EXECUTION
EXHIBIT 10.95
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
dated as of
January 20, 2000
among
MARINER HEALTH GROUP, INC.,
and
EACH OF THE SUBSIDIARIES OF MARINER HEALTH GROUP, INC. PARTY HERETO,
each as debtor and debtor-in-possession,
THE LENDERS PARTY HERETO,
THE LC ISSUING BANKS PARTY HERETO,
FIRST UNION NATIONAL BANK,
as Syndication Agent,
PNC CAPITAL MARKETS, INC. and FIRST UNION SECURITIES, INC.,
as Co-Arrangers,
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent and Collateral Agent
ARTICLE 1. Definitions................................................................................. 1
Section 1.01 Defined Terms............................................................................... 1
Section 1.02 Accounting Terms and Determinations......................................................... 25
Section 1.03 Other Definitional Provisions............................................................... 25
ARTICLE 2. The Credit Facilities....................................................................... 25
Section 2.01 Commitments to Lend......................................................................... 25
Section 2.02 Notice of Borrowing......................................................................... 27
Section 2.03 Notice to Lenders; Funding of Loans......................................................... 27
Section 2.04 Interest Rate; Default Rate................................................................. 28
Section 2.05 Letters of Credit........................................................................... 28
Section 2.06 Fees........................................................................................ 36
Section 2.07 Final Maturity of Loans..................................................................... 36
Section 2.08 Unscheduled Mandatory Prepayments of Loans; Reduction of Commitments....................... 37
Section 2.09 Optional Prepayments........................................................................ 38
Section 2.10 Termination or Reduction of Commitments..................................................... 39
Section 2.11 General Provisions as to Payments........................................................... 39
Section 2.12 Computation of Interest and Fees............................................................ 40
Section 2.13 Superpriority Nature of Obligations......................................................... 40
Section 2.14 Joint and Several Liability; Payment Indemnifications....................................... 41
ARTICLE 3. Conditions.................................................................................. 41
Section 3.01 Effectiveness of this Agreement; Closing.................................................... 41
Section 3.02 Credit Events............................................................................... 45
ARTICLE 4. Representations and Warranties.............................................................. 46
Section 4.01 Corporate Existence and Power............................................................... 46
Section 4.02 Corporate and Governmental Authorization; No Contravention.................................. 47
Section 4.03 Binding Effect.............................................................................. 47
Section 4.04 Security Interests.......................................................................... 47
Section 4.05 Financial Information....................................................................... 47
Section 4.06 Litigation.................................................................................. 48
Section 4.07 Compliance with ERISA....................................................................... 48
Section 4.08 Taxes....................................................................................... 48
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Section 4.09 Compliance with Laws........................................................................ 48
Section 4.10 No Regulatory Restrictions on Borrowing..................................................... 49
Section 4.11 Environmental Matters....................................................................... 50
Section 4.12 Full Disclosure............................................................................. 50
Section 4.13 Information as to Equity Interests and Instruments Owned by MHG Companies................... 50
Section 4.14 Representations in Other Financing Documents................................................ 50
Section 4.15 Year 2000 Compliance........................................................................ 50
Section 4.16 Margin Stock................................................................................ 51
Section 4.17 Representations Concerning Cash Management System; Credit and Collection Policy............. 51
Section 4.18 Prepetition Indebtedness.................................................................... 51
Section 4.19 Chapter 11 Cases............................................................................ 51
Section 4.20 Cash Budget; Year 2000 DIP Budget........................................................... 51
Section 4.21 Liens....................................................................................... 51
Section 4.22 Government Claims........................................................................... 52
Section 4.23 Management Employees........................................................................ 52
ARTICLE 5. Affirmative Covenants....................................................................... 52
Section 5.01 Information................................................................................. 52
Section 5.02 Maintenance of Property..................................................................... 57
Section 5.03 Insurance................................................................................... 57
Section 5.04 Compliance with Law......................................................................... 57
Section 5.05 Maintenance of Existence, Rights, Etc....................................................... 58
Section 5.06 Use of Proceeds and Letters of Credit....................................................... 58
Section 5.07 Future Actions with Respect to Collateral................................................... 58
Section 5.08 Casualty Events............................................................................. 60
Section 5.09 Cash Management System; Credit and Collection Policy........................................ 61
Section 5.10 Certain Orders.............................................................................. 61
Section 5.11 Inspection Rights; Lender Meeting........................................................... 61
Section 5.12 Creditor Schedule........................................................................... 62
Section 5.13 Transition Management....................................................................... 62
Section 5.14 Overhead Payments........................................................................... 63
Section 5.15 Post Closing Deliveries..................................................................... 63
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ARTICLE 6. Financial Covenants......................................................................... 64
Section 6.01 Consolidated EBITDAR........................................................................ 64
Section 6.02 Nursing Home Occupancy...................................................................... 64
