EXHIBIT 10.1
REVOLVING CREDIT AND SECURITY AGREEMENT
AMONG
FOUNTAIN VIEW, INC. AND THE SUBSIDIARY
BORROWERS LISTED ON SCHEDULE 1 ANNEXED HERETO,
AS BORROWERS
and
CAPITALSOURCE FINANCE LLC, AS AGENT
and
CAPITALSOURCE FINANCE LLC, AS SOLE LENDER
DATED AS OF
AUGUST 19, 2003
REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
Page
----
I. DEFINITIONS.................................................................................. 1
1.1. General Terms....................................................................... 1
II. ADVANCES, PAYMENT AND INTEREST............................................................... 1
2.1. The Revolving Facility.............................................................. 2
2.2. The Revolving Notes; Maturity....................................................... 2
2.3. Interest on the Revolving Notes..................................................... 3
2.4. Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate...... 3
2.5. Revolving Facility Collections; Repayment; Borrowing Availability and Lockbox....... 4
2.6. Promise to Pay; Manner of Payment................................................... 5
2.7. Repayment of Excess Advances........................................................ 5
2.8. Other Mandatory Prepayments......................................................... 6
2.9. Payments by Agent................................................................... 7
2.10. Grant of Security Interest; Collateral.............................................. 7
2.11. Collateral Administration........................................................... 9
2.12. Power of Attorney................................................................... 11
2.13. Notes............................................................................... 11
2.14. Replacement of Lost Notes........................................................... 11
2.15. Replacement of Lenders.............................................................. 12
III. FEES AND OTHER CHARGES....................................................................... 13
3.1. Commitment Fee...................................................................... 13
3.2. Unused Line Fee; Minimum Loan Fee................................................... 13
3.3. Collateral Management Fee........................................................... 13
3.4. Computation of Fees; Lawful Limits.................................................. 13
3.5. Default Rate of Interest............................................................ 14
IV. CONDITIONS PRECEDENT......................................................................... 14
4.1. Conditions to Initial Advance and Closing........................................... 14
4.2. Conditions to Each Advance.......................................................... 17
V. REPRESENTATIONS AND WARRANTIES............................................................... 18
5.1. Organization and Authority.......................................................... 18
5.2. Loan Documents...................................................................... 18
5.3. Subsidiaries, Capitalization and Ownership Interests................................ 19
5.4. Properties.......................................................................... 19
5.5. Other Agreements.................................................................... 20
5.6. Litigation.......................................................................... 20
5.7. Hazardous Materials................................................................. 20
i
5.8. Tax Returns; Governmental Reports................................................... 21
5.9. Financial Statements and Reports.................................................... 21
5.10. Compliance with Law................................................................. 21
5.11. Intellectual Property............................................................... 22
5.12. Licenses and Permits; Labor......................................................... 22
5.13. No Default.......................................................................... 22
5.14. Disclosure.......................................................................... 22
5.15. Existing Indebtedness; Investments, Guarantees and Certain Contracts................ 22
5.16. Other Agreements.................................................................... 23
5.17. Insurance........................................................................... 23
5.18. Names; Location of Offices, Records and Collateral.................................. 23
5.19. Non-Subordination................................................................... 23
5.20. Accounts............................................................................ 24
5.21. Healthcare.......................................................................... 24
5.22. Plan of Reorganization.............................................................. 25
5.23. Survival............................................................................ 25
VI. AFFIRMATIVE COVENANTS........................................................................ 25
6.1. Financial Statements, Reports and Other Information................................. 25
6.2. Payment of Obligations.............................................................. 28
6.3. Conduct of Business and Maintenance of Existence and Assets......................... 28
6.4. Compliance with Legal and Other Obligations......................................... 28
6.5. Insurance........................................................................... 28
6.6. True Books.......................................................................... 29
6.7. Inspection; Periodic Audits......................................................... 29
6.8. Further Assurances; Post Closing.................................................... 29
6.9. Payment of Indebtedness............................................................. 30
6.10. Lien Searches....................................................................... 30
6.11. Use of Proceeds..................................................................... 30
6.12. Collateral Documents; Security Interest in Collateral............................... 30
6.13. Taxes and Other Charges............................................................. 31
6.14. New Subsidiaries.................................................................... 31
6.15. Right of First Offer................................................................ 32
6.16. Supplemental Disclosure............................................................. 32
VII. NEGATIVE COVENANTS........................................................................... 33
7.1. Financial Covenants................................................................. 33
7.2. Permitted Indebtedness.............................................................. 33
7.3. Permitted Liens..................................................................... 34
7.4. Investments; New Facilities or Collateral; Subsidiaries............................. 35
7.5. Dividends; Redemptions.............................................................. 35
7.6. Transactions with Affiliates........................................................ 36
7.7. Charter Documents; Fiscal Year; Dissolution; Use of Proceeds........................ 36
7.8. Transfer of Assets.................................................................. 37
7.9. Contingent Obligations.............................................................. 38
7.10 IRS Form 8821....................................................................... 38
7.11. Payment on Subordinated Debt........................................................ 38
7.12. Negative Pledge..................................................................... 39
VIII. EVENTS OF DEFAULT............................................................................ 39
ii
IX. RIGHTS AND REMEDIES AFTER DEFAULT............................................................ 41
9.1. Rights and Remedies................................................................. 41
9.2. Application of Proceeds............................................................. 42
9.3. Rights of Agent to Appoint Receiver................................................. 43
9.4. Rights and Remedies not Exclusive................................................... 43
X. WAIVERS AND JUDICIAL PROCEEDINGS............................................................. 43
10.1. Waivers............................................................................. 43
10.2. Delay; No Waiver of Defaults........................................................ 44
10.3. Jury Waiver......................................................................... 44
10.4 Amendment and Waivers............................................................... 45
XI. EFFECTIVE DATE AND TERMINATION............................................................... 45
11.1. Effectiveness and Termination....................................................... 45
11.2. Survival............................................................................ 46
XII. AGENCY PROVISIONS............................................................................ 46
12.1. Agent............................................................................... 46
12.2. Consents............................................................................ 51
12.3. Set Off and Sharing of Payments..................................................... 51
12.4. Disbursement of Funds............................................................... 52
12.5. Settlements; Payments and Information............................................... 52
12.6. Dissemination of Information........................................................ 54
XIII. BORROWING AGENCY; IRS FORMS.................................................................. 54
13.1. Borrowing Agency Provisions; Acknowledgement of Joint and Several Liability......... 54
13.2. Withholding Tax..................................................................... 55
XIV. MISCELLANEOUS................................................................................ 56
14.1. Governing Law; Jurisdiction; Service of Process; Venue.............................. 56
14.2. Successors and Assigns; Assignments and Participations; New Lenders................. 57
14.3. Application of Payments; Reinstatement.............................................. 59
14.4. Indemnity........................................................................... 59
14.5. Notice.............................................................................. 60
14.6. Severability; Captions; Counterparts; Facsimile Signatures.......................... 61
14.7. Expenses............................................................................ 61
14.8. Entire Agreement.................................................................... 61
14.9. Agent Approvals..................................................................... 62
14.10. Confidentiality and Publicity....................................................... 62
iii
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS REVOLVING CREDIT AND SECURITY AGREEMENT (this
"AGREEMENT") dated as of August 19, 2003, is entered into by and among the
Subsidiary Borrowers listed on Schedule 1 to this Agreement (each individually a
"SUBSIDIARY BORROWER" and collectively, the "SUBSIDIARY BORROWERS"), FOUNTAIN
VIEW, INC., a Delaware corporation ("PARENT" and together with the Subsidiary
Borrowers each individually a "BORROWER" and collectively, the "BORROWERS") and
CAPITALSOURCE FINANCE LLC, a Delaware limited liability company
("CAPITALSOURCE"), as administrative agent and collateral agent for Lenders (in
such capacities, the "AGENT"), and Lenders party hereto.
WHEREAS, Borrowers have requested that Lenders make available
to Borrowers a revolving credit facility (the "REVOLVING FACILITY") in a maximum
principal amount at any time outstanding of up to Twenty One Million Dollars
($21,000,000) (the "FACILITY CAP"), the proceeds of which shall be used by
Borrowers (i) to fund distributions under, and comply with certain requirements
of, the Plan of Reorganization (as defined herein) and (ii) to finance the
working capital and other general corporate needs of Borrowers in the ordinary
course of business and as permitted in this Agreement in connection with their
skilled nursing home, assisted living, pharmacy and therapy business and to
conduct other activities incidental thereto (the "BUSINESS"); and
WHEREAS, Lenders are willing to make the Revolving Facility
available to Borrowers upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and adequacy of which hereby
are acknowledged, Borrowers, Agent and Lenders hereby agree as follows:
I. DEFINITIONS
1.1. GENERAL TERMS
For purposes of this Agreement and the other Loan Documents,
in addition to the definitions above and elsewhere in this Agreement, the terms
listed in Appendix A hereto shall have the meanings given such terms in Appendix
A, which is incorporated herein and made a part hereof. All capitalized terms
used which are not specifically defined shall have meanings provided in Article
9 of the UCC in effect on the date hereof to the extent the same are used or
defined therein. Unless otherwise specified herein or in Appendix A, this
Agreement and any agreement or contract referred to herein or in Appendix A
shall mean such agreement as modified, amended or supplemented from time to
time. Unless otherwise specified, as used in the Loan Documents or in any
certificate, report, instrument or other document made or delivered pursuant to
any of the Loan Documents, all accounting terms not defined in Appendix A
elsewhere in this Agreement shall have the meanings given to such terms in and
shall be interpreted in accordance with GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1. THE REVOLVING FACILITY
(a) Subject to the provisions of this Agreement, each
Lender agrees to make available its Pro Rata Share of Advances to Borrowers
under the Revolving Facility from time to time during the Term, provided that,
(i) the Pro Rata Share of the Advances of any Lender shall not at any time
exceed its separate Commitment, and (ii) the aggregate amount of all Advances at
any one time outstanding under the Revolving Facility shall not exceed the
lesser of (a) the Facility Cap, and (b) the Availability. The obligations of
Lenders hereunder shall be several and not joint. The Revolving Facility is a
revolving credit facility, which may be drawn, repaid and redrawn, from time to
time as permitted under this Agreement. Any determination as to whether there is
Availability shall be made by reference to the most recent Borrowing Certificate
or Interim Borrowing Certificate delivered by Borrowers (subject to Agent's
right to set reserves pursuant to this Agreement). Unless otherwise permitted by
Agent, each Advance shall be in an amount of at least $1,000. Subject to the
provisions of this Agreement, Borrowers may request Advances under the Revolving
Facility up to and including the value, in U.S. Dollars, of the sum of (i)
eighty five percent (85%) of the Borrowing Base plus (ii) the Special Advance
Amount minus (iii) if applicable, amounts reserved pursuant to this Agreement
(such calculated amount being referred to herein as the "Availability").
Advances under the Revolving Facility automatically shall be made for the
payment of interest on the Revolving Notes and other Obligations on the date
when due to the extent available and as provided for herein.
(b) Agent has established the above-referenced advance
rate for Availability based upon Borrowers' actual recent collection history for
the Eligible Receivables for each payor class (i.e., Medicare, Medicaid,
commercial insurance, etc.) in a manner consistent with Agent's underwriting
practices and procedures, including without limitation Agent's review and
analysis of, among other things, Borrowers' historical returns, rebates,
discounts, credits and allowances (collectively, the "DILUTION ITEMS"), and
throughout the Term, if there are adverse changes in the collection history or
the Dilution Items, Agent, upon five (5) Business Days prior written notice to
Borrowing Agent, may, in its Permitted Discretion and as warranted by Agent's
underwriting practices and procedures in its credit judgment exercised in its
Permitted Discretion, adjust the liquidity factors and the advance rate for
Availability. Also, based on changes related to Borrowers after the Closing
Date, Agent shall have the right to establish from time to time, in its credit
judgment exercised in its Permitted Discretion, reserves against the Borrowing
Base, which reserves shall have the effect of reducing the amounts otherwise
eligible to be disbursed to Borrowers under the Revolving Facility pursuant to
this Agreement.
2.2. THE REVOLVING NOTES; MATURITY
(a) All Advances under the Revolving Facility shall be
evidenced by the Revolving Notes, payable to the order of each Lender in the
principal amount of the Commitment of such Lender, duly executed and delivered
by Borrowers. The Revolving Notes shall evidence the aggregate Indebtedness of
Borrowers to Lenders resulting from Advances under the Revolving Facility, from
time to time. Each Lender hereby is authorized, but is not obligated, to enter
the amount of such Lender's Pro Rata Share of each Advance under the Revolving
Facility and the amount of each payment or prepayment of principal or interest
thereon in the appropriate spaces on the reverse of or on an attachment to such
Lender's Revolving Note(s). Agent will account to Borrowers monthly with a
statement of Advances
2
under the Revolving Facility and any charges and payments made pursuant to this
Agreement, and in the absence of manifest error, such accounting rendered by
Agent shall be deemed final, binding and conclusive unless Agent is notified by
Borrowers in writing to the contrary within fifteen (15) calendar days of
Receipt of each accounting, which notice shall be deemed an objection only to
items specifically objected to therein.
(b) All amounts outstanding under the Revolving Notes and
other Obligations under the Revolving Facility shall be due and payable in full,
if not earlier in accordance with this Agreement, on the Maturity Date.
2.3. INTEREST ON THE REVOLVING NOTES
Interest on Advances under the Revolving Notes shall accrue
from the respective dates of the Advances until the respective dates of
repayment of the Advances, in each case at an annual rate of the Prime Rate plus
2.5%, provided, however, that, notwithstanding any provision of any Loan
Document, the interest on outstanding Advances under the Revolving Notes shall
not be less than 7.25%, in each case calculated on the basis of a 360-day year
and for the actual number of calendar days elapsed in each interest calculation
period. Interest accrued on each Advance under the Revolving Notes shall be due
and payable on the first day of each calendar month in accordance with the
procedures provided for in Section 2.5 and Section 2.9, commencing on the first
day of the first calendar month after the Closing Date, and continuing until the
later of the expiration of the Term and the full performance and irrevocable
payment in full in cash of the Obligations (other than Unmatured Surviving
Obligations) and termination of this Agreement.
2.4. REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER
BORROWING CERTIFICATE
So long as no Default or Event of Default shall have occurred
and be continuing, Borrowing Agent on behalf of Borrowers may give Agent
irrevocable written notice requesting an Advance of a specified amount under the
Revolving Facility by notifying Agent not later than 11:00 a.m. (New York City
time) at least one (1) but not more than four (4) Business Days before the
proposed borrowing date of such requested Advance (the "BORROWING DATE"), and
delivering to Agent by noon (New York City time) on the date of the proposed
borrowing, a completed Interim Borrowing Certificate and relevant supporting
documentation satisfactory to Agent in its Permitted Discretion, which shall (i)
specify the proposed Borrowing Date of such Advance, which shall be a Business
Day, (ii) specify the principal amount of such requested Advance, and (iii)
certify the matters contained in Section 4.2. On a monthly basis, within thirty
(30) days after the end of each month, Borrowing Agent on behalf of Borrowers
shall specify to Agent the amount of any Medicare or Medicaid recoupments and/or
recoupments of any third party payor being sought, requested or claimed, or, to
Borrowers' knowledge, threatened against any Borrower or any Borrower's
Affiliates. Each time a request for an Advance is made, and, in any event and
regardless of whether an Advance is being requested, on Tuesday of each week
during the Term (and more frequently if Lender shall so request after and during
the continuance of an Event of Default) until the Obligations (other than
Unmatured Surviving Obligations) are indefeasibly paid in cash in full and this
Agreement is terminated, Borrowers shall deliver to Agent an Interim Borrowing
Certificate, and on the date twenty (20) days after the end of each
3
calendar month, Borrower shall deliver to Agent a Borrowing Certificate. On each
Borrowing Date, each Borrower irrevocably authorizes Agent to disburse the
proceeds of the requested Advance to the appropriate Borrower's account(s) as
set forth on Schedule 2.4 (or to such other account as to which the appropriate
Borrower shall instruct Agent), in all cases for credit to the appropriate
Borrower, via Federal funds wire transfer no later than 4:00 p.m. (New York City
time).
2.5. REVOLVING FACILITY COLLECTIONS; REPAYMENT; BORROWING
AVAILABILITY AND LOCKBOX
Each Borrower shall maintain one or more lockbox accounts or
blocked accounts (individually, a "LOCKBOX ACCOUNT," and collectively, the
"LOCKBOX ACCOUNTS") with one or more financial institutions reasonably
acceptable to Agent (individually, a "LOCKBOX BANK," and collectively, the
"LOCKBOX BANKS"), and shall execute with each Lockbox Bank one or more
agreements reasonably acceptable to Agent (individually a "LOCKBOX AGREEMENT,"
and collectively, the "LOCKBOX AGREEMENTS"), and such other agreements related
thereto as Agent may reasonably require. Each Borrower shall ensure that all
collections of its Accounts and all other cash payments received by such
Borrower are paid and delivered directly from Account Debtors and other Persons
into the appropriate Lockbox Account, provided, however, Borrowers may directly
receive collections from Private Pay Debtors so long as such collections are
remitted to the appropriate Lockbox Account within two (2) Business Days of
receipt by such Borrower. The Lockbox Agreements shall provide that the Lockbox
Banks immediately will transfer all funds paid into the Lockbox Accounts into a
depository account or accounts maintained by Agent or an Affiliate of Agent at a
financial institution selected by Agent from time to time (such account or
accounts, collectively, the "CONCENTRATION ACCOUNT"), except, with respect only
to Accounts payable by Medicaid/Medicare Account Debtors, as instructed by the
applicable Borrower to whom such Accounts are payable as permitted pursuant to
the applicable Lockbox Agreement. Agent agrees that, notwithstanding the
foregoing, (I) it shall instruct each Lockbox Bank to follow the instructions of
Borrowers until the earlier of (x) the occurrence and during the continuance of
an Event of Default or (y) the date upon which the outstanding balance of
Advances shall exceed $3,000,000 for a period of thirty (30) consecutive days
prior to the date of determination, at which time Agent may direct each Lockbox
Bank to remit funds into the Concentration Account; and (II) if, pursuant to
clause (I) it has directed each Lockbox Bank to remit funds into the
Concentration Account, and thereafter (x) the outstanding balance of Advances
shall be equal to or less than $3,000,000 for a period of thirty (30)
consecutive days prior to the date of determination, and (y) no Event of Default
shall have occurred and be continuing, Agent shall instruct each Lockbox Bank to
follow the instructions of Borrowers, and shall not require that each Lockbox
Bank remit funds into the Concentration Account. Notwithstanding and without
limiting any other provision of any Loan Document, Agent shall apply, on a daily
basis, all funds transferred into the Concentration Account pursuant to the
Lockbox Agreement and this Section 2.5, (i) if no Event of Default shall have
occurred and be continuing, to the payment of the Advances, with any excess
after payment of all outstanding Advances to be returned to Borrowers, and (ii)
if an Event of Default shall have occurred and be continuing, in such order and
manner as determined by Agent in accordance with this Agreement, with any excess
after repayment of the Obligations to be returned to Borrowers. To the extent
that any Accounts collections of any Borrower or any other cash payments
received by any Borrower are not sent directly to the appropriate Lockbox
Account but
4
are received by any Borrower, such collections and proceeds shall be held in
trust for the benefit of Agent and Lenders and immediately remitted (and in any
event within two (2) Business Days), in the form received, to the appropriate
Lockbox Account for immediate transfer to the Concentration Account. Each
Borrower acknowledges and agrees that compliance with the terms of this Section
2.5 is an essential term of this Agreement, and that, in addition to and
notwithstanding any other rights Agent may have hereunder, under any other Loan
Document, under applicable law or at equity, upon each and every failure by any
Borrower or any of their Affiliates to comply with any such terms Agent shall be
entitled to assess a non-compliance fee which shall operate to increase the
Revolving Interest Rate by two percent (2.0%) per annum during any period of
non-compliance, whether or not a Default or an Event of Default occurs or is
declared, provided that nothing shall prevent Agent from considering any failure
to comply with the terms of this Section 2.5 to be a Default or an Event of
Default. All funds transferred to the Concentration Account for application to
the Obligations under the Revolving Facility shall be applied to reduce the
Obligations under the Revolving Facility, but, for purposes of calculating
interest hereunder, shall be subject to a seven (7) Business Day clearance
period. If as the result of collections of Accounts and/or any other cash
payments received by any Borrower pursuant to this Section 2.5 a credit balance
exists with respect to the Concentration Account, such credit balance shall not
accrue interest in favor of the appropriate Borrower, but shall be available to
the appropriate Borrower in accordance with the terms of this Agreement. If
applicable, at any time prior to the execution of all or any of the Lockbox
Agreements and operation of all or any of the Lockbox Accounts, each Borrower
shall direct all collections or proceeds it receives on Accounts or from other
Collateral to the account(s) and in the manner specified by Agent in its
Permitted Discretion.
2.6. PROMISE TO PAY; MANNER OF PAYMENT.
(a) Any payments made by Borrowers (other than payments
automatically paid through Advances under the Revolving Facility as provided
herein), shall be made only by ACH or wire transfer on the date when due,
without offset or counterclaim, in U.S. Dollars, in immediately available funds
to such account within the domestic United States as may be indicated in writing
by Agent to Borrowers from time to time. Any such payment received after 4:00
p.m. New York City time on any date shall be deemed received on the following
Business Day. Whenever any payment hereunder shall be stated to be due or shall
become due and payable on a day other than a Business Day, the due date thereof
shall be extended to, and such payment shall be made on, the next succeeding
Business Day, and such extension of time in such case shall be included in the
computation of payment of any interest (at the Revolving Interest Rate then in
effect during such extension) and/or fees, as the case may be.
(b) Borrowers absolutely and unconditionally promise to
pay the Obligations hereunder in accordance with the manner and terms hereof,
without any deduction whatsoever, without setoff, recoupment or counterclaim,
each of which claim or defense hereby is waived.
2.7. REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility
outstanding at any time in excess of the lesser of the Facility Cap or the
Availability shall be immediately due and payable by Borrowers without the
necessity of any demand, at the Payment Office, whether or not a
5
Default or Event of Default has occurred or is continuing and shall be paid in
the manner specified in Section 2.9.
2.8. OTHER MANDATORY PREPAYMENTS
(a) In addition to and without limiting any provision of
any Loan Document, if a Change of Control occurs, on or prior to the first
Business Day following the date of such Change of Control, Borrowers shall
prepay the Advances and all other Obligations (other than Unmatured Surviving
Obligations) in full in cash together with accrued interest thereon to the date
of prepayment and all other amounts owing to Agent and Lenders under the Loan
Documents.
(b) Commencing 2004 and each calendar year thereafter
during the Term, upon the earlier to occur of (i) April 30 of such year and (ii)
not later than 10 days following delivery of the annual financial statements to
Agent referred to in and required by Section 6.1(a)(i) with respect to the prior
calendar year and until the Special Advance Amount shall be paid in full,
Borrowers shall prepay the Special Advance Amount in an amount equal to the sum
of (A) and (B) below:
(A) An amount (the "Target Payment Amount")
equal to (1) the lesser of (a) 100% of Target Excess Cash Flow
for the immediately preceding fiscal year and (b) the positive
excess of (x) Ten Million Dollars ($10,000,000) (or for
calendar year 2003, the 2003 Maximum Amount (as defined
below)) plus any Catch Up Amounts (defined below) with respect
to years prior to the immediately preceding calendar year, if
applicable, over (y) monthly amortization payments made by
Borrowers with respect to the Special Advance Amount during
such immediately preceding calendar year or any other
voluntary prepayments of the Special Advance Amount minus (2)
the sum of (a) the amount of Target Excess Cash Flow -----
applied to make prepayments on the Mezzanine Loan and the
Senior Mortgage Term Loan B on such day and (b) the amount of
voluntary prepayments of the principal amount of the Mezzanine
Loan and the Senior Mortgage Term Loan B made during the
immediately preceding fiscal year. To the extent that with
respect to any calendar year the aggregate amount of (x)
principal payments of (I) the Special Advance Amount under
this Section 2.8(b)(A), (II) the Mezzanine Loan under Section
2.3.2(b) of the Mezzanine Loan Agreement and (III) the Senior
Mortgage Term Loan B under Section 2.3.2(b) of the Senior
Mortgage Term Loan Agreement in such calendar year plus (y)
voluntary principal prepayments of the Mezzanine Loan, the
Senior Mortgage Term Loan B and the Special Advance Amount
during the immediately preceding fiscal year is less than
$10,000,000 the positive excess of $10,000,000 over such
payments shall be defined as a "Catch Up Amount". For purposes
of the foregoing calculation, for calendar year 2003 an amount
equal to the product of (I) $10,000,000 multiplied by (II) a
fraction, the numerator of which is the number of months
during 2003 that the Special Advance Amount is outstanding and
the denominator of which is 12 (the "2003 Maximum Amount")
shall be substituted for $10,000,000 in such calculation.
6
(B) If the Target Excess Cash Flow for any
fiscal year is greater than the Target Payment Amount
calculated with respect to such fiscal year, an amount, but
not less than zero, equal to (1) 80% of Excess Cash Flow for
the immediately preceding fiscal year minus (2) the sum of (a)
the amount of Excess Cash Flow applied to make prepayments on
the Mezzanine Loan and the Senior Mortgage Term Loan B and (b)
the Target Payment Amount.
2.9. PAYMENTS BY AGENT
Should any amount required to be paid under any Loan Document
or under any of the Mezzanine Loan Documentation be unpaid, such amount may be
paid by Agent, for the account of Lenders or Mezzanine Loan Lenders, as the case
may be, which payment shall be treated as an Advance under the Revolving
Facility as of the date such payment is due, and each Borrower irrevocably
authorizes disbursement of any such funds to Agent, for the benefit of Lenders
or Mezzanine Loan Lenders, as the case may be, by way of direct payment of the
relevant amount, interest or Obligations without necessity of any demand in
accordance with Section 2.6 whether or not a Default or Event of Default has
occurred or is continuing. No payment or prepayment of any amount by Agent,
Lenders or any other Person shall entitle any Person to be subrogated to the
rights of Agent or Lenders under any Loan Document unless and until the
Obligations (other than Unmatured Surviving Obligations) have been fully
performed and paid irrevocably in cash and this Agreement has been terminated.
Any sums expended by Agent or Lenders as a result of any Borrower's or any
Guarantor's failure to pay, perform or comply with any Loan Document or any of
the Obligations, or with respect to any failure to pay, perform or comply with
any of the Mezzanine Loan Documentation, may be charged to Borrowers' account as
an Advance under the Revolving Facility and added to the Obligations.
2.10. GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the
Obligations, each Borrower hereby grants to Agent, for the benefit of itself and
Lenders, a continuing security interest in and Lien upon, and pledges to Agent,
for the benefit of itself and Lenders, all of its right, title and interest in
and to and upon all of such Borrower's assets, now owned or hereafter acquired
(collectively and each individually, the "COLLATERAL"), including, without
limitation, all of the following property and interests in property of such
Borrower:
(i) all of such Borrower's tangible personal
property, including without limitation all present and future Inventory and
Equipment (including items of Equipment which are or become Fixtures), now owned
or hereafter acquired;
(ii) all of such Borrower's intangible personal
property, including without limitation all present and future Accounts,
securities, contract rights, Permits, General Intangibles, Chattel Paper,
Documents, Instruments, Deposit Accounts, Letter-of-Credit Rights and Supporting
Obligations, rights to the payment of money or other forms of consideration of
any kind, tax refunds, insurance proceeds, now owned or hereafter acquired, and
all intangible and tangible personal property relating to or arising out of any
of the foregoing;
7
(iii) all of such Borrower's present and future
Government Contracts and rights thereunder and the related Government Accounts
and proceeds thereof, now or hereafter owned or acquired by such Borrower;
provided, however, that Agent shall not have a security interest in any rights
under any Government Contract of such Borrower or in the related Government
Account where the taking of such security interest would be a violation of an
express prohibition contained in the Government Contract (for purposes of this
limitation, the fact that a Government Contract is subject to, or otherwise
refers to, Title 31, Section 203 or Title 00, Xxxxxxx 00 xx xxx Xxxxxx Xxxxxx
Code shall not be deemed an express prohibition against assignment thereof) or
is prohibited by applicable law; and
(iv) any and all additions to any of the
foregoing, and any and all replacements, products and proceeds (including
insurance proceeds) of any of the foregoing.
(b) Notwithstanding the foregoing provisions of this
Section 2.10, such grant of a security interest shall not extend to, and the
term "Collateral" shall not include, (x) any General Intangible, contract,
agreement or document of any Borrower to the extent that (i) such General
Intangible, contract, agreement or document is not assignable or capable of
being encumbered as a matter of law or under the terms of any license or other
agreement applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law) without the consent of the licensor
thereof or other applicable party thereto, and (ii) such consent has not been
obtained; provided, however, that the foregoing grant of a security interest
shall extend to, and the term "Collateral" shall include, each of the following:
(a) any General Intangible which is in the nature of an Account or a right to
the payment of money or a proceed of, or otherwise related to, the enforcement
or collection of, any Account or right to the payment of money, (b) any and all
proceeds of any General Intangible, contract, agreement or document that is
otherwise excluded to the extent that the assignment, pledge or encumbrance of
such proceeds is not so restricted, and (c) upon obtaining the consent of any
such licensor or other applicable party with respect to any such otherwise
excluded General Intangible, contract, agreement or document, such General
Intangible, contract, agreement or document as well as any and all proceeds
thereof that might theretofore have been excluded from such grant of a security
interest and from the term "Collateral"; (y) any asset of any Borrower to the
extent that (i) such asset subject to a contract, agreement or document
otherwise permitted pursuant to this Agreement, which contract, agreement or
document restricts the grant of such security interest (but solely to the extent
that any such restriction shall be enforceable under applicable law) without the
consent of the other party to such contract, agreement or document, and (ii)
such consent has not been obtained; provided, however, that the foregoing grant
of a security interest shall extend to, and the term "Collateral" shall include,
each of the following: (a) any and all proceeds of any asset that is otherwise
excluded to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (b) upon obtaining the consent of the other
party to any such contract, agreement or document with respect to any such
otherwise excluded asset, such asset as well as any and all proceeds thereof
that might theretofore have been excluded from such grant of a security interest
and from the term "Collateral" ; and (z) any Permit of any Borrower to the
extent that the assignment of such Permit would violate the law applicable to
such Permit, or materially impair the validity of such Permit. Each Borrower
shall use all reasonable efforts (which shall not include the unreasonable
expenditure of funds) to obtain any such required consent, provided, however in
the event Borrowers are unable to obtain the required Landlord Consent and
Waiver for any location at which books and records are kept,
8
Borrowers shall maintain a duplicate set of such books and records at a location
owned by a Borrower or with respect to which a Landlord Consent and Waiver
reasonably satisfactory to Agent shall have been obtained.
(c) In addition to the foregoing, to secure the payment
and performance of the Obligations, pursuant to the Pledge Agreements, Agent has
received a pledge of all of the Subsidiary Stock.
(d) Each Borrower shall promptly notify Agent of any
material Commercial Tort Claim in which such Borrower has an interest arising
after the Closing Date and shall provide all necessary information concerning
such Commercial Tort Claim and make all necessary filings with respect thereto
to perfect Agent's (for its benefit and the benefit of Lenders) first priority
security interest therein.
(e) Upon the execution and delivery of this Agreement,
and upon the proper filing of the necessary financing statements, the proper
recordation of the Collateral Patent, Trademark and Copyright Assignment in the
United States Patent and Trademark Office and/or the United States Copyright
Office and proper delivery of the necessary stock certificates, without any
further action, Agent will have a good, valid and perfected first priority Lien
and security interest in the Collateral, subject to no transfer or other
restrictions or Liens of any kind in favor of any other Person except for
Permitted Liens, except for security interests in (x) motor vehicles subject to
a certificate of title, and (y) money. No financing statement relating to any of
the Collateral is on file in any public office except those (i) on behalf of
Agent, and/or (ii) in connection with or with respect to Permitted Liens.
(f) Borrowers shall cause Agent to have a valid first
priority Lien on all Leasehold Properties, subject only to Priority Liens. After
the recordation of the Leasehold Mortgages in the appropriate jurisdiction,
Agent shall have a valid first priority Lien in such Leasehold Property senior
to any Lien asserted by any other person, other than the Priority Liens.
2.11. COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts and equipment
located at the premises of clients and used in their ordinary course of
business) will at all times be kept by Borrowers at the locations set forth on
Schedule 5.18B hereto, and such other locations as Borrowers shall identify to
Agent upon ten (10) calendar days prior written notice, and in any case shall
not be moved outside the continental United States.
(b) Each Borrower shall keep accurate and complete
records of its Accounts and all payments and collections thereon and shall
submit such records to Agent on such periodic bases as Agent may request. In
addition, if Accounts of any Borrower in an aggregate face amount in excess of
$200,000 become ineligible because they fall within one of the specified
categories of ineligibility set forth in the definition of Eligible Receivables,
Borrowers shall notify Agent of such occurrence on the first Business Day
following such occurrence and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence. If requested by Agent, after the occurrence and during
the continuance of an Event of Default, Borrowers shall execute and deliver to
Agent formal written assignments of all of its Accounts weekly or daily as Agent
9
may request, including all Accounts created since the date of the last
assignment, together with copies of claims, invoices and/or other information
related thereto. To the extent that collections from such assigned accounts
exceed the amount of the Obligations, such excess amount shall not accrue
interest in favor of Borrowers, but shall be available to Borrowers upon
Borrowers' written request.
(c) Whether or not an Event of Default has occurred, any
of Agent's officers, employees, representatives or agents shall have the right,
at any time during normal business hours, in the name of Agent, any designee of
Agent or any Borrower, to verify the validity, amount or any other matter
relating to any Accounts of Borrower; provided that unless an Event of Default
has occurred and is continuing, such verification shall only verify account
balances and shall not give notice of Agent's security interest. Borrowers shall
cooperate fully with Agent in an effort to facilitate and promptly conclude such
verification process.
(d) To expedite collection, each Borrower shall endeavor
in the first instance to make collection of its Accounts for Agent. Agent shall
have the right at all times after the occurrence and during the continuance of
an Event of Default to notify (i) Account Debtors owing Accounts to Borrowers
other than Medicaid/Medicare Account Debtors that their Accounts have been
assigned to Agent and to collect such Accounts directly in its own name and to
charge collection costs and expenses, including reasonable attorney's fees, to
Borrowers, and (ii) Medicaid/Medicare Account Debtors that Borrowers have waived
any and all defenses and counterclaims they may have or could interpose in any
such action or procedure brought by Agent to obtain a court order recognizing
the collateral assignment or security interest and lien of Agent in and to any
Account or other Collateral payable by Medicaid/Medicare Account Debtors and
that Agent is seeking or may seek to obtain a court order recognizing the
collateral assignment or security interest and lien of Agent in and to all
Accounts and other Collateral payable by Medicaid/Medicare Account Debtors.
(e) As and when determined by Agent in its Permitted
Discretion, Agent will perform the searches described in clauses (i) and (ii)
below against Borrowers and Guarantors (the results of which are to be
consistent with Borrowers' representations and warranties under this Agreement),
all at Borrowers' expense: (i) UCC searches with the Secretary of State and
local filing offices of each jurisdiction where any Borrower and/or any
Guarantors are organized and/or maintain their respective executive offices, a
place of business or assets; and (ii) judgment, federal tax lien and corporate
and partnership tax lien searches, in each jurisdiction searched under clause
(i) above, provided that unless an Event of Default shall have occurred and
during the continuance thereof, the Borrowers shall not be required to pay for
more than one such search in any fiscal quarter under clause (i) and clause (ii)
above.
(f) Borrowers (i) shall provide prompt written notice to
its current bank to transfer all items, collections and remittances to the
Concentration Account, (ii) shall provide prompt written notice to each Account
Debtor (other than a Private Pay Debtor) directing them to make payments to the
appropriate Lockbox Account, and Borrowers hereby authorizes Agent, upon any
failure to send such notice and directions within ten (10) calendar days after
the date of this Agreement (or ten (10) calendar days after the Person becomes
an Account Debtor (other than a Private Pay Debtor)), to send any and all
similar notices and directions to such Account Debtors and (iii) shall do such
further acts and deeds that may be lawfully required by Agent to
10
make, create, maintain, continue or perfect Agent's security interest in the
Lockbox Accounts or the Collateral. At Agent's request, Borrowers shall
immediately deliver to Agent all items for which Agent must receive possession
to obtain a perfected security interest and all notes, certificates, and
documents of title, Chattel Paper, warehouse receipts, Instruments, and any
other similar instruments constituting Collateral except for promissory notes in
a principal amount less than $100,000 provided that the aggregate principal
amount of all such promissory notes shall be less than $500,000.
2.12. POWER OF ATTORNEY
Agent is hereby irrevocably made, constituted and appointed the true
and lawful attorney for each Borrower (without requiring Agent to act as such)
with full power of substitution to do the following: (i) upon the occurrence and
during the continuance of an Event of Default, endorse the name of such Borrower
upon any and all checks, drafts, money orders, and other instruments for the
payment of money that are payable to such Borrower and constitute collections on
its Accounts; (ii) execute and/or file in the name of such Borrower any
financing statements, amendments to financing statements, schedules,
assignments, instruments, documents, and statements that it is obligated to give
Agent under any of the Loan Documents; (iii) do such further acts and deeds in
the name of any Borrower that Agent may reasonably deem necessary to make,
create, maintain, continue or perfect Agent's, for the benefit of itself and
Lenders, security interest or lien or right in any Collateral; and (iv) upon the
occurrence and during the continuance of an Event of Default, do such other and
further acts and deeds in the name of such Borrower that Agent may reasonably
deem necessary or desirable to enforce Agent's security interest or lien or
rights in any Collateral. In addition, if any Borrower breaches its obligation
hereunder to direct payments of Accounts or the proceeds of any other Collateral
to the appropriate Lockbox Account, Agent, as the irrevocably made, constituted
and appointed true and lawful attorney for such Borrower pursuant to this
paragraph, may, by the signature or other act of any of Agent's officers or
authorized signatories (without requiring any of them to do so), direct any
federal, state or private payor or fiscal intermediary to pay proceeds of
Accounts or any other Collateral to the appropriate Lockbox Account.
2.13. NOTES
Upon Agent's or any Lender's request, and in any event within three (3)
Business Days of any such request, Borrowers shall execute and deliver to Agent
new Revolving Notes and/or divide or split the Revolving Notes in exchange for
then existing Revolving Notes in such smaller amounts or denominations as Agent
or such Lender shall specify in their respective sole and absolute discretion,
provided, that the aggregate principal amount of such new Revolving Notes does
not exceed the aggregate principal amount of the Revolving Notes outstanding at
the time such request is made.
2.14. REPLACEMENT OF LOST NOTES
Upon receipt of evidence reasonably satisfactory to Borrowers of the
mutilation, destruction, loss or theft of any Revolving Note and the ownership
thereof, Borrowers shall, upon the written request of the holder of such
Revolving Note, execute and deliver in replacement thereof a new Revolving Note
in the same form, in the same original principal
11
amount, so mutilated, destroyed, lost or stolen; and such Revolving Note so
mutilated, destroyed, lost or stolen shall then be deemed no longer outstanding
hereunder. If the Revolving Note being replaced has been mutilated, it shall be
surrendered to Borrowers after Agent's receipt of the replacement Revolving
Note; and if such replaced Revolving Note has been destroyed, lost or stolen,
the holder of such Revolving Note shall furnish Borrowers with an indemnity in
writing reasonably acceptable to Borrowers to save them harmless in respect of
such replaced Revolving Note.
2.15. REPLACEMENT OF LENDERS
If, and on each occasion that, a Lender (i) makes a demand for
additional costs or other payments pursuant to Section 6.13 below; (ii) has
failed to perform its obligation to make an Advance required by such Lender
hereunder; or (iii) refuses to approve any requested amendment or modification
which requires unanimous Lender consent and is consented to by the Requisite
Lenders, Borrowers may at their sole expense and effort, upon at least 5
Business Days' prior irrevocable written notice to each of such Lender and
Agent, in whole permanently replace the Commitments of such Lender; provided
that such notice (x) must be given not later than the sixtieth day following the
date of a demand for additional costs or other payments made by such Lender or
the date of any such refusal; and (y) may be given at any time while such
failure to perform is continuing. Any such replacement Lender shall (a) be an
Eligible Assignee, (b) be acceptable to Agent, such acceptance not to be
unreasonably withheld or delayed, and (c) upon the effective date of replacement
purchase the Obligations owed to such replaced Lender for an amount equal to the
outstanding principal amount thereof plus accrued and unpaid interest and fees
due such Lender (which interest and fees will be paid to the replacement Lender
when collected from Borrowers) and shall thereupon for all purposes become a
"Lender" hereunder. The notice from Borrowers replacing a Lender shall specify
an effective date for the replacement of the Commitment of such Lender, which
date shall not be later than the tenth day after the day such notice is given.
