectly controls such Bank) of such Bank to have made,
maintained or funded any Loan to which the Euro-Rate Option applies at any time,
provided that immediately following (on the assumption that a payment were then
due from the Borrower to such other office) and as a result of such change the
Borrower would not be under any greater financial obligation pursuant to Section
5.06 hereof than it would have been in the absence of such change. Notional
funding offices may be selected by each Bank without regard to the Bank's actual
methods of making, maintaining or funding the Loans or any sources of funding
actually used by or available to such Bank.
(b) Actual Funding. Each Bank shall have the right from time
--- --------------
to time, to make or maintain any Loan by arranging for a branch, subsidiary or
affiliate of such Bank to make or maintain such Loan subject to the last
sentence of this Section 11.05(b). If any Bank causes a branch, subsidiary or
affiliate to make or maintain any part of the Loans hereunder, all terms and
conditions of this Agreement shall, except where the context clearly requires
otherwise, be applicable to such part of the Loans to the same extent as if such
Loans were made or maintained by such Banks but in no event shall any Bank's use
of a branch, subsidiary or affiliate to make or maintain any part of the Loans
hereunder cause such Bank or such branch, subsidiary or affiliate to incur any
cost or expenses payable by the Borrower hereunder or require the Borrower to
pay any other compensation to any Bank (including, without limitation, any
94
expenses incurred or payable pursuant to Section 5.06 hereof) which would
otherwise not be incurred).
11.06 Notices. All notices, requests, demands, directions and other
-------
communications (collectively "notices") given to or made upon any party hereto
under the provisions of this Agreement shall be by telephone or in writing
(including telex or facsimile communication) unless otherwise expressly
permitted hereunder and shall be delivered or sent by telex or facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages hereof or in accordance with any subsequent
unrevoked written direction from any party to the others. All notices shall,
except as otherwise expressly herein provided, be effective (a) in the case of
telex or 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, telephonic notices must be confirmed in
writing no later than the next day by letter, facsimile or telex, (d) if given
by mail, four (4) days after such communication is deposited in the mails with
first class postage prepaid, return receipt requested, and (e) if given by any
other means (including by air courier), when delivered; provided, that notices
to the Administrative Agent shall not be effective until received. Any Bank
giving any notice to the Borrower shall simultaneously send a copy thereof to
the Administrative Agent, and the Administrative Agent shall promptly notify the
other Banks of the receipt by it of any such notice.
11.07 Severability. The provisions of this Agreement are intended to
------------
be severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity and
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
11.08 Governing Law. This Agreement shall be deemed to be a contract
-------------
under the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania without regard to its conflict of laws principles.
11.09 Prior Understanding. This Agreement supersedes all prior
-------------------
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
11.10 Duration; Survival. All representations and warranties of the
------------------
Borrower contained herein or made in connection herewith shall survive the
making of Loans and shall not be waived by the execution and delivery of this
Agreement, any investigation by the Administrative Agent, any Agent or the
Banks, the making of Loans, or payment in full of the Loans. All covenants and
agreements of the Borrower contained in Sections 8.01, 8.02 and 8.03 herein
shall continue in full force and effect from and after the date hereof so long
as the Borrower may borrow hereunder and until termination of the Commitments
and payment in full
95
of the Loans. All covenants and agreements of the Borrower contained herein
relating to the payment of principal, interest, premiums, additional
compensation or expenses and indemnification, including those set forth in the
Notes, Article V and Sections 10.05, 10.07 and 11.03 hereof, shall survive
payment in full of the Loans and termination of the Commitments.
11.11 Successors and Assigns.
----------------------
(i) This Agreement shall be binding upon and shall inure to the
benefit of the Banks, the Agents, the Administrative Agent, the Borrower and
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights and obligations hereunder or any interest herein.
Each Bank may, at its own cost, make assignments of or sell participations in
all or any part of its Commitment and the Loans made by it to one or more banks
or other entities, subject in the case of assignments to the consent of the
Borrower (which consent shall not be required (A) during any period in which an
Event of Default exists or (B) in the case of an assignment by a Bank to an
Affiliate of such Bank) and the Administrative Agent with respect to any
assignee, such consent not to be unreasonably withheld, and provided that
assignments may not be made in amounts less than $1,000,000. It is expressly
agreed that upon and after the occurrence and during the continuation of an
Event of Default the consent of the Administrative Agent shall be required,
however the consent of the Borrower shall not be required for a Bank to make an
assignment of all or any part of its Commitment. In order for a Bank, at any
time to sell a participation in all or any part of its Commitment, the consent
of the Administrative Agent shall be required, however the consent of the
Borrower shall not be required. In the case of an assignment, upon receipt by
the Administrative Agent of the Assignment and Assumption Agreement and payment
to the Administrative Agent of a fee in the amount of $3,500, the assignee shall
have, to the extent of such assignment (unless otherwise provided therein), the
same rights, benefits and obligations as it would have if it had been a
signatory Bank hereunder, the Commitments in Section 2.01 shall be adjusted
accordingly, and upon surrender of any Note subject to such assignment, the
Borrower shall execute and deliver a new Note to the assignee in an amount equal
to the amount of the Commitment or Loan assumed by it and a new Note to the
assigning Bank in an amount equal to the Commitment or Loan retained by it
hereunder. In the case of a participation, the participant shall only have the
rights specified in Section 9.02(c) (the participant's rights against such Bank
in respect of such participation to be those set forth in the agreement executed
by such Bank in favor of the participant relating thereto and not to include any
voting rights except with respect to changes of the type referenced in clauses
(a), (b) or (c) under Section 11.01 hereof), all of such Bank's obligations
under this Agreement or any other Loan Document shall remain unchanged and all
amounts payable by any Loan party hereunder or thereunder shall be determined as
if such Bank had not sold such participation. Each Bank may furnish any publicly
available information concerning any Loan Party and any other information
concerning any Loan Party in the possession of such Bank from time to time to
assignees and participants (including prospective assignees or participants)
provided such assignees and participants agree to be bound by the provisions of
Section 11.2 hereof.
