EXHIBIT 10.1
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$490,000,000
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
SUN HEALTHCARE GROUP, INC.,
THE MEDIPLEX GROUP, INC.,
CERTAIN LENDERS,
CERTAIN CO-AGENTS
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER
October 29, 1996
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TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS
Section 1.1 DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 AMENDMENTS AND RENEWALS. . . . . . . . . . . . . . . . . 20
Section 1.3 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 2
ADVANCES
Section 2.1 THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.2 MANNER OF BORROWING AND DISBURSEMENT . . . . . . . . . . 21
Section 2.3 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.5 PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.6 REDUCTION OF COMMITMENTS . . . . . . . . . . . . . . . . 26
Section 2.7 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE LENDER. . . . 26
Section 2.8 PAYMENT OF PRINCIPAL OF ADVANCES . . . . . . . . . . . . 26
Section 2.9 REIMBURSEMENT. . . . . . . . . . . . . . . . . . . . . . 27
Section 2.10 MANNER OF PAYMENT. . . . . . . . . . . . . . . . . . . . 27
Section 2.11 LIBOR LENDING OFFICES. . . . . . . . . . . . . . . . . . 28
Section 2.12 SHARING OF PAYMENTS. . . . . . . . . . . . . . . . . . . 28
Section 2.13 CALCULATION OF LIBOR RATE. . . . . . . . . . . . . . . . 29
Section 2.14 BOOKING LOANS. . . . . . . . . . . . . . . . . . . . . . 29
Section 2.15 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.16 LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . 32
Section 2.17 EXTENSION OF MATURITY DATE . . . . . . . . . . . . . . . 38
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE AND THE
LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . 39
Section 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES AND LETTERS OF
CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 41
Section 4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. . . . . 47
ARTICLE 5
GENERAL COVENANTS
Section 5.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. . . . . . 47
Section 5.2 BUSINESS; COMPLIANCE WITH APPLICABLE LAW . . . . . . . . 48
Section 5.3 MAINTENANCE OF PROPERTIES. . . . . . . . . . . . . . . . 48
Section 5.4 ACCOUNTING METHODS AND FINANCIAL RECORDS . . . . . . . . 48
Section 5.5 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.6 PAYMENT OF TAXES AND CLAIMS. . . . . . . . . . . . . . . 48
Section 5.7 VISITS AND INSPECTIONS . . . . . . . . . . . . . . . . . 49
Section 5.8 PAYMENT OF INDEBTEDNESS. . . . . . . . . . . . . . . . . 49
Section 5.9 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . 49
Section 5.10 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.11 SALES OF ASSETS. . . . . . . . . . . . . . . . . . . . . 50
Section 5.12 CAREERSTAFF SUBSIDIARIES . . . . . . . . . . . . . . . . 51
Section 5.13 RESTRICTED SUBSIDIARIES. . . . . . . . . . . . . . . . . 51
Section 5.14 PRIOR CREDIT AGREEMENT . . . . . . . . . . . . . . . . . 51
ARTICLE 6
INFORMATION COVENANTS
Section 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION . . . . . 51
Section 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION;
CERTIFICATE OF NO DEFAULT. . . . . . . . . . . . . . . . 52
Section 6.3 COMPLIANCE CERTIFICATES. . . . . . . . . . . . . . . . . 52
Section 6.4 COPIES OF OTHER REPORTS AND NOTICES. . . . . . . . . . . 53
Section 6.5 NOTICE OF LITIGATION, DEFAULT AND OTHER MATTERS. . . . . 54
Section 6.6 ERISA REPORTING REQUIREMENTS . . . . . . . . . . . . . . 54
ARTICLE 7
NEGATIVE COVENANTS
Section 7.1 INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.2 LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.3 INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.4 LIQUIDATION, DISPOSITION OF ASSETS, MERGER, NEW
SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.5 ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.6 RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . 60
Section 7.7 AFFILIATE TRANSACTIONS . . . . . . . . . . . . . . . . . 60
Section 7.8 COMPLIANCE WITH ERISA. . . . . . . . . . . . . . . . . . 60
Section 7.9 FIXED CHARGE COVERAGE RATIO. . . . . . . . . . . . . . . 60
Section 7.10 TOTAL DEBT TO CASH FLOW COVERAGE RATIO . . . . . . . . . 61
Section 7.11 TOTAL DEBT TO CAPITALIZATION RATIO . . . . . . . . . . . 61
Section 7.12 SALE OR DISCOUNT OF RECEIVABLES. . . . . . . . . . . . . 62
Section 7.13 AMENDMENT AND MODIFICATION OF SUBORDINATED DEBT
DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.14 INDEBTEDNESS OF SUN INTERNATIONAL. . . . . . . . . . . . 62
Section 7.15 INTERCOMPANY LINE OF CREDIT. . . . . . . . . . . . . . . 62
Section 7.16 SALE AND LEASEBACK . . . . . . . . . . . . . . . . . . . 63
Section 7.17 CAREERSTAFF SUBSIDIARIES . . . . . . . . . . . . . . . . 63
ARTICLE 8
DEFAULT
Section 8.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . 63
Section 8.2 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 9
CHANGES IN CIRCUMSTANCES
Section 9.1 LIBOR BASIS DETERMINATION INADEQUATE . . . . . . . . . . 67
Section 9.2 ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.3 INCREASED COSTS. . . . . . . . . . . . . . . . . . . . . 68
Section 9.4 PRIME RATE ADVANCES RATHER THAN LIBOR ADVANCES . . . . . 69
Section 9.5 CAPITAL ADEQUACY . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 10
AGREEMENT AMONG LENDERS
Section 10.1 AGREEMENT AMONG LENDERS. . . . . . . . . . . . . . . . . 70
Section 10.2 LENDER CREDIT DECISION . . . . . . . . . . . . . . . . . 72
Section 10.3 BENEFITS OF ARTICLE. . . . . . . . . . . . . . . . . . . 72
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ARTICLE 11
MISCELLANEOUS
Section 11.1 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 11.2 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.3 WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 11.4 DETERMINATION BY THE LENDERS CONCLUSIVE AND BINDING. . . 74
Section 11.5 SET-OFF. . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 11.6 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . 75
Section 11.7 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 77
Section 11.8 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . 77
Section 11.9 INTEREST AND CHARGES . . . . . . . . . . . . . . . . . . 77
Section 11.10 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 11.11 AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . 78
Section 11.12 EXCEPTION TO COVENANTS . . . . . . . . . . . . . . . . . 78
Section 11.13 NO LIABILITY OF ISSUING BANK . . . . . . . . . . . . . . 78
Section 11.14 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . 79
Section 11.15 NO NOVATION. . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.16 NO DUTIES OF CO-AGENTS . . . . . . . . . . . . . . . . . 80
SECTION 11.17 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.18 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . 80
SECTION 11.19 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . 80
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SCHEDULES AND EXHIBITS
Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation
Schedule 4: Subsidiaries
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Sale Leaseback Facilities
Schedule 8: Permitted Sales
Schedule 9: Meditrust Loan Agreements
Exhibit A: Promissory Note
Exhibit B: Security Agreement
Exhibit C: Subsidiary Guaranty
Exhibit D: Compliance Certificate
Exhibit E: Assignment Agreement
Exhibit F: Pledge Agreement
Exhibit G: Foreign Subsidiary Pledge Agreement
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FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT is dated as of
October 29, 1996, among SUN HEALTHCARE GROUP, INC., a Delaware corporation
("PARENT"), THE MEDIPLEX GROUP, INC., a Massachusetts corporation ("MEDIPLEX")
(Parent and Mediplex are sometimes collectively referred to herein as the
"BORROWERS"), the Lenders from time to time party hereto (the "LENDERS"), the
Co-Agents from time to time party hereto (the "CO-AGENTS"), and NATIONSBANK OF
TEXAS, N.A., as Administrative Lender for the Lenders (the "Administrative
Lender").
BACKGROUND
Borrowers, Administrative Lender, and certain lenders previously entered
into that certain Third Amended and Restated Credit Agreement dated as of
July 21, 1995 (said Credit Agreement, as amended and modified from time to time,
the "PRIOR CREDIT AGREEMENT"), whereby Borrowers obtained a revolving loan in
the maximum principal amount of $315,000,000 (the "PRIOR LOAN"). The Borrowers
have requested that the Prior Credit Agreement and the Prior Loan be amended and
restated. The Administrative Lender, the Co-Agents and the Lenders are willing
to amend and restate the Prior Credit Agreement in its entirety (which amendment
and restatement is not an extinguishment or novation of the indebtedness
incurred pursuant to the Prior Credit Agreement), subject to the terms and
conditions set forth below.
In consideration of the mutual covenants and agreements contained herein,
and other good and valuable consideration hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINED TERMS. For purposes of this Agreement:
"ACCOUNT SECURITY AGREEMENT" shall mean a Security Agreement in form and
substance satisfactory to the Administrative Lender relating to the accounts
receivable of any leased facility of the Parent or any Restricted Subsidiary
which have been pledged under the lease agreement relating thereto to secure the
obligations owing to the lessor thereunder.
"ACQUISITION" shall mean any transaction pursuant to which the Parent or
any of its Subsidiaries, (i) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (A) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Parent or such Subsidiary or
tenders of equity securities of such Person, or through one or more negotiated
block, market,
private or other transactions not involving a tender offer, or a combination
of any of the foregoing, (B) makes any corporation a Subsidiary of the Parent
or such Subsidiary, or causes any corporation, other than a Subsidiary of the
Parent or such Subsidiary, to be merged into the Parent or such Subsidiary
(or agrees to be merged into any other corporation other than a wholly-owned
Subsidiary of the Parent or such Subsidiary), or (C) agrees to purchase all
or substantially all of the assets of any corporation, pursuant to a merger,
purchase of assets or other reorganization providing for the delivery or
issuance to the holders of such corporation's then outstanding securities, in
exchange for such securities, of cash or securities of the Parent or such
Subsidiary, or any combination thereof, or (ii) purchases all or
substantially all of the business or assets of any Person or of any operating
division of any Person; PROVIDED, HOWEVER, an Acquisition shall not include
mergers or consolidations permitted pursuant to SECTION 7.4(b) hereof.
"ACQUISITION CONSIDERATION" shall mean the consideration given by the
Parent or any of its Subsidiaries for an Acquisition, including but not limited
to the fair market value of any cash, property, stock or services given, the
amount of any Indebtedness and lease expense pursuant to Operating Leases (such
lease expense to be in an amount equal to the product of rental expense for the
four fiscal quarters immediately preceding the date of calculation multiplied by
six) assumed or incurred by the Parent or any Subsidiary in connection with such
Acquisition.
"ADMINISTRATIVE LENDER" shall mean NationsBank of Texas, N.A., as
administrative agent for Lenders, or such successor administrative agent
appointed pursuant to SECTION 10.1(b) hereof.
"ADMINISTRATIVE LENDER FEE LETTER" shall have the meaning set forth in
SECTION 2.4(c) hereof.
"ADVANCE" shall mean any amount advanced by the Lenders to the Borrowers
pursuant to ARTICLE 2 hereof on the occasion of any borrowing, including without
limitation any Refinancing Advance.
"AFFILIATE" shall mean any Person that directly or indirectly through one
or more Subsidiaries Controls, or is Controlled By or Under Common Control with,
any Borrower.
"AGREEMENT" shall mean this Credit Agreement.
"AGREEMENT DATE" shall mean the date of this Agreement.
"APPLICABLE ENVIRONMENTAL LAWS" shall mean Applicable Laws pertaining to
health or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA"), and any and all analogous
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present or future federal, state or local, statutes, rules, laws, and all
regulations promulgated thereunder.
"APPLICABLE LAW" shall mean (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
Sections 85 and 86, as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the maximum
rates of interest on loans and extensions of credit, and the laws of the State
of Texas, including, without limitation, Article 5069-1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended ("Art. 1.04"), and any other statute
of the State of Texas now or at any time hereafter prescribing maximum rates of
interest on loans and extensions of credit; provided that the parties hereto
agree that the provisions of Chapter 15, Title 79, Revised Civil Statutes of
Texas, 1925, as amended, shall not apply to Advances, this Agreement, the Notes
or any other Loan Documents.
"APPLICABLE MARGIN" shall mean the following per annum percentages,
applicable in the following situations:
LIBOR
Applicability Margin
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(i) If the Total Debt to Cash Flow Coverage
Ratio is equal to or greater than 4.5 to 1 1.50%
(ii) If the Total Debt to Cash Flow Coverage
Ratio is less than 4.5 to 1 but is equal
to or greater than 4.0 to 1 1.25%
(iii) If the Total Debt to Cash Flow
Coverage Ratio is less than 4.0 to 1
but is equal to or greater than 3.0 to 1 1.00%
(iv) If the Total Debt to Cash Flow Coverage
Ratio is less than 3.0 to 1 but is equal
to or greater than 2.0 to 1 0.75%
(v) If the Total Debt to Cash Flow Coverage
Ratio is less than 2.0 to 1 0.50%
The Applicable Margin payable by the Borrowers on the Advances outstanding
hereunder shall be subject to reduction or increase, as applicable and as set
forth in the table above, on a quarterly basis according to the Total Debt to
Cash Flow Coverage Ratio; PROVIDED, that each adjustment in the Applicable
Margin shall be effective as of the fifth day following the date of receipt by
the Administrative Lender of the financial statements required pursuant to
SECTION 6.1 OR 6.2 hereof, as appropriate. If financial statements of the
Parent (and corresponding
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Compliance Certificate setting forth the Total Debt to Cash Flow Coverage
Ratio) are not received by the Administrative Lender by the fifth day
following the date required pursuant to SECTION 6.1 OR 6.2 hereof, as
appropriate, the Applicable Margin shall be determined as if the Total Debt
to Cash Flow Coverage Ratio is equal to or greater than 4.5 to 1 until such
time as such financial statements and Compliance Certificate are received.
The Applicable Margin from and including the Agreement Date to the date of
the initial adjustment to be made therein as provided above shall be 1.00%
for the LIBOR Margin.
"ART. 1.04" shall have the meaning ascribed thereto in the definition of
"APPLICABLE LAW."
"ASSIGNEES" shall mean any assignee of a Lender pursuant to an Assignment
Agreement and shall have the meaning ascribed thereto in SECTION 11.6 hereof.
"ASSIGNMENT AGREEMENT" shall have the meaning ascribed thereto in
SECTION 11.6 hereof.
"ASSISTED LIVING INVESTMENTS" shall mean (a) Investments by the Parent or
any of its Restricted Subsidiaries in Assisted Living Investments L.L.C., a
Delaware limited liability company, for the purpose of developing and operating
assisted living facilities which provide housing, personal support services and
health care to facility residents, and (b) without duplication of the Investment
described in the foregoing clause (a), the purchase by the Parent or any of its
Restricted Subsidiaries of an assisted living facility owned by Assisted Living
Investments L.L.C.
"AUTHORIZED SIGNATORY" shall mean such senior personnel of the Notification
Agent as may be duly authorized and designated in writing by the Notification
Agent to execute documents, agreements and instruments on behalf of the
Notification Agent, and to request Advances hereunder.
"BONDHOLDERS" shall mean the holders of the Bonds.
"BONDS" shall mean those certain 11-3/4% Senior Subordinated Notes Due 2002
issued in connection with the Indenture.
"BORROWERS" shall mean, collectively, Parent and Mediplex, and "BORROWER"
shall mean any one of them.
"BUSINESS DAY" shall mean a day on which banks are open for the transaction
of business in Dallas, Texas, and New York, New York, and, with respect to any
LIBOR Advance, in London, England.
"CAPITALIZED LEASE OBLIGATIONS" shall mean that portion of any obligation
of any Person as lessee under a lease which at the time would be required to be
capitalized on a balance sheet prepared in accordance with GAAP.
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"CAREERSTAFF SUBSIDIARIES" shall mean any limited partnership Subsidiary of
the Borrower, of which the 1% general partner and the majority interest limited
partner owning not less than 85% of the limited partnership interests of such
Subsidiary, are corporate Subsidiaries of CareerStaff Unlimited, Inc., and which
are solely engaged in the business of providing therapists on a contract basis
to healthcare providers and other third parties.
"CHANGE OF CONTROL" means the occurrence of any of the following events
after the Agreement Date: (a) any Person or any Persons acting together which
would constitute a "group" (a "Group") for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision thereto, other than the Group whose nominees constituted a
majority of the board of directors of the Parent as of the close of business on
the Agreement Date, together with any Affiliates or Related Persons (as defined
in Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act
or any successor provision thereto) thereof, shall beneficially own at least 50%
of the aggregate voting power of all classes of capital stock of the Parent
entitled to vote generally in the election of directors of the Parent; or
(b) any Person or Group, other than any Person or Group whose nominees
constituted a majority of the board of directors of the Parent as of the close
of business on the Agreement Date, together with any Affiliates or Related
Persons thereof, shall succeed in having sufficient of its or their nominees
elected to the Board of Directors of the Parent, such that such nominees, when
added to any existing director remaining on the Board of Directors of the Parent
after such election who is an Affiliate or Related Person of such Group, shall
constitute a majority of the Board of Directors of the Parent.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall mean any collateral hereafter granted by any Person to
the Administrative Lender for the benefit of the Lenders to secure the
Obligations.
"COLLATERAL DOCUMENT" shall mean any document under which Collateral is
granted and any document related thereto.
"COMMITMENT" shall mean, as to all Lenders, $490,000,000.00, as reduced
from time to time pursuant to SECTION 2.6 hereof, and as to each Lender, such
Lender's Specified Percentage of such amount.
"COMPLIANCE CERTIFICATE" shall mean a certificate, signed by the chief
financial officer of the Parent in substantially the form of EXHIBIT C hereto,
appropriately completed.
"CONSENSUAL LIEN" shall mean only those Liens described in clauses (f) and
(h) of the definition of Permitted Liens.
"CONTROL" or "CONTROLLED BY" or "UNDER COMMON CONTROL" shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however,
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that in any event any Person which beneficially owns, directly or indirectly,
5% or more (in number of votes) of the securities (or in the case of a Person
that is not a corporation, 5% or more of the equity interest) having ordinary
voting power shall be conclusively presumed to control such Person.
"CONTROLLED GROUP" shall mean as of the applicable date, as to any Person,
all members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) which are under common control with such Person
and which, together with such Person, are treated as a single employer under
SECTION 414(b), (c), (m) OR (o) of the Code; provided, however, that the
Restricted Subsidiaries of the Parent shall be deemed to be members of the
Parent's Controlled Group.
"CONVERTIBLE BONDS" shall mean those certain Convertible Subordinated
Debentures issued in connection with the Convertible Indenture.
"CONVERTIBLE BONDHOLDERS" shall mean the holders of the Convertible Bonds.
"CONVERTIBLE INDENTURE" shall mean that certain Indenture dated as of
August 6, 1993, between Mediplex, as issuer thereunder, and Fleet Bank of
Massachusetts, N.A., as trustee thereunder as supplemented pursuant to that
certain Supplement dated as of October 1, 1994, among Parent, Mediplex and Fleet
Bank of Massachusetts, N.A., as trustee, and as the same may be further amended,
modified, supplemented or restated from time to time.
"DEBTOR RELIEF LAWS" shall mean any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief laws affecting the rights of creditors
generally from time to time in effect.
"DEFAULT" shall mean an Event of Default and/or any of the events specified
in SECTION 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"DEFAULT RATE" shall mean a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the Prime Rate plus
three percent.
"DEPRECIATION" shall mean depreciation expense as determined in accordance
with GAAP.
"DETERMINING LENDERS" shall mean, on any date of determination, any
combination of the Lenders having 51% of the aggregate amount of the Advances
then outstanding; provided, however, that if there are no Advances outstanding
hereunder, "Determining Lenders" shall mean any combination of Lenders whose
Specified Percentages aggregate 51%.
"DISCLOSURE LETTER" shall mean that certain letter dated as of the
Agreement Date, delivered by the Parent to the Lenders, pursuant to which the
Parent has disclosed certain items which might have a Material Adverse Effect.
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"DIVIDEND" shall mean, as to any Person, any declaration or payment of any
dividend (other than a stock dividend) on, or the making of any distribution,
loan, or advance to any holder of, any shares of capital stock or other equity
interest of such Person (other than salaries and bonuses paid in the ordinary
course of business).
"DOMESTIC EBITDAR" shall mean, for any period, determined in accordance
with GAAP on a consolidated basis for the Parent and its Restricted
Subsidiaries, the sum of (a) pre-tax net income (excluding therefrom (i) any
items of extraordinary gain, including net gains on the sale of assets other
than asset sales in the ordinary course of business, (ii) any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business, (iii) payments after the Agreement
Date to the Convertible Bondholders as an inducement for the conversion of a
portion of the Convertible Bonds, such payments not to exceed $3,000,000 in
aggregate amount, and (iv) for the fiscal quarter and year ended December 31,
1995, non-cash charges related to the write-off of goodwill and uncollectible
accounts receivable acquired with the acquisition of Mediplex and Honorcare
Healthcare Management, Inc., not to exceed $67,000,000 in aggregate amount),
plus (b) interest expense, whether or not capitalized (including interest
expense pursuant to Capitalized Lease Obligations), Depreciation, amortization
and lease expense pursuant to Operating Leases, in each case for the four fiscal
quarters immediately preceding the date of calculation. For purpose of the
calculation of Domestic EBITDAR with respect to assets not owned at all times
during the four fiscal quarters immediately preceding the date of determination,
Domestic EBITDAR shall be adjusted, on a pro-forma basis, to (i) include the
Domestic EBITDAR attributable to an Acquisition which occurred during any such
fiscal quarter for the twelve month period preceding the date of determination,
provided the Acquisition Consideration for such Acquisition is in excess of
$20,000,000 and (ii) exclude the Domestic EBITDAR of any asset or group of
related amounts disposed of in one transaction or a series of related
transactions during any such fiscal quarter for the twelve month period
preceding the date of determination, provided the consideration received from
the disposition of such asset or group of related assets is in excess of
$20,000,000.
"EBITDAR" shall mean, for any period, determined in accordance with GAAP on
a consolidated basis for the Parent and its Subsidiaries, the sum of (a) pre-tax
net income (excluding therefrom (i) any items of extraordinary gain, including
net gains on the sale of assets other than asset sales in the ordinary course of
business, (ii) any items of extraordinary loss, including net losses on the sale
of assets other than asset sales in the ordinary course of business, (iii)
payments after the Agreement Date to the Convertible Bondholders as an
inducement for the conversion of a portion of the Convertible Bonds, such
payments not to exceed $3,000,000 in aggregate amount, and (iv) for the fiscal
quarter and year ended December 31, 1995, non-cash charges related to the write-
off of goodwill and uncollectible accounts receivable acquired with the
acquisition of Mediplex and Honorcare Healthcare Management, Inc., not to exceed
$67,000,000 in aggregate amount), plus (b) interest expense, whether or not
capitalized (including interest expense pursuant to Capitalized Lease
Obligations), Depreciation, amortization and lease expense pursuant to Operating
Leases, in each case for the four fiscal quarters immediately preceding the date
of calculation. For purpose of the calculation of
-7-
EBITDAR with respect to assets not owned at all times during the four fiscal
quarters immediately preceding the date of determination, EBITDAR shall be
adjusted, on a pro-forma basis, to (i) include the EBITDAR attributable to an
Acquisition which occurred during any such fiscal quarter for the twelve
month period preceding the date of determination, provided the Acquisition
Consideration for such Acquisition is in excess of $20,000,000 and (ii)
exclude the EBITDAR of any asset or group of related amounts disposed of in
one transaction or a series of related transactions during any such fiscal
quarter for the twelve month period preceding the date of determination,
provided the consideration received from the disposition of such asset or
group of related assets is in excess of $20,000,000.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any applicable regulation promulgated thereunder.
"ERISA EVENT" shall mean, with respect to the Parent and its Restricted
Subsidiaries, (a) a Reportable Event with respect to a Pension Plan, (b) the
withdrawal of any such Person or any member of its Controlled Group from a
Pension Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to
terminate a Pension Plan under Section 4041(c) of ERISA, (d) the institution of
proceedings to terminate a Pension Plan by the PBGC, (e) the failure to make
required contributions to a Pension Plan or Multiemployer Plan which could
result in the imposition of a lien under Section 412 of the Code or Section 302
of ERISA, (f) a withdrawal of any such Person or any member of its Controlled
Group from a Multiemployer Plan, (g) a transfer of sponsorship of a Pension Plan
having a material amount of unfunded accrued benefit liabilities to a Person not
a member of a Controlled Group of the Parent or a Restricted Subsidiary, or
(h) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or the imposition of
any liability under Title IV of ERISA other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"EVENT OF DEFAULT" shall mean any of the events specified in SECTION 8.1,
provided that any requirement for notice or lapse of time has been satisfied.
"EXISTING LETTERS OF CREDIT" shall mean any letters of credit issued under
the Prior Credit Agreement and outstanding as of the Agreement Date.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the rate on such transactions as of
the most recent Business Day when such rate was last published.
-8-
"FIXED CHARGES" shall mean, for any date of calculation, calculated for the
Parent and its Subsidiaries on a consolidated basis (provided that if Foreign
Subsidiary EBITDAR shall ever equal or exceed 15% of EBITDAR, Fixed Charges
shall be calculated for the Parent and its Restricted Subsidiaries on a
consolidated basis) determined in accordance with GAAP, the sum of, without
duplication, (a) scheduled principal payments made on Total Debt (other than
(i) lease expense pursuant to Operating Leases, (ii) principal payments made on
the Obligations, and (iii) debt for borrowed money having (x) a maturity of less
than twelve months and (y) no principal amortization), plus (b) interest paid,
whether or not capitalized (including interest paid pursuant to Capitalized
Lease Obligations), plus (c) lease expense pursuant to Operating Leases, in each
case for the four fiscal quarters immediately preceding the date of calculation.
For purpose of the calculation of Fixed Charges with respect to assets not owned
at all times during the four fiscal quarters immediately preceding the date of
determination, Fixed Charges shall be adjusted, on a pro-forma basis, to
(i) include the Fixed Charges attributable to an Acquisition which occurred
during any such fiscal quarter for the twelve month period preceding the date of
determination, provided the Acquisition Consideration for such Acquisition is in
excess of $20,000,000 and (ii) exclude the Fixed Charges of any asset or group
of related amounts disposed of in one transaction or a series of related
transactions during any such fiscal quarter for the twelve month period
preceding the date of determination, provided the consideration received from
the disposition of such asset or group of related assets is in excess of
$20,000,000.
"FIXED CHARGE COVERAGE RATIO" shall mean, for any date of calculation, the
ratio of EBITDAR (provided that if Foreign Subsidiary EBITDAR shall ever equal
or exceed 15% of EBITDAR, the Fixed Charge Coverage Ratio shall be calculated
using Domestic EBITDAR) to Fixed Charges for the four fiscal quarters
immediately preceding such date of calculation.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary which is organized under the
laws of a jurisdiction other than the United States of America, any state
thereof, or the District of Columbia.
"FOREIGN SUBSIDIARY EBITDAR" shall mean, for any period, determined in
accordance with GAAP on a consolidated basis for the Parent's Foreign
Subsidiaries, the sum of (a) pre-tax net income (excluding therefrom (i) any
items of extraordinary gain, including net gains on the sale of assets other
than asset sales in the ordinary course of business, and (ii) any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense, whether or
not capitalized (including interest expense pursuant to Capitalized Lease
Obligations), Depreciation, amortization and lease expense pursuant to Operating
Leases, in each case for the four fiscal quarters immediately preceding the date
of calculation. For purpose of the calculation of Foreign Subsidiary EBITDAR
with respect to assets not owned at all times during the four fiscal quarters
immediately preceding the date of determination, Foreign Subsidiary EBITDAR
shall be adjusted, on a pro-forma basis, to (i) include the Foreign Subsidiary
EBITDAR attributable to an Acquisition which occurred during any such fiscal
quarter for the twelve month period preceding the date of determination,
provided the Acquisition Consideration for such Acquisition is in excess of
$20,000,000 and
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(ii) exclude the Foreign Subsidiary EBITDAR of any asset or group of related
amounts disposed of in one transaction or a series of related transactions
during any such fiscal quarter for the twelve month period preceding the date
of determination, provided the consideration received from the disposition of
such asset or group of related assets is in excess of $20,000,000.
"FOREIGN SUBSIDIARY PLEDGE AGREEMENT" shall mean one or more Foreign
Subsidiary Pledge Agreements executed by each Borrower and Restricted Subsidiary
relating to all or a portion of the capital stock of, or other equity interest
in, any Foreign Subsidiary now owned or hereafter acquired by such Borrower or
Restricted Subsidiary, necessary to cause the Administrative Lender to have a
security interest in, and pledge of, 66% of all of the capital stock of, or
other equity interest in, such Foreign Subsidiary, substantially in the form of
EXHIBIT G hereto, as such agreement may be amended, modified, supplemented or
restated from time to time.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requisite 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, except as otherwise
required by the adoption of Statement of Financial Accounting Standards No. 109.
"GOVERNMENTAL AUTHORITY" shall mean (a) the government of (i) the United
States of America and any State or other political subdivision thereof or
(ii) any jurisdiction in which the Parent or any of its Restricted Subsidiaries
conducts all or any part of its business or owns any property or (b) any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, any such government.
"GUARANTY" or "GUARANTEED", as applied to an obligation of another Person,
shall mean and include (a) a guaranty, direct or indirect, in any manner, of any
part or all of such obligation, and (b) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation, including, without
limiting the foregoing, any reimbursement obligations with respect to amounts
which may be drawn by beneficiaries of outstanding letters of credit.
"GUARANTOR" shall mean each Restricted Subsidiary of the Parent (other than
its Inactive Subsidiaries and Mediplex).
"HIGHEST LAWFUL RATE" shall mean at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of
-10-
the effective time of each change in the Highest Lawful Rate without notice
to the Borrowers or the Notification Agent. For purposes of determining the
Highest Lawful Rate under the Applicable Law of the State of Texas, the
applicable rate ceiling shall be (a) the indicated rate ceiling described in and
computed in accordance with the provisions of Section (a)(1) of Art. 1.04, or
(b) if the parties subsequently contract as allowed by Applicable Law, the
quarterly ceiling or the annualized ceiling computed pursuant to Section (d) of
Art. 1.04; provided, however, that at any time the indicated rate ceiling, the
quarterly ceiling or the annualized ceiling shall be less than 18% per annum or
more than 24% per annum, the provisions of Sections (b)(1) and (2) of said Art.
1.04 shall control for purposes of such determination, as applicable.
"INACTIVE SUBSIDIARY" shall mean any Subsidiary having (a) Total Assets at
any time of less than $1,000,000 in aggregate amount and (b) total gross
revenues per fiscal year of less than $1,000,000, in aggregate amount.
"INDEBTEDNESS" shall mean, with respect to any Person, without duplication,
(a) all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person, (b) all obligations secured by any Lien on any property or asset owned
by such Person, whether or not the obligation secured thereby shall have been
assumed, (c) to the extent not otherwise included, all Capitalized Lease
Obligations of such Person, all obligations of such Person with respect to
leases constituting part of a sale and leaseback arrangement, all Guaranties,
all obligations under interest rate swap agreements or similar hedge agreements,
all indebtedness for borrowed money, and all reimbursement obligations with
respect to outstanding letters of credit, and (d) any "withdrawal liability" of
the Parent or any of its Restricted Subsidiaries, as such term is defined under
Part I of Subtitle E of Title IV of ERISA.
"INDEMNIFIED MATTERS" shall have the meaning ascribed to it in
SECTION 5.10(a) hereof.
"INDEMNITEES" shall have the meaning ascribed to it in SECTION 5.10(a)
hereof.
"INDENTURE" shall mean that certain Indenture dated as of September 1,
1992, between Mediplex, as issuer thereunder, and NationsBank of Virginia, N.A.,
as trustee thereunder, as amended, modified, supplemented or restated from time
to time.
"INTERCOMPANY LINE OF CREDIT" shall mean that certain Line of Credit
Agreement dated as of the 1st day of January, 1995, among the Parent and each of
the Parent's Restricted Subsidiaries that may become party thereto from time to
time, as the same may from time to time be amended, modified, supplemented or
restated.
"INTEREST PERIOD" shall mean, for any LIBOR Advance, the period beginning
on the day the Advance is made and ending one, two, three or six months
thereafter (as the Borrowers, through the Notification Agent, shall select).
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"INVESTMENT" shall mean any direct or indirect purchase or other
acquisition of, or beneficial interest in, capital stock or other securities of
any other Person, or any direct or indirect loan, advance (other than advances
to employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution to, or
investment in any other Person, including without limitation the incurrence or
sufferance of Indebtedness or the purchase, other than purchases in connection
with an Acquisition, of accounts receivable of any other Person that are not
current assets or do not arise in the ordinary course of business, which is not
an Acquisition.
"ISSUING BANK" shall mean NationsBank of Texas, N.A. in its capacity as
issuer of the Letters of Credit.
"LENDER" shall mean each financial institution shown on the signature pages
hereof so long as such financial institution maintains a Commitment or is owed
any part of the Obligations (including the Administrative Lender in its
individual capacity), and each Assignee that hereafter becomes party hereto
pursuant to SECTION 11.6 hereof.
"L/C CASH COLLATERAL ACCOUNT" shall have the meaning specified in
SECTION 2.16(g) hereof.
"L/C RELATED DOCUMENTS" shall have the meaning specified in SECTION 2.16(e)
hereof.
"LETTERS OF CREDIT" shall have the meaning specified in SECTION 2.16(a)
hereof and also shall include the Existing Letters of Credit.
"LETTER OF CREDIT AGREEMENT" shall have the meaning specified in
SECTION 2.16(b) hereof.
"LETTER OF CREDIT FACILITY" shall mean the amount of Letters of Credit the
Issuing Bank may issue pursuant to SECTION 2.16(a) hereof.
"LIBERTY LOAN" shall mean a $12,500,000 working capital loan made by the
Parent to Liberty Healthcare Management Group, Inc., bearing interest at a rate
per annum not to exceed the sum of the rate being offered in the London
interbank market plus 2-1/2% and having a maturity of less than five years.
"LIBERTY NOTE" shall mean a promissory note executed by Liberty Healthcare
Management Group, Inc., made payable to the order of the Parent, evidencing the
Liberty Loan.
"LIBOR ADVANCE" shall mean an Advance which the Borrowers request to be
made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance
with the provisions of SECTION 2.2 hereof.
"LIBOR BASIS" shall mean a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable Margin. The
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LIBOR Basis shall, with respect to LIBOR Advances subject to reserve or
deposit requirements, be subject to premiums therefor assessed by each
Lender, which are payable directly to each Lender. Once determined, the
LIBOR Basis shall remain unchanged during the applicable Interest Period.
"LIBOR LENDING OFFICE" shall mean, with respect to a Lender, the office
designated as its LIBOR Lending Office on SCHEDULE 1 attached hereto, and such
other office of the Lender or any of its affiliates hereafter designated by
notice to the Notification Agent and the Administrative Lender.
"LIBOR RATE" shall mean, for any Interest Period, the interest rate per
annum (rounded upward to the nearest one-sixteenth (1/16th) of one percent) at
which deposits in United States Dollars are offered to the Administrative Lender
by leading banks reasonably selected by the Administrative Lender in the London
interbank market at approximately 11:00 a.m. (London time), two Business Days
before the first day of such Interest Period, in an amount approximately equal
to the principal amount of, and for a length of time approximately equal to the
Interest Period for, the LIBOR Advance sought by the Borrowers.
"LIEN" shall mean, with respect to any property, any mortgage, lien,
pledge, collateral assignment, hypothecation, charge, security interest, title
retention agreement, levy, execution, seizure, attachment, garnishment or other
encumbrance of any kind in respect of such property, whether or not xxxxxx,
vested or perfected.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, any Pledge
Agreements, the Security Agreements, the Subsidiary Guaranty, the Account
Security Agreement and any other document or agreement executed or delivered
from time to time by the Borrowers, any of Parent's Restricted Subsidiaries
(other than Mediplex) or any other Person in connection herewith or therewith or
as security for the Obligations.
"LONG TERM DEBT" shall mean any obligation which is due one year or more
from the date of creation thereof which under GAAP is shown as a liability,
plus, without duplication, amounts equal to the aggregate net rentals payable
one year or more from the date of creation thereof under Capitalized Lease
Obligations.
"MATERIAL ADVERSE EFFECT" shall mean any act or circumstance or event that
(a) causes a Default, (b) otherwise could reasonably be expected to be material
and adverse to (i) the business, assets, liabilities, financial condition,
results of operations, business or prospects of the Parent and its Restricted
Subsidiaries taken as a whole or (ii) the ability of the Borrowers or any
Guarantor to perform their obligations under the respective Loan Documents, or
(c) in any manner whatsoever does or could reasonably be expected to materially
and adversely affect the validity or enforceability of any Loan Document.
-13-
"MATURITY DATE" shall mean October 28, 2001, or the earlier date of
termination in whole of the Commitment pursuant to SECTION 2.6 OR 8.2 hereof, or
such later date as established pursuant to SECTION 2.17 hereof.
"MAXIMUM AMOUNT" shall mean the maximum amount of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations.
"MEDIPLEX" shall mean The Mediplex Group, Inc., a Massachusetts corporation
and a direct, wholly-owned, Subsidiary of Parent.
"MEDITRUST LOAN AGREEMENTS" shall mean the loan agreements described on
SCHEDULE 9 hereto and amendments, modifications, or supplements thereto or
restatements thereof set forth on SCHEDULE 9 hereto without giving effect to any
amendments, modifications or supplements thereto not listed on SCHEDULE 9 unless
the same are consented to in writing by the Determining Lenders.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA and to which the Parent or any member of its
Controlled Group has an obligation to contribute or has liability under Title IV
of ERISA (contingent or otherwise).
"NECESSARY AUTHORIZATION" shall mean any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with, any
governmental or other regulatory authority necessary or appropriate to enable
the Parent or any of its Restricted Subsidiaries to maintain and operate its
business and properties.
"NEGATIVE PLEDGE" shall mean any agreement, contract or arrangement whereby
any Person is prohibited from, or would otherwise be in default as a result of,
creating, assuming, incurring or suffering to exist, directly or indirectly, any
Lien on any of its assets.
"NET CASH PROCEEDS" shall mean, with respect to any sale, lease, transfer
or disposition of any asset by any Person, the aggregate amount of cash received
by such Person in connection with such transaction after payment of any
Indebtedness secured by the asset being sold, leased, transferred or disposed of
and minus reasonable fees, costs and expenses and related taxes.