Upon the effective date of repayment of any such Lender's Commitments pursuant
to this Section 2.15, and the execution by the replacement Lender of a Lender
Addition Agreement, such Lender shall cease to be a Lender hereunder. No such
termination of the Commitment of any such Lender and the purchase of the
Advances of any such Lender pursuant to this Section 2.15 shall affect (A) any
liability or obligation of Borrowers or any other Lender to such terminated
Lender which accrued on or prior to the date of such termination or (B) the
rights of such terminated Lender hereunder in respect of any such liability or
obligation. A Lender shall not be required to make any such assignment if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment cease to apply.
Notwithstanding anything herein to the contrary, Borrowers shall have no right
to replace a Lender pursuant to this Section 2.15 at any time that CapitalSource
is the sole Lender.
12
III. FEES AND OTHER CHARGES
3.1. COMMITMENT FEE
On or before the Closing Date, Borrowers shall pay to Agent 1%
of the Facility Cap as a nonrefundable commitment fee.
3.2. UNUSED LINE FEE; MINIMUM LOAN FEE
(a) Borrowers shall pay to Agent for the ratable benefit
of Lenders an unused line fee (the "UNUSED LINE FEE") in an amount equal to
0.042% per month of the difference derived by subtracting (i) the daily average
amount of the balances under the Revolving Facility outstanding during the
preceding month, from (ii) the Facility Cap. The Unused Line Fee shall be
payable monthly in arrears on the first day of each successive calendar month
(starting with the first calendar month following the month in which the Closing
Date occurs).
(b) In the event the daily average amount of the balances
under the Revolving Facility outstanding during any calendar month is less than
$3,000,000 (the "MINIMUM AVERAGE MONTHLY LOAN AMOUNT") Borrowers shall pay to
Agent for the benefit of Lenders a minimum loan fee in an amount equal to 0.042%
per month on the amount by which the Minimum Average Monthly Loan Amount exceeds
such daily average amount of unpaid balances. Such fee shall be calculated on
the basis of a year of 360 days and actual days elapsed and such fee shall be
charged to Borrowers' account on the first day of each month with respect to the
prior month. In the event Borrowers request that Agent cease charging the
minimum loan fee set forth in this Section 3.2(b), the Unused Line Fee shall
automatically increase to 0.083% per month effective on the first month
following the date of such request.
3.3. COLLATERAL MANAGEMENT FEE
Borrowers shall pay Agent for its own account as additional
interest a monthly collateral management fee (the "COLLATERAL MANAGEMENT FEE")
equal to 0.083% per month calculated on the basis of the daily average amount of
the balances under the Revolving Facility outstanding during the preceding
month. The Collateral Management Fee shall be payable monthly in arrears on the
first day of each successive calendar month (starting with the first calendar
month following the month in which the Closing Date occurs).
3.4. COMPUTATION OF FEES; LAWFUL LIMITS
All fees hereunder shall be computed on the basis of a year of
360 days and for the actual number of days elapsed in each calculation period,
as applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Agent, for the benefit of Lenders for the use, forbearance or
detention of money hereunder exceed the maximum rate permissible under
applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Agent or Lenders shall
have received interest or any other charges of any kind which might be deemed to
be interest under applicable law in excess of
13
the maximum lawful rate, then such excess shall be applied first to any unpaid
fees and charges hereunder, then to unpaid principal balance owed by Borrowers
hereunder, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Agent and Lenders shall promptly refund
such excess amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate. The terms and provisions of this
Section 3.4 shall control to the extent any other provision of any Loan Document
is inconsistent herewith.
3.5. DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuation of an Event of
Default, the Revolving Interest Rate of interest in effect at such time with
respect to the Obligations shall be increased by 3.0% per annum (the "DEFAULT
RATE").
IV. CONDITIONS PRECEDENT
4.1. CONDITIONS TO INITIAL ADVANCE AND CLOSING
The obligations of Lenders to consummate the transactions
contemplated herein and to make the initial Advance under the Revolving Facility
(the "INITIAL ADVANCE") are subject to the satisfaction of Agent of the
following:
(a) (i) Borrowers shall have delivered to Agent (A) the
Loan Documents to which they are a party, each duly executed by an authorized
officer of each Borrower and the other parties thereto, and (B) a Borrowing
Certificate for the most recent month ended 20 days or more prior to the Closing
Date and an Interim Borrowing Base Certificate for the most recent week ended
prior to the Closing Date for the Initial Advance under the Revolving Facility
executed by an authorized officer of Borrowing Agent, and (ii) each Guarantor
shall have delivered to Agent the Loan Documents to which such Guarantor is a
party, each duly executed and delivered by such Guarantor or an authorized
officer of such Guarantor, as applicable, and the other parties thereto;
(b) all in form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have received (i) each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by any Loan Document or under law or reasonably requested by Agent to
be filed, registered or recorded to create in favor of Agent, a perfected
security interest upon the Collateral, and (ii) evidence of each such filing,
registration or recordation and of the payment by Borrowers of any necessary
fee, or tax relating thereto;
(c) Agent shall have received (i) the Charter and Good
Standing Documents, all in form and substance reasonably acceptable to Agent,
(ii) a certificate of the secretary or assistant secretary of each Borrower
dated the Closing Date, as to the incumbency and signature of the Persons
executing the Loan Documents, in form and substance reasonably acceptable to
Agent, (iii) the written legal opinions of counsel and/or special counsel for
Borrowers, in form and substance satisfactory to Agent in its Permitted
Discretion and to its counsel, and (iv) a certificate executed by an authorized
officer of each Borrower, which shall constitute a representation and warranty
by such Borrower as of the Closing Date that the conditions contained in this
Section 4.1 shall have been satisfied; provided that for purposes of giving this
14
representation and warranty, each Borrower may assume that any condition which
requires satisfaction of Agent or Lenders has been satisfied;
(d) Agent shall have completed examinations, the results
of which shall be satisfactory in form and substance to Agent, of the
Collateral, the financial statements and the books, records, business,
obligations, financial condition and operational state of each Borrower and the
Guarantor, and Borrowers shall have demonstrated to Agent's reasonable
satisfaction that (i) its operations comply, in all material respects, with all
applicable federal, state, foreign and local laws, statutes and regulations,
(ii) its operations are not the subject of any governmental investigation,
evaluation or any remedial action which could reasonably be expected to result
in any material expenditure or liability, and (iii) they have no liabilities or
obligations (whether contingent or otherwise) that are material, other than
those set forth in the financial statements or other information delivered to
Agent;
(e) Agent shall have received all fees, charges and
expenses payable to Agent on or prior to the Closing Date pursuant to the Loan
Documents;
(f) all in form and substance satisfactory to Agent in
its Permitted Discretion, Agent shall have received such consents, approvals and
agreements (which shall not include any Landlord Waivers and Consents with
respect to any lease set forth on Schedule 5.4) from such third parties as Agent
and its counsel shall determine are necessary or desirable to (i) perfect any
security interest or Lien granted to the Agent or the Lenders pursuant to the
Security Documents, and/or (ii) permit the execution of and performance under
the Loan Documents without any conflict with any other material agreement,
document, instrument to which any Borrower is a party or by which any of its
properties or assets are bound or subject;
(g) Agent shall have received final fully executed and
acknowledged counterparts of the Leasehold Mortgages.
(h) Borrowers shall, in the reasonable judgment of Agent,
be in compliance with Section 6.5, and Agent shall have received (i) summaries
of all insurance policies required for compliance with Section 6.5 and (ii)
original certificates of such insurance policies confirming (x) that insurance
policies required for compliance with Section 6.5 are in effect, (y) that the
premiums due and owing on or prior to the Closing Date with respect to such
insurance policies have been paid in full and (y) that such insurance policies
name Agent as sole beneficiary or loss payee and additional insured, as
appropriate;
(i) All corporate and other proceedings, documents,
instruments and other legal matters in connection with the transactions
contemplated by the Loan Documents (including, but not limited to, those
relating to corporate and capital structures of Borrowers) shall be reasonably
satisfactory to Agent;
(j) After giving effect to the making of the Initial
Advance and the application of all proceeds of the Initial Advance (including
the application of such proceeds that will occur within 30 days after the
Closing Date):
15
(i) the ratio of (x) the amount of Total Debt on
the Closing Date to (y) EBITDA for the twelve month period
ended on the last day of the second month prior to the Closing
Date shall not exceed 6.5 to 1;
(ii) the ratio of (x) the amount of Senior Debt
on the Closing Date to (y) EBITDA for the twelve month period
ended on the last day of the second month prior to the Closing
Date shall not exceed 4 to 1; and
(iii) the ratio of (a) EBITDA to (b) Interest
Expense, in each case for the twelve month period ended on the
last day of the second month prior to the Closing Date, shall
be not less than 1.75 to 1.
(k) After giving effect to the Plan of Reorganization, no
material default shall exist pursuant to any of Borrowers' obligations under any
material contract and Borrowers shall be in material compliance with all
applicable laws in all material respects;
(l) Borrowers shall have established the Lockbox Accounts
pursuant to Section 2.5;
(m) Agent shall have received copies of all (i) material
licenses and permits required for Borrowers to conduct the business in which it
is currently engaged or is contemplated pursuant to the Loan Documents, and (ii)
all material intercompany agreements, management agreements, documents related
to borrowed money, capital leases and other contracts;
(n) Agent shall have completed its legal due diligence
examinations of Borrowers, the results of which shall be satisfactory in form
and substance to Agent, as evidenced by Agent's execution of the Loan Documents;
(o) Agent shall have received final executed copies of
the Senior Mortgage Loan Documentation, the Mezzanine Loan Documentation and the
Revolving Loan B Documentation, all of which shall contain terms and provisions
reasonably satisfactory to Agent and the transactions contemplated therein shall
be consummated concurrently with the Closing Date;
(p) Agent shall have received executed copies of the
Indenture, the Indenture Notes, and other related agreements, all of which shall
contain terms and provisions reasonably satisfactory to Agent;
(q) Agent shall have received final executed copies of
the Senior Mortgage Intercreditor Agreement;
(r) Agent shall have received final executed copies of
the General Intercreditor Agreement and the Bergen Intercreditor Agreement;
(s) Agent shall have received from The Woodlands Resource
Management, L.P. and The Woodlands Healthcare Center, L.P. final executed copies
of an unsecured Guaranty in form and substance reasonably satisfactory to Agent;
16
(t) Agent shall have received a certificate of the
Secretary or Assistant Secretary of the Parent, dated as of the Closing Date,
certifying (x) that attached thereto is a true, correct and complete copy of the
Confirmation Order (including the Plan of Reorganization attached to the
Confirmation Order) and (y) the effectiveness of the Confirmation Order shall
not have been stayed by any court;
(u) The terms and conditions of the Plan of
Reorganization shall not have been amended or modified from the form of the Plan
of Reorganization attached to the Confirmation Order without the approval of the
Requisite Lenders; provided, however, that modifications which in the reasonable
judgment of Agent do not impair or adversely affect the rights and remedies of
Lenders may be implemented by Borrowers without such approval. All conditions
precedent to the effectiveness of the Plan of Reorganization shall have been
satisfied (or waived), the Confirmation Order shall not have been stayed by any
court and the Effective Date shall have occurred or shall occur concurrently
with the closing;
(v) Borrowers' Available Cash on the Closing Date shall
be $15,000,000 or more;
(w) Borrowers shall have executed and filed IRS Form 8821
with the appropriate office of the Internal Revenue Service;
(x) There shall be no Material Adverse Change in
Borrowers' business or general financial condition from that existing as at
December 31, 2002, including, Borrowers shall not have experienced (1) a
reduction in the average Medi-Cal rate of more than 10% from the rates in effect
at December 31, 2002 on the properties being financed with the Senior Mortgage
Term Loan, other than material changes in Medicare Part B Therapy payments; (2)
any adverse regulatory survey which could reasonably be expected to jeopardize
materially the licensure of any Facility of Borrowers; (3) a reduction in
average Medicaid reimbursement rates for California Facilities of more than 10%;
(4) a material increase in liability insurance premiums; and (5) EBITDA of
Borrowers on a Consolidated Basis, for the twelve month period ending on the
last day of the most recent month prior to the Closing Date, of less than
$40,000,000; and
(y) Agent shall have received such other documents,
certificates, consents and information as Agent may reasonably request, all in
form and substance reasonably satisfactory to Agent.
4.2. CONDITIONS TO EACH ADVANCE
The obligations of Lenders to make any Advance (including,
without limitation, the Initial Advance) are subject to the satisfaction, in the
sole judgment of Agent in its Permitted Discretion, of the following conditions
precedent:
(a) Borrowers shall have delivered to Agent a Borrowing
Certificate or Interim Borrowing Certificate for the Advance executed by an
authorized officer of Borrowing Agent on behalf of Borrowers, which shall
constitute a representation and warranty by Borrowers as of the Borrowing Date
of such Advance that the conditions contained in this Section 4.2 have been
satisfied;
17
(b) Each of the representations and warranties made by
Borrowers in or pursuant to the Loan Documents shall be accurate in all material
respects, before and after giving effect to such Advance, and no Default or
Event of Default shall have occurred or be continuing or would exist after
giving effect to such Advance on such date;
(c) Immediately after giving effect to the requested
Advance, the aggregate outstanding principal amount of Advances under the
Revolving Facility shall not exceed the lesser of Availability and the Facility
Cap;
(d) Since the Closing Date, there has been no Material
Adverse Change;
(e) Agent shall have received all fees, charges and
expenses payable to Agent and/or Lenders on or prior to such date pursuant to
the Loan Documents; and
(f) no Default or Event of Default shall have occurred or
be continuing or would exist after giving effect to the Advance under the
Revolving Facility or the funding of the Advance on such date.
V. REPRESENTATIONS AND WARRANTIES
Each Borrower, jointly and severally, represents and warrants
as of the date hereof, the Closing Date, and each Borrowing Date as follows:
5.1. ORGANIZATION AND AUTHORITY
Each Borrower is a corporation, limited liability company or
limited partnership duly organized, validly existing and in good standing under
the laws of its state of formation. Each Borrower (i) has all requisite power
and authority to own its properties and assets and to carry on its business as
now being conducted and as contemplated in the Loan Documents, (ii) is duly
qualified to do business in every jurisdiction in which failure so to qualify
could reasonably be expected to have a Material Adverse Effect, and (iii) has
all requisite power and authority (A) to execute, deliver and perform the Loan
Documents to which it is a party, (B) to borrow hereunder, (C) to consummate the
transactions contemplated under the Loan Documents, and (D) to grant the Liens
with regard to the Collateral pursuant to the Security Documents to which it is
a party. No Borrower is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or is
controlled by such an "investment company."
5.2. LOAN DOCUMENTS
The execution, delivery and performance by each Borrower of
the Loan Documents to which it is a party, and the consummation of the
transactions contemplated thereby, (a) have been duly authorized by all
requisite action of each such Borrower and have been duly executed and delivered
by or on behalf of such Borrower; (b) do not violate in any material respect any
provisions of (i) applicable law, statute, rule, regulation, ordinance or tariff
applicable to such Borrower, (ii) any order of any Governmental Authority
binding on each such Borrower or any of its properties; or (iii) any material
agreement between any such Borrower and its shareholders, members, partners or
equity owners or among any such shareholders,
18
members, partners or equity owners; (c) do not violate any provision of the
certificate of incorporation or bylaws (or any other equivalent governing
agreement or document) of any such Borrower, (d) are not in conflict with, and
do not result in a breach or default of or constitute an event of default, or an
event, fact, condition or circumstance which, with notice or passage of time, or
both, would constitute or result in a conflict, breach, default or event of
default under, any indenture, agreement or other instrument to which such
Borrower is a party, or by which the properties or assets of such Borrower are
bound, the effect of which could reasonably be expected to have a Material
Adverse Effect; (e) except as set forth therein, will not result in the creation
or imposition of any Lien of any nature upon any of the properties or assets of
any Borrower, and (f) except for those which have been obtained, do not require
the consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person. When
executed and delivered, each of the Loan Documents to which any Borrower is a
party will constitute the legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights and to the
effect of general principles of equity which may limit the availability of
equitable remedies (whether in a proceeding at law or in equity).
5.3. SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
As of the Closing Date, no Borrower has any Subsidiaries other
than those Persons listed as Subsidiaries on Schedule 5.3. Schedule 5.3 also
states, as of the Closing Date, the authorized and issued capitalization of each
such Borrower and each such Subsidiary, and the number and class of equity
securities and/or ownership, voting or partnership interests issued and
outstanding (including options, warrants and other rights to acquire any of the
foregoing). The outstanding equity securities and/or ownership, voting or
partnership interests of each Borrower have been duly authorized and validly
issued and are fully paid and nonassessable, and, as of the Closing Date, each
Person listed on Schedule 5.3 owns beneficially and of record all the equity
securities and/or ownership, voting or partnership interests it is listed as
owning free and clear of any Liens other than Liens created by the Security
Documents. As of the Closing Date, except as listed on Schedule 5.3, no Borrower
owns an interest or participates or engages in any joint venture, partnership or
similar arrangements with any Person.
5.4. PROPERTIES
Each Borrower (i) is the sole owner and has good, valid and
marketable title to, or a valid leasehold interest in, all of its properties and
assets, including the Collateral, whether personal or real, subject to no
transfer restrictions or Liens of any kind except for Permitted Liens, and (ii)
is in compliance in all material respects with each lease to which it is a party
or otherwise bound. Schedule 5.4 lists, as of the Closing Date, all real
properties (and their locations) owned or leased by or to, and all other assets
or property that are leased or licensed by, Borrowers and all leases (including
leases of leased real property) covering or with respect to such properties and
assets. Each Borrower enjoys peaceful and undisturbed possession under all such
leases and such leases are all the leases necessary for the operation of such
properties and assets, are valid and subsisting and are in full force and
effect.
19
5.5. OTHER AGREEMENTS
Except as set forth in Schedule 5.5, no Borrower is (i) a
party to any judgment, order or decree or any agreement, document or instrument,
or subject to any restriction, which would materially adversely affect its
ability to execute and deliver, or perform under, any Loan Document or to pay
the Obligations, (ii) in default in the performance, observance or fulfillment
of any obligation, covenant or condition contained in any agreement, document or
instrument to which it is a party or to which any of its properties or assets
are subject, which default, if not remedied within any applicable grace or cure
period could reasonably be expected to have a Material Adverse Effect, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period could reasonably be expected to have a Material
Adverse Effect, or (iii) a party or subject to any agreement, document or
instrument with respect to, or obligation to pay any, service or management fee
with respect to, the ownership, operation, leasing or performance of any of its
business or any facility, nor is there any manager with respect to any such
facility other than a Person that is a Borrower or a Guarantor.
5.6. LITIGATION
Except as set forth in Schedule 5.6, there is no action, suit,
proceeding or investigation pending or, to their knowledge, threatened against
any Borrower that (i) questions or could prevent the validity of any of the Loan
Documents or the right of any Borrower to enter into any Loan Document or to
consummate the transactions contemplated thereby, (ii) could reasonably be
expected to be or have, either individually or in the aggregate, any Material
Adverse Change or Material Adverse Effect, or (iii) could reasonably be expected
to result in any Change of Control or other change in the current ownership,
control or management of Borrower. No Borrower is aware that there is any basis
for the foregoing. No Borrower is a party or subject to any order, writ,
injunction, judgment or decree of any Governmental Authority that could
reasonably be expected to be or have, either individually or in the aggregate,
any Material Adverse Change or Material Adverse Effect. There is no action,
suit, proceeding or investigation initiated by any Borrower currently pending
that could reasonably be expected to be or have, either individually or in the
aggregate, any Material Adverse Change or Material Adverse Effect. Borrowers
have no existing accrued and/or unpaid Indebtedness to any Governmental
Authority or any other governmental payor that could reasonably be expected to
be or have, either individually or in the aggregate, any Material Adverse Change
or Material Adverse Effect.
5.7. HAZARDOUS MATERIALS
Each Borrower is in compliance in all material respects with
all applicable Environmental Laws. No Borrower has been notified of any action,
suit, proceeding or investigation (i) relating in any way to compliance by or
liability of such Borrower under any Environmental Laws, (ii) which otherwise
deals with any Hazardous Substance or any Environmental Law, or (iii) which
seeks to suspend, revoke or terminate any license, permit or approval necessary
for the generation, handling, storage, treatment or disposal of any Hazardous
20
Substance, which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect.
5.8. TAX RETURNS; GOVERNMENTAL REPORTS
Except as set forth in Schedule 5.8, each Borrower (i) has
filed all material federal, state, foreign (if applicable) and local tax returns
and other reports which are required by law to be filed by such Borrower, and
(ii) has paid all material taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
taxes, in each case that are due and payable, except only for items that such
Borrower is contesting in good faith.
5.9. FINANCIAL STATEMENTS AND REPORTS
All financial statements and financial information relating to
Borrowers that have been or may hereafter be delivered to Agent by Borrowers are
accurate and complete in all material respects and have been prepared in
accordance with GAAP consistently applied with prior periods. No Borrower has
any material obligations or liabilities of any kind not disclosed in such
financial information or statements, and since the date of the most recent
financial statements submitted to Agent, there has not occurred any Material
Adverse Change, Material Adverse Effect or Liability Event or, to Borrower's
knowledge, any other event or condition that could reasonably be expected to
have a Material Adverse Effect or Liability Event.
5.10. COMPLIANCE WITH LAW
Each Borrower (i) is in compliance with all laws, statutes,
rules, regulations, ordinances and tariffs of any Governmental Authority
applicable to such Borrower and/or such Borrower's business, assets or
operations, including, without limitation, ERISA and Healthcare Laws, and (ii)
is not in violation of any order of any Governmental Authority or other board or
tribunal, except where noncompliance or violation could not reasonably be
expected to have a Material Adverse Effect. There is no event, fact, condition
or circumstance known to Borrowers which, with notice or passage of time, or
both, would constitute or result in any noncompliance with, or any violation of,
any of the foregoing, in each case except where noncompliance or violation could
not reasonably be expected to have a Material Adverse Effect. No Borrower has
received any notice that such Borrower is not in compliance in any respect with
any of the requirements of any of the foregoing. No Borrower has (a) engaged in
any Prohibited Transactions as defined in Section 406 of ERISA and Section 4975
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder, (b) failed to meet any applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans and no funding
requirements have been postponed or delayed, (c) knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any of the employee
benefit plans, (d) fiduciary responsibility under ERISA for investments with
respect to any plan existing for the benefit of Persons other than its employees
or former employees, or (e) withdrawn, completely or partially, from any
multi-employer pension plans so as to incur liability under the MultiEmployer
Pension Plan Amendments of 1980, which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect. With respect to each
Borrower, there
21
exists no event described in Section 4043 of ERISA, excluding Subsections
4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day notice period
contained in 12 C.F.R. Section 2615.3 has not been waived and which individually
or in the aggregate with all other such events could reasonably be expected to
have a Material Adverse Effect. Each Borrower has maintained in all material
respects all records required to be maintained by the Joint Commission on
Accreditation of Healthcare Organizations, the Food and Drug Administration,
Drug Enforcement Agency and State Boards of Pharmacy and the federal and state
Medicare and Medicaid programs as required by the Healthcare Laws and, to the
best knowledge of Borrower, there are no presently existing circumstances which
likely would result in material violations of the Healthcare Laws. There is no
Liability Event.
5.11. INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, as of the Closing Date
no Borrower owns, licenses or utilizes, and is a party to, any patents, patent
applications, trademarks, trademark applications, service marks, registered
copyrights, copyright applications, copyrights, trade names, trade secrets,
software or licenses (collectively, the "INTELLECTUAL PROPERTY").
5.12. LICENSES AND PERMITS; LABOR
Each Borrower is in substantial compliance with and has all
Permits and Intellectual Property necessary or required by applicable law or
Governmental Authority for the operation of its businesses. All of the foregoing
are in full force and effect and not in known conflict in any material respect
with the rights of others. No Borrower is (i) in breach of or default under the
provisions of any of the foregoing, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would constitute or
result in a conflict, breach, default or event of default under, any of the
foregoing which, if not remedied within any applicable grace or cure period
could reasonably be expected to have a Material Adverse Effect, (ii) a party to
or subject to any agreement, instrument or restriction that is so unusual or
burdensome that it could reasonably be expected to have a Material Adverse
Effect, and (iii) has been involved in any labor dispute, strike, walkout or
union organization which could reasonably be expected to have a Material Adverse
Effect.
5.13. NO DEFAULT
There does not exist any Default or Event of Default.
5.14. DISCLOSURE
No Loan Document nor any other agreement, document,
certificate, or statement furnished to Agent by or on behalf of any Borrower in
connection with the transactions contemplated by the Loan Documents, nor any
representation or warranty made by any Borrower in any Loan Document, contains
any untrue statement of material fact or omits to state any fact necessary to
make the statements therein not materially misleading. There is no fact known to
any Borrower which has not been disclosed to Agent in writing which could
reasonably be expected to have a Material Adverse Effect.
5.15. EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN
CONTRACTS
22
Except as contemplated or permitted by the Loan Documents, the
Plan of Reorganization or as otherwise set forth on Schedule 5.15, no Borrower
(i) has any outstanding Indebtedness for Borrowed Money or Contingent
Obligations, (ii) is subject or party to any mortgage, note, indenture,
indemnity or guarantee of, with respect to or evidencing any Indebtedness for
Borrowed Money or Contingent Obligations of any other Person, or (iii) does not
own or hold any long-term debt investments in, and does not have any outstanding
advances to or any outstanding guarantees for the obligations of, or any
outstanding borrowings from, any Person. Each Borrower has performed all
material obligations required to be performed by such Borrower pursuant to or
connection with any items listed on Schedule 5.15 and there has occurred no
breach, default or event of default under any document evidencing any such items
or any fact, circumstance, condition or event which, with the giving of notice
or passage of time or both, would constitute or result in a breach, default or
event of default thereunder, which, if not remedied within any applicable grace
or cure period could reasonably be expected to have a Material Adverse Effect.
5.16. OTHER AGREEMENTS
Except as set forth on Schedule 5.16, as of the Closing Date,
there are no existing or proposed agreements, arrangements, understandings or
transactions between any Borrower and any of such Borrower's officers, members,
managers, directors, stockholders, partners, other interest holders, employees
or Affiliates or any members of their respective immediate families.
5.17. INSURANCE
Each Borrower has in full force and effect such insurance
policies as are customary in its industry and as may be required pursuant to
Section 6.5 hereof. All such insurance policies as of the Closing Date are
listed and described on Schedule 5.17.
5.18. NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL
During the preceding five years prior to the Closing Date, no
Borrower has conducted business under or used any name (whether corporate,
partnership or assumed) other than as shown on Schedule 5.18A. Borrowers are the
sole owner of all of its names listed on Schedule 5.18A, and any and all
business done and invoices issued in such names are Borrowers' sales, business
and invoices. Each trade name of each Borrower represents a division or trading
style of such Borrower. As of the Closing Date, each Borrower maintains its
places of business and chief executive offices only at the locations set forth
on Schedule 5.18B, and all Accounts of each Borrower arise, originate and are
located, and all of the Collateral and all books and records in connection
therewith or in any way relating thereto or evidence the Collateral are located
and shall be only, in and at such locations. All of the Collateral is located
only in the continental United States.
5.19. NON-SUBORDINATION
The Obligations are not subordinated in any way to any other
obligations of any Borrower or to the rights of any other Person except to the
extent any Lien may have priority over the Liens of Agent in certain of the
Collateral (other than Accounts) as contemplated in the Plan of Reorganization.
23
5.20. ACCOUNTS
In determining which Accounts are Eligible Receivables, Agent
may rely on all statements and representations made in this Agreement or in the
Borrowing Certificate, Interim Borrowing Certificate or any other writing
delivered by Borrowers with respect to Accounts. Unless otherwise indicated in
writing to Agent or except as hereafter set forth, each Account of Borrowers (i)
is genuine and in all respects what is purports to be and is not evidenced by a
judgment, (ii) arises out of a completed, bona fide sale and delivery of goods
or rendering of Services by Borrowers in the ordinary course of business and in
accordance with the terms and conditions of all purchase orders, contracts,
certifications, participations, certificates of need and other documents
relating thereto or forming a part of the contract between the applicable
Borrower and the applicable Account Debtor, (iii) is for a liquidated amount
maturing as stated in a claim or invoice covering such sale of goods or
rendering of Services, a copy of which has been furnished or is available to
Agent, (iv) together with Agent's security interest therein, is not and will not
be in the future (by voluntary act or omission by Borrowers), subject to any
offset, lien, deduction, defense, dispute, counterclaim or other adverse
condition, is absolutely owing to Borrowers and is not contingent in any respect
or for any reason (except Accounts owed or owing by Medicaid/Medicare Account
Debtors that may be subject to offset or deduction under applicable law), (v)
there are no facts, events or occurrences which in any way impair the validity
or enforceability thereof or tend to reduce the amount payable thereunder from
the face amount of the claim or invoice and statements delivered to Agent with
respect thereto, (vi) to the best of Borrowers' knowledge, (A) the Account
Debtor thereunder had the capacity to contract at the time any contract or other
document giving rise thereto was executed and (B) such Account Debtor is
solvent, (vii) to the best of Borrowers' knowledge, subject to subsection (x)
below, there are no proceedings or actions which are threatened or pending
against any Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the collectability of
such Account, (viii) has been billed and forwarded to the Account Debtor for
payment in accordance with applicable laws and is in compliance and conformance
with any requisite procedures, requirements and regulations governing payment by
such Account Debtor with respect to such Account, and, if due from a
Medicaid/Medicare Account Debtor, is properly payable directly to the applicable
Borrower, (ix) Borrowers have obtained and currently have all Permits necessary
in the generation thereof, and (x) Borrowers have disclosed to Agent on each
Borrowing Certificate the amount of all Accounts of Borrowers for which Medicare
is the Account Debtor and for which payment has been denied and subsequently
appealed pursuant to the procedure described in the definition of Eligible
Receivables hereof, and Borrowers are pursuing all available appeals in respect
of such Accounts. Notwithstanding anything in this Section 5.20 to the contrary,
the failure of any Account other than an Eligible Receivable to satisfy the
requirements of this Section 5.20 shall not constitute a Default or Event of
Default unless Accounts other than Eligible Accounts having an aggregate face
amount of $250,000 or greater fail to comply with the provisions of this Section
5.20.
5.21. HEALTHCARE
Without limiting or being limited by any other provision of
any Loan Document, Borrowers have timely filed or caused to be filed all
material cost and other reports of every kind required by law, agreement or
otherwise. Subject to subsection (x) of Section 5.20, there are no
24
claims, actions or appeals pending (and Borrowers have not filed any claims or
reports which could reasonably result in any such claims, actions or appeals)
before any commission, board or agency or other Governmental Authority,
including, without limitation, any intermediary or carrier, the Provider
Reimbursement Review Board or the Administrator of the Health Care Financing
Administration, with respect to any state or federal Medicare or Medicaid cost
reports or claims filed by Borrower, or any disallowance by any commission,
board or agency or other Governmental Authority in connection with any audit of
such cost reports which claims, actions or appeals, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. No
validation review or program integrity review related to Borrowers or the
consummation of the transactions contemplated herein or to the Collateral have
been conducted by any commission, board or agency or other Governmental
Authority in connection with the Medicare or Medicaid programs, and to the
knowledge of Borrowers, no such reviews are scheduled, pending or threatened
against or affecting any of the providers, any of the Collateral or the
consummation of the transactions contemplated hereby, which, individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
5.22. PLAN OF REORGANIZATION.
Agent has received a copy of the Confirmation Order and the
Confirmation Order has not been stayed by any court. All other conditions
precedent to the confirmation and effectiveness of the Plan of Reorganization
have been satisfied or waived and the Effective Date has occurred.
5.23. SURVIVAL.
Each Borrower makes the representations and warranties
contained herein with the knowledge and intention that Agent is relying and will
rely thereon. All such representations and warranties will survive the execution
and delivery of this Agreement and the making of the Advances under the
Revolving Facility.
VI. AFFIRMATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees
that, until full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations (other than Unmatured Surviving Obligations) and
termination of this Agreement:
6.1. FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
(a) Financial Reports. Borrowers shall furnish to Agent
and each Lender (i) as soon as available and in any event within one hundred
twenty (120) calendar days after the end of each fiscal year of Borrowers,
annual financial statements of Borrowers on a Consolidated Basis and on a
consolidating basis, including the notes thereto, consisting of a consolidated
and consolidating balance sheet at the end of such completed fiscal year and the
related consolidated and consolidating statements of income, consolidated (but
not consolidating) retained earnings, consolidated (but not consolidating) cash
flows and consolidated (but not consolidating) owners' equity for such completed
fiscal year, which consolidated financial statements shall be audited and shall
be accompanied by an opinion of a Big Four accounting firm (or other independent
certified public accounting firm reasonably satisfactory to Agent), which
opinion shall not be
25
qualified as to going concern or scope of audit; (ii) as soon as available and
in any event within forty-five (45) calendar days after the end of each fiscal
quarter of Borrowers (other than the last fiscal quarter of each fiscal year),
unaudited financial statements of Borrowers on a Consolidated Basis and on a
consolidating basis consisting of a consolidated and consolidating balance sheet
and consolidated and consolidating statements of income, consolidated (but not
consolidating) retained earnings and consolidated (but not consolidating) cash
flows and consolidated (but not consolidating) owners' equity as of the end of
such fiscal quarter; and (iii) as soon as available and in any event within
thirty (30) calendar days after the end of each calendar month (other than the
last calendar month of a fiscal quarter), unaudited financial statements of
Borrowers on a Consolidated Basis consisting of a balance sheet and statements
of income, retained earnings, cash flows and owners' equity as of the end of the
immediately preceding calendar month. All such financial statements shall be
prepared in accordance with GAAP consistently applied with prior periods. With
each such financial statement, Borrowing Agent shall also deliver a certificate
of its chief financial officer stating that (A) such person has reviewed the
relevant terms of the Loan Documents and the condition of Borrowers, (B) no
Default or Event of Default has occurred or is continuing, or, if any of the
foregoing has occurred or is continuing, specifying the nature and status and
period of existence thereof and the steps taken or proposed to be taken with
respect thereto, and (C) Borrowers are in compliance with all financial
covenants attached as Annex I hereto. Such certificate shall be accompanied by
the calculations necessary to show compliance with the financial covenants in a
form reasonably satisfactory to Agent. All consolidating statements required
under this Section 6.1(a) or elsewhere in this Agreement shall be prepared for
each Business Group of Borrowers and its Subsidiaries and not with respect to
any individual Borrower or Subsidiary.
(b) Other Materials. Borrowers shall furnish to Agent as
soon as available, and in any event within ten (10) calendar days after the
preparation or issuance thereof or at such other time as set forth below: (i)
any reports, returns, information, notices and other materials that Parent shall
send to its stockholders, members, partners or other equity owners at any time,
(ii) all Medicare and Medicaid cost reports and other document and materials
filed by Borrowers and any other reports, materials or other information
regarding or otherwise relating to Medicaid or Medicare prepared by, for or on
behalf of Borrowers, (iii) concurrently with the delivery of financial
statements under Section 6.1(a), any other material reports, materials or other
information regarding or otherwise relating to Medicaid or Medicare prepared by,
for, or on behalf of, Borrowers or any of their Subsidiaries during the period
to which such financial statements relate, including, without limitation, (A)
copies of material licenses and permits required by any applicable federal,
state, foreign or local law, statute ordinance or regulation or Governmental
Authority for the operation of its business, (B) Medicare and Medicaid provider
numbers and material agreements, (C) state surveys pertaining to any healthcare
facility operated or owned or leased by Borrowers or any of their Affiliates or
Subsidiaries and (D) material participating agreements relating to medical
plans, (iv) within twenty (20) calendar days after the end of each calendar
month for such month, a revenue report and accounts receivable and accounts
payable aging schedules, (v) within thirty (30) calendar days after the end of
each calendar month for such month, a report of census and occupancy percentage
by payor type, (vi) promptly upon receipt thereof, copies of any reports, if
any, submitted to Borrowers by their independent accountants in connection with
any interim audit of the books of such Person or any of its Affiliates and
copies of each management control letter, if any, provided by such independent
accountants, and (vii) such additional information, documents, statements,
reports
26
and other materials as Agent may reasonably request from a credit or security
perspective or otherwise from time to time.
(c) Notices. Borrowers shall promptly, and in any event
within five (5) Business Days after any Borrower or any authorized officer of
any Borrower obtain knowledge thereof, notify Agent in writing of (i) any
pending or threatened litigation, suit, investigation, arbitration, dispute
resolution proceeding or administrative proceeding brought or initiated by any
Borrower or otherwise affecting or involving or relating to any Borrower or any
of its property or assets to the extent (A) (x) with respect to professional
liability claims, the amount in controversy exceeds $5,000,000 (provided that
Borrowers shall notify Agent if in their judgment any such claim has merit and
the Borrowers' potential exposure with respect thereto is greater than
$500,000), and (y) with respect to all other claims the amount in controversy
exceeds $500,000 or (B) to the extent any of the foregoing seeks injunctive
relief which could reasonably be expected to have a Material Adverse Effect,
(ii) the occurrence of any Default or Event of Default, which notice shall
specify the nature and status thereof, the period of existence thereof and what
action is proposed to be taken with respect thereto, (iii) any other
development, event, fact, circumstance or condition that could reasonably be
expected to have a Material Adverse Effect, in each case describing the nature
and status thereof and the action proposed to be taken with respect thereto,
(iv) any notice received by any Borrower from any payor of a material claim,
suit or other action such payor has, claims or has filed against Borrower, (v)
any matter(s) materially and adversely affecting the value, enforceability or
collectability of the Collateral, including, without limitation, claims or
disputes in the amount of $250,000 or more in the aggregate, in existence at any
one time, (vi) any notice given by any Borrower to any other lender of any
Borrower (with a copy of such notice), (vii) receipt of any notice or request
from any Governmental Authority or governmental payor regarding any material
liability or claim of liability, (viii) receipt of any notice by any Borrower
regarding termination of any manager of any facility owned, operated or leased
by Borrowers, and/or (ix) if any Account becomes evidenced or secured by an
Instrument or Chattel Paper.
(d) Consents. Borrowers shall use reasonable efforts
(which shall not include the unreasonable payment of money) to obtain and
deliver from time to time all required consents, approvals and agreements from
such third parties as Agent shall determine are necessary or desirable in its
Permitted Discretion and that are reasonably satisfactory to Agent to (i)
perfect any security interest or lien granted to the Agent or the Lenders
pursuant to the Security Documents, and/or (ii) permit the execution of and
performance under the Loan Documents without any conflict with any other
material agreement, document or instrument to which any Borrower is a party or
by which any of its properties or assets are bound or subject (but in no event
shall any Landlord Waivers or Consents be required with respect to leases in
existence on the Closing Date so long as for any books and records kept at a
location for which Borrowers are not able to obtain a Landlord Consent and
Waiver, Borrowers keep a duplicate up to date set of such books and records at a
location owned by a Borrower or with respect to which a Landlord Waiver and
Consent had been obtained which is reasonably acceptable to Agent).
(e) Operating Budget. Borrowers shall furnish to Agent on
or prior to the Closing Date and for each fiscal year of Borrowers thereafter
not more than sixty (60) calendar days after the commencement of such fiscal
year, consolidated and consolidating by Business Group month by month projected
operating budgets, annual projections, profit and loss
27
statements, balance sheets and cash flow reports of and for Borrowers on
Consolidated Basis for such upcoming fiscal year (including an income statement
for each month and a balance sheet as at the end of the last month in each
fiscal quarter), in each case prepared in accordance with GAAP consistently
applied with prior periods.
6.2. PAYMENT OF OBLIGATIONS
Borrowers shall make full and timely indefeasible payment in
cash of the principal of and interest on the Loans, Advances and all other
Obligations.
6.3. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Each Borrower shall (i) conduct its business in accordance
with good business practices customary to the industry, (ii) engage principally
in the same or similar lines of business substantially as heretofore conducted,
(iii) collect its Accounts in the ordinary course of business, (iv) maintain all
of its material properties, assets and equipment used or useful in its business
in good repair, working order and condition (normal wear and tear excepted and
except as may be disposed of in the ordinary course of business and in
accordance with the terms of the Loan Documents and otherwise as determined by
such Borrower using commercially reasonable business judgment), (v) from time to
time to make all necessary or desirable repairs, renewals and replacements
thereof, as determined by such Borrower using commercially reasonable business
judgment, (vi) maintain and keep in full force and effect its existence and all
material Permits and qualifications to do business and good standing in each
jurisdiction in which the ownership or lease of property or the nature of its
business makes such Permits or qualification necessary and in which failure to
maintain such Permits or qualification could reasonably be likely to have a
Material Adverse Effect, and (vii) remain in good standing and maintain
operations in all jurisdictions in which failure to do so could reasonably be
expected to have a Material Adverse Effect.
