EXHIBIT 10.5
AMENDED AND RESTATED
CREDIT AGREEMENT
BY AND AMONG
CENTENNIAL HEALTHCARE CORPORATION
(formerly known as WelCare International, Inc.)
AND ITS SUBSIDIARIES
IDENTIFIED ON SCHEDULE 1
("Borrowers");
THE LENDERS IDENTIFIED ON
SCHEDULE 2
("Lenders");
AND
CORESTATES BANK, N.A.,
AS AGENT FOR THE LENDERS
("Agent")
December 18, 1996
TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS............................................ 1
1.1. Definitions............................................ 1
1.2. Rule of Construction................................... 16
SECTION 2 FACILITY............................................... 16
2.1. Commitment............................................. 16
2.2. Promissory Notes....................................... 17
2.3. Lenders' Participation................................. 17
2.4. Use of Proceeds........................................ 17
2.5. Repayment.............................................. 18
2.6. Interest............................................... 19
2.7. Advances............................................... 25
2.8. Adjustments to Commitment.............................. 27
2.9. Prepayment; Repayment.................................. 28
2.10. Funding Costs and Loss of Earnings..................... 28
2.11. Payments............................................... 28
2.12. Commitment Fee......................................... 28
2.13. Closing Fee............................................ 29
2.14. Fees to Agent.......................................... 29
2.15. Regulatory Changes in Capital Requirements............. 29
2.16. Taxes.................................................. 30
SECTION 2A LETTERS OF CREDIT...................................... 30
2A.1. Availability of Credits................................ 30
2A.2. Commitment Availability................................ 31
2A.3. Approval and Issuance.................................. 32
2A.4. Obligations of the Borrowers........................... 32
2A.5. Payment by Lenders on Letters of Credit................ 33
2A.6. Collateral Security.................................... 34
2A.7. General Terms of Credits............................... 35
SECTION 3 REPRESENTATIONS AND WARRANTIES......................... 35
3.1. Organization and Good Standing......................... 35
3.2. Power and Authority; Validity of Agreement............. 36
3.3. No Violation of Laws or Agreements..................... 36
3.4. Health Care Facilities................................. 36
3.5. Material Contracts..................................... 36
3.6. Compliance............................................. 37
3.7. Litigation............................................. 37
3.8. Title to Assets........................................ 37
3.9. Corporate Organization; Capital Stock.................. 37
3.10. Accuracy of Information; Full Disclosure............... 38
3.11. Taxes and Assessments.................................. 38
3.12. Indebtedness........................................... 39
3.13. Management Agreements.................................. 39
3.14. Investments............................................ 39
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3.15. ERISA.................................................. 39
3.16. No Extension of Credit for Securities.................. 40
3.17. Perfection of Security Interests....................... 40
3.18. Perfection of Liens.................................... 40
3.19. Hazardous Substances................................... 40
3.20. Solvency............................................... 41
3.21. Employee Controversies................................. 41
3.22. SouthTrust Financings.................................. 42
3.23. Other Financings....................................... 43
3.24. CGC.................................................... 43
SECTION 4 CONDITIONS............................................. 44
4.1. Effectiveness of Agreement; First Advance.............. 44
4.2. Subsequent Advances.................................... 47
4.3. Additional Condition to Lenders' Obligations........... 47
SECTION 5 AFFIRMATIVE COVENANTS.................................. 48
5.1. Existence and Good Standing............................ 48
5.2. Interim Financial Information.......................... 48
5.3. Annual Financial Statements............................ 48
5.4. Quarterly Compliance Certification..................... 49
5.5. Receivables Aging Report............................... 49
5.6. Additional Information................................. 49
5.7. Books and Records...................................... 49
5.8. Maintenance of Assets; Insurance....................... 49
5.9. Notifications.......................................... 50
5.10. Taxes.................................................. 50
5.11. Costs and Expenses..................................... 50
5.12. Additional Collateral Documentation.................... 51
5.13. Compliance............................................. 51
5.14. ERISA.................................................. 52
5.15. Funded Debt to Capital Ratio........................... 53
5.16. Consolidated Senior Debt to Adjusted EBITDA............ 53
5.17. Adjusted Total Debt to Adjusted EBITDAR................ 54
5.18. Consolidated Net Worth................................. 54
5.19. Fixed Charge Coverage Ratio............................ 54
5.20. Borrowing Base......................................... 54
5.21. Management Changes..................................... 54
5.22. Successor Agent........................................ 54
5.23. Transactions Among Affiliates.......................... 54
5.24. Inspections............................................ 55
5.25. The Funds.............................................. 55
5.26. Other Information...................................... 55
SECTION 6 NEGATIVE COVENANTS..................................... 55
6.1. Indebtedness........................................... 55
6.2. Guaranties............................................. 55
6.3. Loans.................................................. 56
6.4. Liens and Encumbrances................................. 56
6.5. Additional Negative Pledge............................. 57
6.6. Restricted Payments.................................... 57
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6.7. Transfer of Assets; Liquidation........................ 57
6.8. Acquisitions and Investments........................... 57
6.9. New Leases............................................. 59
6.10. Use of Proceeds........................................ 59
SECTION 7 COLLATERAL AND RIGHT OF SET-OFF........................ 60
SECTION 8 DEFAULT................................................ 60
8.1. Events of Default...................................... 60
8.2. Remedies............................................... 63
SECTION 9 THE LENDERS............................................ 63
9.1. Application of Payments................................ 63
9.2. Set-Off................................................ 64
9.3. Modifications and Waivers.............................. 64
9.4. Obligations Several.................................... 64
9.5. Lenders' Representations............................... 64
9.6. Investigation.......................................... 65
9.7. Powers of Agent........................................ 65
9.8. General Duties of Agent, Immunity and
Indemnity.............................................. 65
9.9. No Responsibility for Representations or
Validity, etc.......................................... 65
9.10. Action on Instruction of Lenders; Right to
Indemnity.............................................. 65
9.11. Employment of Agents................................... 66
9.12. Reliance on Documents.................................. 66
9.13. Agent's Rights as a Lender............................. 66
9.14. Expenses............................................... 66
9.15. Resignation of Agent................................... 66
9.16. Successor Agent........................................ 66
9.17. Collateral Security.................................... 67
9.18. Enforcement by Agent................................... 67
SECTION 10 MISCELLANEOUS.......................................... 67
10.1. Indemnification and Release Provisions................. 67
10.2. Participations and Assignments......................... 67
10.3. Binding and Governing Law.............................. 68
10.4. Survival............................................... 68
10.5. No Waiver; Delay....................................... 68
10.6. Modification........................................... 69
10.7. Headings............................................... 69
10.8. Notices................................................ 69
10.9. Payment on Non-Business Days........................... 69
10.10. Time of Day............................................ 69
10.11. Severability........................................... 69
10.12. Counterparts........................................... 70
10.13. Consent to Jurisdiction and Service of Process......... 70
10.14. Waiver of Jury Trial................................... 70
10.15. Acknowledgements....................................... 70
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1: Borrowers
Schedule 2: The Lenders, their respective Maximum Principal Amounts
and Percentages of Commitment
Schedule 3: Funds and Fund Service Corporations
Exhibit A: Advance Request Form
Exhibit B-1: Letter of Credit Request Form
Exhibit B-2: Letter of Credit Application
Exhibit C: Form of Note
Exhibit D: Funding Costs and Loss of Earnings Calculation
Exhibit E: Disclosure Pursuant to Representations and Warranties
Exhibit F: Compliance Certificate
Exhibit G-1: Form of Third Party Note
Exhibit G-2: Form of Security Agreement
Exhibit G-3: Form of Pledge Agreement (Collateral Assignment)
Exhibit G-4: Form of Long-Term Management Contract
Exhibit H: Form of Notice of Permitted Acquisition
Exhibit I: UCC Financing Statements
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
made this 18th day of December, 1996, by and among CENTENNIAL HEALTHCARE
CORPORATION (formerly known as WelCare International, Inc.), a Georgia
corporation (the "Company") and the subsidiaries of the Company listed on
Schedule 1 attached hereto (together with the Company and such additional
Subsidiaries as may become Borrowers from time to time as hereinafter provided,
each individually, a "Borrower" and individually and collectively, "Borrowers");
CORESTATES BANK, N.A., a national banking association ("CoreStates") and the
other lenders listed on Schedule 2 attached hereto (together with CoreStates and
such additional financial institutions as may become lenders from time to time
as hereinafter provided, each individually a "Lender" and individually and
collectively, "Lenders"); and CoreStates, as agent for the Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, Borrowers are in the business of operating, either by
lease, management agreement or ownership, nursing homes and related ancillary
businesses in the United States of America; and
WHEREAS, certain of the Borrowers (the "Existing Borrowers") are
parties with CoreStates (as Lender and as Agent) to that certain Credit
Agreement dated August 15, 1995, as amended (as amended, the "Existing Credit
Agreement"); and
WHEREAS, Borrowers have requested, and CoreStates and the other
Lenders have agreed, to amend the Existing Credit Agreement to increase the
aggregate availability to up to Sixty-Five Million Dollars ($65,000,000), to add
the Borrowers in addition to the Existing Borrowers, to add the Lenders in
addition to CoreStates, and in certain additional respects, all on the terms and
conditions as set forth herein.
NOW, THEREFORE, in consideration of the foregoing background and the
promises and the agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereto hereby amend and restate the Existing Credit
Agreement to read in its entirety as follows:
SECTION 1
DEFINITIONS
1.1. Definitions. When used in this Agreement, the following terms
shall have the meanings set forth below; certain terms relating to interest
rates are defined in Paragraph 2.6 and shall have the meanings set forth
thereunder.
"Acquired Operations" shall mean operations of the Company and its
Consolidated Subsidiaries with respect to (i) a Health Care Facility as to which
the Company and its Consolidated Subsidiaries acquires ownership, a leasehold
interest or the right to manage such facility after September 30, 1996, or (ii)
any other business(es) acquired pursuant to a Permitted Acquisition.
"Acquisition Price" shall mean, with respect to any Permitted
Acquisition, the total consideration to be paid, incurred or assumed by
Borrowers in connection with such Permitted Acquisition, including the full
amount of any deferred purchase price or contingent obligations.
"Adjusted EBITDA" shall mean EBITDA for the Company and its
Consolidated Subsidiaries for the two (2) most-recently ended fiscal quarters,
multiplied by two (2), provided, that in the event that any Permitted
Acquisition has been consummated during such two (2) fiscal quarters and
Borrowers have delivered to Lenders pro forma combined historical financial
statements in form and substance satisfactory to Required Lenders, then for
purposes of calculating Adjusted EBITDA hereunder, EBITDA for such two (2)
fiscal quarters shall be calculated for the Company and its Consolidated
Subsidiaries including such Permitted Acquisition, based on such pro forma
combined historical financial statements.
"Adjusted EBITDAR" shall mean EBITDAR for the Company and its
Consolidated Subsidiaries for the two (2) most-recently ended fiscal quarters,
multiplied by two (2), provided, that in the event that any Permitted
Acquisition has been consummated during such two (2) fiscal quarters and
Borrowers have delivered to Lenders pro forma combined historical financial
statements in form and substance satisfactory to Required Lenders, then for
purposes of calculating Adjusted EBITDAR hereunder, EBITDAR for such two (2)
fiscal quarters shall be calculated for the Company and its Consolidated
Subsidiaries including such Permitted Acquisition, based on such pro forma
combined historical financial statements.
"Adjusted Fixed Charges" shall mean the sum of (i) two (2) times
interest expense and operating lease expense for the Company and its
Consolidated Subsidiaries for the two (2) most- recently ended fiscal quarters,
plus (ii) current maturities of Funded Debt for the Company and its Consolidated
Subsidiaries as of the last day of such period, and (iii) two (2) times the
aggregate amount of cash dividends paid on Preferred Stock for the Company and
its Consolidated Subsidiaries for the two (2) most-recently ended fiscal
quarters; provided, that in the event that any Permitted Acquisition has been
consummated during such two (2) fiscal quarters and the pro forma results of the
business so acquired are included in the calculation of Adjusted EBITDAR, then
Adjusted Fixed Charges for such two (2) fiscal quarters shall be calculated for
the Company and its Consolidated Subsidiaries including such Permitted
Acquisition based on such pro forma combined historical financial statements.
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"Adjusted Total Debt" shall mean, as of any date of determination,
the sum of (i) all Funded Debt of the Company and its Consolidated Subsidiaries
as of such date, plus (ii) the amount of all operating leases, based on the
amount of the underlying debt with respect to operating leases where known or
the present value of all payments required under all other operating leases
calculated using a discount rate of ten percent (10%) per annum.
"Advance" shall mean an advance of funds by Lenders under the
Commitment.
"Advance Request Form" shall mean the certificate in the form
attached hereto as Exhibit A to be delivered to the Agent pursuant to Paragraph
2.7 hereof as a condition to each Advance.
"Affiliate" shall mean, with respect to a Person, (i) any Person
directly or indirectly owning, controlling or holding five percent (5%) or more
of the outstanding beneficial interest in such Person, (ii) any Person five
percent (5%) or more of the outstanding beneficial interest of which is directly
or indirectly owned, controlled, or held by such Person, (iii) any Person
directly or indirectly controlling, controlled by, or under common control with
such other Person, or (iv) any officer, director or partner of such Person. For
purposes hereof, "control" shall mean the power to direct the affairs of any
Person, whether by voting rights, contract or otherwise.
"Agent" shall mean CoreStates Bank, N.A., in its capacity as agent
for the Lenders hereunder, and any successor appointed pursuant to Paragraph
9.15 hereof.
"Agreement" shall mean this Amended and Restated Credit Agreement
and all the exhibits and schedules attached hereto, as amended from time to
time.
"Annualized EBITDA" shall mean (i) for the period from the date of
this Agreement through the date of delivery of a Compliance Certificate with
respect to the period ended September 30, 1996, EBITDA for the Existing
Operations of the Company and its Consolidated Subsidiaries for the fiscal
quarter ended June 30, 1996 multiplied by four (4); (ii) for the period from the
delivery of a Compliance Certificate with respect to the period ended September
30, 1996 through the date of delivery of a Compliance Certificate with respect
to the period ended December 31, 1996, EBITDA for the Existing Operations of the
Company and its Consolidated Subsidiaries for the two (2) fiscal quarters ending
September 30, 1996 multiplied by two (2); (iii) for the period from the date of
delivery of a Compliance Certificate with respect to the period ended December
31, 1996 through the date of delivery of a Compliance Certificate for the period
ended Xxxxx 00, 0000, XXXXXX for the Existing Operations of the Company and its
Consolidated Subsidiaries for the three (3) fiscal quarters ending December 31,
1996 multiplied by one and one-third (1-1/3); and (iv) thereafter, EBITDA for
the Existing Operations of the
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Company and its Consolidated Subsidiaries for the four (4) most- recently ended
fiscal quarters, adjusting as of the date following each delivery of a
Compliance Certificate.
"Arden Facility" means the Nursing Home known as The Oaks at Sweeten
Creek (formerly Xxxxxxxxxx of Xxxxx) in North Carolina and, prior to the
acquisition thereof by NCHC, leased by a subsidiary of Xxxxxxxxxx Health Care,
Inc. from HCPI, including, without limitation, all real and personal property
and tangible and intangible assets comprising such Nursing Home.
"Assignments of Rents" shall mean the assignment of rents and leases
delivered from time to time pursuant to Paragraph 5.12 hereof, as the same may
be amended, modified or restated from time to time.
"Borrower" shall mean individually, and "Borrowers" shall mean
individually and collectively, each of the Borrowers identified on Schedule 1
attached hereto on the date of this Agreement, as supplemented from time to time
as provided in Paragraph 5.12 hereof.
"Borrowing Base" shall mean, as of any date of determination, the
sum of (i) Annualized EBITDA for the Existing Operations of the Company and its
Consolidated Subsidiaries, multiplied by (A) 2.50, for fiscal quarters ending on
or prior to December 31, 1996, (B) 2.25, for each fiscal quarter ending on or
prior to December 31, 1997, and (C) 2.00 for each fiscal quarter thereafter,
plus (ii) 3.00 times Qualified EBITDA of any Acquired Operations of the Company
and its Consolidated Subsidiaries for the four (4) most-recently ended fiscal
quarters for which a Compliance Certificate has been delivered, calculated for
any portion of such period prior to the date of acquisition of such Acquired
Operations based on the pro forma historical financial statements with respect
to such Acquired Operations delivered pursuant to the definition of Qualified
EBITDA.
"Business Day" shall mean any day not a Saturday, Sunday or public
holiday under the laws of the Commonwealth of Pennsylvania.
"Capital" shall mean, as of any date of determination, the sum of
Funded Debt and Consolidated Net Worth for the Company and its Consolidated
Subsidiaries as of such date.
"Capital Expenditures" shall mean expenditures for any fixed assets
or improvements, replacements, substitutions or additions thereto, which have a
useful life of more than one (1) year, including direct or indirect acquisition
of such assets, provided, that Permitted Acquisitions shall not constitute
Capital Expenditures.
"Capital Leases" shall mean capital leases and subleases, as defined
in the Financial Accounting Standards Board Statement of
4
Financial Accounting Standards No. 13 dated November 1976, as amended and
updated from time to time.
"CGC" means CGC Liquidation Company, a Delaware general partnership.
"CHMC" shall mean Centennial HealthCare Management Corporation
(formerly known as WelCare International Management Corporation), a Georgia
corporation and a wholly-owned Subsidiary of the Company.
"CHPC" shall mean Centennial HealthCare Properties Corporation
(formerly known as WelCare International Properties Corporation), a Georgia
corporation and wholly-owned Subsidiary of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended and
regulations promulgated thereunder.
"Collateral" shall mean the collateral security afforded to Agent on
behalf of the Lenders from time to time under the Collateral Security Documents.
"Collateral Security Documents" shall mean collectively, this
Agreement; the Security Agreements and the landlord consents and waivers,
mortgagee consents and waivers and financing statements delivered pursuant
thereto; the Pledge Agreements, and related stock certificates and stock powers;
the Note Pledges and related notes and collateral security documents; the
Mortgages; the Assignment of Rents; and the Leasehold Assignments and any
associated landlord consents and any additional documents granting security to
Agent on behalf of the Lenders pursuant to this Agreement.
"Commitment" shall mean the maximum aggregate principal amount up to
which the Lenders, on a several basis, have agreed to make Advances under
Section 2 hereof and/or participate in the issuance of Letters of Credit under
Section 2A hereof, being Sixty- Five Million Dollars ($65,000,000) on the date
hereof, as such maximum aggregate principal amount may be decreased pursuant to
Paragraph 2.8 hereof.
"Company" shall mean Centennial HealthCare Corporation (formerly
known as WelCare International, Inc.), a Georgia corporation.
"Compliance Certificate" shall mean a certificate in the form of
Exhibit F attached hereto delivered by Borrowers to Lenders pursuant to
Paragraph 5.4 or Paragraph 4.1 hereof.
"Consolidated Fixed Charge Coverage Ratio" shall mean, as of any
date of determination, the ratio of Adjusted EBITDAR to Adjusted Fixed Charges.
5
"Consolidated Net Worth" shall mean, as of any date of
determination, Consolidated Total Assets less Consolidated Total Liabilities.
"Consolidated Senior Debt" shall mean all Funded Debt of the Company
and its Consolidated Subsidiaries other than Subordinated Debt.
"Consolidated Subsidiary" shall mean individually, and "Consolidated
Subsidiaries" shall mean individually and collectively, with respect to any
Person, those Subsidiaries of such Person whose accounts, financial results or
position, for financial accounting purposes, are consolidated with those of such
Person. Unless the context specifies otherwise, all references in this Agreement
to a Consolidated Subsidiary shall refer to a Consolidated Subsidiary of the
Company.
"Consolidated Total Assets" shall mean, as of any date of
determination, all assets, as defined in accordance with GAAP, of the Company
and its Consolidated Subsidiaries as of such date provided, however, that the
assets of the Funds and the THS Inactive Partnerships shall be excluded from
such determination.
"Consolidated Total Liabilities" shall mean, as of any date of
determination, all liabilities and deferred items, as defined in accordance with
GAAP, of the Company and its Consolidated Subsidiaries as of such date;
provided, however, that the Preferred Stock and any Indebtedness of the Funds
and the THS Inactive Partnerships shall be excluded from such determination.
"Default" shall mean an event or circumstance which, with the giving
of notice or the passage of time or both, would constitute an Event of Default.
"EBITDA" shall mean, for any period, Net Income of the Company and
its Consolidated Subsidiaries for such period plus (to the extent deducted from
revenue in calculating net income) depreciation, amortization and other non-cash
charges and expenses, taxes and interest expense (including interest expense on
Capital Leases) for the Company and its Consolidated Subsidiaries for such
period.
"EBITDAR" shall mean for any period, EBITDA of the Company and its
Consolidated Subsidiaries for such period plus operating lease expense for the
Company and its Consolidated Subsidiaries for such period.
"EBT" means EBT Healthcare Properties, L.P., a Delaware limited
partnership.