"NET WORTH" shall mean, for the Parent and its Subsidiaries, on a
consolidated basis (provided that if Foreign Subsidiary EBITDAR shall ever equal
or exceed 15% of EBITDAR, Net Worth shall be calculated for the Parent and its
Restricted Subsidiaries on a consolidated basis), determined in accordance with
GAAP, the sum of: (i) capital stock taken at par value, plus (ii) capital
surplus plus (iii) retained earnings less treasury stock.
"NOTE" shall mean each Promissory Note of the Borrowers evidencing Advances
hereunder, substantially in the form of EXHIBIT A hereto, together with any
extension, renewal or amendment thereof, or substitution therefor.
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"NOTIFICATION AGENT" shall mean Parent, or such other Borrower designated
by Parent and agreed to in writing by the Administrative Lender, to receive and
deliver all communications and notices required to be delivered hereunder and to
request Advances.
"OBLIGATIONS" shall mean (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent, including the Reimbursement Obligations) of
the Parent or any of its Restricted Subsidiaries to the Lenders under the Loan
Documents as they may be amended from time to time, and (b) all obligations of
the Parent or any of its Restricted Subsidiaries for losses, damages, expenses
or any other liabilities of any kind that any Lender may suffer by reason of a
breach by the Parent or any of its Restricted Subsidiaries of any obligation,
covenant or undertaking with respect to any Loan Document.
"OPERATING LEASE" means any Operating Lease, as defined in the Financial
Accounting Standard Board Statement No. 13, dated November, 1976, or otherwise
in accordance with GAAP.
"PARENT" shall mean Sun Healthcare Group, Inc., a Delaware corporation.
"PARTICIPANT" shall have the meaning ascribed to it in SECTION 11.6(c)
hereof.
"PARTICIPATION" shall have the meaning ascribed to it in SECTION 11.6(c)
hereof.
"PAYMENT DATE" shall mean the last day of the Interest Period for any LIBOR
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means a retirement plan (other than a Multiemployer Plan)
subject to Title IV of ERISA or Section 412 of the Code to which the Parent or
any member of its Controlled Group has liability (contingent or otherwise) under
Title IV of ERISA or Section 412 of the Code.
"PERMITTED LIENS" shall mean, as applied to any Person:
(a) any Lien in favor of the Lenders to secure the Obligations hereunder;
(b) (i) Liens on real estate for real estate taxes not yet delinquent,
(ii) Liens on assets arising by operation of law to secure the payments of
rental amounts under lease agreements and other sums due thereunder, (iii) Liens
created by lease agreements to secure the payment of rental amounts and other
sums due thereunder provided that such liens are confined to fixtures,
equipment, inventory and other tangible personal property located in or about
the leased premises, (iv) Liens on leasehold interests created by the lessor in
favor of any mortgagee of the leased premises, and (v) Liens for taxes,
assessments, governmental charges, levies or claims
-15-
that are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set aside on such Person's
books, but only so long as no foreclosure, restraint, sale or similar
proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers and materialmen
and other similar Liens incurred in the ordinary course of business for sums not
yet due or being contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(e) Easements, rights-of-way, restrictions and other similar encumbrances
on the use of real property which do not interfere with the ordinary conduct of
the business of such Person;
(f) Liens created to secure Indebtedness permitted by SECTION 7.1(j)
hereof, which is (i) incurred solely for the purpose of financing the
acquisition of assets or an Acquisition and incurred at the time of such
acquisition of assets or such Acquisition or (ii) assumed in connection with an
Acquisition, so long as (A) each such Lien permitted by this subsection (f)
shall at all times be confined solely to the asset or assets so acquired (and
proceeds thereof) and refinancings thereof and (B) the aggregate amount of
Indebtedness related thereto does not result in a violation of SECTION 7.1(j)
hereof;
(g) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been secured,
provided that (i) such Person shall have established adequate reserves for such
judgments or awards, (ii) such judgments or awards shall be fully insured and
the insurer shall not have denied coverage, or (iii) such judgments or awards
shall have been bonded to the satisfaction of the Determining Lenders;
(h) Any Liens which are described on SCHEDULE 2 to the Credit Agreement,
and Liens resulting from the refinancing of the related Indebtedness, provided
that the Indebtedness secured thereby shall not be increased and the Liens shall
not cover additional assets of the Parent or its Restricted Subsidiaries; and
(i) Liens on assets necessary to satisfy SECTION 6 of each of the
Meditrust Loan Agreements.
"PERMITTED RESTRICTED PAYMENTS" shall mean (a) the declaration and payment
of Dividends to the Parent or any of its Restricted Subsidiaries, (b) payments
made after the Agreement Date to the Bondholders in connection with a tender of
the Bonds, not to exceed $8,000,000 in aggregate amount, (c) the repurchase of
shares by the Parent of its shares held by Xxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx pursuant to the terms of that certain
Registration Rights Agreement with Parent, dated as of June 29, 1993, as
-16-
amended by that certain First Amendment to Registration Rights Agreement,
dated as of May 26, 1994, and (d) payments made after the Agreement Date to
the Convertible Bondholders in connection with the conversion of any of the
Convertible Bonds pursuant to the terms of the Convertible Indenture, not to
exceed $7,800,000 in aggregate amount.
"PERSON" shall mean an individual, corporation, partnership, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"PLAN" shall mean (a) any employee benefit plan as defined in Section 3(3)
and subject to Title I of ERISA (including a Multiemployer Plan that is covered
by Title IV of ERISA) pursuant to which any employees of the Parent or its
Restricted Subsidiaries participate and (b) any Pension Plan.
"PLEDGE AGREEMENT" shall mean one or more Pledge Agreements executed by
each Borrower and Restricted Subsidiary relating to all of the capital stock of,
or other equity interest in, Restricted Subsidiaries now owned or hereafter
acquired by such Borrower or Restricted Subsidiary (other than Inactive
Subsidiaries), substantially in the form of EXHIBIT F hereto, as amended,
modified, renewed, supplemented or restated from time to time.
"PLEDGE AGREEMENTS" shall mean any Pledge Agreements, and any Foreign
Subsidiary Pledge Agreements.
"PRIME RATE" shall mean, at any time, the prime interest rate announced or
published by the Administrative Lender from time to time as its reference rate
for the determination of interest rates for loans of varying maturities in
United States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by the Administrative Lender as
its "prime rate;" it being understood that such rate may not be the lowest rate
of interest charged by the Administrative Lender.
"PRIME RATE ADVANCE" shall mean any Advance bearing interest at the Prime
Rate Basis.
"PRIME RATE BASIS" shall mean, for any day, a per annum interest rate equal
to the lesser of (a) the Highest Lawful Rate on such day, or (b) the higher of
(i) the sum of (A) 0.50% plus (B) the Federal Funds Rate or (ii) the Prime Rate
on such day. The Prime Rate Basis shall be adjusted automatically as of the
opening of business on the effective date of each change in the Prime Rate or
Federal Funds Rate, as the case may be, to account for such change.
"QUARTERLY DATE" shall mean the last day of each March, June, September and
December, beginning December 31, 1996.
"REFINANCING ADVANCE" shall mean any LIBOR Advance which is used to pay the
principal amount (or any portion thereof) of a LIBOR Advance at the end of its
Interest Period and which, after giving effect to such application, does not
result in an increase in the aggregate amount of outstanding LIBOR Advances.
-17-
"REIMBURSEMENT OBLIGATIONS" shall mean, in respect of any Letter of Credit
as at any date of determination, the sum of (a) the maximum aggregate amount
which is then available to be drawn under such Letter of Credit plus (b) the
aggregate amount of all drawings under such Letter of Credit and not theretofore
reimbursed by the Borrowers.
"RELEASE DATE" shall mean the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"REPORTABLE EVENT" shall mean an event set forth in Section 4043(c) of
ERISA other than any event for which the provision for 30 days' notice has been
excused under regulations issued under such Section.
"RESTRICTED PAYMENTS" shall mean, collectively, (a) Dividends, (b) Treasury
Stock Purchases, and (c) any payment or prepayment of principal, premium or
penalty on any Subordinated Debt, any prepayment of interest on any Subordinated
Debt or any defeasance, redemption, repurchase or other acquisition or
retirement for value, in whole or in part, of any Subordinated Debt (including,
without limitation, the setting aside of assets or the deposit of funds
therefor).
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary which is not a Foreign
Subsidiary.
"SECURITY AGREEMENT" shall mean any Security Agreement executed by the
Parent or any Restricted Subsidary relating to, with respect to the Parent, the
Intercompany Line of Credit and the Liberty Note and, with respect to any
Restricted Subsidary, any intercompany indebtedness owing to such Restricted
Subsidiary, substantially in the form of Exhibit B hereto, as
amended,modified,renewed, supplemented or restated from time to time.
"SOLVENT" shall mean, with respect to any Person, that the fair value of
the assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.
"SPECIAL COUNSEL" shall mean the law firm of Xxxxxxx, Xxxxxxx & Xxxxxxx,
P.C., or such other legal counsel as the Administrative Lender may select.
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"SPECIFIED PERCENTAGE" shall mean, as to any Lender, the percentage
indicated beside its name on the signature pages hereof, or if applicable,
specified in its most recent Assignment Agreement.
"SUBORDINATED DEBT" shall mean any Indebtedness of the Parent or any of its
Restricted Subsidiaries which shall have been and continues to be validly and
effectively subordinated to the prior payment in full of the Obligations on
terms and documentation approved in writing by the Determining Lenders, such
approval not to be unreasonably withheld by the Determining Lenders.
"SUBSIDIARY", as such term relates to any Person, shall mean (a) any
corporation of which more than 50% of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class of securities of such corporation to exercise such
voting power by reason of the happening of any contingency, is at the time owned
by such Person, directly or through one or more intermediaries, and (b) any
other entity which is Controlled or then capable of being Controlled by such
Person, directly or through one or more intermediaries.
"SUBSIDIARY GUARANTY" shall mean any Subsidiary Guaranty, executed by one
or more Guarantors, guarantying payment and performance of the Obligations,
substantially in the form of EXHIBIT C hereto, as such agreement may be amended,
modified, supplemented or restated from time to time.
"SUN INTERNATIONAL" shall mean Sun Healthcare Group International, Ltd., a
United Kingdom corporation and a direct, wholly-owned, subsidiary of Parent.
"TAXES" shall have the meaning ascribed thereto in SECTION 2.15 hereof.
"TOTAL ASSETS" shall mean, for any Person, the total assets of such Person,
determined in accordance with GAAP (less capitalized interest amounts included
therein).
"TOTAL DEBT" shall mean, as of any date of determination, determined for
the Parent and its Subsidiaries on a consolidated basis (provided that if
Foreign Subsidiary EBITDAR shall ever equal or exceed 15% of EBITDAR, Total Debt
shall be calculated for the Parent and its Restricted Subsidiaries on a
consolidated basis) in accordance with GAAP, the sum (without duplication) of
(a) all principal outstanding under the Loan Documents, plus (b) all obligations
evidenced by a promissory note or otherwise representing borrowed money, plus
(c) all reimbursement obligations for letters of credit, plus (d) all
Capitalized Lease Obligations, plus (e) lease expense pursuant to Operating
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Leases (such lease expense to be in an amount equal to the product of rental
expense for the four fiscal quarters immediately preceding the date of
calculation multiplied by six and shall be net of any income being received
pursuant to subleases during such period, provided that no such sublessee is in
default under its sublease), less (f) an amount equal to any write-up, to market
value, of the Bonds and the Convertible Bonds as required by GAAP. For the
purpose of the calculation of lease expense pursuant to Operating Leases for
Subsidiaries not owned at all times during the four fiscal quarters immediately
preceding the date of determination, such lease expense shall be adjusted, on a
pro-forma basis, to (i) include the lease expense pursuant to Operating Leases
attributable to an Acquisition which occurred during any such fiscal quarter for
the four fiscal quarters of the Subsidiary acquired immediately preceding the
date of determination (such lease expense to be multiplied by six), provided the
Acquisition Consideration for such Acquisition is in excess of $20,000,000 and
(ii) exclude any such lease expense of any asset or group of related assets
disposed of in one transaction or a series of related transactions during any
such fiscal quarter for the four fiscal quarters immediately preceding the date
of determination, provided the consideration received from the disposition of
such asset or group of related assets is in excess of $20,000,000.
"TOTAL DEBT TO CAPITALIZATION RATIO" shall mean, for any date of
calculation, calculated for the Parent and its Subsidiaries on a consolidated
basis (provided that if Foreign Subsidiary EBITDAR shall ever equal or exceed
15% of EBITDAR, the Total Debt to Capitalization Ratio shall be calculated for
the Parent and its Restricted Subsidiaries on a consolidated basis) in
accordance with GAAP, the ratio of (i) Total Debt to (ii) an amount equal to the
sum of (a) Total Debt, plus (b) Net Worth.
"TOTAL DEBT TO CASH FLOW COVERAGE RATIO" shall mean, for any date of
calculation, calculated for the Parent and its Subsidiaries on a consolidated
basis (provided that if Foreign Subsidiary EBITDAR shall ever equal or exceed
15% of EBITDAR, the Total Debt to Cash Flow Coverage Ratio shall be calculated
(a) for the Parent and its Restricted Subsidiaries on a consolidated basis and
(b) using Domestic EBITDAR), the ratio of Total Debt to EBITDAR for the four
fiscal quarters immediately preceding the date of calculation.
"TREASURY STOCK PURCHASES" shall mean, with respect to any Person, any
purchase, redemption or other acquisition or retirement for value by such Person
of any shares of capital stock of such Person.
"UCC" shall mean the Uniform Commercial Code of Texas, as amended from time
to time.
Section 1.2 AMENDMENTS AND RENEWALS. Each definition of an agreement in
this ARTICLE 1 shall include such agreement as amended to date, and as amended
or renewed from time to time in accordance with its terms pursuant to the
provisions of SECTION 11.11 hereof.
Section 1.3 CONSTRUCTION. The terms defined in this ARTICLE 1 (except
as otherwise expressly provided in this Agreement) for all purposes shall have
the meanings set forth in SECTION 1.1 hereof, and the singular shall include the
plural, and vice versa, unless otherwise specifically required by the context.
All accounting terms used in this Agreement which are not otherwise defined
herein shall be construed in accordance with GAAP on a consolidated basis for
the Parent and its Restricted Subsidiaries, unless otherwise expressly stated
herein.
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ARTICLE 2
ADVANCES
Section 2.1 THE ADVANCES. Each Lender severally agrees, upon the terms
and subject to the conditions of this Agreement, to make Advances to the
Borrowers from time to time in an aggregate amount not to exceed its Specified
Percentage of the Commitment less its Specified Percentage of the aggregate
amount of all Reimbursement Obligations then outstanding (assuming compliance
with all conditions to drawing) for the purposes set forth in SECTION 5.9
hereof. Subject to SECTION 2.9 hereof, Advances may be repaid and then
reborrowed. Any Advance shall, at the option of the Borrowers as provided in
SECTION 2.2 hereof (and, in the case of LIBOR Advances, subject to availability
and to the provisions of ARTICLE 9 hereof), be made as a Prime Rate Advance or a
LIBOR Advance; provided that there shall not be outstanding to any Lender, at
any one time, more than five LIBOR Advances. On the Maturity Date unless sooner
paid as provided herein, the outstanding Advances shall be repaid in full.
Section 2.2 MANNER OF BORROWING AND DISBURSEMENT.
(a) In the case of Prime Rate Advances, the Notification Agent, through an
Authorized Signatory, shall give the Administrative Lender prior to 11:00 a.m.,
Dallas, Texas time, on the date of any proposed Prime Rate Advance irrevocable
written notice, or irrevocable telephonic notice followed immediately by written
notice (provided, however, that the Notification Agent's failure to confirm any
telephonic notice in writing shall not invalidate any notice so given), of the
Borrowers' intention to borrow a Prime Rate Advance hereunder. Such notice of
borrowing shall specify the requested funding date, which shall be a Business
Day, and the amount of the proposed aggregate Prime Rate Advances to be made by
Lenders.
(b) In the case of LIBOR Advances, the Notification Agent, through an
Authorized Signatory, shall give the Administrative Lender at least three
Business Days' irrevocable written notice, or irrevocable telephonic notice
followed immediately by written notice (provided, however, that the Notification
Agent's failure to confirm any telephonic notice in writing shall not invalidate
any notice so given), of the Borrowers' intention to borrow or reborrow a LIBOR
Advance hereunder. Notice shall be given to the Administrative Lender prior to
11:00 a.m., Dallas, Texas time, in order for such Business Day to count toward
the minimum number of Business Days required. LIBOR Advances shall in all cases
be subject to availability and to ARTICLE 9 hereof. For LIBOR Advances, the
notice of borrowing shall specify the requested funding date, which shall be a
Business Day, the amount of the proposed aggregate LIBOR Advances to be made by
Lenders and the Interest Period selected by the Borrowers, provided that no such
Interest Period shall extend past the Maturity Date, or prohibit or impair the
Borrowers' ability to comply with SECTION 2.8 hereof.
(c) Subject to SECTIONS 2.1 AND 2.9 hereof, at least three Business Days
prior to each Payment Date for a LIBOR Advance, the Notification Agent, through
an Authorized Signatory, shall give the Administrative Lender irrevocable
written notice, or irrevocable telephonic notice
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followed immediately by written notice (provided, however, that the
Notification Agent's failure to confirm any telephonic notice in writing
shall not invalidate any notice so given), specifying whether all or a
portion of such LIBOR Advance outstanding on the Payment Date (i) is to be
repaid and then reborrowed in whole or in part as a LIBOR Advance, (ii) is to
be repaid and then reborrowed in whole or in part as a Prime Rate Advance, or
(iii) is to be repaid and not reborrowed; provided, however, notwithstanding
anything in this Agreement to the contrary, if on any Payment Date a Default
shall exist, such LIBOR Advance may only be reborrowed as a Prime Rate
Advance. Upon such Payment Date, such LIBOR Advance shall, subject to the
provisions hereof, be so repaid and may be reborrowed.
(d) The aggregate amount of Prime Rate Advances to be made by the Lenders
on any day shall be in a principal amount which is at least $500,000 and which
is an integral multiple of $100,000; provided, however, that such amount may
equal the unused amount of the Commitment. The aggregate amount of LIBOR
Advances having the same Interest Period and to be made by the Lenders on any
day shall be in a principal amount which is at least $1,000,000 and which is an
integral multiple of $100,000; provided, however, that such amount may equal the
unused amount of the Commitment.
(e) The Administrative Lender shall promptly notify the Lenders of each
notice received from the Notification Agent pursuant to this Section. Failure
of the Notification Agent to give any notice in accordance with SECTION 2.2(c)
hereof shall result in a repayment of any such existing LIBOR Advance on the
applicable Payment Date by a Refinancing Advance which is a Prime Rate Advance.
Each Lender shall, not later than 12:30 p.m., Dallas, Texas time, on the date of
any Advance that is not a Refinancing Advance, deliver to the Administrative
Lender, at its address set forth herein, such Lender's Specified Percentage of
such Advance in immediately available funds in accordance with the
Administrative Lender's instructions. Prior to 2:00 p.m., Dallas, Texas time,
on the date of any Advance hereunder, the Administrative Lender shall, subject
to satisfaction of the conditions set forth in ARTICLE 3, disburse the amounts
made available to the Administrative Lender by the Lenders by (i) transferring
such amounts by wire transfer pursuant to the Notification Agent's instructions,
or (ii) in the absence of such instructions, crediting such amounts to the joint
account of the Borrowers maintained with the Administrative Lender. All
Advances shall be made by each Lender according to its Specified Percentage.
Section 2.3 INTEREST.
(a) ON PRIME RATE ADVANCES.
(i) The Borrowers shall jointly and severally pay interest on the
outstanding unpaid principal amount of each Prime Rate Advance, from the
date such Advance is made until it is due (whether at maturity, by reason
of acceleration, by scheduled reduction, or otherwise) or repaid, which
shall be payable as set forth in SECTION 2.3(a)(ii) hereof, at a simple
interest rate per annum equal to the Prime Rate
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Basis for such Prime Rate Advance as in effect from time to time, provided
that interest on such Prime Rate Advance shall not exceed the Maximum
Amount.
(ii) Interest on each Prime Rate Advance shall be computed on the
basis of a year of 365 or 366 days, as applicable, for the number of days
actually elapsed, and shall be payable in arrears on each Quarterly Date
and on the Maturity Date.
(b) ON LIBOR ADVANCES.
(i) The Borrowers shall jointly and severally pay interest on the
unpaid principal amount of each LIBOR Advance, from the date such Advance
is made until it is due (whether at maturity, by reason of acceleration, by
scheduled reduction, or otherwise) or repaid, at a rate per annum equal to
the LIBOR Basis for such Advance. The Administrative Lender, whose
determination shall be conclusive, shall determine the LIBOR Basis on the
second Business Day prior to the applicable funding date and shall notify
the Borrowers, through the Notification Agent, and the Lenders of such
LIBOR Basis.
(ii) Subject to SECTION 11.9 hereof, accrued and unpaid interest on
each LIBOR Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Maturity Date; provided, however, that
if the Interest Period for such Advance exceeds three months, accrued and
unpaid interest shall also be due and payable in arrears on each Quarterly
Date during such Interest Period.
(c) INTEREST IF NO NOTICE OF SELECTION OF LIBOR ADVANCE OR INTEREST RATE
PERIOD. If the Borrowers, through the Notification Agent, fail to give the
Administrative Lender timely notice of their selection of a LIBOR Advance, or if
for any reason a determination of a LIBOR Basis for any Advance is not timely
concluded due to the fault of the Borrowers or the Notification Agent, the Prime
Rate Basis shall apply to the applicable Advance. If the Borrowers, through the
Notification Agent, fail to give the Administrative Lender timely notice of an
Interest Period for a LIBOR Advance, the Interest Period for such LIBOR Advance
shall be deemed to be three months.
(d) INTEREST AFTER AN EVENT OF DEFAULT. (i) After an Event of Default
(other than an Event of Default specified in SECTION 8.1(f) OR (g) hereof) and
during any continuance thereof, at the option of Determining Lenders, and
(ii) after an Event of Default specified in SECTION 8.1(f) OR (g) hereof and
during any continuance thereof, automatically and without any action by the
Administrative Lender or any Lender, the Obligations shall bear interest at a
rate per annum equal to the Default Rate. Such interest shall be payable on the
earlier of demand or the Maturity Date, and shall accrue until the earlier of
(i) waiver or cure (to the satisfaction of the Determining Lenders) of the
applicable Event of Default, (ii) agreement by the Lenders to rescind the
charging of interest at the Default Rate, or (iii) payment in full of the
Obligations. The Lenders shall not be required to accelerate the maturity of
the Advances, to exercise any
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other rights or remedies under the Loan Documents, or to give notice to the
Borrowers, through the Notification Agent, of the decision to charge interest
at the Default Rate. The Lenders will undertake to notify the Borrowers,
through the Notification Agent, after the effective date, of the decision to
charge interest at the Default Rate.
Section 2.4 FEES.
(a) COMMITMENT FEE. Subject to SECTION 11.9 hereof, the Borrowers agree
jointly and severally to pay to the Administrative Lender, for the ratable
account of the Lenders, a commitment fee (which shall be payable quarterly in
arrears on each Quarterly Date and on the Maturity Date) based on the daily
average unused portion of the Commitment (subject to SECTION 11.9 hereof,
computed on the basis of a year of 360-day year for the actual number of days
elapsed) at the following per annum percentages, applicable in the following
situations:
Applicability Percentage
------------- ----------
(A) If the Total Debt to Cash Flow
Coverage Ratio is greater than or
equal to 4.5 to 1 0.3750%
(B) If the Total Debt to Cash Flow
Coverage Ratio is less than 4.5 to 1
but is equal to or greater than 4.0
to 1 0.3000%
(C) If the Total Debt to Cash Flow
Coverage Ratio is less than 4.0 to 1
but is equal to or greater than 3.0
to 1 0.2500%
(D) If the Total Debt to Cash Flow
Coverage Ratio is less than 3.0 to 1
but is equal to or greater than 2.0
to 1 0.2250%
(E) If the Total Debt to Cash Flow
Coverage Ratio is less than 2.0 to 1 0.1875%
For purposes of calculation of the commitment fee, Letters of Credit outstanding
from time to time will reduce the unused portion of the Commitment. The
commitment fee shall be subject to reduction or increase, as applicable and as
set forth above, on a quarterly basis according to the performance of the Parent
as tested by the Total Debt to Cash Flow Coverage Ratio. Any such increase or
decrease in such fee shall be effective on the fifth day following the date of
receipt by the Administrative Lender of the financial statements required
pursuant to SECTION 6.1 OR 6.2 hereof, as appropriate. If such financial
statements are not received by the fifth day following the date required, the
commitment fee shall be determined as if the Total Debt to Cash Flow Coverage
Ratio is greater than or equal to 4.5 to 1 until such time as such financial
statements are received. From and including the Agreement Date to the date of
the initial adjustment of the commitment fee to be made as provided above, the
percentage shall be 0.2500%.
(b) FACILITY FEE. Subject to SECTION 11.9 hereof, the Borrowers agree
jointly and severally to pay to the Administrative Lender, for the account of
Lenders having committed in
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a commitment letter to the Administrative Lender to hold a Commitment
hereunder of (i) greater than or equal to $50,000,000, a one-time facility
fee equal to the product of (x) 0.25% times (y) the amount of each such
Lender's actual Commitment, (ii) greater than or equal to $35,000,000, but
less than $50,000,000, a one-time facility fee equal to the product of (x)
0.175% times (y) the amount of each such Lender's actual Commitment, and
(iii) less than $35,000,000, a one-time facility fee equal to the product of
(x) 0.10% times (y) the amount of each such Lender's actual Commitment. Such
fees shall be payable on the Agreement Date, and shall be fully-earned when
due and, subject to SECTION 11.9 hereof, nonrefundable when paid.
(c) OTHER FEES. Subject to SECTION 11.9 hereof, the Borrowers agree
jointly and severally to pay to the Administrative Lender, for its account and
not the account of the Lenders, the fees provided for in the letter agreement
("ADMINISTRATIVE LENDER FEE LETTER"), dated as of the Agreement Date, between
the Borrowers and the Administrative Lender on the date and in the amounts
specified therein.
Section 2.5 PREPAYMENT.
(a) VOLUNTARY PREPAYMENTS. The principal amount of any Prime Rate Advance
may be prepaid in full or in part at any time, without penalty upon two Business
Days' prior telephonic notice followed immediately by written notice (provided,
however, that the Notification Agent's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given) by an Authorized Signatory
of the Notification Agent to the Administrative Lender. LIBOR Advances may be
voluntarily prepaid upon three Business Days' prior telephonic notice followed
immediately by written notice (provided, however, that the Notification Agent's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given) by an Authorized Signatory of the Notification Agent to the
Administrative Lender, but only so long as the Borrowers concurrently reimburse
the Lenders in accordance with SECTION 2.9 hereof. Any notice of prepayment
shall be irrevocable.
(b) MANDATORY PREPAYMENT AND REPAYMENT. On or before the date of any
reduction of the Commitment, the Borrowers shall jointly and severally prepay or
repay outstanding Advances in an amount necessary to reduce the sum of
outstanding Advances and Reimbursement Obligations to an amount not greater than
the Commitment as so reduced pursuant to SECTION 2.6 hereof. The Borrowers
shall first prepay or repay all Prime Rate Advances and shall thereafter prepay
or repay LIBOR Advances. To the extent that any prepayment requires that a
LIBOR Advance be repaid on a date other than the last day of its Interest
Period, the Borrowers shall jointly and severally reimburse each Lender in
accordance with SECTION 2.9 hereof.
(c) PREPAYMENTS, GENERALLY. Any prepayment of a LIBOR Advance shall be
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial prepayment of a Prime Rate Advance shall be in a principal
amount of $100,000 or an integral multiple thereof and shall be accompanied by
interest accrued on the principal amount being prepaid.
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Section 2.6 REDUCTION OF COMMITMENTS.
(a) VOLUNTARY REDUCTION. The Borrowers shall have the right, upon not
less than 10 Business Days' notice (provided no notice shall be required for a
termination in whole of the Commitment) by an Authorized Signatory of the
Notification Agent to the Administrative Lender (if telephonic, to be confirmed
by telex or in writing on or before the date of reduction or termination), which
shall promptly notify the Lenders, to terminate or reduce the Commitment, in
whole or in part. Each voluntary reduction shall be in an aggregate amount
which is at least $5,000,000 and which is an integral multiple of $100,000, and
no voluntary reduction in the Commitment shall cause any LIBOR Advance to be
repaid prior to the last day of its Interest Period.
(b) MANDATORY REDUCTION. On the Maturity Date, the Commitment shall
automatically reduce to zero.
(c) GENERAL REQUIREMENTS. Upon any reduction of the Commitment pursuant
to this Section, the Borrowers shall jointly and severally immediately make a
repayment of applicable Advances in accordance with SECTION 2.5(b) hereof. The
Borrowers shall jointly and severally reimburse each Lender for any loss or
out-of-pocket expense incurred by each Lender in connection with any such
payment, as set forth in SECTION 2.9 hereof to the extent applicable. The
Borrowers shall not have any right to rescind any termination or reduction.
Once reduced, the Commitment may not be increased or reinstated.
Section 2.7 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE LENDER. Unless
the Administrative Lender shall have been notified by a Lender prior to the date
of any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to the
Administrative Lender, the Administrative Lender may assume that such Lender has
made such proceeds available to the Administrative Lender on such date, and the
Administrative Lender may in reliance upon such assumption (but shall not be
required to) make available to the Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Lender
by such Lender, the Administrative Lender 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 the Borrowers) together with interest thereon
in respect of each day during the period commencing on the date such amount was
available to the Borrowers and ending on (but excluding) the date the
Administrative Lender receives such amount from the Lender, calculated at a per
annum rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the
Federal Funds Rate. No Lender shall be liable for any other Lender's failure to
fund an Advance hereunder.
Section 2.8 PAYMENT OF PRINCIPAL OF ADVANCES. The Borrowers agree
jointly and severally to pay the principal amount of the Advances to the
Administrative Lender for the account of the Lenders as follows:
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(a) PRIME RATE ADVANCES. The unpaid principal amount of the Prime Rate
Advances shall be due and payable on the Maturity Date.
(b) LIBOR ADVANCES. The principal amount of each LIBOR Advance hereunder
shall be due and payable on its Payment Date and, except with respect to LIBOR
Advances falling due on the Maturity Date, such principal payment may be made by
means of a Refinancing Advance.
(c) COMMITMENT REDUCTION. On the date of any reduction of the Commitment
pursuant to SECTION 2.6 hereof, including the Maturity Date, the aggregate
amount of the Advances outstanding on such date of reduction in excess of the
Commitment as reduced minus all outstanding Reimbursement Obligations shall be
due and payable, which principal payment may not be made by means of Refinancing
Advances.
(d) MATURITY DATE. The principal amount of the Advances, all accrued
interest and fees thereon, and all other Obligations related thereto, shall be
due and payable in full on the Maturity Date.
Section 2.9 REIMBURSEMENT. Whenever any Lender shall sustain or incur
any losses or reasonable out-of-pocket expenses in connection with (a) a failure
by the Borrowers to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with SECTION 2.2 hereof (whether by reason of
the Borrowers' election not to proceed or the non-fulfillment of any of the
conditions set forth in ARTICLE 3 hereof), or (b) any prepayment for any reason
of any LIBOR Advance in whole or in part (including, without limitation, a
prepayment pursuant to SECTION 2.5(B) and ARTICLE 9 hereof), the Borrowers agree
jointly and severally to pay to any such Lender, upon its demand, an amount
sufficient to compensate such Lender for all such losses and out-of-pocket
expenses, subject to SECTION 11.9 hereof. Such Lender's good faith
determination of the amount of such losses or out-of-pocket expenses, calculated
in its usual fashion, absent manifest error, shall be binding and conclusive.
Such losses shall include, without limiting the generality of the foregoing,
lost profits and reasonable expenses incurred by such Lender in connection with
the re-employment of funds prepaid, repaid, converted or not borrowed, converted
or paid, as the case may be. Upon request of the Borrowers, through the
Notification Agent, such Lender shall provide a certificate setting forth the
amount to be paid to it by the Borrowers hereunder and calculations therefor.
Section 2.10 MANNER OF PAYMENT.
(a) Each payment (including prepayments) by the Borrowers of the principal
of or interest on the Advances, fees, and any other amount owed under this
Agreement or any other Loan Document shall be made not later than 12:00 noon
(Dallas, Texas time) on the date specified for payment under this Agreement to
the Administrative Lender at the Administrative Lender's office, in lawful money
of the United States of America constituting immediately available funds.
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(b) If any payment under this Agreement or any other Loan Document shall
be specified to be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day, unless such Business Day
falls in another calendar month, in which case payment shall be made on the
preceding Business Day. Any extension of time shall in such case be included in
computing interest and fees, if any, in connection with such payment.
(c) The Borrowers agree jointly and severally to pay principal, interest,
fees and all other amounts due under the Loan Documents without deduction for
set-off or counterclaim or any deduction whatsoever.
(d) If some but less than all amounts due from the Borrowers are received
by the Administrative Lender, the Administrative Lender shall apply such amounts
in the following order of priority: (i) to the payment of the Administrative
Lender's expenses incurred on behalf of the Lenders then due and payable, if
any; (ii) to the payment of all other fees then due and payable; (iii) to the
payment of interest then due and payable on the Advances; (iv) to the payment of
all other amounts not otherwise referred to in this clause (d) then due and
payable under the Loan Documents; and (v) to the payment of principal then due
and payable on the Advances.
Section 2.11 LIBOR LENDING OFFICES. Each Lender's initial LIBOR Lending
Office is set forth opposite its name in SCHEDULE 1 attached hereto. Each
Lender shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate as such Lender's LIBOR Lending
Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of the Borrowers for increased costs or expenses resulting solely from such
designation or transfer (except any such transfer which is made by a Lender
pursuant to SECTION 9.2 OR 9.3 hereof, or otherwise for the purpose of complying
with Applicable Law). Increased costs for expenses resulting from a change in
law occurring subsequent to any such designation or transfer shall be deemed not
to result solely from such designation or transfer.
Section 2.12 SHARING OF PAYMENTS. Any Lender obtaining a payment
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances in excess of its Specified Percentage
of all payments made by the Borrowers with respect to Advances shall purchase
from each other Lender such participation in the Advances made by such other
Lender as shall be necessary to cause such purchasing Lender to share the excess
payment pro rata according to Specified Percentages with each other Lender;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section, to the fullest
extent permitted by law, may exercise all its rights of payment (including the
right of set-off) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrowers in the amount of such participation.
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Section 2.13 CALCULATION OF LIBOR RATE. The provisions of this Agreement
relating to calculation of the LIBOR Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Lender shall be entitled to
fund and maintain its funding of all or any part of a LIBOR Advance as it sees
fit.
Section 2.14 BOOKING LOANS. Any Lender may make, carry or transfer
Advances at, to or for the account of any of its branch offices or the office of
any Affiliate.
Section 2.15 TAXES.
(a) Any and all payments by the Borrowers hereunder shall be made, in
accordance with SECTION 2.10, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, EXCLUDING, in the case
of each Lender and the Administrative Lender, taxes imposed on, based upon or
measured by its overall net income, net worth or capital, and franchise taxes,
doing business taxes or minimum taxes imposed on it, (i) by the jurisdiction
under the laws of which such Lender or the Administrative Lender (as the case
may be) is organized and in which it has its applicable lending office or any
political subdivision thereof; (ii) by any other jurisdiction, or any political
subdivision thereof, other than those imposed by reason of (A) an asserted
relation of such jurisdiction to the transactions contemplated by this
Agreement, (B) the activities of the Borrowers in such jurisdiction, or (C) the
activities in connection with the transactions contemplated by this Agreement of
a Lender or the Administrative Lender; (iii) by reason of failure by the Lender
or the Administrative Lender to comply with the requirements of paragraph (e) of
this SECTION 2.15; and (iv) in the case of any Lender, any Taxes in the nature
of transfer, stamp, recording or documentary taxes resulting from a transfer
(other than as a result of foreclosure) by such Lender of all or any portion of
its interest in this Agreement, the Notes or any other Loan Documents (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If the Borrowers shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Lender, (x) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
SECTION 2.15) such Lender or the Administrative Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (y) the Borrowers shall make such deductions and (z) the
Borrowers shall jointly and severally pay the full amount deducted to the
relevant taxation authority or other authority in accordance with Applicable
Law.
(b) In addition, the Borrowers agree jointly and severally to pay any and
all stamp and documentary taxes and any and all other excise and property taxes,
charges and similar levies (other than Taxes described in clause (iv) of the
first sentence of SECTION 2.15(a)) that arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter referred to as "OTHER
TAXES").
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(c) The Borrowers will jointly and severally indemnify each Lender and the
Administrative Lender for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this SECTION 2.15) paid by such Lender or the
Administrative Lender (as the case may be) and all liabilities (including
penalties, additions to tax, interest and reasonable expenses) arising therefrom
or with respect thereto whether or not such Taxes or Other Taxes were correctly
or legally asserted, other than penalties, additions to tax, interest and
expenses arising as a result of gross negligence on the part of such Lender or
the Administrative Lender, PROVIDED, HOWEVER, that the Borrowers shall have no
obligation to indemnify such Lender or the Administrative Lender unless and
until such Lender or the Administrative Lender shall have delivered to the
Notification Agent a certificate setting forth in reasonable detail the basis of
the Borrowers' obligation to indemnify such Lender or the Administrative Lender
pursuant to this SECTION 2.15. This indemnification shall be made within 30
days from the date such Lender or the Administrative Lender (as the case may be)
makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Notification Agent, on behalf of the Borrowers, will furnish to the
Administrative Lender the original or a certified copy of a receipt evidencing
payment thereof. If no Taxes are payable in respect of any payment hereunder,
the Notification Agent, on behalf of the Borrowers, will furnish to the
Administrative Lender a certificate from each appropriate taxing authority, or
an opinion of counsel acceptable to the Administrative Lender, in either case
stating that such payment is exempt from or not subject to Taxes, PROVIDED,
HOWEVER, that such certificate or opinion need only be given if: (i) the
Borrowers make any payment from any account located outside the United States,
or (ii) the payment is made by a payor that is not a United States Person. For
purposes of this SECTION 2.15 the terms "UNITED STATES" and "UNITED STATES
PERSON" shall have the meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the Agreement Date (or, in the case of a
Lender which becomes a party hereto pursuant to SECTION 11.6 after the
Agreement Date, the date upon which such Lender becomes a party hereto)
deliver to the Borrowers, through the Administrative Lender who shall
deliver the same to the Borrowers through the Notification Agent:
(A) if any lending office is located in the United States of America,
two (2) accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("FORM 4224"),
(B) if any lending office is located outside the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto
("FORM 1001").