6.4. COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Each Borrower shall (i) comply in all material respects with
all laws, statutes, rules, regulations, ordinances and tariffs of all
Governmental Authorities applicable to it or its business, assets or operations,
(ii) pay all material taxes, assessments, fees, governmental charges, claims for
labor, supplies, rent and all other obligations or liabilities of any kind,
except liabilities being contested in good faith and against which adequate
reserves have been established, (iii) perform in accordance with its terms each
contract, agreement or other arrangement to which it is a party or by which it
or any of the Collateral is bound, except where the failure to comply, pay or
perform could not reasonably be expected to have a Material Adverse Effect, (iv)
maintain and comply in all material respects with all Permits necessary to
conduct its business and comply in all material respects with any new or
additional requirements that may be imposed on it or its business, and (v)
appropriately file all Medicaid/Medicare cost reports.
6.5. INSURANCE
Each Borrower shall (i) keep all of its insurable properties
and assets adequately insured in all material respects against losses, damages
and hazards as are customarily insured
28
against by businesses engaging in similar activities or owning similar assets or
properties and at least the minimum amount required by applicable law,
including, without limitation, medical malpractice and professional liability
insurance, as applicable; and maintain general public liability insurance at all
times against liability on account of damage to persons and property having such
limits, deductibles, exclusions and co-insurance and other provisions as are
customary for a business engaged in activities similar to those of such
Borrower; and (ii) maintain insurance under all applicable workers' compensation
laws; all of the foregoing insurance policies to (A) be reasonably satisfactory
in form and substance to Agent, (B) name Agent as loss payee and/or additional
insured thereunder, and (C) expressly provide that they cannot be altered,
amended, modified or canceled without thirty (30) Business Days prior written
notice to Agent and that they inure to the benefit of Agent notwithstanding any
action or omission or negligence of or by any Borrower or any insured
thereunder. By the funding of the Initial Advance, the Agent hereby acknowledges
that the insurance in place on the Closing Date is satisfactory to Agent.
6.6. TRUE BOOKS
Each Borrower shall (i) keep true, complete and accurate books
of record and account in accordance with commercially reasonable business
practices in which true and correct entries are made of all of its and their
dealings and transactions in all material respects; and (ii) set up and maintain
on its books such reserves as may be required by GAAP with respect to doubtful
accounts and all taxes, assessments, charges, levies and claims and with respect
to its business, and include such reserves in its quarterly as well as year end
financial statements.
6.7. INSPECTION; PERIODIC AUDITS
Each Borrower shall permit the representatives of Agent, at
the expense of Borrowers, from time to time during normal business hours upon
reasonable notice, to (i) visit and inspect any of such Borrower's offices or
properties or any other place where Collateral is located to inspect the
Collateral and/or to examine or audit all of such Borrower's books of account,
records, reports and other papers, (ii) make copies and extracts therefrom, and
(iii) discuss such Borrower's business, operations, prospects, properties,
assets, liabilities, condition and/or Accounts with its officers and independent
public accountants (and by this provision such officers and accountants are
authorized to discuss the foregoing); provided that so long as no Default or
Event of Default has occurred and is continuing, Borrowers shall not have to pay
expenses (x) for more than three (3) audits in any fiscal year and (y) in
respect of audits in excess of $100,000 in the aggregate per fiscal year.
6.8. FURTHER ASSURANCES; POST CLOSING
At Borrowers' cost and expense, Borrowers shall (i) within
five (5) Business Days after Agent's demand, take such further actions, obtain
such consents and approvals and duly execute and deliver such further
agreements, assignments, instructions or documents as Agent may request in its
Permitted Discretion to give effect to or carry out the terms of the Loan
Documents and the consummation of the transactions contemplated thereby, whether
before, at or after the performance and/or consummation of the transactions
contemplated hereby or the occurrence of a Default or Event of Default, (ii)
without limiting and notwithstanding any other
29
provision of any Loan Document, execute and deliver, or cause to be executed and
delivered, such agreements and documents, and take or cause to be taken such
actions, and otherwise perform, observe and comply with such obligations, as are
set forth on Schedule 6.8, and (iii) upon the exercise by Agent or any of its
Affiliates of any power, right, privilege or remedy pursuant to any Loan
Document or under applicable law or at equity which requires any consent,
approval, registration, qualification or authorization of any Governmental
Authority, execute and deliver, or cause the execution and delivery of, all
applications, certificates, instruments and other documents that may be so
required for such consent, approval, registration, qualification or
authorization. Without limiting the foregoing, upon the exercise by Agent or any
of its Affiliates of any right or remedy under any Loan Document which requires
any consent, approval or registration with, consent, qualification or
authorization by, any Person, Borrowers shall execute and deliver, or cause the
execution and delivery of, all applications, certificates, instruments and other
documents that Agent, any Lender or their respective Affiliates may be required
to obtain for such consent, approval, registration, qualification or
authorization.
6.9. PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents,
Borrowers shall pay, discharge or otherwise satisfy at or before maturity
(subject to applicable grace periods and, in the case of trade payables, to
ordinary course payment practices) all of its material obligations and
liabilities, except when the amount or validity thereof is being contested in
good faith by appropriate proceedings and against which adequate reserves have
been established.
6.10. LIEN SEARCHES
If Liens other than Permitted Liens exist, Borrowers
immediately shall take, execute and deliver all actions, documents and
instruments necessary to release and terminate such Liens, unless such Liens are
being contested in good faith by appropriate proceedings and against which
adequate reserves have been established.
6.11. USE OF PROCEEDS
Borrowers shall use the proceeds from the Revolving Facility
only for the purposes set forth in the first "WHEREAS" clause of this Agreement.
6.12. COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL
Each Borrower shall (i) execute, obtain, deliver, file,
register and/or record any and all financing statements, continuation
statements, stock powers, instruments and other documents, or cause the
execution, filing, registration, recording or delivery of any and all of the
foregoing, that are necessary or required under law or otherwise or reasonably
requested by Agent to be executed, filed, registered, obtained, delivered or
recorded to create, maintain, perfect, preserve, validate or otherwise protect
the pledge of the Collateral to Agent and Agent's perfected first priority Lien
on the Collateral (and each Borrower irrevocably grants Agent the right, at
Agent's option, to file any or all of the foregoing), (ii) immediately upon
learning thereof, report to Agent any reclamation, return or repossession of
goods in excess of $100,000.00 (individually or in the aggregate), and (iii)
defend the Collateral and Agent's
30
perfected first priority Lien thereon against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to Agent
or any Lender, and pay all costs and expenses (including, without limitation,
in-house documentation and diligence fees and legal expenses and reasonable
attorneys' fees and expenses) in connection with such defense, which may at
Agent's discretion be added to the Obligations.
6.13. TAXES AND OTHER CHARGES
All payments and reimbursements to Agent, for the benefit of
Lenders, made under any Loan Document shall be free and clear of and without
deduction for all taxes, levies, imposts, deductions, assessments, charges or
withholdings, and all liabilities with respect thereto of any nature whatsoever,
excluding taxes to the extent imposed on each Lender's net income or franchise
taxes imposed in lieu of taxes on net income. If Borrowers shall be required by
law to deduct any such amounts from or in respect of any sum payable under any
Loan Document to Agent, for the benefit of Lenders, then the sum payable to
Agent, for the benefit of Lenders, shall be increased as may be necessary so
that, after making all required deductions, each Lender receives an amount equal
to the sum it would have received had no such deductions been made.
Notwithstanding any other provision of any Loan Document, if at any time after
the Closing (a) any change in any existing law, regulation, treaty or directive
or in the interpretation or application thereof, (b) any new law, regulation,
treaty or directive enacted or any interpretation or application thereof, or (c)
compliance by Agent or any Lender with any request or directive (whether or not
having the force of law) from any Governmental Authority: (i) subjects Agent or
such Lender to any tax, levy, impost, deduction, assessment, charge or
withholding of any kind whatsoever with respect to any Loan Document, or changes
the basis of taxation of payments to Agent, for the benefit of Lenders, of any
amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of Agent and/or each Lender), or (ii) imposes on Agent or Lenders any other
condition or increased cost in connection with the transactions contemplated
thereby or participations therein; and the result of any of the foregoing is to
increase the cost to Agent or Lenders of making or continuing any Loan hereunder
or to reduce any amount receivable hereunder, then, in any such case, Borrowers
shall promptly pay to Agent, for the benefit of Lenders, any additional amounts
necessary to compensate Agent and each Lender, on an after-tax basis, for such
additional cost or reduced amount as determined by such Lender; provided that
the Borrowers shall not be obligated to compensate the Agent or any Lender for
any such additional amounts that relate to a period prior to 180 days before the
date of notice from the Agent or the applicable Lender of such additional cost.
If Agent or any Lender becomes entitled to claim any additional amounts pursuant
to this Section 6.13 it shall promptly notify Borrowing Agent of the event by
reason of which Agent or such Lender has become so entitled, and each such
notice of additional amounts payable pursuant to this Section 6.13 submitted by
Agent or such Lender to Borrowers shall, absent manifest error, be final,
conclusive and binding for all purposes. At the request of Agent, Borrowers
shall cause to be delivered to Agent within ten (10) calendar days after the end
of each calendar month a report of ADP wire transfers evidencing payment of
payroll taxes for the immediately preceding calendar month.
6.14. NEW SUBSIDIARIES
31
Within thirty (30) calendar days of any Person becoming a
Subsidiary (other than an Excluded Subsidiary) after the Closing Date, Borrowers
shall cause such Person to (a) deliver to Agent a Joinder Agreement to this
Agreement and to each other Loan Document or a Guaranty and Security Agreement
to which Borrowers or Guarantors are a party duly executed by such Person, which
Joinder Agreement or Guaranty and Security Agreement shall be in the forms of
the attached Exhibits C and D, respectively, (b) provide Agent with copies of
such Person's organizational documents, material contracts, financial
information, and any other information reasonably requested by Agent, on behalf
of the Lenders, in order to perform legal and financial diligence and Uniform
Commercial Code, tax and judgment lien searches, (c) cause to be delivered a
written legal opinion of counsel substantially consistent with the opinions of
counsel delivered on the Closing Date and otherwise in form and substance
reasonably satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Section 6.14 and the other agreements and
instruments executed and delivered pursuant hereto in substantially the form as
delivered at the Closing and (d) cause such Person to duly execute and deliver
such further agreements, assignments, instructions or documents as Agent may
request in its Permitted Discretion with respect to the purposes, terms and
conditions of the Loan Documents.
6.15. RIGHT OF FIRST OFFER
If at any time Borrowers propose to enter into any type of
financing to refinance in full the outstanding Obligations (a "FINANCING"), then
Borrowers shall, before entering into such Financing with any third party,
notify the Agent in writing of their desire to enter into a Financing, such
notice (the "PROPOSAL NOTICE") to set out with particularity the type of
Financing that the Borrowers wish to consummate. Agent shall have five (5)
Business Days (the "ACCEPTANCE PERIOD") after Receipt of the Proposal Notice to
inform the Borrowers of its willingness to provide the Financing (the
"ACCEPTANCE NOTICE"), which Acceptance Notice shall be accompanied by a term
sheet or proposal letter setting forth in detail the proposed terms and
conditions upon which Agent would be prepared to provide the Financing. After
the receipt of the Acceptance Notice, the Borrowers shall have the right, within
five (5) Business Days (the "NEGOTIATION PERIOD") to accept such proposal,
during which period the Agent and the Borrowers may negotiate in good faith the
terms of the Agent's proposal and to execute a mutually acceptable commitment
letter. If no Acceptance Notice is received by Borrowing Agent by the end of the
Acceptance Period or if the parties are unable to agree to the terms of the
Financing by the end of the Negotiation Period, then Borrowers shall have the
right, for a period of one hundred eighty (180) days following the expiration of
the later of the Acceptance Period or the Negotiation Period (the "CLOSING
PERIOD"), to offer the Financing to a third party as set forth in the Proposal
Notice on terms and conditions which are, in the aggregate, more beneficial to
the Borrowers than the terms set forth in the Acceptance Notice. If the
Borrowers are not able to consummate such Financing prior to the expiration of
the Closing Period, the Borrowers shall not be entitled to consummate the
Financing with a third party without again complying with this Section 6.15. Any
failure by Agent or any Lender to issue an Acceptance Notice shall not be
construed as a waiver of any of the terms, covenants or conditions of any of the
Loan Documents. For purposes of this Section 6.15, "Lender" shall include
CapitalSource Finance LLC and any of its parents, subsidiaries or Affiliates.
6.16. SUPPLEMENTAL DISCLOSURE
32
From time to time as may be reasonably requested by Agent
(which request may not be more frequent than once per fiscal quarter unless an
Event of Default shall have occurred and be continuing), the Borrowers shall
supplement the following Schedules: Schedule 2.4, Schedule 5.3, Schedule 5.11,
Schedule 5.18A and Schedule 5.18B.
VII. NEGATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees
that, until full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations (other than Unmatured Surviving Obligations) and
termination of this Agreement:
7.1. FINANCIAL COVENANTS
No Borrower shall violate the financial covenants set forth on
Annex I to this Agreement, which is incorporated herein and made a part hereof.
7.2. PERMITTED INDEBTEDNESS
No Borrower shall create, incur, assume or suffer to exist any
Indebtedness for Borrowed Money, except the following (collectively, "PERMITTED
INDEBTEDNESS"): (a) Indebtedness under the Loan Documents; (b) guaranty
Indebtedness under the Mezzanine Loan; (c) any Indebtedness set forth on
Schedule 7.2 and any Indebtedness which refinances or replaces such Indebtedness
to the extent such refinanced Indebtedness does not increase the total principal
amount thereof, extend the maturity date, accelerate the amortization or is
otherwise on terms and conditions which are not materially more onerous to the
Borrowers ("PERMITTED REFINANCED INDEBTEDNESS"); (d) (i) Capitalized Lease
Obligations incurred after the Closing Date and Indebtedness incurred pursuant
to purchase money Liens permitted by Section 7.3(v) and any Permitted Refinanced
Indebtedness with respect thereto, provided that the aggregate amount thereof
outstanding at any time shall not exceed $5,000,000; (ii) Indebtedness on a
non-recourse (other than customary carve-outs for non-recourse financings) basis
to any assets of any Borrower or any Guarantor other than the asset or assets
that are collateral securing such Indebtedness and which is secured by a Lien
permitted pursuant to Section 7.3(v) and any Permitted Refinancing Indebtedness
with respect thereto and (iii) Indebtedness incurred in connection with the
Eureka Transaction; provided that the aggregate amount outstanding at any time
under 7.2(d)(ii) plus 7.2(d)(iii) shall not exceed $30,000,000; (e) Indebtedness
in connection with advances made by a stockholder in order to cure any default
of the financial covenants set forth on Annex I; provided, however, that such
Indebtedness shall be on an unsecured basis, subordinated in right of repayment
and remedies to all of the Obligations and to all of Agent's rights and in form
and substance reasonably satisfactory to Agent; (f) borrowings incurred in the
ordinary course of business and not exceeding $10,000,000 individually or in the
aggregate outstanding at any one time; provided, however, that such Indebtedness
shall be on an unsecured basis, subordinated in right of repayment and remedies
to all of the Obligations and to all of Agent's rights and in form and substance
satisfactory to Agent; (g) Indebtedness from time to time owing to any Borrower;
(h) Indebtedness of any Borrower arising out of an Interest Rate Agreement
entered into in the ordinary course of business; (i) Subordinated Debt,
provided, however, the aggregate principal amount of Subordinated Debt (I)
evidenced by the Indenture and the Indenture Notes and any Permitted Refinanced
Indebtedness with respect thereto shall
33
not exceed $106,761,608 and (II) evidenced by the Bergen Note and any Permitted
Refinanced Indebtedness with respect thereto shall not exceed $1,237,325.46, (j)
Indebtedness constituting Priority Claims; (k) Indebtedness in respect of
insurance premiums payable to the Insurance Subsidiary in an aggregate amount
not to exceed $10,000,000 and (k) additional unsecured Indebtedness in the
ordinary course of business in an aggregate amount not to exceed $2,000,000.
Notwithstanding anything in this Section 7.2 or this Agreement to the contrary,
the aggregate amount of Indebtedness for Borrowed Money of Borrowers on a
Consolidated Basis, exclusive of the Obligations and the "Obligations" as such
term is defined in the Revolving Loan B Agreement, shall not exceed $255,000,000
in the aggregate.
7.3. PERMITTED LIENS
No Borrower shall create, incur, assume or suffer to exist any
Lien upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets, whether now owned or hereafter acquired, except the
following (collectively, "PERMITTED LIENS"): (i) Liens under the Loan Documents
or otherwise arising in favor of Agent; (ii) Liens securing guaranty
Indebtedness pursuant to the Mezzanine Loan Documentation as permitted in
Section 7.9(d) hereof; (iii) Liens imposed by law for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained by such
Person in accordance with GAAP; (iv) (A) statutory Liens of landlords (provided
that with respect to any landlord for leased locations acquired after the
Closing Date, the applicable Borrower shall have used reasonable efforts (which
shall not include the unreasonable payment of money) to cause such landlord to
execute a Landlord Waiver and Consent in form and substance reasonably
satisfactory to Agent in its Permitted Discretion; provided, further, in the
event Borrowers are unable to obtain any such Landlord Waiver and Consent,
Borrowers shall maintain a duplicate up to date set of any books and records
maintained at the location related to the real property owned by the applicable
landlord at a location owned by a Borrower or with respect to which a Landlord
Waiver and Consent reasonably satisfactory to Agent shall have been obtained)
and of carriers, warehousemen, mechanics, materialmen, and (B) other Liens
imposed by law or that arise by operation of law in the ordinary course of
business from the date of creation thereof, in each case only for amounts not
yet due or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP; (v) Liens (A) incurred
or deposits made in the ordinary course of business (including, without
limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations, or (B) arising as a result of progress payments under government
contracts; (vi) purchase money Liens and Liens securing Capitalized Lease
Obligations (A) securing Indebtedness permitted under Section 7.2(c), or (B) in
connection with the purchase by such Person of assets in the normal course of
business, provided that (x) such payables shall not exceed any limits on
Indebtedness provided for herein and shall otherwise be Permitted Indebtedness
hereunder and (y) with respect to Indebtedness incurred pursuant to Section
7.2(c)(ii) such Liens shall not extend to or cover any property of such Borrower
other than the property being acquired and improvements thereon or which is the
subject of the applicable Capital Lease, (vii) easements, rights-of-way,
restrictions and other
34
similar encumbrances which do not materially interfere with the conduct of the
business of Borrowers and their Subsidiaries; (viii) any intercompany Liens
between a Borrower or Guarantor on the one hand and another Borrower or
Guarantor on the other; (ix) any interest or title of a lessor under a operating
lease; (x) Liens pursuant to Subordinated Debt; (xi) Liens securing the Priority
Claims; (xii) the Vendor's Lien in accordance with the Plan of Reorganization so
long as the amount secured does not exceed $8,000,000 and is otherwise subject
to the General Intercreditor Agreement; (xiii) Liens securing Class 10 Deferred
Obligations and Continuing Creditor Deferred Obligations in accordance with the
Plan of Reorganization so long as the amount secured does not exceed $25,000,000
and is otherwise subject to the General Intercreditor Agreement; and (xiv) Liens
disclosed on Schedule 7.3.
7.4. INVESTMENTS; NEW FACILITIES OR COLLATERAL; SUBSIDIARIES
No Borrower, directly or indirectly, shall (a) purchase, own,
hold, invest in or otherwise acquire obligations or stock or securities of, or
any other interest in, or all or substantially all of the assets of, any Person
or any joint venture or (b) make or permit to exist any loans, advances or
guarantees to or for the benefit of any Person or assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable for or upon or incur
any obligation of any Person (collectively, an "INVESTMENT"), in each case,
other than (i) Investments in any Borrower or any Subsidiary of any Borrower;
(ii) Investments in any Person to the extent such Person either (x) becomes a
Borrower or a Guarantor under this Agreement, (y) with respect to investments by
Parent in any Person or Subsidiary (other than a Borrower), becomes a borrower
or a guarantor under the Revolving Loan B Documentation or the Mezzanine Loan
Documentation or (z) with respect to investments existing on the Closing Date by
Parent in any Person or Subsidiary which is a borrower or guarantor under the
Senior Mortgage Loan Documentation; (iii) Investments in Cash Equivalents; (iv)
Investments listed on Schedule 7.4; (v) trade credit extended in the ordinary
course of business, (vi) advances for business travel and similar temporary
advances made in the ordinary course of business to officers, directors and
employees, (vii) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; (vii)
guaranties by any Borrower or any Guarantor of obligations of another Borrower
or another Guarantor, to the extent the obligation guaranteed is otherwise
permitted under this Agreement; (viii) Investments in the Insurance Subsidiary
in an amount not to exceed $1,500,000; and (ix) additional Investments in an
amount not to exceed $2,000,000. No Borrower, directly or indirectly, shall
purchase, own, operate, hold, invest in or otherwise acquire any facility,
property or assets or any Collateral that is not located at the locations set
forth on Schedule 5.18B unless such Borrower shall provide to Agent at least ten
(10) Business Days prior written notice. No Borrower shall have any Subsidiaries
other than (i) another Borrower, or (ii) such Subsidiaries which execute a
Joinder Agreement or a Guaranty and Security Agreement pursuant to Section 6.14
or (iii) Excluded Subsidiaries.
7.5. DIVIDENDS; REDEMPTIONS
No Borrower shall (i) declare, pay or make any dividend or
distribution on any shares of capital stock or other securities or interests
(other than dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock); (ii) apply any of its funds, property or assets
to the acquisition, redemption or other retirement of any capital stock or other
securities or interests or of any options to purchase or acquire any of the
foregoing (provided,
35
however, that such Borrower may redeem its capital stock from any terminated
employee pursuant to, but only to the extent required or permitted under, the
terms of the related employment or other agreements with such employee, as long
as no Default or Event of Default has occurred and is continuing or would be
caused by or result therefrom), or (iii) otherwise make any payments or
Distributions to any stockholder, member, partner or other equity owner in such
Person's capacity as an equity owner. Notwithstanding the foregoing, (x) any
Borrower (other than Parent) may make Distributions and other payments to the
owner of such Borrower; and (y) after the payment in full of the Mezzanine Loan
and the Special Advance Amount, and provided no Default or Event of Default
shall have occurred, be continuing or would exist after giving effect thereto,
any Borrower may make dividends or Distribution. In addition, no Borrower shall
make any payment of any management, service or related or similar fee to any
Person or with respect to any facility owned, operated or leased by Borrower
except in the manner permitted under the Management Agreements and the
Management Fee Subordination Agreements; provided that Borrower shall not make
or suffer to exist any payment of fees under any Management Agreement if a
Default of Event of Default has occurred and is continuing or would result
therefrom.
7.6. TRANSACTIONS WITH AFFILIATES
Except as set forth on Schedule 7.6, no Borrower shall enter
into or consummate any transaction of any kind with any of its Affiliates or any
Guarantor or any of their respective Affiliates other than: (i) salary, bonus,
employee stock option and other compensation and employment arrangements with
directors or officers in the ordinary course of business, provided, that no
payment of any bonus shall be permitted if an Event of Default under Section
(VIII)(a) has occurred and remains in effect or would be caused by or result
from such payment; (ii) distributions and dividends permitted pursuant to
Section 7.4 or Section 7.5, (iii) transactions on overall terms at least as
favorable to such Borrower as would be the case in an arm's length transaction
between unrelated parties of equal bargaining power, and (iv) payments permitted
under and pursuant to written agreements entered into by and between such
Borrower and one or more of its Affiliates that both (A) reflect and constitute
transactions on overall terms at least as favorable to such Borrower as would be
the case in an arm's-length transaction between unrelated parties of equal
bargaining power, and (B) are subject to such terms and conditions as determined
by Agent in its Permitted Discretion; provided, that notwithstanding the
foregoing or any provision of any Loan Document, no Borrower shall (Y) enter
into or consummate any transaction or agreement pursuant to which it becomes a
party to any mortgage, note, indenture or guarantee evidencing any Indebtedness
for Borrowed Money or Contingent Obligations of any of its Affiliates (other
than a Borrower or Guarantor pursuant to the Loan Documents) or otherwise
becomes responsible or liable, as a guarantor, surety or otherwise, pursuant to
any agreement for any Indebtedness for Borrowed Money or Contingent Obligations
of any such Affiliate (other than a Borrower or Guarantor pursuant to the Loan
Documents) or (Z) make any payment to any of its Affiliates in excess of
$100,000 without the prior written consent of Agent. By execution of this
Agreement, the Agent consents to the payments made to Affiliates pursuant to the
agreements set forth on Schedule 7.6.
7.7. CHARTER DOCUMENTS; FISCAL YEAR; DISSOLUTION; USE OF PROCEEDS
36
No Borrower shall (i) amend, modify, restate or change its
certificate of incorporation or formation or bylaws or similar charter documents
in a manner that would be adverse to Agent or any Lender, (ii) change its fiscal
year unless Borrowers demonstrate to Agent's reasonable satisfaction compliance
with the covenants contained herein for both the fiscal year in effect prior to
any change and the new fiscal year period by delivery to Agent of appropriate
interim and annual pro forma, historical and current compliance certificates for
such periods and such other information as Agent may reasonably request, (iii)
amend, alter or suspend or terminate or make provisional in any material way,
any Permit material to the business of such Borrower without the prior written
consent of Agent, which consent shall not be unreasonably withheld or delayed,
or (iv) use any proceeds of any Advance for "purchasing" or "carrying" "margin
stock" as defined in Regulations U, T or X of the Board of Governors of the
Federal Reserve System.
7.8. TRANSFER OF ASSETS
No Borrower shall sell, lease, transfer, pledge, assign or
otherwise dispose of any Collateral or any interest therein or agree to do any
of the foregoing, except that:
(a) any Borrower may lease (other than by a
sale-leaseback transaction) as lessee real or personal property or surrender all
or a portion of a lease of the same, in each case in the ordinary course of
business (so long as such lease does not create or result in and is not
otherwise a Capitalized Lease Obligation prohibited under this Agreement)
provided that, if books and records regarding Collateral included on any
Borrowing Base Certificate, are to be kept at any new leased location, a
Landlord Waiver is executed, reasonably satisfactory in form and substance to
Agent;
(b) any Borrower may sell obsolete, worn-out or replaced
assets or excess assets no longer needed in the ordinary course of business;
(c) any Borrower may sell Inventory in the ordinary
course of business;
(d) any Borrower may sell or transfer Collateral (other
than Accounts) to any Borrower or any Guarantor so long as after giving effect
thereto Agent retains a perfected security interest in such Collateral with the
same priority as the Agent had in such Collateral prior to such sale or
transfer;
(e) the sale, transfer, lease or other disposition by any
Borrower or any Guarantor of assets aggregating for all Borrowers and Guarantors
not more than $5,000,000 during the Term; and
(f) the sale, transfer, lease or other disposition by any
Borrower or any Guarantor of not more than five (5) Facilities during the Term,
provided that any such sale, transfer, lease or other disposition shall not
result in a Default or Event of Default; and
(g) the sale, transfer, lease or other disposition by any
Borrower or any Guarantor of all or any portion of the pharmacy business or the
locomotion business, provided that any such sale, transfer, lease or other
disposition shall not result in a Default or an Event of Default.
37
7.9. CONTINGENT OBLIGATIONS
No Borrower shall enter into any Contingent Obligations or
assume, guarantee, endorse, contingently agree to purchase or otherwise become
liable for or upon or incur any obligation of any Person except for (a)
Contingent Obligations permitted pursuant to Section 7.2 or Section 7.4; (b)
Contingent Obligations of any Borrower or any Guarantor for any Borrower or any
Guarantor, to the extent the underlying obligation is otherwise permitted under
this Agreement; (c) Contingent Obligations of Parent for any borrower or a
guarantor under the Revolving Loan B Documentation, the Mezzanine Loan
Documentation or the Senior Mortgage Loan Documentation, to the extent the
underlying obligations is otherwise permitted under this Agreement; (d)
Contingent Obligations of any Borrower for any borrower or a guarantor under the
Mezzanine Loan Documentation; (e) Contingent Obligations set forth in Schedule
7.9 hereof; and (f) refinancings and replacements of Contingent Obligations
otherwise permitted hereunder.
7.10 IRS FORM 8821
No Borrower shall alter, amend, restate, or otherwise modify,
or withdraw, terminate or re-file the IRS Form 8821 required to be filed
pursuant to the Conditions Precedent in Section 4.1 hereof.
7.11. PAYMENT ON SUBORDINATED DEBT
No Borrower shall (i) make any payment of any part or all of
any Subordinated Debt or repurchase, redeem or retire any instrument evidencing
any such Subordinated Debt prior to maturity except, in each case, to the extent
permitted in the General Intercreditor Agreement, the Bergen Intercreditor
Agreement, Article 12 of the Indenture as in effect on the Closing Date or the
applicable Subordination Agreement, provided that (x) no payment, repurchase or
redemption may be made in respect of Subordinated Debt if an Event of Default
shall exist or be continuing or would exist after giving effect to such payment
and (y) no principal prepayments may be made in respect of the Indenture Notes,
the Continuing Creditor Deferred Obligation, or the Class 10 Deferred
Obligations until the outstanding balance of the Mezzanine Loan and the Senior
Mortgage Term Loan B has been paid in full and the Special Advance Amount has
been reduced to zero; or (ii) enter into any agreement (oral or written) which
could in any way be construed to amend, modify, alter or terminate any one or
more instruments or agreements evidencing or relating to any Subordinated Debt
(other than the Vendors Lien) which increases the principal amount of such
Subordinated Indebtedness, increases the interest rate charged with respect
thereto, accelerates the maturity date of any payment of principal or interest
or increases any fees or other compensation payable thereunder or amends any
event of default or any other material covenant or agreement of any obligor
thereunder or in respect thereof in a manner materially adverse to Agent or any
Lender; provided, however, so long as (x) no Default or Event of Default shall
exist or be continuing at the time of or after giving effect to any such payment
and (y) the outstanding balance of the Mezzanine Loan and the Senior Mortgage
Term Loan B has been paid in full and the Special Advance Amount has been
reduced to zero, Borrowers may make prepayments of Subordinated Indebtedness;
and provided, further, no mandatory prepayments or redemptions from excess cash
flow of Borrowers may be made in respect of Subordinated Indebtedness until all
mandatory prepayments from excess cash flow have been made in accordance with
the Mezzanine Loan
38
Documentation, Senior Mortgage Term Loan B and the Special Advance Amount has
been reduced to zero.
7.12. NEGATIVE PLEDGE
No Borrower shall pledge or xxxxx x Xxxx (other than a Lien
pursuant to the Mezzanine Loan Documentation) on any stock or other equity
interests of any Subsidiary which it owns at any time to any Person other than
to Agent for itself and the benefit of Lenders.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"EVENT OF DEFAULT":
(a) any Borrower shall fail to pay any amount on the
Obligations or provided for in any Loan Document when due (whether on any
payment date, at maturity, by reason of acceleration, by notice of intention to
prepay, by required prepayment or otherwise);
(b) any representation, statement or warranty made or
deemed made by any Borrower or any Guarantor in any Loan Document or in any
other certificate, document, report or opinion delivered in conjunction with any
Loan Document to which it is a party, shall not be true and correct in all
material respects or shall have been false or misleading in any material respect
on the date when made or deemed to have been made;
(c) any Borrower or any Guarantor or other party thereto
other than Agent or any Lender, shall be in violation, breach or default of, or
shall fail to perform, observe or comply with any covenant, obligation or
agreement set forth in, any Loan Document and such violation, breach, default or
failure shall not be cured within a fifteen (15) calendar day cure period
commencing from the earlier of (i) Receipt by such Person of written notice of
such breach, default, violation or failure, and (ii) the time at which such
Person or any authorized officer thereof knew or became aware, or should have
known or been aware, of such failure, violation, breach or default; provided
that, (A) the cure period set forth above shall not apply to any other Default
or Event of Default set forth in any other provision of this Article VIII as to
which no cure period or a different cure period is provided and (B) with respect
to the covenants set forth in Sections 6.1, 6.2, 6.3(i), (ii) and (iii), 6.5,
6.8, 6.9, 6.11, 6.12, 6.14 and Article VII there shall be no cure period;
(d) (i) any of the Loan Documents ceases to be in full
force and effect, or (ii) any Lien created thereunder ceases to constitute a
valid perfected first priority Lien on the Collateral (other than Priority
Liens) in accordance with the terms thereof, or Agent ceases to have a valid
perfected first priority security interest (subject only to Priority Liens) in
any of the Collateral or any securities pledged to Agent pursuant to the
Security Documents;
(e) one or more judgments or decrees is rendered against
any Borrower or Guarantor in an amount in excess of $2,000,000 individually or
in the aggregate, which is/are not satisfied, stayed, vacated or discharged of
record for a period of thirty (30) consecutive calendar days after being
rendered;
39
(f) (i) any default occurs, which is not cured or waived
(x) in the payment of any amount with respect to Indebtedness under the Senior
Mortgage Loan Documentation, the Mezzanine Loan Documentation, the Revolving
Loan B Documentation, the Indenture, any Subordinated Debt, any Priority Claims
or in respect of any other Indebtedness (other than the Obligations) of any
Borrower or Guarantor in excess of $2,000,000; or (y) in the performance,
observance or fulfillment of any provision contained in any agreement, contract,
document or instrument under or pursuant to which any Indebtedness described in
clause (x) above was issued, created, assumed, guaranteed or secured and such
default continues for more than any applicable grace period or permits the
holder of any such Indebtedness to accelerate the maturity thereof; or (ii) any
such Indebtedness of any Borrower or Guarantor is declared to be due and payable
or is required to be prepaid (other than by a regularly scheduled payment or a
mandatory or voluntary prepayment permitted under this Agreement) prior to the
stated maturity thereof, or any obligation of such Person for the payment of
Indebtedness (other than the Obligations) is not paid when due or within any
applicable grace period, or any such obligation becomes or is declared to be due
and payable before the expressed maturity thereof (other than as a result of a
mandatory or voluntary prepayment permitted under this Agreement);
(g) any Borrower or any Guarantor shall (i) be unable to
pay its debts generally as they become due, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a proceeding for the appointment of
a receiver, trustee, liquidator or conservator of itself or of the whole or any
substantial part of its property, or (iv) file a petition seeking reorganization
or liquidation or similar relief under any Debtor Relief Law or any other
applicable law or statute;
(h) (i) a court of competent jurisdiction shall (A) enter
an order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of any Borrower or Guarantor or the whole or any
substantial part of any such Person's properties, which shall continue unstayed
and in effect for a period of sixty (60) consecutive calendar days, (B) shall
approve a petition filed against any Borrower or Guarantor seeking
reorganization, liquidation or similar relief under the any Debtor Relief Law or
any other applicable law or statute, which is not dismissed within sixty (60)
calendar days or, (C) under the provisions of any Debtor Relief Law or other
applicable law or statute, assume custody or control of any Borrower or
Guarantor or of the whole or any substantial part of any such Person's
properties, which is not irrevocably relinquished within sixty (60) calendar
days, or (ii) there is commenced against any Borrower or Guarantor any
proceeding or petition seeking reorganization, liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute, which (A) is
not unconditionally dismissed within sixty (60) calendar days after the date of
commencement, or (B) is with respect to which any Borrower or Guarantor takes
any action to indicate its approval of or consent to;
(i) (i) any Change of Control occurs, (ii) any Material
Adverse Effect or Material Adverse Change occurs, or (iii) any Liability Event
occurs;
(j) Agent receives any indication or evidence that any
Borrower or Guarantor may have directly or indirectly been engaged in any type
of activity which, in Agent's Permitted Discretion, might result in forfeiture
of any material Collateral to any Governmental Authority which shall have
continued unremedied for a period of ten (10) calendar days after written notice
from Agent;
40
(k) an Event of Default occurs under any other Loan
Document;
(l) any Borrower or Guarantor is criminally indicted or
convicted under any law that could lead to a forfeiture of any Collateral;
(m) the issuance of any process for levy, attachment or
garnishment or execution upon or prior to any judgment against any Borrower or
Guarantor or any of their property or assets in an aggregate amount greater than
$2,000,000;
then, and in any such event, notwithstanding any other provision of any Loan
Document, Agent may (and at the request of Requisite Lenders, shall), by notice
to Borrowers (i) terminate its obligations to make Advances hereunder, whereupon
the same shall immediately terminate and (ii) declare all or any of the
Revolving Notes, all interest thereon and all other Obligations to be due and
payable immediately (except in the case of an Event of Default under Section
VIII(g) or (h), in which event all of the foregoing shall automatically and
without further act by Agent be due and payable), provided that, with respect to
non-material breaches or violations that constitute Events of Default under
clause (ii) of Section VIII(d), there shall be a three (3) Business Day cure
period commencing from the earlier of (A) Receipt by the applicable Person of
written notice of such breach or violation or of any event, fact or circumstance
constituting or resulting in any of the foregoing, and (B) the time at which
such Person or any authorized officer thereof knew or became aware, or should
have known or been aware, of such breach or violation and resulting Event of
Default or of any event, fact or circumstance constituting or resulting in any
of the foregoing)), in each case without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1. RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth
in Article VIII above, upon the occurrence and continuation of an Event of
Default, Agent shall have the right to (and at the request of Requisite Lenders,
shall) exercise any and all rights, options and remedies provided for in any
Loan Document, under the UCC or at law or in equity, including, without
limitation, the right to (i) apply any property of any Borrower held by Agent,
for the benefit of Lenders to reduce the Obligations, (ii) foreclose the Liens
created under the Security Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities pledged (other than Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law) with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
any Borrower, as applicable, might exercise (other than with respect to
Collateral consisting of Accounts owed or owing by Medicaid/Medicare Account
Debtors absent a court order or compliance with applicable law), (v) collect and
send notices regarding the Collateral (other than with respect to Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law), with or without judicial
process, (vi) by its own means or with judicial assistance, enter any premises
at which Collateral and/or pledged securities are located, or dispose of the
Collateral and/or pledged securities on such premises without any liability for
rent, storage, utilities, or other sums (other than amounts agreed to by Agent
in any
41
agreement with any landlord or lessor), and no Borrower shall resist or
interfere with such action, (vii) at Borrowers' expense, require that all or any
part of the Collateral be assembled and made available to Agent at any
reasonable place designated by Agent, (viii) reduce or otherwise change the
Facility Cap, and/or (ix) relinquish or abandon any Collateral or securities
pledged or any Lien thereon. Notwithstanding any provision of any Loan Document,
Agent, in its Permitted Discretion, shall have the right, at any time that any
Borrower fails to do so, and from time to time, without prior notice, to: (i)
obtain insurance covering any of the Collateral to the extent required
hereunder; (ii) pay for the performance of any of Obligations; (iii) discharge
taxes or Liens on any of the Collateral that are in violation of any Loan
Document unless such Borrower is in good faith with due diligence by appropriate
proceedings contesting those items; and (iv) pay for the maintenance and
preservation of the Collateral. Such expenses and advances shall be added to the
Obligations until reimbursed to Agent and shall be secured by the Collateral,
and such payments by Agent shall not be construed as a waiver by Agent or
Lenders of any Event of Default or any other rights or remedies of Agent and
Lenders.
(b) Borrowers agree that notice received by any of them
it at least ten (10) calendar days before the time of any intended public sale,
or the time after which any private sale or other disposition of Collateral is
to be made, shall be deemed to be reasonable notice of such sale or other
disposition. If permitted by applicable law, any perishable Collateral which
threatens to speedily decline in value or which is sold on a recognized market
may be sold immediately by Agent without prior notice to Borrowers. At any sale
or disposition of Collateral or securities pledged, Agent may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by Borrowers which right is hereby waived and released.
Borrowers covenants and agrees not to, and not to permit or cause any of its
Subsidiaries to, interfere with or impose any obstacle to Agent's exercise of
its rights and remedies with respect to the Collateral. Agent, in dealing with
or disposing of the Collateral or any part thereof, shall not be required to
give priority or preference to any item of Collateral or otherwise to marshal
assets or to take possession or sell any Collateral with judicial process.