"Effective Date" shall mean the date that this Agreement becomes
effective in accordance with Paragraph 4.1 hereof.
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"Environmental Control Statutes" shall mean all federal, state or
local laws and regulations regarding environmental or pollution concerns
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (as amended, "CERCLA"), the Solid Waste
Disposal Act, the Clean Water Act and the Clean Air Act, the Resource
Conservation and Recovery Act of 1976, the Federal Water Pollution Control Act
Amendments of 1972 and the Occupational Safety and Health Act, each as amended
from time to time, and all regulations, directives, policies or interpretations
issued in connection with any such statute.
"EPA" shall mean the United States Environmental Protection Agency,
or any successor thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, all amendments thereto and all rules and regulations in effect at any time
thereunder.
"ERISA Affiliate" shall mean any company, whether or not
incorporated, and any other Person which is considered a single employer or an
affiliated service group with any Borrower under Titles I, II or IV of ERISA.
"Xxxxxxxxxx Leased Facilities" means the Nursing Homes known as
Scenic View Health and Rehabilitation Center, Gateway Nursing Center and Emerald
Ridge Rehabilitation and Care Center (formerly known as Xxxxxxxxxx of Xxxx,
Xxxxxxxxxx of Xxxxxx, and Xxxxxxxxxx of Xxxxxxx, respectively), each located in
North Carolina and, prior to the acquisition thereof by NCHC, leased by a
subsidiary of Xxxxxxxxxx Health Care, Inc. from HCPI, including, without
limitation, all real and personal property and tangible and intangible assets
comprising such Nursing Homes.
"Xxxxxxxxxx Owned Facilities" means the Nursing Homes known as
Xxxxxxx Xxxx Healthcare Center, Valley View Care and Rehabilitation Center,
Westwood Health and Rehabilitation Center and Down East Health and
Rehabilitation Center (formerly known as Xxxxxxxxxx of Albemerle, Xxxxxxxxxx of
Xxxxxxx, Xxxxxxxxxx of Archdale and Xxxxxxxxxx of Gates, respectively), each
located in North Carolina, including, without limitation, all real and personal
property and tangible and intangible assets comprising such Nursing Homes.
"Event of Default" shall mean each of the events described in
Paragraph 8.1 hereof.
"Existing Credit Agreement" shall mean the Credit Agreement dated
August 15, 1995 among Borrowers, Agent and CoreStates as Lender, as amended by
Amendment No. 1 dated as of October 31, 1995, Amendment No. 2 dated March 25,
1996, Amendment No. 3 dated March 29, 1996, Amendment No. 4 dated as of June 30,
1996, Amendment No. 5 dated July 18, 1996 and Amendment No. 6 dated November 26,
1996.
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"Existing Operations" shall mean the existing operations of the
Company and its Consolidated Subsidiaries with respect to Health Care Facilities
and ancillary businesses as of September 30, 1996.
"Funded Debt" shall mean, as of any date of determination, the sum
of (i) the aggregate amount available to be drawn under Letters of Credit and
the aggregate amount of unreimbursed draws under Letters of Credit; plus (ii)
the aggregate principal amount of all Indebtedness for (A) borrowed money other
than trade indebtedness incurred in the normal and ordinary course of business
for value received, (B) installment purchases of real or personal property, (C)
Capital Leases, and (D) guaranties of Funded Debt of others, without
duplication.
"Fund Service Corporations" shall mean those corporations listed as
the Fund Service Corporations on Schedule 3 attached hereto.
"Funds" shall mean those entities listed as the Funds on Schedule 3
attached hereto and made a part hereof.
"GAAP" shall mean generally accepted accounting principles, which
shall be (i) applied in accordance with Statement on Auditing Standards No. 69
"The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles in the Independent Auditor's Report," (SAS 69) or superseding
pronouncements, issued by the Auditing Standards Board of the American Institute
of Certified Public Accountants and (ii) in the form and content of any
requirements for financial statements filed with the Securities and Exchange
Commission, as long as the Company is subject to such requirements, in all cases
applied on a consistent basis. The requirement that such principles be applied
on a consistent basis shall mean that the accounting principles observed in a
current period are comparable in all material respects to those applied in a
preceding period; provided, however, that changes in the application of
accounting principles required under SAS 69, or superseding pronouncements or
requirements of the Securities and Exchange Commission shall not, by themselves,
be considered inconsistent applications of such principles.
"Hazardous Substance" shall mean petroleum products, explosives, or
any other substance which is defined as a hazardous or toxic substance, waste,
pollutant or contaminant by any of the Environmental Control Statutes.
"HCFA" shall mean the Health Care Financing Administra- tion of the
United States Department of Health and Human Services and any successor thereto.
"HCPI" means Health Care Property Investors, Inc., a Maryland
corporation.
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"Health Care Facility" shall mean any Nursing Home or other property
or facility which any Borrower or any Subsidiary owns, leases, operates or
manages on or after the date hereof.
"House Investments I" means House Investments - Nursing Home
Partners I, an Indiana limited partnership.
"House Investments II" means House Investments - Nursing Home
Partners II, L.P., an Indiana limited partnership.
"Indebtedness" shall mean, for any Person, all obligations of such
Person which in accordance with GAAP shall be classified on a balance sheet of
such Person as liabilities of such Person and in any event shall include,
without duplication, all (a) obligations of such Person for borrowed money or
which have been incurred in connection with the acquisition of property or
assets, (b) obligations secured by any lien upon property or assets owned by
such Person, notwithstanding that such Person has not assumed or become liable
for the payment of such obligations, (c) obligations created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (d) Capital Leases, (e) guarantees
and (f) letters of credit and letter of credit reimbursement obligations. In
determining the Indebtedness of the Company and its Consolidated Subsidiaries,
the Preferred Stock and any Indebtedness of the Funds shall be excluded.
"Knowledge of Borrowers" shall mean the actual knowledge of
Borrowers and the actual knowledge of any senior officer of Borrowers, or
knowledge which Borrowers or any such senior officers should have possessed in
the ordinary course of managing the business and affairs of the Borrowers in a
manner consistent with the standards of a reasonably prudent business person in
the long-term care industry.
"Leasehold Assignments" shall mean the assignments by Borrowers of
their interests as tenants under leases, executed and delivered pursuant to the
Existing Credit Agreement and confirmed pursuant to Paragraph 4.1 hereof, and
the leasehold assignments delivered from time to time pursuant to Paragraph 5.12
hereof, as the same may be amended, modified or restated from time to time.
"Lender" shall mean individually and "Lenders" shall mean
individually and collectively, the institutions identified on Schedule 2
attached hereto and their respective successors and assigns in accordance with
Paragraph 10.2 hereof (which as provided therein, requires the prior written
consent of the Borrowers under certain circumstances), so long as such
institution retains any portion of the Commitment or Loan hereunder.
9
"Letter of Credit" shall mean individually, and "Letters of Credit"
shall mean individually and collectively, the letter(s) of credit issued
hereunder or under the Existing Credit Agreement in the form agreed upon at the
time of issuance thereof participated in by all the Lenders pursuant to the
terms and conditions of Section 2A hereof.
"Letter of Credit Request Form" shall mean the certificate in the
form attached as Exhibit B-1 hereto to be delivered by Borrowers to Agent as a
condition of each issuance of a Letter of Credit pursuant to Paragraph 2A.3
hereof.
"Letter of Credit Sublimit" shall mean the portion of the Commitment
up to which Lenders have agreed to participate in the issuance by Agent of
Letters of Credit pursuant to Section 2A hereof, being Fifteen Million Dollars
($15,000,000).
"Licenses" shall mean all licenses, permits or other grants of
authority obtained or required to be obtained by any Borrower from the United
States government, HCFA or any Local Authority in connection with the ownership
or operation of any Health Care Facility or other business of Borrowers.
"Loan" shall mean the outstanding principal balance of indebtedness
advanced, and the face amount of Letters of Credit issued, under the Commitment,
and without duplication the amount of all unreimbursed draws under Letters of
Credit, together with interest accrued on and fees and expenses incurred in
connection with any of the foregoing.
"Loan Documents" shall mean this Agreement, the Notes, the
Collateral Security Documents, and all other agreements, documents and
instruments required hereunder or executed and delivered in connection with this
Agreement (or in connection with the Existing Credit Agreement and confirmed by
written agreement in connection herewith).
"Local Authorities" shall mean individually and collectively all
state and local governmental authorities and administrative agencies which
possess statutory or regulatory authority over the ownership or operation of any
Health Care Facility or other business of Borrowers.
"Long-Term Management Contract" shall mean a contract providing for
the management of a Health Care Facility by a Borrower substantially in the form
of Exhibit G-4 attached hereto having a term of not less than five (5) years.
"Material Adverse Effect" shall mean a material adverse effect on
the business, financial condition, assets or prospects of the Company and its
Consolidated Subsidiaries taken as a whole as a result of any event, condition,
circumstance or contingency.
10
"Maximum Principal Amount" shall mean the maximum principal amount
of the Commitment up to which the applicable Lender has agreed to lend funds
and/or participate in the issuance of Letters of Credit, as set forth in
Schedule 2 attached hereto.
"Mortgages" shall mean, individually and collectively, the Deed of
Trust delivered to Agent, for the benefit of Lenders, with respect to the
Nursing Home known as Garden Court, the Mortgages delivered to Agent, for the
benefit of Lenders, with respect to the Nursing Homes known as Xxxxxx Nursing
Center and Cypress Manor, and any mortgages and deeds of trust from time to time
delivered pursuant to Paragraph 5.12 hereof, as the same may be amended,
modified or restated from time to time.
"NC Health Care" means NC Health Care, Inc., a Georgia corporation.
"NC Health Care Loans" means a loan by the Company to NC Health Care
pursuant to a Promissory Note dated as of June 30, 1996 in the original
principal amount of $4,857,847.00 executed by NC Health Care, and loans by CHMC
to each of the subsidiaries of NC Health Care, pursuant to Promissory Notes
dated as of June 30, 1996, each in the original principal of $125,000.00
executed by the applicable subsidiary, each secured by (i) a pledge of the
outstanding shares of capital stock of NC Health Care by the holder of such
shares pursuant to pledge agreements by the owners of such shares dated as of
June 30, 1996, (ii) a pledge of the outstanding shares of capital stock of the
subsidiaries of NC Health Care pursuant to a pledge agreement by NC Health Care
dated as June 30, 1996, and (iii) additional collateral as may be granted
thereunder from time to time.
"NCHC" means NCHC, Inc., a Louisiana corporation.
"NCHC Loan" means a loan of funds by the Company to NCHC pursuant to
an Amended and Restated Promissory Note dated as of March 25, 1996 in the
original principal amount of $4,546,926.00 executed by NCHC in favor of the
Company secured by a (i) a security interest in all personal property of NCHC
pursuant to a Security Agreement dated Xxxxx 00, 0000, (xx) leasehold deeds of
trust dated March 25, 1996 with respect to the leasehold interests of NCHC under
the leases with HCPI with respect to each of the Xxxxxxxxxx Leased Facilities,
and a leasehold deed of trust dated July 18, 1996 with respect to the leasehold
interests of NCHC under the lease with HCPI with respect to the Arden Facility,
(iii) assignments of rents and profits dated March 25, 1996 by NCHC with respect
to each of the Xxxxxxxxxx Leased Facilities, and an assignment of rents and
profits dated July 18, 1996 by NCHC with respect to the Arden Facility, (iv) a
pledge of the outstanding shares of capital stock of NCHC by the holder of such
shares pursuant to a pledge agreement, (v) a collateral assignment of certain
certificates of deposit pursuant to an Assignment of Certificates of Deposit
dated March 25, 1996 and an Assignment of
11
Certificates of Deposit dated July 18, 1996, and (vi) additional collateral as
may be granted thereunder from time to time.
"Net Cash Proceeds" shall mean, with respect to any Sale of Material
Assets, the cash proceeds received by the seller in such a transaction less (i)
the reasonable costs of the transaction, (ii) reasonable reserves for retained
liabilities, (iii) applicable taxes arising out of the transaction, and (iv) any
Medicare or Medicaid reimbursement adjustments caused by and which are required
to be and are paid or reserved in connection with such transaction.
"Net Income" shall mean, for any period, the net income of the
Company and its Consolidated Subsidiaries for such period, as determined in
accordance with GAAP, provided that any gains or losses from the operation of
the Funds and the THS Inactive Partnerships shall be excluded from such
determination.
"Net Worth Requirement" shall mean Thirty-Three Million Seven
Hundred Fifty Thousand Dollars ($33,750,000) plus (i) as of the last day of each
fiscal quarter ending after September 30, 1996, an amount equal to seventy-five
percent (75%) of Net Income of the Company and its Consolidated Subsidiaries for
such fiscal quarter (if positive, with no reduction for losses), on a cumulative
basis, and plus (ii) an amount equal to one hundred percent (100%) of the
proceeds of any issuance of equity securities or other capital investments in
any Borrower.
"North Florida" shall mean North Florida Health Properties II, Ltd.,
a Florida limited partnership.
"Note" shall mean individually, and "Notes" shall mean individually
and collectively the Notes in the form of Exhibit C attached hereto, to be
delivered by Borrowers to Lenders pursuant to Paragraph 4.1 hereof, as the same
may be amended, modified, extended, consolidated or restated from time to time.
"Note Pledges" shall mean the Pledge Agreements (Collateral
Assignment) pursuant to which the Company has pledged to Agent, for the benefit
of Lenders, all of its right, title and interest in and to the NCHC Loan and the
NC Health Care Loans, as collateral for the Loan hereunder, and any additional
similar pledges delivered from time to time pursuant to Paragraph 6.3(iv)
hereof.
"Nursing Home" shall mean individually and "Nursing Homes" shall
mean individually and collectively the nursing homes owned, leased, operated or
managed by any Borrower, and any similar facilities owned or operated by any
Borrower on or after the date hereof.
"OGRLP" means Oak Grove of Xxxxxxxxxx Limited Partnership, a North
Carolina limited partnership.
12
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Acquisition" shall mean any acquisition by a Borrower of
a business, by merger or by purchase of stock or assets, if: (i) such business,
when acquired, would be within the Permitted Lines of Business; and (ii) the
Agent on behalf of the Lenders receives a first priority security interest in
substantially all of the stock and assets, including real and personal property,
of the acquired business in accordance with Paragraph 5.12(c) hereof; and such
transaction otherwise is in compliance with Paragraph 6.8 hereof.
"Permitted Investments" shall mean (i) investments in commercial
paper maturing in one hundred eighty (180) days or less from the date of
issuance which are rated A1 or better by Standard & Poor's Corporation or P1 or
better by Xxxxx'x Investors Services, Inc.; (ii) investments in marketable
direct obligations of the United States of America or obligations of any agency
thereof which are guaranteed by the United States of America, provided that such
obligations mature within three (3) years of the date of acquisition thereof;
(iii) investments in certificates of deposit issued by a bank or trust company
organized under the laws of the United States or any state thereof, having a
rating of A or better from Xxxxx'x Investors Services, Inc.; and (iv)
investments of Borrowers existing on the date hereof and disclosed on Exhibit E
attached hereto, but without increase in the principal amount thereof after the
date of this Agreement. Permitted Investments shall not include the Shares of
any Borrower.
"Permitted Lines of Business" shall mean the provision of nursing
care, home health, speech therapy, occupational therapy, pharmacy, respiratory,
pain and intravenous therapy, enterals and urological therapy or physical
therapy services and products and all other ancillary services related to the
operation of a Nursing Home, and the ownership, management, or operation under
lease, of facilities related thereto.
"Person" shall mean any individual, corporation, partnership,
company, association, limited liability corporation or other legal entity.
"Plan" shall mean any pension benefit or welfare benefit plan
program or arrangement that is an employee benefit plan within the meaning of
Section 3(3) of ERISA covering employees of any Borrower or any ERISA Affiliate
or to which any Borrower or any ERISA Affiliate makes contributions.
"Pledge Agreements" shall mean the pledge agreements executed and
delivered or confirmed pursuant to Paragraph 4.1 hereof, or delivered from time
to time pursuant to Paragraph 5.12 of this Agreement, as the same may be
amended, modified or restated from time to time.
13
"Preferred Stock" shall mean collectively the South Atlantic
Preferred Stock and the Xxxxx Xxxxxx Preferred Stock.
"Pro Rata Share" shall mean, as to a Lender, the ratio which the
outstanding principal balance of its portion of the Loan hereunder bears to the
aggregate outstanding principal balance of the Loan at any time; or if no
indebtedness is outstanding hereunder, its percentage share of the Commitment as
set forth in Schedule 2 attached hereto.
"Qualified EBITDA" shall mean, for any period, EBITDA for any
Acquired Operations (based on the pro forma historical financial information
referred to in clause (iii) below as to periods prior to the date of
Acquisition) as to which (i) Borrowers have ownership of all of the assets of
such Acquired Operations, free and clear of any liens or encumbrances other than
those in favor of Agent, for the benefit of Lenders, and as otherwise permitted
pursuant to Paragraph 6.4 hereof; (ii) Agent, for the benefit of Lenders, has
received a perfected first priority lien on substantially all of the assets of
such Acquired Operations, as required pursuant to Paragraph 5.12 hereof, and
(iii) Borrowers have delivered to Lenders pro forma historical financial
statements with respect to such Acquired Operations in form and substance
satisfactory to Required Lenders.
"Required Lenders" shall mean those Lenders (which may include Agent
in its capacity as a Lender) holding Pro Rata Shares of the Loan aggregating
sixty-six and two-thirds percent (66-2/3%) or more.
"Restricted Payments" shall mean redemptions, purchases,
repurchases, dividends and distributions of any kind in respect of Shares of the
Company (except dividends payable solely in the common stock of the Company) and
payments of principal and interest on Subordinated Debt.
"Sale of Material Assets" shall mean the sale or other disposition
(including damage, destruction or condemnation of assets, but excluding any
foreclosure, transfer in lieu of foreclosure or similar event following a
default) by any Borrower, in a single transaction or in the aggregate as to all
transactions within any twelve (12) consecutive months, of assets (including
stock or other investments or interests in a Person) which, valued at the
greater of book value or fair market value, have a value of Five Million Dollars
($5,000,000) or more; excluding dispositions of equipment no longer used by
Borrowers and inventory, in each case in the ordinary course of business, and
the sale of Permitted Investments for cash or the conversion into cash of
Permitted Investments.
"Security Agreement" shall mean individually and "Security
Agreements" shall mean individually and collectively, the Amended and Restated
Security Agreement and the Security Agreement (Partnership Interests) executed
and delivered pursuant to
14
Paragraph 4.1 hereof, and any additional security agreement from time to time
delivered pursuant to Paragraph 5.12 hereof, as the same may be amended,
modified or restated from time to time.
"Shares" shall mean, with respect to any Person, any and all shares
of capital stock of any class or other shares, interests, participations or
other equivalents (however designated) in the capital of such Person.
"South Atlantic Preferred Stock" shall mean the shares of Series A
Preferred Stock and Series B Preferred Stock issued and outstanding as of the
date hereof and having terms and conditions as set forth in the Articles of
Incorporation of the Company in effect as of the date hereof.
"SouthTrust" means SouthTrust Bank of Alabama, National Association.
"SouthTrust Financing" means financing provided by SouthTrust with
respect to any Health Care Facility.
"Subordinated Debt" shall mean (i) the Transitional Subordinated
Notes, and (ii) any other Indebtedness of the Company or any Consolidated
Subsidiary of the Company subordinated to the Loan with subordination and
repayment provisions and covenants as are in form and substance satisfactory to
Lenders.
"Subsidiary" shall mean, with respect to any Person, any other
Person of which such other Person owns, directly or indirectly, more than fifty
percent (50%) of any class or classes of securities and any Partnership of which
such Person is a General Partner, provided, however, that the Funds shall not
constitute Subsidiaries of any Borrowers provided that the general partner(s) of
such Funds are no longer Subsidiaries of the Company by January 31, 1997.
"Taxes" shall have the meaning specified in Paragraph 2.16 hereof.
"Termination Date" shall mean the earlier of (i) December 18, 1998,
or (ii) the date on which a Commitment is terminated pursuant to Paragraph 2.8
hereof.
"TFS" shall mean Transitional Financial Services, Inc., a Delaware
corporation.
"THS Group" means Transitional Health Services Inc. and all of the
corporations which were part of the affiliated group (as defined in Code Section
1504) of which Transitional Health Services Inc. was the common parent (as
defined in Code Section 1504) immediately prior to the December 31, 1995 merger
with the acquisition subsidiary of the Company, and any corporation owned by any
member of such affiliated group.
15
"THS Nursing Home Subsidiaries" shall mean all direct and indirect
Subsidiaries of Transitional Health Services, Inc. other than Paragon
Rehabilitation, Inc.
"Transitional Subordinated Notes" shall mean the 10.8% Senior
Subordinated Notes due October 30, 2002 of Transitional Financial Services, Inc.