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in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such lending office or lending offices under this Agreement free
from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time
or reasonably promptly thereafter but only to the extent the forms
previously delivered by it hereunder are no longer effective, deliver to
the Borrowers, through the Administrative Lender who shall deliver the same
to the Borrowers through the Notification Agent, in replacement for the
forms previously delivered by it hereunder:
(A) if such changed or additional lending office is located in the
United States of America, two (2) accurate and complete signed
originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of Form
1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such changed or additional lending office under this Agreement
free from withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in
clause (ii) above) requiring a change in the most recent Form 4224 or Form
1001 previously delivered by such Lender and if the delivery of the same be
lawful, deliver to the Borrowers, through the Administrative Lender who
shall deliver the same to the Borrowers through the Notification Agent, two
(2) accurate and complete original signed copies of Form 4224 or Form 1001
in replacement for the forms previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrowers, through the
Notification Agent, to that effect, deliver to the Borrowers such other
forms or similar documentation as may be required from time to time by any
applicable law, treaty, rule or regulation in order to establish such
Lender's tax status for withholding purposes; and
(v) it shall notify the Borrowers, through the Notification Agent,
within 30 days after any event (including an amendment to, or a change in
any applicable law or regulation or in the written interpretation thereof
by any regulatory authority or any judicial authority, or by ruling
applicable to such Lender of any governmental authority charged with the
interpretation or administration of any law) shall occur that results in
such Lender no longer being capable of receiving payments without any
deduction or withholding of United States federal income tax.
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(f) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this SECTION 2.15 shall survive the payment in full of principal and interest
hereunder.
(g) Any Lender claiming any additional amounts payable pursuant to this
SECTION 2.15 shall use its reasonable best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
lending office, if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the reasonable judgment of such Lender, be materially
disadvantageous to such Lender.
(h) Each Lender (and the Administrative Lender with respect to payments to
the Administrative Lender for its own account) agrees that (i) it will take all
reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver, by virtue of the location of any
Lender's lending office) and (ii) otherwise cooperate with the Borrowers to
minimize amounts payable by the Borrowers under this SECTION 2.15; PROVIDED,
HOWEVER, the Lenders and the Administrative Lender shall not be obligated by
reason of this SECTION 2.15(H) to contest the payment of any Taxes or Other
Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Subject to the foregoing, to the extent the Borrowers pay sums pursuant to this
SECTION 2.15 and the Lender or the Administrative Lender receives a refund of
any or all of such sums, such refund shall be applied to reduce any amounts then
due and owing under this Agreement or, to the extent that no amounts are due and
owing under this Agreement at the time such refunds are received, the party
receiving such refund shall promptly pay over all such refunded sums to the
Borrowers, provided that no Default or Event of Default is in existence at such
time.
Section 2.16 LETTERS OF CREDIT.
(a) THE LETTER OF CREDIT FACILITY. The Borrowers, through the
Notification Agent, may request the Issuing Bank, on the terms and conditions
hereinafter set forth, to issue, and the Issuing Bank shall, if so requested,
issue, letters of credit (the "LETTERS OF CREDIT") for the joint account of the
Borrowers or the joint account of any Borrower and any of its Restricted
Subsidiaries, from time to time on any Business Day from the date of the initial
Advance until the Maturity Date in an aggregate maximum amount (assuming
compliance with all conditions to drawing) not to exceed at any time outstanding
the lesser of (i) $50,000,000 (the "LETTER OF CREDIT FACILITY"), and (ii) the
sum of (A) the Commitment MINUS (B) the aggregate principal amount of Advances
then outstanding. No Letter of Credit shall have an expiration date (including
all rights of renewal) later than the earlier of (i) the Maturity Date or
(ii) one year after the date of issuance thereof. The Borrowers, together with
any of their Restricted Subsidiaries which may be an account party, shall be
jointly and severally liable for the repayment of any Reimbursement Obligation.
Immediately upon the issuance of each Letter of Credit (or on the Agreement
Date, with respect to Existing Letters of Credit), the Issuing Bank shall be
deemed to have sold and transferred to each Lender, and each Lender shall be
deemed
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to have purchased and received from the Issuing Bank, in each case
irrevocably and without any further action by any party, an undivided interest
and participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrowers under this Agreement in respect thereof in an
amount equal to the product of (x) such Lender's Specified Percentage times
(y) the maximum amount available to be drawn under such Letter of Credit
(assuming compliance with all conditions to drawing). Within the limits of the
Letter of Credit Facility, and subject to the limits referred to above, the
Borrowers, through the Notification Agent, may request the issuance of Letters
of Credit under this SECTION 2.16(a), repay any Advances resulting from drawings
thereunder pursuant to SECTION 2.16(c) and request the issuance of additional
Letters of Credit under this SECTION 2.16(a).
(b) REQUEST FOR ISSUANCE. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 a.m. (Dallas time) on the third Business Day
prior to the date of the proposed issuance of such Letter of Credit, by the
Borrowers, through the Notification Agent, to the Issuing Bank, which shall give
to the Administrative Lender and each Lender prompt notice thereof by telex,
telecopier or cable. Each Letter of Credit shall be issued upon notice given in
accordance with the terms of any separate agreement between the Borrowers and
the Issuing Bank in form and substance reasonably satisfactory to the Borrowers
and the Issuing Bank providing for the issuance of Letters of Credit pursuant to
this Agreement and containing terms and conditions not inconsistent with this
Agreement (a "LETTER OF CREDIT AGREEMENT"), PROVIDED that if any such terms and
conditions are inconsistent with this Agreement, this Agreement shall control.
Each such notice of issuance of a Letter of Credit (a "NOTICE OF ISSUANCE")
shall be by telex, telecopier or cable, specifying therein, in the case of a
Letter of Credit, the requested (A) date of such issuance (which shall be a
Business Day), (B) maximum amount of such Letter of Credit, (C) expiration date
of such Letter of Credit, (D) name and address of the beneficiary of such Letter
of Credit, (E) form of such Letter of Credit and (F) such other information as
shall be required pursuant to the relevant Letter of Credit Agreement. If the
requested terms of such Letter of Credit are acceptable to the Issuing Bank in
its reasonable discretion, the Issuing Bank will, upon fulfillment of the
applicable conditions set forth in ARTICLE 3 hereof, make such Letter of Credit
available to the Borrowers, through the Notification Agent, at its office
referred to in SECTION 11.1 or as otherwise agreed with the Notification Agent
in connection with such issuance.
(c) PAYMENT AND REIMBURSEMENT. The payment by the Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of an Advance, which shall bear
interest at the Prime Rate Basis, in the amount of such draft (but without any
requirement for compliance with the conditions set forth in ARTICLE 3 hereof).
In the event that a payment under any Letter of Credit is not reimbursed by the
Borrowers by 11:00 a.m. (Dallas time) on the first Business Day after notice of
such drawing has been given by the Issuing Bank to the Borrowers, through the
Notification Agent, the Issuing Bank shall promptly notify Administrative Lender
and each other Lender. Each such Lender shall, on the first Business Day
following such notification, make an Advance, which shall bear interest at the
Prime Rate Basis, and shall be used to repay the applicable portion of the
Issuing Bank's Advance with respect to such Letter of Credit, in an amount equal
to the
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amount of its participation in such drawing for application to reimburse
the Issuing Bank (but without any requirement for compliance with the applicable
conditions set forth in ARTICLE 3 hereof) and shall make available to the
Administrative Lender for the account of the Issuing Bank, by deposit at the
Administrative Lender's office, in same day funds, the amount of such Advance.
In the event that any Lender fails to make available to the Administrative
Lender for the account of the Issuing Bank the amount of such Advance on the
date specified in the notice from the Issuing Bank to such Lender, the Issuing
Bank shall be entitled to recover such amount on demand from such Lender
together with interest thereon from such date until paid at a rate per annum
equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds
Rate.
(d) INCREASED COSTS. If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit or guarantees issued by, or assets held by, or deposits in or for the
account of, the Issuing Bank or any Lender or (ii) impose on the Issuing Bank or
any Lender any other condition regarding this Agreement or such Lender or any
Letter of Credit, and the result of any event referred to in the preceding
clause (i) or (ii) shall be to increase the cost to the Issuing Bank of issuing
or maintaining any Letter of Credit or to any Lender of purchasing any
participation therein or making any Advance pursuant to SECTION 2.16(c), then,
upon demand by the Issuing Bank or such Lender, the Borrowers shall, jointly and
severally, subject to SECTION 11.9 hereof, pay to the Issuing Bank or such
Lender, from time to time as specified by the Issuing Bank or such Lender,
additional amounts that shall be sufficient to compensate the Issuing Bank or
such Lender for such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrowers, through the Notification Agent, by
the Issuing Bank or such Lender, shall include in reasonable detail the basis
for the demand for additional compensation and shall be conclusive and binding
for all purposes, absent manifest error. The obligations of the Borrowers under
this SECTION 2.16(D) shall survive termination of this Agreement. The Issuing
Bank or any Lender claiming any additional compensation under this
SECTION 2.16(D) shall use reasonable efforts (consistent with legal and
regulatory restrictions) to reduce or eliminate any such additional compensation
which may thereafter accrue and which efforts would not, in the sole discretion
of the Issuing Bank or such Lender, be otherwise disadvantageous.
(e) OBLIGATIONS ABSOLUTE. The obligations of the Borrowers under this
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Advance pursuant to SECTION 2.16(C) shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement, any
other Loan Document, any Letter of Credit Agreement, any Letter of Credit
or any other agreement or instrument relating thereto (collectively, the
"L/C RELATED DOCUMENTS");
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(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrowers in respect of
the Letters of Credit or any Advance pursuant to SECTION 2.16(c) or any
other amendment or waiver of or any consent to departure from all or any of
the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Borrowers may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, any
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C Related Documents or any
unrelated transaction;
(iv) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect,
except to the extent that any payment by the Issuing Bank against any such
statement or other document shall be as a result of the Issuing Bank's
gross negligence or willful misconduct;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the terms
of the Letter of Credit, except for any payment made upon the Issuing
Bank's gross negligence or willful misconduct;
(vi) any exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any
Subsidiary Guaranty or any other guarantee, for all or any of the
Obligations of the Borrowers in respect of the Letters of Credit or any
Advance pursuant to SECTION 2.16(c); or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available to,
or a discharge of, the Borrowers or a guarantor, other than the Issuing's
Bank gross negligence or wilful misconduct.
(f) COMPENSATION FOR LETTERS OF CREDIT.
(i) CREDIT FEES. Subject to SECTION 11.9 hereof, the Borrowers shall
jointly and severally pay to the Administrative Lender for the account of
each Lender a credit fee (which shall be payable quarterly in arrears on
each Quarterly Date and on the Maturity Date) on the average daily amount
available for drawing under all outstanding Letters of Credit (computed,
subject to SECTION 11.9 hereof, on the basis of a 360-day year for the
actual number of days elapsed) at the following per annum percentages,
applicable in the following situations:
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Applicability Percentage
------------- ----------
(A) If the Total Debt to Cash Flow 1.50%
Coverage Ratio is greater than or
equal to 4.5 to 1
(B) If the Total Debt to Cash Flow 1.25%
Coverage Ratio is less than 4.5 to 1
but is greater than or equal to 4.0
to 1
(C) If the Total Debt to Cash Flow 1.00%
Coverage Ratio is less than 4.0 to 1
but is greater than or equal to 3.0
to 1
(D) If the Total Debt to Cash Flow 0.75%
Coverage Ratio is less than 3.0 to 1
but is greater than or equal to 2.0
to 1
(E) If the Total Debt to Cash Flow 0.50%
Coverage Ratio is less than 2.0 to 1
(ii) ADJUSTMENT OF CREDIT FEE. The credit fee payable in respect of
the Letters of Credit shall be subject to reduction or increase, as
applicable and as set forth in the table in (i) above, on a quarterly basis
according to the performance of the Parent as tested by the Total Debt to
Cash Flow Coverage Ratio. Any such increase or reduction in such fee shall
be effective on the fifth day following the date of receipt of the
financial statements required pursuant to SECTION 6.1 OR 6.2 hereof, as
appropriate. If such financial statements are not received by the fifth
day following the date required, the fee payable in respect of the Letters
of Credit shall be determined as if the Total Debt to Cash Flow Coverage
Ratio is greater than or equal to 4.50 to 1 until such time as such
financial statements are received. From and including the Agreement Date
to the date of the initial adjustment of the Credit Fee to be made as
provided above, the percentage shall be 1.00%.
(iii) ISSUANCE FEE. Subject to SECTION 11.9 hereof, the Borrowers
shall jointly and severally pay to the Administrative Lender for the sole
account of the Issuing Bank an issuance fee (which fee shall be payable
quarterly in arrears on each Quarterly Date and on the Maturity Date) equal
to 0.125% per annum on the average daily amount available for drawing under
all outstanding Letters of Credit, and computed, subject to SECTION 11.9
hereof, on the basis of a 360-day year for the actual number of days
elapsed.
(g) L/C CASH COLLATERAL ACCOUNT.
(i) Upon the occurrence of an Event of Default and demand by the
Administrative Lender pursuant to SECTION 8.2(C), the Borrowers will
promptly pay,
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jointly and severally, to the Administrative Lender in
immediately available funds an amount equal to 100% of the maximum amount
then available to be drawn under the Letters of Credit then outstanding.
Any amounts so received by the Administrative Lender shall be deposited by
the Administrative Lender in a deposit account maintained by the Issuing
Bank (the "L/C CASH COLLATERAL ACCOUNT").
(ii) As security for the payment of all Reimbursement Obligations and
for any other Obligations, the Borrowers hereby grant, convey, assign,
pledge, set over and transfer to the Administrative Lender (for the benefit
of the Issuing Bank and Lenders), and creates in the Administrative
Lender's favor (for the benefit of the Issuing Bank and Lenders) a Lien in,
all money, instruments and securities at any time held in or acquired in
connection with the L/C Cash Collateral Account, together with all proceeds
thereof. The L/C Cash Collateral Account shall be under the sole dominion
and control of the Administrative Lender and the Borrowers shall have no
right to withdraw or to cause the Administrative Lender to withdraw any
funds deposited in the L/C Cash Collateral Account except as otherwise
provided in SECTION 2.16(g)(III). At any time and from time to time, upon
the Administrative Lender's request delivered to the Notification Agent,
the Borrowers promptly shall execute and deliver any and all such further
instruments and documents, including UCC financing statements, as may be
necessary, appropriate or desirable in the Administrative Lender's judgment
to obtain the full benefits (including perfection and priority) of the
security interest created or intended to be created by this paragraph (ii)
and of the rights and powers herein granted. The Borrowers shall not
create or suffer to exist any Lien on any amounts or investments held in
the L/C Cash Collateral Account other than the Lien granted under this
paragraph (ii) and Liens arising by operation of Law and not by contract
which secure amounts not yet due and payable.
(iii) The Administrative Lender shall (A) apply any funds in the L/C
Cash Collateral Account on account of Reimbursement Obligations when the
same become due and payable if and to the extent that the Borrowers shall
fail directly to pay such Reimbursement Obligations, (B) after the Maturity
Date, apply any proceeds remaining in the L/C Cash Collateral Account FIRST
to pay any unpaid Obligations then outstanding hereunder and THEN to refund
any remaining amount to the Borrowers, and (C) provided no Default or Event
of Default shall be in existence, upon demand by the Borrowers, return any
funds in the L/C Cash Collateral Account to the Borrowers.
(iv) The Borrowers, through the Notification Agent, no more than once
in any calendar month, may direct the Administrative Lender to invest the
funds held in the L/C Cash Collateral Account (so long as the aggregate
amount of such funds exceeds any relevant minimum investment requirement)
in (A) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof and
(B) one or more other types of investments permitted by the Determining
Lenders, in each case with such maturities as the Borrowers, through the
Notification Agent, with the consent of the Determining Lenders, may
specify, pending application of such funds on account of Reimbursement
Obligations or on account of other
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Obligations, as the case may be. In the
absence of any such direction from the Borrowers, the Administrative Lender
shall invest the funds held in the L/C Cash Collateral Account (so long as
the aggregate amount of such funds exceeds any relevant minimum investment
requirement) in one or more types of investments with the consent of the
Determining Lenders with such maturities as the Borrowers, through the
Notification Agent, with the consent of the Determining Lenders, may
specify, pending application of such funds on account of Reimbursement
Obligations or on account of other Obligations, as the case may be. All
such investments shall be made in the Administrative Lender's name for the
account of the Lenders. The Borrowers recognize that any losses or taxes
with respect to such investments shall be borne solely by the Borrowers,
and the Borrowers agree to hold the Administrative Lender and the Lenders
harmless from any and all such losses and taxes. Administrative Lender may
liquidate any investment held in the L/C Cash Collateral Account in order
to apply the proceeds of such investment on account of the Reimbursement
Obligations (or on account of any other Obligation then due and payable, as
the case may be) without regard to whether such investment has matured and
without liability for any penalty or other fee incurred (with respect to
which the Borrowers hereby agree to reimburse the Administrative Lender) as
a result of such application.
(v) The Borrowers shall jointly and severally pay to the
Administrative Lender the fees customarily charged by the Issuing Bank with
respect to the maintenance of accounts similar to the L/C Cash Collateral
Account.
Section 2.17 EXTENSION OF MATURITY DATE. The Borrowers, through the
Notification Agent, may notify the Administrative Lender in writing by each
September 30 four years prior to the Maturity Date then in effect, commencing
September 30, 1997, of its desire to extend the Maturity Date for an additional
12 months beyond the then present Maturity Date. If such notice is given by the
Borrowers, the Administrative Lender, by each October 31 immediately following
each such September 30 deadline for notice, will notify the Borrowers, through
the Notification Agent, in writing of the Lenders' decision whether to extend
the Maturity Date. Extension of the Maturity Date shall be at the sole option
and discretion of the Lenders, and the decision to extend the Maturity Date
shall require the consent of all Lenders. If either the Borrowers or the
Administrative Lender fail to give notice within the time prescribed above, the
Maturity Date shall be the then present Maturity Date. An extension of the
Maturity Date pursuant to this SECTION 2.17 shall not require any renewal Note
or amendment of or a supplement to this Agreement or any other Loan Document
unless otherwise required by the Administrative Lender.
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ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE AND THE LETTERS
OF CREDIT. The obligation of each Lender to make the initial Advance and the
obligation of the Issuing Bank to issue the initial Letter of Credit is subject
to (i) receipt by the Administrative Lender of each of the following, in form
and substance satisfactory to each Lender, with a copy (except for the Notes)
for each Lender and (ii) satisfaction of the following conditions, except as
otherwise waived by each Lender:
(a) A loan certificate of each Borrower certifying as to the accuracy of
its representations and warranties in the Loan Documents, certifying that no
Default has occurred, and including a certificate of incumbency with respect to
each Authorized Signatory, and including (i) a copy of the Articles of
Incorporation of such Borrower, certified to be true, complete and correct by
the secretary of state of its state of incorporation, (ii) a copy of the By-Laws
of such Borrower, as in effect on the Agreement Date, (iii) a copy of the
resolutions of such Borrower authorizing it to execute, deliver and perform this
Agreement, the Notes and the other Loan Documents to which it is a party, and
(iv) a copy of a certificate of good standing and a certificate of existence for
its state of incorporation and each state in which it is qualified to do
business;
(b) A certificate of an officer acceptable to the Lenders of each
Restricted Subsidiary of the Parent (other than Mediplex and Inactive
Subsidiaries), certifying (i) as to the incumbency of the officers signing the
Loan Documents to which it is a party, (ii) that the copy of its Articles of
Incorporation, certified as true, complete and correct by the secretary of state
of its state of incorporation attached to the prior officer's certificate
delivered by such Restricted Subsidiary is in full force and effect except for
any amendments attached thereto, and (iii) that the copy of its By-Laws attached
to the prior officer's certificate delivered by such Restricted Subsidiary is in
full force and effect without amendment except as attached thereto, and
including (x) a copy of the resolutions authorizing it to execute, deliver and
perform the Loan Documents to which it is a party, and (y) a copy of a
certificate of good standing and a certificate of existence for its state of
incorporation;
(c) duly executed Notes, payable to the order of each Lender and in an
amount for each Lender equal to its Specified Percentage of the Commitment;
(d) opinions of counsel to the Borrowers and their Subsidiaries addressed
to the Lenders and in form and substance satisfactory to the Lenders, dated the
Agreement Date;
(e) reimbursement for the Administrative Lender for Special Counsel's
reasonable fees and expenses rendered as of the date set forth in the invoice of
Special Counsel;
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(f) the facility fee and other fees as required pursuant to
SECTIONS 2.4(b) AND (c) hereof, respectively;
(g) a Subsidiary Guaranty, duly executed and completed by each Restricted
Subsidiary, dated as of the Agreement Date;
(h) duly executed and completed Pledge Agreements, together with all stock
certificates of any Subsidiaries to the extent pledged, owned by the Parent and
Parent's Restricted Subsidiaries (other than Inactive Subsidiaries), together
with blank, undated stock powers;
(i) duly executed and completed Security Agreements of the Parent and
CareerStaff Management, Inc., together with original notes evidencing the
indebtedness pledged thereby, duly endorsed in favor of Administrative Lender;
(j) original stock certificates representing 66% of the outstanding
capital stock of Sun International, together with blank, undated stock powers;
(k) a duly executed and completed Account Security Agreement of Parent and
each Restricted Subsidiary party to any lease agreement granting a contractual
landlord's lien to the lessor of such leased facility in accounts receivable
generated by such leased facility.
(l) the items set forth in the Disclosure Letter shall be satisfactory to
the Lenders;
(m) UCC-1 Financing Statements as the Administrative Lender may request
relating to the stock subject to the Pledge Agreements and the proceeds thereof;
and
(n) in form and substance satisfactory to the Lenders and Special Counsel,
such other documents, instruments, reports and certificates as the
Administrative Lender or any Lender may reasonably require prior to execution of
this Agreement.
Section 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES AND LETTERS OF CREDIT.
The obligation of each Lender to make each Advance hereunder (including the
initial Advance) and the obligation of the Issuing Bank to issue each Letter of
Credit (including the initial Letter of Credit) is subject to fulfillment of the
following conditions immediately prior to or contemporaneously with each such
Advance or issuance:
(a) With respect to Advances (other than Refinancing Advances) and each
issuance of a Letter of Credit, all of the representations and warranties of the
Borrowers under this Agreement, which, pursuant to SECTION 4.2 hereof, are made
at and as of the time of such Advance or issuance, shall be true and correct at
such time in all material respects, both before and after giving effect to the
application of the proceeds of the Advance or issuance;
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(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency delivered in the Borrowers' loan certificates pursuant
to SECTION 3.1(A) or as subsequently modified and reflected in a certificate of
incumbency delivered to the Administrative Lender. The Lenders may, without
waiving this condition, consider it fulfilled and a representation by the
Borrowers made to such effect if no written notice to the contrary, dated on or
before the date of such Advance or issuance, is received by the Administrative
Lender from the Notification Agent on behalf of the Borrowers prior to the
making of such Advance or issuance;
(c) There shall not exist a Default hereunder, with respect to Advances
(other than Refinancing Advances) and with respect to issuance of each Letter of
Credit, or an Event of Default, with respect to any Refinancing Advance, and,
with respect to each Advance (other than a Refinancing Advance) and with respect
to issuance of each Letter of Credit, the Administrative Lender shall have
received written or telephonic certification thereof by an Authorized Signatory
of the Notification Agent on the behalf of the Borrowers (which certification,
if telephonic, shall be followed promptly by written certification);
(d) The aggregate Advances and amount available for draws under Letters of
Credit, after giving effect to such proposed Advance or Letter of Credit, shall
not exceed the Commitment; and
(e) The Administrative Lender shall have received all such other
certificates, reports, statements, opinions of counsel or other documents as the
Administrative Lender or any Lender may reasonably request.
Each request by the Notification Agent on behalf of the Borrowers to the
Administrative Lender or the Issuing Bank, as appropriate, for an Advance or the
issuance of a Letter of Credit shall constitute a representation and warranty by
the Borrowers as of the date of the making of such Advance or the issuance of
such Letter of Credit that all the conditions contained in this SECTION 3.2 have
been satisfied.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants to each Lender as follows:
(a) ORGANIZATION; POWER; QUALIFICATION. As of the Agreement Date, the
respective jurisdiction of incorporation or organization and percentage
ownership by the Parent or another of the Parent's Subsidiaries of the
Subsidiaries listed on SCHEDULE 4 are true and correct. Each of the Parent
and its Subsidiaries is a corporation or other legal Person duly organized,
validly existing and in good standing under the laws of its state of
organization. Each of the Parent and
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its Restricted Subsidiaries has the legal power and authority
to own its properties and to carry on its business as now being and hereafter
proposed to be conducted. Each of the Parent and its Restricted Subsidiaries is
duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization except where the failure
to be so qualified or authorized would not have a Material Adverse Effect.
(b) AUTHORIZATION. Each Borrower has corporate power and has taken all
necessary legal action to authorize it to borrow hereunder. Each of the Parent
and its Restricted Subsidiaries has the legal power and has taken all necessary
legal action to execute, deliver and perform the Loan Documents to which it is
party in accordance with the terms thereof, and to consummate the transactions
contemplated thereby. Each Loan Document has been duly executed and delivered
by the Borrower or the Restricted Subsidiary executing it. Each of the Loan
Documents to which the Parent and its Restricted Subsidiaries are a party is a
legal, valid and binding respective obligation of the Parent or such Restricted
Subsidiaries, as applicable, enforceable in accordance with its terms, subject,
as to enforcement of remedies, to the following qualifications: (i) equitable
principles generally, and (ii) Debtor Relief Laws (insofar as any such law
relates to the bankruptcy, insolvency or similar event of the Parent or any of
its Restricted Subsidiaries).
(c) COMPLIANCE WITH OTHER LOAN DOCUMENTS AND CONTEMPLATED TRANSACTIONS.
The execution, delivery and performance by the Parent and its Restricted
Subsidiaries of the Loan Documents to which they are respectively a party, and
the consummation of the transactions contemplated thereby, do not and will not
(i) require any consent or approval not already obtained, (ii) violate any
Applicable Law, (iii) conflict with, result in a breach of, or constitute a
default under the articles of incorporation or by-laws of the Parent or any of
its Restricted Subsidiaries, or under any Necessary Authorization, indenture,
agreement or other instrument, to which the Parent or any of its Restricted
Subsidiaries is a party or by which they or their respective properties may be
bound, or (iv) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by the Parent or
any of its Restricted Subsidiaries, except Permitted Liens.
(d) BUSINESS. The Parent and its Restricted Subsidiaries are engaged
solely in the business of providing health care services, including nursing
care, rehabilitation therapy and other specialized health care services, and
pharmaceutical products and services.
(e) LICENSES, ETC. All Necessary Authorizations, which if not obtained
could be reasonably expected to have a Material Adverse Effect, have been duly
obtained, and are in full force and effect without any known conflict with the
rights of others and free from any unduly burdensome restrictions. The Parent
and its Restricted Subsidiaries are and will continue to be in compliance in all
material respects with all provisions thereof. No circumstance exists which
might impair the utility of the Necessary Authorization or the right to renew
such Necessary Authorization the effect of which would have a Material Adverse
Effect. No Necessary Authorization, which if suspended, canceled or revoked
could reasonably be expected to have
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a Material Adverse Effect, is the subject of any pending or, to the best of
the Borrowers' knowledge, threatened challenge, suspension, cancellation or
revocation.
(f) COMPLIANCE WITH LAW. The Parent and its Restricted Subsidiaries are
in compliance in all respects with all Applicable Laws, except as set forth in
the Disclosure Letter and except where the failure to so comply would not have a
Material Adverse Effect. Except as set forth in the Disclosure Letter, the
Parent and its Restricted Subsidiaries have duly and timely filed all reports,
statements and filings that are required to be filed by any of them with any
Governmental Authority, and are in all material respects in compliance
therewith, including without limitation the rules and regulations of any
Governmental Authority relating to the operation of the Parent's and each of its
Restricted Subsidiary's business. The Parent and its Restricted Subsidiaries
have obtained all appropriate approvals and consents of, and have made all
filings with, the Governmental Authorities in connection with the operation of
the Parent's and each of its Restricted Subsidiary's business where the failure
to obtain such consents and approvals could have a Material Adverse Effect.
(g) TITLE TO PROPERTIES. The Parent and its Restricted Subsidiaries have
good and indefeasible title to, or a valid leasehold interest in, all of their
material assets. None of their assets are subject to any Liens, except
Permitted Liens. No financing statement or other Lien filing (except relating
to Permitted Liens) is on file in any state or jurisdiction that names the
Parent or any of its Restricted Subsidiaries as debtor or covers (or purports to
cover) any assets of the Parent or any of its Restricted Subsidiaries. The
Parent and its Restricted Subsidiaries have not signed any such financing
statement or filing, nor any security agreement authorizing any Person to file
any such financing statement or filing.
(h) LITIGATION. Except as reflected on SCHEDULE 3 hereto and except as
set forth in the Disclosure Letter, there is no action, suit or proceeding
pending against, or, to the best of the Borrowers' knowledge, threatened against
the Borrowers, or in any other manner relating directly and adversely to the
Parent or any of its Restricted Subsidiaries, or any of their properties, in any
court or before any arbitrator of any kind or before or by any governmental
body, which, if adversely determined, could have a Material Adverse Effect.
(i) TAXES. All federal, state and other tax returns of the Parent and its
Restricted Subsidiaries required by law to be filed have been duly filed and all
federal, state and other taxes, assessments and other governmental charges or
levies upon the Parent, its Restricted Subsidiaries or any of their respective
properties, income, profits and assets, which are due and payable, have been
paid, unless the same are being diligently contested in good faith by
appropriate proceedings, with adequate reserves established therefor, and no
Lien (other than a Permitted Lien) has attached and no foreclosure, distraint,
sale or similar proceedings have been commenced. The charges, accruals and
reserves on the books of the Parent and its Restricted Subsidiaries in respect
of their respective taxes are, in the judgment of the Borrowers, adequate.
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(j) FINANCIAL STATEMENTS; MATERIAL LIABILITIES. The Parent has furnished
or caused to be furnished to the Lenders copies of its December 31, 1995,
financial statements, which are prepared in good faith and complete in all
material respects and present fairly in accordance with GAAP the financial
position of the Parent and its Restricted Subsidiaries as at such dates and the
results of operations for the periods then ended. The Parent and its Restricted
Subsidiaries taken as a whole have no material liabilities, contingent or
otherwise, nor material losses, except as set forth in the December 31, 1995,
financial statements.
(k) NO ADVERSE CHANGE. Since December 31, 1995, no event or
circumstances has occurred or arisen that could have a Material Adverse Effect
except for those set forth in the Disclosure Letter.
(l) ERISA. None of the Parent or its Controlled Group maintains or
contributes to any Plan other than those disclosed to the Administrative Lender
in writing. Each Plan (other than any Multiemployer Plan) has been administered
in all material respects in accordance with the terms of the documents pursuant
to which it has been established and is maintained, and is in compliance in all
material respects with the applicable provisions of ERISA, the Code, and any
applicable Federal law, rule or regulation. With respect to each Plan (other
than any Multiemployer Plan) of the Parent and each member of its Controlled
Group, all reports required under ERISA or any other Applicable Law to be filed
with any governmental authority, the failure of which to file could reasonably
result in liability of the Parent or any member of its Controlled Group in
excess of $500,000, have been duly filed. All such reports are true and correct
in all material respects as of the date given. No Pension Plan has been
terminated under Section 4041(c) of ERISA, no accumulated funding deficiency (as
defined in Section 412(a) of the Code) has been incurred (without regard to any
waiver granted under Section 412 of the Code), no funding waiver from the
Internal Revenue Service has been received or requested and no ERISA Event has
occurred which could reasonably be expected to have a Material Adverse Effect.
The present value of the benefit liabilities, as defined in Title IV of ERISA,
of each Pension Plan (other than a Multiemployer Plan) does not exceed by more
than $3,000,000 the present value of the assets of each such Pension Plan as of
the most recent valuation date using each such Plan's actuarial assumptions at
such date. There are no pending, or to the best of the Parent's knowledge
threatened, claims, lawsuits or actions (other than routine claims for benefits
in the ordinary course) asserted or instituted with respect to any Plan or its
related trust or against any fiduciary of a Plan with respect to the operation
of such Plan the result of which could reasonably be expected to have a Material
Adverse Effect. None of the Parent or any member of its Controlled Group has
withdrawn from any Multiemployer Plan except as described in writing to the
Administrative Lender prior to the Agreement Date, nor has incurred or
reasonably expects to incur (A) any liability under Title IV of ERISA (other
than premiums due under Section 4007 of ERISA to the PBGC), (B) any withdrawal
liability (and no event has occurred which with the giving of notice under
Section 4219 of ERISA would result in such liability) under Section 4201 of
ERISA as a result of a complete or partial withdrawal (within the meaning of
Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any liability
under Section 4062 of ERISA to the PBGC or to a trustee appointed under Section
4042 of ERISA. None of the Parent or any member of its Controlled Group
maintains or has established
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any Plan, which is a material welfare benefit plan within the meaning of
Section 3(1) of ERISA and which provides for continuing benefits or coverage
for any participant or any beneficiary of any participant after such
participant's termination of employment, except (i) as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA")
and the regulations thereunder, (ii) for a Plan under which the liabilities
are fully funded through one or more insurance contracts with an independent
third party insurance company, or (iii) for a Plan under which the unfunded
liabilities do not exceed $3,000,000. Each of Parent and its Controlled
Group which maintains a Plan which is a welfare benefit plan within the
meaning of Section 3(1) of ERISA has complied in all material respects with
any applicable notice and continuation requirements of COBRA and the
regulations thereunder. None of the Parent or any member of its Controlled
Group maintains, or to the knowledge of the Parent and each member of its
Controlled Group, has established, or has ever participated in a multiple
employer welfare benefit arrangement within the meaning of Section 3(40)(A)
of ERISA.
(m) COMPLIANCE WITH REGULATIONS G, T, U AND X. Neither Borrower is
engaged principally or as one of its important activities in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System, and no part of the proceeds of the Advances or the
Letters of Credit will be used directly or indirectly to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock. No assets of the Parent and its Restricted
Subsidiaries are margin stock. None of the Parent and its Restricted
Subsidiaries nor any agent acting on their behalf, have taken or will knowingly
take any action which might cause this Agreement or any other Loan Documents to
violate any regulation of the Board of Governors of the Federal Reserve System
or to violate the Securities Exchange Act of 1934, in each case as in effect now
or as the same may hereafter be in effect.
(n) GOVERNMENTAL REGULATION. The Parent and its Restricted Subsidiaries
are not required to obtain any Necessary Authorization that has not already been
obtained from, or effect any material filing or registration that has not
already been effected with, any Governmental Authority in connection with the
execution and delivery of this Agreement or any other Loan Document, or the
performance thereof (other than (a) any enforcement of remedies by the
Administrative Lender on behalf of the Lenders and (b) filings of certain
Collateral Documents under the UCC), in accordance with their respective terms,
including any borrowings hereunder.
(o) ABSENCE OF DEFAULT. The Parent and its Restricted Subsidiaries are in
compliance in all material respects with all of the provisions of their articles
of incorporation and by-laws or other applicable organizational documents, and
no event has occurred or failed to occur, which has not been remedied or waived,
the occurrence or non-occurrence of which constitutes, or which with the passage
of time or giving of notice or both would constitute, (i) a Default or an Event
of Default or (ii) a default by the Parent or any of its Restricted Subsidiaries
under any material indenture, agreement or other instrument, or any judgment,
decree or order to which
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the Parent or any of its Restricted Subsidiaries or by which they or any of
their material properties is bound.
(p) INVESTMENT COMPANY ACT. No Borrower is required to register under the
provisions of the Investment Company Act of 1940, as amended. Neither the
entering into or performance by the Borrowers of this Agreement nor the issuance
of the Notes violates any provision of such act or requires any consent,
approval, or authorization of, or registration with, the Securities and Exchange
Commission or any other governmental or public body of authority pursuant to any
provisions of such act.
(q) ENVIRONMENTAL MATTERS. Each of the Parent and its Restricted
Subsidiaries is in compliance with all Applicable Environmental Laws in effect
in each jurisdiction where it is presently doing business or has done business,
and in which the failure so to comply could have a Material Adverse Effect.
Neither the Parent nor any of its Restricted Subsidiaries is subject to any
liability under any Applicable Environmental Laws that, in the aggregate, could
have a Material Adverse Effect. Neither the Parent nor any of its Restricted
Subsidiaries has received any (a) notice from any Governmental Authority by
which any of its present or previously-owned or leased real properties has been
designated, listed, or identified in any manner by any Governmental Authority
charged with administering or enforcing any Applicable Environmental Law as a
Hazardous Substance disposal or removal site, "Super Fund" clean-up site, or
candidate for removal or closure pursuant to any Applicable Environmental Law,
(b) notice of any Lien arising under or in connection with any Applicable
Environmental Law that has attached to any revenues of, or to, any of its owned
or leased real properties, or (c) summons, citation, notice, directive, letter,
or other communication, written or oral, from any Governmental Authority
concerning any intentional or unintentional action or omission by the Parent or
such Restricted Subsidiary in connection with its ownership or leasing of any
real property resulting in the releasing, spilling, leaking, pumping, pouring,
emitting, emptying, dumping, or otherwise disposing of any Hazardous Substance
into the environment resulting in any material violation of an Applicable
Environmental Law, in each case in (a), (b) and (c) immediately preceding where
the effect of which could have a Material Adverse Effect.
(r) CERTAIN FEES. No broker's, finder's or other fee or commission will
be payable by either Borrower (other than to the Lenders or their Affiliates
hereunder) with respect to the making of the Commitment or the Advances
hereunder or the issuance of any Letters of Credit. The Borrowers jointly and
severally agree to indemnify and hold harmless the Administrative Lender and
each Lender from and against any claims, demand, liability, proceedings, costs
or expenses asserted with respect to or arising in connection with any such fees
or commissions.
(s) NECESSARY AUTHORIZATIONS. Except as set forth in the Disclosure
Letter, no event has occurred which permits (or with the passage of time would
permit) the revocation or termination of any Necessary Authorization, or which
could result in the imposition of any restriction thereon of such a nature that
could reasonably be expected to have a Material Adverse Effect.