9.2. APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Agent
and Lenders have under the Loan Documents, the UCC, at law or in equity, all
dividends, interest, rents, issues, profits, fees, revenues, income and other
proceeds collected or received from collecting, holding, managing, renting,
selling, or otherwise disposing of all or any part of the Collateral or any
proceeds thereof upon exercise of its remedies hereunder shall be applied in the
following order of priority: (i) first, to the payment of all reasonable costs
and expenses of such collection, storage, lease, holding, operation, management,
sale, disposition or delivery and of conducting Borrowers' business and of
maintenance, repairs, replacements, alterations, additions and improvements of
or to the Collateral, and to the payment of all sums which Agent or Lenders may
be required or may elect to pay, if any, for taxes, assessments, insurance and
other charges upon the Collateral or any part thereof, and all other payments
that Agent or Lenders may be required or authorized to make under any provision
of this Agreement (including, without limitation, in each such case, reasonable
in house documentation and diligence fees and legal expenses, search, audit,
recording, professional and filing fees and expenses and reasonable attorneys'
fees and all expenses, liabilities and advances made or incurred in connection
therewith); (ii) second, to the payment of all Obligations as provided herein
and as determined by
42
Agent in its sole discretion; (iii) third, to the satisfaction of other
Indebtedness secured by any subordinate security interest of record in the
Collateral as provided in the General Intercreditor Agreement, the Bergen
Intercreditor Agreement or any applicable Subordination Agreement if written
notification of demand therefor is received before distribution of the proceeds
is completed, provided, that, if requested by Agent, the holder of a subordinate
security interest shall furnish reasonable proof of its interest, and unless it
does so, Agent and Lenders need not address their claims; and (iv) fourth, to
the payment of any surplus then remaining to Borrowers, unless otherwise
provided by law or directed by a court of competent jurisdiction, provided that
Borrowers shall be liable for any deficiency if such proceeds are insufficient
to satisfy the Obligations or any of the other items referred to in this
section.
9.3. RIGHTS OF AGENT TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options
and remedies Agent and Lenders have under the Loan Documents, the UCC, at law or
in equity, upon the occurrence and continuation of an Event of Default, Agent
and Lenders shall have the right to apply for and have a receiver appointed by a
court of competent jurisdiction in any action taken by Agent to enforce its
rights and remedies in order to manage, protect and preserve the Collateral and
continue the operation of the business of Borrowers and to collect all revenues
and profits thereof and apply the same to the payment of all reasonable expenses
and other charges of such receivership including the reasonable compensation of
the receiver and to the payments as aforesaid until a sale or other disposition
of such Collateral shall be finally made and consummated.
9.4. RIGHTS AND REMEDIES NOT EXCLUSIVE
Agent shall have the right in its sole discretion to determine
which rights, Liens and/or remedies Agent or Lenders may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Agent's or Lenders' rights, Liens or remedies under any
Loan Document, applicable law or equity. The enumeration of any rights and
remedies in any Loan Document is not intended to be exhaustive, and all rights
and remedies of Agent and Lenders described in any Loan Document are cumulative
and are not alternative to or exclusive of any other rights or remedies which
Agent or Lenders otherwise may have. The partial or complete exercise of any
right or remedy shall not preclude any other further exercise of such or any
other right or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1. WAIVERS
(a) Except as expressly provided for herein, each
Borrower hereby waives set-off, counterclaim, demand, presentment, protest, all
defenses with respect to any and all instruments and all notices and demands of
any description, and the pleading of any statute of limitations as a defense to
any demand under any Loan Document. Each Borrower hereby waives any and all
defenses and counterclaims it may have or could interpose in any action or
procedure brought by Agent or any Lender to obtain an order of court recognizing
the assignment of, or Lien of Agent, for the benefit of itself and Lenders, in
and to, any Collateral,
43
whether or not payable by a Medicaid/Medicare Account Debtor. With respect to
any action hereunder, Agent conclusively may rely upon, and shall incur no
liability to Borrowers in acting upon, any request or other communication that
Agent reasonably believes to have been given or made by a person authorized on
Borrower's behalf, whether or not such person is listed on the incumbency
certificate delivered pursuant to Section 4.1 hereof. In each such case, each
Borrower hereby waives the right to dispute Agent's action based upon such
request or other communication, absent manifest error.
(b) If it is at any time determined that any Borrower is
liable as a guarantor of any portion of the Obligations (and not as a co-obligor
or co-borrower), the liability of each Borrower hereunder shall be absolute and
unconditional irrespective of (a) the insolvency of, or the voluntary or
involuntary bankruptcy, assignment for the benefit of creditors, reorganization
or other similar proceedings affecting any other Borrower or any of its assets,
or (b) any other circumstance or claim which might otherwise constitute a
defense available to, or a discharge of, any Person that is a Borrower in
respect of the Obligations. No payment made by any Borrower, or received or
collected by Agent or any Lender from any Borrower by virtue of any action,
proceeding or set-off in reduction or in payment of the Obligations shall be
deemed to modify, release or otherwise affect the liability of any Borrower
under the Loan Documents, and each Borrower shall remain liable for the
Obligations until all Obligations are paid in full.
10.2. DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension
of any provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Agent's or Lenders' part in
enforcing any such provision shall affect the liability of any Borrower or
Guarantor or operate as a waiver of such provision or affect the liability of
any Borrower or Guarantor or preclude any other or further exercise of such
provision. No waiver by any party to any Loan Document of any one or more
defaults by any other party in the performance of any of the provisions of any
Loan Document shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver. Notwithstanding any
other provision of any Loan Document, by completing the Closing under this
Agreement and/or by making Advances, neither Agent nor any Lender waives any
breach of any representation or warranty of under any Loan Document, and all of
Agent's and Lenders' claims and rights resulting from any such breach or
misrepresentation are specifically reserved.
10.3. JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN
DOCUMENTS OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES WITH RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT
44
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4 AMENDMENT AND WAIVERS
(a) Except as otherwise provided herein, no amendment,
modification, termination, or waiver of any provision of this Agreement or any
Loan Document, or consent to any departure by Borrowers therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Requisite Lenders, Agent and Borrowers; provided, that no amendment,
modification, termination, or waiver shall, unless in writing and signed by each
Lender directly affected thereby, do any of the following: (i) increase the
Commitment of such Lender; (ii) reduce the principal of, rate of interest (other
than default interest) on or fees payable with respect to any Loan; (iii) extend
the scheduled due date or reduce the amount due on any scheduled due date, of
any installment of principal, interest, or fees payable with respect to any
Loan, or waive, forgive, extend, defer or postpone the payment thereof; (iv)
change the percentage of the Commitments, of the aggregate unpaid principal
amount of the Loans, or of Lenders which shall be required for Lenders or any of
them to take any action hereunder; (v) except as otherwise permitted herein or
in the other Loan Documents, release any Guaranty or release any material
portion of the Collateral (provided, that consent to such release shall not be
required if such release is made after and during the continuance of an Event of
Default in connection with the sale or disposition of the Collateral by Agent);
(vi) amend, modify or waive this Section 10.4 or the definitions of the terms
used in this Section 10.4 insofar as the definitions affect the substance of
this Section 10.4; (vii) consent to the assignment or other transfer by
Borrowers or any other party (other than any Lender) to any Loan Documents of
any of their rights and obligations under any Loan Document; or (viii) increase
the Advance Rate or change the definition of Eligible Receivables or Borrowing
Base; and, provided, further, that no amendment, modification, termination or
waiver affecting the rights or duties of Agent under any Loan Document shall in
any event be effective, unless in writing and signed by Agent, in addition to
Lenders required herein above to take such action.
(b) Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given. No amendment, modification, termination or waiver shall
be required for Agent to take additional Collateral pursuant to any Loan
Document.
(c) Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 10.4 shall be binding upon each
Lender and Borrowers.
XI. EFFECTIVE DATE AND TERMINATION
11.1. EFFECTIVENESS AND TERMINATION
Subject to Agent's and Lenders' rights to accelerate the Loans
and terminate and cease making and funding Advances if any Event of Default has
occurred and is continuing, this Agreement shall continue in full force and
effect until the full performance and indefeasible payment in cash of all
Obligations, unless terminated sooner as provided in this Section 11.1.
45
Borrowers may terminate this Agreement at any time upon not less than fifteen
(15) calendar days' prior written notice to Agent and upon full performance and
indefeasible payment in full in cash of all Obligations on or prior to such 15th
calendar day after Receipt by Agent of such written notice, provided, however,
that, notwithstanding any other provision of any Loan Document, (x) Borrowers
shall have no right to terminate this Agreement until the second anniversary of
the Closing Date (unless either (i) Borrowers shall pay to Agent, for the pro
rata benefit of Lenders, an amount equal to the Unused Line Fee that would
accrue during the period from such termination to such second anniversary or
(ii) such termination occurs in connection with a Change of Control); and (y)
Borrowers shall have no right to terminate this Agreement until the termination
and indefeasible payment in full of all Obligations (other than Unmatured
Surviving Obligations) hereunder and all obligations under the Mezzanine Loan
Documentation and the Senior Mortgage Term Loan B. All of the Obligations shall
be immediately due and payable upon any such termination on the termination date
stated in any notice of termination (the "TERMINATION DATE"); provided that,
notwithstanding any other provision of any Loan Document, the Termination Date
shall be effective no earlier than the first Business Day following the
expiration of the fifteen (15) calendar days' prior written notice period.
Notwithstanding any other provision of any Loan Document, no termination of this
Agreement shall affect any Lender's or Agent's rights or any of the Obligations
existing as of the effective date of such termination, and the provisions of the
Loan Documents shall continue to be fully operative until the Obligations (other
than Unmatured Surviving Obligations) have been fully performed and indefeasibly
paid in cash in full. The Liens granted to Agent, for the benefit of itself and
Lenders, under the Security Documents and the financing statements filed
pursuant thereto and the rights and powers of Agent and Lenders shall continue
in full force and effect notwithstanding the fact that Borrowers' borrowings
hereunder may from time to time be in a zero or credit position until all of the
Obligations (other than Unmatured Surviving Obligations) have been fully
performed and indefeasibly paid in full in cash.
11.2. SURVIVAL
All obligations, covenants, agreements, representations,
warranties, waivers and indemnities made by any Borrower in any Loan Document
shall survive the execution and delivery of the Loan Documents, the Closing, the
making of the Advances and any termination of this Agreement until all
Obligations (other than Unmatured Surviving Obligations) are fully performed and
indefeasibly paid in full in cash. The obligations and provisions of Sections
3.4, 3.5, 6.13, 10.1, 10.3, 11.1, 11.2, 14.4, 14.7 and 14.9 shall survive
termination of the Loan Documents and any payment, in full or in part, of the
Obligations.
XII. AGENCY PROVISIONS
12.1. AGENT
(a) Appointment. Each Lender hereby designates and
appoints CapitalSource as the administrative agent and the collateral agent,
under this Agreement and the other Loan Documents, and each Lender hereby
irrevocably authorizes CapitalSource, as the administrative agent and the
collateral agent for such Lender, to take such action or to refrain from taking
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
delegated to Agent by the terms of this
46
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Agent agrees to act as such on the conditions
contained in this Article. Except for rights specifically noted, the provisions
of this Article are solely for the benefit of Agent and Lenders, and Borrowers
shall have no rights as a third-party beneficiary of any of the provisions
hereof. Agent may perform any of its duties hereunder, or under the Loan
Documents, by or through its agents or employees.
(b) Nature of Duties. In performing its functions and
duties under this Agreement, Agent is acting solely on behalf of Lenders and its
duties are administrative in nature and it does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Lenders, other than as expressly set forth herein and in the other
Loan Documents, or for Borrowers. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Except for information,
notices, reports, and other documents expressly required to be furnished to
Lenders by Agent hereunder or given to Agent for the account of or with copies
for Lenders, each Lender shall make its own independent investigation of the
financial condition and affairs of Borrowers in connection with the extension of
credit hereunder and shall make its own appraisal of the creditworthiness of
Borrowers, and Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
Closing Date or at any time or times thereafter. If Agent seeks the consent or
approval of any Lenders to the taking or refraining from taking any action
hereunder, then Agent shall send prior written notice thereof to each Lender.
Agent shall promptly notify (in writing) each Lender any time that the
applicable percentage of Lenders have instructed Agent to act or refrain from
acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of
its officers, directors, managers, members, equity owners, employees or agents
shall be liable to any Lender for any action lawfully taken or omitted by them
hereunder or under any of the other Loan Documents, or in connection herewith or
therewith. Notwithstanding the foregoing, Agent shall be obligated on the terms
set forth herein for performance of its express duties and obligations
hereunder, and Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith, and if any such apportionment
or distribution is subsequently determined to have been made in error, the sole
recourse of any Lender to whom payment was due but not made shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them). In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account. Agent shall not be responsible
to any Lender for any recitals, statements, representations or warranties made
by Borrowers herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of the
other Loan Documents or the transactions contemplated thereby, or for the
financial condition of Borrowers. Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions, or conditions of this Agreement or any of the Loan Documents or the
financial condition of Borrowers, or the existence or possible existence of any
Default or Event of Default.
47
Agent may at any time request instructions from Lenders with respect to any
actions or approvals which by the terms of this Agreement or of any of the other
Loan Documents Agent is permitted or required to take or to grant, and Agent
shall be absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever to any Person for
refraining from taking any action or withholding any approval under any of the
Loan Documents until it shall have received such instructions from the
applicable percentage of Lenders. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of the applicable percentage of
Lenders and notwithstanding the instructions of Lenders, Agent shall have no
obligation to take any action if it, in good faith believes that such action
exposes Agent or any of its officers, directors, managers, members, equity
owners, employees or agents to any personal liability unless Agent receives an
indemnification reasonably satisfactory to it from Lenders with respect to such
action.
(d) Reliance. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex, telecopy
or telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) Indemnification. Each Lender, severally and not
jointly, agrees to reimburse and indemnify Agent and its officers, directors,
managers, members, equity owners, employees and agents (to the extent not
reimbursed by Borrowers or the Guarantors), ratably according to their
respective Pro Rata Share in effect on the date on which indemnification is
sought under this subsection of the total outstanding obligations (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with their Pro Rata Share immediately prior to such date of the total
outstanding obligations), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses,
advances, or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Agent or any of its officers, directors,
managers, members, equity owners, employees or agents in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any action
taken or omitted by Agent under this Agreement or any of the other Loan
Documents; provided, however, that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements resulting
from Agent's gross negligence or willful misconduct. The obligations of Lenders
under this Article XII shall survive the payment in full of the Obligations and
the termination of this Agreement.
(f) CapitalSource Individually. With respect to the Loans
made by it, and the Revolving Notes issued to it, CapitalSource shall have and
may exercise the same rights and powers hereunder and under the other Loan
Documents and is subject to the same obligations and liabilities as and to the
extent set forth herein and the other Loan Documents as any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
48
context clearly otherwise indicates, include CapitalSource in its individual
capacity as a Lender or one of the Requisite Lenders. CapitalSource may lend
money to, and generally engage in any kind of banking, trust or other business
with any Borrower or any Subsidiary of any Borrower as if it were not acting as
Agent pursuant hereto.
(g) Successor Agent.
(i) Resignation. Agent may resign from the
performance of all its functions and duties hereunder at any time by giving at
least thirty (30) days' prior written notice to Borrowers and Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (ii) below or as otherwise provided below.
(ii) Appointment of Successor. Upon any such
notice of resignation pursuant to clause (g)(i) above, Requisite Lenders shall
appoint a successor Agent with, so long as no Event of Default shall have
occurred and be continuing, the consent of Borrowing Agent (which consent shall
not be unreasonably withheld or delayed). If a successor Agent shall not have
been so appointed within said thirty (30) day period, the retiring Agent, upon
notice to Borrowers, may, on behalf of Lenders, then appoint a successor Agent
who shall serve as Agent until such time, as Requisite Lenders (with, so long as
no Event of Default shall have occurred and be continuing, the consent of
Borrowing Agent (which consent shall not be unreasonably withheld or delayed)),
appoint a successor Agent as provided above. If no successor Agent has been
appointed pursuant to the foregoing within said thirty (30) day period, the
resignation shall become effective and Requisite Lenders shall thereafter
perform all the duties of Agent hereunder, until such time, if any, as Requisite
Lenders appoint a successor Agent as provided above.
(iii) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and, upon the
earlier of such acceptance or the effective date of the retiring Agent's
resignation, the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents, except that any indemnity rights or other
rights in favor of such retiring Agent shall continue. After any retiring
Agent's resignation as Agent under the Loan Documents, the provisions of this
Article XII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.
(h) Collateral Matters.
(i) Collateral. Each Lender agrees that any
action taken by Agent or the Requisite Lenders (or, where required by the
express terms of this Agreement, a greater proportion of Lenders) in accordance
with the provisions of this Agreement or of the other Loan Documents relating to
the Collateral, and the exercise by Agent or the Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of Lenders and Agent. Without limiting the
generality of the foregoing, Agent shall have the sole and exclusive right and
authority to (i) act as the disbursing and collecting agent for Lenders with
respect to all payments and collections arising in connection herewith and with
the Loan
49
Documents in connection with the Collateral; (ii) execute and deliver each Loan
Document relating to the Collateral and accept delivery of each such agreement
delivered by Borrowers or any of their Subsidiaries; (iii) act as collateral
agent for Lenders for purposes of the perfection of all security interests and
Liens created by such agreements and all other purposes stated therein; (iv)
manage, supervise and otherwise deal with the Collateral; (v) take such action
as is necessary or desirable to maintain the perfection and priority of the
security interests and Liens created or purported to be created by the Loan
Documents relating to the Collateral, and (vi) except as may be otherwise
specifically restricted by the terms hereof or of any other Loan Document,
exercise all remedies given to such Agent and Lenders with respect to the
Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(ii) Release of Collateral. Lenders hereby
irrevocably authorize Agent, and Agent and Lenders agree for the benefit of
Borrowers, to release any Lien granted to or held by Agent for the benefit of
Lenders upon (A) all Collateral upon termination of this Agreement and payment
and satisfaction in full of all Obligations (other than Unmatured Surviving
Obligations); or (B) any portion of the Collateral which is sold, transferred or
otherwise disposed of in accordance with the provisions of this Agreement, if
Borrowers certify to Agent that such sale, transfer or other disposition is made
in compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry). Upon at
least five (5) Business Days prior written request by any Borrower, Agent shall
(and is hereby irrevocably authorized by Lenders to) execute such documents as
may be necessary to evidence the release of the Liens granted to Agent for the
benefit of Lenders herein or pursuant hereto upon all or any portion of the
Collateral in accordance with the previous sentence.
(iii) Absence of Duty. Agent shall have no
obligation whatsoever to any Lender or any other Person to assure that the
property covered by this Agreement or the Loan Documents exists or is owned by
Borrowers or is cared for, protected or insured or has been encumbered or that
the Liens granted to Agent on behalf of Lenders herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure, or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Section 12.1(h) or in any of the Loan Documents, it
being understood and agreed that in respect of the property covered by this
Agreement or the Loan Documents or any act, omission, or event related thereto,
Agent may act in any manner consistent with the provisions of this Agreement and
the other Loan Documents and as it may otherwise deem appropriate, in its
Permitted Discretion, given Agent's own interest in property covered by this
Agreement or the Loan Documents as one of Lenders and that Agent shall have no
duty or liability whatsoever to any of the other Lenders; provided, that Agent
shall exercise the same care which it would in dealing with loans for its own
account. Notwithstanding the foregoing, Agent shall be liable with respect to
its own gross negligence or willful misconduct.
(i) Agency for Perfection. Each Lender hereby appoints
Agent as agent for the purpose of perfecting Lenders' security interest in
Collateral which, in accordance with Article 9 of the UCC in any applicable
jurisdiction, can be perfected only by possession. Should any Lender (other than
Agent) obtain possession of any such Collateral, such Lender shall notify
50
Agent thereof, and, promptly upon Agent's request therefor, shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
(j) Exercise of Remedies. Except as set forth in Section
12.3, each Lender agrees that it will not have any right individually to enforce
or seek to enforce this Agreement or any Loan Document or to realize upon any
collateral security for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by Agent.
12.2. CONSENTS
(a) In the event Agent requests the consent of a Lender
and does not receive a written denial thereof within five (5) Business Days
after such Lender's receipt of such request, then such Lender will be deemed to
have given such consent so long as such request contained a notice stating that
such failure to respond within five (5) Business Days would be deemed to be a
consent by such Lender.
(b) In the event Agent requests the consent of a Lender
in a situation where such Lender's consent would be required and such consent is
denied, then Agent may, at its option, require such Lender to assign its
interest in the Loans to Agent for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender, which interest and fees will be paid when collected from Borrowers. In
the event that Agent elects to require any Lender to assign its interest to
Agent pursuant to this Section 12.2, Agent will so notify such Lender in writing
within forty-five (45) days following such Lender's denial, and such Lender will
assign its interest to Agent no later than five (5) days following receipt of
such notice.
12.3. SET OFF AND SHARING OF PAYMENTS
In addition to any rights and remedies now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, each
Lender is hereby authorized by Borrowers at any time or from time to time, to
the fullest extent permitted by law, with reasonably prompt subsequent notice to
Borrowers or to any other Person (any prior or contemporaneous notice being
hereby expressly waived) to set off and to appropriate and to apply any and all
(a) balances (general or special, time or demand, provisional or final) held by
such Lender at any of its offices for the account of Borrowers or the Guarantors
(regardless of whether such balances are then due to Borrowers or the
Guarantors), and (b) other property at any time held or owing by such Lender or
such holder to or for the credit or for the account of Borrowers or the
Guarantors, against and on account of any of the Obligations which are not paid
when due; except that no Lender shall exercise any such right without the prior
written consent of Agent; provided, however, that the failure to give notice to
Borrowers shall not affect the validity of such set-off and application. Any
Lender which has exercised its right to set off or otherwise has received any
payment on account of the Obligations shall, to the extent the amount of any
such set off or payment exceeds its Pro Rata Share of payments obtained by all
of Lenders on account of such Obligations, purchase for cash participations in
each such other Lender's Pro Rata Share of Obligations as would be necessary to
cause such Lender to share such excess with each other Lender or holder in
accordance with their respective Pro Rata Shares; provided, however, that if all
or any portion
51
of such excess payment or benefits is thereafter recovered from such purchasing
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery. Borrowers agrees, to the fullest
extent permitted by law, that (a) any Lender may exercise its right to set off
with respect to amounts in excess of its Pro Rata Share of the Obligations and
may sell participations in such excess to other Lenders and holders, and (b) any
Lender or holder so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender were a direct holder of Loans and other Obligations
in the amount of such participation.
12.4. DISBURSEMENT OF FUNDS
Agent may, on behalf of Lenders, disburse funds to Borrowers
for Advances requested. Each Lender shall reimburse Agent on demand for its Pro
Rata Share of all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Advance
before Agent disburses same to Borrowers. If Agent elects to require that funds
be made available prior to disbursement to Borrowers, Agent shall advise each
Lender by telephone, telex or telecopy of the amount of such Lender's Pro Rata
Share of such requested Advance no later than one (1) Business Day prior to the
funding date applicable thereto, and each such Lender shall pay Agent such
Lender's Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent's account not later than 3:00 p.m. (Eastern Time) on the day
prior to the funding date. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent's demand, Agent shall promptly notify Borrowers, and
Borrowers shall immediately repay such amount to Agent. Any repayment required
pursuant to this Section 12.4 shall be without premium or penalty. Nothing in
this Section 12.4 or elsewhere in this Agreement or the other Loan Documents,
including without limitation the provisions of Section 12.5, shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice any
rights that Agent or Borrowers may have against any Lender as a result of any
default by such Lender hereunder.
12.5. SETTLEMENTS; PAYMENTS AND INFORMATION
(a) Advances and Payments; Interest and Fee Payments.
(i) The amount outstanding pursuant to Advances
may fluctuate from day to day through Agent's disbursement of funds to, and
receipt of funds from, Borrower. In order to minimize the frequency of transfers
of funds between Agent and each Lender notwithstanding terms to the contrary set
forth in Section 12.4, Advances and repayments may be settled according to the
procedures described in Sections 12.5(a)(ii) and 12.5(a)(iii) of this Agreement.
Payments of principal, interest and fees in respect of the Loans will be
settled, in accordance with each Lender's Pro Rata Share on the first Business
Day after such payments are received. Notwithstanding these procedures, each
Lender's obligation to fund its Pro Rata Share of any advances made by Agent to
Borrowers will commence on the date such advances are made by Agent. Such
payments will be made by such Lender without set-off, counterclaim or reduction
of any kind.
52
(ii) Once each week, or more frequently
(including daily), if Agent so elects (each such day being a "SETTLEMENT DATE"),
Agent will advise each Lender by 1 p.m. (Eastern Time) by telephone, telex, or
telecopy of the amount of each such Lender's Pro Rata Share of the outstanding
Advances. In the event payments are necessary to adjust the amount of such
Lender's share of the Advances to such Lender's Pro Rata Share of the Advances,
the party from which such payment is due will pay the other, in same day funds,
by wire transfer to the other's account not later than 3:00 p.m. (Eastern Time)
on the Business Day following the Settlement Date.
(iii) On the first Business Day of each month
("INTEREST SETTLEMENT DATE"), Agent will advise each Lender by telephone or
facsimile of the amount of interest and fees charged to and collected from
Borrowers for the proceeding month in respect of the Advances. Provided that
such Lender has made all payments required to be made by it under this
Agreement, Agent will pay to such Lender, by wire transfer to such Lender's
account (as specified by such Lender on Schedule 2 of this Agreement as amended
by such Lender from time to time after the date hereof pursuant to the notice
provisions contained herein) not later than 3 p.m. (Eastern Time) on the next
Business Day following the Interest Settlement Date such Lender's share of such
interest and fees.
(b) Availability of Lenders' Pro Rata Share.
(i) Unless Agent has been notified by a Lender
prior to any proposed funding date of such Lender's intention not to fund its
Pro Rata Share of the Advance amount requested by Borrowers, Agent may assume
that such Lender will make such amount available to Agent on the proposed
funding date or the Business Day following the next Settlement Date, as
applicable. If such amount is not, in fact, made available to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without set-off, counterclaim, or deduction of any kind.
(ii) Nothing contained in this Section 12.5(b)
will be deemed to relieve a Lender of its obligation to fulfill its commitments
or to prejudice any rights Agent or Borrowers may have against such Lender as a
result of any default by such Lender under this Agreement.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from Borrowers and such related payment is not
received by Agent, then Agent will be entitled to recover such amount from such
Lender without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to Borrowers or
paid to any other Person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to
53
such Lender, together with interest at such rate, if any, as Agent is required
to pay to Borrowers or such other Person, without set-off, counterclaim or
deduction of any kind. such Lender, together with interest at such rate, if any,
as Agent is required to pay to Borrowers or such other Person, without set-off,
counterclaim or deduction of any kind.
12.6. DISSEMINATION OF INFORMATION
Agent will distribute promptly to each Lender copies of all
notices, schedules, reports, projections, financial statements, agreements and
other material and other information, including, but not limited to, Borrowers'
requests for Advances and financial and reporting information received from
Borrowers or its Subsidiaries or generated by a third party (and excluding only
internal information generated by CapitalSource for its own use as a Lender or
as Agent), as provided for in this Agreement and the other Loan Documents as
received by Agent. Agent shall promptly give notice to Lenders of the receipt or
sending of any notice, schedule, report, projection, financial statement or
other document or information pursuant to this Agreement or any of the other
Loan Documents and shall promptly forward a copy thereof to each Lender. Agent
shall request information from Borrowers or its Subsidiaries as Lenders may
request from time to time. Agent shall not be liable to Lenders for any failure
to comply with its obligations under this Section 12.6, except to the extent
that such failure is attributable to Agent's gross negligence or willful
misconduct.
XIII. BORROWING AGENCY; IRS FORMS
13.1. BORROWING AGENCY PROVISIONS; ACKNOWLEDGEMENT OF JOINT AND
SEVERAL LIABILITY
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Parent.
(b) The handling of this credit facility as a
co-borrowing facility and the designation by each Borrower of Borrowing Agent as
its borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. None of Agent nor any Lender
shall incur liability to any Borrower as a result thereof. To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent or any Lender on any request or instruction
from Borrowing Agent or any other action taken by Agent or any Lender with
respect to this Section 13 except due to willful misconduct or gross negligence
by the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
by Agent or any Lender to any other Borrower, failure of Agent or any Lender to
give such Borrower notice of borrowing or any other notice, any failure of Agent
or any Lender to pursue or preserve its rights against any other Borrower, the
release by
54
Agent or any Lender of any Collateral now or thereafter acquired from
any other Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by
Agent or any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
(d) Each Borrower expressly understands, agrees and
acknowledges that (i) Borrowers are all Affiliated entities by common ownership,
(ii) each Borrower desires to have the availability of one common credit
facility instead of separate credit facilities, (iii) each Borrower has
requested that Lenders extend such a common credit facility on the terms herein
provided, (iv) Lenders will be lending against, and relying on a lien upon, all
of Borrowers' assets even though the proceeds of any particular loan made
hereunder may not be advanced directly to a particular Borrower, (v) each
Borrower will nonetheless benefit by the making of all such loans by each Lender
and the availability of a single credit facility of a size greater than each
could independently warrant, (vi) all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in the
Loan Documents shall be applicable to and shall be binding upon each Borrower
and (vii) each Borrower has executed the Revolving Notes as co-makers of the
Revolving Notes and that it would not be able to obtain the credit provided by
Lenders hereunder without the financial support provided by the other Borrowers.
(e) Each Borrower expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Borrower may now or hereafter have against the other Borrowers
or other Persons directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers' property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations (other than the Unmatured
Surviving Obligations).
13.2. WITHHOLDING TAX.
(a) If any Lender is a "foreign corporation, partnership
or trust" within the meaning of the Internal Revenue Code, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Borrowers:
(i) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States of America tax
treaty, properly completed IRS Forms W-8BEN before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States of America
withholding tax because it is effectively connected with a United
States of America trade or business of such Lender, two properly
completed and executed copies of IRS Form W-8ECI before the payment of
any interest is due in the first taxable year of such Lender and in
each succeeding taxable year of such Lender during which interest may
be paid under this Agreement, and, if applicable, IRS Form W-9; and
55
(iii) such other form or forms as may be required
under the Internal Revenue Code or other laws of the United States of
America as a condition to exemption from, or reduction of, United
States of America withholding tax.
Such Lender agrees to promptly notify Agent and Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing IRS
Form FW-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify Borrowers and Agent of the percentage amount in which it
is no longer the beneficial owner of Obligations of Borrowers to such Lender. To
the extent of such percentage amount, Agent will treat such Lender's IRS Form
W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States
of America withholding tax by filing IRS Form W-8ECI with Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
owing to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Internal Revenue Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the Internal Revenue Service or any other
Governmental Authority of the United States of America or other jurisdiction
asserts a claim that Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered,
was not properly executed, or because such Lender failed to notify Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify Agent and Borrowers fully for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
and Borrowers under this Section, together with all costs and expenses
(including reasonably attorneys fees and expenses). The obligation of Lenders
under this subsection shall survive the payment of all Obligations and the
resignation or replacement of Agent.
XIV. MISCELLANEOUS
14.1. GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to its choice of law provisions (other than Section 5-1401 of the New York
General Obligation Law). Any judicial proceeding
56
against Borrowers with respect to the Obligations, any Loan Document or any
related agreement may be brought in any federal or state court of competent
jurisdiction located in the City of New York, State of New York (any such court,
individually a "New York Court," and all such courts collectively, the "New York
Courts"), provided nothing in this Agreement shall be deemed or operate to
preclude Agent from bringing suit or taking other legal action in any
jurisdiction to the extent, but only to the extent, it is required to bring suit
in such jurisdiction to realize on the Collateral or any other security for the
Obligations (any such court and any New York Court, individually a "Qualified
Court" and collectively, the "Qualified Courts"), and provided, further that
Agent, Lenders and Borrowers acknowledge that any appeals from a Qualified Court
may have to be heard by a court located outside of the jurisdiction where such
Qualified Court sits. By execution and delivery of each Loan Document to which
it is a party, each Borrower (i) accepts the non-exclusive jurisdiction of the
Qualified Courts and irrevocably agrees to be bound by any judgment rendered
thereby, (ii) waives personal service of process, (iii) agrees that service of
process upon it may be made by certified or registered mail, return receipt
requested, pursuant to Section 14.5 hereof and (iv) waives any objection to
jurisdiction and venue of any action instituted hereunder in any Qualified Court
and agrees not to assert any defense to an action brought in any Qualified Court
based on lack of jurisdiction, venue or convenience. Any judicial proceedings
against Agent or any Lender involving, directly or indirectly, the Obligations,
any Loan Document or any related agreement shall be brought only in a New York
Court. All parties acknowledge that they participated in the negotiation and
drafting of this Agreement and that, accordingly, no party shall move or
petition a court construing this Agreement to construe it more stringently
against one party than against any other.
14.2. SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS; NEW
LENDERS
(a) Each Lender may at any time assign all or a portion
of its rights and delegate all or a portion of its obligations under this
Agreement and the other Loan Documents (including all its rights and obligations
with respect to the Loans) to one or more Persons (a "TRANSFEREE"); provided,
that (i) (x) unless an Event of Default shall have occurred and be continuing or
(y) such Transferee is an Eligible Assignee, the Borrowing Agent shall have
consented to such Transferee (such consent not to be unreasonably withheld or
delayed) and (ii) such Transferee and such assigning Lender shall execute and
deliver to Agent for acceptance and recording in the Register, a Lender Addition
Agreement, satisfactory to Agent. Agent shall give Borrowers notice if Agent
sells or assigns its rights and obligations hereunder. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Lender Addition Agreement, (i) the Transferee thereunder shall
be a party hereto and, to the extent provided in such Lender Addition Agreement,
shall have the same rights, benefits and obligations as it would if it were a
Lender hereunder, and (ii) the assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitment or assigned portion
thereof, as the case may be, to the extent that such obligations shall have been
expressly assumed by the Transferee pursuant to such Lender Addition Agreement.
Borrowers hereby acknowledge and agree that any assignment will give rise to a
direct obligation of Borrowers to the Transferee and that the Transferee shall
be considered to be a "Lender" hereunder. Borrowers may not sell, assign or
transfer any interest in this Agreement, any of the other Loan Documents, or any
of the Obligations, or any portion thereof, including Borrowers' rights, title,
interests, remedies, powers, and duties hereunder or thereunder without the
prior written consent of Agent and each Lender. In order to assist a Lender in
assigning its rights to a potential
57
Transferee as provided herein, Borrowers shall, if requested by Agent, arrange
for an opinion of counsel, in form and substance satisfactory to Agent and such
Transferee (it being agreed that an opinion substantially in the form delivered
by Xxxxxx & Xxxxxxx on the Closing Date is satisfactory), to be delivered to
Agent and such Transferee.
(b) Each Lender may at any time sell participations in
all or any part of its rights and obligations under this Agreement and the other
Loan Documents (including all its rights and obligations with respect to the
Loans) to one or more Persons (a "PARTICIPANT"). In the event of any such sale
by a Lender of a participation to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain unchanged,
such Lender shall remain solely responsible for the performance thereof, such
Lender shall remain the holder of any such Loan (and any Revolving Note
evidencing such Loan) for all purposes under this Agreement and the other Loan
Documents and Borrowers and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. Any agreement pursuant to which any
Lender shall sell any such participation shall provide that such Lender shall
retain the sole right and responsibility to exercise such Lender's rights and
enforce each of Borrowers' obligations hereunder, including the right to consent
to any amendment, supplement, modification or waiver of any provision of this
Agreement or any of the other Loan Documents; provided, that such participation
agreement may provide that such Lender will not agree, without the consent of
the Participant, to any amendment, supplement, modification or waiver of: (i)
any reduction in the principal amount, interest rate (other than default
interest) or fees payable with respect to any Loan in which such holder
participates; (ii) any extension of the termination date of this Agreement or
the date fixed for any payment of principal, interest or fees payable with
respect to any Loan in which such holder participates; and (iii) any release of
all or substantially all of the Collateral (other than in accordance with the
terms of this Agreement or the Loan Documents).
(c) Agent, on behalf of Borrowers, shall maintain at its
address referred to in Section 14.5 a copy of each Lender Addition Agreement
delivered to it and a register (the "REGISTER") for the recordation of the names
and addresses of Lenders and the Commitment of, and the principal amount of the
Loans owing to, and the Revolving Notes evidencing such Loans owned by, each
Lender from time to time. Notwithstanding anything in this Agreement to the
contrary, each of Borrowers, Agent and Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan, the Revolving Notes
and the Commitment recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Notwithstanding anything in this Agreement to the
contrary, no assignment under Subsection 14.2(a) of any rights or obligations
under or in respect of the Loans or the Revolving Notes evidencing such Loans
shall be effective unless and until Agent shall have recorded the assignment
pursuant to Subsection 14.2(c). Upon its receipt of a Lender Addition Agreement
executed by an assigning Lender and a Transferee, Agent shall (i) promptly
accept such Lender Addition Agreement and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give prompt notice of such acceptance and recordation to Lenders and Borrowers.
On or prior to such effective date, the assigning Lender shall surrender any
outstanding Revolving Notes held by it all or a portion of
58
which are being assigned, and Borrowers, at their own expense, shall, upon the
request of Agent by the assigning Lender or the Transferee, as applicable,
execute and deliver to Agent new Revolving Notes to reflect the interest held by
the assigning Lender and its Transferee.
(e) Except as otherwise provided in this Section 14.2 no
Lender shall, as between Borrowers and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrowers and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants); provided, however, that prior to the disclosure by a Lender of
such information, Lender shall obtain an agreement from the Person to whom such
disclosure is proposed to be made to hold such information confidential in
accordance with the provisions of Section 14.10.
(f) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement, including, without limitation, the
Loans owing to it and the Revolving Notes held by it.
(g) Borrowers agree to use their commercially reasonable
efforts to assist any Lender (at such Lender's expense) in assigning or selling
participations in all or any part of any Loans made by such Lender to another
Person identified by such Lender.
(h) Notwithstanding anything in the Loan Documents to the
contrary, (i) CapitalSource and its Affiliates shall not be required to execute
and deliver a Lender Addition Agreement in connection with any transaction
involving its Affiliates or lenders, (ii) no lender to or funding source of
CapitalSource or its Affiliates shall be considered a Transferee and (iii) there
shall be no limitation or restriction on CapitalSource's ability to assign or
otherwise transfer any Loan Document to any such Affiliate or lender; provided,
however, CapitalSource shall continue to be liable as a "Lender" under the Loan
Documents unless such Affiliate or lender executes a Lender Addition Agreement
and thereby becomes a "Lender."
14.3. APPLICATION OF PAYMENTS; REINSTATEMENT
Any payments with respect to the Obligations and any and all
proceeds of Collateral shall be credited and applied in such manner and order as
Agent shall decide in its Permitted Discretion, subject to the express terms
regarding application of proceeds in the Concentration Account provided in
Section 2.5 hereof. To the extent that any payment made or received with respect
to the Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other Person under any Debtor Relief Law,
common law or equitable cause or any other law, then the Obligations intended to
be satisfied by such payment shall be revived and shall continue as if such
payment had not been received by Agent or any Lender.
14.4. INDEMNITY
Borrowers jointly and severally shall indemnify Agent, each
Lender, its and their Affiliates and its and their respective managers, members,
officers, employees, Affiliates, agents,
59
representatives, successors, assigns, accountants and attorneys (collectively,
the "INDEMNIFIED PERSONS") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel and in-house
documentation and diligence fees and legal expenses) which may be imposed on,
incurred by or asserted against any Indemnified Person with respect to or
arising out of, or in any litigation, proceeding or investigation instituted or
conducted by any Person with respect to any aspect of, or any transaction
contemplated by or referred to in, or any matter related to, any Loan Document
or any agreement, document or transaction contemplated thereby, whether or not
such Indemnified Person is a party thereto, except to the extent that any of the
foregoing arises out of the gross negligence or willful misconduct of such
Indemnified Person. If any Indemnified Person uses in-house counsel for any
purpose for which Borrowers are responsible to pay or indemnify, Borrowers
expressly agree that their indemnification obligations include reasonable
charges for such work. Agent agrees to give Borrowers reasonable notice of any
event of which Agent becomes aware for which indemnification may be required
under this Section 14.4, and Agent may elect (but is not obligated) to direct
the defense thereof, provided that the selection of counsel shall be subject to
Borrowers' consent, which consent shall not be unreasonably withheld or delayed.
Any Indemnified Person may, in its reasonable discretion, take such actions as
it deems necessary and appropriate to investigate, defend or settle any event or
take other remedial or corrective actions with respect thereto as may be
necessary for the protection of such Indemnified Person or the Collateral.
Notwithstanding the foregoing, if any insurer agrees to undertake the defense of
an event (an "INSURED EVENT"), Agent agrees not to exercise its right to select
counsel to defend the event if that would cause Borrowers' insurer to deny
coverage; provided, however, that Agent reserves the right to retain counsel to
represent any Indemnified Person with respect to an Insured Event at its sole
cost and expense. To the extent that Agent or any Lender obtains recovery from a
third party other than an Indemnified Person of any of the amounts that
Borrowers have paid to Agent or any Lender pursuant to the indemnity set forth
in this Section 14.4, then Agent and/or any Lender shall promptly pay to
Borrowers the amount of such recovery. Without limiting any of the foregoing,
Borrowers jointly and severally indemnify the Indemnified Parties for all claims
for brokerage fees or commissions (other than claims of a broker with whom such
Indemnified Party has directly contracted in writing) which may be made in
connection with respect to any aspect of, or any transaction contemplated by or
referred to in, or any matter related to, any Loan Document or any agreement,
document or transaction contemplated thereby.