("TFS") in the aggregate principal amount of $17,650,000 and the 11.79% Senior
Subordinated Notes due October 30, 2002 of TFS in the aggregate principal amount
of $7,650,000, each as guaranteed by the Company pursuant to the Guaranty
Agreement dated as of December 31, 1995.
"WelCare Group" means the Company and all of the corporations which
were part of the affiliated group (as defined in Code Section 1504) of which the
Company was the common parent (as defined in Code Section 1504) immediately
prior to the December 31, 1995 merger with THS and any corporation owned by any
member of such affiliated group.
"Xxxxx Xxxxxx Preferred Stock" shall mean the shares of Series C
Preferred Stock issued and outstanding as of the date hereof and having terms
and conditions as set forth in the Articles of Incorporation of the Company in
effect as of the date hereof.
1.2. Rule of Construction. Except as otherwise provided herein,
financial and accounting terms used in the foregoing definitions or elsewhere in
this Agreement shall be defined in accordance with GAAP. SECTION 2 FACILITY
SECTION 2
FACILITY
2.1. Commitment.
(a) Commitment. From time to time prior to the Termination
Date, subject to the provisions below, each Lender severally agrees to make
Advances to Borrowers up to such Lender's Maximum Principal Amount as set forth
on Schedule 2 attached hereto, and Borrowers may repay at the offices of Agent
and reborrow under the Commitment, up to an aggregate principal amount not to
exceed at any time outstanding (together with the amount available to be drawn
under Letters of Credit and any unreimbursed draws under Letters of Credit) the
lesser of (i) the Borrowing Base or (ii) the Commitment as from time to time in
effect; provided, however, that in no event shall funds be advanced or Letters
of Credit issued for use in the business or operations of the THS Nursing Home
Subsidiaries in an aggregate principal amount in excess of Twenty Million
Dollars ($20,000,000) outstanding at any time.
(b) Joint and Several Obligation. The obligations of Borrowers
hereunder are and shall be joint and several.
16
(c) Authority of the Company. Each of the Borrowers hereby
irrevocably authorizes and requests that the Company execute all Advance Request
Forms, make all elections as to interest rates and take any other actions
required or permitted of Borrowers hereunder, on its respective behalf, in each
case with the same force and effect as if such Borrower had executed such
Advance Request Form, made such election or taken such other action itself.
2.2. Promissory Notes. The indebtedness of Borrowers to each Lender
under the Loan will be evidenced by a Note executed by Borrowers, jointly and
severally, in favor of such Lender. The original principal amount of each
Lender's Note will be the amount identified in Schedule 2 attached hereto as its
Maximum Principal Amount; provided, however, that notwithstanding the face
amount of each such Note, the Borrowers' liability under each such Note shall be
limited at all times to the actual indebtedness, principal, interest, fees, and
expenses, then outstanding to such Lender under the Loan.
The Notes shall collectively replace and supersede the Working
Capital Note dated August 15, 1995 and the Amended and Restated Permitted
Acquisitions Note dated November 26, 1996 by certain of the Borrowers in favor
of CoreStates as Lender under the Existing Credit Agreement (the "Existing
Notes"), provided, that the execution and delivery of such Notes shall not in
any circumstance be deemed to have terminated, extinguished or discharged the
Indebtedness under the Existing Notes, all of which Indebtedness and the
Collateral therefor shall continue under and be governed by the Notes, this
Agreement and the other Loan Documents. The Notes collectively are a
replacement, consolidation, amendment and restatement of the Existing Notes and
are NOT A NOVATION. Nothing herein is intended to modify or in any way affect
the priority of the Collateral which secures the Loan.
2.3. Lenders' Participation. Lenders shall participate in the Loan
in the Maximum Principal Amounts and Pro Rata Shares set forth in Schedule 2
attached hereto.
2.4. Use of Proceeds. Advances under the Commitment may be used
solely (i) for Borrowers' working capital needs, (ii) for capital expenditures
and general corporate purposes of Borrowers, (iii) for reimbursement of draws
under Letters of Credit in accordance with Paragraph 2A.4(b) hereof, (iv) to
finance the purchase price and related expenses in connection with Permitted
Acquisitions, (v) to advance working capital financing to other parties in
connection with entering into Long-Term Management Contracts, as permitted
pursuant to Paragraph 6.3(iv) hereof, (vi) to refinance indebtedness to Xxxxxx
Financial Corporation and (vii) to refinance indebtedness outstanding under the
Existing Credit Agreement; provided, however, that (x) in no event shall funds
be Advanced or Letters of Credit issued for use in the business or operations of
the THS Nursing Home Subsidiaries in an aggregate principal amount in excess of
Twenty Million Dollars ($20,000,000),
17
and (y) in no event shall the proceeds of any Advance be advanced to or used by
any Subsidiary that is not a Borrower.
2.5. Repayment.
(a) Scheduled Repayment. The aggregate outstanding principal
balance of the Loan on the Termination Date shall be payable in fifteen (15)
equal quarterly payments, each in the amount of one fifteenth (1/15th) of the
outstanding principal balance on the Termination Date, payable on the last
Business Day of each March, June, September and December, commencing with March
31, 1999 and continuing thereafter until the Loan is paid in full; provided,
however, that notwithstanding the foregoing, the entire outstanding balance of
the Loan shall be payable in full on the earlier to occur of September 30, 2002
or the date of acceleration of the Loan pursuant to Paragraph 8.2 hereof.
(b) Mandatory Payments. In addition to the scheduled payments
of principal pursuant to Paragraph 2.5(a) above, Borrowers shall make principal
payments in the circumstances and in the amounts set forth below:
(i) Asset Dispositions. In connection with each Sale of
Material Assets approved by Lenders pursuant to Paragraph 6.7 hereof, the Net
Cash Proceeds to the seller of such transaction shall be paid directly to Agent
for the account of Lenders and applied to the Loan as set forth in subparagraph
(v) below.
(ii) New Debt. In the event a Borrower incurs
Indebtedness consented to by Required Lenders which is not otherwise permitted
pursuant to Paragraph 6.1 hereof, the net cash proceeds of such Indebtedness
shall be paid directly to Agent for the account of the Lenders and applied to
the Loan as set forth in subparagraph (v) below.
(iii) Equity Issuance. In connection with any issuance
of equity by the Company, fifty percent (50%) of the net cash proceeds to the
Company of such issuance, after retirement of the Transitional Subordinated
Notes and Preferred Stock, shall be paid directly to Agent for the account of
the Lenders and applied to the Loan as set forth in subparagraph (v) below;
provided, however, that no such payment shall be required in connection with (A)
up to Ten Million Dollars ($10,000,000) in proceeds received upon the issuance
of Preferred Stock to any Welsh Xxxxxx Xxxxxxxx & Xxxxx partnership or affiliate
having terms and conditions in form and substance acceptable to Required
Lenders, or (B) proceeds received upon the issuance of shares of Common Stock in
connection with the exercise of options outstanding on the date hereof as set
forth on Exhibit E.
(iv) Borrowing Base. Immediately upon delivery of a
Compliance Certificate showing a Borrowing Base that is less than the
outstanding principal balance of the Loan, including the
18
amount available to be drawn under Letters of Credit and the amount of any
unreimbursed draws under Letter of Credit, Borrowers shall pay to Agent, for
application to the Loan as provided in subparagraph (v) below, an amount
necessary to reduce the outstanding balance of the Loan to an amount that is
less than or equal to the Borrowing Base.
(v) Application of Payments. Payments made pursuant to
subparagraph 2.5(b)(i) through (iv) above shall be applied to the outstanding
principal balance of the Loan and shall be accompanied by all accrued and unpaid
interest and fees in connection with the amount prepaid (including any amount
payable under Paragraph 2.10 hereof). Any such payments prior to the Termination
Date shall not reduce the Commitment and may be reborrowed in accordance
herewith. Any such payment after the Termination Date shall be applied to
payments of the Loan in the inverse order of the maturity thereof.
2.6. Interest. Portions of the Loan shall bear interest on the
outstanding principal amount thereof in accordance with the following
provisions:
(a) Definitions. As used in this Paragraph 2.6, the following
words and terms shall have the meanings specified below:
"Adjusted Libor Rate" shall mean, for any Interest Period, as
applied to a Portion, the rate per annum (rounded upwards, if necessary to the
next 1/16 of 1%) determined pursuant to the following formula:
Adjusted Libor Rate = Libor Rate
------------------------
[1 - Reserve Percentage]
For purposes hereof, "Libor Rate" shall mean, as applied to a Portion, the rate
which appears on the Telerate page 3750 at approximately 9:00 a.m. Philadelphia
time two London Business Days prior to the commencement of such Interest Period
for the offering to leading banks in the London Interbank Market of deposits in
United States dollars ("Eurodollars") or, if such rate does not appear on the
Telerate page 3750, the rate which appears (or, if two or more such rates
appear, the average rounded up to the nearest 1/16 of 1% of the rates which
appear) on the Reuters Screen LIBO Page as of 9:00 a.m. Philadelphia time two
London Business Days prior to the commencement of the Interest Period, in either
case for an amount substantially equal to such Portion as to which Borrower may
elect the Adjusted Libor Rate to be applicable with a maturity of comparable
duration to the Interest Period selected by Borrower for such Portion, as may be
adjusted from time to time in accordance with Paragraph 2.6(f) hereof.
"Applicable Margin" means the percentage per annum set forth in the
appropriate column below that corresponds to the ratio of Adjusted Total Debt to
Adjusted EBITDAR (the Applicable Margin
19
being the lowest applicable percentage per annum as to which the ratio
requirement has been attained):
Applicable Margin
-----------------
Ratio of Adjusted Total Base Rate Libor
Debt to Adjusted EBITDAR Portions Portions
------------------------ -------- --------
less than 3.50 to 1 0.00% 1.25%
less than 4.00 to 1 0.00% 1.50%
but greater than or
equal to 3.50 to 1
less than 4.50 to 1 0.25% 1.75%
but greater than or
equal to 4.00 to 1
less than 5.00 to 1 0.50% 2.00%
but greater than or
equal to 4.50 to 1
greater than or equal 1.00% 2.50%
to 5.00 to 1
The initial Applicable Margin, which shall be applicable commencing on the
Effective Date, shall be based on the Company's financial statements for the
fiscal period ended June 30, 1996 and the Compliance Certificate delivered
pursuant to Paragraph 4.1 hereof; thereafter the Applicable Margin shall adjust
automatically, as appropriate, on the day following delivery of each Compliance
Certificate, provided, that in the event that a Compliance Certificate has not
been delivered as required by Paragraph 5.4 then the Applicable Margin shall
adjust to the highest margin provided above as of the date of required delivery;
provided further, however, that the Applicable Margin shall adjust on the day
after delivery of such delinquent Compliance Certificate based on the ratio set
forth in such Compliance Certificate. Notwithstanding the foregoing, at any time
that the default rate of interest shall apply in accordance with Paragraph
2.6(b)(ii) hereof, the Applicable Margin shall be the highest margin provided
above with respect to Base Rate Portions and Libor Portions, respectively.
"Base Rate" shall mean the higher of (a) the Federal Funds Rate plus
one half of one percent (1/2%) per annum or (b) the Prime Rate.
"Federal Funds Rate" shall mean the daily rate of interest announced
from time to time by the Board of Governors of the Federal Reserve System in
publication H.15 as the "Federal Funds Rate."
20
"Interest Period" shall mean, with respect to the Adjusted Libor
Rate, a period of one (1), two (2), three (3) or six (6) months' duration, as
Borrowers may elect, during which the Adjusted Libor Rate is applicable;
provided, however, that (a) if any Interest Period would otherwise end on a day
which shall not be a London Business Day, such Interest Period shall be extended
to the next succeeding London Business Day, unless such London Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding London Business Day, subject to clause (c) below; (b)
interest shall accrue from and including the first day of each Interest Period
to, but excluding, the day on which any Interest Period expires; and (c) with
respect to an Interest Period which begins on the last London Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period), the Interest Period
shall end on the last London Business Day of a calendar month.
"London Business Day" shall mean any Business Day on which banks in
London, England are open for business.
"Portion" shall mean a portion of the Loan as to which a specific
interest rate and, in the case of a Portion bearing interest based upon the
Adjusted Libor Rate, an Interest Period, has been elected by Borrowers.
"Prime Rate" shall mean the rate of interest announced by Agent from
time to time as its prime rate.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.
"Reserve" shall mean, for any day, that reserve (expressed as a
decimal) which is in effect (whether or not actually incurred) with respect to a
Lender (or any bank Affiliate of such Lender) on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor or any other
banking authority to which a Lender (or any bank Affiliate of such Lender) is
subject including any board or governmental or administrative agency of the
United States or any other jurisdiction to which a Lender (or any bank Affiliate
of such Lender) is subject), for determining the maximum reserve requirement
(including without limitation any basic, supplemental, marginal or emergency
reserves) for Eurocurrency liabilities as defined in Regulation D.
"Reserve Percentage" shall mean, for a Lender (or any bank Affiliate
of such Lender) on any day, that percentage (expressed as a decimal) prescribed
by the Board of Governors of the Federal Reserve System (or any successor or any
other banking authority to which a Lender (or any bank Affiliate of such Lender)
is subject, including any board or governmental or administrative
21
agency of the United States or any other jurisdiction to which a Lender is
subject), for determining the reserve requirement (including without limitation
any basic, supplemental, marginal or emergency reserves) for (i) deposits of
United States Dollars or (ii) Eurocurrency liabilities as defined in Regulation
D, in each case used to fund a Portion subject to an Adjusted Libor Rate or any
Loan made with the proceeds of such deposit. The Adjusted Libor Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
(b) Interest on Loan.
(i) At the Borrowers' election in accordance with the
provisions of Paragraph 2.6(c) below, in the absence of an Event of Default
hereunder and prior to maturity or judgment, and subject to clause (ii) below,
any Portion of the Loan shall bear interest at either of the following rates:
(A) Base Rate. The Base Rate plus the Applicable
Margin, such rate to change when and as the Base Rate
changes and when and as the Applicable Margin changes.
(B) Adjusted Libor Rate. The Adjusted Libor Rate
plus the Applicable Margin, such rate to change when and
as the Applicable Margin changes.
(ii) Notwithstanding the foregoing, upon the occurrence
and during the continuance of an Event of Default hereunder, including after
maturity and upon judgment, Borrowers hereby agree to pay to Lenders interest
(A) on any outstanding Portion of the Loan or bearing interest based on the
Adjusted Libor Rate, at the rate which is two percent (2%) per annum in excess
of the Adjusted Libor Rate plus the highest margin provided in the definition of
Applicable Margin with respect to Libor Portions through the end of the
applicable Interest Period, and thereafter, at the rate of two percent (2%) per
annum in excess of the Base Rate plus the highest margin provided in the
definition of Applicable Margin with respect to Base Rate Portions, and (B) on
any Portion bearing interest based on the Base Rate, at the rate of two percent
(2%) per annum in excess of the Base Rate plus the highest margin provided in
the definition of Applicable Margin with respect to Base Rate Portions.
(iii) Borrowers shall pay to CoreStates on the Effective
Date all accrued and unpaid interest to and including the Effective Date in
accordance with the Existing Credit Agreement together with all funding costs
and loss of earnings associated with the termination of outstanding Libor
Portions as of the
22
Effective Date, calculated in accordance with Exhibit D attached hereto.
(c) Procedure for Determining Interest Periods and Rates of
Interest.
(i) If Borrowers elect the rate based on the Base Rate
to be applicable to a Portion, Borrowers must notify Agent of such election in
writing prior to eleven o'clock (11:00) a.m. Philadelphia time one (1) Business
Day prior to the proposed application of such rate. If Borrowers elect the rate
based on the Adjusted Libor Rate to be applicable to a Portion, Borrowers must
notify Agent of such election and the Interest Period selected prior to eleven
o'clock (11:00) a.m. Philadelphia time at least three (3) London Business Days
prior to the commencement of the proposed Interest Period. If Borrowers do not
provide notice for the rate based on the Adjusted Libor Rate, then Borrowers
shall be deemed to have requested that the rate based on the Base Rate shall
apply to any Portion as to which the Interest Period is expiring and to any new
Advance of the Loan until Borrowers shall have given proper notice of a change
in or determination of the rate of interest in accordance with this Paragraph
2.6(c).
(ii) Borrowers shall not elect more than four (4)
different Portions bearing interest at the rate based on the Adjusted Libor Rate
to be applicable to the Loan at one time.
(d) Payment and Calculation of Interest. With respect to
Portions which bear interest at the rate based on the Adjusted Libor Rate,
interest shall be due and payable on the last day of each Interest Period for
each such Portion and, in the case of a Portion with an Interest Period of six
(6) months, on the ninetieth (90th) day after the Portion is advanced and on the
last day of the Interest Period, and with respect to Portions which bear
interest at the rate based on the Base Rate, interest shall be due and payable
on the last Business Day of the month commencing on the first such date after
the first Advance which bears interest at the rate based on the Base Rate.
Interest shall be calculated in accordance with the provisions of Paragraph
2.6(b) hereof; all interest shall be calculated on the basis of the actual
number of days elapsed over a year of three hundred sixty (360) days for
Portions bearing interest at the rate based on the Adjusted Libor Rate, and over
a year of three hundred sixty-five (365) or three hundred sixty-six (366) days,
as the case may be, for Portions bearing interest at the rate based on the Base
Rate.
(e) Reserves. If at any time when a Portion is subject to the
rate based on the Adjusted Libor Rate, a Lender (or a bank Affiliate of such a
Lender) is subject to and incurs a Reserve, other than a Reserve Percentage
provided in the calculation of the applicable Adjusted Libor Rate, Borrowers
hereby agree to pay within five (5) Business Days of demand thereof from time to
time, as billed by Agent on behalf of itself or a Lender, such additional amount
as is necessary to reimburse such Lender (or
23
such Lender's bank Affiliate) for its costs in maintaining such Reserve. Such
amount shall be computed by taking into account the cost incurred by the Lender
(or such Lender's bank Affiliate) in maintaining such Reserve in an amount equal
to such Lender's ratable share of the Portion on which such Reserve is incurred,
which computation shall be set forth in any such demand by Agent on behalf of
itself or a Lender. The Agent agrees to xxxx Borrowers promptly upon receipt of
any such demand from a Lender. The determination by Agent or any Lender of such
costs incurred and the allocation, if any, of such costs among Borrowers and
other customers which have similar arrangements with such Lender (or such
Lender's bank Affiliate) shall be prima facie evidence of the correctness of the
fact and the amount of such additional costs.
(f) Special Provisions Applicable to Adjusted Libor Rate. The
following special provisions shall apply to the Adjusted Libor Rate:
(i) Change of Adjusted Libor Rate. The Adjusted Libor
Rate may be automatically adjusted by Agent on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes in applicable law or
regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable Interest Period, including but not limited
to changes in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve System (or any successor), excluding the
Reserve Percentage and any Reserve which has resulted in a payment pursuant to
subparagraph (e) above, that increase the cost to Lenders of funding the Loan or
a Portion thereof bearing interest based on the Adjusted Libor Rate. Agent shall
give Borrowers and each Lender notice of such a determination and adjustment,
which determination shall be prima facie evidence of the correctness of the fact
and the amount of such adjustment. Borrowers may, by notice to Agent, (A)
request Agent to furnish to Borrowers a statement setting forth the basis for
adjusting such Adjusted Libor Rate and the method for determining the amount of
such adjustment; and/or (B) repay the Portion of the Loan with respect to which
such adjustment is made, subject to the requirements of Paragraph 2.9 and 2.10
hereof.
(ii) Unavailability of Eurodollar Funds. In the event
that Borrowers shall have requested the rate based on the Adjusted Libor Rate in
accordance with Paragraph 2.6(c) and any Lender (or such Lender's bank
Affiliate) shall have reasonably determined that Eurodollar deposits equal to
the amount of the principal of the Portion and for the Interest Period specified
are unavailable, or that the rate based on the Adjusted Libor Rate will not
adequately and fairly reflect the cost of making or maintaining the principal
amount of the Portion specified by Borrowers during the Interest Period
specified, or that by reason of circumstances affecting Eurodollar markets,
adequate and reasonable means do not exist for ascertaining the rate based on
the Adjusted Libor Rate
24
applicable to the specified Interest Period, such Lender shall give notice to
Agent and Agent shall promptly give notice of such determination to Borrowers
that the rate based on the Adjusted Libor Rate is not available. A determination
by such Lender (or such Lender's bank Affiliate) hereunder shall be prima facie
evidence of the correctness of the fact and amount of such additional costs or
unavailability. Upon such a determination, (i) the obligation to advance or
maintain Portions at the rate based on the Adjusted Libor Rate shall be
suspended until Agent shall have notified Borrowers and Lenders that such
conditions shall have ceased to exist, and (ii) the rate based on the Base Rate
shall be applicable to all Portions.