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(t) DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement which has been furnished to any Lender by or on behalf
of the Parent or any of its Restricted Subsidiaries in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statement contained herein and therein not
misleading at the time it was furnished. There is no fact or omission known to
any Borrower and not known to the public generally that could reasonably be
expected to materially adversely affect the assets or business of the Parent and
its Restricted Subsidiaries, or in the future could reasonably be expected (so
far as the Borrowers can now foresee) to have a Material Adverse Effect, that
has not been disclosed in writing pursuant to this Agreement, the Disclosure
Letter, or in the documents, certificates and statements furnished to the
Lenders by or on behalf of the Borrowers prior to the date hereof in connection
with the transaction contemplated hereby.
(u) SOLVENCY. Each of the Borrowers is, and the Parent and its
Subsidiaries on a consolidated basis are, Solvent.
(v) INACTIVE SUBSIDIARIES. The Inactive Subsidiaries do not have Total
Assets equal to or greater than $1,000,000 in aggregate amount or total gross
revenues per fiscal year equal to or greater than $1,000,000 in aggregate
amount.
(w) CONSOLIDATED BUSINESS ENTITY. The Parent and its Restricted
Subsidiaries are engaged in the business set forth in SECTION 4.1(d) hereof.
These operations require financing on a basis such that the credit supplied can
be made available from time to time to the Parent and various of its Restricted
Subsidiaries, as required for the continued successful operation of the Parent
and its Restricted Subsidiaries as a whole. The Borrowers have requested
Lenders to make credit available hereunder primarily for the purpose of
financing the operations of the Parent and its Restricted Subsidiaries. The
Parent and its Restricted Subsidiaries expect to derive benefit (and the boards
of directors of the Parent and its Restricted Subsidiaries have determined that
their Restricted Subsidiaries may reasonably expect to derive benefit), directly
or indirectly, from the credit extended by Lenders hereunder, both in their
separate capacities and as members of the group of companies, since the
successful operation and condition of the Parent and its Restricted Subsidiaries
is dependent on the continued successful performance of the functions of the
group as a whole.
Section 4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance and each Letter of Credit, and each shall be true
and correct when made, except to the extent (a) previously fulfilled in
accordance with the terms hereof, (b) applicable to a specific date or otherwise
subsequently inapplicable, or (c) previously waived in writing by the
Determining Lenders with respect to any particular factual circumstance. All
such representations and warranties shall survive, and not be waived by, the
execution hereof by any Lender, any investigation or inquiry by any Lender, or
by the making of any Advance under this Agreement.
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ARTICLE 5
GENERAL COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. The Parent
shall, and shall cause each of its Restricted Subsidiaries to:
(a) except as otherwise permitted by SECTION 7.4 hereof, preserve and
maintain, or timely obtain and thereafter preserve and maintain, its existence,
rights, franchises, licenses, authorizations, consents, privileges and all other
Necessary Authorizations from federal, state and local governmental bodies and
any tribunal (regulatory or otherwise), the loss of which could have a Material
Adverse Effect; and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, unless the failure to do
so could not have a Material Adverse Effect.
Section 5.2 BUSINESS; COMPLIANCE WITH APPLICABLE LAW. The Parent and
its Restricted Subsidiaries shall (a) engage solely in the businesses set forth
in SECTION 4.1(d) hereof, and (b) comply in all material respects with the
requirements of all Applicable Law, including, without limitation, all
Applicable Environmental Laws.
Section 5.3 MAINTENANCE OF PROPERTIES. The Parent shall, and shall
cause each of its Restricted Subsidiaries to, maintain or cause to be maintained
all its properties (whether owned or held under lease) in reasonably good
repair, working order and condition, ordinary wear and tear excepted, taken as a
whole, and from time to time make or cause to be made all appropriate repairs,
renewals, replacements, additions, betterments and improvements thereto.
Section 5.4 ACCOUNTING METHODS AND FINANCIAL RECORDS. The Parent shall,
with respect to its consolidated financial statements, maintain a system of
accounting established and administered in accordance with GAAP, keep adequate
records and books of account in which complete entries will be made and all
transactions reflected in accordance with GAAP, and keep accurate and complete
records of its respective assets. The Parent and each of its Restricted
Subsidiaries shall maintain a fiscal year ending on December 31.
Section 5.5 INSURANCE. The Parent shall, and shall cause each of its
Restricted Subsidiaries to, maintain insurance from responsible companies in
such amounts and against such risks as shall be customary and usual in the
industry for companies of similar size and capability or as the Lenders may
reasonably request from time to time. Each Borrower shall maintain key-person
life insurance in amounts and with respect to executives of such Borrower as the
Lenders shall require.
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Section 5.6 PAYMENT OF TAXES AND CLAIMS. The Parent shall, and shall
cause each of its Restricted Subsidiaries to, pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or its income or
properties prior to the date on which penalties attach thereto, and all lawful
material claims for labor, materials and supplies which, if unpaid, might become
a Lien upon any of its properties; except that no such tax, assessment, charge,
levy or claim need be paid which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the books and records of such Person in accordance with GAAP, but only
so long as no Lien (other than a Permitted Lien) shall attach with respect
thereto and no foreclosure, distraint, sale or similar proceedings shall have
been commenced. The Parent shall, and shall cause each of its Restricted
Subsidiaries to, timely file all information returns required by federal, state
or local tax authorities.
Section 5.7 VISITS AND INSPECTIONS. Subject to Applicable Law dealing
with patient confidentiality, the Parent shall, and shall cause each of its
Restricted Subsidiaries to, promptly permit representatives of the
Administrative Lender or any Lender from time to time to (a) visit and inspect
the properties of the Parent and each of its Restricted Subsidiaries as often as
the Administrative Lender or any Lender shall reasonably deem advisable,
(b) inspect and make extracts from and copies of the Parent's and each of its
Restricted Subsidiaries' books and records, and (c) discuss with the Parent's
and each of its Restricted Subsidiaries' directors, officers, employees and
auditors its business, assets, liabilities, financial positions, results of
operations and business prospects; provided, however, any information obtained
by the Administrative Lender or any Lender shall be handled pursuant to the
confidentiality provisions of SECTION 11.14 hereof. Prior to the occurrence of
an Event of Default, all such visits and inspections shall be conducted during
normal business hours after reasonable notice. Following the occurrence and
during the continuance of an Event of Default, such visits and inspections shall
be conducted at any time requested by the Administrative Lender or any Lender.
Section 5.8 PAYMENT OF INDEBTEDNESS. Subject to SECTION 5.6 hereof, the
Parent shall, and shall cause each of its Restricted Subsidiaries to, pay its
Indebtedness when and as the same becomes due, other than amounts (other than
the Obligations) duly and diligently disputed in good faith.
Section 5.9 USE OF PROCEEDS. The Borrowers shall use the proceeds of
Advances and Letters of Credit for acquisitions, working capital, capital
expenditures, and for other general corporate purposes, to repay the
Indebtedness outstanding under the Prior Credit Agreement, and to repay other
Indebtedness to the extent not prohibited hereby.
Section 5.10 INDEMNITY.
(a) The Borrowers jointly and severally agree to defend, protect,
indemnify and hold harmless the Administrative Lender, each Lender, each of
their respective Affiliates, and each of their respective (including such
Affiliates') officers, directors, employees, agents, attorneys, shareholders and
consultants (including, without limitation, those retained in connection with
the satisfaction or attempted satisfaction of any of the conditions set forth
herein) of each of the
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foregoing (collectively, "INDEMNITEES") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel (including reasonable allocated costs and expenses
of in-house counsel) for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees (whether direct, indirect or consequential
and whether based on any federal, state, or local laws and regulations, under
common law or at equitable cause, or on contract, tort or otherwise, arising
from or connected with the past, present or future operations of the
Borrowers or its predecessors in interest, or the past, present or future
environmental condition of property of the Parent or any of its Subsidiaries
or the violation or asserted violation by the Parent or any of its
Subsidiaries of any Applicable Law, including any Applicable Environmental
Law), in any manner relating to or arising out of this Agreement, the Loan
Documents, or any act, event or transaction or alleged act, event or
transaction relating or attendant thereto, the making of any participations
in the Advances and the management of the Advances, INCLUDING IN CONNECTION
WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY NEGLIGENCE OF
ADMINISTRATIVE LENDER OR ANY LENDER (other than those matters raised
exclusively by a participant against the Administrative Lender or any Lender
and not the Borrowers), or the use or intended use of the proceeds of the
Advances hereunder, or in connection with any investigation of any potential
matter covered hereby, but excluding (i) any claim or liability from an
Indemnitee that arises as the result of the gross negligence or willful
misconduct of any such Indemnitee, as finally judicially determined by a
court of competent jurisdiction, and (ii) matters raised by one Lender
against another Lender or by any shareholders of a Lender against a Lender
or its management (collectively, "INDEMNIFIED MATTERS"). To the extent that
any Indemnified Matter involves one or more Indemnitees, such Indemnitees
shall use the same legal counsel unless any Indemnitee in its reasonable
discretion determines that conflicts exist or may arise in connection with
such representation.
(b) In addition, the Borrowers jointly and severally shall periodically,
upon request, reimburse each Indemnitee for its reasonable legal and other
actual expenses (including the cost of any investigation and preparation)
incurred in connection with any Indemnified Matter. If for any reason the
foregoing indemnification is unavailable to any Indemnitee or insufficient to
hold any Indemnitee harmless with respect to Indemnified Matters, then the
Borrowers shall jointly and severally contribute to the amount paid or payable
by such Indemnitee as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by the Borrowers and the Borrowers' stockholders on the one hand and such
Indemnitee on the other hand but also the relative fault of the Borrowers and
such Indemnitee, as well as any other relevant equitable considerations. The
reimbursement, indemnity and contribution obligations under this Section shall
be in addition to any liability which the Borrowers may otherwise have, shall
extend upon the same terms and conditions to each Indemnitee, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Borrowers, the Administrative Lender, the
Lenders and all other Indemnitees. This SECTION 5.10 shall survive any
termination of this Agreement and payment of the Obligations.
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Section 5.11 SALES OF ASSETS. Immediately upon the receipt of any Net
Cash Proceeds from any sale or disposition of assets permitted by
(a) SECTIONS 7.4(a)(iv), 7.4(a)(vi) or 7.16 hereof, the Borrowers shall prepay
outstanding Advances in a principal amount equal to such Net Cash Proceeds and
(b) SECTION 7.4(a)(vii) hereof, the Borrower shall prepay outstanding Advances
in a principal amount equal to the remainder of (i) such net Cash Proceeds minus
(ii) $1,000,000.
Section 5.12 CAREERSTAFF SUBSIDIARIES. Within 15 days following any
event causing either Borrower or any Restricted Subsidiary to own 100% of the
capital stock of, or other equity interest in, any CareerStaff Subsidiary, such
Borrower or Restricted Subsidiary, as applicable, shall cause the capital stock
of, or other equity interest in, such CareerStaff Subsidiary to be pledged to
the Administrative Lender pursuant to a Pledge Agreement and take such other
steps as may be necessary or reasonably requested by Administrative Lender in
order to cause Administrative Lender to have a perfected, first priority
security interest in such capital stock or equity interest.
Section 5.13 RESTRICTED SUBSIDIARIES. Within 15 days following the
Acquisition or formation of any Restricted Subsidiary (other than Inactive
Subsidiaries), the Borrowers shall cause (a) the capital stock of, or other
equity interest in, such Restricted Subsidiary to be pledged to the
Administrative Lender pursuant to a Pledge Agreement and take such other steps
as may be necessary or reasonably requested by Administrative Lender in order to
cause Administrative Lender to have a perfected, first priority security
interest in such capital stock or equity interest and (b) such Restricted
Subsidiary to become party to a Subsidiary Guaranty and deliver such evidence of
corporate authority as may be reasonably requested by Administrative Lender in
connection therewith.
Section 5.14 PRIOR CREDIT AGREEMENT. Simultaneously with the
satisfaction of the conditions precedent to the making of the initial Advance
and the issuance of the initial Letter of Credit, the aggregate principal amount
of outstanding Advances under the Prior Credit Agreement and all interest and
fees and all other payments accrued under the Prior Credit Agreement shall be
paid in full.
Section 5.15 LANDLORD LIENS. The Parent shall seek to obtain a landlord
lien waiver or subordination, in form and substance satisfactory to the
Administrative Lender, from the lessor of any leased facility which has been
granted a security interest in the accounts receivable relating to such leased
facility and which security interest is not, by its terms, subordinated to the
lien of the Administrative Lender granted by the Account Security Agreement.
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ARTICLE 6
INFORMATION COVENANTS
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrowers shall furnish or cause to be furnished to
each Lender:
Section 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION. Within 60
days after the end of each fiscal quarter (other than the last fiscal quarter of
each fiscal year), consolidated and consolidating balance sheets of the Parent
and its Restricted Subsidiaries as at the end of such quarter and the related
consolidated and consolidating statements of income and consolidated and
consolidating statements of changes in cash for such quarter and for the elapsed
portion of the year ended with the last day of such quarter and all of which
shall be certified by the chief financial officer of the Parent, to be, in his
or her opinion, complete and correct in all material respects and to present
fairly, in accordance with GAAP, the financial position and results of
operations of the Parent and its Restricted Subsidiaries as at the end of and
for such period, and for the elapsed portion of the year ended with the last day
of such period, subject only to normal year-end adjustments.
Section 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION; CERTIFICATE OF
NO DEFAULT.
(a) Within 105 days after the end of each fiscal year, a copy of (i) the
consolidated and consolidating balance sheets of the Parent and its Restricted
Subsidiaries, as of the end of the current and prior fiscal years and
(ii) consolidated and consolidating statements of earnings, consolidated and
consolidating statements of changes in shareholders' equity, and consolidated
and consolidating statements of changes in cash as of and through the end of
such fiscal year, all of which (A) consolidated and consolidating statements are
prepared in accordance with GAAP and (B) consolidated statements are certified
by independent certified public accountants acceptable to the Lenders (the
Lenders agree that Xxxxxx Xxxxxxxx & Co. is acceptable to the Lenders), whose
opinion shall be in scope and substance in accordance with generally accepted
auditing standards and shall be unqualified.
(b) Simultaneously with the delivery of the statements required by this
SECTION 6.2, a letter from the Parent's public accountants certifying that no
Default was detected during the examination of the Parent and its Restricted
Subsidiaries, and authorizing the Parent to deliver such financial statements
and opinion thereon to the Administrative Lender and Lenders pursuant to this
Agreement.
(c) As soon as available, but in any event within 105 days following the
end of each fiscal year, a copy of an annual consolidated and consolidating
operating budget of the Parent and its Restricted Subsidiaries for the
succeeding fiscal year.
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Section 6.3 COMPLIANCE CERTIFICATES. At the time financial statements
are furnished pursuant to SECTIONS 6.1 AND 6.2 hereof, a Compliance Certificate:
(a) setting forth at the end of such period, a calculation of the Total
Debt to Cash Flow Coverage Ratio, as well as certifications and arithmetical
calculations required to establish whether the Parent and its Restricted
Subsidiaries were in compliance with the requirements of SECTIONS 7.1(f),
7.3(j), 7.5, 7.9, 7.10 AND 7.11 hereof, which shall be substantially in the form
of EXHIBIT D hereto;
(b) setting forth the aggregate amount of outstanding Advances and
Reimbursement Obligations; and
(c) stating that, to the best of his or her knowledge after due inquiry,
no Default has occurred as at the end of such period, or if a Default has
occurred, disclosing each such Default and its nature, when it occurred, whether
it is continuing and the steps being taken with respect to such Default.
Section 6.4 COPIES OF OTHER REPORTS AND NOTICES.
(a) Promptly upon their becoming available, a copy of (i) all material
reports or letters submitted to the Parent or any of its Restricted Subsidiaries
by accountants in connection with any annual, interim or special audit,
including without limitation any report prepared in connection with the annual
audit referred to in SECTION 6.2 hereof, and, if requested by the Administrative
Lender, any other comment letter submitted to management in connection with any
such audit, (ii) each financial statement, report, notice or proxy statement
sent by the Parent or any of its Restricted Subsidiaries to stockholders
generally, (iii) each regular, periodic or other report and any registration
statement (other than statements on Form S-8) or prospectus (or material written
communication in respect of any thereof) filed by the Parent or any of its
Restricted Subsidiaries with any securities exchange, with the Securities and
Exchange Commission or any successor agency, and (iv) all press releases
concerning material financial aspects of the Parent or any of its Restricted
Subsidiaries;
(b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of Indebtedness or other security of the Parent or any of its
Restricted Subsidiaries in excess of $3,000,000 in the aggregate has given
notice or taken any action with respect to a breach, failure to perform, claimed
default or event of default thereunder, (ii) any party to any Operating Lease
has given notice or taken any action with respect to a breach, failure to
perform, claimed default or event of default thereunder, (iii) any party to any
Capitalized Lease Obligations has given notice or taken any action with respect
to a breach, failure to perform, claimed default or event of default thereunder,
(iv) any occurrence or non-occurrence of any event which constitutes or which
with the passage of time or giving of notice or both could constitute a material
breach by the Parent or any of its Restricted Subsidiaries under any material
agreement or instrument other than this Agreement to which the Parent or any of
its Restricted Subsidiaries is a party or by which any of their properties may
be bound, or (v) any event,
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circumstance or condition which could reasonably be expected to have a
Material Adverse Effect, a written notice specifying the details thereof (or
the nature of any claimed default or event of default) and what action is
being taken or is proposed to be taken with respect thereto;
(c) Promptly upon receipt thereof, copies of any notices received from any
Governmental Authority relating to any order, ruling, law, information or policy
that relates to a breach of or noncompliance with Applicable Laws and which is
reasonably likely to (i) result in the payment of money by the Parent or any of
its Restricted Subsidiaries in an amount of $3,000,000 or more in the aggregate,
(ii) otherwise have a Material Adverse Effect, or (iii) result in the loss or
suspension of any material Necessary Authorization;
(d) Promptly upon receipt from any governmental agency, or any government,
political subdivision or other entity, any material notice, correspondence,
hearing, proceeding or order regarding or affecting the Parent, any of its
Restricted Subsidiaries, or any of their properties or businesses; and
(e) From time to time and promptly upon each request, such data,
certificates, reports, statements, opinions of counsel, documents or further
information regarding the assets, business, liabilities, financial position,
projections, results of operations or business prospects of the Parent and its
Restricted Subsidiaries, as the Administrative Lender or any Lender may
reasonably request.
Section 6.5 NOTICE OF LITIGATION, DEFAULT AND OTHER MATTERS. Prompt
notice of the following events after any Borrower has knowledge or notice
thereof:
(a) The commencement of all proceedings and investigations by or before
any Governmental Authority, and all actions and proceedings in any court or
before any arbitrator involving claims for damages (including punitive damages)
in excess of $3,000,000 in the aggregate (after deducting the amount with
respect to which the Parent or any of its Restricted Subsidiaries is insured),
against or in any other way relating directly to the Parent, any of its
Restricted Subsidiaries, or any of their properties or businesses;
(b) Promptly upon the happening of any condition or event which
constitutes a Default, a written notice specifying the nature and period of
existence thereof and what action is being taken or is proposed to be taken with
respect thereto; and
(c) Any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or prospective business
of the Parent or any of its Restricted Subsidiaries, other than changes in the
ordinary course of business which have not had and are not likely to have a
Material Adverse Effect.
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Section 6.6 ERISA REPORTING REQUIREMENTS.
(a) Promptly and in any event (i) within 30 days after the Parent or any
member of its Controlled Group knows or has reason to know that any ERISA Event
described in clause (a) of the definition of ERISA Event or any event described
in Section 4063(a) of ERISA with respect to any Plan of the Parent or any member
of its Controlled Group has occurred, and (ii) within 10 days after the Parent
or any member of its Controlled Group knows or has reason to know that any other
ERISA Event with respect to any Plan of the Parent or any member of its
Controlled Group has occurred or a request for a minimum funding waiver under
Section 412 of the Code with respect to any Plan of the Parent or any member of
its Controlled Group, a written notice describing such event and describing what
action is being taken or is proposed to be taken with respect thereto, together
with a copy of any notice of event that is given to the PBGC;
(b) If requested by the Administrative Lender, promptly and in any event
within 30 days after the filing thereof by the Parent or any member of its
Controlled Group with the United States Department of Labor or the Internal
Revenue Service, copies of each annual report (including Schedule B thereto, if
applicable) with respect to each Plan of which the Parent or any member of its
Controlled Group is the "plan sponsor";
(c) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Parent or any member of its Controlled
Group receives from the Plan Sponsor (as defined by Section 4001(a)(10) of
ERISA) of any Multiemployer Plan concerning the assessment of withdrawal
liability pursuant to Section 4219 or 4202 of ERISA, and a statement from the
chief financial officer of the Parent or such member of its Controlled Group
setting forth details as to the events giving rise to such potential withdrawal
liability and the action which the Parent or such member of its Controlled Group
is taking or proposes to take with respect thereto;
(d) Notification within 30 days of any material increases in the benefits
of any existing Plan which is not a Multiemployer Plan, or the establishment of
any new Plans, or the commencement of contributions to any Plan to which the
Parent or any member of its Controlled Group was not previously contributing
which would in either case, result in a liability to the Parent or to any member
of its Controlled Group in excess of $3,000,000;
(e) Notification within three Business Days after the Parent or any member
of its Controlled Group knows or has reason to know that the Parent or any such
member of its Controlled Group has filed or intends to file a notice of intent
to terminate any Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA or that the PBGC intends to terminate any Pension Plan
or to have a trustee appointed to administer any Pension Plan, and a copy of any
such notice received from or filed with the PBGC; and
(f) Promptly after receipt of written notice of commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board,
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bureau, agency or instrumentality, domestic or foreign, affecting the Parent
or any member of its Controlled Group with respect to any Plan or foreign
employee benefit plan, except those which, in the aggregate, if adversely
determined could not have a Material Adverse Effect.
ARTICLE 7
NEGATIVE COVENANTS
So long as any of the Obligations are outstanding and unpaid or the
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 7.1 INDEBTEDNESS. The Parent shall not, and shall not permit
any of its Restricted Subsidiaries to, create, assume, incur or otherwise become
or remain obligated in respect of, or permit to be outstanding, or suffer to
exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable incurred in the ordinary course of business;
(c) Endorsement in the ordinary course of business of negotiable
instruments for deposit or collection;
(d) Indebtedness under agreements existing on the Agreement Date which is
described on SCHEDULE 6 hereto (but no increases in the principal amount
permitted to be borrowed thereunder), including renewals or refinancings (but no
increases except with respect to accounts payable, accrued compensation, accrued
property and payroll taxes, accrued workers' compensation, other accrued
liabilities, income taxes payable, and deferred current and long-term taxes)
thereof; provided, that no such renewal or refinancing shall result in any
change to the terms of the Indebtedness being renewed or refinanced which the
Lenders deem materially adverse to them (including, without limitation, relating
to events of default, acceleration rights, interest rates, maturity date,
amortization, subordination, covenants, prohibition against amending any Loan
Document and definitions with respect thereto);
(e) Subordinated Debt incurred after the Agreement Date, provided that
such proposed Subordinated Debt does not have any scheduled or mandatory
principal or sinking fund payment due and payable prior to October 1, 2002,
(ii) such proposed Subordinated Debt is on terms and conditions acceptable to
the Determining Lenders, and (iii) no Default or Event of Default shall exist
prior to and after giving effect to such proposed Subordinated Debt;
(f) Guaranties by the Borrowers of any of their respective Restricted
Subsidiaries' obligations (A) as lessee under lease agreements and (B) in
respect of Indebtedness otherwise permitted pursuant to this SECTION 7.1;
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(g) the Guaranty by any of the Parent's Restricted Subsidiaries (other
than Mediplex) of Mediplex's obligations under the Convertible Indenture,
provided, that such Guaranty shall be validly and effectively subordinated to
the prior payment in full of the Obligations on terms and pursuant to
documentation approved in writing by the Determining Lenders;
(h) Indebtedness evidenced by the Intercompany Line of Credit;
(i) Guaranties by the Borrowers and Indebtedness pursuant to letters of
credit in respect of obligations of Foreign Subsidiaries as lessees under
Operating Leases (such Guaranty obligation to be calculated as an amount equal
to the product of rental expense for the four fiscal quarters immediately
preceding the date of calculation subject to the terms of the Guaranty
multiplied by six), provided the aggregate amount of such Guaranties and letters
of credit incurred after the Agreement Date, together with Investments made
after the Agreement Date pursuant to SECTION 7.3(j) which are not in entities
organized under the laws of the United States or any state thereof and
Acquisition Consideration for all Foreign Subsidiaries acquired after the
Agreement Date pursuant to SECTION 7.5(c) hereof, shall not exceed $50,000,000;
and
(j) other Indebtedness not to exceed in aggregate amount 5% of the Total
Assets of the Parent and its Restricted Subsidiaries on a consolidated basis.
Section 7.2 LIENS. The Parent shall not, and shall not permit any of
(a) its Restricted Subsidiaries to, create, assume, incur, permit or suffer to
exist, directly or indirectly, any Lien on any of its assets, whether now owned
or hereafter acquired, except Permitted Liens, or (b) its Subsidiaries to,
create, assume, incur, permit or suffer to exist, directly or indirectly, any
Lien on any of the capital stock of, or other equity interest in, any Subsidiary
of such Subsidiary. Except with respect to this Agreement, the Parent shall
not, and shall not permit any of (a) its Restricted Subsidiaries to, enter into,
or be subject to, a Negative Pledge (except for Negative Pledges covering assets
subject to Permitted Liens), or (b) its Subsidiaries to, enter into, or be
subject to, a Negative Pledge with respect to any of the capital stock of, or
other equity interest in, any Subsidiary of such Subsidiary.
Section 7.3 INVESTMENTS. The Parent shall not, and shall not permit any
of its Restricted Subsidiaries to, make any Investment, except that the Parent
may purchase or otherwise acquire and own:
(a) Marketable, direct obligations of, or guaranteed by, the United States
of America or any agency thereof and maturing in three years or less of the date
of purchase;
(b) Commercial paper maturing not more than 1 year from the date of
creation and having a rating of P-1/A-1 or equivalent by Xxxxx'x Investors
Service or Standard & Poor's Ratings Services, a Division of XxXxxx-Xxxx, Inc.,
a New York corporation, respectively;
(c) Accounts receivable that arise in the ordinary course of business and
are payable on standard terms or which have been converted to a note receivable;
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(d) Investments in demand deposit accounts, certificates of deposit and
time deposits maturing within 1 year from the date of acquisition, in each case
issued by (i) a bank organized or licensed under the laws of the United States
of America or any state thereof and having capital and surplus of at least
$500,000,000, or (ii) Sunwest Bank of Albuquerque, N.A., and its Affiliates;
(e) Investments in existence on the Agreement Date which are described on
SCHEDULE 5 hereto;
(f) the Liberty Loan, provided that the Liberty Note is pledged in favor
of the Administrative Lender pursuant to a Security Agreement;
(g) Investments by Parent in one or more Restricted Subsidiaries (other
than Inactive Subsidiaries); PROVIDED THAT, (i) any such Restricted Subsidiary
is subject to the provisions hereof, (ii) any such Restricted Subsidiary is or
immediately becomes party to a Subsidiary Guaranty and the Intercompany Line of
Credit, (iii) all of the capital stock of, or other equity interest in, such
Restricted Subsidiary (other than CareerStaff Subsidiaries unless otherwise
required by SECTION 5.12) is pledged pursuant to a Pledge Agreement, as
applicable, and (iv) to the extent such Investment is in the form of a loan or
advance, the obligation to repay such loan or advance is recorded on the books
and records of such Restricted Subsidiary in form and with detail satisfactory
to the Lenders;
(h) Investments by CareerStaff Management, Inc. in one or more CareerStaff
Subsidiaries; PROVIDED THAT, (i) such CareerStaff Subsidiary is subject to the
provisions hereof, (ii) such CareerStaff Subsidiary is or immediately becomes
party to a Subsidiary Guaranty, (iii) the indebtedness owing to CareerStaff
Management, Inc. by such CareerStaff Subsidiary is evidenced by a promissory
note which has been delivered to, and endorsed in favor of, Administrative
Lender and (iv) to the extent required by SECTION 5.12, all of the capital stock
of, or other equity interest in, such CareerStaff Subsidiary is pledged pursuant
to a Pledge Agreement;
(i) Assisted Living Investments after the Agreement Date not to exceed
$50,000,000 in aggregate amount; and
(j) other Investments made after the Agreement Date primarily related to
the business of providing healthcare services, including nursing care,
rehabilitation therapy and other specialized healthcare services, the
consideration for which does not exceed $35,000,000 in aggregate amount;
provided, however, to the extent that any Investments made pursuant to this
SECTION 7.3(j) are in entities which are not organized under the laws of the
United States or any state thereof, the aggregate amount of such Investments in
entities not organized under the laws of the United States or any state thereof,
together with the aggregate Acquisition Consideration for all Foreign
Subsidiaries acquired after the Agreement Date pursuant to SECTION 7.5(c) hereof
and obligations incurred after the Agreement Date in respect of Guaranties and
letters of credit pursuant to SECTION 7.1(i) hereof, shall not exceed
$50,000,000.
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Section 7.4 LIQUIDATION, DISPOSITION OF ASSETS, MERGER, NEW
SUBSIDIARIES. The Parent shall not, and shall not permit any of its Restricted
Subsidiaries to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up; or sell, lease, abandon, transfer or
otherwise dispose of all or any part of its assets, properties or business,
other than (i) immaterial assets sold or otherwise disposed of in the ordinary
course of business, (ii) sales by the Parent or any of its Restricted
Subsidiaries of assets to the Parent or any other of its Restricted
Subsidiaries, (iii) liquidations or dissolutions of Foreign Subsidiaries or
Inactive Subsidiaries, (iv) sales of the facilities set forth on SCHEDULES 7 AND
8 hereto, (v) sales of assets permitted by Section 7.16 hereof, (vi) voluntary
dissolutions or liquidations of CareerStaff Subsidiaries, or (vii) other sales,
leases, transfers or other dispositions of assets for full and fair
consideration pursuant to arm's-length transactions and having a book value not
in excess of $20,000,000 in aggregate amount per fiscal year;
(b) enter into any merger or consolidation except that (i) any of the
Parent's Restricted Subsidiaries may merge with the Parent (provided that the
Parent shall be the continuing or surviving corporation), (ii) any of the
Parent's Restricted Subsidiaries may merge with one or more of the Parent's
other Restricted Subsidiaries (provided that if Mediplex is merging with any
other Restricted Subsidiary, Mediplex shall be the continuing or surviving
corporation), (iii) any of the Parent's Restricted Subsidiaries may merge or
consolidate with any other corporation, provided that, immediately after giving
effect to such merger or consolidation (A) the continuing or surviving
corporation shall constitute a Restricted Subsidiary and (B) no Default or Event
of Default shall exist hereunder, and (iv) the Parent may merge or consolidate
with any other corporation, provided that immediately after giving effect to
such merger or consolidation (A) the Parent shall be the continuing or surviving
corporation and (B) no Default or Event of Default shall exist hereunder; or
(c) create or acquire any Subsidiary, except for Acquisitions by the
Parent and its Restricted Subsidiaries permitted by SECTION 7.5 hereof.
Section 7.5 ACQUISITIONS. The Parent shall not, and shall not permit
any of its Restricted Subsidiaries to, make, in one or more transactions, any
(a) Acquisition during the fiscal year ending on December 31, 1996, (i) if the
Acquisition is not of a Restricted Subsidiary or of the assets of a domestic
entity, (ii) if the Acquisition Consideration therefor equals or exceeds
$65,000,000, (iii) if the sum of the Acquisition Consideration therefor,
together with the Acquisition Consideration given for all other such
Acquisitions by the Parent and its Restricted Subsidiaries during such period,
equals or exceeds $120,000,000, and (iv) unless such Restricted Subsidiary
becomes a party to a Subsidiary Guaranty and the Intercompany Line of Credit and
all the capital stock of, or other equity interest in, such Restricted
Subsidiary (other than CareerStaff Subsidiaries unless otherwise required by
SECTION 5.12) and its Restricted Subsidiaries (other than CareerStaff
Subsidiaries unless otherwise required by SECTION 5.12) shall be pledged
pursuant to a Pledge Agreement; or (b) Acquisition during any fiscal year ending
after December 31, 1996, (i) if the Acquisition is not of a Restricted
Subsidiary or of the assets of a domestic entity, (ii) if the Acquisition
Consideration therefor equals or exceeds
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$65,000,000, (iii) if the sum of the Acquisition Consideration therefor,
together with the Acquisition Consideration given for all other such
Acquisitions during such fiscal year exceeds $100,000,000, and (iv) unless
such Restricted Subsidiary becomes a party to a Subsidiary Guaranty and the
Intercompany Line of Credit and all the capital stock of, or other equity
interest in, such Restricted Subsidiary (other than CareerStaff Subsidiaries
unless otherwise required by SECTION 5.12) and its Subsidiaries (other than
CareerStaff Subsidiaries unless otherwise required by SECTION 5.12) shall be
pledged pursuant to a Pledge Agreement; or (c) Acquisition of a Foreign
Subsidiary, unless (x) the Acquisition Consideration for all such
Acquisitions occurring after the Agreement Date, together with the aggregate
amount of obligations incurred after the Agreement Date in respect of
Guaranties and letters of credit pursuant to SECTION 7.1(i) hereof and
Investments made after the Agreement Date pursuant to SECTION 7.3(j) which
are not in entities organized under the laws of the United States or any
state thereof, does not exceed $50,000,000 and (y) an amount of the capital
stock of such Foreign Subsidiary necessary to cause the Administrative Lender
to have a security interest in, and pledge of, all of the capital stock of,
or other equity interest in, such Foreign Subsidiary owned by the pledgor or
such lesser amount such that in any case not more than 66% of all of the
capital stock of, or other equity interest in, such Foreign Subsidiary, shall
be pledged pursuant to a Foreign Subsidiary Pledge Agreement.
Section 7.6 RESTRICTED PAYMENTS. The Parent shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, make any
Restricted Payment other than Permitted Restricted Payments; provided, however,
that no Permitted Restricted Payments set forth in clause (iv) of the definition
thereof shall be made if, immediately after giving effect to any such payments,
a Default or Event of Default would exist hereunder.
Section 7.7 AFFILIATE TRANSACTIONS. The Parent shall not, and shall not
permit any of its Restricted Subsidiaries to, at any time engage in any
transaction with an Affiliate, nor make an assignment or other transfer of any
of its assets or properties to any Affiliate, on terms materially less
advantageous to the Parent or such Restricted Subsidiary than would be the case
if such transaction had been effected with a non-Affiliate (other than advances
to employees in the ordinary course of business).
Section 7.8 COMPLIANCE WITH ERISA. The Parent shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, or permit
any member of its Controlled Group to directly or indirectly, (a) terminate any
Plan so as to result in any material (in the opinion of the Determining Lenders)
liability to the Parent or any member of its Controlled Group taken as a whole,
(b) permit to exist any ERISA Event, or any other event or condition which
presents the risk of a material (in the opinion of the Determining Lenders)
liability of the Parent or any member of its Controlled Group taken as a whole,
(c) make a complete or partial withdrawal (within the meaning of Section 4201 of
ERISA) from any Multiemployer Plan so as to result in any material (in the
opinion of the Determining Lenders) liability to the Parent or any member of its
Controlled Group taken as a whole, (d) enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder except in the
ordinary course of business consistent with past practice which could result in
any material (in the opinion of the
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Xxxxxxxxxxx Xxxxxxx) liability to the Parent or any member of its Controlled
Group taken as a whole, or (e) permit the present value of all benefit
liabilities, as defined in Title IV of ERISA, under each Pension Plan (using
the actuarial assumptions utilized by each such Plan) to exceed the fair
market value of Pension Plan assets allocable to such benefits, all
determined as of the most recent valuation date for each such Plan, by
$3,000,000.
Section 7.9 FIXED CHARGE COVERAGE RATIO. The Parent shall not permit
the Fixed Charge Coverage Ratio to be, as of the last day of any fiscal quarter
set forth below, less than the correlative ratio indicated below:
Fiscal Quarter Ending Fixed Charge Coverage Ratio
--------------------- -------------------------------
September 30, 1996 1.45 to 1
December 31, 1996 1.45 to 1
March 31, 1997 1.45 to 1
June 30, 1997 1.50 to 1
September 30, 1997 1.50 to 1
December 31, 1997 1.50 to 1
March 31, 1998 1.55 to 1
June 30, 1998 1.65 to 1
September 30, 1998 1.70 to 1
December 31, 1998 and each
fiscal quarter thereafter 1.75 to 1
Section 7.10 TOTAL DEBT TO CASH FLOW COVERAGE RATIO. The Parent shall
not permit the Total Debt to Cash Flow Coverage Ratio to be, as of the last day
of any fiscal quarter set forth below, greater than the correlative ratio
indicated below:
Total Debt to Cash Flow
Fiscal Quarter Ending Coverage Ratio
--------------------- -----------------------
September 30, 1996 5.75 to 1
December 31, 1996 5.75 to 1
March 31, 1997 5.75 to 1
June 30, 1997 5.50 to 1
September 30, 1997 5.25 to 1
December 31, 1997 5.00 to 1
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March 31, 1998 5.00 to 1
June 30, 1998 5.00 to 1
September 30, 1998 4.75 to 1
December 31, 1998 and
each fiscal quarter
thereafter 4.75 to 1
Section 7.11 TOTAL DEBT TO CAPITALIZATION RATIO. The Parent shall not
permit the Total Debt to Capitalization Ratio to be, as of the last day of any
fiscal quarter, set forth below, greater than the correlative ratio indicated
below:
Fiscal Quarter Ending Total Debt to Capitalization Ratio:
--------------------- -----------------------------------
September 30, 1996 .70 to 1
December 31, 1996 .70 to 1
March 31, 1997 .70 to 1
June 30, 1997 .70 to 1
September 30, 1997 .70 to 1
December 31, 1997 .68 to 1
March 31, 1998 .68 to 1
June 30, 1998 .68 to 1
September 30, 1998 .68 to 1
December 31, 1998 .68 to 1
March 31, 1999 .68 to 1
June 30, 1999 .68 to 1
September 30, 1999 .68 to 1
December 31, 1999 and
each fiscal quarter
thereafter .65 to 1
Section 7.12 SALE OR DISCOUNT OF RECEIVABLES. The Parent shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly
sell, with or without recourse, for discount or otherwise, any notes or accounts
receivable.
Section 7.13 AMENDMENT AND MODIFICATION OF SUBORDINATED DEBT DOCUMENTS.
The Parent shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, amend, modify, supplement, waive compliance with, or
assent to noncompliance with, any term,
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provision or condition of any of the documents governing or evidencing the
Subordinated Debt, which (i) the Lenders deem material (including, without
limitation, relating to events of default, acceleration rights, interest
rates, maturity date, amortization, subordination, covenants, prohibition
against amending any Loan Document and definitions with respect thereto) or
(ii) places any further restrictions on the Parent or any of its Restricted
Subsidiaries or increases the obligations of the Parent or any of its
Restricted Subsidiaries thereunder or confers on the holders thereof any
additional rights.