14.5. NOTICE
Any notice or request under any Loan Document shall be given
to any party to this Agreement at such party's address set forth beneath its
signature on the signature page to this Agreement, or at such other address as
such party may hereafter specify in a notice given in the manner required under
this Section 14.5. Any notice or request hereunder shall be given only by, and
shall be deemed to have been received upon (each, a "RECEIPT"): (i) registered
or certified mail, return receipt requested, on the date on which such received
as indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier, or
(iii) facsimile or electronic transmission, in each case upon telephone or
further electronic communication from the recipient acknowledging receipt
(whether automatic or manual from recipient), as applicable.
60
14.6. SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
If any provision of any Loan Document is adjudicated to be
invalid under applicable laws or regulations, such provision shall be
inapplicable to the extent of such invalidity without affecting the validity or
enforceability of the remainder of the Loan Documents which shall be given
effect so far as possible. The captions in the Loan Documents are intended for
convenience and reference only and shall not affect the meaning or
interpretation of the Loan Documents. The Loan Documents may be executed in one
or more counterparts (which taken together, as applicable, shall constitute one
and the same instrument) and by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts. Each party to
this Agreement agrees that it will be bound by its own facsimile signature and
that it accepts the facsimile signature of each other party.
14.7. EXPENSES
Borrowers shall pay, whether or not the Closing occurs, all
reasonable costs and expenses incurred by Agent and/or its Affiliates,
including, without limitation, documentation and diligence fees and expenses,
all out-of-pocket charges and expenses (including, without limitation, UCC and
judgment and tax lien searches and UCC filings and fees for post-Closing UCC and
judgment and tax lien searches and wire transfer fees and audit expenses), and
reasonable attorneys' fees and expenses, (i) in any effort to enforce, protect
or collect payment of any Obligation or to enforce any Loan Document or any
related agreement, document or instrument, (ii) in connection with entering
into, negotiating, preparing, reviewing and executing the Loan Documents and/or
any related agreements, documents or instruments, (iii) arising in any way out
of administration of the Obligations, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Agent's Liens in any of
the Collateral or securities pledged under the Loan Documents, whether through
judicial proceedings or otherwise, (v) in defending or prosecuting any actions,
claims or proceedings arising out of or relating to Agent's and Lenders'
transactions with Borrowers, (vi) in seeking, obtaining or receiving any advice
with respect to its rights and obligations under any Loan Document and any
related agreement, document or instrument, and/or (vii) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document and/or any related agreement, document or instrument. All of the
foregoing shall be charged to Borrowers' account and shall be part of the
Obligations. If Agent or any Lender uses in-house counsel for any purpose under
any Loan Document for which Borrowers is responsible to pay or indemnify,
Borrowers expressly agree that their Obligations include reasonable charges for
such work commensurate with the fees that would otherwise be charged by outside
legal counsel selected by Agent, any Lender or such Affiliate in its sole
discretion for the work performed. Without limiting the foregoing, Borrowers
shall pay all taxes (other than taxes based upon or measured by each Lender's
income or revenues or any personal property tax), if any, in connection with the
issuance of any Revolving Note and the filing and/or recording of any documents
and/or financing statements.
14.8. ENTIRE AGREEMENT
This Agreement and the other Loan Documents to which Borrowers
are parties constitute the entire agreement between Borrowers, Agent and Lenders
with respect to the
61
subject matter hereof and thereof, and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof. Any
promises, representations, warranties or guarantees not herein contained and
hereinafter made shall have no force and effect unless in writing signed by
Borrowers, Agent and Lenders, as appropriate. No provision of this Agreement may
be changed, modified, amended, restated, waived, supplemented, discharged,
canceled or terminated orally or by any course of dealing or in any other manner
other than by an agreement in writing signed by Agent, Requisite Lenders and
Borrowers. Each party hereto acknowledges that it has been advised by counsel in
connection with the negotiation and execution of this Agreement and is not
relying upon oral representations or statements inconsistent with the terms and
provisions hereof.
14.9. AGENT APPROVALS
Unless expressly provided herein to the contrary, any
approval, consent, waiver or satisfaction of Agent or Lenders with respect to
any matter that is subject of any Loan Document may be granted or withheld by
Agent in its Permitted Discretion.
14.10. CONFIDENTIALITY AND PUBLICITY
Borrowers, Agent and Lenders agree, and agree to cause each of
their respective Affiliates, (i) not to transmit or disclose provision of any
Loan Document to any Person (other than to their respective directors, advisors
and officers on a need-to-know basis and except as set forth in this Section
14.10) without the prior written consent of Agent, in the case of Borrowers, or
Borrowing Agent, in the case of Agent and Lenders, (ii) to inform all Persons of
the confidential nature of the Loan Documents and to direct them not to disclose
the same to any other Person and to require each of them to be bound by these
provisions. Agent and each Lender reserves the right to review and approve all
materials that Borrowers or any of their Affiliates prepare that contain Agent's
or such Lender's name or describe or refer to any Loan Document, any of the
terms thereof or any of the transactions contemplated thereby. Each Borrower
reserves the right to review and approve all materials that Agent, Lenders or
any of their Affiliates prepare that contain such Borrower's name or describe or
refer to any Loan Document, any of the terms thereof or any of the transactions
contemplated thereby. No Borrower shall, and shall not permit any of its
Affiliates to, use Agent's or any Lender's name (or the name of any of Agent's
Affiliates) in connection with any of its business operations. Neither Agent nor
any Lender shall, and shall not permit any of its respective Affiliates to, use
any Borrower's name (or the name of any of any Borrower's Affiliates) in
connection with any of its business operations. Nothing contained in any Loan
Document is intended to permit or authorize any Borrower or any of its
Affiliates to contract on behalf of Agent or any Lender, or except as expressly
provided in the Loan Documents to permit Agent or any Lender to contract on
behalf of any Borrower. Further, Borrowers agree that Agent or any Lender or any
Affiliate of Agent or any Lender may (i) disclose a general description of
transactions arising under the Loan Documents for advertising, marketing or
other similar purposes, (ii) use any Borrower's or Guarantor's name, logo or
other indicia germane to such party in connection with such advertising,
marketing or other similar purposes, (iii) disclose confidential information (it
being understood that with respect to (a) and (b) below the Persons to whom such
disclosure is made will be informed of the confidential nature of such
information and instructed to keep such information confidential) (a) to its
examiners, lenders, affiliates, outside auditors, counsel and
62
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees and Participant, (c) as required or requested by any Governmental
Authority or representative thereof, (d) to the extent required by applicable
laws or regulations or by subpoena or similar legal process, (e) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) with the consent of Borrowers or (h) to the
extent such information becomes publicly available other than as a result of a
breach of this Section or becomes available to the Agent or any Lender on a
nonconfidential basis from a source other than the Borrowers or any of its
Affiliates.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
63
IN WITNESS WHEREOF, each of the parties has duly executed this
Revolving Credit and Security Agreement as of the date first written above.
BORROWERS
FOUNTAIN VIEW, INC.
ALEXANDRIA CARE CENTER, INC.
ALTA CARE CENTER, LLC
ANAHEIM TERRACE CARE CENTER, LLC
BAY CREST CARE CENTER, LLC
BRIER OAK ON SUNSET, INC.
XXXXXX SENIOR ASSISTED LIVING, LLC
ELMCREST CARE CENTER, INC.
FOUNTAIN VIEW SUBACUTE AND NURSING CENTER, INC.
HALLMARK INVESTMENT GROUP, INC.
HALLMARK REHABILITATION GP, LLC
HALLMARK REHABILITATION LP
By: Hallmark Rehabilitation GP, LLC,
its general partner
XXXXXXX PARK REHABILITATION CENTER, INC.
XXXXXXX PARK SENIOR ASSISTED LIVING, INC.
HEMET SENIOR ASSISTED LIVING, LLC
LEASEHOLD RESOURCE GROUP, LLC
MONTEBELLO CARE CENTER, LLC
RIO HONDO SUBACUTE AND NURSING CENTER, INC.
ROYALWOOD CARE CENTER, LLC
XXXXXX CARE CENTER, LLC
SKILLED HEALTHCARE, LLC
SUMMIT CARE CORPORATION
SUMMIT CARE TEXAS MANAGEMENT, LLC
SUMMIT CARE PHARMACY, INC.
SUMMIT CARE TEXAS, L.P.
By: Summit Care Texas Management,
LLC, its general partner
SYCAMORE PARK CARE CENTER, INC.
WOODLAND CARE CENTER, LLC
By: /s/ Xxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxx X. Xxxx
Title: Secretary
Address for Notices:
Fountain View, Inc.
00000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxxxxxxx.xxx
AGENT
CAPITALSOURCE FINANCE LLC
By: /s/ Xxx Xxxxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxxxx
Its: Director
Address for Notices:
CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Healthcare Finance Group,
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxxxxxxxx.xxx
EXHIBITS
Exhibit A -- Form of Borrowing Base Certificate
Exhibit B -- Form of Interim Borrowing Base Certificate
Exhibit C -- Form of Joinder Agreement
Exhibit D -- Form of Guaranty and Security Agreement
Exhibit E Calculation of Excess Cash Flow
SCHEDULES
Schedule 1 -- Subsidiary Borrowers
Schedule 2 -- Commitments
Schedule 2.4 -- Borrower's Deposit Accounts
Schedule 5.3 -- Capitalization, Organization Chart (including all
subsidiaries and authorized/issued capitalization
and Joint Ventures
Schedule 5.4 -- Liens; Real and Personal Property Owned or Leased;
Leases
Schedule 5.5 -- Defaults; Service Fees; Managers
Schedule 5.6 -- Litigation
Schedule 5.8 -- Taxes
Schedule 5.10 -- Liability Event
Schedule 5.11 -- Intellectual Property
Schedule 5.15 -- Existing Indebtedness
Schedule 5.16 -- Shareholder Agreements
Schedule 5.17 -- Insurance
Schedule 5.18A -- Corporate Names
Schedule 5.18B -- Places of Business
Schedule 6.8 -- Further Assurances/Post Closing
Schedule 7.2 -- Permitted Indebtedness
Schedule 7.3 -- Liens
Schedule 7.4 -- Investments
Schedule 7.6 -- Affiliate Transactions
Schedule 7.9 -- Contingent Obligations
ANNEX I
FINANCIAL COVENANTS
1) Minimum EBITDA
Borrowers shall not permit EBITDA as of the end of any fiscal quarter during any
fiscal year (calculated for the four fiscal quarter period ended as of the end
of such fiscal quarter) to be less than the amounts set forth below
corresponding to such fiscal year.
FISCAL YEAR ENDED MINIMUM EBITDA
----------------- --------------
12/31/03 $ 42,000,000
12/31/04 and as at the end of each fiscal
quarter during each fiscal year thereafter $ 45,000,000
2) Net Total Leverage Ratio (Total Debt to EBITDA)
Borrowers shall not permit the Net Total Leverage Ratio of Borrowers on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to exceed 6.5 to 1.
3) Net Senior Leverage Ratio (Senior Debt to EBITDA)
Borrowers shall not permit the Net Senior Leverage Ratio of Borrowers on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to exceed 4 to 1.
4) Net Interest Coverage Ratio (EBITDA/Interest Expense)
Borrowers shall not permit the Net Interest Coverage Ratio of Borrowers on a
Consolidated Basis as of the end of any fiscal quarter during any fiscal year
(calculated as of the end of such fiscal quarter) to be less than 1.75 to 1.
5) Fixed Charge Coverage Ratio (EBITDA/Fixed Charges)
Borrowers shall not permit the Fixed Charge Ratio of Borrowers on a Consolidated
Basis as of the end of any fiscal quarter during any fiscal year (calculated as
of the end of such fiscal quarter) to be less than the ratio set forth below for
such fiscal year:
FISCAL YEAR ENDED FIXED CHARGE COVERAGE RATIO
----------------- ---------------------------
December 31, 2003 1.10 to 1
Annex 1 - Page 1
December 31, 2004 and 1.25 to 1
at the end of each
fiscal quarter during
each fiscal year thereafter
6) Tangible Net Worth
Until full performance and satisfaction, and indefeasible payment in full in
cash, of all the Obligations (other than Unmatured Surviving Obligations),
Borrowers on a Consolidated Basis will at all times maintain Tangible Net Worth
of not less than ($100,000,000).
7) Minimum Liquidity
At Closing and at all other times Borrowers shall have not less than $3,000,000
of Available Cash on hand.
8) Capital Expenditures
Borrowers on a Consolidated Basis shall not permit Maintenance Capital
Expenditures made during any fiscal year to exceed $7,000,000.
For purposes of the covenants set forth in this Annex I, the
terms listed below shall have the following meanings:
"Available Cash" shall mean, for any date of determination,
the sum without duplication of the following for Borrowers: (a) unrestricted
cash on hand on such date, (b) Cash Equivalents held on such date, and (c) the
unborrowed Availability on and as of such date.
"EBITDA" shall mean, for any period, the sum, without
duplication, of the following for Borrowers on a Consolidated Basis (i) Net
Income, (ii) Interest Expense, (iii) taxes on income, whether paid, payable or
accrued, (iv) depreciation expense, (v) amortization expense, (vi) the impact on
Net Income of FASB 121 and 142, (vii) Restructuring Costs and (viii) the impact
on Net Income of any gains and losses from the sales of fixed assets, and (ix)
the impact on Net Income of any extraordinary items, each calculated for such
period in accordance with GAAP.
"Fixed Charge Coverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) EBITDA to
(ii) Fixed Charges, in each case for the four fiscal quarter period ended as of
such date of determination.
"Fixed Charges" shall mean for any period for Borrowers on a
Consolidated Basis, the sum during such period of (i) Total Debt Service, (ii)
Capital Expenditures not financed with Non-Recourse Indebtedness, (iii) taxes on
income whether paid, payable or accrued, and (iv) dividends whether paid,
payable or accrued, each calculated in accordance with GAAP.
Annex 1 - Page 2
"Intangible Assets" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, intellectual
property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income, restricted funds, investments in Subsidiaries,
intercompany receivables and accumulated depreciation.
"Interest Expense" shall mean, for any period, total interest
expense (including attributable to Capital Leases in accordance with GAAP) of
Borrowers on a Consolidated Basis for such period, calculated in accordance with
GAAP, including capitalized interest, provided, however, for purposes of this
Agreement for any fiscal quarter ended prior to September 30, 2004, Interest
Expense shall be calculated as follows: (i) for the four fiscal quarters ended
September 30, 2003 Interest Expense shall equal $23,700,000, (ii) for the four
fiscal quarters ended December 31, 2003, Interest Expense shall equal actual
Interest Expense for the fiscal quarter ended December 31, 2003 multiplied by 4,
(iii) for the four fiscal quarters ended March 31, 2004, Interest Expense shall
equal actual Interest Expense for the 2 fiscal quarters ended March 31, 2004
multiplied by 2 and (iv) for the four fiscal quarters ended June 30, 2004,
Interest Expense shall equal actual Interest Expense for the three fiscal
quarters ended June 30, 2004 multiplied by 1.33.
"Maintenance Capital Expenditures" shall mean Capital
Expenditures other than Capital Expenditures that are made in connection with
the acquisition by Borrower or any Subsidiary of Borrower of a Facility or the
operations related to a Facility.
"Net Income" shall mean, for any period, the net income (or
loss) of Borrowers on a Consolidated Basis for such period, determined in
conformity with GAAP, provided that there shall be excluded (i) the income (or
loss) of any Person in which any other Person (other than Borrowers) has a joint
interest, but the amount of dividends or other distributions actually paid to a
Borrower by such Person shall be included in net income (or loss), (ii) the
income (or loss) of any Person accrued prior to the date it became a Borrower or
is merged into or consolidated with a Borrower or that Person's assets are
acquired by a Borrower, (iii) the income of any Subsidiary of any Borrower to
the extent that the declaration or payment of dividends or similar distributions
of that income by such Subsidiary is not at the time permitted by operation of
the terms of the charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary, (iv)
compensation expense resulting from the issuance of capital stock, stock options
or stock appreciation rights issued to former or current employees, including
officers, of any Borrower or any Subsidiary of any Borrower, or the exercise of
such options or rights, in each case to the extent the obligation (if any)
associated therewith is not expected to be settled by the payment of cash by a
Borrower or any Subsidiary thereof, and (v) compensation expense resulting from
the repurchase of capital stock, options and rights described in clause (v) of
this definition of Net Income.
"Net Interest Coverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) EBITDA, to
(ii) Interest Expense, in each case for the four fiscal quarter period ended as
of such date of determination.
"Net Senior Leverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) the amount
of Senior Debt as of such date of
Annex 1 - Page 3
determination, to (ii) EBITDA for the four fiscal quarter period ended as of
such date of determination.
"Net Total Leverage Ratio" shall mean, as of any date of
determination, the ratio for Borrowers on a Consolidated Basis of (i) the amount
of Total Debt as of such date of determination, to (ii) EBITDA for the four
fiscal quarter period ended as of such date of determination.
"Restructuring Costs" shall mean, for any period,
restructuring and/or reorganization costs relating to the Bankruptcy Case
incurred by Borrowers on a Consolidated Basis during such period, calculated in
accordance with GAAP.
"Senior Debt" shall mean at any date of determination, the sum
of the amount (determined in accordance with GAAP) on such date of determination
of (i) the Obligations, (ii) Indebtedness in respect of the Senior Mortgage
Loan, (iii) Indebtedness in respect of the Mezzanine Loan, (iv) Indebtedness in
respect of the Revolving Loan B and (v) Indebtedness in respect of Priority
Claims.
"Tangible Net Worth" shall mean assets (excluding Intangible
Assets) less liabilities (determined in accordance with GAAP).
"Total Debt" shall mean, as of any date of determination, the
aggregate amount of Indebtedness for Borrowed Money on such date of
determination of Borrowers, on a Consolidated Basis calculated in accordance
with GAAP.
"Total Debt Service" shall mean for any period the sum during
such period of (i) scheduled or other required payments of principal on Total
Debt during such period, and (ii) Interest Expense during such period, in each
case calculated exclusive of payments on Total Debt (x) which was repaid or
satisfied in full prior to the Closing Date and which does not survive after the
Closing Date and (y) required to be made pursuant to the Plan of Reorganization
on, or within thirty (30) days after, the Closing Date.
Annex 1 - Page 4
APPENDIX A
DEFINITIONS
"Account Debtor" shall mean any Person who is obligated under
an Account.
"Accounts" shall mean all "accounts" (as defined in the UCC)
of Borrowers (or, if referring to another Person, of such other Person),
including without limitation, accounts, accounts receivables, monies due or to
become due and obligations in any form (whether arising in connection with
contracts, contract rights, Instruments, General Intangibles or Chattel Paper),
in each case whether arising out of goods sold or services rendered or from any
other transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Advance" shall mean a borrowing under the Revolving Facility.
Any amounts paid by Agent or any Lender on behalf of Borrowers or any Guarantor
under any Loan Document shall be an Advance for purposes of the Agreement.
"Affiliate" shall mean, as to any Person, any other Person (a)
that, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, (b) who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such Person,
or (iii) of any Person described in clause (a) above with respect to such
Person, or (c) which, directly or indirectly through one or more intermediaries,
is the beneficial or record owner (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, as the same is in effect on the date hereof)
of ten percent (10%) or more of any class of the outstanding voting stock,
securities or other equity or ownership interests of such Person. For purposes
of this definition, the term "control" (and the correlative terms, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies, whether through ownership of securities or other interests, by
contract or otherwise.
"Agent" shall have the meaning given in the introductory
paragraph to this Agreement.
"Agreement" shall have the meaning given in the introductory
paragraph to this Agreement.
"Availability" shall have the meaning given in Section 2.1(a)
of this Agreement.
"Bank Midwest Loan" shall mean that certain $5,633,333 loan by
Bank Midwest N.A. to The Woodlands Resource Management, L.P. and The Woodlands
Healthcare Center, L.P. pursuant to (i) that certain Deed of Trust Note, dated
March 6, 1985, made by Woodlands Place Nursing Center, Inc., a Texas corporation
("WPNC") and predecessor in interest to the Bank Midwest Borrowers, as maker, in
favor of Xxxxxxxx Mortgage Company, as supplemented by (x) that certain Second
Deed of Trust Note dated January 19, 1989; (y) that certain Renewal,
Modification, Extension and Consolidation Deed of Trust Note (Multifamily) dated
December 1,
Appendix A - 1
1993, made by WPNC in favor of the Secretary of Housing and Urban Development;
and (z) and that certain Amendment to Deed of Trust Note, dated _______________,
2003, made by The Woodlands Resource Management, L.P. and The Woodlands
Healthcare Center, L.P. in favor of Bank Midwest, N.A.; (ii) that certain
promissory note dated ____________________, 2003, in the principal amount of
$706,206.13 made by the Bank Midwest Borrowers payable to Bank Midwest; and
(iii) all other agreements, documents, instruments and certificates executed and
delivered in connection therewith, as each may be amended, modified and
supplemented from time to time.
"Bankruptcy Case" shall mean the bankruptcy case described in
and which is the subject of the Plan of Reorganization.
"Bergen Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated as of the Closing Date by and among Agent,
Mezzanine Agent, the Senior Mortgage Term Loan B Lender, AmerisourceBergen Drug
Corporation, Parent and certain of the Subsidiary Borrowers.
"Bergen Note" shall mean the promissory note in a principal
amount not to exceed $1,237,880 to be issued by Summit Care Pharmacy to
AmerisourceBergen Drug Corporation (or its designee) pursuant to the Plan of
Reorganization.
"Borrowers" and "Borrower" shall have the meaning given in the
introductory paragraph to this Agreement.
"Borrowing Agent" shall mean Skilled Healthcare, LLC, a
Delaware limited liability company, in its capacity as agent for Borrowers, as
specified in Section 13.1.
"Borrowing Base" shall mean, as of any date of determination,
the net collectible U.S. Dollar value of Eligible Receivables, as determined
with reference to the most recent Borrowing Certificate or Interim Borrowing
Certificate and otherwise in accordance with this Agreement; provided, however,
that if as of such date the most recent Borrowing Certificate or Interim
Borrowing Base Certificate is as of a date more than four Business Days before,
the Borrowing Base shall be determined by Agent in its sole discretion. For
purposes hereof, "net collectible U.S. Dollar value" shall mean the amount
Borrowers xxxx third-party payors less deductible obligations and contractual
allowances.
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit A.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which the Federal Reserve, any Lender or the Cash
Management Bank is closed.
"Business Group" shall mean (a) the Subsidiaries of Parent
that are borrowers under the Revolving Loan B Documentation, the Mezzanine Loan
Documentation or the Senior Mortgage Loan Documentation or Subsidiaries of such
borrowers; (b) the long term care business (other than such business as is
covered by clause (a)); (c) the pharmacy business; (d) the locomotion business,
and (e) corporate headquarters and overhead.
Appendix A - 2
"Capital Expenditures" shall mean, for any period, the sum
(without duplication) of all expenditures (whether paid in cash or accrued as
liabilities) during such period that are or should be treated as capital
expenditures under GAAP.
"Capital Lease" shall mean, as to any Person, a lease of any
interest in any kind of property or asset by that Person as lessee that is,
should be or should have been recorded as a "capital lease" in accordance with
GAAP.
"Capitalized Lease Obligations" shall mean all obligations of
any Person under Capital Leases, in each case, taken at the amount thereof
accounted for as a liability in accordance with GAAP.
"CapitalSource" shall have the meaning given in the
introductory paragraph to this Agreement.
"Cash Equivalents" shall mean (a) securities issued, or
directly and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (i) any Lender, (ii) any
domestic commercial bank of recognized standing having capital and surplus in
excess of $500,000,000, or (ii) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Ratings Services
("S&P") is at least A-2 or the equivalent thereof or from Xxxxx'x Investors
Service, Inc. ("XXXXX'X") is at least P-2 or the equivalent thereof in each case
with maturities of not more than six months from the date of acquisition (any
bank meeting the qualifications specified in clauses (b)(i), (ii) or (iii), an
"APPROVED BANK"), (c) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a), above,
entered into with any Approved Bank, (d) commercial paper issued by any Approved
Bank or by the parent company of any Approved Bank and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or the equivalent
thereof, from S&P or A2 or the equivalent thereof from Moody's and in each case
maturing within six months after the date of acquisition and (e) investments in
money market funds substantially all of whose assets are comprised of securities
of the type described in clauses (a) through (d) above.
"Cash Management Bank" shall mean Xxxxx Fargo Bank, in its
capacity as the cash management bank for Borrowers, or any other cash management
bank selected by Borrowers in accordance with the provisions of this Agreement.
"Change of Control" shall mean, (a) with respect to Parent,
the occurrence of any of the following: (i) a merger, consolidation,
reorganization, recapitalization or share or interest exchange, sale or transfer
or any other transaction or series of transactions in which its stockholders,
managers, partners or interest holders immediately prior to such transaction or
series of transactions receive, in exchange for the stock or interests owned by
them, cash, property or securities of the resulting or surviving entity or any
Affiliate thereof, and, as a result
Appendix A - 3
thereof, Persons who, individually or in the aggregate, were holders of 35% or
more of its voting stock, securities or equity, partnership or ownership
interests immediately prior to such transaction or series of transactions hold
less than 35% of the voting stock, securities or other equity, partnership or
ownership interests of the resulting or surviving entity or such Affiliate
thereof, calculated on a fully diluted basis, (ii) a direct or indirect sale,
transfer or other conveyance or disposition, in any single transaction or series
of transactions, of all or substantially all of its assets, or (iii) any "change
in/of control" or "sale" or "disposition" or similar event as defined in any
document governing indebtedness of Parent which gives the holder of such
indebtedness the right to accelerate or otherwise require payment of such
indebtedness prior to the maturity date thereof and (b) Parent shall cease to
own or control, directly or indirectly, 100% of the equity interests of each
Subsidiary Borrower.
"Charter and Good Standing Documents" shall mean, for each
Borrower (i) a copy of the certificate of incorporation or formation (or other
charter document) certified as of a date before the Closing Date reasonably
satisfactory to Agent by the applicable Governmental Authority of the
jurisdiction of incorporation or organization of such Person, (ii) a copy of the
bylaws or similar organizational documents of certified as of a date before the
Closing Date reasonably satisfactory to Agent by the corporate secretary or
assistant secretary of such Person, (iii) an original certificate of good
standing as of a date reasonably acceptable to Agent issued by the applicable
Governmental Authority of the jurisdiction of incorporation or organization of
such Person and of every other jurisdiction in which such Person is required to
be in good standing, and (iv) copies of the resolutions of the Board of
Directors or managers (or other applicable governing body) and, if required,
stockholders, members or other equity owners authorizing the execution, delivery
and performance of the Loan Documents to which such Person is a party, certified
by an authorized officer of such Person as of the Closing Date.
"Claims Agent" shall mean Development Specialists, Inc., as
Claims Agent under the Claims Agent Agreement, and any successor thereto.
"Claims Agent Agreement" shall mean that certain General Claim
Holder Agency Agreement, entered into as of August 19, 2003 by and between the
Claims Agent, on the one hand, and Parent and certain of its subsidiaries on the
other hand, as amended, modified and supplemented.
"Class 10 Deferred Obligations" shall have the meaning set
forth in the Plan of Reorganization.
"Closing" shall mean the satisfaction, or written waiver by
Agent and the Requisite Lenders, of all of the conditions precedent set forth in
the Agreement required to be satisfied prior to the consummation of the
transactions contemplated hereby.
"Closing Date" shall mean the date the Closing occurs.
"Collateral" shall mean, collectively and each individually,
all collateral and/or security granted to Agent, for the benefit of itself and
Lenders, by Borrowers and/or the Guarantors pursuant to the Loan Documents.
Appendix A - 4
"Collateral Agency Agreement" shall mean that certain
Collateral Agency Agreement, dated as of August 19, 2003, by and among the
Borrowers, the Claims Agent and U.S. Bank National Association, as Indenture
Trustee and as Collateral Agent, as amended, modified and supplemented.
"Collateral Agent" shall mean US Bank, National Association,
as Collateral Agent under the Collateral Agency Agreement, and any successor
thereto.
"Collateral Patent, Trademark and Copyright Assignment" shall
mean any patent, trademark, or copyright assignment or acknowledgement executed
by and between Borrowers and Agent, as such may be modified, amended or
supplemented from time to time.
"Commitment" or "Commitments" shall mean (a) as to any Lender,
the aggregate commitment of such Lender to make Advances and draws, as set forth
on Schedule 2 or in the most recent Lender Addition Agreement executed by such
Lender, and (b) as to all Lenders, the aggregate commitment of all Lenders to
make Advances and draws.
"Confirmation Order" shall mean the order pursuant to Section
1129 of the Bankruptcy Code confirming Borrowers' Plan of Reorganization entered
by the court in Borrower's case on July 10, 2003, which order shall be in form
and substance reasonably acceptable to Agent.
"Consolidated Basis" shall mean, with respect to Borrowers,
the consolidation in accordance with GAAP of the accounts or other items of
Parent and its Subsidiaries.
"Contingent Obligations" shall mean, as to any Person, any
obligation of such Person guaranteeing or intending to guaranty any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) otherwise to assure or to
hold harmless the owner of such primary obligation against loss in respect
thereof, provided, however, that the term "Contingent Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business.
"Continuing Creditor Deferred Obligation" shall have the
meaning set forth in the Plan of Reorganization.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy
Code of the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
Appendix A - 5
"Default" shall mean any event, fact, circumstance or
condition that, with the giving of applicable notice or passage of time or both,
would constitute or be or result in an Event of Default.
"Deposit Account" shall mean, collectively, the Lockbox
Accounts and all bank or other depository accounts of Borrowers.
"Distribution" shall mean any fee, payment, bonus or other
remuneration of any kind, and any repayment of or debt service on loans or other
indebtedness.
"Eligible Assignee" means (a) a commercial bank, commercial
finance company, asset based lender, insurance company, mutual fund entity or
other financial institution having total assets in excess of $250,000,000 and
which is regularly engaged in making, purchasing or investing in revolving
loans; (b) any Lender; (c) any Affiliate of any Lender; (d) Highbridge/Xxxxx
Capital Management, LLC or any of its Affiliates, and (e) any other Person
consented to by Borrowing Agent (such consent not to be unreasonably withheld or
delayed).
"Eligible Receivables" shall mean each Account arising in the
ordinary course of Borrowers' business from the sale of goods or rendering of
Services unless:
(a) it is not subject to a valid perfected first priority
security interest in favor of Agent, subject to no other Lien (other than Liens
in favor of the Collateral Agent and expressly subordinated to Agent's Lien and
otherwise subject to the General Intercreditor Agreement);
(b) it is not evidenced by an invoice, statement or other
documentary evidence reasonably satisfactory to Agent; provided, that Agent in
its Permitted Discretion may from time to time include as Accounts that are not
evidenced by an invoice, statement or other documentary evidence reasonably
satisfactory to Agent as Eligible Receivables and determine the advance rate,
liquidity factors and reserves applicable to Advances made on any such Accounts;
(c) it or any portion thereof (in which case only such
portion shall not be an Eligible Receivable) is payable by a beneficiary,
recipient or subscriber individually and not directly by a Medicaid/Medicare
Account Debtor or commercial medical insurance carrier acceptable to the Agent;
(d) it arises out of services rendered or a sale made to,
or out of any other transaction between Borrowers or any of their Subsidiaries
and, one or more Affiliates of Borrowers or any of their Subsidiaries;
(e) it remains unpaid for longer than the earlier of (i)
150 calendar days after the first to occur of the claim date or the invoice
date, and (ii) 180 calendar days after the applicable Services were rendered;
(f) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates, if more than ten 10% of the aggregate
balance of all such Accounts (other than accounts being disputed by such Account
Debtor) owing from such Account Debtor and/or its Affiliates remain unpaid for
longer than the earlier of (i) 150 calendar days after the first to
Appendix A - 6
occur of the claim date or the invoice date, and (ii) 180 calendar days after
the applicable Services were rendered;
(g) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates, 25% or more of all such Accounts are not
deemed Eligible Receivables for any reason hereunder (which percentage may, in
Agent's sole discretion, be increased or decreased);
(h) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates (except Medicaid/Medicare Account Debtors),
if, and only to the extent, such Accounts exceed 20% of the aggregate value of
all Eligible Receivables included in Borrowing Base at any one time (including
Accounts from Medicaid/Medicare Account Debtors);
(i) any covenant, agreement, representation or warranty
contained in any Loan Document with respect to such Account has been breached
and remains uncured after applicable cure periods;
(j) the Account Debtor for such Account has commenced a
voluntary case under any Debtor Relief Law or has made an assignment for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in respect of such Account Debtor in an involuntary
case under any Debtor Relief Law, or any other petition or application for
relief under any Debtor Relief Law has been filed against such Account Debtor,
or such Account Debtor has failed, suspended business, ceased to be solvent, or
has consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs;
(k) it arises from the sale of property or services
rendered to one or more Account Debtors outside the continental United States or
that have their principal place of business or chief executive offices outside
the continental United States;
(l) it represents the sale of goods or rendering of
services to an Account Debtor on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by Chattel Paper or an Instrument of any kind or has been
determined pursuant to judgment;
(m) the applicable Account Debtor for such Account is any
Governmental Authority, unless rights to payment of such Account have been
assigned to Agent pursuant to the Assignment of Claims Act of 1940, as amended
(31 U.S.C. Section 3727, et seq. and 41 U.S.C. Section 15, et seq.), or
otherwise all with applicable statutes or regulations respecting the assignment
of government Accounts have been complied with (for example, with respect to all
Account payable directly by a Medicaid/Medicare Account Debtor);
(n) to the extent, but only to the extent that, it is
subject to any offset, credit (including any resource or other income credit or
offset) deduction, defense, discount, chargeback, freight claim, allowance,
adjustment, dispute or counterclaim, or is contingent in any respect or for any
reason;
Appendix A - 7
(o) there is any agreement with an Account Debtor for any
deduction from such Account, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each invoice
related thereto, such that only the discounted amount of such Account after
giving effect to such discounts and allowances shall be considered an Eligible
Receivable;
(p) to the extent, but only to the extent that, any
return, rejection or repossession of goods or services related to it has
occurred;
(q) it is not payable to Borrowers;
(r) to the extent, but only to the extent that, any of
Borrowers has agreed to accept or has accepted any non-cash payment for such
Account;
(s) with respect to any Account arising from the sale of
goods, the goods have not been shipped to the Account Debtor or its designee;
(t) with respect to any Account arising from the
performance of Services, the Services have not been actually performed or the
Services were undertaken in material violation of any applicable law; or
(u) such Account fails to meet such other specifications
and requirements which may from time to time be established by Agent in its
Permitted Discretion.
"Environmental Laws" shall mean, collectively and each
individually ,the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendment and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act, the Toxic Substances Control Act,
the Clean Air Act, the Clean Water Act, any other "Superfund" or "Superlien" law
and all other federal, state and local and foreign environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances
and codes relating to the protection of the environment and/or governing the
use, storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances, in each case, as amended, and
the rules, regulations, policies, guidelines, interpretations, decisions, orders
and directives of Governmental Authorities with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.
"Eureka Transaction" shall mean the transactions contemplated
by that certain Option Agreement dated as of May 30, 2003 (as amended, modified
or supplement from time to time with the consent of the Agent (such consent not
to be unreasonably withheld), the "Option Agreement") by and among Xxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxxx, Trustees of the Xxxxxx Family Living Trust,
Landlord and Parent, including without limitation, (i) the entering into of that
certain Commercial Lease to be entered into pursuant to the Option Agreement by
and between Matmel Enterprises, Inc. as "Landlord", and Parent or a Subsidiary
of Parent, as "Tenant" with respect to the lease by such Tenant of the premises
commonly known as Sunset Care Center, 0000 00xx Xxxxxx, Xxxxxx, Xxxxxxxxxx
00000, the Granada Care Center, 0000 Xxxxxx
Xxxxxxxx A - 0
Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, the Pacific Care Center, 0000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx 00000, the Seaview Care Center, 0000 Xxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx 00000 (collectively, the "Care Centers") and the Redwood Care Xxxxxx
Xxxxxx Xxxxxxxx, 0000 00xx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the "Office
Building" and collectively with the Care Centers, the "Eureka Premises") and
(ii) the purchase by Parent or a Subsidiary of Parent of the Eureka Premises or
all of the equity interests in the entity that owns the Eureka Premises, in each
case pursuant to the Option Agreement.
"Event of Default" shall mean the occurrence of any event set
forth in Article VIII.
"Excess Cash Flow" shall have the meaning set forth in Exhibit
E to this Agreement.
"Exchange Act" shall mean Securities Exchange Act of 1934, as
amended.
"Excluded Subsidiary" shall mean any Subsidiary that is (i) a
Mezzanine Loan Borrower, (ii) a borrower under the Senior Mortgage Loan
Documentation, (iii) a Revolving Loan B Borrower, (iv) a partner in an entity
described in clause (i), (ii) or (iii), and (iv) a Person designated by
Borrowing Agent as an excluded Subsidiary.
"Facility" shall mean, individually, any facility providing
Services and operated by any of Borrowers.
"Facility Cap" shall have the meaning given in the first
WHEREAS clause in this Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time as applied by
nationally recognized accounting firms.
"General Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated as of the Closing Date by and among Agent, the
Mezzanine Agent, the Indenture Trustee , the Claims Agent, the Senior Mortgage
Term B Lender and the Borrowers.
"Government Accounts" shall be defined to mean all Accounts
arising out of or with respect to any Government Contract.
"Government Contracts" shall be defined to mean all contracts
with any Government Authority, and all amendments thereto.
"Governmental Authority" shall mean any federal, state,
municipal, national, local or other governmental department, court, commission,
board, bureau, agency or instrumentality or political subdivision thereof, or
any entity or officer exercising executive, legislative or judicial, regulatory
or administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
Appendix A - 9
"Guarantor" shall mean, collectively and each individually,
all guarantors of the Obligations or any part thereof.
"Guaranty" shall mean any guaranty of the obligations of
Borrowers executed by a Guarantor in favor of Agent for its benefit and for the
ratable benefit of Lenders.
"Hazardous Substances" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Healthcare Laws" shall mean all applicable statutes, laws,
ordinances, rules and regulations of any Governmental Authority with respect to
regulatory matters primarily relating to patient healthcare, healthcare
providers and healthcare services (including without limitation Section 1128B(b)
of the Social Security Act, as amended, 42 U.S.C. Section 1320a-7(b) (Criminal
Penalties Involving Medicare or State Health Care Programs), commonly referred
to as the "Federal Anti-Kickback Statute," and the Social Security Act, as
amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against Certain
Referrals), commonly referred to as "Xxxxx Statute").
"Indebtedness" of any Person shall mean, without duplication,
(a) all items (other than trade payables and current accrued liabilities) which,
in accordance with GAAP, would be included in determining total liabilities as
shown on the liability side of the balance sheet of such Person as of the date
as of which Indebtedness is to be determined, including any lease which, in
accordance with GAAP would constitute a capital lease, (b) all indebtedness
secured by any mortgage, pledge, security, Lien or conditional sale or other
title retention agreement to which any property or asset owned or held by such
Person is subject, whether or not the indebtedness secured thereby shall have
been assumed, (c) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
"Indebtedness for Borrowed Money" of any Person shall mean,
without duplication, (a) all Indebtedness of such Person for borrowed money,
whether or not evidenced by bonds, debentures, notes or similar instruments, (b)
all Capitalized Lease Obligations of such Person, (c) all Indebtedness of such
Person secured by any mortgage, pledge, security, Lien or conditional sale or
other title retention agreement to which any property or asset owned or held by
such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (d) all Indebtedness for the deferred purchase price of
property and (e) all direct or indirect guaranties of any or all of the
foregoing.
"Indemnified Persons" shall have the meaning assigned to it in
Section 14.4 hereof.
Appendix A - 10
"Indenture" shall mean the Indenture dated as of August 19,
2003 by Parent, as Issuer, the subsidiaries of the Parent party thereto as
Guarantors and the Indenture Trustee, pursuant to which the Indenture Notes were
issued as the same may be amended, supplemented or modified from time to time.
"Indenture Notes" shall mean the $106,761,608 of Senior
Subordinated Increasing Rate Secured Notes due 2008 issued pursuant to the
Indenture.
"Indenture Trustee" shall mean US Bank, National Association,
as Trustee under the Indenture, and any successor thereto.
"Insurance Subsidiary" shall mean the offshore insurance
subsidiary to be formed by the Parent.
"Insurer" shall mean a Person that insures another Person
against any costs incurred in the receipt by such other Person of Services, or
that has an agreement with any Borrower to compensate it for providing Services
to such Person.
"Intellectual Property" shall have the meaning assigned to it
in Section 5.11 hereof.
"Interest Rate Agreement" shall mean any interest rate swap,
cap or collar agreement or other similar agreement or arrangement designed to
hedge the position with respect to interest rates.