(iii) Illegality. In the event that it becomes unlawful
for a Lender (or such Lender's bank Affiliate) to maintain Eurodollar
liabilities sufficient to fund any Portion of the Loan subject to the rate based
on the Adjusted Libor Rate, then such Lender shall immediately notify Borrowers
thereof (with a copy to Agent) and such Lender's obligations hereunder to
advance or maintain advances at the rate based on the Adjusted Libor Rate shall
be suspended until such time as such Lender (or such Lender's bank Affiliate)
may again cause the rate based on the Adjusted Libor Rate to be applicable to
its share of any Portion of the outstanding principal balance of the Loan and
such Lender's share of any Portion shall then be subject to the rate based on
the Base Rate.
2.7. Advances.
(a) At the time Borrowers provide the requisite notice set
forth in Paragraph 2.6(c) hereof relating to the election of interest rates,
Borrowers shall give Agent written notice of each requested Advance. Such notice
of a requested Advance shall be in the form of the Advance Request Form attached
hereto as Exhibit A, shall be certified by the chief executive or chief
financial officer of the Company, on behalf of Borrowers, and shall contain the
following information and representations, which shall be deemed affirmed and
true and correct as of the date of and upon receipt of the requested Advance:
(i) the aggregate amount of the requested Advance, which
shall be equal to $1,000,000 or an even multiple of $250,000 in excess thereof;
(ii) the date of the requested Advance;
(iii) the interest rate(s) Borrowers have elected to
apply to the Advance and, if more than one interest rate has been elected, the
amount of the Portion as to which each interest rate shall apply and, in the
case of Portions bearing interest at the rate based on the Adjusted Libor Rate,
the Interest Period;
25
(iv) confirmation of compliance with Paragraphs 5.15
through 5.20 hereof and with the Borrowing Base immediately prior to and
following such Advance and, if applicable, consummation of the Permitted
Acquisition;
(v) a statement that the Advance will be used for the
purposes permitted by Paragraph 2.4 hereof;
(vi) statements that the representations and warranties
set forth in Section Three hereof and in the Collateral Security Documents are
true and correct in all material respects as of the date thereof; no Default or
Event of Default has occurred and is then continuing; and there has been no
Material Adverse Effect or event or circumstance which might reasonably be
expected to have a Material Adverse Effect since the date hereof;
(vii) in the case of an Advance for purposes of making a
Permitted Acquisition:
(A) a statement that based on the pro forma
combined financial statements required pursuant to Paragraph 6.8 hereof, there
would be no Default or Event of Default for the most-recent fiscal period for
which a Compliance Certificate has been delivered and for the remaining life of
the Loan; and
(B) a covenant to deliver such additional
documents as any Lender may reasonably request in accordance with Paragraph 5.12
hereof.
(b) (i) Upon receiving a request for an Advance in accordance
with subparagraph (a) above, Agent shall request by prompt notice to Lenders
that each Lender advance funds to Agent so that each Lender participates in the
requested Advance in the same percentage as it participates in the applicable
Commitment. In the case of a request for an Advance for purposes of making a
Permitted Acquisition, the Agent shall promptly provide copies of the Advance
Request Form and all attachments and information provided to the Lenders. Each
Lender shall advance its applicable percentage of the requested Advance to Agent
by delivering federal funds immediately available at Agent's offices prior to
twelve o'clock (12:00) noon on the date of the Advance. Subject to the
satisfaction of the terms and conditions hereof, Agent shall make the requested
Advance available to Borrowers by crediting such amount to the Company's deposit
account with Agent not later than two o'clock (2:00) p.m. on the day of the
requested Advance; provided, however, that in the event Agent does not receive a
Lender's share of the requested Advance by such time as provided above, Agent
shall not be obligated to advance such Lender's share.
(ii) Unless Agent shall have been notified by a Lender
prior to the date such Lender's share of any such Advance is to be made by such
Lender that such Lender does not intend to make its share of such requested
Advance available to Agent, Agent
26
may assume that such Lender has made such proceeds available to Agent on such
date, and Agent may, in reliance upon such assumption (but shall not be
obligated to), make available to Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to Agent by such Lender on
the date the Advance is made, Agent shall be entitled to recover such amount on
demand from such Lender (or, if such Lender fails to pay such amount forthwith
upon such demand, from Borrowers) together with interest thereon in respect of
each day during the period commencing on the date such amount was made available
to Borrowers and ending on (but excluding) the date Agent recovers such amount,
from such Lender, at a rate per annum equal to the effective rate for overnight
federal funds in New York as reported by the Federal Reserve Bank of New York
for such day (or, if such day is not a Business Day, for the next preceding
Business Day) and from Borrowers, at a rate per annum as provided in Paragraph
2.6(b)(i)(A) hereof.
(c) Each request for an Advance pursuant to this Paragraph 2.7
shall be irrevocable and binding on Borrowers. In the case of any Advance
bearing interest at the rate based upon the Adjusted Libor Rate, Borrowers shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in such
request for an Advance the applicable conditions set forth in Section Four
hereof, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or redeployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender when such Advance, as
a result of such failure, is not made on such date, as calculated by Agent in
accordance with Exhibit D attached hereto.
2.8. Adjustments to Commitment.
(a) Optional Reduction by Borrowers. Borrowers shall have the
right at any time and from time to time, upon three (3) Business Days' prior
written notice to Agent, to reduce the Commitment in whole or in part pro rata
among the Lenders in increments of $1,000,000, without penalty or premium,
provided that on the effective date of such reduction Borrowers shall make a
payment to the Agent for the account of the Lenders in an amount, if any, by
which the aggregate outstanding principal balance of the Loan exceeds the amount
of the Commitment, as then so reduced, together with accrued interest on the
amount so prepaid, and, if a Portion is paid prior to the last day of an
Interest Period, any amounts which may be due pursuant to Paragraph 2.10 hereof.
(b) Termination by Lenders. Pursuant to Paragraph 8.2 hereof,
Required Lenders shall have the right to terminate the Commitment at any time,
in their discretion and upon notice to Borrowers, upon the occurrence of any
Event of Default hereunder. Any payment following the occurrence of an Event of
Default, acceleration and demand for payment shall include the payment of any
amounts due pursuant to Paragraph 2.10 hereof.
27
(c) Restoration Only with Consent. Any termination or
reduction of the Commitment shall be permanent, and the Commitment cannot
thereafter be restored or increased without the written consent of all Lenders.
2.9. Prepayment; Repayment. Upon one (1) Business Day's prior
written notice by Borrowers to Agent, Borrowers may prepay, in whole or in part,
the outstanding principal balance under the Loan at any time without premium or
penalty, provided that (i) any prepayment of the Loan shall be in an amount
equal to $250,000 or a multiple of $250,000 in excess thereof; (ii) prepayments
prior to the Termination Date shall not reduce the Commitment and may be
reborrowed in accordance with this Agreement, and payments applied to amounts
outstanding under the Loan after the Termination Date shall be applied in the
inverse order of the installments due under Paragraph 2.5(a) hereof; and (iii)
such prepayment shall include all accrued interest on the amount prepaid plus
any amounts which may be due pursuant to Paragraph 2.10 hereof.
2.10. Funding Costs and Loss of Earnings. In connection with any
prepayment or repayment of a Portion bearing interest at a rate based on an
Adjusted Libor Rate made on other than the last day of the applicable Interest
Period, whether such prepayment or repayment is voluntary, mandatory, by demand,
acceleration or otherwise, Borrowers shall pay to Lenders all funding costs and
loss of earnings which may arise in connection with such prepayment or
repayment, as calculated by Agent in accordance with Exhibit D attached hereto.
2.11. Payments. All payments of principal, interest, fees and other
amounts due hereunder, including any prepayments thereof, shall be made by
Borrowers to Agent for the accounts of the Lenders in immediately available
funds before twelve o'clock (12:00) noon on any Business Day at the principal
office of Agent set forth at the beginning of this Agreement. Borrowers hereby
authorize Agent to charge Borrowers' account with Agent for all payments of
principal, interest and fees due hereunder.
2.12. Commitment Fee. Borrowers shall pay to Agent, for the benefit
of the Lenders, a non-refundable commitment fee equal to three-eighths of one
percent (3/8%) per annum on the average unused portion of the Commitment as from
time to time in effect from the date hereof through the Termination Date, which
fee shall be payable at the offices of Agent for the account of the Lenders
quarterly in arrears on the first day of each June, September, December and
March, as billed by Agent, and on the Termination Date. Lenders shall share in
such commitment fee in the same percentages as they participate in the
Commitment as set forth on Schedule 2 attached hereto. The commitment fee shall
be calculated on the basis of the actual number of days elapsed over a year of
three hundred sixty (360) days.
Borrowers and Lenders hereby agree that for purposes of calculating
the commitment fee to be paid from time to time under
28
this Paragraph 2.12, the unborrowed portion of the Commitment (on which such fee
is calculated) shall be reduced by the amount available to be drawn under
outstanding Letters of Credit and the amount of any unreimbursed draws on any
Letters of Credit.
The commitment fees provided in this Paragraph 2.12 shall apply from
and after the Effective Date, and Borrowers shall pay to CoreStates on the
Effective Date all accrued and unpaid commitment fees to and including the
Effective Date in accordance with the Existing Credit Agreement.
2.13. Closing Fee. Borrowers shall pay to Agent, for the benefit of
Lenders, on the Effective Date, a closing fee in the amount of three-quarters of
one percent (3/4%) of the aggregate amount of the Commitment, in which Lenders
shall share in the same percentages as they participate in the Commitment as set
forth on Schedule 2 attached hereto.
2.14. Fees to Agent. Borrowers shall pay to Agent the fees as agreed
upon between Borrowers and Agent pursuant to the Summary of Terms and Conditions
dated June 6, 1996 and accepted by Borrowers on June 7, 1996.
2.15. Regulatory Changes in Capital Requirements. If any Lender
shall have determined that the adoption or the effectiveness after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy, or
any change in any of the foregoing or in the interpretation or administration of
any of the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Lender (or any lending office or bank Affiliate of such Lender) or such
Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's bank
Affiliate or holding company (if any) as a consequence of this Agreement, the
Commitment or the Loan made by such Lender pursuant hereto to a level below that
which such Lender or its holding company or such bank Affiliate of such Lender
could have achieved, but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's policies and the policies of such
Lender's bank Affiliate or holding company with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time Borrowers
shall pay to such Lender on demand as set forth below such additional amount or
amounts as will compensate such Lender or its bank Affiliate or holding company
for any such reduction suffered together with interest on each such amount from
the date demanded until payment in full thereof at the rate provided in
Paragraph 2.6(b)(ii) hereof with respect to amounts not paid when due. Such
Lender will notify Borrowers of any event occurring that will entitle such
Lender to compensation pursuant to this Paragraph 2.15 as promptly as
29
practicable within ninety (90) days after it obtains knowledge thereof.
A certificate of such Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender or its holding company as specified
above shall be delivered to Borrowers and shall be conclusive absent manifest
error. Borrowers shall pay such Lender the amount shown as due on any such
certificate delivered by such Lender within ten (10) days after its receipt of
the same.
The Lenders shall determine the applicability of, and the amount due
under, this Paragraph 2.15 consistent with the manner in which they apply
similar provisions and calculate similar amounts payable to them by other
borrowers having in their credit agreements provisions comparable to this
Paragraph 2.15.
Failure on the part of any Lender to demand compensation for
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to any other period.
2.16. Taxes. Any and all payments by Borrowers to the Lenders
hereunder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding in the case of each Lender,
(i) taxes assessed solely on the net income of such Lender, and (ii) taxes and
withholdings arising solely from a connection between such Lender and the
jurisdiction imposing such tax, other than a connection arising from the
activities of such Lender solely in connection with this Agreement (all such
non-excluded taxes, levies, imposts, deductions, charges, withholding and
liabilities being hereinafter referred to as "Taxes"). If any Taxes shall be
required by law to be paid or deducted from or in respect of any sum payable
hereunder or under any Note to any Lender, the sum payable by Borrowers shall be
increased as may be necessary so that after making all required payments and
deductions (including payments and deductions applicable to additional sums
payable under this Paragraph 2.16) such Lender receives an amount equal to the
sum it would have received had no such payments or deductions been made, but
shall be decreased to take into account any credit, deduction or offset
available in any other jurisdiction as a result of such payment.
SECTION 2A
LETTERS OF CREDIT
2A.1. Availability of Credits. Subject to the terms and conditions
set forth herein, Lenders shall from time to time prior to the Termination Date
participate in the issuance or renewal by
30
Agent of Letters of Credit for the account of Borrowers on the following terms
and conditions:
(a) at the time of issuance or renewal of the Letter of
Credit, the unborrowed portion of the Commitment shall equal or exceed the sum
of the amount available to be drawn under such Letter of Credit and the amount
available to be drawn under and any unreimbursed draws under all other Letters
of Credit;
(b) at the time of issuance or renewal of the Letter of
Credit, the amount available to be drawn under such Letter of Credit and all
other Letters of Credit then outstanding hereunder plus any unreimbursed draws
under all other Letters of Credit shall not exceed, in the aggregate, the Letter
of Credit Sublimit;
(c) the final expiration date of each Letter of Credit shall
be on or before the earlier of (i) one year from the date of issuance thereof or
(ii) the Termination Date;
(d) there shall not exist at the time of issuance or renewal
of the Letter of Credit, and as a result thereof, any Default or Event of
Default; and
(e) each Letter of Credit issued or renewed under this Section
2A shall be required by a Borrower for purposes reasonably satisfactory to Agent
(it being agreed and understood that issuance of a one-year Letter of Credit in
the amount of $2,000,000 to secure obligations under leases of nursing home
facilities by HCPI to Subsidiaries of Transitional Financial Services, Inc. is a
purpose satisfactory to Agent).
Upon issuance of each Letter of Credit, each Lender shall have a
participating interest therein based on its percentage share of the Commitment
as set forth in Schedule 2 attached to the Credit Agreement.
On the Effective Date, all Letters of Credit outstanding under the
Existing Credit Agreement shall continue under and be governed by this
Agreement, the Letter of Credit Application delivered in connection with the
issuance thereof, and the other terms of such Letter of Credit. On the Effective
Date, Agent shall pay to each Lender their proportionate share of any LC Fees
received by Agent in accordance with the Existing Credit Agreement with respect
to Letters of Credit issued prior to the Effective Date and continuing in effect
after the Effective Date, and Borrowers shall pay any additional amount of fees
required to be paid with respect to such Letter of Credit under the terms of the
Agreement.
2A.2. Commitment Availability. The amount available under the
Commitment as from time to time in effect shall be reduced by the amount
available to be drawn under all outstanding Letters of Credit and unreimbursed
amounts of any draws under
31
Letters of Credit. The amount by which the Commitment is so reduced shall not be
available for advances under Paragraph 2.7 hereof, except advances thereunder
which are made to reimburse Agent for draws under the Letters of Credit as
permitted pursuant to Paragraph 2A.4(b) hereof.
2A.3. Approval and Issuance.
(a) Borrowers shall provide Agent not less than three (3)
Business Days' prior written notice of each request for the issuance of a Letter
of Credit by delivery of a Letter of Credit Request Form in the form attached as
Exhibit B-1 hereto and Agent's Letter of Credit Application in the form attached
as Exhibit B-2 hereto. Each Letter of Credit Request Form submitted by Borrowers
to Agent requesting the issuance of a Letter of Credit shall be certified by the
chief executive or chief financial officer of the Company, on behalf of
Borrowers, and shall, in addition to the matters described in Paragraph 2.7(a)
hereof, list all Letters of Credit outstanding for the account of Borrowers at
that time and, for each Letter of Credit so listed, its face amount, outstanding
undrawn balance and expiration date. It shall be a condition to the issuance of
any Letter of Credit that Agent shall have received a Letter of Credit Request
Form and Letter of Credit Application as described above and that the conditions
set forth in Paragraph 4.3 shall be satisfied.
(b) Agent will promptly provide to Lenders written or
telephonic notification of Agent's receipt of the Letter of Credit Request Form
and the Letter of Credit Application which shall state (i) the amount of the
Letter of Credit requested and (ii) the expiration date of the requested Letter
of Credit.
2A.4. Obligations of the Borrowers.
(a) Borrowers agree to pay to Agent in connection with each
Letter of Credit issued hereunder: (i) immediately upon the demand of Agent on
behalf of all Lenders, the amount paid by each Lender with respect to such
Letter of Credit; (ii) immediately upon demand of Agent, the amount of any draft
presented purporting to be drawn under such Letter of Credit provided that the
draft and accompanying documents conform to the terms of the Letter of Credit
but subject to the terms of Paragraph 2A.7 (whether or not Agent has at such
time honored such draft) and any other amounts paid thereunder (it being
understood that Agent is not required to make demand upon or proceed against any
Lender or other party or to resort to any Collateral before obtaining payment
from Borrowers); (iii) on the date of issuance of each Letter of Credit and on
the effective date of any extension or renewal of any Letter of Credit a
non-refundable fee for the benefit of Lenders in accordance with each Lender's
percentage share of the Commitment as set forth on Schedule 2 attached hereto,
calculated on the outstanding face amount of such Letter of Credit at a rate per
annum equal to the Applicable Margin for a Libor Portion, as set forth in
Paragraph 2.6 hereof; (iv) on the date of issuance of each Letter of Credit
32
and on the effective date of any renewal or extension of any Letter of Credit a
fee of one-eighth of one percent (0.00125) per annum on the outstanding face
amount of such Letter of Credit, payable to Agent for its own account; (v)
interest on any indebtedness outstanding with respect to such Letter of Credit,
whether for funds paid on drafts on such Letter of Credit, or otherwise (but
such indebtedness shall not include undrawn balances of such Letter of Credit
issued hereunder) at the rate applicable to Base Rate Portions under Paragraph
2.6(b)(i)(A) hereof from the date of payment by Agent (if not reimbursed by
Borrower on the same day) to the date one (1) Business Day after notice to
Borrowers of such payment, and thereafter at the rate applicable to Base Rate
Portions under Paragraph 2.6(b) hereof. Interest under the preceding clause (v)
shall be paid at the times and in the manner set forth in Paragraph 2.6 hereof,
and shall accrue on amounts paid on a Letter of Credit (if not reimbursed by
Borrower on the same day) from the date of payment by Agent, whether or not
demand is made, until such amounts are reimbursed by Borrowers whether before,
at or after demand.
(b) On or before the Termination Date, in the absence of a
Default or Event of Default, and subject to the provisions of Paragraph 2.7
hereof, Lenders hereby agree to advance funds to Borrowers under the Loan to
make the payments required under Paragraphs 2A.4(a)(i) and (ii) hereof. If any
payment by the Agent of a draft drawn under a Letter of Credit is for any reason
(including without limitation the occurrence or continuation of a Default or
Event of Default hereunder) not reimbursed prior to or on the date of such
payment, the amount of such payment shall thereupon be deemed for purposes
hereof an advance under Paragraph 2.7 hereof. Such reimbursement obligation
shall be repayable, prepayable, and otherwise subject to all the terms and
conditions thereof as if advanced by Lenders pursuant to Paragraph 2.7 hereof
(but without duplication).
2A.5. Payment by Lenders on Letters of Credit.
(a) With respect to each Letter of Credit, each Lender agrees
that it is irrevocably obligated to pay to Agent, for each such Letter of
Credit, such Lender's Pro Rata Share of each and every payment made or to be
made by Agent under such Letter of Credit (each such payment to be made, a "LOC
Contribution"). Each Lender's LOC Contribution shall be due from such Lender
immediately upon, and in any event no later than the same day as, receipt of
written notice (which may be sent by telex or telecopier) from Agent (except
that if such notice is received after 3:00 p.m. on any Business Day, payment may
be made on the following Business Day, together with interest equal to the
effective rate for overnight funds in New York as reported by the Federal
Reserve Bank of New York for such day (or, if such day is not a Business Day,
for the next preceding Business Day)) that (i) it has made a payment or (ii) a
draft has been presented purporting to be drawn on a Letter of Credit issued
hereunder. Such payment shall be made at Agent's offices in immediately
available federal funds.
33
(b) The obligation of each Lender to make its LOC Contribution
hereunder is absolute, continuing and unconditional, and Agent shall not be
required first to make demand upon or proceed against Borrowers or any guarantor
or surety, or any others liable with respect to the applicable Letter of Credit
and shall not be required first to resort to any Collateral. LOC Contributions
shall be made without regard to termination of this Agreement or the Commitment,
the existence of an Event of Default or Default hereunder, the acceleration of
indebtedness hereunder or any other event or circumstance.
2A.6. Collateral Security.
(a) The indebtedness, liabilities and obligations of Borrowers
under this Section 2A, however created or incurred, whether now existing or
hereafter arising, due or to become due, absolute or contingent, direct or
indirect, secured or unsecured, are among the obligations secured by the
security interests, liens and encumbrances created by the Collateral Security
Documents delivered to Agent by Borrowers, and Agent and the Lenders are
entitled to the benefit of the collateral security granted thereunder with
respect to such indebtedness.
(b) Notwithstanding the payment in full of the Loan, the
termination of the Commitment or the occurrence of the Termination Date, the
Collateral shall continue to secure the indebtedness, liabilities and
obligations of Borrowers under this Section 2A until all Letters of Credit shall
have expired and all indebtedness, liabilities and obligations under this
Section 2A shall have been paid in full.