Section 7.14 INDEBTEDNESS OF SUN INTERNATIONAL. Until the Parent shall
cease to own, as a result of an initial public offering of the capital stock of
Sun International, a number of shares of the capital stock of Sun International
having ordinary voting power to elect a majority of Sun International's board of
directors, the Parent shall not permit Sun International to, create, assume,
incur or otherwise become or remain obligated in respect of, or permit to be
outstanding, or suffer to exist, any Indebtedness except Indebtedness to the
Parent.
Section 7.15 INTERCOMPANY LINE OF CREDIT. The Parent shall not reduce
the aggregate principal amount available to Restricted Subsidiaries under the
Intercompany Line of Credit below $490,000,000.
Section 7.16 SALE AND LEASEBACK. Except for (a) the sale and leaseback
of those facilities set forth on SCHEDULE 7 hereto and (b) sale and leaseback
transactions entered into in connection with Assisted Living Investments
permitted pursuant to SECTION 7.3(i) hereof and subject to the limitations
thereof, the Parent shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any arrangement whereby it sells or transfers any of
its assets, and thereafter rents or leases such assets having a book value in
excess of (a) $20,000,000 per occurrence or (b) $50,000,000 in aggregate amount
per fiscal year.
Section 7.17 CAREERSTAFF SUBSIDIARIES. Notwithstanding anything
contained to the contrary in SECTION 7.5 hereof, the Parent shall not permit any
CareerStaff Subsidiary to have Subsidiaries.
ARTICLE 8
DEFAULT
Section 8.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or
non-governmental body:
(a) Any representation or warranty made under any Loan Document shall
prove to have been incorrect or misleading in any material respect when made or
deemed to have been made;
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(b) Any Borrower shall default in the payment of (i) any interest under
any Note or any fees payable hereunder or any other costs, fees, expenses or
other amounts payable hereunder or under the Loan Documents, when due, which
Default is not cured within one Business Day from the date such payment became
due by payment of such late amount, or (ii) any principal under any of the Notes
when due;
(c) The Parent or any of its Restricted Subsidiaries shall default in the
performance or observance of any agreement or covenant contained in SECTION 5.1,
5.9, 6.5(b) or ARTICLE 7 hereof;
(d) The Parent or any of its Restricted Subsidiaries shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this SECTION 8.1, and such
default shall not be cured within a period of 30 days after the earlier of
notice from the Administrative Lender thereof or actual notice thereof by the
Notification Agent on behalf of the Borrowers or such Restricted Subsidiary;
(e) There shall occur any default or breach in the performance or
observance of any agreement or covenant (after the expiration of any applicable
grace period) in any of the Loan Documents (other than this Agreement);
(f) There shall be entered a decree or order by a court having
jurisdiction in the premises constituting an order for relief in respect of the
Parent or any of its Restricted Subsidiaries under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official of
the Parent or any of its Restricted Subsidiaries, or of any substantial part of
their respective properties, or ordering the winding-up or liquidation of the
affairs of the Parent or any of its Restricted Subsidiaries, and any such decree
or order shall continue unstayed and in effect for a period of 60 consecutive
days;
(g) The Parent or any of its Restricted Subsidiaries shall file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or the Parent or any of its
Restricted Subsidiaries shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or taking
of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Parent or any of its Restricted
Subsidiaries or of any substantial part of their respective properties, or the
Parent or any of its Restricted Subsidiaries shall fail generally to pay its
debts as they become due, or the Parent or any of its Restricted Subsidiaries
shall take any action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court against
the Parent or any of its Restricted Subsidiaries for the payment of money which
exceeds $3,000,000 in the aggregate, or a warrant of attachment or execution or
similar process shall be issued or levied
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against property of the Parent or any of its Restricted Subsidiaries which,
together with all other such property of the Parent and its Restricted
Subsidiaries subject to other such process, exceeds in value $3,000,000 in
the aggregate, and if such judgment or award is not insured or, within 30
days after the entry, issue or levy thereof, such judgment, warrant or
process shall not have been paid or discharged or stayed pending appeal, or
if, after the expiration of any such stay, such judgment, warrant or process
shall not have been paid or discharged;
(i) With respect to any Plan of the Parent or any member of its Controlled
Group: (i) the Parent, any such member, or any other party-in-interest or
disqualified person shall engage in transactions which in the aggregate would
reasonably result in a direct or indirect liability to the Parent or any member
of its Controlled Group in excess of $3,000,000 under Section 409 or 502 of
ERISA or Section 4975 of the Code; (ii) the Parent or any member of its
Controlled Group shall incur any accumulated funding deficiency, as defined in
Section 412 of the Code, in the aggregate in excess of $3,000,000, or request a
funding waiver from the Internal Revenue Service for contributions in the
aggregate in excess of $3,000,000; (iii) the Parent or any member of its
Controlled Group shall incur any withdrawal liability in the aggregate in excess
of $1,000,000 as a result of a complete or partial withdrawal within the meaning
of Section 4203 or 4205 of ERISA, or any other liability with respect to a Plan
in excess of $3,000,000 without the prior written consent of the Determining
Lenders, unless the amount of such liability has been funded within the Plan or
pursuant to one or more insurance contracts; (iv) the Parent or any member of
its Controlled Group shall fail to make a required contribution by the due date
under Section 412 of the Code or Section 302 of ERISA which would result in the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA; or
(v) any ERISA Event with respect to a Plan subject to Title IV of ERISA shall
have occurred, and 30 days thereafter (A) such ERISA Event, other than such
event described in clause (h) of the definition of ERISA Event herein, (if
correctable) shall not have been corrected and (B) the then present value of
such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed
the then current value of assets accumulated in such Plan; provided, however,
that the events listed in subsections (iv) through (v) shall constitute Events
of Default only if, as of the date thereof or any subsequent date, the amount of
liability that the Parent or any member of its Controlled Group reasonably is
likely to incur in the aggregate under Section 4062, 4063, 4064, 4219 or 4023 of
ERISA or any other provision of law with respect to all such Plans, computed,
with respect to any Pension Plan, by the actuary of the Pension Plan taking into
account any applicable rules and regulations of the PBGC at such time, and based
on the actuarial assumptions used by the Pension Plan, resulting from or
otherwise associated with such event exceeds $3,000,000;
(j) All or any material portion of the Collateral or the Loan Documents
shall be the subject of any proceeding instituted by any Person other than a
Lender (except in connection with any Lender's exercise of any remedies under
the Loan Documents), or there shall exist any litigation or threatened
litigation with respect to all or any material portion of the Collateral or the
Loan Documents, or any Person shall challenge in any manner whatsoever the
validity or enforceability of all or any material portion of the Loan Documents;
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(k) The Parent or any of its Restricted Subsidiaries shall default in the
payment of any Indebtedness in an aggregate amount of $3,000,000 or more beyond
any grace period provided with respect thereto, or shall default in the
performance of any agreement or instrument under which such Indebtedness is
created or evidenced beyond any applicable grace period (or any event thereunder
shall occur and be continuing), if the effect of such default or event is to
permit or cause the holder of such Indebtedness (or a trustee on behalf of any
such holder) to cause such Indebtedness to become due prior to its date of
maturity;
(l) A Change of Control shall occur;
(m) Any Necessary Authorization shall be revoked, the revocation of which
could result in a Material Adverse Effect; or there shall occur a default under
any Necessary Authorization by the Parent or any of its Restricted Subsidiaries
beyond any applicable grace period, which default could result in a Material
Adverse Effect; or any proceedings shall in any way be brought by any Person to
challenge the validity or enforceability of any Necessary Authorization or
seeking the revocation, suspension or cancellation of such Necessary
Authorization and such proceeding is not contested in good faith by appropriate
proceedings and an adverse determination in such proceeding could result in a
Material Adverse Effect;
(n) Any provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any party to it (other than the
Administrative Lender or any Lender) in all material respects, or any such party
shall so state in writing;
(o) Any Collateral Document shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first priority Lien
(other than Permitted Liens which are not Consensual Liens) in any Collateral;
(p) The Parent or any of its Restricted Subsidiaries shall, at any time,
be in default in the payment of any obligations under one or more Operating
Leases beyond any grace period provided with respect thereto and the aggregate
amount of payments in default shall equal or exceed $500,000;
(q) Except for Permitted Restricted Payments, any event shall occur in
respect of any Subordinated Debt, the result of which would obligate the Parent
or any of its Restricted Subsidiaries to purchase, prepay or redeem all or any
portion of such Subordinated Debt; or
(r) In a bankruptcy or insolvency proceeding or in other proceedings under
similar law now or hereafter in effect involving a Foreign Subsidiary of the
Parent, (i) any claim is made by any Person against the Parent or any of its
Restricted Subsidiaries or any asset owned by the Parent or any of its
Restricted Subsidiaries and such claim or claims, in the aggregate, could result
in a Material Adverse Effect, or (ii) any claim is made to consolidate such
proceeding of the Foreign Subsidiary with the Parent or any of its Restricted
Subsidiaries.
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Section 8.2 REMEDIES. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in SECTION 8.1(f)
OR (g) hereof, the Administrative Lender shall, upon the direction of the
Determining Lenders, terminate the Commitment and/or declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything in the Loan Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in SECTION 8.1(f)
OR (g) hereof, such principal, interest and other amounts shall thereupon and
concurrently therewith become due and payable and the Commitment shall forthwith
terminate, all without any action by the Administrative Lender, any Lender or
any holders of the Notes and without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in the Loan
Documents to the contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the Administrative
Lender may (or, upon the direction of the Determining Lenders, shall) demand
upon the Borrowers, through the Notification Agent, to, and forthwith upon such
demand, the Borrower shall jointly and severally pay to the Administrative
Lender in same day funds at the office of the Administrative Lender in such
demand for deposit in the L/C Cash Collateral Account, an amount equal to the
maximum amount available to be drawn under the Letters of Credit then
outstanding.
(d) Subject to the terms and provisions of the Loan Documents, the
Administrative Lender and the Lenders may exercise all of the post-default
rights granted to them under the Loan Documents or under Applicable Law.
(e) The rights and remedies of the Administrative Lender and the Lenders
hereunder shall be cumulative, and not exclusive.
ARTICLE 9
CHANGES IN CIRCUMSTANCES
Section 9.1 LIBOR BASIS DETERMINATION INADEQUATE. If with respect to
any proposed LIBOR Advance for any Interest Period, any Lender determines that
(i) deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the LIBOR Basis
for such proposed LIBOR Advance does not adequately cover the cost to such
Lender of making and maintaining such proposed LIBOR Advance for such Interest
Period, such Lender shall forthwith give notice thereof to the Borrowers,
through the Notification Agent, whereupon until such Lender notifies the
Borrowers, through the
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Notification Agent, that the circumstances giving rise to such situation no
longer exist, the obligation of such Lender to make LIBOR Advances shall be
suspended.
Section 9.2 ILLEGALITY. If any applicable law, rule or regulation, or
any change therein or adoption thereof, or interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for such Lender (or its LIBOR
Lending Office) to make, maintain or fund its LIBOR Advances, such Lender shall
so notify the Borrowers, through the Notification Agent, and the Administrative
Lender. Before giving any notice to the Borrowers pursuant to this Section, the
notifying Lender shall designate a different LIBOR Lending Office or other
lending office if such designation will avoid the need for giving such notice
and will not, in the sole judgment of the Lender, be materially disadvantageous
to the Lender or contrary to its policies. Upon receipt of such notice by the
Notification Agent, notwithstanding anything contained in ARTICLE 2 hereof, the
Borrowers jointly and severally shall repay in full the then outstanding
principal amount of each LIBOR Advance owing to the notifying Lender, together
with accrued interest thereon, on either (a) the last day of the Interest Period
applicable to such Advance, if the Lender may lawfully continue to maintain and
fund such Advance to such day, or (b) immediately, if the Lender may not
lawfully continue to fund and maintain such Advance to such day. Concurrently
with repaying each affected LIBOR Advance owing to such Lender, notwithstanding
anything contained in ARTICLE 2 hereof, the Borrowers may borrow a Prime Rate
Advance from such Lender, and such Lender shall make such Prime Rate Advance, in
an amount such that the outstanding principal amount of the Advances owing to
such Lender shall equal the outstanding principal amount of the Advances owing
immediately prior to such repayment, and such Prime Rate Advance shall be
payable on the same date or dates as the affected LIBOR Advances of such Lender
would have otherwise been due and payable but for this SECTION 9.2.
Section 9.3 INCREASED COSTS.
(a) If any applicable law, rule or regulation, or any change in or
adoption of any law, rule or regulation, or any interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or compatible
agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to any Tax
(net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis
of taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to
make such Advances (except for changes in the rate of tax on the overall
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net income, net worth or capital of the Lender and franchise taxes, doing
business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender's
LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending
Office) or on the United States market for certificates of deposit or the
London interbank market any other condition affecting its LIBOR Advances or
its obligation to make such Advances;
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 15 days after demand by a Lender, the Borrowers jointly
and severally agree to pay to such Lender such additional amount as will
compensate such Lender for such increased costs or reduced amounts, subject to
SECTION 11.9 hereof. The affected Lender will as soon as practicable notify the
Borrowers, through the Notification Agent, of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section and will designate a different LIBOR
Lending Office or other lending office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
judgment of the affected Lender made in good faith, be disadvantageous to such
Lender.
(b) A certificate of any Lender claiming compensation under this Section
and setting forth the additional amounts to be paid to it hereunder and
calculations therefor shall be conclusive in the absence of manifest error. In
determining such amount, a Lender may use any reasonable averaging and
attribution methods. If a Lender demands compensation under this Section, the
Borrowers may at any time, upon at least five Business Days' prior notice to the
Lender given by the Notification Agent, after reimbursement to the Lender by the
Borrowers in accordance with this Section of all costs incurred, prepay in full
the then outstanding LIBOR Advances of the Lender, together with accrued
interest thereon to the date of prepayment, along with any reimbursement
required under SECTION 2.9 hereof. Concurrently with prepaying such LIBOR
Advances, the Borrowers shall borrow a Prime Rate Advance from the Lender, and
the Lender shall make such Prime Rate Advance, in an amount such that the
outstanding principal amount of the Advances owing to such Lender shall equal
the outstanding principal amount of the Advances owing immediately prior to such
prepayment, and such Prime Rate Advance shall be payable on the same date or
dates as the LIBOR Advances of such Lender would have otherwise been due and
payable but for this SECTION 9.3.
Section 9.4 PRIME RATE ADVANCES RATHER THAN LIBOR ADVANCES. If notice
has been given pursuant to SECTION 9.1, 9.2 OR 9.3 hereof suspending the
obligation of a Lender to make LIBOR Advances, or requiring LIBOR Advances of a
Lender to be repaid or prepaid, then, unless and until the Lender notifies the
Borrowers, through the Notification Agent, that the
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circumstances giving rise to such repayment no longer apply, all Advances
which would otherwise be made by such Lender as LIBOR Advances shall be made
instead as Prime Rate Advances.
Section 9.5 CAPITAL ADEQUACY. If either (a) the introduction of or any
change in or in the interpretation of any law, rule or regulation or
(b) compliance by a Lender with any law, rule or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's Commitment or Advances hereunder
and other commitments or advances of such Lender of this type, then, upon demand
by such Lender through the Notification Agent, subject to SECTION 11.9, the
Borrowers jointly and severally shall immediately pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to compensate
such Lender with respect to such circumstances, to the extent that such Lender
reasonably determines in good faith such increase in capital to be allocable to
the existence of such Lender's Commitment hereunder. A certificate as to such
amounts submitted to the Borrowers, through the Notification Agent, by a Lender
hereunder, shall, in the absence of manifest error, be conclusive and binding
for all purposes.
ARTICLE 10
AGREEMENT AMONG LENDERS
Section 10.1 AGREEMENT AMONG LENDERS. The Lenders agree among themselves
that:
(a) ADMINISTRATIVE LENDER. Each Lender hereby appoints the Administrative
Lender as its nominee in its name and on its behalf, to receive all documents
and items to be furnished hereunder; to act as nominee for and on behalf of all
Lenders under the Loan Documents; to, except as otherwise expressly set forth
herein, take such action as may be requested by the Determining Lenders,
provided that, unless and until the Administrative Lender shall have received
such requests, the Administrative Lender may take such administrative action, or
refrain from taking such administrative action, as it may deem advisable and in
the best interests of the Lenders; to arrange the means whereby the proceeds of
the Advances of the Lenders are to be made available to the Borrowers; to
distribute promptly to each Lender information, requests and documents received
from the Borrowers and the Notification Agent, and each payment (in like funds
received) with respect to any of such Lender's Advances, fee or other amount;
and to deliver to the Borrowers' requests, demands, approvals and consents
received from the Lenders. Administrative Lender agrees to promptly distribute
to each Lender, at such Lender's address set forth below information, requests,
documents and payments received from the Borrowers and the Notification Agent.
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(b) REPLACEMENT OF ADMINISTRATIVE LENDER. Should the Administrative
Lender or any successor Administrative Lender ever cease to be a Lender
hereunder, or should the Administrative Lender or any successor Administrative
Lender ever resign as Administrative Lender, or should the Administrative Lender
or any successor Administrative Lender ever be removed with cause by the
Determining Lenders, then the Lender appointed by the other Lenders shall
forthwith become the Administrative Lender, and the Borrowers and the Lenders
shall execute such documents as any Lender may reasonably request to reflect
such change. Any resignation or removal of the Administrative Lender or any
successor Administrative Lender shall become effective upon the appointment by
the Lenders of a successor Administrative Lender; provided, however, that if the
Lenders fail for any reason to appoint a successor within 60 days after such
removal or resignation, the Administrative Lender or any successor
Administrative Lender (as the case may be) shall thereafter have no obligation
to act as Administrative Lender hereunder.
(c) EXPENSES. Each Lender shall pay its pro rata share, based on its
Specified Percentage, of any expenses paid by the Administrative Lender directly
and solely in connection with any of the Loan Documents if Administrative Lender
does not receive reimbursement therefor from other sources within 60 days after
the date incurred, unless payment of such fees is being diligently disputed by
such Lender or the Borrowers in good faith. Any amount so paid by the Lenders
to the Administrative Lender shall be returned by the Administrative Lender pro
rata to each paying Lender to the extent later paid by the Borrowers or any
other Person on the Borrowers' behalf to the Administrative Lender.
(d) DELEGATION OF DUTIES. The Administrative Lender may execute any of
its duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to (and shall be protected in relying upon) advice
of counsel concerning all matters pertaining to its duties hereunder.
(e) RELIANCE BY ADMINISTRATIVE LENDER. The Administrative Lender and its
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably believed
by it or them in good faith to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinions of
counsel selected the Administrative Lender. The Administrative Lender may, in
its reasonable judgment, deem and treat the payee of any Note as the owner
thereof for all purposes hereof.
(f) LIMITATION OF ADMINISTRATIVE LENDER'S LIABILITY. Neither the
Administrative Lender nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and reasonably believed by it or them to be within
the discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Lender shall be under no duty to enforce any rights with respect
to any of the Advances, or any security
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therefor. The Administrative Lender shall not be compelled to do any act
hereunder or to take any action towards the execution or enforcement of the
powers hereby created or to prosecute or defend any suit in respect hereof,
unless indemnified to its satisfaction against loss, cost, liability and
expense. The Administrative Lender shall not be responsible in any manner to
any Lender for the effectiveness, enforceability, genuineness, validity or
due execution (other than its own due execution) of any of the Loan Documents
by any other Person, or for any representation, warranty, document,
certificate, report or statement made herein or furnished in connection with
any Loan Documents by any other Person, or be under any obligation to any
Lender to ascertain or to inquire as to the performance or observation of any
of the terms, covenants or conditions of any Loan Documents on the part of
the Borrowers. To the extent not reimbursed by the Borrowers, each Lender
hereby jointly and severally indemnifies and holds harmless the
Administrative Lender, pro rata according to its Specified Percentage, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and/or disbursements of any kind
or nature whatsoever which may be imposed on, asserted against, or incurred
by the Administrative Lender (in its capacity as Administrative Lender and
not as a Lender) in any way with respect to any Loan Documents or any action
taken or omitted by the Administrative Lender in its capacity as
Administrative Lender and not as a Lender under the Loan Documents (including
any negligent action of the Administrative Lender), except to the extent the
same result from gross negligence or wilful misconduct by the Administrative
Lender.
(g) LIABILITY AMONG LENDERS. No Lender shall incur any liability (other
than the sharing of expenses and other matters specifically set forth herein and
in the other Loan Documents) to any other Lender, except for acts or omissions
in bad faith.
(h) RIGHTS AS LENDER. With respect to its commitment hereunder, the
Advances made by it and Note issued to it, the Administrative Lender shall have
the same rights as a Lender and may exercise the same as though it were not the
Administrative Lender, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Lender in its individual
capacity. The Administrative Lender or any Lender may accept deposits from, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrowers and any of their Affiliates, and any Person who may do
business with or own securities of the Borrowers or any of their Affiliates, all
as if the Administrative Lender were not the Administrative Lender hereunder and
without any duty to account therefor to the Lenders.
Section 10.2 LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Lender or any
other Lender and based upon the financial statements referred to in
SECTIONS 4.1(J), 6.1 AND 6.2 hereof, and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Administrative Lender or any other Lender and
based upon such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
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Section 10.3 BENEFITS OF ARTICLE. None of the provisions of this Article
shall inure to the benefit of any Person other than Lenders; consequently, no
Person shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Lender or any Lender to comply
with such provisions.
ARTICLE 11
MISCELLANEOUS
Section 11.1 NOTICES.
(a) All notices and other communications under this Agreement shall be in
writing and shall be deemed to have been given on the date personally delivered
or sent by telecopy (answerback received), or three days after deposit in the
mail, designated as certified mail, return receipt requested, postage-prepaid,
or one day after being entrusted to a reputable commercial overnight delivery
service, or one day after being delivered to the telegraph office or sent out by
telex addressed to the party to which such notice is directed at its address
determined as provided in this Section. All notices and other communications
under this Agreement shall be given to the parties hereto at the following
addresses:
(i) If to the Borrowers or the Notification Agent, at:
Sun Healthcare Group, Inc.
000 Xxx Xxxx, X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Chief Financial Officer
(ii) If to the Administrative Lender, at:
NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx, Senior Vice President
(iii) If to a Lender, at its address shown below its name on the
signature pages hereof, or if applicable, set forth in its
Assignment Agreement.
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days' written notice of such change to the other parties.
Section 11.2 EXPENSES. The Borrowers jointly and severally shall
promptly pay:
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(a) all reasonable out-of-pocket expenses of the Administrative Lender in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of Advances and the issuance of Letters of Credit
hereunder, including without limitation the reasonable fees and disbursements of
Special Counsel;
(b) all reasonable out-of-pocket expenses and attorneys' fees of the
Administrative Lender in connection with the administration of the transactions
contemplated in this Agreement and the other Loan Documents and the preparation,
negotiation, execution and delivery of any waiver, amendment or consent by the
Lenders relating to this Agreement or the other Loan Documents; and
(c) all costs, out-of-pocket expenses and attorneys' fees of the
Administrative Lender and each Lender incurred for enforcement, collection,
restructuring, refinancing and "work-out", or otherwise incurred in obtaining
performance under the Loan Documents, and all costs and out-of-pocket expenses
of collection if default is made in the payment of the Notes, which in each case
shall include without limitation fees and expenses of consultants, counsel for
the Administrative Lender and any Lender, and administrative fees for the
Administrative Lender.
Section 11.3 WAIVERS. The rights and remedies of the Lenders under this
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Administrative Lender or any Lender in exercising any right shall operate as
a waiver of such right. The Lenders expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance and the Issuing Bank expressly reserves the
right to require strict compliance with the terms of this Agreement in
connection with any issuance of a Letter of Credit. In the event that any
Lender decides to fund an Advance or the Issuing Bank decides to issue a Letter
of Credit at a time when the Borrowers are not in strict compliance with the
terms of this Agreement, such decision by such Lender shall not be deemed to
constitute an undertaking by the Lender to fund any further requests for
Advances or by the Issuing Bank to issue any additional Letters of Credit or
preclude the Lenders from exercising any rights available under the Loan
Documents or at law or equity. Any waiver or indulgence granted by the Lenders
shall not constitute a modification of this Agreement, except to the extent
expressly provided in such waiver or indulgence, or constitute a course of
dealing by the Lenders at variance with the terms of the Agreement such as to
require further notice by the Lenders of the Lenders' intent to require strict
adherence to the terms of the Agreement in the future. Any such actions shall
not in any way affect the ability of the Administrative Lender or the Lenders,
in their discretion, to exercise any rights available to them under this
Agreement or under any other agreement, whether or not the Administrative Lender
or any of the Lenders are a party thereto, relating to the Borrowers.
Section 11.4 DETERMINATION BY THE LENDERS CONCLUSIVE AND BINDING. Any
material determination required or expressly permitted to be made by the
Administrative Lender or any
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Lender under this Agreement shall be made in its reasonable judgment and in
good faith, and shall when made, absent manifest error, be conclusive and
binding on all parties.
Section 11.5 SET-OFF. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender and any subsequent holder of any
Note, and any assignee or participant in any Note is hereby authorized by the
Borrowers at any time or from time to time, without notice to the Borrowers or
any other Person, any such notice being hereby expressly waived, to set-off,
appropriate and apply any deposits (general or special (except trust and escrow
accounts), time or demand, including without limitation Indebtedness evidenced
by certificates of deposit, in each case whether matured or unmatured) and any
other Indebtedness at any time held or owing by such Lender or holder to or for
the credit or the account of the Borrowers, against and on account of the
Obligations and other liabilities of the Borrowers to such Lender or holder,
irrespective of whether or not (a) the Lender or holder shall have made any
demand hereunder, or (b) the Lender or holder shall have declared the principal
of and interest on the Advances and other amounts due hereunder to be due and
payable as permitted by SECTION 8.2 and although such obligations and
liabilities, or any of them, shall be contingent or unmatured. Any sums
obtained by any Lender or by any assignee, participant or subsequent holder of
any Note shall be subject to pro rata treatment of all Obligations and other
liabilities hereunder.
Section 11.6 ASSIGNMENT.
(a) The Borrowers may not assign or transfer any of their respective
rights or obligations hereunder or under the other Loan Documents without the
prior written consent of the Lenders.
(b) No Lender shall be entitled to assign its interest in this Agreement,
its Notes or its Advances, except as hereinafter set forth.
(c) A Lender may at any time sell participations in all or any part of its
Advances (collectively, "PARTICIPATIONS") to any banks or other financial
institutions ("PARTICIPANTS") provided that (i) each such sale of a
Participation in any bank or other financial institution not an Affiliate of the
selling Lender shall be subject to the prior written consent of the Borrowers,
which consent shall not be unreasonably withheld, (ii) any Lender selling a
Participation to any bank or other financial institution not an Affiliate of the
selling Lender shall give the Administration Lender and the Borrowers, through
the Notification Agent, notice of any such proposed sale no later than 10 days
prior to any such sale, and (iii) such Participation shall not confer on any
Person (other than the parties hereto) any right to vote on, approve or sign
amendments or waivers, or any other independent benefit or any legal or
equitable right, remedy or other claim under this Agreement or any other Loan
Documents, other than the right to vote on, approve, or sign amendments or
waivers or consents with respect to items that would result in (A) any increase
in the commitment of any Participant; or (B)(1) the extension of the date of
maturity of, or (2) the extension of the due date for any payment of principal,
interest or fees
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respecting, or (3) the reduction of the amount of any installment of
principal or interest on or the change or reduction of any mandatory
reduction required hereunder, or (4) a reduction of the rate of interest on,
the Advances, the Letters of Credit, or the Reimbursement Obligations, or
change in Applicable Margin; or (C) the release of security for the
Obligations, including without limitation any guarantee; or (D) the reduction
of any fees payable hereunder. Notwithstanding the foregoing, the Borrowers
agree that the Participants shall be entitled to the benefits of ARTICLE 9
and SECTION 11.5 hereof as though they were Lenders and the Lenders may
provide copies of all financial information received from the Borrowers to
such Participants. To the fullest extent it may effectively do so under
Applicable Law, the Borrowers agree that any Participant may exercise any and
all rights of banker's lien, set-off and counterclaim with respect to this
Participation as fully as if such Participant were the holder of the Advances
in the amount of its Participation. Any Lender selling a Participation to an
Affiliate hereunder shall give prompt notice thereof to the Borrowers through
the Notification Agent and the Administrative Lender.
(d) Each Lender may assign to one or more financial institutions or funds
organized under the laws of the United States, or any state thereof, or under
the laws of any other country that is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country,
which is engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business (each, an "ASSIGNEE") its rights
and obligations under this Agreement and the other Loan Documents; PROVIDED,
HOWEVER, that (i) each such assignment shall be subject to the prior written
consent of the Administrative Lender and Borrowers, which consent shall not be
unreasonably withheld (provided, however, notwithstanding anything herein to the
contrary, no consent of the Borrowers shall be required for any assignment
(A) during any time that an Event of Default has occurred and is continuing,
(B) to an Affiliate of the assigning Lender, or (C) to an existing Lender
hereunder), (ii) each such assignment shall be of a constant, and not a varying,
percentage of the Lender's rights and obligations under this Agreement,
(iii) the amount of the total Advances and Reimbursement Obligations being
assigned pursuant to each such assignment (determined as of the date of the
assignment with respect to such assignment) shall in no event be less than the
lesser of (A) $10,000,000, or (B) the applicable Lender's Commitment, (iv) the
applicable Lender, Administrative Lender and applicable Assignee shall execute
and deliver to the Administrative Lender an Assignment and Acceptance Agreement
(an "ASSIGNMENT AGREEMENT") in substantially the form of EXHIBIT E hereto,
together with the Notes subject to such assignment, (v) the Assignee or the
Lender executing the Assignment as the case may be, shall deliver to the
Administrative Lender a processing fee of $3,500, and (vi) the Administrative
Lender shall give the Borrowers, through the Notification Agent, notice of any
proposed assignment no later than 10 days prior to any assignment by any Lender.
Upon such execution, delivery and acceptance from and after the effective date
specified in each Assignment, which effective date shall be at least three
Business Days after the execution thereof, (A) the Assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment, have the rights and obligations
of a Lender hereunder and (B) the Administrative Lender shall, to the extent
that rights and obligations hereunder have been
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assigned by it pursuant to such Assignment, relinquish such rights and be
released from such obligations under this Agreement.
(e) Notwithstanding anything in clause (d) above to the contrary, any
Lender may assign and pledge all or any portion of its Advances and Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided, however, that no such assignment
under this clause (e) shall release the assignor Lender from its obligations
hereunder.
(f) Upon the Notification Agent's receipt of an Assignment Agreement
executed by a Lender and an Assignee, and any Note or Notes subject to such
assignment, the Borrowers shall, within three Business Days after the
Notification Agent's receipt of such Assignment Agreement, at its own expense,
execute and deliver to the Administrative Lender in exchange for the surrendered
Notes new Notes to the order of such Assignee in an amount equal to the portion
of the Advances, Reimbursement Obligations and Commitment assigned to it
pursuant to such Assignment Agreement and new Notes to the order of the
Administrative Lender in an amount equal to the portion of the Advances and
Commitment retained by it hereunder. Such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Notes, shall be dated the effective date of such Assignment Agreement and shall
otherwise be in substantially the form of EXHIBIT A hereto.
(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this SECTION 11.6, disclose to
the assignee or Participant or proposed assignee or participant, any information
relating to the Borrowers furnished to such Lender by or on behalf of the
Borrowers.
(h) Except as specifically set forth in this SECTION 11.6, nothing in this
Agreement or any other Loan Documents, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan documents.
(i) Notwithstanding anything in this SECTION 11.6 to the contrary, no
Assignee or Participant shall be entitled to receive any greater payment under
SECTION 2.15 or SECTION 9.3 than such assigning or participating Lender would
have been entitled to receive with respect to the interest assigned or
participated to such Assignee or Participant.
Section 11.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 SEVERABILITY. Any provision of this Agreement which is for
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall
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be ineffective to the extent of such prohibition or invalidity or
unenforceability without invalidating the remaining provisions hereof in such
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
Section 11.9 INTEREST AND CHARGES. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Maximum Amount. If
any Lender or participant ever receives, collects or applies, as interest, any
such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrowers. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, the Borrowers and the Lenders shall, to
the maximum extent permitted under Applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Amount, the Lenders shall
refund to the Borrowers the amount of such excess or credit the amount of such
excess against the total principal amount of the Obligations owing, and, in such
event, to the extent permitted by Applicable Law, the Lenders shall not be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the Maximum Amount. This Section shall control
every other provision of all agreements pertaining to the transactions
contemplated by or contained in the Loan Documents.
Section 11.10 HEADINGS. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 AMENDMENT AND WAIVER. The provisions of this Agreement may
not be amended, modified or waived except by the written agreement of the
Borrowers and the Determining Lenders; provided, however, that no such
amendment, modification or waiver shall be made (a) without the consent of all
Lenders, if it would (i) increase the Specified Percentage or commitment of any
Lender, or (ii) extend the date of maturity of, extend the due date for any
payment of principal or interest on, reduce the amount of any installment of
principal or interest on, or reduce the rate of interest on, any Advance, the
Reimbursement Obligations or other amount owing under any Loan Documents, or
(iii) release any security for or guaranty of the Obligations (except pursuant
to this Agreement) or otherwise amend any Collateral Documents in a manner which
would adversely affect the rights of the Lenders , or (iv) reduce the fees
payable hereunder, or (v) revise this SECTION 11.11, or (vi) waive the date for
payment of any of the Obligations, or (vii) amend the definition of Determining
Lenders; or (b) without the consent of the Administrative Lender, if it would
alter the rights, duties or obligations of the
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Administrative Lender. Neither this Agreement nor any term hereof may be
amended orally, nor may any provision hereof be waived orally but only by an
instrument in writing signed by the Administrative Lender and, in the case of
an amendment, by the Borrowers.
Section 11.12 EXCEPTION TO COVENANTS. Neither the Parent nor any of its
Subsidiaries shall be deemed to be permitted to take any action or fail to take
any action which is permitted as an exception to any of the covenants contained
herein or which is within the permissible limits of any of the covenants
contained herein if such action or omission would result in the breach of any
other covenant contained herein.
Section 11.13 NO LIABILITY OF ISSUING BANK. The Borrowers jointly and
severally assume all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letter of
Credit. Neither the Issuing Bank nor any Lender nor any of their respective
officers or directors shall be liable or responsible for: (a) the use that may
be made of any Letter of Credit or any acts or omissions of any beneficiary or
transferee in connection therewith; (b) the validity, sufficiency or genuineness
of documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by the Issuing Bank against presentation of documents that do not
comply with the terms of a Letter of Credit, including failure of any documents
to bear any reference or adequate reference to the Letter of Credit, except for
any payment made upon the Issuing Bank's gross negligence or willful misconduct;
or (d) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit, EXCEPT that the Borrowers shall have a claim against
the Issuing Bank, and the Issuing Bank shall be liable to the Borrowers, to the
extent of any direct, but not consequential, damages suffered by the Borrowers
that the Borrowers prove were caused by (i) the Issuing Bank's willful
misconduct or gross negligence or (ii) the Issuing Bank's willful failure to
make lawful payment under a Letter of Credit after the presentation to it of a
draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, the
Issuing Bank 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.
Section 11.14 CONFIDENTIALITY. Each Lender and the Administrative Lender
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the Borrowers pursuant
to this Agreement which is identified by the Borrowers as being confidential at
the time the same is delivered to the Lenders or the Administrative Lender,
provided that nothing herein shall limit the disclosure of any such information
(a) to the extent required by statute, rule, regulation or judicial process,
(b) to counsel for any Lender or the Administrative Lender, (c) to bank
examiners, auditors or accountants of any Lender, (d) to the Administrative
Lender or any other Lender, (e) in connection with any litigation to which any
one or more of Lenders is a party, provided, further, that, unless specifically
prohibited by Applicable Law or court order, each Lender shall, prior
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to disclosure thereof, notify the Borrowers, through the Notification Agent,
of any request for disclosure of any such not-public information (i) by any
governmental agency or representative thereof (other than any such request in
connection with an examination of such Lender's financial condition by such
governmental agency) or (ii) pursuant to legal process, or (f) to any
assignee or participant (or prospective assignee or participant) so long as
such assignee or participant (or prospective assignee or participant) agrees
to handle such information confidentially.
Section 11.15 NO NOVATION. Except for Liens expressly released in
connection herewith, the execution, delivery and effectiveness of this Agreement
shall not extinguish the obligations for the payment of money outstanding under
the Prior Credit Agreement (as defined in the recitals hereof) or discharge or
release the Lien or priority of any security agreement, any pledge agreement or
any other security therefor. Nothing herein contained shall be construed as a
substitution or novation of the Obligations outstanding under the Prior Credit
Agreement or instruments securing the same, which shall remain in full force and
effect, except as modified hereby or by instruments executed concurrently
herewith. Nothing expressed or implied in this Agreement, or any other document
contemplated hereby shall be construed as a release or other discharge of the
Borrowers under the Prior Credit Agreement or any Guarantor under any Guaranty
or any Collateral Document (as such terms are defined in the Prior Credit
Agreement) from any of its obligations and liabilities thereunder. The Prior
Credit Agreement and the Collateral Documents shall remain in full force and
effect, until and except as modified hereby or in connection herewith.
Section 11.16 NO DUTIES OF CO-AGENTS. Each Borrower and Lender
acknowledge that the Co-Agents shall have no duties, responsibilities or
liabilities in their capacities as Co-Agents hereunder.
SECTION 11.17 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(b), TITLE 79,
REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE
PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS
AMENDED, SHALL NOT APPLY TO THE ADVANCES, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE BORROWERS AGREE THAT
THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE
JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ARE PERFORMABLE IN
DALLAS COUNTY, TEXAS.
SECTION 11.18 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE
ADMINISTRATIVE LENDER AND THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE
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MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY
ADVANCES HEREUNDER.