"Interim Borrowing Certificate" shall mean an Interim
Borrowing Certificate substantially in the form of Exhibit B.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the regulations thereunder.
"Inventory" shall mean all "inventory" (as defined in the UCC)
of Borrowers (or, if referring to another Person, of such other Person), now
owned or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Joinder Agreement" shall mean an agreement in form and
substance acceptable to Agent in its Permitted Discretion, the material terms of
which shall provide that a Person shall become a party to and become bound by
the terms of this Agreement and/or the other Loan Documents in the same capacity
and to the same extent as a Borrower.
"Landlord Waiver and Consent" shall mean a waiver/consent in
form and substance reasonably satisfactory to Agent from the owner/lessor of any
premises not owned by Borrowers at which any of the Collateral is now or
hereafter located for the purpose of providing Agent access to such Collateral,
in each case as such may be modified, amended or supplemented from time to time.
Appendix A - 11
"Leasehold Mortgage" shall mean, with respect to each
Leasehold Property, that certain Leasehold Deed of Trust, Security Agreement,
Assignment of Leases, Rents and Profits and Fixture Filing executed and
delivered as security for the Loan and encumbering such Leasehold Property, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"Leasehold Property" shall mean those properties identified as
leasehold properties on Schedule 5.4 and/or any other leasehold property of
Borrowers upon which the Agent is entitled to a Lien pursuant to this Agreement.
"Lender Addition Agreement" shall mean an agreement among
Agent, a Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans and other interests under
this Agreement.
"Lenders" shall mean the financial institutions, from time to
time named on Schedule 2 under the heading "Lenders", their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any participant that is not otherwise a party to this Agreement).
"Liability Event" shall mean any event, fact, condition or
circumstance or series thereof (i) in or for which any Borrower becomes liable
or otherwise responsible for any material amount owed or owing to any Medicaid
or Medicare program by a provider under common ownership with such Borrower or
any provider owned by such Borrower pursuant to any applicable law, ordinance,
rule, decree, order or regulation of any Governmental Authority after the
failure of any such provider to pay any such amount when owed or owing, (ii) in
which material Medicaid or Medicare payments to any Borrower are lawfully
set-off against payments to such or any other Borrowers to satisfy any liability
of or for any material amounts owed or owing to any Medicaid or Medicare program
by a provider under common ownership with such Borrower or any provider owned by
such Borrower pursuant to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority, or (iii) any of the foregoing under
clauses (i) or (ii) in each case pursuant to statutory or regulatory provisions
that are similar to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority referenced in clauses (i) and (ii)
above or successor provisions thereto.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof), or any other arrangement pursuant
to which title to the property is retained by or vested in some other Person for
security purposes.
"Loan" or "Loans" shall mean, individually and collectively,
all Advances under the Revolving Facility.
"Loan Documents" shall mean, collectively and each
individually, this Agreement, the Revolving Notes, the Security Documents, the
Guaranties (if any), the Subordination Agreements, the General Intercreditor
Agreement, the Bergen Intercreditor Agreement, the Landlord Waiver and Consents,
the Borrowing Certificates, and all other
Appendix A - 12
agreements, documents, instruments and certificates heretofore or hereafter
executed or delivered to Agent or Lenders in connection with any of the
foregoing or the Loans, as the same may be amended, modified or supplemented
from time to time.
"Lockbox Accounts" shall mean the accounts maintained by
Borrowers at the Lockbox Banks into which all collections or payments on their
Accounts and other Collateral are paid.
"Lockbox Agreements" shall have the meaning given in Section
2.5 of this Agreement.
"Lockbox Banks" shall have the meaning given in Section 2.5 of
this Agreement.
"Management Agreement" shall have the meaning given such term
in the Management Fee Subordination Agreement.
"Management Fee Subordination Agreement" shall mean that
certain Management Fees Subordination Agreement among Agent, the managers and
Borrowers executed in connection herewith, as the same may be amended, modified,
restated or supplemented from time to time.
"Material Adverse Effect" or "Material Adverse Change" shall
mean any event, condition or circumstance or set of events, conditions or
circumstances or any change(s) which (i) has, had or could reasonably be
expected to have any material adverse effect upon or change in the validity or
enforceability of any Loan Document, (ii) has been or could reasonably be
expected to be material and adverse to the value of the Collateral or to the
business, operations, prospects, properties, assets, liabilities or condition of
Borrowers and the Guarantors taken as a whole, or (iii) has materially impaired
or could reasonably be expected to materially impair the ability of any Borrower
or Guarantor to perform the Obligations or to consummate the transactions under
the Loan Documents executed by such Person.
"Maturity Date" shall mean the earliest of (i) the occurrence
of any automatic acceleration upon an Event of Default as provided for in this
Agreement, (ii) Agent's acceleration and demand for payment following an Event
of Default pursuant to the provisions of this Agreement and (iii) the last day
of the Term.
"Medicaid/Medicare Account Debtor" shall mean any Account
Debtor which is (i) the United States of America acting under the Medicaid or
Medicare program established pursuant to the Social Security Act or any other
federal healthcare program, including, without limitation, CHAMPUS, (ii) any
state or the District of Columbia acting pursuant to a health plan adopted
pursuant to Title XIX of the Social Security Act or any other state health care
program, or (iii) any agent, carrier, administrator or intermediary for any of
the foregoing.
"Mezzanine Loan" shall mean that certain $23,000,000 term loan
made by the Mezzanine Loan Lenders in favor of the Mezzanine Borrowers pursuant
to the Mezzanine Loan Documentation.
Appendix A - 13
"Mezzanine Loan Agent" shall mean CapitalSource Finance LLC
and any successor agent under the Mezzanine Loan Documentation.
"Mezzanine Loan Agreement" shall mean that certain Mezzanine
Loan Agreement dated as of the Closing Date by and among the Mezzanine Loan
Lenders, the Mezzanine Loan Borrowers and Parent.
"Mezzanine Loan Borrowers" shall mean Borrowers under the
Mezzanine Loan Agreement from time to time.
"Mezzanine Loan Documentation" shall mean, collectively, the
Mezzanine Loan Agreement and all other agreements, documents, instruments and
certificates executed and delivered in connection therewith.
"Mezzanine Loan Lenders" shall mean Lenders party to the
Mezzanine Loan Documentation from time to time and shall include their
successors and assigns.
"Mortgage" shall mean, with respect to each Mortgaged
Property, that certain Deed of Trust, Security Agreement, Assignment of Leases,
Rents and Profits and Fixture Filing given by Borrowers in favor of Agent
pursuant to which Borrowers have granted Agent a first priority mortgage on,
among other things, the Mortgaged Property and other collateral as more fully
described in the Mortgage, as the same may be amended, restated, supplemented,
replaced or otherwise modified from time to time.
"Mortgaged Property" shall mean those properties identified as
owned properties on Schedule 5.4 and/or any other owned real property of
Borrowers upon which the Agent is entitled to a Lien pursuant to this Agreement.
"Non-Recourse Indebtedness" means Indebtedness for Borrowed
Money permitted to be incurred by Parent or any Subsidiary of Parent pursuant to
Section 7.2(d)(ii) or (iii) of this Agreement or Section 7.2(d)(ii) of the
Revolving Loan B Agreement.
"Obligations" shall mean all present and future obligations,
Indebtedness and liabilities of Borrowers and/or the Guarantors to Agent or
Lenders at any time and from time to time of every kind, nature and description,
direct or indirect, secured or unsecured, joint and several, absolute or
contingent, due or to become due, matured or unmatured, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated, under
any of the Loan Documents or otherwise relating to Revolving Notes and/or Loans,
including, without limitation, all applicable fees, charges and expenses and/or
all amounts paid or advanced by Agent or any Lender on behalf of or for the
benefit of any Borrower and/or any Guarantor for any reason at any time,
including in each case obligations of performance as well as obligations of
payment and interest that accrue after the commencement of any proceeding under
any Debtor Relief Law by or against any such Person.
"Parent" shall have the meaning given in the introductory
paragraph to this Agreement.
Appendix A - 14
"Payment Office" shall mean initially the address set forth
beneath Agent's name on the signature page of this Agreement, and thereafter,
such other office of Agent within the United States, if any, which it may
designate by notice to Borrowers to be the Payment Office.
"Permits" shall mean collectively all licenses, leases,
powers, permits, franchises, certificates, authorizations, approvals,
certificates of need, provider numbers and other rights.
"Permitted Discretion" shall mean a determination or judgment
made by Agent in good faith in the exercise of reasonable (from the perspective
of a secured lender) business judgment.
"Permitted Liens" shall have the meaning given in Section 7.3
of this Agreement.
"Permitted Refinanced Indebtedness" shall have the meaning
given in Section 7.2 of this Agreement.
"Person" shall mean an individual, a partnership, a
corporation, a limited liability company, a business trust, a joint stock
company, a trust, an unincorporated association, a joint venture, a Governmental
Authority or any other entity of whatever nature.
"Plan of Reorganization" or "Plan" shall mean Debtors' Third
Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code,
dated April 22, 2003, in Case No. LA 01-39678BB through LA 01-39697BB and LA
01-45516BB, LA 01-45520BB and XX 00-00000XX, xx xxx Xxxxxx Xxxxxx Bankruptcy
Court for the Central District of California, Los Angeles Division, as such may
be modified, amended or supplemented from time to time.
"Pledge Agreement" shall mean, collectively and each
individually, that certain Pledge Agreement by and among Borrowers and Agent
executed in connection herewith, as such may be modified, amended or
supplemented from time to time.
"Prime Rate" shall mean a fluctuating interest rate per annum
equal at all times to the rate of interest announced publicly from time to time
by Citibank, N.A. as its base or prime rate; provided, that such rate is not
necessarily the best rate offered to its customers, and, should Agent be unable
to determine such rate, such other indication of the prevailing prime rate of
interest for substantial money center lending institutions as may reasonably be
chosen by Agent. Each change in the Prime Rate shall result in a corresponding
and simultaneously change in the interest rate applicable to Advances under this
Agreement.
"Priority Claims" shall mean Class 1, Class 2, Class 3, Class
4 and Class 7 claims under the Plan of Reorganization and any other liens given
priority under the Plan of Reorganization and outstanding on the Closing Date.
"Priority Liens" shall mean Liens permitted pursuant to
Section 7.3(ii), (iii), (iv), (v), (vi), (vii), (ix), (xi) and Liens set forth
on Part A of Schedule 7.3.
"Private Pay Debtor" shall mean an Account Debtor that is not
a Government Authority or a commercial medical insurance carrier.
Appendix A - 15
"Pro Rata Share" shall mean with respect to matters relating
to a particular Commitment of a Lender, the percentage obtained by dividing (i)
such Commitment of such Lender by (ii) all such Commitments of all Lenders;
provided, however, that if any Commitment of Lenders is terminated pursuant to
the terms hereof, then "Pro Rata Share" shall mean the percentage obtained by
dividing (x) the aggregate amount of such Lender's outstanding Loans related to
such Commitment by (y) the aggregate amount of all outstanding Loans related to
such Commitment; in any case as such percentage may be adjusted by assignments
permitted pursuant to Section 14.2.
"Receipt" shall have the meaning given in Section 14.5 of this
Agreement.
"Register" shall have the meaning given in Section 14.2(c) of
this Agreement.
"Requisite Lenders" shall mean Lenders holding or being
responsible for (i) 100%, if there are only two Lenders, and (ii) at least
66-2/3% if there are more than two Lenders, in each case, of the sum of (a) all
outstanding Loans and (b) all unutilized Commitments.
"Revolving Facility" shall have the meaning given in the first
WHEREAS clause in this Agreement.
"Revolving Interest Rate" shall mean the rate of interest set
forth in Section 2.3 hereof.
"Revolving Loan B" shall mean that certain $11,000,000 maximum
amount of revolving loans made by the Revolving Loan B Lenders in favor of the
Revolving Loan B Borrowers pursuant to the Revolving Loan B Documentation.
"Revolving Loan B Agreement" shall mean that certain Revolving
Credit and Security Agreement dated as of the Closing Date by and among the
Revolving Loan B Borrowers, CapitalSource, as agent for the Revolving Loan B
Lenders, and the Revolving Loan B Lenders.
"Revolving Loan B Borrowers" shall mean Borrowers from time to
time under the Revolving Loan B Agreement.
"Revolving Loan B Documentation" shall mean, collectively, the
Revolving Loan B Agreement and all other agreements, documents, instruments and
certificates executed and delivered in connection therewith.
"Revolving Loan B Lenders" shall mean the parties other than
the Revolving Loan B Borrowers party to the Revolving Loan B Documentation from
time to time and shall include their successors and assigns.
"Revolving Note" shall mean, collectively and each
individually, the promissory note(s) payable to the order of Agent executed by
Borrowers evidencing the Revolving Facility, as the same may be modified,
amended or supplemented from time to time.
Appendix A - 16
"Security Documents" shall mean this Agreement, the Collateral
Patent, Trademark, and Copyright Assignment, the Pledge Agreement, the Lockbox
Agreements, and all other documents or instruments necessary to create or
perfect the Liens in the Collateral, as such may be modified, amended or
supplemented from time to time.
"Senior Mortgage Intercreditor Agreement" shall mean that
certain Intercreditor Agreement dated the Closing Date by and among Mezzanine
Loan Agent and the Senior Mortgage Loan Lender.
"Senior Mortgage Loan" shall mean that certain $95,000,000
Senior Mortgage Loan made by the Senior Mortgage Loan Lender in favor of the
Senior Mortgage Loan Borrowers pursuant to the Senior Mortgage Loan
Documentation.
"Senior Mortgage Loan Agreement" shall mean that certain Loan
Agreement dated as of the Closing Date among Senior Mortgage Loan Lender and the
Senior Mortgage Loan Borrowers.
"Senior Mortgage Loan Borrowers" shall mean the borrowers
party to the Senior Mortgage Loan Agreement from time to time and shall include
their respective successors and assigns.
"Senior Mortgage Loan Documentation" shall mean, collectively,
the Senior Mortgage Loan Agreement and all other agreements, documents,
instruments and certificates executed and delivered in connection therewith.
"Senior Mortgage Loan Lender" shall mean Column Financial,
Inc. and its successors and assigns under the Senior Mortgage Loan
Documentation.
"Senior Mortgage Term Loan B" shall mean that certain
$10,000,000 Term Loan B under the Senior Mortgage Loan Documentation.
"Senior Mortgage Term Loan B Lender" shall mean, collectively,
the holders of the Senior Mortgage Term Loan B and their respective successors
and assigns under the Senior Mortgage Loan Documentation.
"Services" shall mean medical and health care services
provided to a Person, including, but not limited to, medical and health care
services which are covered by a policy of insurance issued by an Insurer,
physician services, nurse and therapist services, dental services, hospital
services, skilled nursing facility services, comprehensive outpatient
rehabilitation services, home health care services, pharmacy services,
residential and out-patient behavioral healthcare services.
"Special Advance Amount" shall mean $6,000,000 on the Closing
Date, and shall be reduced by $250,000 on the first day of the first full
calendar month after the Closing Date and on the first day of each calendar
month thereafter until the Special Advance Amount has been reduced to $0.
Appendix A - 17
"Subordinated Debt" shall mean Indebtedness under the
Indenture, the Bergen Note, the Class 10 Deferred Obligation, the Continuing
Creditor Deferred Obligation and the Vendor's Lien and any other Indebtedness
which is expressly subordinated to the Obligations pursuant to a Subordination
Agreement or otherwise in a manner satisfactory to Agent.
"Subordination Agreement" shall mean, collectively and each
individually, any subordination agreements to which Agent and other service
providers or creditors of any Borrower are a party and any other agreement in
form and substance reasonably satisfactory to Agent pursuant to which a Person
agrees to subordinate its Indebtedness and/or Liens to the Obligations.
"Subsidiary" shall mean, as to any other Person, any Person in
which more than 50% of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by such Person or by one or more of
such Person's Subsidiaries.
"Subsidiary Borrowers" and "Subsidiary Borrower" shall have
the meaning given in the introductory paragraph to this Agreement.
"Subsidiary Stock" shall mean all stock, membership interests,
limited partnership interests and other securities of each Subsidiary Borrower
and their respective Subsidiaries.
"Target Excess Cash Flow" shall have the meaning set forth in
Exhibit E to this Agreement.
"Term" shall mean the period commencing on the date set forth
on the first page hereof and ending on the date that is five (5) years after the
Closing Date.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York from time to time.
"Union Bank Loan" shall mean that certain loan made by Union
Bank to Summit Care Corporation pursuant to that certain Amended and Restated
Promissory Note dated April 1, 2001, as amended, modified, supplemented and
extended to date, in the principal amount of $823,333.04 and all other
agreements, documents, instruments and certificates executed and delivered in
connection therewith, as each may be amended, modified and supplemented from
time to time.
"Unmatured Surviving Obligations" shall mean indemnity
Obligations with respect to which no claim has been made and which pursuant to
the provisions of this Agreement survive termination of this Agreement.
"Vendors' Lien" shall have the meaning set forth in the Plan
of Reorganization.
"Woodlands Place Loan" shall mean that certain loan by
Woodlands Place Nursing Center, L.P. to The Woodlands Resource Management, L.P.
and The Woodlands Healthcare Center, L.P. pursuant to that certain Amended and
Restated Promissory Note dated August 19, 2003, in the principal amount of
$1,887,866.62 and all other agreements, documents,
Appendix A - 18
instruments and certificates executed and delivered in connection therewith, as
each may be amended, modified and supplemented from time to time.
Appendix A - 19
EXHIBIT A
BORROWING CERTIFICATE
dated as of _________________ , 2003
SKILLED HEALTHCARE, LLC, a Delaware limited liability company
("BORROWING AGENT"), as Borrowing Agent for itself and for the other Borrowers
(as defined in the Revolving Credit and Security Agreement dated as of
___________________, 2003, by and among Borrowers and CapitalSource Finance LLC,
as administrative agent and collateral agent for Lenders (in such capacities,
the "AGENT"), and the Lenders party thereto, (as amended, supplemented or
modified from time to time, the "LOAN AGREEMENT"; all capitalized terms not
defined herein have the meanings given them in the Loan Agreement)) by the
undersigned officer hereby certifies to Agent in accordance with the Loan
Agreement and other Loan Documents that:
A. Borrowing Base and Compliance
Pursuant to the Security Documents, Agent, on behalf of Lenders, has
been granted a lien on all Accounts of Borrowers. Set forth on Schedule 1 is a
true and correct calculation of Availability calculated in accordance with the
Loan Agreement. All of the Accounts included as Eligible A/R on Schedule 1 are
Eligible Receivables.
B. Borrowing Notice (TO BE COMPLETED AND EFFECTIVE ONLY IF BORROWERS
ARE REQUESTING AN ADVANCE)
(1) In accordance with Sections 2.4 and 4.2(a) of the Loan
Agreement, Borrowing Agent on behalf of Borrowers hereby irrevocably requests
from Agent an Advance under the Revolving Facility pursuant to the Loan
Agreement in the aggregate principal amount of $_________ ("REQUESTED ADVANCE")
to be made on _________________, _________ (the "BORROWING DATE"), which day is
a Business Day.
(2) Immediately after giving effect to the Requested Advance, the
aggregate outstanding principal amount of Advances will not exceed the lesser of
(i) the Availability and (ii) the Facility Cap.
C. General Certifications
Borrowing Agent further certifies to Agent that each of the conditions
contained in Section 4.2 of the Loan Agreement are as of the date hereof, and
will be as of the Borrowing Date (if applicable), satisfied, including, without
limitation, receipt by Agent of all fees, charges and expenses payable to Agent
on or prior to such Borrowing Date pursuant to the Loan Documents.
Exhibit A - 1
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed as of the day first written above.
SKILLED HEALTHCARE, LLC,
AS BORROWING AGENT
By: ___________________________________________
Name: _________________________________________
Title: ________________________________________
Exhibit A - 2
SCHEDULE 1
TO
[NAMES OF BORROWERS]
BORROWING CERTIFICATE
FOR PERIOD ENDING - (__/__/__)
Private
Medicare Medicaid Insurance Pay Total
-------------------------------------------------------------------
A SECTION A: A/R AVAILABILITY
1 Beginning A/R (from prev. certificate) -
-------------------------------------------------------------------
2 (+) Sales (New A/R) -
-------------------------------------------------------------------
3 (+/-) Debit/Credit Memos -
-------------------------------------------------------------------
4 (+/-) Adjustments -
-------------------------------------------------------------------
5 (-) Posted A/R Collections -
-------------------------------------------------------------------
6 Ending A/R (Date ----------) 0 0 0 0 -
-------------------------------------------------------------------
7 Ineligible Receivables (A) 0 -
-------------------------------------------------------------------
8 Eligible A/R (6-7) 0 0 0 0 -
-------------------------------------------------------------------
9 Liquidity Factor 100.0% 100.0% 100.0% 100.0%
-------------------------------------------------------------------
10 Net Eligible A/R (8*9) 0 0 0 0 -
-------------------------------------------------------------------
11 (-) Unposted A/R Collections -
-------------------------------------------------------------------
12 Adjusted Net A/R Availability (10-9) -
-------------------------------------------------------------------
13 Advance Rate 85%
-------------------------------------------------------------------
14 A/R Availability (12*13) -
-------------------------------------------------------------------
B SECTION B: GROSS AVAILABILITY
1 A/R Availability -
-------
2 (+) Approved Overadvance -
-------
3 (-) Reserves -
-------
4 Collateral Availability (1+2-3) -
-------
5 Facility Cap -
-------
6 Gross Availability (lesser of Collateral Availability and Facility Cap) -
-------
(A) Attach a supporting schedule showing all Receivables that are not
Eligible Receivables pursuant to the definitions in the Loan Agreement. If there
is any discrepancy between the definition of Eligible Receivables as set forth
in the Loan Agreement and any of the information set forth in this certificate,
Schedule 1 or any supporting documentation, the provisions of the Loan Agreement
shall control.
Exhibit A - 3
EXHIBIT B
INTERIM BORROWING CERTIFICATE
dated as of ________________, 2003
SKILLED HEALTHCARE, LLC, a Delaware limited liability company
("BORROWING AGENT"), as Borrowing Agent for itself and for the other Borrowers
(as defined in the Revolving Credit and Security Agreement dated as of
___________________, 2003, by and among Borrowers and CapitalSource Finance LLC,
as administrative agent and collateral agent for Lenders (in such capacities,
the "AGENT"), and the Lenders party thereto, (as amended, supplemented or
modified from time to time, the "LOAN AGREEMENT"; all capitalized terms not
defined herein have the meanings given them in the Loan Agreement)) by the
undersigned officer hereby certifies to Agent in accordance with the Loan
Agreement and other Loan Documents that:
A. Borrowing Base and Compliance
Pursuant to the Security Documents, Agent, on behalf of Lenders, has
been granted a lien on all Accounts of Borrowers. Set forth on Schedule 1 is a
true and correct calculation of Availability calculated in accordance with the
Loan Agreement. All of the Accounts included as Eligible A/R on Schedule 1 are
Eligible Receivables.
B. Borrowing Notice (TO BE COMPLETED AND EFFECTIVE ONLY IF
BORROWERS ARE REQUESTING AN ADVANCE)
(1) In accordance with Sections 2.4 and 4.2(a) of the Loan
Agreement, Borrowing Agent on behalf of Borrowers hereby irrevocably requests
from Agent an Advance under the Revolving Facility pursuant to the Loan
Agreement in the aggregate principal amount of $_________ ("REQUESTED ADVANCE")
to be made on _________________, _________ (the "BORROWING DATE"), which day is
a Business Day.
(2) Immediately after giving effect to the Requested Advance, the
aggregate outstanding principal amount of Advances will not exceed the lesser of
(i) the Availability and (ii) the Facility Cap.
C. General Certifications
Borrowing Agent further certifies to Agent that each of the
conditions contained in Section 4.2 of the Loan Agreement are as of the date
hereof, and will be as of the Borrowing Date (if applicable), satisfied,
including, without limitation, receipt by Agent of all fees, charges and
expenses payable to Agent on or prior to such Borrowing Date pursuant to the
Loan Documents.
Exhibit B - 1
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed as of the day first written above.
SKILLED HEALTHCARE, LLC, AS BORROWING
AGENT
By: ___________________________________
Name:__________________________________
Title: ________________________________
Exhibit B - 2
SCHEDULE 1
TO
[NAMES OF BORROWERS]
INTERIM BORROWING CERTIFICATE
FOR PERIOD ENDING - (__/__/__)
Private
Medicare Medicaid Insurance Pay Total
--------------------------------------------------------------
A SECTION A: A/R AVAILABILITY
Beginning Eligible A/R (Line 8 from prev.
1 Borrowing Certificate) -
--------------------------------------------------------------
2 (+) Estimated Sales (Beds * Days * Rate) -
--------------------------------------------------------------
3 (-) Posted A/R Collections -
--------------------------------------------------------------
4 Ending Estimated Eligible A/R (Date --------) 0 0 0 0 -
--------------------------------------------------------------
5 Liquidity Factor 100.0% 100.0% 100.0% 100.0%
--------------------------------------------------------------
6 Net Eligible A/R (4*5) 0 0 0 0 -
--------------------------------------------------------------
7 (-) Unposted A/R Collections -
--------------------------------------------------------------
8 Adjusted Net A/R Availability (6-7) -
--------------------------------------------------------------
9 Advance Rate 85%
--------------------------------------------------------------
10 A/R Availability (8*9) -
--------------------------------------------------------------
B SECTION B: GROSS AVAILABILITY
1 A/R Availability -
------
2 (+) Approved Overadvance -
------
3 (-) Reserves -
------
4 Collateral Availability (1+2-3) -
------
5 Facility Cap -
------
6 Gross Availability (lesser of Collateral
Availability and Facility Cap) -
------
Exhibit B - 3
EXHIBIT C
TO THE CREDIT AGREEMENT
FORM OF JOINDER AGREEMENT
This JOINDER AGREEMENT, dated as of ______________ __, 20__ (this
"Joinder Agreement"), made by the entity or entities that are signatories hereto
(collectively, the "Additional Borrowers"), in favor of CapitalSource Finance
LLC ("CapitalSource"), as administrative agent and collateral agent (in such
capacity, "Agent") for the Lenders (as defined below).
W I T N E S S E T H :
WHEREAS, Fountain View, Inc., a Delaware corporation (together with any
assignee of its rights and obligations thereunder as provided for therein,
"Parent"), the other borrowers party thereto from time to time (collectively,
and together with Parent, "Borrowers," and each, a "Borrower"), the lenders
party thereto from time to time (the "Lenders"), and Agent are parties to that
certain Revolving Credit and Security Agreement, dated as of August 19, 2003 (as
such may from time to time be renewed, refunded, replaced, refinanced, amended,
amended and restated, modified or supplemented, the "Credit Agreement").
Capitalized terms not defined herein have the meanings given to them in the
Credit Agreement.
WHEREAS, the parties to this Joinder Agreement wish to amend Schedule 1
to the Credit Agreement in the manner hereinafter set forth and, pursuant to
Section 6.l4 of the Credit Agreement, join the Additional Borrowers as Borrowers
under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
A G R E E M E N T:
1. Each of the undersigned Additional Borrowers hereby
acknowledges that it has received and reviewed a copy of the Credit Agreement
and acknowledges and agrees to:
(a) join the Credit Agreement as a Borrower (with the
same effect as if initially named therein), as indicated with its signature
below;
(b) be bound by all covenants, agreements and
acknowledgements attributable to a Borrower in the Credit Agreement, including,
without limitation, the grant of security interest in the Collateral (as defined
in the Credit Agreement) under the Credit Agreement; and
Exhibit C - 1
(c) perform all obligations and duties required of it by
the Credit Agreement as a Borrower.
2. Each of the undersigned hereby represents and warrants that
the representations and warranties with respect to it contained in Article 5 of
the Credit Agreement and in each of the other Loan Documents to which such
signatory is a party, by virtue of this Joinder Agreement or otherwise, or which
are contained in any certificate furnished by or on behalf of such signatory,
are true and correct on the date hereof as if made on and as of the date hereof
(except where such representation or warranty expressly relates to an earlier
date, in which case such representation or warranty was true and correct as of
such date).
3. The address and jurisdiction of incorporation of each of the
undersigned is set forth below its name on the signature pages hereto.
4. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO ITS CHOICE OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATION LAW).
[Remainder of page intentionally blank]
Exhibit C - 2
IN WITNESS WHEREOF, each of the undersigned has caused this JOINDER AGREEMENT to
be duly executed by its proper and duly authorized officer as of the date first
set forth above.
ADDITIONAL BORROWER:
________________________,
a _______________________
By: _____________________________
Name:
Title:
Address:
Jurisdiction of Incorporation:
ACKNOWLEDGED AND AGREED TO:
CAPITALSOURCE FINANCE LLC
By: ___________________________
Name:
Title:
Exhibit C - 3
EXHIBIT D TO
LOAN AGREEMENT
EXHIBIT D
GUARANTY AND SECURITY AGREEMENT
THIS GUARANTY AND SECURITY AGREEMENT(this "AGREEMENT") is made as of
___________ 20___, by ______________________________, a _____________
corporation ("GUARANTOR"), to and for the benefit of CAPITALSOURCE FINANCE LLC,
a Delaware limited liability company as administrative agent and collateral
agent for the Lenders (as defined below) ("AGENT").
WHEREAS, FOUNTAIN VIEW, INC., a Delaware corporation ("PARENT"), the
other borrowers party thereto ("SUBSIDIARY BORROWERS" and together with Parent,
each a "BORROWER" and collectively, "BORROWERS"), Agent and the Lenders party
thereto ("LENDERS") have entered into that certain Revolving Credit and Security
Agreement (as amended, supplemented or modified from time to time, the "CREDIT
AGREEMENT"), dated as of ______________, 2003 (the "Closing Date"), pursuant to
which Borrowers have agreed to borrow from Lenders, and Lenders have agreed to
lend to Borrowers, certain amounts pursuant to a revolving credit facility, all
in accordance with and subject to the terms and conditions set forth in the
Credit Agreement, which borrowings are evidenced by the Revolving Notes executed
and delivered to Lenders by Borrowers, dated as of the Closing Date (together
collectively and each individually, the "NOTE", and together with all of the
other agreements, documents, instruments, certificates, reports and financing
statements heretofore or hereafter executed or delivered in connection therewith
or with the Advances to be made under the Credit Agreement, as the same may be
amended, supplemented or modified from time to time, the "LOAN DOCUMENTS");
WHEREAS, Guarantor has become a Subsidiary (as defined in the Credit
Agreement) of a Borrower and, pursuant to Section 6.14 of the Credit Agreement,
as a condition incident to the obligation of Lenders to make additional Advances
to Borrowers, Guarantor is required, and has agreed, to execute and deliver this
Agreement and to grant to Agent on behalf of Lenders a security interest in the
Collateral as security for Guarantor's obligations under this Agreement;
WHEREAS, Lenders are willing to make additional Advances under the
Credit Agreement and the other Loan Documents only upon the condition that
Guarantor executes and delivers to Agent this Agreement and agrees to perform
and to comply with its obligations under this Agreement; and
WHEREAS, Guarantor acknowledges and confirms that, as [an affiliate] [a
subsidiary] of a Borrower, (a) it will benefit from the advancement of funds
under the Revolving Facility to Borrowers, (b) the Loans by Lenders constitute
valuable consideration to Guarantor, (c) this Agreement is intended to be an
inducement to Lenders to continue to extend credit and the Loans to Borrowers,
and (d) Lenders are relying upon this Agreement in making and advancing the
Loans to Borrowers.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
and agreements hereinafter set forth, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement for Lenders to continue making
Advances to Borrowers under the Credit
Agreement and the other Loan Documents, Guarantor, intending to be legally bound
hereby, agrees as follows:
5. All capitalized terms in this Agreement and not
defined herein shall have the defined meanings provided in the Credit Agreement.
6. Guarantor unconditionally and absolutely guarantees
(i) the due and punctual payment and performance when due of the principal of
the Note and the interest thereon and of the Obligations and any and all other
monies and amounts due or which may become due on or with respect to any of the
foregoing, and the due and punctual performance and observance by Borrowers of
all of the other terms, covenants, agreements and conditions of the Loan
Documents, in any case whether according to the present terms thereof, at any
earlier or accelerated date or dates or pursuant to any extension of time or to
any change in the terms, covenants, agreements and conditions thereof now or at
any time hereafter made or granted, (ii) all liabilities and obligations of
Guarantor hereunder, and (iii) all costs, expenses and liabilities (including,
without limitation, reasonable attorneys fees and expenses, documentation and
diligence fees and legal expenses, and search, audit, recording, professional
and filing fees and expenses) that may be incurred or advanced by Agent and/or
Lenders in any way in connection with the foregoing and/or otherwise required to
be paid by Guarantor hereunder (collectively, such items in clauses (i) through
(iii) being the "GUARANTEED OBLIGATIONS"). Guarantor acknowledges that this
Agreement shall be deemed a continuing guaranty of the Guaranteed Obligations
under the Loan Documents.
7. This Agreement is a guaranty of payment and not a
guaranty of collection. If any Guaranteed Obligation is not satisfied when due,
whether by acceleration or otherwise, Guarantor shall forthwith satisfy such
Guaranteed Obligation, upon demand, and no such satisfaction shall discharge the
obligations of Guarantor hereunder until all Guaranteed Obligations have been
indefeasibly paid in cash and performed and satisfied in full and the Credit
Agreement terminated. The liability of Guarantor under this Agreement shall be
primary and direct and not conditional or contingent upon the enforceability of
any obligation, the solvency of Borrowers, any Borrower or any other Person, any
obligation or circumstance which might otherwise constitute a legal or equitable
discharge or defense of a surety or guaranty or the pursuit by Agent of any
remedies it may have against Borrowers or any other guarantor of the Guaranteed
Obligations or any other Person. Without limiting the generality of the
foregoing, Agent shall not be required to make any demand on Borrowers or any
other guarantor of the Guaranteed Obligations or any other Person or to sell at
foreclosure or otherwise pursue or exhaust its remedies against any Collateral
of Borrowers or any other guarantor of the Guaranteed Obligations or any other
Person before, simultaneously with or after enforcing its rights and remedies
hereunder against Guarantor, and any one or more successive and/or concurrent
actions may be brought against Guarantor in the same action brought against
Borrowers or any other guarantor of the Guaranteed Obligations or any other
Person or in separate actions, as often as Agent may deem advisable, in its sole
discretion. The obligations of Guarantor hereunder shall not in any way be
affected by any action taken or not taken by Agent, which action or inaction is
hereby consented and agreed to by Guarantor, or by the partial or complete
unenforceability or invalidity of any other guaranty or surety agreement,
pledge, assignment, Lien or other security interest or security for any of the
Guaranteed Obligations or of
the value, genuineness, validity or enforceability of the Collateral or any of
the Guaranteed Obligations.
8. (A) To secure the payment and performance of the
Guaranteed Obligations, Guarantor hereby grants to Agent, for the benefit of
itself and Lenders, a continuing security interest in and Lien upon, and pledges
to Agent, for the benefit of itself and Lenders, all of its right, title and
interest in and to and upon all of Guarantor's assets, now owned or hereafter
acquired (collectively and each individually, the "Collateral"), including,
without limitation, all of the following property and interests in property of
Guarantor which security interest is intended to be a first priority security
interest:
(i) all of its tangible personal
property, including without limitation all present and future
Inventory and Equipment (including items of Equipment which
are or become Fixtures), now owned or hereafter acquired;
(ii) all of its intangible personal
property, including without limitation all present and future
Accounts, securities, contract rights, Permits, General
Intangibles, Chattel Paper, Documents, Instruments, Deposit
Accounts, Letter of Credit Rights and Supporting Obligations,
rights to the payment of money or other forms of consideration
of any kind, tax refunds, insurance proceeds, now owned or
hereafter acquired, and all intangible and tangible personal
property relating to or arising out of any of the foregoing;
(iii) all of its present and future
Government Contracts and rights thereunder and the related
Government Accounts and proceeds thereof, now or hereafter
owned or acquired by Guarantor; provided, however, that Agent
shall not have a security interest in any rights under any
Government Contract of Guarantor or in the related Government
Account where the taking of such security interest would be a
violation of an express prohibition contained in the
Government Contract (for purposes of this limitation, the fact
that a Government Contract is subject to, or otherwise refers
to, Title 31, Section 203 or Title 00, Xxxxxxx 00 xx xxx
Xxxxxx Xxxxxx Code shall not be deemed an express prohibition
against assignment thereof) or is prohibited by applicable
law; and
(iv) any and all additions to any of the
foregoing, and any and all replacements, products and proceeds
(including insurance proceeds) of any of the foregoing.
(B) Notwithstanding the foregoing provisions of this
Section 4, such grant of a security interest shall not extend to, and
the term "Collateral" shall not include, (x) any General Intangible,
contract, agreement or document of Guarantor to the extent that (i)
such General Intangible, contract, agreement or document is not
assignable or capable of being encumbered as a matter of law or under
the terms of any license or other agreement applicable thereto (but
solely to the extent that any such restriction shall be enforceable
under applicable law) without the consent of the licensor thereof or
other applicable party thereto, and (ii) such consent has not been
obtained; provided, however, that the foregoing grant of a security
interest shall extend to, and the term "Collateral" shall include, each
of the following: (a) any General Intangible which is in the nature of
an Account or a right to the payment of money or a proceed of, or
otherwise related to, the enforcement or collection of, any Account or
right to the payment of money, (b) any and all proceeds of any General
Intangible, contract, agreement or document that is otherwise excluded
to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (c) upon obtaining the consent of
any such licensor or other applicable party with respect to any such
otherwise excluded General Intangible, contract, agreement or document,
such General Intangible, contract, agreement or document as well as any
and all proceeds thereof that might theretofore have been excluded from
such grant of a security interest and from the term "Collateral"; (y)
any asset of Guarantor to the extent that (i) such asset subject to a
contract, agreement or document otherwise permitted pursuant to this
Agreement, which contract, agreement or document restricts the grant of
such security interest (but solely to the extent that any such
restriction shall be enforceable under applicable law) without the
consent of the other party to such contract, agreement or document, and
(ii) such consent has not been obtained; provided, however, that the
foregoing grant of a security interest shall extend to, and the term
"Collateral" shall include, each of the following: (a) any and all
proceeds of any asset that is otherwise excluded to the extent that the
assignment, pledge or encumbrance of such proceeds is not so
restricted, and (b) upon obtaining the consent of the other party to
any such contract, agreement or document with respect to any such
otherwise excluded asset, such asset as well as any and all proceeds
thereof that might theretofore have been excluded from such grant of a
security interest and from the term "Collateral" ; and (z) any Permit
of Guarantor to the extent that the assignment of such Permit would
violate the law applicable to such Permit, or materially impair the
validity of such Permit. Guarantor shall use all reasonable efforts
(which shall not include the unreasonable expenditure of funds) to
obtain any such required consent, provided, however in the event
Guarantor is unable to obtain the required Landlord Consent and Waiver
for any location at which books and records are kept, Guarantor shall
maintain a duplicate set of such books and records at a location owned
by a Guarantor or with respect to which a Landlord Consent and Waiver
reasonably satisfactory to Agent shall have been obtained.
[(C) In addition to the foregoing, to secure the payment
and performance of the Obligations, Guarantor has (i) entered into a
pledge agreement pledging all of its Subsidiary Stock to Agent and (ii)
entered into and recorded leasehold mortgages or deeds of trust in the
appropriate jurisdictions. Agent has received a perfected security
interest in Guarantors leaseholds and real property.]
(D) Guarantor shall promptly notify Agent of any material
Commercial Tort Claim in which Guarantor has an interest arising after
the Closing Date and shall provide all necessary information concerning
such Commercial Tort Claim and make all necessary filings with respect
thereto to perfect Agent's (for its benefit and the benefit of Lenders)
first priority security interest therein.
(E) Upon the execution and delivery of this Agreement,
and upon the proper filing of the necessary financing statements, the
proper recordation of the Collateral Patent, Trademark and Copyright
Assignment in the United States Patent and Trademark Office and/or the
United States Copyright Office, the proper recordation of any
Leasehold Mortgages or deeds of trust with respect to Guarantors'
leaseholds and/or real property and proper delivery of the necessary
stock certificates, in each case as applicable, then without any
further action, Agent will have a good, valid and perfected first
priority Lien and security interest in the Collateral, subject to no
transfer or other restrictions or Liens of any kind in favor of any
other Person except for Permitted Liens, except for security interests
in (x) motor vehicles subject to a certificate of title, and (y) money.
No financing statement relating to any of the Collateral is on file in
any public office except those (i) on behalf of Agent, and/or (ii) in
connection with or with respect to the Permitted Liens.