(c) On the termination of the Commitment or the occurrence of
an Event of Default, Required Lenders may require (and in the case of an Event
of Default occurring under Paragraph 8.1(k) it shall be required automatically)
that Borrowers deliver to Agent, cash or U.S. Treasury Bills with maturities of
not more than 90 days from the date of delivery (discounted in accordance with
customary banking practice to present value to determine amount) in an amount
equal at all times to one hundred ten percent (110%) of the outstanding undrawn
amount of all Letters of Credit, such cash or U.S. Treasury Bills and all
interest earned thereon to constitute cash collateral for all such Letters of
Credit. At such time as such collateral is required to be and has not been
deposited, Agent on behalf of Lenders shall be entitled to liquidate such of the
other collateral for the Loan (if any) as is necessary or appropriate in its
sole judgment so as to create such cash collateral.
(d) Any cash collateral deposited under subparagraph (c)
above, and all interest earned thereon, shall be held by Agent and invested and
reinvested at the expense and the written direction of Borrower, in U.S.
Treasury Bills with maturities of no more than ninety (90) days from the date of
investment.
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2A.7. General Terms of Credits. The following terms and conditions
apply with respect to each Letter of Credit (a "Credit") notwithstanding
anything to the contrary contained herein:
(a) Borrowers assume all risks of the acts or omissions of the
beneficiary of each Credit with respect to the use of the Credit or with respect
to the beneficiary's obligations to Borrowers. None of the Lenders nor any of
their officers or directors shall be liable or responsible for, and the Lenders
hereby agree to indemnify and hold Agent and any issuer of a Credit harmless
(except for the issuer's gross negligence or willful misconduct) with respect
to: (i) the use which may be made of the Credit or for any acts or omissions of
the beneficiary in connection therewith; (ii) the accuracy, truth, validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should in fact prove to be in any or all respects false,
misleading, inaccurate, invalid, insufficient, fraudulent, or forged; (iii) the
payment by Agent against presentation of documents which do not comply with the
terms of the Credit, including failure of any documents to bear any reference or
adequate reference to a Credit; (iv) any other circumstances whatsoever in
making or failing to make payment under a Credit; or (v) any inaccuracy,
interruption, error or delay in transmission or delivery of correspondence or
documents by post, telegraph or otherwise. In furtherance and not in limitation
of the foregoing, Agent may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
(b) Notwithstanding the foregoing, with respect to any Credit,
Borrowers shall have a claim against Agent, and Agent shall be liable to
Borrowers, to the extent, but only to the extent, of any direct, as opposed to
indirect or consequential, damages suffered by Borrowers caused by the Agent's
willful misconduct or gross negligence.
(c) To the extent not inconsistent with this Agreement, the
Uniform Customs and Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, are hereby made a part of
this Agreement with respect to obligations in connection with each Credit.
SECTION 3
REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant to Lenders that, except as set forth
on Exhibit E:
3.1. Organization and Good Standing. Each Borrower and each
Subsidiary is duly organized and existing and in good standing under the laws of
the state of its formation as identified on Schedule 1 attached hereto, has the
power and authority to carry on its business as now conducted, and is qualified
to do business in
35
all other states in which the nature of its business or the ownership of its
properties requires such qualification except where the failure to so qualify
would not have a Material Adverse Effect.
3.2. Power and Authority; Validity of Agreement. Each Borrower has
the power and authority under the law of its state of incorporation and under
its articles or certificate of incorporation and by-laws to enter into and
perform the Loan Documents, to the extent it is a party thereto; all actions
(corporate or otherwise) necessary or appropriate for Borrowers' execution and
performance of the Loan Documents, to the extent it is a party thereto, have
been taken; and, upon their execution, the Loan Documents will constitute the
valid and binding obligations of Borrowers, to the extent each is a party
thereto, enforceable in accordance with their terms.
3.3. No Violation of Laws or Agreements. The entering into and
performance of the Loan Documents by the Borrowers will not: (a) violate any
provisions of any law or regulation, federal, state or local, applicable to a
Borrower, (b) violate any provision of the respective articles or certificates
of incorporation and by-laws of Borrowers or (c) result in any breach or
violation of, or constitute a default under, any agreement or instrument by
which any Borrower or their respective property are bound.
3.4. Health Care Facilities. Exhibit E hereto sets forth a
description of each Health Care Facility owned, leased or managed by Borrowers
or any Subsidiary, and for each Health Care Facility, sets forth the name and
location thereof, the applicable owner, lessor, lessee and manager, all Licenses
and contracts of such Health Care Facility with respect to which the default
thereunder by either party thereto or the failure to maintain in full force and
effect might reasonably be expected to have a Material Adverse Effect and the
expiration dates thereof, the number of licensed beds in each Health Care
Facility, the record owners of the real property on which such Health Care
Facility is situated, a description of all mortgages, deeds of trust or
assignments of rents and leases covering such Health Care Facility of which a
Borrower or any Subsidiary is mortgagor or grantor and a description of all real
property leases covering such Health Care Facility on which a Borrower or any
Subsidiary is either lessor or lessee. Each Health Care Facility is certified as
a provider of Medicare and Medicaid services. Each real property lease for a
Health Care Facility on which a Borrower is a lessee is assignable to and
assumable by Lenders.
3.5. Material Contracts. No Borrower or any Subsidiary is a party to
or in any manner obligated under any contracts under which a default by either
party might reasonably be expected to have a Material Adverse Effect, and, to
the Knowledge of Borrowers, there exists no default under any of such contracts.
36
3.6. Compliance. Each Borrower, each Subsidiary and each Health Care
Facility is in compliance with all applicable laws and regulations, federal,
state and local (including without limitation those administered by the Local
Authorities and HCFA), material to the conduct of its business and operations
except to the extent that non-compliance would not reasonably be expected to
have a Material Adverse Effect; each Borrower, each Subsidiary and each Health
Care Facility possesses all required Licenses, except to the extent that failure
to possess any such License would not reasonably be expected to have a Material
Adverse Effect; and such Licenses are valid, binding, enforceable and subsisting
without any defaults thereunder or enforceable adverse limitations thereon and
are not subject to any proceedings or claims opposing the issuance, development
or use thereof or contesting the validity thereof except to the extent such
defaults, limitations or proceedings would not reasonably be expected to, in the
aggregate, have a Material Adverse Effect; and no approvals, waivers or
consents, governmental (federal, state or local) or non-governmental, under the
terms of contracts or otherwise, are required by reason of or in connection with
Borrowers' execution and performance of the Loan Documents.
3.7. Litigation. There are no actions, suits, proceedings or claims
which are pending or, to the Knowledge of Borrowers, threatened against any
Borrower or any Subsidiary which, if adversely resolved, might reasonably be
expected to have a Material Adverse Effect.
3.8. Title to Assets. Each Borrower and each Subsidiary has good and
marketable title to all of its assets free and clear of any liens and
encumbrances, except the security interests granted to the Lenders under the
Collateral Security Documents and except as permitted pursuant to Paragraph 6.4
hereof, and all such assets are in substantially good order and repair (normal
wear and tear excepted) and covered by the insurance required under Paragraph
5.8 hereof.
3.9. Corporate Organization; Capital Stock. The Subsidiaries of the
Company are completely and accurately set forth on Exhibit E attached hereto.
The number of shares and classes of the capital stock or partnership interests
of each Borrower and each Subsidiary and the ownership thereof as of the date of
execution of this Agreement are accurately set forth on Exhibit E attached
hereto; all such shares or interests are validly existing, fully paid and
non-assessable, and the issuance and sale thereof are in compliance with all
applicable federal and state securities and other applicable laws; and the
ownership thereof is free and clear of any contractual restrictions, liens and
encumbrances, except (i) the pledge to the Lenders under the Pledge Agreements
and Security Agreements and (ii) the restrictions pursuant to the Shareholders
Agreement dated as of December 31, 1995 by and among the Company, J. Xxxxxxx
Xxxxx, South Atlantic Venture Fund II, Limited Partnership, South Atlantic
Venture Fund III, Limited Partnership, Welsh, Carson, Xxxxxxxx & Xxxxx VI, L.P.,
WCAS Capital
37
Partners II, L.P., WCAS Health Care Partners, L.P., CID Equity Capital III, L.P.
and Xxxxxxx Xxxxxxx.
3.10. Accuracy of Information; Full Disclosure.
(a) All information furnished to Lenders concerning the
financial condition of Borrowers, and the Health Care Facilities, including the
audited annual financial statements of the Company and its Consolidated
Subsidiaries dated December 31, 1995, copies of which have been furnished to
Lenders, has been prepared in accordance with GAAP as applicable and fairly
presents the financial condition of Borrowers as of the dates and for the
periods covered and discloses all liabilities of Borrowers required to be
disclosed in accordance with GAAP and there has been no change in the financial
condition, business, assets or prospects of Borrowers from the date of such
statements to the date hereof except changes which would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; and
(b) All financial statements and other documents furnished by
Borrowers to Lenders in connection with the Loan Documents do not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading.
Borrowers have disclosed to Lenders in writing any and all facts which might
reasonably be expected to have a Material Adverse Effect, or which could
materially affect Borrowers' ability to perform its obligations under the Loan
Documents.
3.11. Taxes and Assessments.
(a) Each Borrower and each Subsidiary has filed all required
tax returns or has filed for extensions of time for the filing thereof, and has
paid all applicable federal, state and local taxes, other than taxes not yet due
or which may be paid hereafter without penalty; provided that no such taxes
shall be required to be paid if they are being contested in good faith by
appropriate proceedings and are covered by appropriate reserves maintained in
accordance with GAAP.
(b) To the Knowledge of Borrowers there is no material tax
deficiency or additional assessment in connection therewith not provided for in
the financial statements required hereunder.
(c) The net operating losses of the WelCare Group and the THS
Group have been calculated using a reasonable method and they have been reported
on all federal, state or local tax returns. Exhibit E attached hereto sets forth
the amount as of October 30, 1996 of (i) the consolidated net operating loss of
each of WelCare Group and THS Group and the date of expiration thereof, and (ii)
any limitations on the use of such losses in the future including the
limitations imposed, if any, by the operation of Sections 269, 382, 383, 384 and
1502 of the Code and any regulation
38
promulgated thereunder. The projections delivered to Lenders pursuant to
Paragraph 4.1(k) hereof have taken into account and reflect all such limitations
on the use of such losses in the periods covered by such projections.
3.12. Indebtedness. Borrowers and the Subsidiaries have no presently
outstanding Indebtedness or obligations including contingent obligations and
obligations under leases of property from others, except Indebtedness and
obligations permitted by Paragraph 6.1 hereof.
3.13. Management Agreements. No Borrower is a party to any
management agreement for the provision of services to such Borrower, except that
a Borrower provides management services to certain of the Borrowers as set forth
on Exhibit E attached hereto.
3.14. Investments. The Company has no Subsidiaries other than those
identified on Exhibit E attached hereto; and no Borrower has any investments in
or loans to any other individuals or business entities, other than Permitted
Investments, except as described in Exhibit E hereto.
3.15. ERISA. Each Plan is in compliance in all material respects
with all applicable provisions of ERISA, the Code and the regulations
promulgated thereunder; and
(a) No Borrower or any ERISA Affiliate maintains or
contributes to or has maintained or contributed to any multiemployer plan (as
defined in section 4001 of ERISA) under which any Borrower or any ERISA
Affiliate could have any withdrawal liability which might reasonably be expected
to have a Material Adverse Effect;
(b) No Borrower or any ERISA Affiliate, sponsors or maintains
any Plan under which there is an accumulated funding deficiency within the
meaning of ss.412 of the Code, whether or not waived which might reasonably be
expected to have a Material Adverse Effect;
(c) The aggregate liability for accrued benefits and all
ancillary benefits (in each case determined as of the date hereof) under each
Plan that is a defined benefit pension plan (determined on the basis of the
actuarial assumptions prescribed for valuing benefits under terminating defined
benefit plan under Title IV of ERISA) does not exceed the aggregate fair market
value of the assets (determined as of the date of the latest annual report on
Form 5500) under each such defined benefit pension Plan by an amount which might
reasonably be expected to have a Material Adverse Effect;
(d) The aggregate liability of each Borrower and each ERISA
Affiliate arising out of or relating to a failure of any Plan to comply with the
provisions of ERISA or the Code, would not reasonably be expected to have a
Material Adverse Effect; and
39
(e) There does not exist any unfunded liability (determined on
the basis of actuarial assumptions utilized by the actuary for the Plan in
preparing the most recent Annual Report) of any Borrower or ERISA Affiliate
under any Plan providing post-retirement life or health benefits.
3.16. No Extension of Credit for Securities. No Borrower is now, or
at any time has it been engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any securities. The proceeds of the Loan shall be used by Borrowers as
set forth in Paragraph 2.4 hereof and none of the proceeds of the Loan will be
used, directly or indirectly, to purchase or carry margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System.
3.17. Perfection of Security Interests. Upon the filing of financing
statements in the jurisdictions identified in Exhibit I attached hereto, and
upon delivery of possession to Agent of stock certificates representing all the
outstanding shares of capital stock pledged pursuant to the Pledge Agreements,
no further action, including any filing or recording of any document, is
necessary in order to establish, perfect and maintain Lenders' first priority
security interests (except to the extent the same are subject to such liens and
security interests as are permitted by Paragraph 6.4) in the Collateral as
described in the Security Agreements, and the shares of stock described in the
Pledge Agreements, respectively, except for the periodic filing of continuation
statements with respect to financing statements filed under the Uniform
Commercial Code of the applicable jurisdiction. In addition, Agent may be
required to comply with the Social Security Act (42 U.S.C. 1395g(c)) in order to
enforce its security interest in Collateral governed thereby.
3.18. Perfection of Liens. When filed in the counties and states
where the related real property is located, the Mortgages, the Leasehold
Assignments and the Assignments of Rents will create liens on the real property
interests described in the Mortgages and Leasehold Assignments and on the rights
to receive payments for the use of the real property described in the
Assignments of Rents, subject to no prior liens other than those disclosed in
the title reports delivered pursuant thereto, and no further action, including
the filing or recording of any document, is necessary to maintain such lien.
3.19. Hazardous Substances.
To the Knowledge of Borrowers:
(a) Each Borrower and each Subsidiary has received all permits
and filed all notifications necessary to carry on its respective business(es)
under, and is in compliance in all respects with, all Environmental Control
Statutes.
40
(b) No Borrower nor any Subsidiary has given any written or
oral notice to the EPA or any state or local governmental agency with
jurisdiction under any Environmental Control Statute with regard to any actual
or imminently threatened "removal," "spill," "release" or "discharge" of
Hazardous Substances on properties owned or leased by any Borrower or in
connection with the conduct of its business and operations. The terms "removal,"
"spill," "release" and "discharge," as used in this Paragraph 3.19, have the
meanings given to them in the Environmental Control Statutes.
(c) No Borrower nor any Subsidiary has received written or
oral notice that it is potentially responsible for clean-up, remediation, costs
of clean-up or remediation, fines or penalties with respect to any actual,
alleged or imminently threatened "spill," "release" or "discharge" of Hazardous
Substances pursuant to any Environmental Control Statute.
3.20. Solvency. To the Knowledge of Borrowers, the Borrowers are, on
a consolidated basis, and after receipt and application of the proceeds of each
Advance under the Commitment will be, solvent such that (i) the fair value of
their assets on a consolidated basis (including, without limitation, the fair
salable value of goodwill and other intangible property) is greater than the
total amount of their liabilities on a consolidated basis including without
limitation, contingent liabilities, (ii) the present fair salable value of their
assets on a consolidated basis (including without limitation the fair salable
value of the goodwill and other intangible property) is not less than the amount
that will be required to pay the probable liability on their debts on a
consolidated basis as they become absolute and matured, and (iii) they are able
to realize upon their assets and pay their debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business. The Borrowers (i) do not intend to, and do not believe that they
will, incur debts or liabilities on a consolidated basis beyond their ability to
pay as such debts and liabilities mature, and (ii) are not engaged in a business
or transaction, or about to engage in a business or transaction, for which their
property on a consolidated basis would constitute unreasonably small capital
after giving due consideration to the prevailing practice and industry in which
they are engaged. For purposes of this Paragraph 3.20, in computing the amount
of contingent liabilities at any time, it is intended that Borrowers shall
compute such liabilities at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual matured liability. For the purposes of the
calculations in this Paragraph 3.20, Borrowers shall not include in their
liabilities any contingent liabilities that arise from the Funds or the
Preferred Stock.
3.21. Employee Controversies. There are no material controversies
pending or, to the Knowledge of Borrowers, threatened or anticipated between any
Borrower or any Subsidiary and any of
41
its respective employees, and there are no labor disputes, grievances,
arbitration proceedings or any strikes, work stoppages or slowdowns pending, or
to the Knowledge of Borrowers, threatened between any Borrower or any Subsidiary
and its respective employees and representatives which could impair the ability
of Borrowers to perform their obligations under the Loan Documents, or which
might reasonably be expected to have a Material Adverse Effect.
3.22. SouthTrust Financings.
(a) Set forth on Exhibit E is a complete and correct listing
of the Health Care Facilities financed by the SouthTrust Financing, the original
principal amount of indebtedness under the SouthTrust Financing with respect to
such Health Care Facility, and the outstanding principal amount of the
SouthTrust Financing with respect to such Health Care Facility as of the date of
this Agreement.
(b) The documents executed by or otherwise binding upon any
Borrower or any Subsidiary in connection with each SouthTrust Financing with EBT
are: (i) an Indemnity Agreement by the Company and CHPC in favor of EBT; (ii) an
Assignment and Security Agreement by CHPC in favor of EBT as collateral security
for CHPC's obligations under the lease with respect to such Health Care
Facility; (iii) a Lease Guaranty Agreement by the Company in favor of EBT; (iv)
an Amended and Restated Lease Agreement between CHPC and EBT with respect to the
applicable Health Care Facility; (v) a Subordination, Attornment and
Non-Disturbance Agreement among EBT, CHPC and SouthTrust; and (vi) a
Subordination Agreement among CHPC, CHMC and SouthTrust, subordinating CHMC's
rights to payment from CHPC under the management agreement to CHPC's obligations
to SouthTrust.
(c) Set forth on Exhibit E is a complete and correct listing
of the documents entered into in connection with the SouthTrust Financings with
House Investment I and House Investments II, respectively. The documents
executed by or otherwise binding upon any Borrower or any Subsidiary in
connection with the SouthTrust Financing with House Investments I and House
Investments II, respectively, are: (A) a Guaranty Agreement by Transitional
Health Services, Inc. in favor of SouthTrust, guaranteeing payment of the
obligations of House Investments I and House Investments II, respectively, to
SouthTrust, (B) an Indemnity Agreement among Transitional Health Services, Inc.,
House Investments I or House Investments II (as applicable) and SouthTrust, (C)
an Assignment and Security Agreement and Agreement Regarding Financial Covenants
between Transitional Health Partners and SouthTrust, and (D) a Subordination,
Attornment and Non- Disturbance Agreement among House Investments I or House
Investments II (as applicable), Transitional Health Partners and SouthTrust.
(d) Set forth on Exhibit E is a complete and correct listing
of the documents entered into in connection with
42
the SouthTrust Financing with Transitional Health Partners relating to the Xxxx
Health and Rehabilitation Center.
(e) Each document enumerated in subparagraph (b)(i) through
(vi) is consistent in all material respects with respect to each SouthTrust
Financing with EBT, except for such changes as reflect the name, address and
legal description of the particular Health Care Facility to which such document
relates, the interest rate and maturity of the related Indebtedness, and the
identification of the applicable lease and management agreement with respect to
such Health Care Facility, and, in the case of each lease, the term of such
lease.
3.23. Other Financings.
(a) Set forth on Exhibit E is a complete and correct listing
of the documents entered into in connection with each of the following
financings:
(i) financing with Oak Grove of Xxxxxxxxxx Limited
Partners with respect to Oak Grove Healthcare Center;
(ii) financing with Transitional Health Partners with
respect to Riverview of Xxx Arbor;
(iii) financing with Parkview Partnership with respect
to Parkview Manor Nursing Facility;
(iv) financing with Montclair Medical Investors, L.P.
with respect to Montclair Nursing Center; and
(v) financing with Xxxxx Investors I, L.P. with respect
to THS of Kannapolis.
(b) Except for the SouthTrust Financings described in
Paragraph 3.22(b) and (c) hereof, and the financing with respect to THS of
Kannapolis referred to in clause (v) of 3.23(a), no Borrower has any liability
or obligation with respect to any indebtedness of a lessor of a Health Care
Facility (other than a lessor that is a Borrower), and no creditor of any such
lessor has any security interest in or other right or claim to any assets of any
Borrower.
3.24. CGC. CGC holds no assets except for certain claims and
receivables and is not engaged in any business activity; and there does not
exist, by virtue of statute, common law, contract or otherwise, any liability
of, or any activity or condition relating to, CGC, including, without
limitation, with respect to any environmental condition, taxes, employee benefit
plan, program or statutory obligation, tort claim or contract dispute, which may
survive the liquidation of CGC (whether by operation of law, express assumption
or otherwise), except for those liabilities which do not in the aggregate exceed
Ten Thousand Dollars ($10,000).