(ii) Notwithstanding any other provision of this Agreement, any
Bank may at any time pledge or grant a security interest in all or any portion
of its rights under this
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Agreement, its Note and the other Loan Documents to any Federal Reserve Bank in
accordance with Regulation A of the FRB or U.S. Treasury Relegation 31 CFR
Section 203.14 without notice to or consent of the Borrower or the
Administrative Agent. No such pledge or grant of a security interest shall
release the transferor Bank of its obligations hereunder or under any other Loan
Document.
11.12 Confidentiality. The Agents, the Administrative Agent and the
---------------
Banks each agree to keep confidential all information obtained from any Loan
Party which is nonpublic and confidential or proprietary in nature (including
any information any Loan Party specifically designates as confidential), except
as provided below, and to use such information only in connection with their
respective capacities under this Agreement and for the purposes contemplated
hereby. The Agents, the Administrative Agent and the Banks shall be permitted
to disclose such information (i) to outside legal counsel, accountants and other
professional advisors who need to know such information in connection with the
administration and enforcement of this Agreement, subject to agreement of such
persons to maintain the confidentiality, (ii) assignees and participants as
contemplated by Section 11.11, (iii) to the extent requested by any bank
regulatory authority or, with notice to the Borrower, as otherwise required by
applicable Law or by any subpoena or similar legal process, or in connection
with any investigation or proceeding arising out of the transactions
contemplated by this Agreement, (iv) if it becomes publicly available other than
as a result of a breach of this Agreement or becomes available from a source not
subject to confidentiality restrictions, or (v) the Borrower shall have
consented to such disclosure.
11.13 Counterparts. This Agreement may be executed by different
------------
parties hereto on any number of separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such counterparts shall
together constitute one and the same instrument.
11.14 Agent's or Bank's Consent. Whenever the Administrative
-------------------------
Agent's, any Agent's or any Bank's consent is required to be obtained under this
Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, the Administrative Agent, each Agent and each Bank
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional
collateral, the payment of money or any other matter.
11.15 Exceptions. The representations, warranties and covenants
----------
contained herein shall be independent of each other and no exception to any
representation, warranty or covenant shall be deemed to be an exception to any
other representation, warranty or covenant contained herein unless expressly
provided, nor shall any such exceptions be deemed to permit any action or
omission that would be in contravention of applicable Law.
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL. THE BORROWER HEREBY
--------------------------------------
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON
PLEAS OF ALLEGHENY COUNTY AND UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
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UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR
REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESSES PROVIDED FOR IN
SECTION 11.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
ACTUAL RECEIPT THEREOF. THE BORROWER WAIVES ANY OBJECTION TO JURISDICTION AND
VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO
ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. THE BORROWER, THE
ADMINISTRATIVE AGENT, THE AGENTS AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT
PERMITTED BY LAW.
11.17 Tax Withholding Clause. At least five (5) Business Days prior
----------------------
to the first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank that is not incorporated under the laws of the
United States of America or state thereof agrees that it will deliver to each of
the Borrower and the Administrative Agent two (2) duly completed copies of (i)
Internal Revenue Service Form W-9, 4224 or 1001, or other applicable form
prescribed by the Internal Revenue Service, certifying in either case that such
Bank is entitled to receive payments under this Agreement and the other Loan
Documents without deduction or withholding of any United States federal income
taxes, or is subject to such tax at a reduced rate under an applicable tax
treaty, or (ii) Form W-8 or other applicable form or a certificate of the Bank
indicating that no such exemption or reduced rate is allowable with respect to
such payments. Each Bank which so delivers a Form W-8, W-9, 4224 or 1001
further undertakes to deliver to each of the Borrower and the Administrative
Agent two (2) additional copies of such form (or a successor form) on or before
the date that such form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Administrative Agent, either certifying that
such Bank is entitled to receive payments under this Agreement and the other
Loan Documents without deduction or withholding of any United States federal
income taxes or is subject to such tax at a reduced rate under an applicable tax
treaty or stating that no such exemption or reduced rate is allowable. The
Administrative Agent shall be entitled to withhold United States federal income
taxes at the full withholding rate unless the Bank establishes an exemption or
at the applicable reduced rate as established pursuant to the above provisions.
11.18 Appointment of Collateral Agent. Each Agent and each Bank has
-------------------------------
reviewed a copy of the Collateral Sharing Agreement and hereby consents to: (a)
the Collateral Sharing Agreement and the appointment of PNC Bank as Collateral
Agent under the Collateral Sharing Agreement, the First Mortgages, Pledge
Agreements, Security Agreement, Patent, Trademark and Copyright Security
Agreement and other Loan Documents and (b) the execution of the Collateral
Sharing Agreement by the Administrative Agent on behalf of each Agent and each
Bank.
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