SECTION 11.19 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
-81-
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
BORROWERS: SUN HEALTHCARE GROUP, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
THE MEDIPLEX GROUP, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-82-
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A., as
Administrative Lender
By:
---------------------------------
Xxxxxx X. Xxxxx
Senior Vice President
-83-
CO-AGENTS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Co-Agent
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-84-
CREDIT LYONNAIS NEW YORK BRANCH, as
Co-Agent
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-85-
CREDIT SUISSE, as Co-Agent
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-86-
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Co-Agent
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-00-
XXXXXXXXXXX XXXXXXXX XXXXXXXXXX -
XXXXXXXXXXXXXX, B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH, as Co-
Agent
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-88-
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as Co-Agent
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-89-
PNC BANK, NATIONAL ASSOCIATION, as
Co-Agent
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-90-
LENDERS: NATIONSBANK OF TEXAS, N.A., as a Lender
and as Issuing Bank
Specified Percentage:
10.20408163%
By:
---------------------------------
Xxxxxx X. Xxxxx
Senior Vice President
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx,
Senior Vice President
-00-
XXXXXXX XXXX XX XXXXXXXXXXX, N.A.
Specified Percentage
4.08163265%
By:
---------------------------------
Xxxx X. Xxxxxxx
Vice President
0000 Xxx Xxxxx Xxxx., Xxxxx X
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Vice President
-92-
XXXXX FARGO BANK (TEXAS) NATIONAL
ASSOCIATION
Specified Percentage
5.10204082%
By:
---------------------------------
Xxxxx X. Xxxxxxxxx
Vice President
000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Vice President
-93-
CREDIT LYONNAIS NEW YORK BRANCH
Specified Percentage
9.18367347%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx Xxxxxx
Vice President
-00-
XXXXXXXXXXX XXXXXXXX XXXXXXXXXX -
XXXXXXXXXXXXXX, B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
Specified Percentage
9.18367347%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Services
with a copy to:
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx
Assistant Vice President
-95-
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY
Specified Percentage
8.16326531%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Tokaomi Tomioka
-00-
XXX XXXX XX XXXX XXXXXX
Specified Percentage
5.00000000%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxx
-00-
XXX XXXX, NATIONAL ASSOCIATION
Specified Percentage
8.16326531%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
0 XXX Xxxxx - 0xx Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
-98-
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
Specified Percentage
9.18367347%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxx
-99-
CREDIT SUISSE
Specified Percentage
9.18367347%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
-100-
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK
Specified Percentage
9.18367347%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
-101-
THE SUMITOMO BANK, LIMITED
Specified Percentage
5.10204082%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx Xxxxxxxx
-102-
FUJI BANK, LIMITED
Specified Percentage
4.08163265%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx
-103-
THE SANWA BANK, LIMITED
Specified Percentage
4.08163265%
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
0000 Xxxx Xxxxxx, 0000 Xxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxx
-104-
ACKNOWLEDGED AND AGREED TO THIS _____ day of October, 1996, for the purpose
of acknowledging the undersigned Restricted Subsidiaries' obligations under
Section 2.16 of the foregoing Agreement.
Sundance Rehabilitation Corporation, a Connecticut
corporation
SunQuest Consulting, Inc., a New Mexico
corporation
Sunrise Healthcare Corporation, a New Mexico
corporation
SunScript Pharmacy Corporation, a New Mexico
corporation
Sunrise Rehab of Colorado, Inc., a Colorado
corporation
Sunrise Healthcare of Colorado, Inc., a Colorado
corporation
Sunrise Healthcare of Florida, Inc., a Florida
corporation
Four Seasons Healthcare Management, Inc., a
Delaware corporation
LTC Staffinders, Inc., a Connecticut corporation
SunSpectrum Outpatient Rehabilitation-Concord,
Inc., a Massachusetts corporation
Nursing Home Inc., a Washington corporation
Living Services, Inc., a Washington corporation
Golden Care, Inc., an Indiana corporation
Bay Colony Health Service, Inc., a Massachusetts
corporation
Bergen Eldercare, Inc., a New Jersey corporation
Community Re-Entry Services of Cortland, Inc., a
Delaware corporation
G-WZ of Stamford, Inc., a Connecticut corporation
Manatee Springs Nursing Center, Inc., a Florida
corporation
Mediplex Management, Inc., a Massachusetts
corporation
Mediplex Management of Palm Beach County, Inc., a
Florida corporation
Mediplex Management of Texas, Inc., a Texas
corporation
Mediplex of Colorado, Inc., a Colorado corporation
Mediplex of Concord, Inc., a Massachusetts
corporation
-105-
Mediplex of Connecticut, Inc., a Connecticut
corporation
Mediplex of Kentucky, Inc., a Kentucky corporation
Mediplex of Maryland, Inc., a Maryland corporation
Mediplex of Massachusetts, Inc., a Massachusetts
corporation
Mediplex of New Hampshire, Inc., a New Hampshire
corporation
Mediplex of New Jersey, Inc., a New Jersey
corporation
Mediplex of New York, Inc., a New York corporation
Mediplex of Ohio, Inc., an Ohio corporation
Mediplex of Tennessee, Inc., a Tennessee
corporation
Mediplex Atlanta Rehabilitation Institute, Inc., a
Georgia corporation
Mediplex Rehabilitation of Massachusetts, Inc., a
Massachusetts corporation
P.M.N.F. Management, Inc., a New Jersey
corporation
Quality Care Holding Corp., a Massachusetts
corporation
Quality Nursing Care of Massachusetts, Inc., a
Massachusetts corporation
Xxxxxxxx Land, Inc., a New Hampshire corporation
Sun Care Corp., a Delaware corporation
Valley View Psychiatric Services, Inc., a Colorado
corporation
HSR Management, Inc., a Delaware corporation
CareerStaff Management, Inc., a Delaware
corporation
PRI, Inc., a Texas corporation
CareerStaff Unlimited, Inc., a Delaware
corporation
CareerStaff HSR, Inc., a Delaware corporation
Healthcare Staff Resources, Inc., a Texas
corporation
SunBridge, Inc., a New Mexico corporation
SunMark of New Mexico, a New Mexico corporation
SunChoice Medical Supply, Inc., a New Mexico
corporation
-106-
HTA of New Jersey, Inc., a New Jersey corporation
HTA of New York, Inc., a New York corporation
New Bedford Acquisition Corp., a Massachusetts
corporation
New Bedford Nursing Center, Inc., a Massachusetts
corporation
Worcester Nursing Center, Inc., a Massachusetts
corporation.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Therapists Unlimited-Atlanta, L.P., a Texas
limited partnership
Therapists Unlimited-Baltimore/Washington, D.C.,
L.P., a Texas limited partnership
Therapists Unlimited-Charlotte, L.P., a Texas
limited partnership
Therapists Unlimited-Chicago II, L.P., a Texas
limited partnership
Therapists Unlimited-Cincinnati, L.P., a Texas
limited partnership
Therapists Unlimited-Dallas, L.P., a Texas limited
partnership
Therapists Unlimited-Detroit II, L.P., a Texas
limited partnership
Therapists Unlimited-Fort Lauderdale, L.P., a
Texas limited partnership
Therapists Unlimited-Houston II, L.P., a Texas
limited partnership
Therapists Unlimited-Indianapolis, L.P., a Texas
limited partnership
Therapists Unlimited-Los Angeles, L.P., a Texas
limited partnership
Therapists Unlimited-Minneapolis, L.P., a Texas
limited partnership
Therapists Unlimited-New Orleans, L.P., a Texas
limited partnership
Therapists Unlimited-New York, L.P., a Texas
limited partnership
-107-
Therapists Unlimited-Philadelphia, L.P., a Texas
limited partnership
Therapists Unlimited-San Diego, L.P., a Texas
limited partnership
Therapists Unlimited-San Francisco, L.P., a Texas
limited partnership
Therapists Unlimited-Seattle, L.P., a Texas
limited partnership
Therapists Unlimited-Travelers, L.P., a Texas
limited partnership
By: CareerStaff Management, Inc., a Delaware
corporation and the general partner of the
above-listed limited partnership Guarantors
By:
-------------------------------------
Name:
--------------------------------
Title:
--------------------------------
HSR Partners, L.P.
By: HSR Management, Inc., a Delaware corporation
and its general partner
By:
-------------------------------------
Name:
--------------------------------
Title:
--------------------------------
-108-
West Jersey/Mediplex Rehabilitation, L.P.
By: Mediplex of New Jersey, Inc., a
New Jersey corporation and its
general partner
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
Address for all Restricted Subsidiaries:
000 Xxx Xxxx, X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Chief Financial Officer
-109-
EXHIBIT A
PROMISSORY NOTE
Dallas, Texas $_____________ October 29, 1996
SUN HEALTHCARE GROUP, INC., a Delaware corporation ("Sun"), and THE
MEDIPLEX GROUP, INC., a Massachusetts corporation ("Mediplex") (Sun and Mediplex
collectively referred to herein as the "Borrowers"), for value received, jointly
and severally promise to pay to the order of ___________________________________
("Lender"), at the principal office of NationsBank of Texas, N.A., in
lawful money of the United States of America, the principal sum of
_______________________ DOLLARS ($_____________), or such lesser sum as shall
be due and payable from time to time hereunder, as hereinafter provided. All
terms used but not defined herein shall have the meanings set forth in the
Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Advances under
this Promissory Note from time to time outstanding shall be due and payable as
set forth in the Credit Agreement.
This Promissory Note is issued pursuant to and evidences Advances under a
Fourth Amended and Restated Credit Agreement, dated as of October 29, 1996,
among the Borrowers, NationsBank of Texas, N.A., as Administrative Lender,
certain Co-Agents, and the lenders parties thereto (as amended, restated,
supplemented, renewed, extended or otherwise modified from time to time, "Credit
Agreement"), to which reference is made for a statement of the rights and
obligations of the Lender and the duties and obligations of the Borrowers in
relation thereto; but neither this reference to the Credit Agreement nor any
provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrowers to pay the principal sum of and interest on this
Promissory Note when due and, together with each of the other Notes, modifies
and replaces the Promissory Notes executed by Sun and Mediplex in connection
with the Third Amended and Restated Credit Agreement dated as of July 21, 1995
(the "Prior Notes"), but does not extinguish the debt evidenced by the Prior
Notes. This Promissory Note, together with each of the other Notes, is not
intended as, and shall not be construed as, a novation of the debt evidenced by
the Prior Notes.
The Borrower and all endorsers, sureties and guarantors of this Promissory
Note hereby severally waive demand, presentment for payment, protest, notice of
protest, notice of intention to accelerate the maturity of this Promissory Note,
diligence in collecting, the bringing of any suit against any party and any
notice of or defense on account of any extensions, renewals, partial payments or
changes in any manner of or in this Promissory Note or in any of its terms,
provisions and covenants, or any releases or substitutions of any security, or
any delay, indulgence or other act of any trustee or any holder hereof, whether
before or after maturity.
THIS PROMISSORY NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SUN HEALTHCARE GROUP, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
THE MEDIPLEX GROUP, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-2-
EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of __________, 199_ (this "AGREEMENT"),
is made by Sun Healthcare Group, Inc., a Delaware corporation ("DEBTOR"), in
favor of NationsBank of Texas, N.A., as Administrative Lender ("ADMINISTRATIVE
LENDER") for NationsBank of Texas, N.A. and each other lender a party to the
Credit Agreement described below (singly, a "SECURED PARTY" and collectively,
the "SECURED PARTIES").
RECITALS:
(1) Debtor, The Mediplex Group, Inc. (collectively, the "BORROWERS"),
Secured Parties, certain Co-Agents and Administrative Lender have entered into a
Fourth Amended and Restated Credit Agreement, dated as of October 29, 1996 (as
the same may be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT"); the capitalized terms used herein and not
otherwise defined herein shall have the meaning given to them in the Credit
Agreement.
(2) It is the intention of the parties hereto that this Agreement create a
first priority security interest in the Collateral (subject only to Permitted
Liens) securing the payment of the obligations set forth in SECTION 2 hereof.
AGREEMENT.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and under the terms of the Credit Agreement, Debtor hereby
agrees with Administrative Lender for its benefit and the ratable benefit of
Secured Parties as follows:
1. ASSIGNMENT AND GRANT OF SECURITY. Debtor hereby assigns and pledges
to Administrative Lender for its benefit and for the ratable benefit of Secured
Parties, and hereby grants to Administrative Lender for its benefit and the
ratable benefit of Secured Parties a security interest in, all the entire right,
title and interest of Debtor, in and to the following, whether now owned or
hereafter acquired ("COLLATERAL"):
(a) any and all (i) intercompany notes representing indebtedness owing by
any Subsidiary to Debtor (including without limitation, that certain Line of
Credit Agreement dated as of ____________, 1996, among the Borrowers and, among
other entities, the Debtors) and (ii) that certain promissory note dated as of
_____________, 1996, in the principal amount of
$____________, executed by Liberty Healthcare Management Group, Inc., made
payable to the order of Debtor (any and all such intercompany notes and notes
being the "NOTES"); and
(b) all cash and non-cash proceeds and products of any and all of the
foregoing Collateral (including, without limitation, proceeds which constitute
property of the types described in this SECTION 1) and, to the extent not
otherwise included, all payments under any indemnity, warranty or guaranty,
payable by reason of loss with respect to any of the foregoing Collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement creates with respect to the
Notes, a first priority security interest securing the payment and performance
of (a) all present and future obligations, indebtedness and liabilities, and all
renewals and extensions of all or any part thereof of Borrowers to
Administrative Lender, Lenders or any Lender arising from, by virtue of, or
pursuant to the Credit Agreement, the Notes, and the other Loan Documents,
including any extensions, modifications, substitutions, amendments and renewals
of any thereof, including, without limitation, interest, fees and other charges
that would accrue or become owing both prior to and subsequent to and but for
the commencement of any proceeding against or with respect to any Borrower or
any other Person liable for, or whose property secures the performance of, any
of the indebtedness and obligations referred to in this SECTION 2 under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 ET SEQ. whether or
not a claim is allowed for the same in any such proceeding, and (b) all
indebtedness and obligations incurred or arising pursuant to the provisions of
this Agreement. The indebtedness referred to in this SECTION 2 is hereinafter
sometimes called the "OBLIGATIONS".
Notwithstanding any contrary provision herein or in any other Loan
Document, Debtor's maximum liability hereunder shall not exceed the Maximum
Secured Indebtedness. Debtor agrees that the Obligations may at any time exceed
the aggregate Maximum Secured Indebtedness of all obligors (excluding Borrowers)
on all or any part of the Obligations, without affecting or impairing the
obligation of Debtor. "MAXIMUM SECURED INDEBTEDNESS" means, with respect to
Debtor as of the date of determination, the lesser of (a) the Obligations or
(b) the maximum amount for which Debtor may be liable under this Agreement
without such amount and Debtor's obligations under this Agreement with respect
to such amount being deemed a fraudulent transfer, as determined by a bankruptcy
or similar court.
3. DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Administrative Lender of
any of the rights hereunder shall not release Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) neither Administrative Lender nor any Secured Party shall have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Administrative Lender or any
Secured Party be obligated to perform any of the obligations or duties of Debtor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
-2-
4. DELIVERY OF SECURITY COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of Administrative Lender pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
Administrative Lender. In addition, Administrative Lender shall have the right
at any time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger denominations.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants, with
respect to itself and the Collateral, as follows:
(a) The Notes have been delivered and pledged to Administrative Lender,
duly endorsed and accompanied by such duly executed instruments of transfer or
assignment as are necessary for such pledge, to be held as pledged collateral.
(b) Debtor is the legal and beneficial owner of its Collateral pledged by
it free and clear of any Lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement. No
effective financing statement or other similar document used to perfect and
preserve a security interest under the Laws of any jurisdiction (a "FINANCING
STATEMENT") covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of Administrative
Lender relating to this Agreement.
(c) This Agreement and the pledge of the Collateral pursuant hereto
creates a valid and perfected security interest in the Collateral, securing the
payment of the Obligations, and all filings and other actions necessary or
desirable to perfect and protect such security interests have been duly taken
(or will be taken).
(d) No consent of any other Person and no authorization, approval or other
action by, and no notice to or filing (other than filing of financing statements
pursuant to the UCC) with, any governmental authority or regulatory body is
required (i) for the pledge by Debtor of the Collateral pledged by it hereunder,
for the grant by Debtor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by Debtor, (ii) for the
perfection or maintenance of the pledge, assignment and security interest
created hereby (including the first priority nature of such pledge, assignment
and security interest) or (iii) for the exercise by Administrative Lender of the
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement.
6. FURTHER ASSURANCES.
(a) Debtor agrees that it will, from time to time, at the expense of
Debtor, execute and deliver all further instruments and documents, and take all
further action, that may be reasonably necessary or reasonably desirable, or
that Administrative Lender may reasonably request, in order to perfect and
protect any pledge, assignment or security interest granted or
-3-
purported to be granted hereby, and the priority thereof, or to enable
Administrative Lender to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.
(b) Debtor hereby authorizes Administrative Lender to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of Debtor where permitted by
Law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by Law.
(c) Debtor will furnish to Administrative Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Administrative Lender
may reasonably request, all in reasonable detail.
(d) In addition to such other information as shall be specifically
provided for herein, Debtor shall furnish to Administrative Lender such other
information with respect to the Collateral as Administrative Lender may
reasonably request from time to time in connection with the Collateral, or the
protection, preservation, maintenance or enforcement of the security interest or
the Collateral.
7. NOTES AND THE RESTRICTED ACCOUNTS. If any Event of Default shall have
occurred and be continuing, upon demand by Administrative Lender, until the
Obligations are paid in full and the Commitment has terminated:
(a) Debtor will maintain the accounts listed as restricted accounts on
SCHEDULE I (the "RESTRICTED ACCOUNTS") with Administrative Lender into which
all proceeds of the Notes shall be deposited, in the name of Debtor, but such
Restricted Accounts shall be owned by Administrative Lender and shall be under
the sole control and dominion of Administrative Lender.
(b) It shall be a term and condition of each Restricted Account,
notwithstanding any term or condition to the contrary in any other agreement
relating to such Restricted Account, that no amount (including interest and
other proceeds of the cash and other property in the Restricted Account) shall
be paid or released to or for the account of, or withdrawn by or for the account
of, the Debtor or any other Person from such Restricted Account.
(c) Debtor will promptly instruct each debtor in respect of the Notes to
make all payments to the Restricted Accounts.
(d) Debtor shall not adjust, settle or compromise the amount or payment of
any Note, release wholly or partly any account debtor or obligor thereof, or
allow any credit or discount thereon.
Debtor understands and acknowledges that Administrative Lender may and permits
Administrative Lender to remove amounts from the Restricted Accounts from time
to time and
-4-
use the amounts to reduce the Obligations. Notwithstanding the foregoing,
upon Debtor's cure of an Event of Default giving rise to the Restricted
Accounts and upon demand by Debtor, Administrative Lender will terminate the
Restricted Accounts of Debtor and return the amounts deposited therein to
Debtor.
8. TRANSFERS AND OTHER LIENS. (a) Debtor shall not (i) sell, assign or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, or (ii) create or permit to exist any Lien, security interest,
option or other charge or encumbrance upon or with respect to any of the
Collateral, except for the security interest under this Agreement.
9. ADMINISTRATIVE LENDER APPOINTED ATTORNEY-IN-FACT. Debtor hereby
irrevocably appoints Administrative Lender attorney-in-fact, with full authority
in the place and stead of Debtor and in the name of Debtor or otherwise, only
after an Event of Default which is continuing and thereafter from time to time
in Administrative Lender's discretion, to take any action and to execute any
instrument which Administrative Lender may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral,
(b) to receive, indorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with the Collateral,
(c) to contact and instruct each debtor in respect of the Notes to make
all payments to the Restricted Accounts, and
(d) to file any claims or take any action or institute any proceedings
which Administrative Lender may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Collateral or the rights of Administrative Lender with respect
to any of the Collateral. The appointment of Administrative Lender as
attorney-in-fact is coupled with an interest and is irrevocable prior to the
final payment in full of the Obligations and the expiration or termination of
the obligations of all Secured Parties to extend credit to Debtor under the
Credit Agreement.
10. ADMINISTRATIVE LENDER MAY PERFORM. If Debtor fails to perform any
agreement contained herein, Administrative Lender may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Administrative
Lender incurred in connection therewith shall be payable by Debtor under
SECTION 12(B).
11. ADMINISTRATIVE LENDER'S DUTIES. The Secured Parties hereby appoint
NationsBank of Texas, N.A. as Administrative Lender hereunder to act as their
agent as provided herein and in the Credit Agreement, which actions hereunder,
including without limitation, the administration of the Collateral, enforcement
of the rights hereunder and collection of amounts
-5-
secured hereby, are on behalf of, and for the ratable benefit of, the
Lenders. The powers conferred on Administrative Lender hereunder are solely
to protect Secured Parties' interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, Administrative Lender shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to exchanges,
maturities or other matters relative to any Collateral, whether or not
Administrative Lender or any Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any reasonable
care in the custody and preservation of any Collateral in its possession if
such Collateral is accorded treatment substantially equal to that which
Administrative Lender accords its own property. Except as provided in this
SECTION 11, Administrative Lender shall not have any duty or liability to
protect or preserve any Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or
obligating Administrative Lender, and Administrative Lender shall not be
required or obligated, to (i) present or file any claim or notice or take any
action, with respect to any Collateral or in connection therewith or (ii)
notify Debtor of any decline in the value of any Collateral.
12. REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) Administrative Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code in effect in the State of Texas at that time (the
"UCC"), and also may (i) require Debtor to, and Debtor hereby agrees that it
will at its expense and upon request of Administrative Lender forthwith,
assemble all records with respect to all or part of the Collateral as directed
by Administrative Lender and make it available to Administrative Lender at a
place to be designated by Administrative Lender which is reasonably convenient
to both parties and (ii) without notice, except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Administrative Lender's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as Administrative Lender may deem
commercially reasonable. Debtor agrees that, to the extent notice of sale shall
be required by Law, at least ten days' notice to Debtor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Administrative Lender shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Administrative Lender may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(b) All cash proceeds received by Administrative Lender or any Secured
Party upon any sale of, collection of, or other realization upon, all or any
part of the Collateral shall be applied, as follows:
-6-
FIRST: To the payment of all reasonable out-of-pocket costs and reasonable
expenses incurred in connection with the sale of, collection of or other
realization upon Collateral, including reasonable attorneys' fees and
reasonable disbursements;
SECOND: To the payment of the Obligations to be distributed pro rata to
each Secured Party based upon the percentage that the amount of the
Obligations owing to each Secured Party bears to the total unpaid amount of
the Obligations (with Borrowers remaining liable for any deficiency); and
THIRD: To the extent of the balance (if any) of such proceeds, to Debtor
or other Person legally entitled thereto.
(c) All payments received by Debtor under or in connection with any
Collateral shall be received in trust for the benefit of Administrative Lender,
and on demand by Administrative Lender shall be segregated from other funds of
Debtor and shall be forthwith paid over to Administrative Lender in the same
form as so received (with any necessary indorsement).
13. AMENDMENTS; ETC. No amendment or waiver of any provision of this
Agreement, and no consent to any departure by Debtor herefrom, shall in any
event be effective unless the same shall be in writing and signed by
Administrative Lender and Debtor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
14. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until the later of (x) the final payment in full of the
Obligations and all amounts payable under this Agreement and (y) the expiration
or termination of the obligations of all Secured Parties to extend credit to
Borrowers under the Credit Agreement, (ii) be binding upon Debtor, its
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, Administrative Lender, Secured Parties and their respective successors,
transferrees and assigns. Upon the later of the payment in full of the
Obligations and all other amounts payable under this Agreement and the
expiration or termination of the obligations of all Secured Parties to extend
credit to Borrowers under the Credit Agreement, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to Debtor.
Upon any such termination, Administrative Lender will, at Debtor's expense,
execute and deliver to Debtor such documents as Debtor shall reasonably request
to evidence such termination.
15. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. WITHOUT EXCLUDING ANY
OTHER JURISDICTION, DEBTOR AGREES THAT THE
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STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS, SHALL HAVE
JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH. UNLESS OTHERWISE
DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 9 OF THE UCC
ARE USED HEREIN AS THEREIN DEFINED.
16. WAIVER OF JURY TRIAL. EACH OF THE ADMINISTRATIVE LENDER, THE SECURED
PARTIES AND DEBTOR HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY
WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO EACH SECURED PARTY ENTERING INTO THE CREDIT
AGREEMENT.
17. ADMINISTRATIVE LENDER'S RIGHT TO USE AGENTS. Administrative Lender
may exercise its rights under this Agreement through an agent or other designee.
18. NO INTERFERENCE, COMPENSATION OR EXPENSE. Administrative Lender may
exercise its rights under this Agreement without payment of any rent, license
fee or compensation of any kind to Debtor.
19. NOTICES AND DELIVERIES. All notices, communications and materials to
be given or delivered pursuant to this Agreement shall be given and shall be
effective as provided in SECTION 11.1 of the Credit Agreement but to Debtor at
the address shown opposite its name on the signature page hereto.
20. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
21. SUCCESSORS AND ASSIGNS. All of the provisions of this Agreement shall
be binding and inure to the benefit of the parties hereto and their respective
successors and assigns.
22. LOAN DOCUMENT. This Agreement is a Loan Document executed pursuant to
the Credit Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance with the terms and provisions
thereof.
23. DEFINITIONS. Capitalized terms not otherwise defined herein have the
meaning specified in the Credit Agreement, and, to the extent of any conflict,
terms as defined in the
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Credit Agreement shall control (provided, that a more expansive or
explanatory definition shall not be deemed a conflict).
24. OBLIGATIONS NOT AFFECTED. To the fullest extent permitted by
Applicable Law, the obligations of Debtor under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:
(a) any amendment or modification or addition or supplement to any Loan
Document, any instrument delivered in connection therewith or any assignment or
transfer thereof;
(b) any exercise, non-exercise, or waiver by Administrative Lender or any
Secured Party of any right, remedy, power or privilege under or in respect of,
or any release of any guaranty, any collateral or the Collateral or any part
thereof provided pursuant to, this Agreement or any Loan Document;
(c) any waiver, consent, extension, indulgence or other action or inaction
in respect of this Agreement or any Loan Document or any assignment or transfer
of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of any Borrower or any other Person,
whether or not Debtor shall have notice or knowledge of any of the foregoing.
25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
26. SUBROGATION. Debtor shall not assert, enforce, or otherwise exercise
(i) any right of subrogation to any of the rights or liens of any Lender or
Administrative Lender or any other beneficiary against any Borrower or any other
obligor on the Obligations or any collateral or other security or (ii) any right
of recourse, reimbursement, contribution, indemnification, or similar right
against any Borrower or any other obligor on all or any part of the Obligations
or any guarantor thereof, and Debtor hereby waives any and all of the foregoing
rights and the benefit of, and any right to participate in, any collateral or
other security given to any Lender or Administrative Lender or any other
beneficiary to secure payment of the Obligations. The provisions of this
SECTION 26 shall survive the termination of this Agreement and any satisfaction
and discharge of any Borrower by virtue of any payment, court order, or Law.
[27. NO NOVATION. THE EXECUTION, DELIVERY AND EFFECTIVENESS OF THIS
AGREEMENT SHALL NOT DISCHARGE OR RELEASE THE LIEN OR PRIORITY OF THAT CERTAIN
AMENDED AND RESTATED SECURITY AGREEMENT DATED AS OF __________________, EXECUTED
BY DEBTOR IN FAVOR OF ADMINISTRATIVE LENDER, SECURING THE COMPANIES' OBLIGATIONS
UNDER THAT CERTAIN THIRD AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF
JULY 21, 1995, AMONG THE BORROWERS, ADMINISTRATIVE LENDER AND THE LENDERS PARTY
THERETO (THE "PRIOR CREDIT AGREEMENT"). NOTHING HEREIN CONTAINED SHALL BE
CONSTRUED AS A SUBSTITUTION OR NOVATION OF ANY COLLATERAL
-9-
DOCUMENTS (AS SUCH TERM IS DEFINED IN THE PRIOR CREDIT AGREEMENT) OR THE
LIENS GRANTED THEREBY, ALL OF WHICH SHALL CONTINUE AND REMAIN IN FULL FORCE
AND EFFECT, EXCEPT AS MODIFIED HEREBY, OR BY INSTRUMENTS EXECUTED
CONCURRENTLY HEREWITH.]
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, Debtor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
DEBTOR:
SUN HEALTHCARE GROUP, INC.
Address:
000 Xxx Xxxx, X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000 By:
---------------------------------
Name:
-------------------------------
Attn: Chief Financial Officer Title:
------------------------------
ADMINISTRATIVE LENDER:
NATIONSBANK OF TEXAS, N.A.,
as Administrative Lender
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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Schedule I
DEBTOR BANK ACCOUNTS
Restricted Account
Account No.
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EXHIBIT C
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY, dated as of ____________________, 199__ (this
"Guaranty"), made by______________________________, a _______________________
corporation,__________________________________, a ____________________________
corporation, and ___________________________, a ______________________________
corporation (collectively, the "Guarantors"), of the obligations
of Sun Healthcare Group, Inc., a Delaware corporation, The Mediplex Group, Inc.,
a Massachusetts corporation (collectively, the "Companies"), under the Credit
Agreement (defined below) among the Companies, NationsBank of Texas, N.A., as
Administrative Lender ("Administrative Lender"), and the lenders parties to the
Credit Agreement (singly, a "Lender" and collectively, the "Lenders").
BACKGROUND
1. The Companies, Administrative Lender, certain Co-Agents and the
Lenders have entered into a Fourth Amended and Restated Credit Agreement, dated
as of October 29, 1996 (as it may be amended or otherwise modified from time to
time, being the "Credit Agreement"). The capitalized terms not otherwise
defined herein have the meanings specified in the Credit Agreement.
2. Pursuant to the Credit Agreement, the Companies may, subject to the
terms of the Credit Agreement and the other Loan Documents, request that the
Lenders make Advances and issue, or participate in the issuance of, Letters of
Credit.
3. It is a condition precedent to the obligation of the Lenders to make
such Advances and issue, or participate in the issuance of, Letters of Credit
that each Guarantor guaranty repayment thereof upon the terms and conditions set
forth herein.
4. The Board of Directors of each Guarantor has determined that the
execution, delivery, and performance of this Guaranty is necessary and
convenient to the conduct, promotion, and attainment of each Guarantor's
business.
5. The Guarantors desire to induce the Lenders to make such Advances and
issue, or participate in the issuance of, Letters of Credit, which may
reasonably be expected to benefit, directly or indirectly, each Guarantor.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances and issue, or participate in the issuance of, Letters
of Credit under the Credit Agreement, the Guarantors hereby agree as follows:
1. GUARANTY.
(a) Each Guarantor, jointly and severally, hereby unconditionally
guarantees the punctual payment of, and promises to pay, when due, whether
at stated maturity, by mandatory prepayment, by acceleration or otherwise,
all obligations, indebtedness and liabilities, and all rearrangements,
renewals and extensions of all or any part thereof, of the Companies or any
Subsidiary now or hereafter arising from, by virtue of or pursuant to the
Credit Agreement, the Notes, any other Loan Document, and any and all
renewals and extensions thereof, or any part thereof, or future amendments
thereto, whether for principal, interest (including, without limitation,
interest, fees and other charges that would accrue or become owing both
prior to and subsequent to and but for the commencement of any proceeding
against or with respect to any Company under any chapter of the Bankruptcy
Code of 1978, 11 U.S.C. Section 101 ET SEQ. whether or not a claim is
allowed for the same in any such proceeding), premium, fees, commissions,
expenses or otherwise (such obligations being the "Obligation"), and agrees
to pay any and all reasonable expenses (including reasonable counsel fees
and expenses) incurred in enforcement or collection of all or any part
thereof, whether such obligations, indebtedness and liabilities are direct,
indirect, fixed, contingent, joint, several or joint and several, and of
any rights under this Guaranty.
(b) Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of each Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that
would not render its obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the
United States Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving
effect to all other liabilities of such Guarantor, contingent or otherwise,
that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liabilities of such Guarantor in respect of
intercompany indebtedness to any Company or other Affiliates of any Company
to the extent that such indebtedness would be discharged in an amount equal
to the amount paid by such Guarantor hereunder) and after giving effect as
assets, subject to Paragraph 4(a) hereof, to the value (as determined under
the applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation or contribution of such Guarantor pursuant to (i) Applicable
Law or (ii) any agreement providing for an equitable allocation among such
Guarantor and other Affiliates of the Companies of obligations arising
under guaranties by such parties.
2. GUARANTY ABSOLUTE. The Guarantors guarantee that the Obligation will
be paid strictly in accordance with the terms of the Credit Agreement, the
Notes, and the other Loan Documents, regardless of any Applicable Law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Lender with respect thereto; provided,
however, nothing contained in this Guaranty shall require the Guarantors to make
any payment under this Guaranty in violation of any Applicable Law, regulation
or order now or hereafter in effect. The obligations and liabilities of each
Guarantor hereunder are independent
-2-
of the obligations of the Companies under the Credit Agreement and any
Applicable Law. The liability of each Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(a) the taking or accepting of any other security or guaranty for any
or all of the Obligations;
(b) any increase, reduction or payment in full at any time or from
time to time of any part of the Obligation, including any reduction or
termination of the Commitment;
(c) any lack of validity or enforceability of the Credit Agreement,
the Notes, or any other Loan Document or other agreement or instrument
relating thereto, including but not limited by the unenforceability of all
or any part of the Obligation by reason of the fact that (i) the
Obligation, and/or the interest paid or payable with respect thereto,
exceeds the amount permitted by Applicable Law, (ii) the act of creating
the Obligation, or any part thereof, is ULTRA XXXXX, (iii) the officers
creating same acted in excess of their authority, or (iv) for any other
reason;
(d) any lack of corporate power of any Company or any other Person at
any time liable for the payment of any or all of the Obligation;
(e) any Debtor Relief Law affecting the rights of creditors generally
involving any Company, any Guarantor or any other Person obligated on any
of the Obligation;
(f) any renewal, compromise, extension, acceleration or other change
in the time, manner or place of payment of, or in any other term of, all or
any of the Obligation; any adjustment, indulgence, forbearance, or
compromise that may be granted or given by any Lender or the Administrative
Lender to the Companies, any Guarantor, or any Person at any time liable
for the payment of any or all of the Obligation; or any other modification,
amendment, or waiver of or any consent to departure from the Credit
Agreement, the Notes, or any other Loan Document and other agreement or
instrument relating thereto without notification of any Guarantor (the
right to such notification being herein specifically waived by Guarantors);
(g) any exchange, release, sale, subordination, or non-perfection of
any collateral or Lien thereon or any lack of validity or enforceability or
change in priority, destruction, reduction, or loss or impairment of value
of any collateral or Lien thereon;
(h) any release or amendment or waiver of or consent to departure
from any other guaranty for all or any of the Obligation;
(i) the failure by any Lender or the Administrative Lender to make
any demand upon or to bring any legal, equitable, or other action against
any Company or any other Person (including without limitation any other
Guarantor), or the failure or
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delay by any Lender or the Administrative Lender to, or the manner
in which any Lender or the Administrative Lender shall, proceed to
exhaust rights against any direct or indirect security for the Obligation;
(j) the existence of any claim, defense, set-off, or other rights
which any Company or any Guarantor may have at any time against any
Company, the Lenders, or any Guarantor, or any other Person, whether in
connection with this Guaranty, the Loan Documents, the transactions
contemplated thereby, or any other transaction;
(k) any failure of any Lender or the Administrative Lender to notify
any Guarantor of any renewal, extension, or assignment of the Obligation or
any part thereof, or the release of any security, or of any other action
taken or refrained from being taken by any Lender or the Administrative
Lender, it being understood that the Lenders and the Administrative Lender
shall not be required to give any Guarantor any notice of any kind under
any circumstances whatsoever with respect to or in connection with the
Obligation;
(l) any payment by any Company to the Lenders or the Administrative
Lender is held to constitute a preference under any Debtor Relief Law or if
for any other reason the Lenders or the Administrative Lender is required
to refund such payment or pay the amount thereof to another Person; or
(m) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Company, any Guarantor, any other
guarantor or other Person liable on the Obligation, including without
limitation any defense by reason of any disability or other defense of any
Company, or the cessation from any cause whatsoever of the liability of any
Company, or any claim that the Guarantors' obligations hereunder exceed or
are more burdensome than those of any Company.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligation is rescinded or must
otherwise be returned by any Lender or any other Person upon the insolvency,
bankruptcy or reorganization of any Company, any Guarantor or otherwise, all as
though such payment had not been made.
3. WAIVER. To the extent not prohibited by Applicable Law, each
Guarantor hereby waives: (a) promptness, protests, diligence, presentments,
acceptance, performance, demands for performance, notices of nonperformance,
notices of protests, notices of dishonor, notices of acceptance of this Guaranty
and of the existence, creation or incurrence of new or additional indebtedness,
and any of the events described in SECTION 2 and of any other occurrence or
matter with respect to any of the Obligation, this Guaranty or any of the other
Loan Documents; (b) any requirement that the Administrative Lender or any Lender
protect, secure, perfect, or insure any Lien or security interest or any
property subject thereto or exhaust any right or take any action against any
Company or any other Person or any collateral or pursue any other remedy in the
Administrative Lender's or any Lender's power whatsoever; (c) any right to
assert
-4-
against the Administrative Lender or any Lender as a counterclaim, set-off or
cross-claim, any counterclaim, set-off or claim which it may now or hereafter
have against any Company or other Person liable on the Obligation; (d) any
right to seek or enforce any remedy or right that the Administrative Lender
or any Lender now has or may hereafter have against any Company (to the
extent permitted by Applicable Law); (e) any right to participate in any
collateral or any right benefiting the Administrative Lender or the Lenders
in respect of the Obligation; and (f) any right by which it might be entitled
to require suit on an accrued right of action in respect of any of the
Obligation or require suit against any Company or any other Person, whether
arising pursuant to Section 34.02 of the Texas Business and Commerce Code, as
amended, Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended, Rule 31 of the Texas Rules of Civil Procedure, as amended, or
otherwise.
4. SUBROGATION AND SUBORDINATION.
(a) Notwithstanding any reference to subrogation contained herein to the
contrary, each Guarantor hereby irrevocably waives any claim or other rights
which it may have or hereafter acquire against any Company that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under this Guaranty, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, any right to
participate in any claim or remedy of any Lender against any Company or any
collateral which any Lender now has or hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statutes or common
law, including without limitation, the right to take or receive from any
Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Obligations shall not have been paid in full, such amount shall
be deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Lenders, and shall forthwith be paid to the
Administrative Lender to be credited and applied upon the Obligations, whether
matured or unmatured, in accordance with the terms of the Credit Agreement.
Each Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Credit Agreement and that
the waiver set forth in this Paragraph 4(a) is knowingly made in contemplation
of such benefits.