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SECTION 4
CONDITIONS
4.1. Effectiveness of Agreement; First Advance. The effectiveness of
this Agreement and the obligation of Lenders to make the first Advance hereunder
shall be subject to satisfaction of each of the following conditions, in each
case in form and substance satisfactory to Lenders:
(a) Promissory Notes. The Notes duly executed by Borrowers and
delivered to Lenders.
(b) Security Agreement. An amended and restated Security
Agreement executed by Borrowers in favor of Agent on behalf of the Lenders
granting a first priority security interest, subject only to security interests
permitted pursuant to Paragraph 6.4 hereof, in all of Borrowers' assets (now
owned or hereafter acquired) as security for the Loan; together with financing
statements and amendments to financing statements, landlord consents and
waivers, mortgagee consents and waivers, consents to the assignment of
management contracts of Borrowers and evidence of any other recordations
required by applicable law or by Lenders to perfect or to continue the perfected
status of such security interests.
(c) Pledge Agreements. Pledge Agreements (or amendments and
confirmations of previously delivered Pledge Agreements, as appropriate) in
favor of Agent on behalf of the Lenders granting a pledge of all of the
outstanding Shares of each Borrower other than the Company as security for the
Loan, together with the stock certificates therefor, stock powers executed in
blank, and copies of all shareholder agreements relating thereto.
(d) Assignments of Partnership Interests. Assignments (or
amendments and confirmations of previously delivered assignments, as
appropriate) of all interests of Borrowers as general partner or as a limited
partner in any partnership other than the Funds, together with any certificates
representing such partnership interests.
(e) Note Pledges. Confirmation of the Note Pledges executed by
the Company in favor of Agent for the benefit of Lenders pursuant to the
Existing Credit Agreement.
(f) Mortgage. Confirmations of each Mortgage executed in favor
of Agent for the benefit of Lenders pursuant to the Existing Credit Agreement in
recordable form, together with an updated title policy and opinion of counsel.
(g) Insurance. Certificates of insurance naming Agent on
behalf of Lenders as an additional insured on all liability policies; and
evidence of loss payee and mortgagee endorsements (to the extent Agent is a
mortgagee) in favor of
44
Lenders for policies covering Collateral, with respect to all of the Borrowers'
fire, casualty, and other insurance covering its respective property and
business.
(h) Licenses, Etc. If requested by Agent, copies of all
Licenses and contracts which are material in accordance with Paragraphs 3.4 and
3.5 hereof, respectively, including without limitation, those issued by the
Local Authorities, all of which shall be owned by a Borrower and be otherwise
reasonably satisfactory to Lenders.
(i) Leasehold Assignments. Confirmations of the Leasehold
Assignments executed in favor of Agent on behalf of Lenders pursuant to the
Existing Agreement, assigning all rights of Borrowers under certain leases, duly
executed by the applicable Borrowers.
(j) Searches. Uniform Commercial Code, tax and judgment lien
searches dated as of a recent date against each Borrower in those offices and
jurisdictions as the Lenders shall reasonably request.
(k) Financial Information. (i) Audited financial statements
for the Company and its Consolidated Subsidiaries as of and for the periods
ended December 31, 1995; and (ii) cash flow projections for the Company and its
Consolidated Subsidiaries on consolidated and consolidating bases, for the five
(5) fiscal years ending December 31, 2002, including quarterly information for
the first two (2) such years, satisfactory to Agent and Lenders and certified as
reasonable by the Company (such cash flow projections shall take into account
the transactions contemplated by this Agreement and shall identify the sources
of cash that the Company intends to use to meet its cash needs during such five
year period).
(l) Opinions of Borrowers' Counsel. An opinion letter from
counsel for Borrowers covering such matters as reasonably requested by Lenders.
(m) Fees. Payment of fees required pursuant to Paragraph 2.13
hereof, and of the Agent's reasonable expenses, costs and fees in connection
with the preparation and entering into of this Agreement and the other Loan
Documents.
(n) Corporate Documents. A certificate of the secretary or
assistant secretary of each Borrower attaching: (i) articles or certificate of
incorporation; (ii) by-laws; (iii) resolutions of the Board of Directors
authorizing the execution and full performance of the Loan Documents; (iv) an
incumbency certificate setting forth the officers thereof and their specimen
signatures; and (v) Certificates of Good Standing dated as of a recent date as
to such Borrower in its state of incorporation and in all states in which it is
qualified to do business.
45
(o) SouthTrust Intercreditor Agreements.
(i) An intercreditor agreement among the Agent on behalf
of the Lenders, SouthTrust, EBT and CHPC;
(ii) An intercreditor agreement among the Agent on
behalf of the Lenders, LaSalle National Bank, as Trustee under that certain
Pooling and Servicing Agreement dated as of December 1, 1995 for RMF Commercial
Mortgage Pass-Through Certificates (Series 1995-1), EBT and CHPC;
(iii) An intercreditor agreement among the Agent on
behalf of Lenders, SouthTrust, Centennial/Ashton Properties Corporation, and
Xxxxxx Xxxxx Limited Partnership;
(iv) An intercreditor agreement among Agent on behalf of
Lenders, SouthTrust and Transitional Health Partners with respect to the Xxxx
Health and Rehabilitation Center;
in each case in form and substance satisfactory to Lenders and together with
such other documentation as Lenders shall reasonably require.
(p) NationsBanc Intercreditor Agreement. An intercreditor
agreement among Agent on behalf of Lenders, NationsBanc Mortgage Capital Corp.
or its successor, and Parkview Partnership with respect to Parkview Manor
Nursing Facility.
(q) HCPI Intercreditor Agreement. Confirmation of the
intercreditor arrangements with HCPI in connection with the NC Health Care Loan
and the NCHC Loan.
(r) Agreement of Preferred Stockholders. Confirmation of the
acknowledgment and agreement of all holders of the South Atlantic Preferred
Stock and the Xxxxx Xxxxxx Preferred Stock to the limitations on dividends and
redemptions with respect to such Preferred Stock.
(s) Subordination of Transitional Subordinated Notes.
(i) A Subordination Agreement subordinating the
Transitional Subordinated Notes and the guaranty of the Transitional
Subordinated Notes by the Company to the Loan, executed by each holder of the
Transitional Subordinated Notes; and
(ii) Amendment of the Transitional Subordinated Notes to
reflect the subordination of such Notes as provided herein.
(t) Agreement of Lessors. Confirmation of the agreements of
each lessor under any lease assigned under the Leasehold Assignments, pursuant
to which each such lessor: (i) consents to such Leasehold Assignment; (ii)
waives any
46
landlord's liens with respect to assets of Borrowers; (iii) agrees to provide
notice of any default under such lease, and provide a grace period during which
such default may be cured prior to eviction; (iv) agrees to the transfer of all
rights under the assigned lease upon the exercise of remedies under the
Leasehold Assignment, provided all defaults are cured under such lease, and (v)
acknowledges that there are no defaults under such leases as of the date
thereof.
(u) Agreement of Owners. Confirmation of the agreements by
each owner of a Health Care Facility operated by Borrower under a management
agreement, pursuant to which each such owner: (i) consents to the assignment of
such management agreement pursuant to the Security Agreement; and (ii)
acknowledges that there are no defaults under such management agreements as of
the date thereof; provided, however, that Borrowers shall not be required to
obtain the consent referred to in clause (i) with respect to those Health Care
Facilities which are owned by partnerships in which Xxxx X. Xxxxx is the general
partner or a principal of the corporate general partner.
(v) Xxxxxx Pay-Off. A pay-off letter from Xxxxxx Financial,
duly executed UCC termination statements with respect to all financing
statements filed in favor of such lender, and terminations of all other
collateral documents in favor of such lender.
(w) Closing Compliance Certificates. A Compliance Certificate
as of the most recent fiscal quarter end for which a Compliance Certificate
would be required under the terms hereof and a pro forma compliance certificate
reflecting the effects of any acquisitions since such date.
(x) Initial Advance Request. A completed Advance Request Form
with respect to the initial Advance to be made hereunder as of the Effective
Date.
(y) Other Documents. Such additional documents as Lenders
reasonably may request.
4.2. Subsequent Advances. The obligation of Agent or Lenders to make
additional Advances under the Commitment or issue Letters of Credit shall be
subject to their receipt of a completed Advance Request Form or Letter of Credit
Request Form and Letter of Credit Application, as applicable, and in the case of
an Advance for purposes of making a Permitted Acquisition, receipt of the
required information, confirmations and documents.
4.3. Additional Condition to Lenders' Obligations. It shall be a
condition to Agent's or Lenders' obligation hereunder to make any Advance or
issue any Letter of Credit that the representations and warranties set forth
herein and in the Collateral Security Documents shall be true and correct in all
material respects as if made on the date of such Advance, that no
47
Event of Default or Default shall have occurred and be continuing on the date of
such Advance or be caused by such Advance, that all fees required pursuant to
Paragraphs 2.12, 2.13 and 2.14 hereof have been paid, and there shall have been
no Material Adverse Effect or event or circumstance which might reasonably be
expected to cause a Material Adverse Effect.
SECTION 5
AFFIRMATIVE COVENANTS
Borrowers covenant and agree that so long as the Commitment of
Lenders to Borrowers or any indebtedness of Borrowers to Lenders is outstanding
each Borrower will and will cause each of its Subsidiaries to:
5.1. Existence and Good Standing. Preserve and maintain its
existence as a corporation and its good standing in all states in which it
conducts business and the validity of all its licenses, permits, certificates of
need or other grants of authority required in the conduct of its business.
5.2. Interim Financial Information. Furnish Lenders within
forty-five (45) days of the end of each fiscal quarter hereafter with unaudited
quarterly consolidated and consolidating financial statements of the Company and
its Consolidated Subsidiaries, in form and substance as reasonably required by
Lenders, including a balance sheet, a consolidated statement of income and a
statement of cash flows, and a certificate signed by the chief financial or
chief executive officer of Borrowers stating that the financial statements
fairly present the financial condition of the Company and its Consolidated
Subsidiaries as of the date and for the periods covered and were prepared in
accordance with GAAP consistently applied.
5.3. Annual Financial Statements. Furnish to Lenders within ninety
(90) days after the close of each fiscal year audited consolidated and
consolidating annual financial statements of the Company and its Consolidated
Subsidiaries, including the financial statements and information required under
Paragraph 5.2 hereof, which consolidated financial statements shall be prepared
in accordance with GAAP and shall be certified without qualification by Coopers
& Xxxxxxx L.L.P. or another independent certified public accounting firm
satisfactory to Lenders, and cause Lenders to be furnished, within ninety (90)
days after the close of each fiscal year, with a report prepared in accordance
with Statement on Auditing Standards No. 62 "Special Reports," or superseding
pronouncements, issued by the Auditing Standards Board of the American Institute
of Certified Public Accountants, providing that nothing has come to the
attention of such accountants which would lead them to believe that there is a
Default or Event of Default under this Agreement.
48
5.4. Quarterly Compliance Certification. Furnish to Lenders at the
time of delivery of the quarterly and annual financial statements pursuant to
Paragraphs 5.2 and 5.3 hereof a certificate of the chief financial officer of
the Company in the form of Exhibit F attached hereto showing the calculation of
the covenants set forth in Paragraphs 5.15 through 5.20 hereof, calculation of
the Applicable Margin as of the date of such financial statements and
calculation of the Borrowing Base as of the date of such financial statements,
together with (a) a schedule of operating leases, indicating the imputed
outstanding principal balance thereunder as of the end of the fiscal period to
which such Compliance Certificate relates, (b) financial statements for the
Existing Operations and the Acquired Operations, respectively, including pro
forma historical financial statements for any Acquired Operations, as
applicable, and (c) pro forma historical combined financial statements including
any Permitted Acquisitions, as applicable.
5.5. Receivables Aging Report. Furnish to Lenders no later than
forty-five (45) days after the end of each fiscal quarter an accounts receivable
aging report as of the last day of such quarter.
5.6. Additional Information. Deliver to Lenders, (i) promptly upon
transmission thereof, copies of all such financial statements, proxy statements,
notices and reports as it shall send to its stockholders, copies of all
registration statements (without exhibits), and all annual, quarterly or other
reports which it files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities and
Exchange Commission) including, without limitation, Form 10-Q and Form 10-K; and
(ii) within ten (10) Business Days of receipt copies of all auditors' annual
management letters delivered to any Borrower.
5.7. Books and Records. Keep and maintain satisfactory and adequate
books and records of account in accordance with GAAP and make or cause the same
to be made available to Lenders, or their respective agents, during normal
business hours at any reasonable time upon reasonable notice for inspection and
to make extracts thereof and permit any Lender to discuss the contents of same
with senior officers of Borrowers and also with outside auditors and accountants
of Borrowers. With the consent of Borrowers, which consent will not be
unreasonably withheld, any Lender may also meet with other officers and
employees of Borrowers.
5.8. Maintenance of Assets; Insurance. Keep and maintain all of its
property and assets in good order and repair, normal wear and tear excepted, and
adequately covered by insurance with reputable and financially sound insurance
companies against such hazards and in such amounts and with such deductibles and
retentions as are customary in the industry, under policies requiring the
insurer to furnish reasonable notice to Agent and
49
opportunity to cure any non-payment of premiums prior to termination of
coverage; and, upon request of Agent no more than twice a year, furnish Agent
with certificates of such insurance and cause Agent, as agent for Lenders, to be
named as additional insured and, in the case of policies covering Collateral,
the loss payee and mortgagee thereof, as their interests may appear under a
standard mortgagee clause.
5.9. Notifications.
(a) Promptly notify Agent in writing of (i) the institution of
any litigation, the commencement of any administrative proceedings, the
happening of any event or the assertion or threat of any claim which, if
resolved in favor of a party adverse to a Borrower, might reasonably be expected
to have a Material Adverse Effect, or would result in the occurrence of any
Event of Default or Default hereunder; (ii) the occurrence of a Default or an
Event of Default; and (iii) the opening of any new place of business, the
entering into of any new contract for the operation or management of any
additional Health Care Facility, or the relocation of any Collateral to a
location at which Lenders do not have a perfected security interest; and
(b) With respect to all matters previously disclosed to
Lenders pursuant to Paragraphs 3.19 or 5.13 hereof, no later than forty-five
(45) days after the last day of each fiscal quarter, deliver to Agent a report
describing any material information or change in circumstances regarding actual
or alleged liability of Borrowers and the quantification thereof.
5.10. Taxes. Pay and discharge all taxes, assessments or other
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any penalty for non-payment or late payment is
incurred, unless the same are (i) currently being contested in good faith by
appropriate proceedings and (ii) are covered by appropriate reserves maintained
in accordance with GAAP.
5.11. Costs and Expenses. Pay or reimburse Agent for all reasonable
out-of-pocket costs and expenses (including but not limited to reasonable
attorneys' fees and disbursements and costs of Agent's periodic audits) Agent
may pay or incur in connection with the preparation, review, execution, filing
and recording of this Agreement and the other Loan Documents and all waivers,
consents and amendments in connection therewith and all other documentation
related thereto, the making of the Loan hereunder, and the collection and
enforcement of the Loan, including without limitation, any reasonable fees and
disbursements incurred in defense of or to retain amounts of principal, interest
or fees paid; and pay or reimburse each Lender for all reasonable out-of-pocket
costs and expenses (including, but not limited to, reasonable attorneys' fees
and expenses) in connection with the collection or enforcement of the Loan
following a Default or an Event of Default or maturity, including without
limitation any
50
reasonable fees and disbursements incurred in defense of or to retain amounts of
principal, interest or fees paid. All obligations provided for in this Paragraph
5.11 shall survive any termination of this Agreement or the Commitment and the
repayment of the Loan.
5.12. Additional Collateral Documentation.
(a) Execute, deliver and record, at any time upon Agent's
request and in form and substance satisfactory to Lenders, any of the following
instruments in favor of Agent on behalf of Lenders as additional Collateral for
the Loan: (i) mortgages, leasehold mortgages and/or assignments of rents and
leases on any real property of Borrowers, (ii) assignments of leases of real or
personal property leased by Borrowers from or to others, (iii) to the extent
permitted by applicable law, specific assignments by Borrowers of easements,
Licenses or like grants of authority or service agreements, (iv) assignments of
partnership interests, including without limitation general partnership
interests in the Funds in the event that the owner of any such general
partnership interests shall continue to be a Subsidiary of the Company after
December 31, 1996, and (vi) any other like assignments or agreements
specifically covering any of Borrowers' properties or assets.
(b) If required or applicable to any collateral, give,
execute, deliver and file in the appropriate governmental offices any instrument
necessary to perfect a security interest in accounts and the proceeds thereof
under the provisions of the Federal Assignment of Claims Act.
(c) In connection with (1) any Permitted Acquisition, whether
or not financed with an Advance hereunder, at the time of consummation of the
Permitted Acquisition or (2) the creation of any Subsidiary, deliver to Agent,
for the benefit of Lenders: (i) joinders to this Agreement and the Notes by any
new Subsidiary formed or acquired in connection therewith, other than the Funds;
(ii) a pledge of all Shares of stock or partnership interests of any such new
Borrower; (iii) such Collateral Security Documents as shall be necessary to
grant to Agent, on behalf of Lenders, a first priority lien on substantially all
of the assets acquired in such acquisition (subject to such exceptions as are
permitted pursuant to Paragraph 6.4 hereof); (iv) certificates, opinions of
counsel, and other documents and information, including without limitation lien
searches, title insurance, environmental reports, and appraisals, as reasonably
required by Lenders; and (v) if such Permitted Acquisition is made without using
the proceeds of an Advance hereunder, the items and information required to be
delivered pursuant to subparagraph 2.7(a) hereof in connection with Advances for
purposes of making a Permitted Acquisition.
5.13. Compliance.
51
(a) Comply in all respects with all local, state and federal
laws and regulations applicable to its business, including without limitation
the Environmental Control Statutes, and all laws and regulations of HCFA and the
Local Authorities, and the provisions and requirements of all Licenses and other
like grants of authority held by Borrowers, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect; and
notify Agent immediately in detail of any actual or alleged failure to comply
with or perform, breach, violation or default under any such laws or regulations
or under the terms of any of such Licenses, or grants of authority, or of the
occurrence or existence of any facts or circumstances which with the passage of
time, the giving of notice or otherwise could create such a breach, violation or
default or could occasion the termination of any of such License, or grant of
authority, except where the failure to comply with or perform, breach, violation
or default could not reasonably be expected to have a Material Adverse Effect.
(b) With respect to the Environmental Control Statutes, notify
the Agent when any Person (including, without limitation, EPA or any state or
local agency) provides oral or written notification to any Borrower with regard
to an actual or imminently threatened "removal," "spill," or "release" (as
defined in the Environmental Control Statutes) of any Hazardous Substance if the
obligation or liability with respect thereto is reasonably foreseeable to exceed
at any time or from time to time One Hundred Thousand Dollars ($100,000); and
notify the Agent in detail promptly upon the receipt by any Borrower of an
assertion of liability under the Environmental Control Statutes, of any actual
or alleged failure to comply with or perform, breach, violation or default under
any such statute or regulation or of the occurrence or existence of any facts,
events or circumstances which with the passage of time, the giving of notice, or
both, could create such a breach, violation or default if the obligation or
liability with respect thereto is reasonably foreseeable to exceed at any time
or from time to time One Hundred Thousand Dollars ($100,000).
5.14. ERISA.
(a) Comply in all material respects with the provisions of
ERISA and the Code to the extent applicable to any Plan; not incur any
accumulated funding deficiency (within the meaning of ERISA and the regulations
promulgated thereunder), or any liability to the PBGC (as established by ERISA)
in excess of Two Hundred Fifty Thousand Dollars ($250,000); and not take any
action (or omit to take any action) which may result in the institution of
termination proceedings by the PBGC under Section 4042 of ERISA or may result in
the imposition of a lien on its properties or assets; and
(b) Notify Agent in writing promptly after it has come to the
attention of senior management of any Borrower that any event has occurred or
will occur with respect to a defined benefit
52
pension plan which must be reported to the PBGC or which is described in Section
4042(a) of ERISA (relating to the soundness of a Plan) or which would result in
the PBGC's ability to assert a material liability against it or impose a lien in
an amount in excess of One Hundred Thousand Dollars ($100,000) on any Borrower's
properties or assets.