(F) Guarantor shall (i) execute, obtain, deliver, file,
register and/or record any and all financing statements, continuation
statements, stock powers, instruments and other documents, or cause the
execution, filing, registration, recording or delivery of any and all
of the foregoing, that are necessary or required under law or otherwise
or reasonably requested by Agent to be executed, filed, registered,
obtained, delivered or recorded to create, maintain, perfect, preserve,
validate or otherwise protect the pledge of the Collateral to Agent and
Agent's perfected first priority Lien on the Collateral (and Guarantor
irrevocably grants Agent the right, at Agent's option, to file any or
all of the foregoing), (ii) immediately upon learning thereof, report
to Agent any reclamation, return or repossession of goods in excess of
$100,000.00 (individually or in the aggregate), and (iii) defend the
Collateral and Agent's perfected first priority Lien thereon against
all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to Agent or any Lender, and pay all costs
and expenses (including, without limitation, in-house documentation and
diligence fees and legal expenses and reasonable attorneys' fees and
expenses) in connection with such defense, which may at Agent's
discretion be added to the Obligations..
(G) Guarantor agrees that notice received by it at least
ten (10) calendar days before the time of any intended public sale, or
the time after which any private sale or other disposition of
Collateral is to be made, shall be deemed to be reasonable notice of
such sale or other disposition. If permitted by applicable law, any
perishable Collateral which threatens to speedily decline in value or
which is sold on a recognized market may be sold immediately by Agent
without prior notice to Guarantor. At any sale or disposition of
Collateral or securities pledged, Agent may (to the extent permitted by
applicable law) purchase all or any part thereof free from any right of
redemption by Guarantor which right is hereby waived and released.
Guarantor covenants and agrees not to, and not to permit or cause any
of its Subsidiaries to, interfere with or impose any obstacle to
Agent's exercise of its rights and remedies with respect to the
Collateral. Agent, in dealing with or disposing of the Collateral or
any part thereof, shall not be required to give priority or preference
to any item of Collateral or otherwise to marshal assets or to take
possession or sell any Collateral with judicial process.
(H) In addition to any other rights, options and remedies
Agent and Lenders have under the Loan Documents, the UCC, at law or in
equity, all dividends, interest, rents, issues, profits, fees,
revenues, income and other proceeds collected or received from
collecting, holding, managing, renting, selling, or otherwise disposing
of all or any part of the Collateral or any proceeds thereof upon
exercise of its remedies hereunder
shall be applied in the following order of priority: (i) first, to the
payment of all reasonable costs and expenses of such collection,
storage, lease, holding, operation, management, sale, disposition or
delivery and of conducting Guarantors' business and of maintenance,
repairs, replacements, alterations, additions and improvements of or to
the Collateral, and to the payment of all sums which Agent or Lenders
may be required or may elect to pay, if any, for taxes, assessments,
insurance and other charges upon the Collateral or any part thereof,
and all other payments that Agent or Lenders may be required or
authorized to make under any provision of this Agreement (including,
without limitation, in each such case, reasonable in house
documentation and diligence fees and legal expenses, search, audit,
recording, professional and filing fees and expenses and reasonable
attorneys' fees and all expenses, liabilities and advances made or
incurred in connection therewith); (ii) second, to the payment of all
Obligations as provided herein and as determined by Agent in its sole
discretion; (iii) third, to the satisfaction of other Indebtedness
secured by any subordinate security interest of record in the
Collateral as provided in the General Intercreditor Agreement, the
Bergen Intercreditor Agreement or any applicable Subordination
Agreement if written notification of demand therefor is received before
distribution of the proceeds is completed, provided, that, if requested
by Agent, the holder of a subordinate security interest shall furnish
reasonable proof of its interest, and unless it does so, Agent and
Lenders need not address their claims; and (iv) fourth, to the payment
of any surplus then remaining to Guarantor, unless otherwise provided
by law or directed by a court of competent jurisdiction, provided that
Guarantor shall be liable for any deficiency if such proceeds are
insufficient to satisfy the Obligations or any of the other items
referred to in this section.
(I) Without limiting and in addition to any other rights,
options and remedies Agent and Lenders have under this Agreement, the
Loan Documents, the UCC, at law or in equity, upon the occurrence and
continuation of an Event of Default, Agent and Lenders shall have the
right to apply for and have a receiver appointed by a court of
competent jurisdiction in any action taken by Agent to enforce its
rights and remedies in order to manage, protect and preserve the
Collateral and continue the operation of the business of Guarantor and
to collect all revenues and profits thereof and apply the same to the
payment of all reasonable expenses and other charges of such
receivership including the reasonable compensation of the receiver and
to the payments as aforesaid until a sale or other disposition of such
Collateral shall be finally made and consummated.
(J) All Collateral (except Deposit Accounts and equipment
located at the premises of clients and used in their ordinary course of
business) will at all times be kept by Guarantor at the locations set
forth on Schedule 4(J) hereto, and such other locations as Guarantor
shall identify to Agent upon ten (10) calendar days prior written
notice, and in any case shall not be moved outside the continental
United States.
(K) Guarantor shall keep accurate and complete records of
its Accounts and all payments and collections thereon and shall submit
such records to Agent on such periodic bases as Agent may request. In
addition, if Accounts of Guarantor in an aggregate face amount in
excess of $200,000 become ineligible because they fall within one of
the specified categories of ineligibility set forth in the definition
of Eligible
Receivables, Guarantor shall notify Agent of such occurrence on the
first Business Day following such occurrence and the Borrowing Base
shall thereupon be adjusted to reflect such occurrence. If requested by
Agent, after the occurrence and during the continuance of an Event of
Default, Guarantor shall execute and deliver to Agent formal written
assignments of all of its Accounts weekly or daily as Agent may
request, including all Accounts created since the date of the last
assignment, together with copies of claims, invoices and/or other
information related thereto. To the extent that collections from such
assigned accounts exceed the amount of the Obligations, such excess
amount shall not accrue interest in favor of Guarantor, but shall be
available to Guarantor upon Guarantors' written request.
(L) Whether or not an Event of Default has occurred, any
of Agent's officers, employees, representatives or agents shall have
the right, at any time during normal business hours, in the name of
Agent, any designee of Agent or any Borrower, to verify the validity,
amount or any other matter relating to any Accounts of Guarantor;
provided unless an Event of Default has occurred and is continuing,
such verification shall only verify account balances and shall not give
notice of Agent's security interest. Guarantor shall cooperate fully
with Agent in an effort to facilitate and promptly conclude such
verification process.
(M) To expedite collection, Guarantor shall endeavor in
the first instance to make collection of its Accounts for Agent. Agent
shall have the right at all times after the occurrence and during the
continuance of an Event of Default to notify (i) Account Debtors owing
Accounts to Guarantor other than Medicaid/Medicare Account Debtors that
their Accounts have been assigned to Agent and to collect such Accounts
directly in its own name and to charge collection costs and expenses,
including reasonable attorney's fees, to Guarantor, and (ii)
Medicaid/Medicare Account Debtors that Guarantor has waived any and all
defenses and counterclaims they may have or could interpose in any such
action or procedure brought by Agent to obtain a court order
recognizing the collateral assignment or security interest and lien of
Agent in and to any Account or other Collateral payable by
Medicaid/Medicare Account Debtors and that Agent is seeking or may seek
to obtain a court order recognizing the collateral assignment or
security interest and lien of Agent in and to all Accounts and other
Collateral payable by Medicaid/Medicare Account Debtors.
(N) As and when determined by Agent in its Permitted
Discretion, Agent will perform the searches described in clauses (i)
and (ii) below against Guarantor (the results of which are to be
consistent with Guarantors' representations and warranties under this
Agreement), all at Guarantors' expense: (i) UCC searches with the
Secretary of State and local filing offices of each jurisdiction where
Guarantor is organized and/or maintains its executive offices, a place
of business or assets; and (ii) judgment, federal tax lien and
corporate and partnership tax lien searches, in each jurisdiction
searched under clause (i) above, provided that unless an Event of
Default shall have occurred and during the continuance thereof,
Guarantor shall not be required to pay for more than one such search in
any fiscal quarter under clause (i) and clause (ii) above.
(O) Guarantor (i) shall provide prompt written notice to
its current bank to transfer all items, collections and remittances to
the Concentration Account, (ii) shall provide prompt written notice to
each Account Debtor (other than a Private Pay Debtor) directing them to
make payments to the appropriate Lockbox Account, and Guarantor hereby
authorizes Agent, upon any failure to send such notice and directions
within ten (10) calendar days after the date of this Agreement (or ten
(10) calendar days after the Person becomes an Account Debtor (other
than a Private Pay Debtor)), to send any and all similar notices and
directions to such Account Debtors and (iii) shall do such further acts
and deeds that may be lawfully required by Agent to make, create,
maintain, continue or perfect Agent's security interest in the Lockbox
Accounts or the Collateral. At Agent's request, Guarantor shall
immediately deliver to Agent all items for which Agent must receive
possession to obtain a perfected security interest and all notes,
certificates, and documents of title, Chattel Paper, warehouse
receipts, Instruments, and any other similar instruments constituting
Collateral except for promissory notes in a principal amount less than
$100,000 provided that the aggregate principal amount of all such
promissory notes shall be less than $500,000.
9. Guarantor hereby represents and warrants to Agent (which
representations and warranties shall survive the execution and delivery of this
Agreement and the making of Advances under the Credit Agreement) as follows:
(A) Guarantor is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
[INSERT], and all of Guarantor's issued and outstanding shares of
capital stock, equity securities and other ownership interests are
owned of record and beneficially directly by [ ], free and clear of all
Liens, mortgages, pledges, security interests, hypothecations,
assignments, charges, rights, encumbrances or transfer or other
restrictions (individually, "ENCUMBRANCE" and collectively,
"ENCUMBRANCES") in favor of any other Person or otherwise, except for
Encumbrances in favor of Agent pursuant to the Loan Documents;
(B) Guarantor (i) has all requisite power and
authority to own the Collateral and its properties and assets and to
carry on its business as now being conducted, and (ii) is duly
qualified to do business in every jurisdiction in which failure so to
qualify could reasonably be expected to have or result in a Material
Adverse Effect;
(C) Guarantor has all requisite power and
authority (i) to execute, deliver and perform this Agreement, (ii) to
consummate the transactions contemplated hereunder, and (iii) to grant
the Liens and security interests with regard to the Collateral granted
hereby;
(D) The execution, delivery and performance by
Guarantor of this Agreement and the consummation of the transactions
contemplated hereby, (a) have been duly authorized by all requisite
action of Guarantor and have been duly executed and delivered by or on
behalf of Guarantor; (b) do not violate in any material respect any
provisions of (i) applicable law, statute, rule, regulation, ordinance
or tariff applicable to Guarantor, (ii) any order of any Governmental
Authority binding on Guarantor or any of
its properties; or (iii) any material agreement between Guarantor and
its shareholders, members, partners or equity owners or among any such
shareholders, members, partners or equity owners; (c) do not violate
any provision of the certificate of incorporation or bylaws (or any
other equivalent governing agreement or document) of Guarantor, (d) are
not in conflict with, and do not result in a breach or default of or
constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would
constitute or result in a conflict, breach, default or event of default
under, any indenture, agreement or other instrument to which Guarantor
is a party, or by which the properties or assets of Guarantor are
bound, the effect of which could reasonably be expected to have a
Material Adverse Effect; (e) except as set forth therein, will not
result in the creation or imposition of any Lien of any nature upon any
of the properties or assets of Guarantor, and (f) except for those
which have been obtained, do not require the consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of Guarantor, enforceable against Guarantor in accordance
with its terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law affecting
the enforceability of creditors' rights and to the effect of general
principles of equity which may limit the availability of equitable
remedies (whether in a proceeding at law or in equity).
(E) Guarantor is not (i) a party to any
judgment, order or decree or any agreement, document or instrument, or
subject to any restriction, which would materially adversely affect its
ability to execute and deliver, or perform under, this Agreement or to
pay the Guaranteed Obligations, (ii) in default in the performance,
observance or fulfillment of any obligation, covenant or condition
contained in any agreement, document or instrument to which it is a
party or to which any of its properties or assets are subject, which
default, if not remedied within any applicable grace or cure period,
could reasonably be expected to have a Material Adverse Effect, nor is
there any event, fact, condition or circumstance which, with notice or
passage of time, or both, would constitute or result in a conflict,
breach, default or event of default under, any of the foregoing which,
if not remedied within any applicable grace or cure period, could
reasonably be expected to have a Material Adverse Effect, or (iii) a
party or subject to any agreement, document or instrument with respect
to, or obligation to pay any, service or management fee with respect
to, the ownership, operation, leasing or performance of any of its
business or any facility, nor is there any manager with respect to any
such facility other than a Person that is a Borrower or a Guarantor;
(F) Guarantor (i) is in compliance with all
laws, statutes, rules, regulations, ordinances and tariffs of any
Governmental Authority applicable to Guarantor and/or Guarantor's
business, assets or operations, including, without limitation, ERISA
and Healthcare Laws, and (ii) is not in violation of any order of any
Governmental Authority or other board or tribunal, except where
noncompliance or violation could not reasonably be expected to have a
Material Adverse Effect. There is no event, fact, condition or
circumstance known to Guarantor which, with notice or passage of time,
or both, would constitute or result in any noncompliance with, or any
violation of, any of the foregoing, in each case except where
noncompliance or violation could not reasonably be expected to have a
Material Adverse Effect. Guarantor has not received any notice that
Guarantor is not in compliance in any respect with any of the
requirements of any of the foregoing;
(G) There is no action, suit, proceeding or
investigation pending or, to its knowledge, threatened against
Guarantor that (i) questions or could prevent the validity of this
Agreement or the right of Guarantor to enter into this Agreement or to
consummate the transactions contemplated hereby, (ii) could reasonably
be expected to be or have, either individually or in the aggregate, any
Material Adverse Change or Material Adverse Effect, or (iii) could
reasonably be expected to result in any Change of Control or other
change in the current ownership, control or management of Guarantor.
Guarantor is not aware that there is any basis for the foregoing.
Guarantor is not a party or subject to any order, writ, injunction,
judgment or decree of any Governmental Authority that could reasonably
be expected to be or have, either individually or in the aggregate, any
Material Adverse Change or Material Adverse Effect. There is no action,
suit, proceeding or investigation initiated by Guarantor currently
pending that could reasonably be expected to be or have, either
individually or in the aggregate, any Material Adverse Change or
Material Adverse Effect. Guarantor has no existing accrued and/or
unpaid Indebtedness to any Governmental Authority or any other
governmental payor that could reasonably be expected to be or have,
either individually or in the aggregate, any Material Adverse Change or
Material Adverse Effect.;
(H) None of the business or properties of
Guarantor, any relationship between Guarantor and any other Person, any
circumstance in connection with the execution, delivery and performance
of this Agreement, or the consummation of the transactions contemplated
hereby, requires a consent, approval or authorization of, or filing,
registration or qualification which has not been obtained with, any
Governmental Authority or any other Person;
(I) Guarantor is not a party to and has not
entered into any agreement, document or instrument that conflicts with
this Agreement or that otherwise relates to the Guaranteed Obligations;
(J) The obligations of Guarantor under this
Agreement are not subordinated in any way to any other obligations of
Guarantor or to the rights of any other Person;
(K) Guarantor is in substantial compliance with
and has all Permits and Intellectual Property necessary or required by
applicable law or Governmental Authority for the operation of its
businesses. All of the foregoing are in full force and effect and not
in known conflict in any material respect with the rights of others.
Guarantor is not (i) in breach of or default under the provisions of
any of the foregoing, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would
constitute or result in a conflict, breach, default or event of default
under, any of the foregoing which, if not remedied within any
applicable grace or cure period could
reasonably be expected to have a Material Adverse Effect, (ii) a party
to or subject to any agreement, instrument or restriction that is so
unusual or burdensome that it could reasonably be expected to have a
Material Adverse Effect, and (iii) has been involved in any labor
dispute, strike, walkout or union organization which could reasonably
be expected to have a Material Adverse Effect;
(L) No representation or warranty made by
Guarantor in this Agreement contains any untrue statement of material
fact or omits to state any fact necessary to make the statements herein
or therein not materially misleading. There is no fact known to
Guarantor which Guarantor has not disclosed to Agent in writing which
could reasonably be expected to have a Material Adverse Effect;
(M) During the five years prior to the date
hereof, Guarantors has not conducted business under or used any other
name (whether corporate, partnership or assumed);
(N) The foregoing representations and warranties
are made with the knowledge and intention that Agent is relying and
will rely thereon. All such representations and warranties shall
survive the execution and delivery of this Agreement.
10. Guarantor hereby waives demand, presentment, protest, notice
of dishonor or non-payment, as well as all defenses with respect to any and all
instruments, notice of acceptance hereof, notice of Loans or Advances made,
credit extended, collateral received or delivered, or any other action taken by
Agent in reliance hereon, and all other demands and notices of any description,
except such as are expressly provided for herein, it being the intention hereof
that Guarantor shall remain liable as a principal until the full amount of all
Guaranteed Obligations shall have been indefeasibly paid in full in cash and
performed and satisfied in full (other than the Unmatured Surviving Obligations)
and the Credit Agreement terminated, notwithstanding any act, omission, or
anything else which might otherwise operate as a legal or equitable discharge of
Guarantor. .
11. Guarantor acknowledges and agrees that its obligations as
Guarantor shall not be impaired, modified, changed, released or limited in any
manner whatsoever by any impairment, modification, change, release or limitation
of the liability of Borrowers or any other guarantor of the Guaranteed
Obligations or any other Person or its estate in bankruptcy resulting from the
operation of any present or future provision of the bankruptcy laws or other
similar statute, or from the decision of any court.
12. Guarantor acknowledges and agrees that Agent shall have the
full right and power, in its sole discretion and without any notice to or
consent from Guarantor and without affecting or discharging, in whole or in
part, the liability of Guarantor hereunder to deal in any manner with the
Guaranteed Obligations and any security or guaranties therefor, including,
without limitation, to (A) release, extend, renew, compromise or substitute and
administer the Guaranteed Obligations and other obligations under the Loan
Documents in any manner it sees fit, (B) release any or all collateral for the
Guaranteed Obligations, (C) release any guarantor of the Guaranteed Obligations,
(D) extend the time for payment of the Guaranteed
Obligations or any part thereof, (D) change the interest rate on the Guaranteed
Obligations or any Note under the Credit Agreement, (E) reduce or increase the
outstanding principal amount of the Guaranteed Obligations or any Note under the
Credit Agreement, (F) accelerate the Guaranteed Obligations, (G) make any
change, amendment or modification whatsoever to the terms or conditions of the
Loan Documents, (H) extend, in whole or in part, on one or any number of
occasions, the time for the payment of any principal or interest or any other
amount pursuant to any Note or for the performance of any term or condition of
the Loan Documents, (I) settle, compromise, release, substitute, impair, enforce
or exercise, or fail or refuse to enforce or exercise, any claims, rights, or
remedies, of any kind or nature, which Agent may at any time have against
Borrowers or any other guarantor of the Guaranteed Obligations or any other
Person, or with respect to any security interest of any kind held by Agent at
any time, whether under any Loan Document or otherwise, (J) release or
substitute any security interest of any kind held by Agent at any time, (K)
collect and retain or liquidate any collateral subject to such security
interest, (L) make advances for the purpose of performing any term or covenant
contained in the Loan Documents with respect to which Borrowers or any other
guarantor of the Guaranteed Obligations is in default, (M) foreclose on any of
the Collateral, (N) grant waivers or indulgences, (O) take additional
collateral, (P) obtain any additional guarantors, (Q) take a deed in lieu of
foreclosure and/or (R) take or fail to take any other action whatsoever with
respect to the Guaranteed Obligations. Guarantor hereby waives and agrees not to
assert against Agent any rights which a guarantor or surety could exercise.
Notwithstanding any other provision of this Agreement or any other Loan
Document, Guarantor agrees that Agent has no duties of any nature whatsoever to
Guarantor, whether express or implied, by virtue of this Agreement, operation of
law or otherwise.
13. Guarantor agrees that its obligations hereunder are
irrevocable and independent of the obligations of Borrowers or any other
guarantor of the Guaranteed Obligations or any other Person. Guarantor shall
take all necessary and appropriate actions to ensure that this Agreement is and
remains enforceable against Guarantor in accordance with its terms and that
Guarantor complies with each of its obligations hereunder and thereunder.
Guarantor shall not (a) cause or permit to be done, or enter into or make or
become a party to any agreement (oral or written), arrangement or commitment to
do or cause to be done, any of the things prohibited by this Agreement or that
would breach this Agreement or any other instrument, agreement, arrangement,
commitment or document to which Guarantor is a party or by which it or any of
its properties or assets is or may be bound or subject, or (b) enter into or
make or become a party to any agreement, document or instrument or arrangement
that conflicts with this Agreement or that would prevent Guarantor from
complying with and performing under this Agreement.
14. Guarantor agrees that it shall have no right of subrogation
whatever with respect to the Guaranteed Obligations guaranteed hereby or to any
collateral securing such Guaranteed Obligations unless and until such Guaranteed
Obligations have been irrevocably and indefeasibly paid in full in cash and
performed in full (other than the Unmatured Surviving Obligations) and the
Credit Agreement and this Agreement have been terminated.
15. Guarantor agrees that this Agreement shall inure to the
benefit of, and may be enforced by, Agent and Lenders, all future holders of any
Note or any of the Guaranteed
Obligations or any of the Collateral and all Transferees (as defined below), and
each of their respective successors and permitted assigns, and shall be binding
upon and enforceable against Guarantor and Guarantor's assigns and successors.
Guarantor agrees that it may not assign, delegate or transfer this Agreement or
any of its rights or obligations under this Agreement without the prior written
consent of Agent. Nothing contained in this Agreement or any other Loan Document
shall be construed as a delegation to Agent of Guarantor's duty of performance,
including, without limitation, any duties under any account or contract in which
Agent has a security interest or Lien. GUARANTOR ACKNOWLEDGES THAT AGENT AT ANY
TIME AND FROM TIME TO TIME may sell, assign or GRANT PARTICIPATING INTERESTS IN
OR transfer all or any part of its rights or obligations under, this AGREEMENT,
ANY Note, THE GUARANTEED OBLIGATIONS, THE COLLATERAL and/or the Loan Documents
TO one or more OTHER PERSONS, INCLUDING, WITHOUT LIMITATION, FINANCIAL
INSTITUTIONS (EACH SUCH TRANSFEREE, ASSIGNEE OR PURCHASER, A "TRANSFEREE"). In
such case, the Transferee shall have all of the rights and benefits with respect
to the portion of such Guaranteed Obligations, any Note, this Agreement, the
Collateral and the Loan Documents held by it as fully as if such Transferee were
the original holder thereof (including without limitation rights of set-off and
recoupment), and shall become vested with all of the powers and rights given to
Agent hereunder with respect thereto, and shall be deemed to be "Agent" for all
purposes hereunder, the predecessor Agent shall thereafter be forever released
and fully discharged from any liability or responsibility hereunder with respect
to the rights and interests so assigned, and either Agent or any Transferee may
be designated as the sole agent to manage the transactions and obligations
contemplated herein. Notwithstanding any other provision of this Agreement,
Agent may disclose to any Transferee all information, and may furnish to such
Transferee copies of reports, financial statements, certificates, and documents
obtained under any provision of this Agreement or any Loan Document.
16. Guarantor hereby agrees to take or cause to be taken such
further actions, to obtain such consents and approvals and to duly execute,
deliver and file or cause to be executed, delivered and filed such further
agreements, assignments, instructions, documents and instruments as may be
necessary or as may be reasonably requested by Agent in its sole discretion in
order to fully effectuate the purposes, terms and conditions of this Agreement
and the consummation of the transactions contemplated hereby and performance and
payment of the Guaranteed Obligations hereunder, whether before, at or after the
performance and/or consummation of the transactions contemplated hereby or the
occurrence of a Default or Event of Default under any Loan Document.
17. Notwithstanding and without limiting or being limited by any
other provision of this Agreement or the Loan Documents, Guarantor shall pay all
costs and expenses incurred by Agent or any of its Affiliates, including,
without limitation, documentation and diligence fees and expenses, all search,
audit, appraisal, recording, professional and filing fees and expenses and all
other out-of-pocket charges and expenses (including, without limitation, UCC and
judgment and tax lien searches and UCC filings and fees for post-Closing UCC and
judgment and tax lien searches), and reasonable attorneys' fees and expenses (a)
in any effort to enforce this Agreement and/or any related agreement, document
or instrument, or to effect collection hereunder or thereunder, (b) in
connection with entering into, negotiating, preparing, reviewing
and executing this Agreement, (c) arising in any way out of administration of
the Guaranteed Obligations or the security interests or Liens created with
respect thereto, including without limitation, any wire transfer fees or audit
expenses or filing or recordation fees, (d) in connection with instituting,
maintaining, preserving and enforcing Agent's rights hereunder or under all
related agreements, documents and instruments, (e) in defending or prosecuting
any actions, claims or proceedings arising out of or relating to this Agreement
and/or any related agreement, document or instrument, (f) in seeking or
receiving any advice with respect to its rights and obligations under this
Agreement and/or all related agreements, documents and instruments, and/or (g)
in connection with any modification, amendment, supplement, waiver or extension
of this Agreement and/or any related agreement, document or instrument, and all
of the same shall be part of the Guaranteed Obligations. If Agent or any of its
Affiliates uses in-house counsel for any of the purposes set forth above or any
other purposes under this Agreement for which Guarantor is responsible to pay or
indemnify, Guarantor expressly agrees that its Obligations include reasonable
charges for such work commensurate with the fees that would otherwise be charged
by outside legal counsel selected by Agent or such Affiliate in its sole
discretion for the work performed.
18. Any notice or request under this Agreement shall be given to
any party to this Agreement at such party's address set forth below, or at such
other address as such party may hereafter specify in a notice given in the
manner required under this Section 14. Any notice or request hereunder shall be
given only by, and shall be deemed to have been received upon (each, a
"RECEIPT"): (i) registered or certified mail, return receipt requested, on the
date on which such received as indicated in such return receipt, (ii) delivery
by a nationally recognized overnight courier, one (1) Business Day after deposit
with such courier, or (iii) facsimile or electronic transmission, in each case
upon telephone or further electronic communication from the recipient
acknowledging receipt (whether automatic or manual from recipient), as
applicable.
If to Agent:
CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Loan Management Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxxxxxxx.xxx
If to Guarantors:
c/o Fountain View, Inc.
00000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx, Esq., General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxxxx.xxx
19. No course of action or dealing, renewal, release or extension
of any provision of this Agreement, or single or partial exercise of any such
provision, or delay, failure or omission on Agent's part in enforcing any such
provision shall affect the liability of Guarantor or operate as a waiver of such
provision or affect the liability of Guarantor or preclude any other or further
exercise of such provision. No waiver by any party to this Agreement of any one
or more defaults by any other party in the performance of any of the provisions
of this Agreement shall operate or be construed as a waiver of any future
default, whether of a like or different nature, and each such waiver shall be
limited solely to the express terms and provisions of such waiver.
20. If any term or provision of this Agreement is adjudicated to
be invalid under applicable laws or regulations, such provision shall be
inapplicable to the extent of such invalidity or unenforceability without
affecting the validity or enforceability of, the remainder of this Agreement
which shall be given effect so far as possible.
21. Agent shall have the right in its sole discretion to determine
which rights, powers, Liens, security interests or remedies Agent may at any
time pursue, relinquish, subordinate or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any
of Agent's rights, powers, Liens, security interests or remedies hereunder or
under any of the Loan Documents or under applicable law or at equity. The
enumeration of the rights and remedies herein is not intended to be exhaustive.
The rights and remedies of Agent described herein are cumulative and are not
alternative to or exclusive of any other rights or remedies which Agent or
Lenders otherwise may have. The partial or complete exercise of any right or
remedy shall not preclude any other further exercise of such or any other right
or remedy.
22. This Agreement shall be effective on the date hereof and shall
continue in full force and effect until full performance (other than Unmatured
Surviving Obligations) and indefeasible payment in full in cash of all
Guaranteed Obligations and termination of this Agreement and the Credit
Agreement, all in accordance with the Credit Agreement, and the rights and
powers granted to Agent hereunder shall continue in full force and effect
notwithstanding the termination of this Agreement or the fact that Borrower's
borrowings under the Credit Agreement may from time to time be temporarily in a
zero or credit position until all of the Guaranteed Obligations have been
indefeasibly paid in full in cash and performed and satisfied in full. Guarantor
waives any rights which it may have under the UCC or otherwise to demand the
filing of termination statements with respect to the Collateral, and Agent shall
not be required to send such termination statements to Guarantor, or to file
them with any filing office, unless and until this Agreement and the Credit
Agreement shall have been terminated in accordance with their respective terms
and all Guaranteed Obligations shall have been performed in full (other than
Unmatured Surviving Obligations) and indefeasibly paid in full in cash.
23. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to its choice of law provisions (other than Section 5-1401 of the New York
General Obligation Law). Any judicial proceeding with respect to the
Obligations, any Loan Document or any related agreement may be brought in
any federal or state court of competent jurisdiction located in the City of New
York, State of New York (any such court, individually a "New York Court," and
all such courts collectively, the "New York Courts"), provided nothing in this
Agreement shall be deemed or operate to preclude Agent from bringing suit or
taking other legal action in any jurisdiction to the extent, but only to the
extent, it is required to bring suit in such jurisdiction to realize on the
Collateral or any other security for the Obligations (any such court and any New
York Court, individually a "Qualified Court" and collectively, the "Qualified
Courts"), and provided, further that Agent, Lenders and Guarantor acknowledge
that any appeals from a Qualified Court may have to be heard by a court located
outside of the jurisdiction where such Qualified Court sits. By execution and
delivery of this Agreement, Guarantor (i) accepts the non-exclusive jurisdiction
of the Qualified Courts and irrevocably agrees to be bound by any judgment
rendered thereby, (ii) waives personal service of process, (iii) agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, pursuant to Section 14 hereof and (iv) waives any objection
to jurisdiction and venue of any action instituted hereunder in any Qualified
Court and agrees not to assert any defense to an action brought in any Qualified
Court based on lack of jurisdiction, venue or convenience. Any judicial
proceedings against Agent or any Lender involving, directly or indirectly, the
Obligations, any Loan Document or any related agreement shall be brought only in
a New York Court. All parties acknowledge that they participated in the
negotiation and drafting of this Agreement and that, accordingly, no party shall
move or petition a court construing this Agreement to construe it more
stringently against one party than against any other.
24. This Agreement may be executed in one or more counterparts,
all of which taken together shall constitute one and the same instrument. This
Agreement may be executed by facsimile transmission, which facsimile signatures
shall be considered original executed counterparts for purposes of this Section
21, and Guarantor agrees that it will be bound by its own facsimile signature
and that it accepts the facsimile signature of each other party to this
Agreement.
25. Notwithstanding and without limiting any other provision of
this Agreement or any Loan Document, Guarantor shall indemnify Agent, each
Lender, its and their Affiliates and its and their respective managers, members,
officers, employees, Affiliates, agents, representatives, successors, assigns,
accountants and attorneys (collectively, the "INDEMNIFIED PERSONS") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits and costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel and in-house documentation and diligence fees and legal
expenses) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any aspect of, or any transaction contemplated by or referred to in, or any
matter related to, this Agreement or any agreement, document or transaction
contemplated hereby, whether or not such Indemnified Person is a party thereto,
except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of such Indemnified Person. If any Indemnified
Person uses in-house counsel for any purpose for which Guarantor is responsible
to pay or indemnify, Guarantor expressly agrees that its indemnification
obligations include reasonable charges for such work. Agent agrees to give
Guarantor reasonable notice of any event of which Agent
becomes aware for which indemnification may be required under this Section 21,
and Agent may elect (but is not obligated) to direct the defense thereof,
provided that the selection of counsel shall be subject to Guarantor's consent,
which consent shall not be unreasonably withheld or delayed. Any Indemnified
Person may, in its reasonable discretion, take such actions as it deems
necessary and appropriate to investigate, defend or settle any event or take
other remedial or corrective actions with respect thereto as may be necessary
for the protection of such Indemnified Person or the Collateral. Notwithstanding
the foregoing, if any insurer agrees to undertake the defense of an event (an
"INSURED EVENT"), Agent agrees not to exercise its right to select counsel to
defend the event if that would cause Guarantor's insurer to deny coverage;
provided, however, that Agent reserves the right to retain counsel to represent
any Indemnified Person with respect to an Insured Event at its sole cost and
expense. To the extent that Agent or any Lender obtains recovery from a third
party other than an Indemnified Person of any of the amounts that Guarantor has
paid to Agent or any Lender pursuant to the indemnity set forth in this Section
21, then Agent and/or any Lender shall promptly pay to Guarantor the amount of
such recovery. Without limiting any of the foregoing, Guarantor indemnifies the
Indemnified Parties for all claims for brokerage fees or commissions (other than
claims of a broker with whom such Indemnified Party has directly contracted in
writing) which may be made in connection with respect to any aspect of, or any
transaction contemplated by or referred to in, or any matter related to, this
Agreement or any agreement, document or transaction contemplated thereby.
26. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY.
27. This Agreement constitutes the entire agreement between
Guarantor, Agent and Lenders with respect to the subject matter hereof and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless
in writing signed by Guarantor, Agent and Lenders, as appropriate. No provision
of this Agreement may be changed, modified, amended, restated, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing or in any other manner other than by an agreement in writing signed by
Agent, Requisite Lenders and Guarantor. Each party hereto acknowledges that it
has been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.
28. This Agreement is not intended to benefit or confer any rights
upon Borrowers or upon any third party other than Agent and Lenders, who are
intended beneficiaries hereof and for whose benefit this Agreement is explicitly
made.
29. Guarantor, Agent and Lenders agree (a) to treat this Agreement
and all provisions hereof confidentially and not to transmit any copy hereof or
thereof or disclose the contents hereof or thereof, in whole or in part, to any
Person (including, without limitation, any financial institution or
intermediary) without Agent's prior written consent, other than to Guarantor's
advisors and officers on a need-to-know basis, (b) to inform all such Persons
who receive information concerning this Agreement of the confidential nature
hereof and shall direct them to treat the same confidentially and not to
disclose it to any other Person, and (c) to be bound by these provisions. Agent
and Lenders shall have the right to review and approve all materials that
Guarantor or any Guarantors prepare that contain Agent's name or describe or
refer to this Agreement or any of the terms hereof or thereof or any of the
transactions contemplated hereby or thereby. Guarantor reserves the right to
review and approve all materials that Agent, Lenders or any of their Affiliates
prepare that contain Guarantor's name or describe or refer to this Agreement,
any of the terms hereof or thereof or any of the transactions contemplated
hereby or thereby. Notwithstanding any other provision of this Agreement,
Guarantor shall not, and shall not permit any of its Subsidiaries to, use
Agent's name (or the name of any of Agent's Affiliates) in connection with any
of its business operations. Nothing contained in this Agreement is intended to
permit or authorize Guarantor to make any contract on behalf of Agent. Neither
Agent nor Lenders shall, and shall not permit any of its respective Affiliates
to, use Guarantor's name (or the name of any of either Guarantor's Affiliates)
in connection with any of its business operations.
30. Upon the exercise by Agent or any of its Affiliates of any
power, right, privilege or remedy pursuant to this Agreement or under applicable
law or at equity which requires any consent, approval, registration,
qualification or authorization of any Governmental Authority, Guarantor will
execute and deliver, or will cause the execution and delivery of, all
applications, certificates, instruments and other documents that may be so
required for such consent, approval, registration, qualification or
authorization.
31. In addition to and notwithstanding any other provision of this
Agreement, Agent, in its sole discretion, shall have the right, at any time that
Guarantor fails to do so, without prior notice to Guarantor, to (i) obtain
insurance covering any of the Collateral as and to the extent required under the
Credit Agreement; (ii) pay for the performance of any of the Guarantor's
obligations hereunder; (iii) discharge taxes, liens, security interests, or
other encumbrances at any time levied or placed on any of the Collateral in
violation of this Agreement unless Guarantor is in good faith with due diligence
by appropriate proceedings contesting those items; and (iv) pay for the
maintenance and preservation of any of the Collateral. Such expenses and
advances shall be added to the Guaranteed Obligations until reimbursed to Agent
and shall be secured by the Collateral. Any such payments and advances by Agent
shall not be construed as a waiver by Agent of an Event of Default or any other
rights, remedies or powers of Agent or Lenders hereunder or otherwise.
32. Unless expressly provided herein to the contrary, any
approval, consent, waiver or satisfaction of Agent or Lenders with respect to
any matter that is subject of this Agreement may be granted or withheld by Agent
in its Permitted Discretion.
33. In any litigation, arbitration or other dispute resolution
proceeding relating to this Agreement, or to any of the other Loan Documents,
Guarantor waives any and all defenses, objections and counterclaims it may have
or could interpose with respect to any director, officer, employee or agent of
Guarantor and/or its and their Affiliates being deemed to be employees or
managing agents of Guarantor for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise). Guarantor waives any and all defenses,
objections and counterclaims it may have or could interpose with respect to
Agent's counsel in any such dispute resolution proceeding examining any such
individuals as if under cross-examination and using any discovery deposition of
any of them in that proceeding as if it were an evidence deposition. Guarantor
waives any and all defenses, objections and counterclaims it may have or could
interpose with respect to it using all commercially reasonable efforts to
produce in any such dispute resolution proceeding, at the time and in the manner
requested by Agent, all Persons, documents (whether in tangible, electronic or
other form) and/or other things under its control and relating to the dispute in
any jurisdiction that recognizes that (or any similar) distinction.
[SIGNATURE APPEARS ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, Guarantor has executed this Guaranty and Security
Agreement as of the day and year first above written.
_________________________________________
By:______________________________________
Its:_____________________________________
CAPITALSOURCE FINANCE LLC
By:______________________________________
Its:_____________________________________
Schedule 4(J)
Location of Collateral
EXCESS CASH FLOW
"Asset Sale Proceeds" means, for any fiscal year, the aggregate amount
of all net cash proceeds (i.e., cash proceeds net of all amounts paid or payable
in connection with such sale or other disposition of assets (including, without
limitation, indebtedness paid and federal and state income taxes paid or payable
in connection therewith)) realized by Parent and its Subsidiaries during such
fiscal year in connection with any sale or other disposition of any asset (other
than the sales of inventory in the ordinary course of business); provided that,
for purposes of this definition, such net cash proceeds will not be deemed to be
realized until the earlier to occur of (a) 360 days after the receipt by Parent
and its Subsidiaries of such net cash proceeds and (b) the date Parent and its
Subsidiaries apply such net cash proceeds to prepay indebtedness, to make
capital expenditures or to make acquisitions.
"Excess Cash Flow" means for any fiscal year of Parent, (a) the sum,
without duplication, of (i) the net income or loss of Parent and its
Subsidiaries for such fiscal year, calculated in accordance with GAAP,
excluding, however, all gains and losses (together with any related provision
for federal and state income taxes on such gains and losses) realized in
connection with any sale or other disposition by Parent or any of its
Subsidiaries of any asset (other than the sales of inventory in the ordinary
course of business); (ii) the aggregate amount of all interest expense of Parent
and its Subsidiaries during such fiscal year, calculated in accordance with
GAAP, whether paid or accrued; (iii) the aggregate amount of all federal and
state income taxes incurred by Parent and its Subsidiaries during such fiscal
year, calculated in accordance with GAAP, whether paid or accrued; (iv) the
aggregate amount of all depreciation expense and amortization expense of Parent
and its Subsidiaries during such fiscal year, calculated in accordance with
GAAP; (v) the aggregate amount of all non-cash extraordinary losses (together
with any related provision for federal and state income taxes on such
extraordinary losses) of Parent and its Subsidiaries during such fiscal year,
calculated in accordance with GAAP; (vi) the Asset Sales Proceeds for such
fiscal year; and (vii) an amount equal to any decrease in the Working Capital
during such fiscal year; minus (b) the sum, without duplication, of (i) the
Maintenance Capital Expenditures for such fiscal year; (ii) the aggregate amount
of all non-financed acquisitions (other than the non-cash portion of any
acquisitions) by Parent and its Subsidiaries during such fiscal year; (iii) the
aggregate amount of all interest expense of Parent and its Subsidiaries paid or
payable during such fiscal year; (iv) the aggregate amount of all federal and
state income taxes of Parent and its Subsidiaries paid or payable during such
fiscal year; (v) the aggregate amount of all non-cash extraordinary gains
(together with any related provision for federal and state income taxes on such
extraordinary gains) of Parent and its Subsidiaries during such fiscal year,
calculated in accordance with GAAP; (vi) an amount equal to any increase in the
Working Capital during such fiscal year; and (vii) the aggregate amount of all
scheduled payments and mandatory prepayments of principal actually made or
required to be made during such fiscal year with respect to the Senior Mortgage
Loan, the Senior Mortgage Term Loan B, the Bank Midwest Loan, the Woodlands
Place Loan, the Union Bank Loan, the Mezzanine Loan, the Revolving Loan A, the
Revolving Loan B, the Bergen Note, the Indenture Notes, the Class 10 Deferred
Obligations and the Continuing Creditor Deferred Obligations; and (vi) the
aggregate amount of all voluntary prepayments of principal actually made with
respect to the Senior Mortgage Loan,
Exhibit E - 1
the Senior Mortgage Term Loan B, the Mezzanine Loan, the Revolving Loan A
(solely to the extent that such prepayment is accompanied by a reduction in the
commitments thereunder) and the Revolving Loan B (solely to the extent that such
prepayment is accompanied by a reduction in the commitments thereunder.