(b) If any Guarantor becomes the holder of any indebtedness payable by any
Company, each Guarantor hereby subordinates all indebtedness owing to it from
such Company to all indebtedness of the Companies to the Lenders, and agrees
that upon the occurrence and continuance of a Default or an Event of Default, it
shall not accept any payment on the same until payment in full of the
obligations of the Companies under the Credit Agreement, the Notes and all other
Loan Documents, and shall in no circumstance whatsoever attempt to set-off or
reduce any obligations hereunder because of such indebtedness. If any amount
shall nevertheless be paid to a Guarantor by any Company or another Guarantor on
behalf of such Company prior to payment in full of the Obligation, such amount
shall be held in trust for the benefit of the Lenders and shall forthwith be
paid to the Administrative Lender to be credited and applied to the Obligation,
whether matured or unmatured.
-5-
5. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents and
warrants that all representations and warranties as they apply to such Guarantor
only set forth in Article 4 of the Credit Agreement (each of which is hereby
incorporated by reference) are true and correct.
6. COVENANTS. Each Guarantor hereby expressly assumes, confirms, and
agrees to perform, observe, and be bound by all conditions and covenants set
forth in the Credit Agreement, to the extent applicable to it, as if it were a
signatory thereto. Each Guarantor further covenants and agrees (a) punctually
and properly to perform all of such Guarantor's covenants and duties under any
other Loan Documents; (b) from time to time promptly to furnish the
Administrative Lender with any information or writings which the Administrative
Lender may request concerning this Guaranty; and (c) promptly to notify the
Administrative Lender of any claim, action, or proceeding affecting this
Guaranty.
7. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by any Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by each
Guarantor, the Lenders, the Administrative Lender, or the Determining Lenders,
if applicable, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
8. ADDRESSES FOR NOTICES. Unless otherwise provided herein, all notices,
requests, consents and demands shall be in writing and shall be delivered by
hand or overnight courier service, mailed or sent by telecopy to the respective
addresses specified herein, or, as to any party, to such other addresses as may
be designated by it in written notice to all other parties. All notices,
requests, consents and demands hereunder shall be deemed to have been given on
the date of receipt if delivered by hand or overnight courier service or sent by
telecopy, or if mailed, effective on the earlier of actual receipt or three (3)
days after being mailed by certified mail, return receipt requested, postage
prepaid, addressed as aforesaid.
9. NO WAIVER; REMEDIES. No failure on the part of the Administrative
Lender or any Lender to exercise, and no delay in exercising, any right
hereunder or under any of the Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder or under any of
the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right. Neither the Administrative Lender nor any Lender
shall be required to (a) prosecute collection or seek to enforce or resort to
any remedies against any Company or any other Person liable on any of the
Obligation, (b) join any Company or any other Person liable on any of the
Obligation in any action in which Lender prosecutes collection or seeks to
enforce or resort to any remedies against any Company or other Person liable on
any of the Obligation, or (c) seek to enforce or resort to any remedies with
respect to any Liens granted to (or benefiting, directly or indirectly) the
Administrative Lender or any Lender by any Company or any other Person liable on
any of the Obligation. Neither the Administrative Lender nor any Lender shall
have any obligation to protect, secure or insure any of the Liens or the
properties or interests in properties subject thereto. The remedies herein
provided are cumulative and not exclusive of any remedies provided by Applicable
Law.
-6-
10. RIGHT OF SET-OFF. Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time and from time
to time, to the fullest extent permitted by Law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for the
credit or the account of any Guarantor against any and all of the obligations of
any Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not such Lender shall have made any demand under this Guaranty. Each
Lender agrees promptly to notify such Guarantor after any such set-off and
application, provided 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 10 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
11. LIENS. To the extent not prohibited by Applicable Law, each Guarantor
agrees that the Administrative Lender or any Lender, in its discretion, without
notice or demand to or upon any Guarantor and without affecting either the
liability of such Guarantor, any Company or any other Person liable on any of
the Obligation under, or the Liens and security interests created by, this
Guaranty, or any security interest or other Lien, may foreclose any deed of
trust or mortgage or similar Lien covering interests in real or personal
property, and the interests in real or personal property secured thereby, by
nonjudicial sale; and, to the extent not prohibited by Applicable Law, such
Guarantor hereby waives any defense to the recovery by the Administrative Lender
or any Lender hereunder against any Company, such Guarantor or any collateral of
any deficiency after a nonjudicial sale and such Guarantor expressly waives any
defense or benefits that may be derived from Chapter 34 of the Texas Business
and Commerce Code, Section 51.003 of the Texas Property Code, or any similar
statute in effect in any other jurisdiction. Without limiting the foregoing,
each Guarantor waives, to the extent not prohibited by Applicable Law, any
defense arising out of any such nonjudicial sale even though such sale operates
to impair or extinguish any right of reimbursement or subrogation or any other
right or remedy of such Guarantor against any Company or any other Person or any
Collateral or any other collateral. Each Guarantor hereby agrees that such
Guarantor shall be liable, subject to the limitations of SECTION 1 hereof, for
any part of the Obligation remaining unpaid after any foreclosure.
12. CONTINUING GUARANTY; TRANSFER OF NOTES. This Guaranty is an
irrevocable continuing guaranty of payment and shall (a) remain in full force
and effect until final payment in full (after the Maturity Date) of the
Obligation and all other amounts payable under this Guaranty, (b) be binding
upon each Guarantor, its successors and assigns, and (c) inure to the benefit of
and be enforceable by each Lender and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), to the extent
permitted by the Credit Agreement, each Lender may assign or otherwise transfer
its rights under the Credit Agreement, the Notes or any of the Loan Documents or
any interest therein to any other Person, and such other Person shall thereupon
become vested with all the rights or any interest therein, as appropriate, in
respect thereof granted to the Lender herein or otherwise.
-5-
13. INFORMATION. Each Guarantor acknowledges and agrees that it shall
have the sole responsibility for obtaining from each Company such information
concerning such Company's financial condition or business operations as such
Guarantor may require, and that neither the Administrative Lender nor any Lender
has any duty at any time to disclose to any Guarantor any information relating
to the business operations or financial conditions of the Companies.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, EACH GUARANTOR AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS, SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION
HEREWITH.
15. WAIVER OF JURY TRIAL. EACH GUARANTOR, THE ADMINISTRATIVE LENDER, AND
THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THE CREDIT AGREEMENT.
16. RATABLE BENEFIT. This Guaranty is for the ratable benefit of the
Lenders, each of which shall share any proceeds of this Guaranty pursuant to the
terms of the Credit Agreement.
17. GUARANTOR INSOLVENCY. Should any Guarantor become insolvent, fail to
pay its debts generally as they become due, voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject of any proceeding provided for by any Debtor Relief Law (other
than as a creditor or claimant) that could suspend or otherwise adversely affect
the rights of any Lender granted hereunder, then, the obligations of such
Guarantor under this Guaranty shall be, as between such Guarantor and such
Lender, a fully-matured, due, and payable obligation of such Guarantor to such
Lender (without regard to whether the Companies are then in default under the
Credit Agreement or whether any part of the Obligation is then due and owing by
the Companies to such Lender), payable in full by such Guarantor to such Lender
upon demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.
18. ENTIRE AGREEMENT. THIS GUARANTY, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES
-8-
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
-9-
IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
Address for all Guarantors:
------------------------------------
------------------------------
------------------------------ By:
---------------------------------
------------------------------ Name:
Attn: -------------------------------
-------------------------- Title:
------------------------------
-10-
EXHIBIT D
COMPLIANCE CERTIFICATE
To: NationsBank of Texas, N.A., as Administrative Lender
From: Sun Healthcare Group, Inc. and The Mediplex Group, Inc.
Date: _________________, 19____
Re: Fourth Amended and Restated Credit Agreement, dated as of October 29, 1996
("Credit Agreement"), among Sun Healthcare Group, Inc., The Mediplex Group,
Inc. (collectively, the "Borrowers"), certain Lenders, certain Co-Agents,
and NationsBank of Texas, N.A. as Administrative Lender
This Compliance Certificate is delivered pursuant to Section 6.3 of the
Credit Agreement. All capitalized terms used herein and defined in the Credit
Agreement shall be used herein as so defined. For purposes hereof, section
references herein related to sections of the Credit Agreement, and bracketed
amounts or ratios refer to the maximum or minimum amounts or ratios required
under the relevant sections of the Credit Agreement.
19. COVENANT CALCULATIONS. [To be completed quarterly] Demonstration of
compliance with certain covenants contained in Article 7 of the Credit Agreement
for the period ended ______________________.
a. SECTIONS 7.1(i), 7.3(i) AND 7.5(c)
Guaranties and Letters of Credit in
respect of obligations of Foreign
Entities as lessees under Operating
Leases, Investments in Foreign
Entities, and Acquisition
Consideration for Foreign Entities
(i) Maximum $50,000,000
(ii) Actual $__________
b. SECTION 7.1(j) Other Indebtedness incurred.
(i) Maximum $__________
5% of Total Assets
(ii) Actual $__________
c. SECTION 7.3(h) Assisted Living Investments
(i) Maximum $50,000,000
(ii) Actual $__________
d. SECTION 7.3(i) Other Investments in Domestic
entities.
(1) Maximum $35,000,000
(2) Actual $__________
e. SECTION 7.3(j) Investments in Frost Street
Outpatient Surgical Center, Inc. and Medical
Surgical Centers of America, Inc.
(1) Maximum $750,000
(2) Actual $__________
f. SECTION 7.5 Acquisitions (Domestic) by or of
Restricted Subsidiaries.
(i) Maximum
(a) For the fiscal year ending
December 31, 1996, in aggregate
amount $120,000,000
(b) Per Acquisition for fiscal year
ending December 31, 1996, and
during each fiscal year thereafter $65,000,000
(c) In aggregate for each fiscal year
ending after December 31, 1996 $100,000,000
(ii) Actual $__________
g. SECTION 7.9 Fixed Charge Coverage Ratio
[calculated for the preceding four fiscal quarters]
(i) Minimum
FISCAL QUARTER ENDING FIXED CHARGE COVERAGE RATIO
September 30, 1996 1.45 to 1
December 31, 1996 1.45 to 1
March 31, 1997 1.45 to 1
June 30, 1997 1.50 to 1
December 31, 1997 1.50 to 1
March 31, 1998 1.55 to 1
June 30, 1998 1.65 to 1
September 30, 1998 1.70 to 1
December 31, 1998 and each fiscal 1.75 to 1
quarter thereafter
- 2 -
(ii) Actual(1)
(a) EBITDAR (from
item (a) of Schedule 1) __________
(b) Domestic EBITDA
(from item (b) of
Schedule 1) __________
(c) Fixed Charges (from
item (d) of Schedule 1) __________
(d) [((a) or (b), as
applicable) to (c)] _____ to 1
h. SECTION 7.10 Total Debt to Cash
Flow Coverage Ratio [calculated for
the preceding four fiscal quarters]
(i) Maximum
TOTAL DEBT TO CASH
FISCAL QUARTER ENDING FLOW COVERAGE RATIO
September 30, 1996 5.75 to 1
December 31, 1996 5.75 to 1
March 31, 1997 5.75 to 1
June 30, 1997 5.50 to 1
September 30, 1997 5.25 to 1
December 31, 1997 5.00 to 1
March 31, 1998 5.00 to 1
June 30, 1998 5.00 to 1
September 30, 1998 4.75 to 1
December 31, 1998 and each fiscal 4.75 to 1
quarter thereafter
(ii) Actual(1)
(a) Total Debt (from item (e)
of Schedule 1) ________________
(b) EBITDAR (from item (a)
of Schedule 1) ________________
(c) Domestic EBITDA (from
item (b) of Schedule 1) ________________
-------------------------
(1)Use EBITDA from item (a) of Schedule 1 until Foreign Subsidiary EBITDAR
exceeds 15% of EBITDAR, at which time Domestic EBITDAR is to be used.
- 3 -
(d) [(a) to ((b) or (c), as ___________ to 1
applicable)]
i. PRICING GRID. Applicable Margin, Commitment Fee and Letter of
Credit Fee are based on the Cash Flow Coverage Ratio as follows:
Cash Flow Coverage Applicable Commitment Letter of
Ratio Margin Fee Credit Fee
-------------------------------------------------------------------------------
< 2.0x LIBOR + .50% 0.1875% .50%
Base Rate
< 3.00x but > or = LIBOR + .75% 0.225% .75%
2.00x Base Rate
< 4.00x but > or = LIBOR + 1.00% 0.25% 1.00%
3.00x Base Rate
< 4.50x but > or= LIBOR + 1.25% 0.30% 1.25%
4.00x Base Rate
> or = 4.50x LIBOR + 1.50% 0.375% 1.50%
Base Rate
Based on the above grid, Applicable Margin, Commitment Fee and Letter of
Credit Fee for the period ended ________________ is as follows:
Applicable Margin _______________
Commitment Fee _______________
Letter of Credit Fee _______________
Adjustments in the above pricing shall be effective as of the fifth day
following the date of receipt by the Administrative Lender of the financial
statements required pursuant to Section 6.1 or 6.2.
- 4 -
j. SECTION 7.11 Total Debt to Capitalization
Ratio
(i) Maximum
TOTAL DEBT TO
FISCAL QUARTER ENDING CAPITALIZATION RATIO
September 30, 1996 .70 to 1
December 31, 1996 .70 to 1
March 31, 1997 .70 to 1
June 30, 1997 .70 to 1
September 30, 1997 .70 to 1
December 31, 1997 .68 to 1
March 31, 1998 .68 to 1
June 30, 1998 .68 to 1
September 30, 1998 .68 to 1
December 31, 1998 .68 to 1
March 31, 1999 .68 to 1
June 30, 1999 .68 to 1
September 30, 1999 .68 to 1
December 31, 1999 and each fiscal quarter .65 to 1
thereafter
(ii) Actual
(a) Total Debt (from item (e) of __________
Schedule 1)
(b) Net Worth __________
(c) [(a) to ((a)+(b))] _____ to 1
k. SECTION 7.16 Sale and Leaseback (other
than those entered into in connection with
Assisted Living Investments and those listed
on Schedule 7 to Credit Agreement)
(i) Maximum (per occurrence) $20,000,000
(ii) Actual $__________
(iii) Maximum (per fiscal year) $50,000,000
(iv) Actual $__________
l. SECTION 7.16 Sale and Leaseback related to
Assisted Living Investments
(i) Maximum (in aggregate amount after
Agreement Date) $50,000,000
- 5 -
(ii) Actual $__________
20. COMPLIANCE CERTIFICATE. [To be completed quarterly] The undersigned
hereby certifies to you as follows:
(a) I am the duly elected qualified and acting chief financial
officer [or chief accounting officer] of the Borrowers.
(b) I have reviewed the provisions of the Credit Agreement and the
other Loan Documents, and a review of the activities of the
Borrowers during the period from __________, 19__ to
_______________, 19__ (the "Reporting Period") has been made
under my supervision with a view toward determining whether,
during the Reporting Period, the Borrowers have kept, observed,
performed and fulfilled all its obligations under the Credit
Agreement and such Loan Documents.
(c) The representations and warranties made in the Loan Documents
are true and correct in all material respects as of the date
hereof as though made at and as of the date hereof, except for
such representations and warranties which relate to a
particular date or which fail to be true and correct as a
result of events or occurrences permitted under the Loan
Documents, and no Default or Event of Default has occurred or
is continuing or is imminent.
This Compliance Certificate is executed and delivered on the _______ day of
_____________________, 19__.
SUN HEALTHCARE GROUP, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
THE MEDIPLEX GROUP, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
- 6 -
SCHEDULE I
Calculation of Items used in Financial Covenants
(a) EBITDAR [pro forma for Acquisitions and asset
sales exceeding $20,000,000 in Consideration*]
(Calculated for Sun and all Subsidiaries on a
consolidated basis including Foreign Subsidiaries)
(1) Pre-tax net income $_________
(2) Interest expense [including interest expense
pursuant to Capitalized Lease Obligations] $_________
(3) Extraordinary gain [to the extent included in
(1)] $_________
(4) Extraordinary loss [to the extent included in
(1)] $_________
(5) Payments after the Agreement Date to
Convertible Bondholders not to exceed
$3,000,000 in aggregate amount [to the
extent indicated in (1)] $_________
(6) Non-cash charges for the fiscal quarter and
year ended December 31, 1995 related to
write-off of goodwill and uncollectible
accounts receivable acquired with acquisition
of Mediplex and Honorcare not to exceed
$67,000,000 $_________
(7) Depreciation and amortization $_________
(8) Lease expense [pursuant to Operating
Leases] $_________
(9) EBITDAR
(1)+(2)-(3)-(4)-(5)-(6)+(7)+(8) $_________
(b) Domestic EBITDAR [pro forma for Acquisitions
and asset sales exceeding $20,000,000 in
Consideration*] (Calculated for Sun and all
RESTRICTED Subsidiaries on a consolidated basis)
(1) Pre-tax net income $_________
(2) Interest expense [including interest expense
pursuant to Capitalize Lease Obligations] $_________
- 7 -
(3) Extraordinary gain [to the extent included in
(1)] $_________
(4) Extraordinary loss [to the extent included in
(1)] $_________
(5) Payments after the Agreement Date to
Convertible Bondholders not to exceed
$3,000,000 in aggregate amount [to the
extent indicated in (1)] $_________
(6) Non-cash charges for the fiscal quarter and
year ended December 31, 1995 related to
write-off of goodwill and uncollectible
accounts receivable acquired with acquisition
of Mediplex and Honorcare not to exceed
$67,000,000 $_________
(7) Depreciation and amortization $_________
(8) Lease expense [pursuant to Operating
Leases] $_________
(9) EBITDAR
(1)+(2)-(3)-(4)-(5)-(6)+(7)+(8) $_________
(c) Foreign Subsidiary EBITDAR [pro forma for
Acquisitions and asset sales exceeding $20,000,000
in Consideration*] (Calculated on a consolidated
basis for Foreign Subsidiaries only)
(1) Pre-tax net income $_________
(2) Interest expense [including interest expense
pursuant to Capitalize Lease Obligations] $_________
(3) Extraordinary gain [to the extent included in
(1)] $_________
(4) Extraordinary loss [to the extent included in
(1)] $_________
(5) Depreciation and amortization $_________
(6) Lease expense [pursuant to Operating
Leases] $_________
(7) EBITDAR
(1)+(2)-(3)-(4)+(5)+(6) $_________
- 8 -
(d) Fixed Charges [*pro forma for Acquisitions and
asset sales exceeding $20,000,000 in
Consideration](1)
(1) Scheduled principal payments made on Total
Debt (excluding lease expense pursuant to
Operating Leases, principal payments made
on the Obligations and debt for borrowed
money having a maturity of less than 12
months and no principal amortization) $_________
(2) Interest paid [including interest paid
pursuant to Capitalized Lease Obligations] $_________
(3) Lease Expense [pursuant to Operating
Leases] $_________
(4) Fixed Charges
(1)+(2)+(3) $_________
(e) Total Debt [*pro forma for Acquisitions and asset
sales exceeding $20,000,000 in Consideration](2)
(1) Principal outstanding under Loan Documents $_________
(2) Other obligations for borrowed money $_________
(3) Capitalized Lease Obligations $_________
(4) Lease Expense (pursuant to Operating
Leases (to be equal to product of rental
expense multiplied for the four fiscal
quarters immediately preceding the date of
calculation by six and to be net of any
income being received via subleases unless
such sublessee is in default thereunder)) $_________
(5) Reimbursement obligations for letters of
credit $_________
-------------------------
(1)To the extent Foreign Subsidiary EBITDAR ever exceeds 15% of EBITDAR,
Fixed Charges shall then be calculated for Sun and its Restricted
Subsidiaries only. Prior to such time, Fixed Charges shall be calculated for
Sun and all of its Subsidiaries, including Foreign Subsidiaries.
(2)To the extent Foreign Subsidiary EBITDAR ever exceeds 15% of EDITDAR,
Total Debt shall then be calculated for Sun and its Restricted Subsidiaries
only. Prior to such time, Total Debt shall be calculated for Sun and all of
its Subsidiaries, including Foreign Subsidiaries.
- 9 -
(6) Write-up to market value of the Bonds and
Convertible Bonds required by GAAP $_________
(7) Total Debt
(1)+(2)+(3)+(4)+(5)-(6) $_________
*Detailed calculations of the pro forma income statements including pro forma
effect of Acquisitions and sales of assets during the prior four fiscal
quarters, the consideration for which exceeded $20,000,000, calculated for the
12-month period immediately preceding the date of calculation.
- 10 -
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
Dated _______________, 199__
Reference is made to the Fourth Amended and Restated Credit Agreement
dated as of October 29, 1996 (the "Credit Agreement") among Sun Healthcare
Group, Inc., a Delaware corporation, The Mediplex Group, Inc., a
Massachusetts corporation (collectively, the "Borrowers"), NationsBank of
Texas, N.A. as Administrative Lender ("Administrative Lender"), certain
Co-Agents, and the lenders parties thereto. Terms defined in the Credit
Agreement are used herein with the same meaning.
____________________("Assignor") and __________________("Assignee") agree
as follows:
1. Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor, a ____% interest in and to all of
Assignor's rights and obligations under the Credit Agreement as of the
Effective Date (as defined below), with respect to such percentage interest
in Assignor's Commitment as in effect on the Effective Date, the principal
amount of Advances owing to Assignor on the Effective Date, and the Note held
by Assignor, and Assignor's participation in any Letters of Credit and
Reimbursement Obligations outstanding on the Effective Date, subject to the
terms and conditions of this Assignment and Acceptance.
2. Assignor (a) represents and warrants that (i) as of the date hereof
its Commitment (without giving effect to assignments thereof which have not
yet become effective) is $_________ and, as of the date hereof, the
outstanding principal amount of the Advances owing to it (without giving
effect to assignments thereof which have not yet become effective) is
$__________, (ii) as of the date hereof its participation in Letters of
Credit and Reimbursement Obligations (without giving effect to assignments
thereof which have not yet become effective) is $____________, and (iii) it
is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (b)
makes no representation or warranty and assumes no responsibility with
respect to (i) any statements, warranties, or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of the Credit Agreement or
any other instrument or document furnished pursuant thereto or (ii) the
financial condition of the Borrowers or the performance or observance by the
Borrowers of any of their respective obligations under the Credit Agreement
or any other instrument or document furnished pursuant thereto; and (c)
attaches the Note referred to in Paragraph 1 above to exchange such Note for
new Notes as follows: a Note dated _________, 19___, in the principal amount
of $______________ payable to the order of Assignee, and a Note dated
____________, 19___, in the principal amount of $____________ payable to the
order of Assignor.
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement and the other Loan Documents, together with copies of the financial
statements referred to in Sections 4.1(j), 6.1 and 6.2 of the Credit Agreement
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (b) agrees that it will, independently and without reliance upon the
Administrative Lender, Assignor, or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement and the other Loan Documents; (c) appoints and authorizes the
Administrative Lender to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement, the other Loan Documents, and this
Assignment and Acceptance as are delegated to the Administrative Lender by the
terms thereof and hereof, together with such powers as are reasonably incidental
thereto and hereto; (d) agrees that it will perform in accordance with its terms
all of the obligations which by the terms of the Credit Agreement, the other
Loan Documents, and this Assignment and Acceptance are required to be performed
by it as a Lender; [and] (e) specifies the addresses set forth in Schedule I
attached hereto as its address for the receipt of notices and as its initial
LIBOR Lender Office, respectively[; and (f) attaches the forms prescribed by the
IRS certifying as to Assignee's status for purposes of determining exception
from United States withholding taxes with respect to all payments to be made to
Assignee under the Credit Agreement, the other Loan Documents, and this
Assignment and Acceptance or such other documents as are necessary to indicate
that all such payments are subject to such taxes at a rate reduced by an
applicable tax treaty].
4. The effective date for this Assignment and Acceptance shall be
_______________, 19___ (the "Effective Date").
5. Upon such acceptance as of the Effective Date and upon the remittance
of a $3,500 processing fee to the Administrative Lender, (a) Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and
(b) Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
6. Upon such acceptance from and after the Effective Date, whenever the
Administrative Lender shall receive a payment, or whenever the Administrative
Lender shall make an application of funds, in respect of any aggregate
outstanding principal amount of the Revolving Credit Advances or in respect of
any aggregate amount of interest accrued on the Advances, or in respect of the
commitment fee (other than a payment or an application of funds in respect of
any amount due and owing to any Lender or the Administrative Lender under
Sections 2.9, 5.10, 9.3, 9.5, or 11.2 of the Credit Agreement), the
Administrative Lender shall pay over to each of the Lenders an amount equal to
(i) such Lender's Pro Rata Share (as defined below) of such aggregate amount of
principal, (ii) such Lender's Pro Rata Share of such aggregate amount of
interest, and (iii) such Lender's Pro Rata Share of such aggregate amount of the
commitment fee.
- 2 -
The "Pro Rata Share" of any aggregate amount means, with respect to such
Lender, the amount equal to the product obtained by multiplying (i) such
aggregate amount and (ii) a fraction, the numerator of which is such Lender's
Commitment, or after the Advances have been made, the principal amount of the
Advances owing to such Lender and the denominator of which is the sum of the
Commitments of all of the Lenders, or after the Advances have been made, the
aggregate principal amount of the Advances owing to all of the Lenders.
7. In the event that, after the Administrative Lender has paid to any
Lender its Pro Rata Share of any such payment received by the Administrative
Lender or any such application made by the Administrative Lender, such payment
or application is rescinded or must otherwise be returned or must be paid over
by the Administrative Lender for any reason, such Lender shall, upon notice by
the Administrative Lender, forthwith pay back to the Administrative Lender such
Lender's Pro Rata Share of the amount so rescinded or so returned or paid over.
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America.
Without excluding any other jurisdiction, Assignee agrees that the courts of
Texas will have jurisdiction over proceedings in connection herewith.
9. Assignee's Specified Percentage shall be _____%.
10. This Assignment and Acceptance may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
[NAME OF ASSIGNOR]
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
[NAME OF ASSIGNEE]
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
- 3 -
Accepted this ___ day of ____________, 199___
NATIONSBANK OF TEXAS, N.A.,
as Administrative Lender
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
SUN HEALTHCARE GROUP, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
THE MEDIPLEX GROUP, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
- 4 -
Schedule I
ASSIGNEE'S ADDRESS
1. ADDRESS FOR THE ADVANCES AND RECEIPT OF NOTICES
2. INITIAL LIBOR LENDING OFFICE
EXHIBIT F
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of __________________________, 199__, by
_________________________________ , a ____________ corporation ("Pledgor"), in
favor of NationsBank of Texas, N.A., as Administrative Lender ("Administrative
Lender") for NationsBank of Texas, N.A., and each other lender a party to the
Credit Agreement described below (singly, a "Secured Party" and collectively,
the "Secured Parties").
A. AGREEMENT
1. PLEDGE. Upon the terms hereof, for value received, the Pledgor hereby
irrevocably and unconditionally pledges, assigns, hypothecates and transfers to
the Administrative Lender, for the ratable benefit of the Administrative Lender
and Secured Parties, a first and prior pledge and security interest in (a) all
shares of capital stock of each Restricted Subsidiary (other than Inactive
Subsidiaries) of Pledgor (collectively, the "Subsidiaries" and individually a
"Subsidiary"), now or hereafter owned beneficially or of record by the Pledgor,
including the stock of each Subsidiary described on Exhibit A attached hereto,
and (b) all proceeds thereof, and any increase and profits received therefrom
(collectively, "Collateral"). Unless otherwise defined in this agreement, terms
used herein shall have the meanings set forth in the Fourth Amended and Restated
Credit Agreement, dated as of October 29, 1996, among Sun Healthcare Group,
Inc., The Mediplex Group, Inc. (collectively, the "Companies"), the
Administrative Lender, certain Co-Agents, and the Secured Parties (as the same
may be amended, modified, supplemented, renewed or extended from time to time,
"Credit Agreement").
B. OBLIGATION
1. DESCRIPTION OF OBLIGATION. The following obligations (collectively,
"Obligation") are secured by this agreement:
a. All debt, obligations, liabilities and agreements of any nature
of the Companies to the Secured Parties or any Secured Party, whether
matured or unmatured, fixed or contingent, including all future advances,
now or hereafter existing, arising pursuant to or in connection with
(i) this agreement; (ii) the Credit Agreement; (iii) all other Loan
Documents; and (iv) all amendments, modifications, renewals, extensions,
increases, substitutions or rearrangements of any of the foregoing.
b. All costs incurred by the Administrative Lender or any Secured
Party to obtain, preserve, perfect and enforce this agreement, the other
Loan Documents, and the pledge and security interest granted hereby,
collect the Obligation, and maintain,
preserve, collect and enforce the Collateral, including, without
limitation, taxes, assessments, reasonable attorneys' fees and legal
expenses, and expenses of sale.
c. Interest on the above amounts as agreed between the Companies and
the Secured Parties, including, without limitation, interest, fees and
other charges that would accrue or become owing both prior to and
subsequent to and but for the commencement of any proceeding against or
with respect to any Company under any chapter of the Bankruptcy Code of
1978, 11 U.S.C. Section 101 ET SEQ. whether or not a claim is allowed for
the same in any such proceeding.
Notwithstanding any contrary provision herein or in any other Loan
Document, the Pledgor's maximum liability hereunder shall not exceed the Maximum
Secured Indebtedness. The Pledgor agrees that the Obligation may at any time
exceed the aggregate Maximum Secured Indebtedness of all obligors (excluding the
"Companies") on all or any part of the Obligation, without affecting or
improving the obligation of the Pledgor. "MAXIMUM SECURED INDEBTEDNESS" means,
with respect to the Pledgor as of the date of determination, the lesser of
(a) the Obligation or (b) the maximum amount for which the Pledgor may be liable
under this agreement without such amount and the Pledgor's obligations under
this agreement with respect to such amount being deemed a fraudulent transfer,
as determined by a bankruptcy or similar court.
C. COVENANTS, REPRESENTATIONS AND WARRANTIES
1. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
that (a) it has full power, authority and legal right to execute, deliver and
perform this agreement; (b) the capital stock described on Exhibit A constitutes
100% of each Subsidiary's issued and outstanding capital stock; (c) the shares
of stock pledged hereunder are duly authorized, validly issued, fully paid and
nonassessable; (d) the pledge, assignment and delivery of the Collateral create
a valid first and prior perfected security interest in the Collateral and no
other security agreement covering the Collateral, or any part thereof, has been
made, and no pledge or security interest, other than the one herein created, has
attached or been perfected in the Collateral or in any part thereof; and (e) no
dispute, right of setoff, counterclaim or defense exists with respect to any
part of the Collateral. The delivery at any time by the Pledgor to the
Administrative Lender of Collateral shall constitute a representation and
warranty by the Pledgor under this agreement that, with respect to such
Collateral, and each item thereof, the Pledgor is the sole legal and beneficial
owner of, with good title to, the Collateral; and the matters warranted in this
paragraph are true and correct.
2. COVENANTS.
a. AFFIRMATIVE COVENANTS. The Pledgor covenants and agrees
(i) promptly to deliver to the Administrative Lender all instruments,
certificates, documents or agreements evidencing any of the Collateral;
(ii) from time to time promptly to execute and deliver to the Administrative
Lender all such other assignments, certificates, supplemental writings and
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financing statements, and do all other acts or things, as the Administrative
Lender or any Secured Party may request in order more fully to evidence and
perfect the security interest and pledge herein created or to effect the
purposes of this agreement; (iii) promptly to furnish the Administrative Lender
with any information or writings which the Administrative Lender or any Secured
Party may request concerning the Collateral; (iv) to allow the Administrative
Lender or any Secured Party to inspect all records of the Pledgor relating to
the Collateral, and to make and take away copies of such records, at the
Pledgor's expense, at such reasonable times and as often as may be reasonably
requested by the Administrative Lender or such Secured Party; (v) promptly to
notify the Administrative Lender of any change in any fact or circumstances
warranted or represented by the Pledgor in this agreement or in any other
writings furnished by or on behalf of the Pledgor to the Administrative Lender
or any Secured Party in connection with the Collateral; (vi) promptly to notify
the Administrative Lender of any claim, action or proceeding affecting title to
the Collateral, or any part thereof, or the security interest therein, and, at
the request of the Administrative Lender, appear in and defend, at the Pledgor's
expense, any such action or proceeding; and (vii) promptly to pay to the
Administrative Lender the amount of all reasonable costs and attorneys' fees
incurred by the Administrative Lender and each Secured Party hereunder or in
connection with the enforcement hereof.
b. NEGATIVE COVENANTS. The Pledgor covenants and agrees that the
Pledgor will not (i) except to the extent permitted by the Credit Agreement,
sell, assign or transfer any of the Pledgor's rights in the Collateral;
(ii) create any other security interest or pledge in, mortgage or otherwise
encumber the Collateral or any part thereof, or permit the same to be or become
subject to any Lien, attachment, execution, sequestration, other legal or
equitable process, or any encumbrance of any kind or character; or (iii) cause,
permit, or suffer either Subsidiary to issue any capital stock to the Pledgor
that is not concurrently delivered to the Administrative Lender; or (iv) cause,
permit or suffer either Subsidiary to take any action that would cause the
Collateral to represent less than 100% of the issued and outstanding capital
stock of such Subsidiary.
D. RIGHTS OF SECURED PARTIES
1. RIGHTS TO DIVIDENDS, DISTRIBUTIONS, AND PAYMENTS. With respect to
such instruments which are stock certificates, bonds or other securities, the
Administrative Lender may demand of the corporate obligor issuing the same,
and may receive and receipt for, any and all stock dividends and other
distributions (other than cash dividends) payable in respect thereof, whether
ordinary or extraordinary. If, while this agreement is in effect, the
Pledgor shall become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital, or issued in connection with any
reorganization), option or rights, whether as an addition to, in substitution
of, as a conversion of or in exchange for any of the Collateral, or
otherwise, the Pledgor agrees to accept the same as the Administrative
Lender's agent and to hold the same in trust on behalf of and for the benefit
of the Administrative Lender, and to deliver the same forthwith to the
Administrative Lender in the exact form received, with appropriate undated
stock powers, duly executed in
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blank, to be held by the Administrative Lender, subject to the terms hereof,
as additional collateral security for the Obligation. Until an Event of
Default shall have occurred and during the continuance thereof, the Pledgor
shall be entitled to receive all cash dividends, principal, and interest paid
in respect of the Collateral. After the occurrence and during the
continuance of an Event of Default, the Administrative Lender shall be
entitled to all cash dividends and to any sums paid upon or in respect of the
Collateral upon the liquidation, dissolution or reorganization of the issuer
thereof which shall be paid to the Administrative Lender to be held by it as
additional collateral security for the Obligation. In case any distribution
shall be made on or in respect of the Collateral pursuant to the
reorganization, liquidation or dissolution of the issuer thereof, the
property so distributed shall be delivered to the Administrative Lender to be
held by it as additional collateral security for the Obligation. After an
Event of Default, all sums of money and property so paid or distributed in
respect of the Collateral (other than proceeds of any liquidation or similar
proceeding) which are received by the Pledgor shall, until paid or delivered
to the Administrative Lender, be held by the Pledgor in trust as additional
Collateral for the Obligation.
2. PRESERVATION OF COLLATERAL. Neither the Administrative Lender nor any
Secured Party shall have any duty to fix or preserve rights against prior
parties to the Collateral, nor be liable for any delay in the collection of, or
failure to use diligence to collect on, the Obligation or any amount payable in
respect of the Collateral.
3. PERFORMANCE BY THE ADMINISTRATIVE LENDER. Should any covenant, duty
or agreement of the Pledgor fail to be performed in accordance with its terms
hereunder, the Administrative Lender may, but shall never be obligated to,
perform or attempt to perform such covenant, duty or agreement on behalf of the
Pledgor, and any amount expended by the Administrative Lender in such
performance or attempted performance shall become a part of the Obligation,
shall be payable upon demand and shall bear interest at a per annum rate equal
to the lesser of the Highest Lawful Rate and the sum of the Prime Rate Basis
plus three percent.
4. VOTING RIGHTS. It is expressly understood and agreed that the
Pledgor shall retain all voting rights to the Collateral until the occurrence
of an Event of Default, at which time such voting rights shall transfer to
the Administrative Lender, at its sole discretion; provided, however, that no
voting or corporate rights shall be exercised or vote cast or consent, waiver
or ratification given or action taken by the Pledgor that would impair the
Collateral or be inconsistent with or violate any provision of this agreement
or any other Loan Documents.
5. POWER OF ATTORNEY. PLEDGOR HEREBY IRREVOCABLY GRANTS TO THE
ADMINISTRATIVE LENDER PLEDGOR'S PROXY (EXERCISABLE FROM AND AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT WHICH IS CONTINUING) AND APPOINTS THE
ADMINISTRATIVE LENDER PLEDGOR'S ATTORNEY-IN-FACT TO PERFORM ALL OBLIGATIONS
OF PLEDGOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF THE ADMINISTRATIVE
LENDER'S RIGHTS HEREUNDER. THE PROXY AND POWER OF ATTORNEY HEREIN GRANTED,
AND EACH STOCK POWER AND SIMILAR POWER NOW OR HEREAFTER GRANTED (INCLUDING
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ANY EVIDENCED BY A SEPARATE WRITING) ARE COUPLED WITH AN INTEREST AND ARE
IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
E. DEFAULT
1. RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default,
in addition to any and all other rights and remedies which the Administrative
Lender or any Secured Party may then have hereunder, under any other Loan
Documents, under Applicable Law or otherwise, the Administrative Lender at
its option may, subject to any limitation or restriction imposed by any
applicable bankruptcy, insolvency or other law relating to the relief of
debtors, (a) obtain from any Person information regarding the Pledgor, any
issuer of the Collateral, or any of their businesses, which information any
such Person may furnish without liability to the Pledgor; (b) require the
Pledgor to give possession or control of any of the Collateral to the
Administrative Lender; (c) unless earlier permitted hereunder, take control
of funds generated by the Collateral and any other proceeds and exercise all
other Rights which an owner of such Collateral may exercise; (d) declare the
entire unpaid balance of principal and interest on the Obligation immediately
due and payable, without notice, demand or presentment, which are hereby
expressly waived; (e) reduce its claim to judgment, foreclose or otherwise
enforce its security interest in all or any part of the Collateral by any
available judicial procedure; (f) after notification, if any, provided for in
this agreement or any other Loan Documents, sell or otherwise dispose of, at
the office of the Administrative Lender, all or any part of the Collateral,
and any such sale or other disposition shall be in accordance with Applicable
Law, and may be as a unit or in parcels, by public or private proceedings,
and by way of one or more contracts (it being agreed that the sale of any
part of the Collateral shall not exhaust the Administrative Lender's power of
sale, but sales may be made from time to time until all of the Collateral has
been sold or until the Obligation has been paid in full), and at any such
sale it shall not be necessary to exhibit the Collateral; (g) at its
discretion, retain the Collateral in satisfaction of the Obligation whenever
the circumstances are such that the Administrative Lender is entitled to do
so under Applicable Law; (h) apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral, or any part hereof, and the
Pledgor hereby consents to any appointment; (i) buy the Collateral at any
public sale; and (j) buy the Collateral at any private sale, subject to any
restrictions imposed by Applicable Law. Any Secured Party may buy the
Collateral at any public sale and buy the Collateral at any private sale,
subject to the restrictions imposed by Applicable Law. Pledgor agrees that,
if notice is required to be given by Applicable Law, five (5) days' advance
notice shall constitute reasonable notice. The Administrative Lender shall
apply the proceeds of any collection, sale, disposition or other realization
upon any Collateral as follows:
FIRST, to the payment of the costs and expenses of such collection,
sale, disposition, or other realization, including reasonable out-of-pocket
costs and expenses of the Administrative Lender and the reasonable fees and
expenses of its agents and counsel;
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NEXT, to the payment of the Obligation, equally and ratably to each
Secured Party in accordance with the respective amounts thereof due and
owing to each Secured Party; and
FINALLY, to the payment to the Pledgor, or its successors or assigns,
or as a court of competent jurisdiction may direct, of any surplus then
remaining.