5.15. Funded Debt to Capital Ratio. Maintain as of the last day of
each fiscal quarter during the periods set forth in the left hand column below a
ratio of Funded Debt to Capital of not more than the ratio set forth in the
right hand column below:
Period Required Ratio
------ --------------
Effective Date through
December 31, 1996 0.80:1
January 1, 1997 through
December 31, 1997 0.75:1
January 1, 1998 through
December 31, 1998 0.70:1
January 1, 1999 through
December 31, 1999 0.65:1
January 1, 2000 and thereafter 0.60:1
5.16. Consolidated Senior Debt to Adjusted EBITDA. Maintain as of
the last day of each fiscal quarter during the periods set forth in the left
hand column below a ratio of Consolidated Senior Debt to Adjusted EBITDA for the
Company and its Consolidated Subsidiaries of not more than the ratio set forth
in the right hand column below:
Period Required Ratio
------ --------------
Effective Date through
September 30, 1996 4.50:1
October 1, 1996 through
December 31, 1996 4.25:1
January 1, 1997 through
March 31, 1997 4.00:1
April 1, 1997 through
June 30, 1997 3.75:1
July 1, 1997 through
December 31, 1997 3.50:1
January 1, 1998 through
December 31, 1998 3.25:1
53
January 1, 1999 and thereafter 3.00:1
5.17. Adjusted Total Debt to Adjusted EBITDAR. Maintain as of the
last day of each fiscal quarter ending during the periods set forth in the left
hand column below a ratio of Adjusted Total Debt to Adjusted EBITDAR for the
Company and its Consolidated Subsidiaries of not more than the ratio set forth
in the right hand column below:
Period Required Ratio
------ --------------
Effective Date through
September 30, 1996 6.00:1
October 1, 1996 through
December 31, 1996 5.75:1
January 1, 1997 through
December 31, 1997 5.50:1
January 1, 1998 through
December 31, 1998 5.25:1
January 1, 1999 and thereafter 4.50:1
5.18. Consolidated Net Worth. Maintain as of the last day of each
fiscal quarter Consolidated Net Worth in an amount not less than the Net Worth
Requirement.
5.19. Fixed Charge Coverage Ratio. Maintain as of the last day of
each fiscal quarter through December 31, 1999 a Consolidated Fixed Charge
Coverage Ratio of not less than 1.15 to 1, and maintain as of the last day of
each fiscal quarter thereafter a Consolidated Fixed Charge Coverage Ratio of not
less than 1.25 to 1.
5.20. Borrowing Base. Maintain at all times the outstanding balance
of the Loan in an amount not to exceed the Borrowing Base.
5.21. Management Changes. Notify Agent in writing promptly of any
change of Borrowers' senior officers.
5.22. Successor Agent. In the event of the appointment of any
successor Agent pursuant to Paragraph 9.16 hereof, execute and deliver any
documents reasonably requested by Lenders to effectuate and confirm the transfer
to such successor Agent of all rights, powers, duties, obligations and property
vested in its predecessor Agent hereunder.
5.23. Transactions Among Affiliates. Cause all transactions between
and among Affiliates to be on an arms-length basis in the ordinary course and on
such terms and conditions as
54
are customary in the applicable industry between and among unrelated entities.
5.24. Inspections. Permit Lenders from time to time to conduct
inspections of the Health Care Facilities during normal business hours at
reasonable times and without undue disruption of operations at any such Health
Care Facility.
5.25. The Funds. If the Funds have not ceased to be Subsidiaries
prior to January 31, 1997, deliver to Agent on behalf of Lenders a pledge of the
stock of the general partners thereof.
5.26. Other Information. Provide Lenders with any other documents
and information, financial or otherwise, reasonably requested by Lenders from
time to time.
SECTION 6
NEGATIVE COVENANTS
So long as the Commitment or any Indebtedness of Borrowers to
Lenders remains outstanding hereunder, each Borrower covenants and agrees that
it will not and will not permit any Subsidiary to:
6.1. Indebtedness. Borrow any monies or create any Indebtedness
except: (i) borrowings from Lenders hereunder; (ii) trade indebtedness in the
normal and ordinary course of business for value received; (iii) Indebtedness
incurred to purchase or lease fixed or capital assets (other than acquisitions
pursuant to Paragraph 6.8 hereof), provided, however, that the aggregate
principal amount of such Indebtedness shall not exceed Three Million Dollars
($3,000,000); (iv) intercompany loans among the Borrowers or from Borrowers to
OGRLP, provided, that (A) the aggregate amount of all such advances to THS
Nursing Home Subsidiaries shall not at any time exceed Twenty Million Dollars
($20,000,000) and (B) the aggregate amount of all advances to OGRLP shall not at
any time exceed Two Hundred Thousand Dollars ($200,000); (v) Indebtedness
outstanding on the date hereof, as described on Exhibit E attached hereto, as
reduced by payments required thereunder; and (vi) additional Indebtedness which,
together with the amount of any guaranties permitted pursuant to Paragraph
6.2(iii) hereof, shall not exceed Five Hundred Thousand Dollars ($500,000) at
any time outstanding.
6.2. Guaranties. Guarantee or assume or agree to become liable in
any way, either directly or indirectly, for any additional indebtedness or
liability of others except: (i) endorsement of checks or drafts in the ordinary
course of business; (ii) guarantees in existence on the date hereof as described
on Exhibit E attached hereto, but without increase in the principal amount
thereof; and (iii) guaranties the liability under which, together with the
amount of Indebtedness permitted pursuant
55
to Paragraph 6.1(vii) hereof, shall not exceed Five Hundred Thousand Dollars
($500,000) at any time outstanding.
6.3. Loans. Make any loans or advances to others other than: (i)
intercompany loans among the Borrowers or to OGRLP, provided that (A) the
aggregate amount of all such advances to THS Nursing Home Subsidiaries, together
with amounts borrowed by THS Nursing Home Subsidiaries hereunder, shall not at
any time exceed Twenty Million Dollars ($20,000,000) and (B) the aggregate
amount of all such advances to OGRLP shall not at any time exceed Two Hundred
Thousand Dollars ($200,000), (ii) loans by the Company to certain officers and
employees of the Company in an aggregate principal amount not to exceed Two
Hundred Fifty Thousand Dollars ($250,000) outstanding at any time, (iii) the
NCHC Loan and the NC Health Care Loan outstanding on the date hereof, as reduced
by payments thereunder, (iv) advances to third parties that own or Nursing Homes
for working capital purposes, in connection with the entering into of a
Long-Term Management Contract with respect to such Nursing Home(s), provided
that (A) such advances are evidenced by a promissory note in the form of Exhibit
G-1 attached hereto and secured by a first priority security interest in all
accounts receivable with respect to such Nursing Home pursuant to a security
agreement in the form of Exhibit G-2 attached hereto; (B) such promissory note
and all collateral security therefor are pledged to Agent, for the benefit of
Lenders, pursuant to a Pledge Agreement (Collateral Assignment) in the form of
Exhibit G-3 attached hereto, and (C) the aggregate principal amount of all such
advances shall not exceed at any time Five Million Dollars ($5,000,000), and (v)
Permitted Investments.
6.4. Liens and Encumbrances. Create, permit or suffer the creation
or existence of any liens, security interests, or any other encumbrances on any
of its property, real or personal, except in favor of Lenders as security for
the Loan, and except (i) liens arising in favor of sellers or lessors for
indebtedness and obligations permitted under Paragraph 6.1(iii) hereof incurred
to purchase or lease fixed or capital assets; provided, however, that such liens
secure only the indebtedness and obligations created thereunder and are limited
to the assets purchased or leased pursuant thereto; (ii) liens for taxes,
assessments or other governmental charges, federal, state or local, which are
then being currently contested in good faith by appropriate proceedings and are
covered by appropriate reserves maintained in accordance with GAAP; (iii)
pledges or deposits to secure obligations under workmen's compensation,
unemployment insurance or social security laws or similar legislation; (iv)
deposits to secure performance or payment bonds, bids, tenders, contracts,
leases, franchises or public and statutory obligations required in the ordinary
course of business; (v) deposits to secure surety, appeal or custom bonds
required in the ordinary course of business; (vi) liens in effect as of the date
hereof as described on Exhibit E, and, (vii) liens for taxes which are not yet
due and payable.
56
6.5. Additional Negative Pledge. Enter into an agreement with or
covenant or promise to any Person other than Lenders that in any manner
restricts its ability to pledge its assets or properties or otherwise grant
liens, security interests or encumbrances on its property.
6.6. Restricted Payments. Make any Restricted Payments; provided,
however, that so long as there exists no Event of Default or Default under this
Agreement and the payment would not give rise to an Event of Default or Default:
(a) the Company may pay dividends on the South Atlantic Preferred Stock in
accordance with the terms thereof as in effect on the date hereof; (b) the
Company may redeem or repurchase South Atlantic Preferred Stock if required by
the terms thereof on the date of such redemption or repurchase pursuant to the
terms of the South Atlantic Preferred Stock as in effect on the date of this
Agreement; (c) the Company may redeem or repurchase Preferred Stock or the
Transitional Subordinated Notes out of proceeds of the issuance of equity by the
Company; and (d) TFS or the Company may pay regularly scheduled payments of
interest on the Transitional Subordinated Notes in accordance with the terms
thereof as in effect on the date of this Agreement.
6.7. Transfer of Assets; Liquidation.
(a) Sell, lease, transfer or otherwise dispose of any assets;
provided, however, Borrowers may (i) dispose of assets in the ordinary course of
business provided that the disposition does not constitute a Sale of Material
Assets, (ii) convert Permitted Investments into cash and cash into Permitted
Investments, and (iii) sell or otherwise dispose of the capital stock of WelCare
Consolidated Resources of America and the Fund Service Corporations, subject to
the requirements of Paragraph 2.5(b)(i) if applicable. Borrowers may request
from time to time the right to consummate a sale or other disposition of assets
and Lenders shall have the absolute discretion to withhold consent to any
proposed disposition of assets.
(b) Discontinue, liquidate, or change in any material respect
any substantial part of its operations or business.
6.8. Acquisitions and Investments.
(a) Purchase or otherwise acquire (including without
limitation by way of share exchange) any part or amount of the capital stock or
assets of, or make any investments in, any other firm or corporation, or enter
into any joint venture or partnership except: (i) Borrowers may own the
Subsidiaries owned by them on the date hereof as set forth on Exhibit E attached
hereto and Borrowers may be general partners in partnerships in which they are
general partners as of the date hereof as set forth on Exhibit E; (ii) Borrowers
may make Permitted Investments, subject to the conditions and limitations set
forth in the definition thereof; (iii) in the absence of an Event of Default or
57
a Default, and if such contemplated action would not cause an Event of Default
or a Default, Borrowers may make Permitted Acquisitions, subject to the
conditions and limitations set forth in the definition thereof, provided,
however, that (A) no Permitted Acquisition may be made pursuant to this clause
(iii) without the prior written consent of Required Lenders if the Acquisition
Price in such acquisition is in excess of Ten Million Dollars ($10,000,000), (B)
no Permitted Acquisition may be made pursuant to this clause (iii) without the
prior written consent of Required Lenders if the Acquisition Price in such
acquisition, together with the Acquisition Price in connection with all other
Permitted Acquisitions consummated without the consent of Required Lenders
within the prior twelve months is in excess of Twenty-Five Million Dollars
($25,000,000), (C) each Permitted Acquisition of a Nursing Home shall be only by
the acquisition of ownership thereof, free and clear of any liens, claims or
encumbrances except as permitted pursuant to Paragraph 6.4 hereof, (D) no
Permitted Acquisition may be consummated unless Borrowers shall have complied
with Paragraph 5.12(c) hereof, and (E) without regard to whether such Permitted
Acquisition is being funded by an Advance hereunder, Borrowers shall provide to
Lenders no later than fifteen (15) Business Days prior to a Permitted
Acquisition, a notice of Permitted Acquisition in the form of Exhibit H attached
hereto together with:
(I) a narrative description of the proposed acquisition
which describes the terms of the proposed acquisition and demonstrates it to be
a Permitted Acquisition, and describes the business to be acquired, the legal
structure for the acquisition, the acquisition price to be paid, and other
material features of the proposed acquisition;
(II) copies of financial statements of the business to
be acquired for the three most-recently ended fiscal years of such business and
for the most recently-ended interim fiscal period of such business for which
financial statements are available;
(III) a proposed amendment or supplement to Exhibit E
hereto, to include the information required to be disclosed pursuant to the
representations and warranties set forth in Section Three thereof, as applied to
such business, which amendment or supplement shall be subject to approval of
Required Lenders as provided herein;
(IV) pro forma combined financial statements of the
business to be acquired and the Company and its Consolidated Subsidiaries giving
effect to the proposed acquisition on an historical basis for the most recent
period for which a Compliance Certificate has been delivered and on a projected
basis for the remaining life of the Loan, including calculations demonstrating
pro forma covenant compliance for the most recent period for which a Compliance
Certificate has been delivered and prospective covenant compliance for the
remaining life of the Loan; and
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(V) pro forma historical financial information for the
proposed Acquired Operations on a stand alone basis, and on a combined basis
with all other Acquired Operations, including calculation of the Borrowing Base
and demonstrating compliance therewith.
In addition, Borrowers shall deliver in connection with any
Permitted Acquisition, prior to consummation thereof, (x) an appraisal of the
Health Care Facility to be acquired, if an appraisal is reasonably requested in
writing by Required Lenders, dated as of a recent date, and (y) such additional
information regarding the acquisition as any Lender may reasonably request.
With respect to any Permitted Acquisition requiring approval of
Required Lenders hereunder, Borrowers shall request such approval by delivering
such request in writing to Lenders together with the Notice of Acquisition and
information required by clause (a)(iii)(E) above. Not later than fifteen (15)
Business Days after receipt of a completed Notice of Acquisition, including all
of the information specified above, each Lender shall either indicate to Agent
and Borrowers that its approval will not be given, or shall execute and return
to Agent and Borrowers the Notice of Acquisition, indicating such Lender's
approval as to (x) the amendment or supplement to Exhibit E hereto as required
pursuant to clause (a)(iii)(E)(III) above; (y) the pro forma financial
information, as required pursuant to the definitions of Adjusted EBITDA and
Adjusted EBITDAR; and (z) if applicable, the Permitted Acquisition, as required
pursuant to this Paragraph 6.8.
(b) Enter into any new business activities or ventures not
within the Permitted Lines of Business; or merge or consolidate with or into any
other Person (other than (i) any merger or consolidation among Borrowers; and
(ii) any other merger having as its effect a Permitted Acquisition, subject to
the provision of subparagraph (a) above); or, except in connection with an
acquisition permitted by subparagraph (a) above or the creation of a Subsidiary
in which the requirements of paragraph 5.12(c) have been met, create any
Subsidiary, become a general partner in any partnership, or acquire in excess of
fifty percent (50%) of the outstanding partnership interests of any partnership.
6.9. New Leases. Enter into or assume, or otherwise become obligated
under, any lease of a Health Care Facility.
6.10. Use of Proceeds. Use any of the proceeds of the Loan, directly
or indirectly, to purchase or carry margin securities within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System; or engage
as its principal
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business in the extension of credit for purchasing or carrying such securities.
SECTION 7
COLLATERAL AND RIGHT OF SET-OFF
As additional collateral for the payment of any and all of
Borrowers' indebtedness and obligations to Lenders, whether matured or
unmatured, now existing or hereafter incurred or created hereunder or otherwise,
each Borrower hereby grants to Lenders a security interest in and lien upon all
funds, balances or other property of any kind of such Borrower, or in which such
Borrower has an interest, limited to the interest of Borrowers therein, whether
now or hereafter in the possession, custody or control of any Lender.
Each Lender (and any Lender's bank Affiliate) is hereby authorized
from time to time, to the fullest extent permitted by law, to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender (or
such Lender's bank Affiliate) to or for the credit or the account of any
Borrower against any and all of the obligations of Borrowers now or hereafter
existing under any of the Loan Documents, irrespective of whether such Lender
shall have made any demand thereunder. Each Lender agrees promptly to notify
Borrowers after any such set-off and application made by such Lender (or such
Lender's bank Affiliate); provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Lender under this Section Seven are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Lender (or such Lender's bank Affiliate) may have.
SECTION 8
DEFAULT
8.1. Events of Default. Each of the following events shall be an
Event of Default hereunder:
(a) If Borrowers shall fail to pay (i) any installment of
principal when due; or (ii) any payment of interest or any other sum payable to
Lenders hereunder or otherwise within three (3) days of when due;
(b) If any representation or warranty made herein or in
connection herewith or in any statement, certificate or other document furnished
hereunder shall be false or misleading in any material respect when made;
(c) If Borrowers shall default in the payment or performance
of any terms of (i) any lease of a Health Care Facility
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or Indebtedness secured by real property, whether now or hereafter entered into,
or (ii) any other obligation or indebtedness to another of Two Hundred Fifty
Thousand Dollars ($250,000) or more, whether now or hereafter incurred;
(d) If any Borrower shall default in or fail to observe at any
test date the covenants set forth in Paragraphs 5.15 through 5.20 hereof or
Section Six hereof;
(e) If any Borrower shall default in the performance of any
other agreement or covenant contained herein (other than as provided in
subparagraphs (a), (b) or (d) above) or in any document executed or delivered in
connection herewith, including without limitation any Collateral Security
Document and such default shall continue uncured for twenty (20) days after
notice thereof to any Borrower given by Agent pursuant to the direction of
Required Lenders;
(f) If the Company shall cease to own directly or indirectly
one hundred percent (100%) of each other Borrower;
(g) If any Person which is controlled by J. Xxxxxxx Xxxxx as
of the date of this Agreement and is a general partner of any partnership from
which any Borrower leases any Health Care Facility or with which any Borrower
has contracted for the management of any Health Care Facility shall cease to be
a Person in which J. Xxxxxxx Xxxxx maintains control. For purposes of this
provision, "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of an entity,
whether through the ownership of voting securities, by contract or otherwise;
(h) If: (i) J. Xxxxxxx Xxxxx and members of his immediate
family or trusts for the benefit of such family members shall cease to own at
least ten percent (10%) of the voting securities of the Company; or (ii) any
person or group within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the rules and regulations
promulgated thereunder (other than (x) J. Xxxxxxx Xxxxx and members of his
immediate family or trust for the benefit of such family members, (y) South
Atlantic Venture Fund II, Limited Partnership and South Atlantic Venture Fund
III, Limited Partnership, and (z) Welsh, Carson, Xxxxxxxx & Xxxxx VI, L.P., WCAS
Capital Partners II, L.P., WCAS Health Care Partners, L.P. and CID Equity
Capital III, L.P.) shall have beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act), directly or indirectly, of securities of the Company (or
other securities convertible into such securities within the time specified in
Rule 13d-3 of the 0000 Xxx) representing ten percent (10%) or more of the
combined voting power of all securities of the Company entitled to vote in the
election of directors (hereinafter called a "Controlling Person"); or (iii) a
majority of the board of directors of the Company shall cease for any reason to
consist of (A) individuals who on the date hereof were serving as directors of
Borrowers and (B) individuals who
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subsequently become members of the Board if such individuals' nominations for
election or elections to the Board are recommended or approved by a majority of
the Board of Directors of the Company. For purposes of clause (ii) above, a
person or group shall not be a Controlling Person if such person or group holds
voting power in good faith, and not for the purpose of circumventing this
Paragraph 8.1(h) as an agent, bank, broker, nominee, trustee, or holder of
revocable proxies given in response to a solicitation pursuant to the 1934 Act,
for one or more beneficial owners who do not individually, or, if they are a
group acting in concert, as a group, have the voting power specified in clause
(i) above;
(i) If J. Xxxxxxx Xxxxx shall cease to be Chief Executive
Officer of the Company, provided that if such cessation of service is as a
result of death or permanent disability then there shall be no Event of Default
under this Paragraph 8.1(i) if a replacement is named within thirty (30) days of
such death or permanent disability and Required Lenders have not given written
notice to the Company of their objection to such replacement within fifteen (15)
days after such naming;
(j) If custody or control of any substantial part of the
property of any Borrower shall be assumed by any governmental agency or any
court of competent jurisdiction at the instance of any governmental agency; if
any License to operate a Health Care Facility or any other material License
shall be suspended, revoked, not renewed at expiration or otherwise terminated;
or if any governmental regulatory authority or judicial body shall make any
other final non-appealable determination which, in any of the foregoing
instances, might reasonably be expected to have a Material Adverse Effect;
(k) If any Borrower becomes insolvent, bankrupt or generally
fails to pay its debts as such debts become due; or is adjudicated insolvent or
bankrupt; or admits in writing its inability to pay its debts; or shall suffer a
custodian, receiver or trustee for it or substantially all of its property to be
appointed and if appointed without its consent, not be discharged within thirty
(30) days; or makes an assignment for the benefit of creditors; or suffers
proceedings under any law related to bankruptcy, insolvency, liquidation or the
reorganization, readjustment or the relief of debtors to be instituted against
it and if contested by it not dismissed or stayed within thirty (30) days; or if
proceedings under any law related to bankruptcy, insolvency, liquidation, or the
reorganization, readjustment or the relief of debtors is instituted or commenced
by any Borrower; or if any order for relief is entered relating to any of the
foregoing proceedings; or if any Borrower shall call a meeting of its creditors
with a view to arranging a composition or adjustment of its debts; or if any
Borrower shall by any act or failure to act indicate its consent to, approval of
or acquiescence in any of the foregoing;
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(l) If any judgment, writ, warrant or attachment or execution
or similar process which calls for payment or presents liability in excess of
Two Hundred Fifty Thousand Dollars ($250,000) shall be rendered, issued or
levied against any Borrower or its respective property and such process shall
not be paid, waived, stayed, vacated, discharged, settled, satisfied or fully
bonded within sixty (60) days after its issuance or levy.