"Maintenance Capital Expenditures" means, for any fiscal year, the
aggregate amount of all non-financed capital expenditures (other than capital
expenditures that are made in connection with an acquisition) incurred or made
by Parent and its Subsidiaries during such fiscal year; provided that, for
purposes of this definition, the maximum amount of such capital expenditures
deducted in any fiscal year (for any fiscal year, the "Maximum Amount") shall
not exceed (a) for fiscal year 2003, $7,000,000 and (b) for any fiscal year
thereafter, $7,000,000 plus the Maximum Amount for the immediately preceding
fiscal year minus the actual amount of Maintenance Capital Expenditures included
in the definition of Target Excess Cash Flow and Excess Cash Flow in such
immediately preceding fiscal year.
"Target Excess Cash Flow" means for any fiscal year of Parent, (a) the
sum, without duplication, of (i) the net income or loss of Parent and its
Subsidiaries for such fiscal year, calculated in accordance with GAAP,
excluding, however, all gains and losses (together with any related provision
for federal and state income taxes on such gains and losses) realized in
connection with any sale or other disposition by Parent or any of its
Subsidiaries of any asset (other than the sales of inventory in the ordinary
course of business); (ii) the aggregate amount of all interest expense of Parent
and its Subsidiaries during such fiscal year, calculated in accordance with
GAAP, whether paid or accrued; (iii) the aggregate amount of all federal and
state income taxes incurred by Parent and its Subsidiaries during such fiscal
year, calculated in accordance with GAAP, whether paid or accrued; (iv) the
aggregate amount of all depreciation expense and amortization expense of Parent
and its Subsidiaries during such fiscal year, calculated in accordance with
GAAP; (v) the aggregate amount of all non-cash extraordinary losses (together
with any related provision for federal and state income taxes on such
extraordinary losses) of Parent and its Subsidiaries during such fiscal year,
calculated in accordance with GAAP; and (vi) an amount equal to any decrease in
the Working Capital during such fiscal year up to $2,000,000 per year; minus (b)
the sum, without duplication, of (i) the Maintenance Capital Expenditures for
such fiscal year; (ii) the aggregate amount of all interest expense of Parent
and its Subsidiaries paid or payable during such fiscal year, (iii) the
aggregate amount of all federal and state income taxes of Parent and its
Subsidiaries paid or payable during such fiscal year; (iv) an amount equal to
any increase in the Working Capital during such fiscal year up to $2,000,000 per
year; (v) the aggregate amount of all scheduled payments and mandatory
prepayments of principal actually made or required to be made during such fiscal
year with respect to the Senior Mortgage Loan, the Bank Midwest Loan, the
Woodlands Place Loan, the Union Bank Loan, the Mezzanine Loan and the Senior
Mortgage Term Loan B, (vi) the aggregate amount of all voluntary prepayments of
principal actually made with respect to the Senior Mortgage Loan, the Mezzanine
Loan and the Senior Mortgage Term Loan B and (vii) the aggregate amount of all
non-cash extraordinary gains (together with any related provision for federal
and state income taxes on such extraordinary gains) of Parent and its
Subsidiaries during such fiscal year, calculated in accordance with GAAP.
Exhibit E - 2
"Working Capital" means, as of any date, (a) the sum, without
duplication, of (i) current assets (other than cash and cash equivalents) and
(ii) cash and cash equivalents held in restricted accounts minus (b) the sum,
without duplication, of (i) current liabilities (other than the current portion
of long term debt) and (ii) long term liabilities related to accrued insurance,
in each case calculated on such date for Parent and its Subsidiaries.
Exhibit E - 3
SCHEDULE 1
SUBSIDIARY BORROWERS
1. Summit Care Corporation, a California corporation
2. Summit Care Pharmacy, Inc., a California corporation, d/b/a Skilled Care
Pharmacy
3. Alexandria Care Center, Inc., a California corporation
4. Brier Oak on Sunset, Inc., a California corporation
5. Elmcrest Care Center, Inc., a California corporation
6. Xxxxxxx Park Rehabilitation Center, Inc., a California corporation
7. Xxxxxxx Park Senior Assisted Living, Inc., a California corporation
8. Fountain View Subacute and Nursing Center, Inc., a California corporation
9. Rio Hondo Subacute and Nursing Center, Inc., a California corporation
10. Sycamore Park Care Center, Inc., a California corporation
11. Anaheim Terrace Care Center, LLC, a Delaware limited liability company
12. Bay Crest Care Center, LLC, a Delaware limited liability company
13. Alta Care Center, LLC, a Delaware limited liability company
14. Royalwood Care Center, LLC, a Delaware limited liability company
15. Xxxxxx Care Center, LLC, a Delaware limited liability company
16. Woodland Care Center, LLC, a Delaware limited liability company
17. Xxxxxx Senior Assisted Living, LLC, a Delaware limited liability company
18. Hemet Senior Assisted Living, LLC, a Delaware limited liability company
19. Montebello Care Center, LLC, a Delaware limited liability company
20. Hallmark Rehabilitation, LP, a Delaware limited partnership
21. Leasehold Resource Group, LLC, a Delaware limited liability company
22. Skilled Healthcare, LLC, a Delaware limited liability company
23. Summit Care Texas, L.P., a Texas limited partnership
24. Summit Care Texas Management, LLC, a Delaware limited liability company
25. Hallmark Investment Group, Inc., a Delaware corporation
26. Hallmark Rehabilitation GP, LLC, a Delaware limited liability company
Schedule 1 - Page 1
SCHEDULE 2
Lenders Commitment
CAPITALSOURCE FINANCE LLC $21,000,000
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group
Portfolio Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: xxxxxxx@xxxxxxxxxxxxx.xxx
Wire Instructions:
Bank: Bank of America, Baltimore, Maryland
Account: 003930559738
ABA: 000000000
Account Name: CapitalSource Funding LLC
Reference: Fountain View
Schedule 1
SUBSIDIARY BORROWERS
1. Summit Care Corporation, a California corporation
2. Summit Care Pharmacy, Inc., a California corporation, d/b/a Skilled Care
Pharmacy
3. Alexandria Care Center, Inc., a California corporation
4. Brier Oak on Sunset, Inc., a California corporation
5. Elmcrest Care Center, Inc., a California corporation
6. Xxxxxxx Park Rehabilitation Center, Inc., a California corporation
7. Xxxxxxx Park Senior Assisted Living, Inc., a California corporation
8. Fountain View Subacute and Nursing Center, Inc., a California corporation
9. Rio Hondo Subacute and Nursing Center, Inc., a California corporation
10. Sycamore Park Care Center, Inc., a California corporation
11. Anaheim Terrace Care Center, LLC, a Delaware limited liability company
12. Bay Crest Care Center, LLC, a Delaware limited liability company
13. Alta Care Center, LLC, a Delaware limited liability company
14. Royalwood Care Center, LLC, a Delaware limited liability company
15. Xxxxxx Care Center, LLC, a Delaware limited liability company
16. Woodland Care Center, LLC, a Delaware limited liability company
17. Xxxxxx Senior Assisted Living, LLC, a Delaware limited liability company
18. Hemet Senior Assisted Living, LLC, a Delaware limited liability company
19. Montebello Care Center, LLC, a Delaware limited liability company
20. Hallmark Rehabilitation, LP, a Delaware limited partnership
21. Leasehold Resource Group, LLC, a Delaware limited liability company
22. Skilled Healthcare, LLC, a Delaware limited liability company
23. Summit Care Texas, L.P., a Texas limited partnership
24. Summit Care Texas Management, LLC, a Delaware limited liability company
25. Hallmark Investment Group, Inc., a Delaware corporation
26. Hallmark Rehabilitation GP, LLC, a Delaware limited liability company
Schedule 2
COMMITMENTS
Lenders Commitment
CAPITALSOURCE FINANCE LLC $21,000,000
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Corporate Finance Group
Portfolio Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: xxxxxxx@xxxxxxxxxxxxx.xxx
Wire Instructions:
Bank: Bank of America, Baltimore, Maryland
Account: 003930559738
ABA: 000000000
Account Name: CapitalSource Funding LLC
Reference: Fountain View
Schedule 2.4
BORROWER'S DEPOSIT ACCOUNTS
BANK ADDRESS ABA ROUTING # ACCOUNT NUMBER
---------------- -------------- ------------- --------------
Xxxxx Fargo Bank 0000 Xxxx Xxxxxx 000-000-000 0000000000
Xxxxxx, XX 00000-
7255
Schedule 5.3
CAPITALIZATION, ORGANIZATION CHART (INCLUDING ALL SUBSIDIARIES,
AUTHORIZED/ISSUED CAPITALIZATION) AND JOINT VENTURES
JURISDICTION OF
NAME TYPE ORGANIZATION OWNER TYPE OF INTEREST/PERCENTAGE
-----------------------------------------------------------------------------------------------------------------------------------
Fountain View, Inc. Corp. Delaware Stockholders Those with 5% or more ownership:
1) Heritage Fund II, LP
2) Xxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxx
3) GS private Equity Partners, LP
4) PMI Mezzanine Fund, LP
5) Baylor Health Care System
-----------------------------------------------------------------------------------------------------------------------------------
Summit Care Corporation Corp. California Fountain View, Inc. 100% Capital Stock
-----------------------------------------------------------------------------------------------------------------------------------
Summit Care Pharmacy, Inc. d/b/a Corp. California Summit Care Corporation 100% Capital Stock
Skilled Care Pharmacy
-----------------------------------------------------------------------------------------------------------------------------------
SHG Property Resources, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Leasehold Resource Group, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
The Woodlands Resource Management GP, LLC Delaware Leasehold Resource Group, LLC Sole Member LLC
LLC
-----------------------------------------------------------------------------------------------------------------------------------
The Woodlands Resource Management, LP LP Delaware The Woodlands Resource Management 1% General Partner/ 99% Limited
LLC/ Leasehold Resource Group, LLC Partner
-----------------------------------------------------------------------------------------------------------------------------------
Alexandria Care Center, Inc. Corp. California Summit Care Corporation 100% Capital Stock
-----------------------------------------------------------------------------------------------------------------------------------
Brier Oak on Sunset, Inc. Corp. California Summit Care Corporation 100% Capital Stock
-----------------------------------------------------------------------------------------------------------------------------------
Elmcrest Care Center, Inc. Corp. California Summit Care Corporation 100% Capital Stock
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Park Rehabilitation Center, Corp. California Summit Care Corporation 100% Capital Stock
Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Park Senior Assisted Living, Corp. California Summit Care Corporation 100% Capital Stock
Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Fountain View Subacute and Nursing Corp. California Summit Care Corporation 100% Capital Stock
Center, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Rio Hondo Subacute and Nursing Center, Corp. California Summit Care Corporation 100% Capital Stock
Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Sycamore Park Care Center, Inc. Corp. California Summit Care Corporation 100% Capital Stock
-----------------------------------------------------------------------------------------------------------------------------------
Skilled Healthcare, LLC LLC Delaware Fountain View, Inc. Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Schedule 5.3
JURISDICTION OF
NAME TYPE ORGANIZATION OWNER TYPE OF INTEREST/PERCENTAGE
-----------------------------------------------------------------------------------------------------------------------------------
Skilled Healthcare II, LLC LLC Delaware Skilled Healthcare, LLC Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Hallmark Investment Group, Inc. Corp. Delaware Fountain View, Inc. 100% Capital Stock
-----------------------------------------------------------------------------------------------------------------------------------
Hallmark Rehabilitation GP, LLC LLC Delaware Hallmark Investment Group, Inc. Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Hallmark Rehabilitation, LP LP Delaware Hallmark Rehabilitation GP, 1% General Partner/99% Limited
LLC/Hallmark Investment Group, Inc. Partner
-----------------------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. LP Texas Summit Care Texas Management, 1% General Partner/99% Limited
LLC/Summit Care Corporation Partner
-----------------------------------------------------------------------------------------------------------------------------------
Summit Care Texas Management, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
SHG Investments, LLC LLC Delaware Summit Care Texas, L.P. Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Anaheim Terrace Care Center, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Alta Care Center, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Bay Crest Care Center, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Senior Assisted Living, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Hemet Senior Assisted Living, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Montebello Care Center, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Royalwood Care Center, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Care Center, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
Woodland Care Center, LLC LLC Delaware Summit Care Corporation Sole Member LLC
-----------------------------------------------------------------------------------------------------------------------------------
JOINT VENTURES: None.
Schedule 5.4
OWNED PROPERTIES:
PROPERTY DESCRIPTION
---------------------------------------------------------------------------------------------
Hemet, California Residential property adjacent to Devonshire Care Center
[Further details to be provided at a later date]
---------------------------------------------------------------------------------------------
LaGrange, Texas Property of 12.267 acres adjacent to
Monument Hill Nursing Homes [Further details to
be provided at a later date]o
---------------------------------------------------------------------------------------------
White Settlement, Texas Property adjacent to West Side Campus of Care [Further
details to be provided at a later date]
---------------------------------------------------------------------------------------------
LEASEHOLD PROPERTIES
TENANT/ SUBTENANT/
PROPERTY ADDRESS CURRENT LESSOR / LANDLORD SUBLESSOR OPERATOR
--------------------------------------------------------------------------------------------------------------------
Alexandria Convalescent 1515 N. Alexandria Alexandria Convalescent Investments Leasehold Alexandria
Hospital Avenue, Los Angeles, 000 X. Xxx Xxxxxx Xxx. Resource Group, Care Xxxxxx,
XX 00000 Xxx Xxxxxxx, XX 00000 LLC Inc.
--------------------------------------------------------------------------------------------------------------------
Brier Oak Terrace Care 0000 Xxxxxx Xxxx., Xxxxxxx Xxxxxx, Xxxxxx & Xxxxxx Leasehold Brier Oak on
Center Los Angeles, CA Xxxxxxxx As Trustees For The Xxxxxx Resource Group, Sunset, Inc.
90027 And Xxxxxx Xxxxxxxx Family Trust Of LLC
September 0xx, 0000, Xxxxx Xxxxx,
And Sunset Motel And Development Co.
00000 Xxxxxxx Xxxxxxxxx, Xxx 000
Xxxxxx, Xx 00000
--------------------------------------------------------------------------------------------------------------------
Elmcrest Convalescent 3111 Santa Xxxxx Xxx-Gar Associates, L.P. Leasehold Elmcrest Care
Avenue, Los Angeles, c/o Nigro, Karlin, & Xxxxx CPAs Resource Group, Center, Inc.
CA 91733 00000 Xxxxx Xxxxxx Xxxx. XXX
Xxx Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx Park 000 X Xx Xxxx Xx Brea Convalescent Investments Leasehold Xxxxxxx Park
Convalescent Avenue, Los Angeles, 0000 Xxxxxxx Xxxx., #000 Xxxxxxxx Xxxxx, Xxxxxxxxxxxxxx
XX 00000 Xxx Xxxxxxx, XX 00000 LLC Center, Inc.
--------------------------------------------------------------------------------------------------------------------
Schedule 5.4
TENANT/ SUBTENANT/
PROPERTY ADDRESS CURRENT LESSOR / LANDLORD SUBLESSOR OPERATOR
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx Park 515 N. La Brea La Brea Convalescent Investments Leasehold Xxxxxxx Park
Retirement Hotel Avenue, Los Angeles, 0000 Xxxxxxx Xxxx., #000 Xxxxxxxx Xxxxx, Xxxxxx
XX 00000 Xxx Xxxxxxx, XX 00000 LLC Assisted
Living, Inc.
--------------------------------------------------------------------------------------------------------------------
Fountainview 5310 Fountain Xxxxxx Xxxxxx and Xxxxxx Xxxxxx Leasehold Fountain View
Convalescent Avenue, Los Angeles, 10284 Century Wood Drive Resource Group, Subacute and
CA 90029 Xxx Xxxxxxx, XX 00000 LLC Nursing
Center, Inc.
--------------------------------------------------------------------------------------------------------------------
Rio Hondo Nursing Center 273 E. Xxxxxxx Xxxxxx Xxxxxx and Xxxxxx Xxxxxx Leasehold Rio Hondo
Blvd., Montebello, 10284 Century Wood Drive Resource Group, Xxxxxxxx xxx
XX 00000 Xxx Xxxxxxx, XX LLC Nursing
90067 Center, Inc.
--------------------------------------------------------------------------------------------------------------------
Xxxxxxxx Xxxx 0000 X. Xxxxxxxx Xxxxxx Xxxxxx and Xxxxxx Xxxxxx Leasehold Sycamore Park
Convalescent Street, Los Angeles, 10284 Century Wood Drive Resource Group, Care Xxxxxx,
XX 00000 Xxx Xxxxxxx, XX LLC Inc.
90067
--------------------------------------------------------------------------------------------------------------------
Montebello Convalescent 1036 W. Xxxxxxx Xxxxxx Xxxxxx and Xxxxxx Xxxxxx Leasehold Montebello
Blvd., Montebello, 10284 Century Wood Drive Resource Group, Xxxx Xxxxxx,
XX 00000 Xxx Xxxxxxx, XX LLC LLC
90067
--------------------------------------------------------------------------------------------------------------------
Anaheim Terrace Care 000 X. Xxxxx Xxxxxx, Xxx Menlo, Trustee of the Menlo Leasehold Xxxxxxx
Xxxxxx Xxxxxxx, XX 00000 Trust U/T/I 5/22/83 Resource Group, Terrace Care
x/x Xxxxxxx Xxxxxxxxxx, Xxxxx 000 LLC Center, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------------------------------
Bay Crest Care Center 0000 Xxxxxx Xxxxxx, Xxxxx Xxx Sanitarium and Leasehold Xxx Xxxxx Xxxx
Xxxxxxxx, XX 00000 Convalescent Hospital Resource Group, Center, LLC
c/o Dr. Xxxxx Xxxxxx LLC
00000 Xxxxxxx 00
Xxxxxxxxx, XX 00000
--------------------------------------------------------------------------------------------------------------------
Schedule 5.4
TENANT/ SUBTENANT/
PROPERTY ADDRESS CURRENT LESSOR / LANDLORD SUBLESSOR OPERATOR
--------------------------------------------------------------------------------------------------------------------
Palm Grove Care Center 13075 Blackbird, Palmcrest Associates, Ltd. Leasehold Alta Care
Garden Grove, CA 0000 Xxxxxx Xxxx Xx., Xxx 000 Cts., Resource Group, Center, LLC
00000 Xxxxxx xxx Xxx, XX 00000 LLC
--------------------------------------------------------------------------------------------------------------------
Royalwood Care Center 00000 Xxxxx Xxxxxx, Xxxx X. Xxxxxx and Xxxxxx Xxx Xxxxx, Leasehold Royalwood Care
Xxxxxxxx, XX 00000 Jr. Resource Group, Center, LLC
000 Xxxxxx Xxxxxx, XX 00 LLC
Xxxxxxxxx XX 00000
--------------------------------------------------------------------------------------------------------------------
Xxxxxx Care Center 8167 W. Third R.E.M. Properties Leasehold Xxxxxx Care
Street, Los Angeles, 0000 Xxxxxxxx Xxxxxx Xxxxxxxx Xxxxx, Xxxxxx, XXX
XX 00000 Los Angeles, CA LLC
90025
--------------------------------------------------------------------------------------------------------------------
Woodland Care Center 0000 Xxxxxx Xxxxxx, Xxx-Xxx Associates Leasehold Xxxxxxxx Xxxx
Xxxxxx, XX 00000 Xxxxx, Xxxxxx & Xxxxx, Ste 1300 Resource Group, Center, LLC
00000 Xxxxx Xxxxxx Xxxx. XXX
Xxx Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------------------------------
Xxxxxx Retirement 000 Xxxx Xxxxxx Xx. Xxxxxx - Xxxxxxx Prop Inc., Leasehold Carson Senior
(ground lease) Xxxxxx, XX 00000 000 X. Xxxxx Xxxx., Xxx 0000 Resource Group, Assisted
Xxxxxxxx, XX 00000 LLC Living, LLC
--------------------------------------------------------------------------------------------------------------------
Hemet Assisted Living 0000 X. Xxxxxxxxxx X.X.X. Ltd. Lessor Leasehold Hemet Senior
Retirement Center Avenue 6363 Christie Ave., 2925 Resource Group, Assisted
(ground lease) Xxxxx, XX 00000 Xxxxxxxxx, XX 00000 LLC Living, LLC
--------------------------------------------------------------------------------------------------------------------
Xxxxxxxx Xxxxx 00000 Xxxxxxx XX Foothill 10/241, LLC Skilled N/A
(Corporate Office) Parkway, Suite 200, 3501 Jamboree Road, Suite 2000 Healthcare, LLC
Foothill Ranch, CA Xxxxxxx Xxxxx, XX 00000
92610
--------------------------------------------------------------------------------------------------------------------
Schedule 5.4
TENANT/ SUBTENANT/
PROPERTY ADDRESS CURRENT LESSOR / LANDLORD SUBLESSOR OPERATOR
--------------------------------------------------------------------------------------------------------------------
Texas Regional Xxxxxx 00000 XX 0000, Xxxx Xxxxxxx, dba Xxxxxxx Skilled N/A
Suite 5, Garden Properties IV Healthcare, LLC
Xxxxx, XX 00000 00000 XX 0000
Xxxxxx Xxxxx, Xxxxx 00000
--------------------------------------------------------------------------------------------------------------------
Skilled Care 000 X. Xxxxxxxxxx The Employees Retirement System, Summit Care N/A
Pharmacy (Monrovia) Drive #111, The State of Hawaii Pharmacy, Inc.
Monrovia, CA Xxxxxxxx Xxxx Company dba Skilled Care
91016 c/o Tooley & Company Pharmacy
000 X. Xxxxxx, Xxx. 000
Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------------------------------
Skilled Care Pharmacy 00000 Xxx Xxxxx Xxxxx Xxxxxx Xxxxxx Business Summit Care N/A
(Xxxxx Xxxxx) Road, Xxxxx Xxxxx, Parks Pharmacy, Inc.
CA 92887 File 30036 dba Skilled Care
X.X. Xxx 0000 Xxxxxxxx
Xxx Xxxxxxxxx, XX 0000-0000
--------------------------------------------------------------------------------------------------------------------
Schedule 5.5
DEFAULTS; SERVICE FEES; MANAGERS
None.
Schedule 5.6
LITIGATION
None.
Schedule 5.8
TAX LIENS
None.
Schedule 5.10
LIABILITY EVENT
None.
Schedule 5.11
INTELLECTUAL PROPERTY
REGISTERED TRADEMARKS AND SERVICE MARKS
TRADEMARK OR SERVICE XXXX XXXXXX REGISTRATION DATE REGISTRATION NO.
------------------------------------------------------------------------------------------------
Design of man with outstretched Summit Care Corporation 10/20/98 2197216
arms standing on top of a
medicinal tablet
------------------------------------------------------------------------------------------------
"Innovative Solutions In Health Summit Care Corporation 10/06/98 2193214
Care"
------------------------------------------------------------------------------------------------
"RXPertise" Summit Care Corporation 03/03/98 2140771
------------------------------------------------------------------------------------------------
"SCP Systems" Summit Care Corporation 03/20/01 2436075
------------------------------------------------------------------------------------------------
"Skilled Care Pharmacy" Summit Care Corporation 03/07/00 2325082
------------------------------------------------------------------------------------------------
"SkilledCare Pharmacy" (including Summit Care Corporation 03/07/00 2325083
design of man with outreached
arms standing on top of a
medicinal tablet)
------------------------------------------------------------------------------------------------
REGISTERED PATENTS
None.
REGISTERED COPYRIGHTS
None.
Schedule 5.15
EXISTING INDEBTEDNESS
NONE.
Schedule 5.16
SHAREHOLDER AGREEMENTS
Stockholder's Agreement, dated March 27, 1998, among the holders of the Existing
Class A Common Stock, Existing Class B Common Stock, Existing Class C Common
Stock, and the Existing Preferred Stock, as subsequently amended on May 4, 1998,
and amended further as of August 15, 2003.
Schedule 5.17
INSURANCE
DESC. OF INSURANCE POLICY POLICY LIMITS OF RETRO
COVERAGE CARRIER NUMBER PERIOD INSURANCE DATE
-------------------------------------------------------------------------------------------------------
Professional/ Lexington (AIG) 2004776 4/10/01 - Professional Liability Summit =
General Liability 04/10/04 $4,000,000 Per Med. Inc. 4/10/2001
$5,000,000 Agg. Per Loc. FV9 =
General Liability 4/10/2002
$1,000,000 Each Occ.
$5,000,000 Agg. Per Loc.
$50,000 Fire Damage
$5,000 Med. Expense
$5,000,000 Policy
Aggregate
-------------------------------------------------------------------------------------------------------
California Workers' State 1672742-02 1/1/03- $1,000,000 Statutory N/A
Compensation Compensation 1/1/04 Limits - W/C and
Insurance Fund Employers Liability
-------------------------------------------------------------------------------------------------------
Employment Lexington (AIG) 1052217 3/1/03- $5,000,000 Ea. Event 3/1/2000
Practices Liability 3/1/04 $5,000,000 Policy Agg.
-------------------------------------------------------------------------------------------------------
Texas Excess Lexington (AIG) 650-0147 4/1/03 - $5,000,000 Ea. Event N/A
Employers Liability 4/1/04 $5,000,000 Policy Agg.
-------------------------------------------------------------------------------------------------------
DESC. OF SIR/ ANNUAL BROKER/
COVERAGE DEDUCTIBLE PREMIUM CONTACT
-------------------------------------------------------------------------
Professional/ $250,000 CA per $ 360,938 Xxxxxx Xxxxx
General Liability claim Xxxxx Xx Xxxxx
Aon LA
$1,000,000 TX per
claim
No SIR Aggregate
-------------------------------------------------------------------------
California Workers' None $7,200,000 Xxxxxx Xxxxx
Compensation Xxxxx Xx Xxxxx
Xxxxx Xxxxxx
Aon LA
-------------------------------------------------------------------------
Employment $50,000 $ 345,516 Xxxxxx Xxxxx
Practices Liability Xxxxxxxxxxx
Xx Xxxxx
Aon LA
-------------------------------------------------------------------------
Texas Excess $1,000,000 $ 426,164 Xxxxxx Xxxxx
Employers Liability Xxxxxxxxxxx
Xx Xxxxx
Aon LA
-------------------------------------------------------------------------
Schedule 5.17
DESC. OF INSURANCE POLICY POLICY LIMITS OF RETRO
COVERAGE CARRIER NUMBER PERIOD INSURANCE DATE
-------------------------------------------------------------------------------------------------------
Property Travelers 4/15/03 - Blanket Limit - $150 million N/A
4/15/04 Replacement Cost
Quake/Windstorm/Flood Incl.
CA Earthquake $25 million
-------------------------------------------------------------------------------------------------------
California Auto American Home 64597-78 5/30/03 - $1,000,000 CSL N/A
(AIG) 05/30/04 $1,000,000 UM/UIM
$5,000 MEDICAL
-------------------------------------------------------------------------------------------------------
Texas Auto American Home 64597-79 5/30/03 - $1,000,000 CSL N/A
(AIG) 05/30/04 $1,000,000 UM/UIM
$5,000 MEDICAL
-------------------------------------------------------------------------------------------------------
Directors & AIG 002410795 5/31/03 - $10,000,000 Aggregate 1/13/1997
Officers Liability 5/31/04
-------------------------------------------------------------------------------------------------------
Fiduciary Liability AIG 002410704 5/31/03 - $2,000,000 Aggregate 5/31/2003
5/31/04
-------------------------------------------------------------------------------------------------------
DESC. OF SIR/ ANNUAL BROKER/
COVERAGE DEDUCTIBLE PREMIUM CONTACT
-------------------------------------------------------------------------
Property Ded. All Risk $ 537,823 Heritage Program
$100,000/Quake 5% Lockton Kansas City
Windstorm 5% Xxx Xxxxxx
Xxx Xxxxxxx
-------------------------------------------------------------------------
California Auto $500 Deductible $ 52,761 Xxxxxx Xxxxx
Comprehensive Xxxxxxxxxxx
$500 Deductible Xx Xxxxx
Collision Aon LA
-------------------------------------------------------------------------
Texas Auto $500 Deductible $ 58,750 Xxxxxx Xxxxx
Comprehensive Xxxxxxxxxxx
$500 Deductible Xx Xxxxx
Collision Aon LA
-------------------------------------------------------------------------
Directors & $100,000 SIR $ 154,515 Heritage Program
Officers Liability (Incl.
$ 6,615 Lockton NY
Broker fee)
-------------------------------------------------------------------------
Fiduciary Liability $10,000 SIR $ 6,630 Heritage Program
Lockton NY
-------------------------------------------------------------------------
Schedule 5.17
DESC. OF INSURANCE POLICY POLICY LIMITS OF RETRO
COVERAGE CARRIER NUMBER PERIOD INSURANCE DATE
-------------------------------------------------------------------------------------------------------
Travel Accident The Hartford ETB 104559 4/9/02 - $150,000 Benefit N/A
4/9/05 Per employee Accidental
Death or Dismemberment
$1,000,000 Aggregate
-------------------------------------------------------------------------------------------------------
Crime National Union 8526611 9/22/02- $2,000,000 N/A
(AIG) 9/22/03 Employee Dishonesty
Forgery or Alteration
Theft - inside and outside
Robbery and Safe Burglary
Computer Fraud
Money Orders and
Counterfeit
-------------------------------------------------------------------------------------------------------
DESC. OF SIR/ ANNUAL BROKER/
COVERAGE DEDUCTIBLE PREMIUM CONTACT
-------------------------------------------------------------------------
Travel Accident None $ 4,392 Aon LA
Xxxxx Xxxxx
-------------------------------------------------------------------------
Crime $75,000 Each Claim $ 20,747 Xxxxxx Xxxxx
Xxxxxxxxxxx
Xx Xxxxx
Aon LA
-------------------------------------------------------------------------
TOTAL $9,168,236
Schedule 5.18A
CORPORATE NAMES
CURRENT NAMES
(AS OF EFFECTIVE DATE)
1. Fountain View Inc., a California corporation
2. Summit Care Corporation, a California corporation
3. Summit Care Pharmacy, Inc., a California corporation, d/b/a Skilled Care
Pharmacy
4. Alexandria Care Center, Inc., a California corporation
5. Brier Oak on Sunset, Inc., a California corporation
6. Elmcrest Care Center, Inc., a California corporation
7. Xxxxxxx Park Rehabilitation Center, Inc., a California corporation
8. Xxxxxxx Park Senior Assisted Living, Inc., a California corporation
9. Fountain View Subacute and Nursing Center, Inc., a California corporation
10. Rio Hondo Subacute and Nursing Center, Inc., a California corporation
11. Sycamore Park Care Center, Inc., a California corporation
12. Anaheim Terrace Care Center, LLC, a Delaware limited liability company
13. Bay Crest Care Center, LLC, a Delaware limited liability company
14. Alta Care Center, LLC, a Delaware limited liability company
15. Royalwood Care Center, LLC, a Delaware limited liability company
16. Xxxxxx Care Center, LLC, a Delaware limited liability company
17. Woodland Care Center, LLC, a Delaware limited liability company
18. Xxxxxx Senior Assisted Living, LLC, a Delaware limited liability company
19. Hemet Senior Assisted Living, LLC, a Delaware limited liability company
20. Montebello Care Center, LLC, a Delaware limited liability company
21. Hallmark Rehabilitation, LP, a Delaware limited partnership
22. Leasehold Resource Group, LLC, a Delaware limited liability company
23. Skilled Healthcare, LLC, a Delaware limited liability company
24. Summit Care Texas, L.P., a Texas limited partnership
25. Summit Care Texas Management, LLC, a Delaware limited liability company
26. Hallmark Investment Group, Inc., a Delaware corporation
27. Hallmark Rehabilitation GP, LLC, a Delaware limited liability company
Schedule 5.18A
PREVIOUS NAMES
(PRIOR TO EFFECTIVE DATE)
1. AIB Corp., dba Xxxxxxx Park Convalescent, a California corporation
2. Alexandria Convalescent Hospital, Inc., a California corporation
3. Anaheim Terrace Care Center (California)
4. Bay Crest Care Center (California)
5. BIA Hotel Corp. dba Xxxxxxx Park Retirement Hotel, a California corporation
6. Brier Oak Convalescent, Inc., a California corporation
7. Brier Oak Terrace Care Center (California)
8. Carson Retirement Center (California)
9. Elmcrest Convalescent Hospital, a California corporation
10. Elmcrest Convalescent Hospital, a California corporation
11. Fountain View Convalescent Hospital (California)
12. Fountain View Management, Inc., a California corporation
13. Fountain View Management, Inc., a Delaware corporation
14. Fountain View, Inc, a Delaware corporation
15. Fountainview Convalescent Hospital, a California corporation
16. FV-SCC Acquisition Corp. , a Delaware corporation
17. Hemet Assisted Living Center (California)
18. Xxxxx Convalescent, Inc. (California)
19. Locomotion Holdings, Inc., a Delaware corporation
20. Locomotion Therapy, Inc., a Delaware corporation (d/b/a Texas Locomotion
Therapy)
21. Locomotion Therapy, Inc., a Delaware corporation
22. Montebello Convalescent (California)
23. Montebello Convalescent, Inc. (California)
24. Palm Grove Center (California)
25. Palm Grove Convalescent Center (California)
26. Rio Hondo Nursing Center, a California corporation
27. Rio Hondo Nursing Center, Inc. (California)
28. Riverside Manors, Inc. dba Hemet Retirement Center (California)
29. Royalwood Care Center (California)
30. Xxxxxx Care Center (California)
Schedule 5.18A
31. Summit Care California, Inc., a California corporation
32. Summit Care California, Inc., a California corporation (f/k/a Xxxxx
Convalescent, Inc.)
33. Summit Care Corporation dba Los Olivos Healthcare Center (Arizona)
34. Summit Care Corporation, a California corporation
35. Summit Care Pharmacy, Inc., dba Skilled Care Pharmacy, a California
corporation
36. Sycamore Park Convalescent Hospital, a California corporation
37. Texas Locomotion Therapy (Texas)
38. Woodland Care Center (California)
Schedule 5.18B
PLACES OF BUSINESS
CHIEF EXECUTIVE OFFICE:
1. 00000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, XX 00000
PLACES OF BUSINESS:
1. 0000 X. Xxxxxxxx Xxxx., Xxxxxxx, XX 00000
2. 0000 X. Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
3. 0000 Xxxxxx Xxxx., Xxx Xxxxxxx, XX 00000
4. 0000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
5. 000 X Xx Xxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
6. 000 X. Xx Xxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
7. 0000 Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
8. 000 X. Xxxxxxx Xxxx., Xxxxxxxxxx, XX 00000
9. 0000 X. Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
10. 0000 X. Xxxxxxx Xxxx., Xxxxxxxxxx, XX 00000
11. 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX 00000
12. 0000 Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000
13. 00000 Xxxxxxxxx, Xxxxxx Xxxxx, XX 00000
14. 00000 Xxxxx Xxxxxx, Xxxxxxxx, XX 00000
15. 0000 X. Xxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
16. 0000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000
17. 000 Xxxx Xxxxxx Xx., Xxxxxx, XX 00000
18. 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx, XX 00000
19. 00000 XX 0000, Xxxxx 0, Xxxxxx Xxxxx, XX 00000
20. 000 X. Xxxxxxxxxx Xxxxx #000, Xxxxxxxx, XX 00000
21. 00000 Xxx Xxxxx Xxxx, Xxxxx Xxxxx, XX 00000
Schedule 6.8
FURTHER ASSURANCES/POST CLOSING
1. Fourteen (14) days after the Closing Date, healthcare regulatory opinion
covering facilities operating in the State of California.
2. Thirty (30) days after the Closing Date, certified copies of all insurance
policies required to be delivered pursuant to sECTION 4.1(g).
3. Thirty (30) days after the Closing Date, correction of legal descriptions
and subsequent resubmission of those leasehold deeds of trust, if any,
rejected for recordation by the appropriate county recorders offices due to
the insufficiency of the attached legal description.
4. One-hundred and twenty (120) days after the Closing Date, delivery of
Mortgages relating to those fee properties listed on Schedule 5.4.
Schedule 7.2
PERMITTED INDEBTEDNESS
Indebtedness as contemplated or permitted by the Loan Documents and the
Plan of Reorganization.
Schedule 7.3
LIENS
DEBTOR LIEN COLLATERAL
(SEARCH NAME) JURISDICTION SECURED PARTY TYPE FILING INFO DESCRIPTION
---------------------------------------------------------------------------------------------------------------------
Fountain View Inc. Woodland Care California Minolta Business Systems UCC 9821760613 Equipment
Center Secretary of State Inc. filed: 8-3-98
0000 Xxxxxx Xxx Xx Xxx 000
Xxxxxx, XX 00000 Xxxx Xxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Xxxxxxx Park Convalescent Hospital California BCL Capital UCC 199823960967 Equipment
000 Xxxxx XX Xxxx Xxxxxx Secretary of State 000 X. Xxxxxxx Xx filed: 8-27-98
Xxx Xxxxxxx, XX 00000 Xxxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Rio Hondo Convalescent Hospital California Ecolab Inc. UCC 199932360360 Equipment
000 Xxxx Xxxxxxx Xxxx. Secretary of State 000 Xxxxxxx Xx filed: 11-12-99
Xxx Xxxxxxx, XX 00000 Xx. Xxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Summit Care-California, Inc. California Safeco Credit Co, Inc. UCC 0112961109 Equipment
0000 X. XX Xxxx Xxx Secretary of State dba Safeline Leasing filed: 5-7-01
Xxxxxx, XX 00000 00000 Xxxxxxx Xx XX
Xxxxxxx, XX 00000
and
Fountain Care Center
0000 X. XX Xxxx Xxx
Xxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Summit Care Corp., Texas Secretary of IKON Office Solutions UCC 9900115658 Equipment
dba Oak Crest Nursing Center State 2090 Xxxxxxxx filed: 6-7-99
0000 XX 0000 Xxxxxx, XX 00000
Xxxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Summit Care Corporation Texas Secretary of Mellon First United UCC 9800136642 Equipment
0000 Xxx Xxxxxx Xx., Xxx 000 Xxxxx Leasing filed: 0-0-00
Xxx Xxxxxxx, XX 00000 000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Schedule 7.3
DEBTOR LIEN COLLATERAL
(SEARCH NAME) JURISDICTION SECURED PARTY TYPE FILING INFO DESCRIPTION
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of Xxxxxxxxxxx Incorporated UCC 9800160360 Equipment
0000 Xxxx Xxxxxxxx Xxxx. Xxxxx 00000 Xxxxxxxxx Xxxx Ste filed: 8-6-03
Xxxxxxx, XX 00000 103
Xxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of Safeco Credit Co., Inc. UCC 0100088987 Equipment
0000 Xxx Xxxxx Xxxxx Xxxxx Xxxxx dba Safeline Leasing filed: 0-0-00
Xxxxx Xxxxxxxxxx, XX 00000 00000 Xxxxxxx Xx XX
Xxxxxxx, XX 00000
and
West Side Campus Care
0000 Xxx Xxxxx Xxxxx Xxxxx
Xxxxx Xxxxxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of Norwest Financial UCC 9900093404 Equipment
0000 X. 00xx Xx Xxxxx Leasing, Inc. filed: 5-10-99
Xxxxxxx, XX 00000 0000 Xxxx Xxx., Xxx 000
Xxxxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Summit Care Texas, L.P. Texas Secretary of Xxx Xxxxx UCC 020008568685 Equipment
0000 Xxxxx Xx. Xxxxx PO Box 12380 filed: 5-10-99
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
Schedule 7.4
INVESTMENTS
None.
Schedule 7.6
AFFILIATE TRANSACTIONS
1. Agreements, whether written or oral, regarding the reimbursement of certain
out-of-pocket and allocated overhead expenses incurred by Heritage Partners
in connection with the management and operation of the Company.
2. $32,000,000 Promissory Note by SHG Investments, LLC in favor of Summit Care
Texas, L.P.
3. Long-term care facilities leases with Xxxxxx and Xxxxxx Xxxxxx:
a. Fountainview Convalescent Hospital, 0000 Xxxxxxxx Xxxxxx, Xxx
Xxxxxxx, XX.
b. Rio Hondo Nursing Center, 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx,
XX.
c. Sycamore Park Convalescent Hospital, 0000 Xxxxx Xxxxxxxx Xxxxxx,
Xxx Xxxxxxx, XX.
d. Montebello Convalescent Hospital, 0000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, XX
4. Intercompany agreements to provide services and supplies at the facilities.
Schedule 7.9
CONTINGENT OBLIGATIONS
None.