If the proceeds of collection, sale, disposition, or other realization are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Obligation, the Companies shall remain liable for any deficiency.
2. SECURITIES LAWS; TRANSFER
a. Immediately upon the occurrence of an Event of Default, the
Pledgor hereby grants to the Administrative Lender the right to have the
Collateral, or any portion thereof, registered and sold under the Securities Act
of 1933, as amended ("Securities Act"), or under any applicable state blue sky
laws. If the Administrative Lender shall determine to exercise its right to
sell any or all of the Collateral pursuant to the terms hereof, and if in the
opinion of the Administrative Lender it is necessary or advisable to have the
Collateral (or that portion thereof to be sold) registered under the provisions
of the Securities Act, the Pledgor will cause the issuer of the Collateral to
execute and deliver, and cause the directors and officers thereof to execute and
deliver, all at the Pledgor's expense, all such instruments and documents, and
to do or cause to be done all such other acts and things as may be necessary or,
in the opinion of the Administrative Lender, advisable to register such
Collateral under the provisions of the Securities Act and to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
such Collateral, or that portion thereof to be sold, and to make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Administrative Lender, are necessary or advisable, all in conformity with the
requirements of Applicable Law. The Pledgor agrees to cause the issuer of the
Collateral to comply with the provisions of the securities or "blue sky" laws of
any jurisdiction which the Administrative Lender shall designate and to cause
the issuer of the Collateral to make available to its security holders, as soon
as practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act.
b. The Pledgor recognizes that the Administrative Lender may be
unable to effect a public sale of any or all of the Collateral by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such Collateral for their own account for investment
and not with a view to the distribution or resale thereof. The Pledgor
acknowledges and agrees that any such private sale conducted in the manner
described herein may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any private sale shall be deemed in that instance to
have been made in a commercially reasonable manner. The Administrative Lender
shall be under no obligation
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to delay a sale of any of the Collateral for the period of time necessary to
permit the issuer of the Collateral to register such Collateral for public
sale under the Securities Act, or under applicable state securities laws,
even if the issuer of the Collateral would agree to do so.
c. The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make any sales of any portion or
all of the Collateral pursuant to paragraphs (a) and (b) of this Section valid
and binding and in compliance with any and all applicable laws (including,
without limitation, the Securities Exchange Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission applicable
thereto), regulations, orders, writs, injunctions, decrees or awards of any and
all courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Pledgor's expense.
The Pledgor further agrees that a breach of any of the covenants contained in
this Section will cause irreparable injury to the Administrative Lender and the
Secured Parties and that the Administrative Lender and Secured Parties may not
have an adequate remedy at law in respect of such breach. As a consequence, the
Pledgor agrees that each and every covenant contained in this Section shall be
specifically enforceable against the Pledgor. The Pledgor hereby waives and
agrees not to assert any defenses against an action for specific performance of
such covenants.
d. The Pledgor agrees (i) that in the event the Administrative
Lender shall, upon any Event of Default, sell the Collateral or any portion
thereof, at a private sale or sales, the Administrative Lender shall have the
right to rely upon the advice and opinion of a member of a nationally recognized
investment banking firm acceptable to the Administrative Lender, as to the best
price reasonably obtainable upon such a private sale thereof, and (ii) in the
absence of fraud, wilful misconduct and gross negligence, that such reliance
shall be conclusive evidence that the Administrative Lender handled such matter
in a commercially reasonable manner under the Uniform Commercial Code.
3. NOTICE. Notification of the time and place of any public sale of the
Collateral, or reasonable notification of the time after which any private sale
or other intended disposition of the Collateral is to be made, shall be sent to
the Pledgor and to any other Person entitled under Applicable Law to notice.
F. GENERAL
1. ADMINISTRATIVE LENDER'S DUTIES. The Secured Parties hereby appoint
NationsBank of Texas, N.A. as Administrative Lender to act as their agent as
provided herein and in the Credit Agreement, which actions hereunder, including
without limitation, the administration of the Collateral, enforcement of the
rights hereunder and collection of amounts secured hereby, are on behalf of, and
for the ratable benefit of, the Lenders. In the event the Administrative Lender
is replaced pursuant to Section 10.1(b) of the Credit Agreement, the successor
Administrative Lender appointed in accordance with Section 10.1(b) of the Credit
Agreement shall be the Administrative Lender hereunder. The powers conferred on
the Administrative Lender hereunder are solely to protect the Secured Parties'
interest in the Collateral and shall
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not impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Administrative Lender shall have no
duty as to any Collateral, as to ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders, or other matters
relative to any Collateral, whether or not the Administrative Lender or any
Secured Party has or is deemed to have knowledge of such matters, or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Administrative
Lender accords its own property. Except as provided in this Section F.1.,
the Administrative Lender shall not have any duty or liability to protect or
preserve any Collateral or to preserve rights pertaining thereto. Nothing
contained in this agreement shall be construed as requiring or obligating the
Administrative Lender, and the Administrative Lender shall not be required or
obligated, (a) to present or file any claim or notice or take any action,
with respect to any Collateral or in connection therewith or (b) to notify
Pledgor of any decline in the value of any Collateral.
2. CUMULATIVE RIGHTS. All rights and remedies of the Administrative
Lender and the Secured Parties hereunder are cumulative of each other and of
every other right or remedy which the Administrative Lender or the Secured
Parties may otherwise have at law or in equity or under any other contract or
other writing for the enforcement of the security interest herein or the
collection of the Obligation, and the exercise of one or more rights or remedies
shall not prejudice or impair the concurrent or subsequent exercise of other
rights or remedies.
3. WAIVER. No delay or omission by the Administrative Lender or any
Secured Party in exercising any right or power hereunder, or under any other
Loan Documents, shall impair any such right or power or be construed as a waiver
thereof or an acquiescence therein, nor shall any single or partial exercise of
any such right or power preclude other or further exercise thereof, or the
exercise of any other right or power of the Administrative Lender or any Secured
Party hereunder or under such other writings.
4. INTEREST; LIMITATION OF LAW. No provision herein or in any Loan
Documents shall require the payment or permit the collection of interest in
excess of the maximum permitted by Applicable Law. If, in any contingency
whatsoever, the Administrative Lender or any Secured Party shall receive
anything of value from the Pledgor deemed interest under Applicable Law which
would exceed the maximum amount of interest permissible under Applicable Law,
the provisions of the Credit Agreement shall govern.
5. PARTIES BOUND. This agreement shall be binding on the Pledgor and its
successors, assigns and legal representatives, and shall inure to the benefit of
the Administrative Lender and the Secured Parties, and their successors, assigns
and legal representatives; provided, however, that the Pledgor may not assign
its rights or obligations hereunder without the prior written consent of the
Administrative Lender. The rights, powers and interests held by the
Administrative Lender hereunder may be transferred and assigned by the
Administrative Lender, in whole or in part, at such time and upon such terms as
permitted by the Credit Agreement.
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6. NOTICE; WAIVERS BY PLEDGOR. All notices, communications and materials
to be given or delivered pursuant to this agreement shall be given and shall be
effective as provided in SECTION 11.1 of the Credit Agreement but to Pledgor at
the address shown opposite its name on the signature page hereto. The Pledgor
waives notices of the creation, advance, increase, existence, extension or
renewal of, and of any indulgence with respect to, the Obligation; waives
presentment, demand, notice of dishonor and protest; waives notice of the amount
of the Obligation outstanding at any time, notice of any change in financial
condition of any Person liable for the Obligation or any part thereof, notice of
any Event of Default and all other notices respecting the Obligation; waives all
rights of redemption, appraisal, or valuation; and agrees that maturity of the
Obligation and any part thereof may be accelerated, increased, extended or
renewed one or more times by the Secured Parties in their discretion, without
notice to the Pledgor.
7. MODIFICATIONS. No provision hereof shall be modified or limited
except by a written agreement expressly referring hereto and to the provisions
so modified or limited and signed by the Pledgor and the Administrative Lender.
8. CONTROL. Notwithstanding anything herein to the contrary, this
agreement and the transactions contemplated hereby do not and will not
constitute, create, or have the effect of constituting or creating, directly or
indirectly, actual or practical ownership of the Pledgor or the issuer of the
Collateral by the Administrative Lender, or control, affirmative or negative,
direct or indirect, by the Administrative Lender or the Secured Parties, over
the management or any aspect of the day-to-day operation of the Pledgor or the
issuer of the Collateral, which control remains in the Pledgor, the issuer of
the Collateral, and their respective shareholders and boards of directors.
9. OBLIGATIONS NOT AFFECTED. To the fullest extent permitted by
Applicable Law, the obligations of Pledgor under this agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:
a. any amendment or modification or addition or supplement to any
Loan Document, any instrument delivered in connection therewith or any
assignment or transfer thereof;
b. any exercise, non-exercise, or waiver by Administrative Lender or
any Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty, any collateral or the
Collateral or any part thereof provided pursuant to, this agreement or any
Loan Document;
c. any waiver, consent, extension, indulgence or other action or
inaction with respect of this agreement or any Loan Document or any
assignment or transfer of any thereof; or
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d. any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Companies,
Pledgor or any other Person, whether or not Pledgor shall have notice or
knowledge of any of the foregoing.
10. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
11. SUBROGATION. Pledgor shall not assert, enforce, or otherwise
exercise (i) any right of subrogation to any of the rights or liens of any
Lender or Administrative Lender or any other beneficiary against the
Companies or any other obligor on the Obligation or any collateral or other
security or (ii) any right of recourse, reimbursement, contribution,
indemnification, or similar right against the Companies or any other obligor
on all or any part of the Obligation or any guarantor thereof, and Pledgor
hereby waives any and all of the foregoing right and the benefit of, and any
right to participate in, any collateral or other security given to any Lender
or Administrative Lender or any other beneficiary to secure payment of the
Obligation. The provisions of this SECTION F.11 shall survive the
termination of this agreement and satisfaction and discharge of the Companies
by virtue of any payment, court order, or Law.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF
AMERICA. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE PLEDGOR AGREES THAT
THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE
JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH.
13. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR, THE ADMINISTRATIVE
LENDER AND THE SECURED PARTIES HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND
INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO
THE CREDIT AGREEMENT.
14. ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
[15. NO NOVATION. THE EXECUTION, DELIVERY AND EFFECTIVENESS OF THIS
AGREEMENT SHALL NOT DISCHARGE OR RELEASE THE LIEN OR PRIORITY OF THAT CERTAIN
AMENDED AND RESTATED
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PLEDGE AGREEMENT DATED AS OF __________________, EXECUTED BY PLEDGOR IN FAVOR
OF ADMINISTRATIVE LENDER, SECURING THE COMPANIES' OBLIGATIONS UNDER THAT
CERTAIN THIRD AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF JULY 21,
1995, AMONG THE COMPANIES, ADMINISTRATIVE LENDER AND THE LENDERS PARTY
THERETO (THE "PRIOR CREDIT AGREEMENT"). NOTHING HEREIN CONTAINED SHALL BE
CONSTRUED AS A SUBSTITUTION OR NOVATION OF ANY COLLATERAL DOCUMENTS (AS SUCH
TERM IS DEFINED IN THE PRIOR CREDIT AGREEMENT) OR THE LIENS GRANTED THEREBY,
ALL OF WHICH SHALL CONTINUE AND REMAIN IN FULL FORCE AND EFFECT, EXCEPT AS
MODIFIED HEREBY, OR BY INSTRUMENTS EXECUTED CONCURRENTLY HEREWITH.]
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the Pledgor has executed this Pledge Agreement as of
this ____________________ day of _____________________, 199___.
------------------------------------
Address:
----------------------------- By:
----------------------------- ---------------------------------
----------------------------- Name:
Attn: ----------------------------
------------------------ Title:
---------------------------
NATIONSBANK OF TEXAS, N.A., as
Administrative Lender
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
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Exhibit A to Pledge Agreement
Record Class and
Subsidiary Certificate No. Owners Number of Shares
---------- -------------- ------ ----------------
EXHIBIT G
FOREIGN SUBSIDIARY PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of ______________________, 199__, by
__________________________________ ("Pledgor"), in favor of NationsBank of
Texas, N.A., as Administrative Lender ("Administrative Lender") for NationsBank
of Texas, N.A., and each other lender a party to the Credit Agreement described
below (singly, a "Secured Party" and collectively, the "Secured Parties").
G. AGREEMENT
1. PLEDGE. Upon the terms hereof, for value received, the Pledgor
hereby irrevocably and unconditionally pledges, assigns, hypothecates and
transfers to the Administrative Lender, for the ratable benefit of the
Administrative Lender and Secured Parties, a first and prior pledge and
security interest in (a) the lesser of (i) all of the capital stock of each
Foreign Subsidiary of Pledgor and (ii) 66% of all of the issued and
outstanding capital stock of any such Foreign Subsidiary of Pledgor
(collectively, the "Subsidiaries and individually, a "Subsidiary"), now or
hereafter owned beneficially or of record by the Pledgor, including the stock
of each Subsidiary described on Exhibit A attached hereto, and (b) all
proceeds thereof, and any increase and profits received therefrom
(collectively, "Collateral"). Unless otherwise defined in this agreement,
terms used herein shall have the meanings set forth in the Fourth Amended and
Restated Credit Agreement, dated as of October 29, 1996, among Sun Healthcare
Group, Inc., The Mediplex Group, Inc. (collectively, the "Companies"), the
Administrative Lender, and the Secured Parties (as the same may be amended,
modified, supplemented, renewed or extended from time to time, "Credit
Agreement").
H. OBLIGATION
1. DESCRIPTION OF OBLIGATION. The following obligations (collectively,
"Obligation") are secured by this agreement:
a. All debt, obligations, liabilities and agreements of any nature
of the Companies to the Secured Parties or any Secured Party, whether
matured or unmatured, fixed or contingent, including all future advances,
now or hereafter existing, arising pursuant to or in connection with
(i) this agreement; (ii) the Credit Agreement; (iii) all other Loan
Documents; and (iv) all amendments, modifications, renewals, extensions,
increases, substitutions or rearrangements of any of the foregoing.
b. All costs incurred by the Administrative Lender or any Secured
Party to obtain, preserve, perfect and enforce this agreement, the other
Loan Documents, and the pledge and security interest granted hereby,
collect the Obligation, and maintain,
preserve, collect and enforce the Collateral, including without limitation
taxes, assessments, reasonable attorneys' fees and legal expenses, and
expenses of sale.
c. Interest on the above amounts as agreed between the Companies and
the Secured Parties, including, without limitation, interest, fees and
other charges that would accrue or become owing both prior to and
subsequent to and but for the commencement of any proceeding against or
with respect to any Company under any chapter of the Bankruptcy Code of
1978, 11 U.S.C. Section 101 ET SEQ. whether or not a claim is allowed for
the same in any such proceeding.
I. COVENANTS, REPRESENTATIONS AND WARRANTIES
1. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants that (a) it has full power, authority and legal right to execute,
deliver and perform this agreement; (b) the capital stock described on
Exhibit A constitutes all of each Subsidiary's issued and outstanding capital
stock owned by Pledgor up to but not exceeding 66% (or such greater
percentage as may be permitted under the Code without resulting in the pledge
hereunder being characterized as a dividend for tax purposes) of all of the
issued and outstanding capital stock of each such Subsidiary; (c) the shares
of stock pledged hereunder are duly authorized, validly issued, fully paid
and nonassessable; (d) the pledge, assignment and delivery of the Collateral
create a valid first and prior perfected security interest in the Collateral
and no other security agreement covering the Collateral, or any part thereof,
has been made, and no pledge or security interest, other than the one herein
created, has attached or been perfected in the Collateral or in any part
thereof; and (e) no dispute, right of setoff, counterclaim or defense exists
with respect to any part of the Collateral. The delivery at any time by the
Pledgor to the Administrative Lender of Collateral shall constitute a
representation and warranty by the Pledgor under this agreement that, with
respect to such Collateral, and each item thereof, the Pledgor is the sole
legal and beneficial owner of, with good title to, the Collateral; and the
matters warranted in this paragraph are true and correct.
2. COVENANTS.
a. AFFIRMATIVE COVENANTS. The Pledgor covenants and agrees (i)
promptly to deliver to the Administrative Lender all instruments,
certificates, documents or agreements evidencing any of the Collateral; (ii)
from time to time promptly to execute and deliver to the Administrative
Lender all such other assignments, certificates, supplemental writings and
financing statements, and do all other acts or things, as the Administrative
Lender or any Secured Party may request in order more fully to evidence and
perfect the security interest and pledge herein created or to effect the
purposes of this agreement; (iii) promptly to furnish the Administrative
Lender with any information or writings which the Administrative Lender or
any Secured Party may request concerning the Collateral; (iv) to allow the
Administrative Lender or any Secured Party to inspect all records of the
Pledgor relating to the Collateral, and to make and take away copies of such
records, at the Pledgor's expense, at such reasonable times and as often as
may be reasonably requested by the Administrative Lender or such Secured
Party;
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(v) promptly to notify the Administrative Lender of any change in any fact or
circumstances warranted or represented by the Pledgor in this agreement or in
any other writings furnished by or on behalf of the Pledgor to the
Administrative Lender or any Secured Party in connection with the Collateral;
(vi) promptly to notify the Administrative Lender of any claim, action or
proceeding affecting title to the Collateral, or any part thereof, or the
security interest therein, and, at the request of the Administrative Lender,
appear in and defend, at the Pledgor's expense, any such action or
proceeding; and (vii) promptly to pay to the Administrative Lender the amount
of all reasonable costs and attorneys' fees incurred by the Administrative
Lender and each Secured Party hereunder or in connection with the enforcement
hereof.
b. NEGATIVE COVENANTS. The Pledgor covenants and agrees that the
Pledgor will not (i) except to the extent permitted by the Credit Agreement,
sell, assign or transfer any of the Pledgor's rights in the Collateral; (ii)
create any other security interest or pledge in, mortgage or otherwise
encumber the Collateral or any part thereof, or permit the same to be or
become subject to any Lien, attachment, execution, sequestration, other legal
or equitable process, or any encumbrance of any kind or character; or (iii)
cause, permit, or suffer any Subsidiary to issue any capital stock to the
Pledgor which would cause the Administrative Lender to have a pledge of
capital stock representing a lesser percentage of the issued and outstanding
capital stock of each Subsidiary than the Administrative Lender has as of the
date hereof; or (iv) cause, permit or suffer any Subsidiary to take any
action that would cause the Pledgor to own a lesser percentage of the issued
and outstanding capital stock of each Subsidiary than the Pledgor owns as of
the date hereof.
J. RIGHTS OF SECURED PARTIES
1. RIGHTS TO DIVIDENDS, DISTRIBUTIONS, AND PAYMENTS. With respect to
such instruments which are stock certificates, bonds or other securities, the
Administrative Lender may demand of the corporate obligor issuing the same,
and may receive and receipt for, any and all stock dividends and other
distributions (other than cash dividends) payable in respect thereof, whether
ordinary or extraordinary. If, while this agreement is in effect, the
Pledgor shall become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital, or issued in connection with any
reorganization), option or rights, whether as an addition to, in substitution
of, as a conversion of or in exchange for any of the Collateral, or
otherwise, the Pledgor agrees to accept the same as the Administrative
Lender's agent and to hold the same in trust on behalf of and for the benefit
of the Administrative Lender, and to deliver the same forthwith to the
Administrative Lender in the exact form received, with appropriate undated
stock powers, duly executed in blank, to be held by the Administrative
Lender, subject to the terms hereof, as additional collateral security for
the Obligation. Until an Event of Default shall have occurred and during the
continuance thereof, the Pledgor shall be entitled to receive all cash
dividends, principal, and interest paid in respect of the Collateral. After
the occurrence and during the continuance of an Event of Default, the
Administrative Lender shall be entitled to all cash dividends and to any sums
paid upon or in respect of the Collateral upon the liquidation, dissolution
or reorganization
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of the issuer thereof which shall be paid to the Administrative Lender to be
held by it as additional collateral security for the Obligation. In case any
distribution shall be made on or in respect of the Collateral pursuant to the
reorganization, liquidation or dissolution of the issuer thereof, the
property so distributed shall be delivered to the Administrative Lender to be
held by it as additional collateral security for the Obligation. After an
Event of Default, all sums of money and property so paid or distributed in
respect of the Collateral (other than proceeds of any liquidation or similar
proceeding) which are received by the Pledgor shall, until paid or delivered
to the Administrative Lender, be held by the Pledgor in trust as additional
Collateral for the Obligation.
2. PRESERVATION OF COLLATERAL. Neither the Administrative Lender nor
any Secured Party shall have any duty to fix or preserve rights against prior
parties to the Collateral, nor be liable for any delay in the collection of,
or failure to use diligence to collect on, the Obligation or any amount
payable in respect of the Collateral.
3. PERFORMANCE BY THE ADMINISTRATIVE LENDER. Should any covenant,
duty or agreement of the Pledgor fail to be performed in accordance with its
terms hereunder, the Administrative Lender may, but shall never be obligated
to, perform or attempt to perform such covenant, duty or agreement on behalf
of the Pledgor, and any amount expended by the Administrative Lender in such
performance or attempted performance shall become a part of the Obligation,
shall be payable upon demand and shall bear interest at a per annum rate
equal to the lesser of the Highest Lawful Rate and the sum of the Prime Rate
Basis plus three percent.
4. VOTING RIGHTS. It is expressly understood and agreed that the
Pledgor shall retain all voting rights to the Collateral until the occurrence
of an Event of Default, at which time such voting rights shall transfer to
the Administrative Lender, at its sole discretion; provided, however, that no
voting or corporate rights shall be exercised or vote cast or consent, waiver
or ratification given or action taken by the Pledgor that would impair the
Collateral or be inconsistent with or violate any provision of this agreement
or any other Loan Documents.
5. POWER OF ATTORNEY. PLEDGOR HEREBY IRREVOCABLY GRANTS TO THE
ADMINISTRATIVE LENDER PLEDGOR'S PROXY (EXERCISABLE FROM AND AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT WHICH IS CONTINUING) AND APPOINTS THE
ADMINISTRATIVE LENDER PLEDGOR'S ATTORNEY-IN-FACT TO PERFORM ALL OBLIGATIONS
OF PLEDGOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF THE ADMINISTRATIVE
LENDER'S RIGHTS HEREUNDER. THE PROXY AND POWER OF ATTORNEY HEREIN GRANTED,
AND EACH STOCK POWER AND SIMILAR POWER NOW OR HEREAFTER GRANTED (INCLUDING
ANY EVIDENCED BY A SEPARATE WRITING) ARE COUPLED WITH AN INTEREST AND ARE
IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
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K. DEFAULT
1. RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default,
in addition to any and all other rights and remedies which the Administrative
Lender or any Secured Party may then have hereunder, under any other Loan
Documents, under Applicable Law or otherwise, the Administrative Lender at
its option may, subject to any limitation or restriction imposed by any
applicable bankruptcy, insolvency or other law relating to the relief of
debtors, (a) obtain from any Person information regarding the Pledgor, any
issuer of the Collateral, or any of their businesses, which information any
such Person may furnish without liability to the Pledgor; (b) require the
Pledgor to give possession or control of any of the Collateral to the
Administrative Lender; (c) unless earlier permitted hereunder, take control
of funds generated by the Collateral and any other proceeds and exercise all
other Rights which an owner of such Collateral may exercise; (d) declare the
entire unpaid balance of principal and interest on the Obligation immediately
due and payable, without notice, demand or presentment, which are hereby
expressly waived; (e) reduce its claim to judgment, foreclose or otherwise
enforce its security interest in all or any part of the Collateral by any
available judicial procedure; (f) after notification, if any, provided for in
this agreement or any other Loan Documents, sell or otherwise dispose of, at
the office of the Administrative Lender, all or any part of the Collateral,
and any such sale or other disposition shall be in accordance with Applicable
Law, and may be as a unit or in parcels, by public or private proceedings,
and by way of one or more contracts (it being agreed that the sale of any
part of the Collateral shall not exhaust the Administrative Lender's power of
sale, but sales may be made from time to time until all of the Collateral has
been sold or until the Obligation has been paid in full), and at any such
sale it shall not be necessary to exhibit the Collateral; (g) at its
discretion, retain the Collateral in satisfaction of the Obligation whenever
the circumstances are such that the Administrative Lender is entitled to do
so under Applicable Law; (h) apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral, or any part hereof, and the
Pledgor hereby consents to any appointment; (i) buy the Collateral at any
public sale; and (j) buy the Collateral at any private sale, subject to any
restrictions imposed by Applicable Law. Any Secured Party may buy the
Collateral at any public sale and buy the Collateral at any private sale,
subject to the restrictions imposed by Applicable Law. Pledgor agrees that,
if notice is required to be given by Applicable Law, five (5) days' advance
notice shall constitute reasonable notice. The Administrative Lender shall
apply the proceeds of any collection, sale, disposition or other realization
upon any Collateral as follows:
FIRST, to the payment of the costs and expenses of such collection,
sale, disposition, or other realization, including reasonable out-of-pocket
costs and expenses of the Administrative Lender and the reasonable fees and
expenses of its agents and counsel;
NEXT, to the payment of the Obligation, equally and ratably to each
Secured Party in accordance with the respective amounts thereof due and
owing to each Secured Party; and
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FINALLY, to the payment to the Pledgor, or its successors or assigns,
or as a court of competent jurisdiction may direct, of any surplus then
remaining.
If the proceeds of collection, sale, disposition, or other realization are
insufficient to cover the costs and expenses of such realization and the
payment in full of the Obligation, the Companies shall remain liable for any
deficiency.
2. SECURITIES LAWS; TRANSFER
a. Immediately upon the occurrence of an Event of Default, the
Pledgor hereby grants to the Administrative Lender the right to have the
Collateral, or any portion thereof, registered and sold under the Securities
Act of 1933, as amended ("Securities Act"), or under any applicable state
blue sky laws. If the Administrative Lender shall determine to exercise its
right to sell any or all of the Collateral pursuant to the terms hereof, and
if in the opinion of the Administrative Lender it is necessary or advisable
to have the Collateral (or that portion thereof to be sold) registered under
the provisions of the Securities Act, the Pledgor will cause the issuer of
the Collateral to execute and deliver, and cause the directors and officers
thereof to execute and deliver, all at the Pledgor's expense, all such
instruments and documents, and to do or cause to be done all such other acts
and things as may be necessary or, in the opinion of the Administrative
Lender, advisable to register such Collateral under the provisions of the
Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for a period of one year from the
date of the first public offering of such Collateral, or that portion thereof
to be sold, and to make all amendments thereto and/or to the related
prospectus which, in the opinion of the Administrative Lender, are necessary
or advisable, all in conformity with the requirements of Applicable Law. The
Pledgor agrees to cause the issuer of the Collateral to comply with the
provisions of the securities or "blue sky" laws of any jurisdiction which the
Administrative Lender shall designate and to cause the issuer of the
Collateral to make available to its security holders, as soon as practicable,
an earnings statement which will satisfy the provisions of Section 11(a) of
the Securities Act.
b. The Pledgor recognizes that the Administrative Lender may be
unable to effect a public sale of any or all of the Collateral by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Collateral for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale conducted in the
manner described herein may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any private sale shall be deemed in that instance
to have been made in a commercially reasonable manner. The Administrative
Lender shall be under no obligation to delay a sale of any of the Collateral
for the period of time necessary to permit the issuer of the Collateral to
register such Collateral for public sale under the Securities Act, or under
applicable state securities laws, even if the issuer of the Collateral would
agree to do so.
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c. The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make any sales of any portion or
all of the Collateral pursuant to paragraphs (a) and (b) of this Section
valid and binding and in compliance with any and all applicable laws
(including, without limitation, the Securities Exchange Act of 1933, as
amended, and the rules and regulations of the Securities and Exchange
Commission applicable thereto), regulations, orders, writs, injunctions,
decrees or awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such
sale or sales, all at the Pledgor's expense. The Pledgor further agrees that
a breach of any of the covenants contained in this Section will cause
irreparable injury to the Administrative Lender and the Secured Parties and
that the Administrative Lender and Secured Parties may not have an adequate
remedy at law in respect of such breach. As a consequence, the Pledgor
agrees that each and every covenant contained in this Section shall be
specifically enforceable against the Pledgor. The Pledgor hereby waives and
agrees not to assert any defenses against an action for specific performance
of such covenants.
d. The Pledgor agrees (i) that in the event the Administrative
Lender shall, upon any Event of Default, sell the Collateral or any portion
thereof, at a private sale or sales, the Administrative Lender shall have the
right to rely upon the advice and opinion of a member of a nationally
recognized investment banking firm acceptable to the Administrative Lender,
as to the best price reasonably obtainable upon such a private sale thereof,
and (ii) in the absence of fraud, wilful misconduct and gross negligence,
that such reliance shall be conclusive evidence that the Administrative
Lender handled such matter in a commercially reasonable manner under the
Uniform Commercial Code.
3. NOTICE. Notification of the time and place of any public sale of
the Collateral, or reasonable notification of the time after which any
private sale or other intended disposition of the Collateral is to be made,
shall be sent to the Pledgor and to any other Person entitled under
Applicable Law to notice.
L. GENERAL
1. ADMINISTRATIVE LENDER'S DUTIES. The Secured Parties hereby appoint
NationsBank of Texas, N.A. as Administrative Lender to act as their agent as
provided herein and in the Credit Agreement, which actions hereunder,
including without limitation, the administration of the Collateral,
enforcement of the rights hereunder and collection of amounts secured hereby,
are on behalf of, and for the ratable benefit of, the Lenders. In the event
the Administrative Lender is replaced pursuant to Section 10.1(b) of the
Credit Agreement, the successor Administrative Lender appointed in accordance
with Section 10.1(b) of the Credit Agreement shall be the Administrative
Lender hereunder. The powers conferred on the Administrative Lender
hereunder are solely to protect the Secured Parties' interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Lender shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders, or
other matters relative to
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any Collateral, whether or not the Administrative Lender or any Secured Party
has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any reasonable care in the custody and preservation of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Administrative Lender accords its own
property. Except as provided in this SECTION F.1., the Administrative Lender
shall not have any duty or liability to protect or preserve any Collateral or
to preserve rights pertaining thereto. Nothing contained in this agreement
shall be construed as requiring or obligating the Administrative Lender, and
the Administrative Lender shall not be required or obligated, (a) to present
or file any claim or notice or take any action, with respect to any
Collateral or in connection therewith or (b) to notify Pledgor of any decline
in the value of any Collateral.
2. CUMULATIVE RIGHTS. All rights and remedies of the Administrative
Lender and the Secured Parties hereunder are cumulative of each other and of
every other right or remedy which the Administrative Lender or the Secured
Parties may otherwise have at law or in equity or under any other contract or
other writing for the enforcement of the security interest herein or the
collection of the Obligation, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise
of other rights or remedies.
3. WAIVER. No delay or omission by the Administrative Lender or any
Secured Party in exercising any right or power hereunder, or under any other
Loan Documents, shall impair any such right or power or be construed as a
waiver thereof or an acquiescence therein, nor shall any single or partial
exercise of any such right or power preclude other or further exercise
thereof, or the exercise of any other right or power of the Administrative
Lender or any Secured Party hereunder or under such other writings.
4. INTEREST; LIMITATION OF LAW. No provision herein or in any Loan
Documents shall require the payment or permit the collection of interest in
excess of the maximum permitted by Applicable Law. If, in any contingency
whatsoever, the Administrative Lender or any Secured Party shall receive
anything of value from the Pledgor deemed interest under Applicable Law which
would exceed the maximum amount of interest permissible under Applicable Law,
the provisions of the Credit Agreement shall govern.
5. PARTIES BOUND. This agreement shall be binding on the Pledgor and
its successors, assigns and legal representatives, and shall inure to the
benefit of the Administrative Lender and the Secured Parties, and their
successors, assigns and legal representatives; provided, however, that the
Pledgor may not assign its rights or obligations hereunder without the prior
written consent of the Administrative Lender. The rights, powers and
interests held by the Administrative Lender hereunder may be transferred and
assigned by the Administrative Lender, in whole or in part, at such time and
upon such terms as permitted by the Credit Agreement.
6. NOTICE; WAIVERS BY PLEDGOR. All notices, communications and
materials to be given or delivered pursuant to this agreement shall be given
and shall be effective as provided in SECTION 11.1 of the Credit Agreement
but to Pledgor at the address shown opposite its name
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on the signature page hereto. The Pledgor waives notices of the creation,
advance, increase, existence, extension or renewal of, and of any indulgence
with respect to, the Obligation; waives presentment, demand, notice of
dishonor and protest; waives notice of the amount of the Obligation
outstanding at any time, notice of any change in financial condition of any
Person liable for the Obligation or any part thereof, notice of any Event of
Default and all other notices respecting the Obligation; waives all rights of
redemption, appraisal, or valuation; and agrees that maturity of the
Obligation and any part thereof may be accelerated, increased, extended or
renewed one or more times by the Secured Parties in their discretion, without
notice to the Pledgor.
7. MODIFICATIONS. No provision hereof shall be modified or limited
except by a written agreement expressly referring hereto and to the
provisions so modified or limited and signed by the Pledgor and the
Administrative Lender.
8. CONTROL. Notwithstanding anything herein to the contrary, this
agreement and the transactions contemplated hereby do not and will not
constitute, create, or have the effect of constituting or creating, directly
or indirectly, actual or practical ownership of the Pledgor or the issuer of
the Collateral by the Administrative Lender, or control, affirmative or
negative, direct or indirect, by the Administrative Lender or the Secured
Parties, over the management or any aspect of the day-to-day operation of the
Pledgor or the issuer of the Collateral, which control remains in the
Pledgor, the issuer of the Collateral, and their respective shareholders and
boards of directors.
9. OBLIGATIONS NOT AFFECTED. To the fullest extent permitted by
Applicable Law, the obligations of Pledgor under this agreement shall remain
in full force and effect without regard to, and shall not be impaired or
affected by:
a. any amendment or modification or addition or supplement to any
Loan Document, any instrument delivered in connection therewith or any
assignment or transfer thereof;
b. any exercise, non-exercise, or waiver by Administrative Lender or
any Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty, any collateral or the
Collateral or any part thereof provided pursuant to, this agreement or any
Loan Document;
c. any waiver, consent, extension, indulgence or other action or
inaction with respect of this agreement or any Loan Document or any
assignment or transfer of any thereof; or
d. any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Companies,
Pledgor or any other Person, whether or not Pledgor shall have notice or
knowledge of any of the foregoing.
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10. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
11. SUBROGATION. Pledgor shall not assert, enforce, or otherwise
exercise (i) any right of subrogation to any of the rights or liens of any
Lender or Administrative Lender or any other beneficiary against the
Companies or any other obligor on the Obligation or any collateral or other
security or (ii) any right of recourse, reimbursement, contribution,
indemnification, or similar right against the Companies or any other obligor
on all or any part of the Obligation or any guarantor thereof, and Pledgor
hereby waives any and all of the foregoing right and the benefit of, and any
right to participate in, any collateral or other security given to any Lender
or Administrative Lender or any other beneficiary to secure payment of the
Obligation. The provisions of this SECTION F.11 shall survive the
termination of this agreement and satisfaction and discharge of the Companies
by virtue of any payment, court order, or Law.
12. LIMITATION OF SHARES PLEDGED Notwithstanding anything herein to
the contrary, in no event shall this agreement cause the Administrative
Lender to have, at any time, a security interest in capital stock exceeding
66% of the total combined voting power of all classes of stock of each
Subsidiary entitled to vote.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF
AMERICA. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE PLEDGOR AGREES THAT
THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE
JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH.
14. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR, THE ADMINISTRATIVE
LENDER AND THE SECURED PARTIES HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND
INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO
THE CREDIT AGREEMENT.
15. ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
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[16. NO NOVATION. THE EXECUTION, DELIVERY AND EFFECTIVENESS OF THIS
AGREEMENT SHALL NOT DISCHARGE OR RELEASE THE LIEN OR PRIORITY OF THAT CERTAIN
AMENDED AND RESTATED PLEDGE AGREEMENT DATED AS OF ____________________, EXECUTED
BY PLEDGOR IN FAVOR OF ADMINISTRATIVE LENDER, SECURING THE COMPANIES'
OBLIGATIONS UNDER THAT CERTAIN THIRD AMENDED AND RESTATED CREDIT AGREEMENT DATED
AS OF JULY 21, 1995, AMONG THE COMPANIES, ADMINISTRATIVE LENDER AND THE LENDERS
PARTY THERETO (THE "PRIOR CREDIT AGREEMENT"). NOTHING HEREIN CONTAINED SHALL BE
CONSTRUED AS A SUBSTITUTION OR NOVATION OF ANY COLLATERAL DOCUMENTS (AS SUCH
TERM IS DEFINED IN THE PRIOR CREDIT AGREEMENT) OR THE LIENS GRANTED THEREBY, ALL
OF WHICH SHALL CONTINUE AND REMAIN IN FULL FORCE AND EFFECT, EXCEPT AS MODIFIED
HEREBY, OR BY INSTRUMENTS EXECUTED CONCURRENTLY HEREWITH.]
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the Pledgor has executed this Pledge Agreement as of
this ______day of __________, 199___.
------------------------------------
Address:
----------------------------- By:
----------------------------- ---------------------------------
----------------------------- Name:
Attn: ----------------------------
------------------------ Title:
---------------------------
NATIONSBANK OF TEXAS, N.A., as
Administrative Lender
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
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Exhibit A to Pledge Agreement
Record Class and
Subsidiary Certificate No. Owners Number of Shares
---------- -------------- ------ ----------------