(m) If any event or condition shall occur or exist with
respect to any activity or substance regulated under the Environmental Control
Statutes and as a result of such event or condition, Borrowers have incurred or
in the opinion of Lenders are reasonably likely to incur a liability or
liabilities in excess of Two Hundred Fifty Thousand Dollars ($250,000) during
any consecutive twelve (12) month period.
8.2. Remedies. Upon the happening of any Event of Default and at any
time thereafter, at the election of Required Lenders, and by notice by Agent to
Borrowers (except if an Event of Default described in Paragraph 8.1(k) shall
occur in which case acceleration shall occur automatically without notice),
Required Lenders may declare the entire unpaid balance, principal, interest and
fees, of all Indebtedness of Borrowers to Lenders, hereunder or otherwise, to be
immediately due and payable. Upon such declaration, the Commitment shall
immediately and automatically terminate and Lenders shall have no further
obligation to make any Advance and they shall have the immediate right to
enforce or realize on any Collateral in a commercially reasonable manner in any
manner or order they deem expedient without regard to any equitable principles
of marshalling or otherwise. Whether such a declaration has been made by
Required Lenders that the Indebtedness is due and payable following an Event of
Default, Required Lenders may terminate the Commitment at any time following an
Event of Default by notice thereof by Agent to Borrowers. In addition to any
rights granted hereunder or in any documents delivered in connection herewith,
including without limitation, the Collateral Security Documents, Lenders shall
have all the rights and remedies granted by any applicable law, all of which
shall be cumulative in nature.
SECTION 9
THE LENDERS
This Section sets forth the relative rights and duties of Agent and
Lenders respecting the Loan and, with the exception of Paragraphs 9.3 and 9.15
hereof, does not confer any enforceable rights on Borrowers against Lenders or
create on the part of Lenders any duties or obligations to Borrowers.
9.1. Application of Payments. Agent shall apply all payments of
principal, interest, commitment fee or other amounts hereunder made to Agent by
or on behalf of Borrowers, to Lenders on the basis of their Pro Rata Shares of
the outstanding principal
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balance of the Loan, except for interest and fees outstanding under the Existing
Agreement and required to be paid to CoreStates on the Effective Date and the
fees payable under Paragraph 2.13 and Paragraph 2A.4(iv) hereof, which shall be
paid solely to Agent. Such distribution of payments shall be made promptly in
federal funds immediately available at the office of each Lender set forth
above.
9.2. Set-Off. In the event a Lender, by exercise of its right of
set-off, or otherwise, receives any payment of Indebtedness owing to it,
hereunder or otherwise, in an amount greater than its Pro Rata Share of such
payment based upon the Lenders' respective shares of principal Indebtedness
outstanding hereunder immediately before such payment, such Lender shall
purchase a portion of the Indebtedness hereunder owing to each other Lender so
that after such purchase each Lender shall hold its Pro Rata Share of all the
Indebtedness then outstanding hereunder, provided that if all or any portion of
such excess payment is thereafter recovered from such Lender, such purchase
shall be rescinded and the purchase price restored to the extent of any such
recovery, but without interest.
9.3. Modifications and Waivers. No modification or amendment hereof,
consent hereunder or waiver of any Event of Default shall be effective except by
written consent of the Required Lenders; provided, however, that the written
consent of all Lenders shall be required to (i) modify, amend, waive, discharge,
terminate or suspend compliance with (A) any rate of interest applicable to the
Loan to the extent it is proposed to be decreased, (B) the amount of the
Commitment, to the extent it is proposed to be increased, and the Lenders'
respective shares thereof; (C) the dates or amounts of payment of the Loan or
the circumstances requiring payment under Paragraph 2.5(b) hereof, (D) the
commitment fee set forth in Paragraph 2.12 hereof or other amounts payable by
Borrowers hereunder except if payable solely to the Agent, to the extent any
such amount is proposed to be decreased, (E) the definition of Required Lenders,
or (F) this Paragraph 9.3; or (ii) to release of any Collateral valued in excess
of $250,000 in the aggregate in any calendar year other than in the ordinary
course of business.
9.4. Obligations Several. The obligations of the Lenders hereunder
are several, and each Lender hereunder shall not be responsible for the
obligations of the other Lenders hereunder, nor will the failure of one Lender
to perform any of its obligations hereunder relieve the other Lenders from the
performance of their respective obligations hereunder.
9.5. Lenders' Representations. Each Lender represents and warrants
to the other Lenders that (i) it has been furnished all information it has
requested for the purpose of evaluating its proposed participation under this
Agreement; and (ii) it has decided to enter into this Agreement on the basis of
its independent review and credit analysis of Borrowers, this Agreement
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and the documentation in connection therewith and has not relied for such
analysis on any information or analysis provided by any other Lender.
9.6. Investigation. No Lender shall have any obligation to the
others to investigate the condition of Borrowers or any of the Collateral or any
other matter concerning the Loan.
9.7. Powers of Agent. Agent shall have and may exercise those powers
specifically delegated to Agent herein, together with such powers as are
reasonably incidental thereto.
9.8. General Duties of Agent, Immunity and Indemnity. Upon receipt
of notices and reports delivered by Borrowers to the Agent under this Agreement,
the Agent shall promptly deliver the same in the form received to the Lenders.
In performing its duties as Agent hereunder, Agent will take the same care as it
takes in connection with loans in which it alone is interested, subject to the
limitations on liabilities contained herein; provided that Agent shall not be
obligated to ascertain or inquire as to the performance of any of the terms,
covenants or conditions hereof by Borrowers. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any action or
omission by any of them hereunder or in connection herewith except for gross
negligence or willful misconduct. Subject to such exception, each of the Lenders
hereby indemnifies Agent (in its capacity as Agent) on the basis of such
Lender's Pro Rata Share, against any liability, claim, loss or expense arising
from or relating to any action taken or omitted to be taken with respect to this
Agreement, a Collateral Security Document or the transactions contemplated
thereby or Borrowers, to the extent that the Agent has not been reimbursed
therefor by Borrowers.
9.9. No Responsibility for Representations or Validity, etc. Each
Lender agrees that Agent shall not be responsible to any Lender for any
representations, statements, or warranties of Borrowers herein. Neither Agent
nor any of its directors, officers, employees or agents shall be responsible for
the validity, effectiveness, sufficiency, perfection or enforceability of this
Agreement and any Collateral, or any documents relating thereto or for the
priority of any of Lenders' security interests in any such Collateral.
9.10. Action on Instruction of Lenders; Right to Indemnity. Agent
shall act upon written instruction of the Required Lenders or Lenders, as
appropriate, and in all cases Agent shall be fully protected in acting or
refraining from acting hereunder in accordance with such written instructions to
it signed by Required Lenders unless the consent of all the Lenders is expressly
required hereunder in which case Agent shall be so protected when acting in
accordance with such instructions from all the Lenders. Such instructions and
any action taken or failure to act pursuant thereto shall be binding on all the
Lenders, provided
65
that except as otherwise provided herein, Agent may act hereunder in its own
discretion without requesting such instructions.
9.11. Employment of Agents. In connection with its activities
hereunder, Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its authorized
agents, for the default or misconduct of agents or attorneys-in-fact selected
with reasonable care.
9.12. Reliance on Documents. Agent shall be entitled to rely upon
(a) any paper or document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons and (b) upon the opinion of
its counsel with respect to legal matters.
9.13. Agent's Rights as a Lender. With respect to its share of the
indebtedness hereunder, Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not Agent. Each of
the Lenders may accept deposits from and generally engage in other banking or
trust business with Borrowers as if it were not Agent or a Lender hereunder.
9.14. Expenses. Each of the Lenders shall reimburse Agent, from time
to time at the request of Agent, for its Pro Rata Share of any expenses incurred
by Agent in connection with the performance of its functions hereunder, provided
however that in the event Lenders shall reimburse Agent for expenses for which
Borrowers subsequently reimburses Agent, Agent shall remit to each Lender the
respective amount received from such Lender against such expenses.
9.15. Resignation of Agent. Agent may at any time resign its
position as Agent, without affecting its position as a Lender, by giving written
notice to Lenders and Company. Such resignation shall take effect upon the
appointment of a successor agent in accordance with this Paragraph 9.15. In the
event Agent shall resign, Lenders with the consent of the Company shall appoint
a Lender with banking powers as successor agent. If within thirty (30) days of
the Agent's notice of resignation no successor agent shall have been appointed
by Lenders and accepted such appointment, then Agent, in its discretion may
appoint any other Lender with banking powers as a successor agent.
9.16. Successor Agent. The successor Agent appointed pursuant to
Paragraph 9.15 shall execute and deliver to its predecessor and Lenders an
instrument in writing accepting such appointment, and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all
the properties, rights, duties and obligations of its predecessor Agent. The
predecessor Agent shall deliver to its successor Agent forthwith all Collateral,
documents and moneys held by it as Agent,
66
if any, whereupon such predecessor Agent shall be discharged from its duties and
obligations as Agent under this Agreement.
9.17. Collateral Security. Agent will hold, administer and manage
any Collateral pledged from time to time hereunder either in its own name or as
Agent, but each Lender shall hold a direct, undivided pro-rata beneficial
interest therein, on the basis of its Pro Rata Share, by reason of and as
evidenced by this Agreement.
9.18. Enforcement by Agent. All rights of action under this
Agreement and under the Notes and all rights to the Collateral hereunder may be
enforced by Agent and any suit or proceeding instituted by Agent in furtherance
of such enforcement shall be brought in its name as Agent without the necessity
of joining as plaintiffs or defendants any other Lenders, and the recovery of
any judgment shall be for the benefit of Lenders subject to the expenses of
Agent.
SECTION 10
MISCELLANEOUS
10.1. Indemnification and Release Provisions. Borrowers hereby agree
to defend Agent and each Lender and its respective directors, officers, agents
and employees from, and hold each of them harmless against, any and all losses,
liabilities (including, without limitation, settlement costs and amounts,
transfer taxes, documentary taxes, or assessments or charges made by any
governmental authority), claims, damages, interests, judgments, costs, or
expenses, including without limitation reasonable fees and disbursements of
counsel incurred by any of them arising out of or in connection with or by
reason of this Agreement, the Commitment, the making of the Loan or any
Collateral Security Document, including without limitation, any and all losses,
liabilities, claims, damages, interests, judgments, costs or expenses relating
to or arising under any Environmental Control Statute or License or the
application of any such Statute to any of Borrowers' properties or assets,
excluding, however, those caused by such party's respective gross negligence or
willful misconduct. Borrowers hereby release Agent and each Lender and its
respective directors, officers, agents and employees from any and all claims for
loss, damages, costs or expenses caused or alleged to be caused by any act or
omission on the part of any of them except for those caused by such party's
respective gross negligence or willful misconduct. All obligations provided for
in this Paragraph 10.1 shall survive any termination of this Agreement or the
Commitment and the repayment of the Loan.
10.2. Participations and Assignments. Borrowers hereby acknowledge
and agree that a Lender may at any time: (a) grant participations in its Loan or
any Note or of its right, title and interest therein or in or to this Agreement
(collectively, "Participations") to any other lending office or to any other
bank,
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lending institution or other Person which (x) in the absence of an Event of
Default hereunder, is not a Person in a Permitted Line of Business and (y) has
the requisite sophistication to evaluate the merits and risks of investments in
Participations ("Participants"); provided, however, that: (i) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
granted such Participation; and (ii) any agreement pursuant to which any Lender
may grant a Participation: (A) shall provide that such Lender shall retain the
sole right and responsibility to enforce the obligations of Borrowers hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provisions of this Agreement; (B) may provide that such Lender
will not agree to any modification, amendment or waiver of this Agreement
requiring approval of all Lenders pursuant to Paragraph 9.3 hereof without the
consent of the Participant and (C) shall not relieve such Lender from its
obligations, which shall remain absolute, to make Advances hereunder; and (b)
assign (i) all or any percent of its Loan or any Note or right, title and
interest therein or in and to this Agreement, to (x) a Lender; (y) any Affiliate
of a Lender; or (z) any Federal Reserve Bank; or (ii) all or any part of its
Loan or any Note or right, title and interest therein or in and to this
Agreement to a third party; provided, however, that in the absence of an Event
of Default or Default hereunder, (x) any participations granted pursuant to (a)
above and assignments pursuant to (b)(ii) above shall not exceed forty-nine
percent (49%) of such Lender's initial interest in the Loan and its Note
hereunder and (y) no assignment pursuant to (b)(ii) above shall be made without
the prior written consent of the Agent and Borrowers, which consent shall not be
unreasonably withheld. Any participations pursuant to subparagraph (a) and any
assignments pursuant to subparagraph (b) shall be in an amount not less than
Five Million Dollars ($5,000,000). Any assignment pursuant to subparagraph (b)
shall require payment by the applicable Lender to Agent of a $2,500 transfer
fee.
10.3. Binding and Governing Law. This Agreement and all documents
executed hereunder shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns and shall be governed
as to their validity, interpretation and effect by the laws of the Commonwealth
of Pennsylvania.
10.4. Survival. All agreements, representations, warranties and
covenants of Borrowers contained herein or in any documentation required
hereunder shall survive the execution of this Agreement and the making of the
Loan hereunder and except for Paragraphs 5.11 and 10.1 which provide otherwise,
will continue in full force and effect as long as any Indebtedness or other
obligation of Borrowers to any Lender under this Agreement or any Collateral
Security Document, or any Commitment, remains outstanding.
10.5. No Waiver; Delay. If Lenders or any of them shall waive any
power, right or remedy arising hereunder or under any
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applicable law, such waiver shall not be deemed to be a waiver upon any other
Lender or the later occurrence or recurrence of any of said events with respect
to any Lender. No delay by Lenders in the exercise of any power, right or remedy
shall, under any circumstances, constitute or be deemed to be a waiver, express
or implied, of the same and no course of dealing between the parties hereto
shall constitute a waiver of Lenders' powers, rights or remedies. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
10.6. Modification. Except as otherwise provided in this Agreement,
no modification or amendment hereof shall be effective unless made in a writing
signed by appropriate officers of all of the parties hereto.
10.7. Headings. The various headings in this Agreement are inserted
for convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
10.8. Notices. Any notice, request or consent required hereunder or
in connection herewith shall be deemed satisfactorily given if in writing and
delivered by hand, telecopied or mailed (registered or certified mail) to the
parties at their respective addresses and telecopy numbers set forth in this
Agreement or such other addresses as may be given by any party to the others in
writing, if to any Borrower at the address and telecopy numbers of such Borrower
set forth in Schedule 1 attached hereto, with a copy to Xxxx X. Xxxxxx, Esq.,
Nelson, Mullins, Xxxxx & Scarborough, L.L.P., 000 Xxxxxx Xxxxxx, Xxxxx 0000,
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, XX 00000; and if to the Agent and the
Lenders to the individuals at the addresses and telecopy numbers set forth in
Schedule 2 attached hereto. Any communication from or to the Company, and any
agreement to an amendment, modification or waiver with respect hereto by the
Company, shall be effective as to and binding upon all of the Borrowers.
10.9. Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, provided however that
such extension of time shall be included in the computation of interest due in
conjunction with such payment or other fees due hereunder, as the case may be.
10.10. Time of Day. All time of day restrictions imposed herein
shall be calculated using Agent's local time.
10.11. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other Persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
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10.12. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document, and each such counterpart shall be deemed to be an
original.
10.13. Consent to Jurisdiction and Service of Process. Borrowers
each hereby consent that any action or proceeding against it be commenced and
maintained in any court within the Commonwealth of Pennsylvania or in the United
States District Court for the Eastern District of Pennsylvania by service of
process on Borrowers at the offices of the Registered Agent for service of
process of the Company set forth on Schedule 1 attached hereto with a copy to
Xxxx X. Xxxxxx, Esq., Nelson, Mullins, Xxxxx & Scarborough, L.L.P., 000 Xxxxxx
Xxxxxx, Xxxxx 0000, 0000 Xxxxx Xxxxxx, X.X. Xxxxxxx, XX 00000 and Borrowers
agree that the courts of the Commonwealth of Pennsylvania and the United States
District Court for the Eastern District of Pennsylvania shall have jurisdiction
with respect to the subject matter hereof and the person of each Borrower and
waive any defense that such a court is an inconvenient forum. Notwithstanding
the foregoing, the Agent, in its absolute discretion may also initiate
proceedings in the courts of any other jurisdiction in which Borrowers may be
found or in which any of their properties or Collateral may be located.
10.14. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE NOTES OR COLLATERAL SECURITY
DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY LENDER OR AGENT. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDERS' ENTERING INTO THIS AGREEMENT.
10.15. Acknowledgements. BORROWERS ACKNOWLEDGE THAT THEY HAVE HAD
THE ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND,
SPECIFICALLY, PARAGRAPH 10.14 HEREOF, AND FURTHER ACKNOWLEDGE THAT THE MEANING
AND EFFECT OF THE FOREGOING WAIVER OF JURY TRIAL HAS BEEN FULLY EXPLAINED TO
BORROWERS BY SUCH COUNSEL.
IN WITNESS WHEREOF, the undersigned, by their duly authorized
officers, have executed this Agreement the day and year first above written.
ATTEST: CENTENNIAL HEALTHCARE CORPORATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Executive Vice President
[EXECUTIONS CONTINUED]
70
ATTEST: CENTENNIAL/ASHTON PROPERTIES
CORPORATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
ATTEST: CENTENNIAL HEALTHCARE PROPERTIES
CORPORATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
ATTEST: CENTENNIAL HEALTHCARE MANAGEMENT
CORPORATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Executive Vice President
ATTEST: CENTENNIAL ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
ATTEST: CENTENNIAL PROFESSIONAL THERAPY
SERVICES CORPORATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
[EXECUTIONS CONTINUED]
71
ATTEST: CENTENNIAL HEALTHCARE INVESTMENT
CORPORATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
ATTEST: TRANSITIONAL HEALTH SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
ATTEST: TRANSITIONAL FINANCIAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Asst. Secretary Title: Vice President
ATTEST: PARAGON REHABILITATION, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Exec. Vice President
ATTEST: THS PARTNERS I, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
[EXECUTIONS CONTINUED]
72
ATTEST: THS PARTNERS II, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
TRANSITIONAL HEALTH PARTNERS
ATTEST: BY: THS PARTNERS I, INC., its
general partner
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- -----------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
ATTEST: BY: THS PARTNERS II, INC., its
general partner
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ----------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
PARKVIEW PARTNERSHIP
ATTEST: BY: THS PARTNERS I, INC., its
general partner
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
---------------------- ------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
[EXECUTIONS CONTINUED]
73
ATTEST: BY: THS PARTNERS II, INC., its
general partner
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- -----------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxx
Title: Secretary Title: Vice President
CORESTATES BANK, N.A., for itself
and as Agent
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Vice President
NATIONSBANK, N.A. (SOUTH)
---------------------------------
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Vice President
AMSOUTH BANK OF ALABAMA
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: W. Page Xxxxxx
Title: Senior Vice President
74
Schedule 1
Borrowers
Centennial HealthCare Corporation
Georgia corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Centennial/Ashton Properties Corporation (100%)
Georgia corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Centennial HealthCare Properties Corporation (100%)
Georgia corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Centennial HealthCare Investment Corporation (100%)
Georgia corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Centennial HealthCare Management Corporation (100%)
Georgia corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Centennial Professional Therapy Services Corporation (100%)
Georgia corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
75
Centennial Acquisition Corp. (100%)
Georgia corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Transitional Health Services, Inc. (100%)
Delaware corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Transitional Financial Services, Inc. (100%)
Delaware corporation
000 Xxxx Xxxxx Xxxxxx Xxxxx
Xxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxx
Paragon Rehabilitation, Inc. (100%)
Delaware corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
THS Partners I, Inc. (100%)
Delaware corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
THS Partners II, Inc. (100%)
Delaware corporation
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
76
Transitional Health Partners (* %)
Delaware general partnership
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
Parkview Partnership (* %)
Delaware general partnership
000 Xxxxxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxx
----------
* Transitional Health Partners and Parkview Partnership are each owned 50% by
THS Partners I, Inc. and 50% by THS Partners II, Inc.
77
Schedule 2
Lenders
Maximum Principal Amount
Maximum
Principal Amount Percent
--------------------------------
CoreStates Bank, N.A. $ 35,000,000 53.80%
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
NationsBank, N.A. (South) 20,000,000 30.80%
000 Xxxxxxxxx Xxxxxxxxx
00xx Xxxxx, XX 1-006-18-29
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
AmSouth Bank of Alabama 10,000,000 15.40%
0000 0xx Xxxxxx Xxxxx
XxXxxxx-Xxxxx Tower - 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: W. Page Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
------------ ------
$ 65,000,000 100.00%
78