Section 6.03 Receivables................................................................................. 65
Section 6.04 Compliance with Cash Budget................................................................. 65
Section 6.05 Capital Expenditures........................................................................ 65
ARTICLE 7. Negative Covenants.......................................................................... 66
Section 7.01 Limitation on Debt.......................................................................... 66
Section 7.02 Negative Pledge............................................................................. 67
Section 7.03 Consolidations, Mergers and Asset Sales..................................................... 68
Section 7.04 Limitations on Investments.................................................................. 68
Section 7.05 Limitations on Transactions with Affiliates................................................. 69
Section 7.06 Limitation on Restrictions Affecting Subsidiaries........................................... 69
Section 7.07 Restricted Payments......................................................................... 69
Section 7.08 No Modification of Certain Documents Without Consent........................................ 70
Section 7.09 No Change of Fiscal Periods................................................................. 71
Section 7.10 Margin Stock................................................................................ 71
Section 7.11 Limitation on Business...................................................................... 71
Section 7.12 Leases...................................................................................... 71
Section 7.13 Limitation on Cash Not Held in Collateral Accounts or Concentration Accounts................ 71
Section 7.14 Chapter 11 Claims........................................................................... 71
Section 7.15 Limitation on Repayments; Prepetition Obligations........................................... 72
Section 7.16 Agreements.................................................................................. 72
Section 7.17 Management Employees........................................................................ 72
ARTICLE 8. Defaults.................................................................................... 72
Section 8.01 Events of Default........................................................................... 72
Section 8.02 Notice of Default........................................................................... 76
Section 8.03 Enforcement Notice.......................................................................... 76
Section 8.04 Cash Cover.................................................................................. 76
ARTICLE 9. The Agents.................................................................................. 77
Section 9.01 Appointment and Authorization............................................................... 77
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Section 9.02 Agents and Affiliates....................................................................... 77
Section 9.03 Action by Agents............................................................................ 77
Section 9.04 Delegation of Duties; Consultation with Experts............................................. 78
Section 9.05 Liability of Agents......................................................................... 78
Section 9.06 Indemnification............................................................................. 79
Section 9.07 Credit Decision............................................................................. 79
Section 9.08 Successor Agents............................................................................ 80
ARTICLE 10. Changes In Circumstances.................................................................... 80
Section 10.01 Increased Cost and Reduced Return........................................................... 80
Section 10.02 Taxes....................................................................................... 81
ARTICLE 11. Miscellaneous............................................................................... 83
Section 11.01 Notices..................................................................................... 83
Section 11.02 No Waiver................................................................................... 83
Section 11.03 Expenses; Indemnification................................................................... 83
Section 11.04 Sharing of Set-offs......................................................................... 87
Section 11.05 Amendments and Waivers...................................................................... 87
Section 11.06 Successors and Assigns...................................................................... 89
Section 11.07 Margin Stock................................................................................ 91
Section 11.08 Governing Law; Submission to Jurisdiction................................................... 91
Section 11.09 Counterparts; Integration................................................................... 92
Section 11.10 WAIVER OF JURY TRIAL........................................................................ 92
Section 11.11 Confidentiality............................................................................. 92
Section 11.12 Parties Including Trustees; Court Proceedings............................................... 93
Section 11.13 MHG Appointed Attorney-In-Fact.............................................................. 94
Section 11.14 No Waiver................................................................................... 94
Section 11.15 Survival of Agreements...................................................................... 94
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SCHEDULES
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Commitment Schedule
Schedule 1 - [Intentionally Omitted]
Schedule 2 - [Intentionally Omitted]
Schedule 3 - Subsidiaries; Excluded Subsidiaries
Schedule 4 - Certain Transactions
Schedule 5 - [Intentionally Omitted]
Schedule 6 - Prepetition Indebtedness
Schedule 7 - Existing Liens
Schedule 8 - Existing Investments
Schedule 9 - Material Contracts and Approvals
Schedule 10 - Cash Management System
Schedule 11 - [Intentionally Omitted]
Schedule 12 - Healthcare Facilities; Nursing Home Facilities
Schedule 13 - Prepetition Liens on Accounts
Schedule 14 - [Intentionally Omitted]
Schedule 15 - Management Employees
-v-
EXHIBITS
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Exhibit A - Form of Tranche A Note
Exhibit B - Form of Tranche B Note
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of LC Request
Exhibit E - Form of Prepayment Notice
Exhibit F - Form of Security Agreement
Exhibit G - Financial Officer's Certificate
Exhibit H - Form of Opinion of Counsel for the Borrowers
Exhibit I - Form of Assignment Agreement
Exhibit J - Form of Interim Borrowing Order
Exhibit K - Form of Borrowing Order
Exhibit L - Form of Healthcare Status Report
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DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This DEBTOR-IN-POSSESSION CREDIT AGREEMENT is dated as of January 20,
2000 and entered into by and among MARINER HEALTH GROUP, INC., a Delaware
corporation ("MHG"), as debtor and debtor-in-possession, and EACH OF MHG'S
SUBSIDIARIES LISTED ON THE SIGNATURE PAGES HEREOF, each as debtor and debtor-in-
possession (each such Subsidiary and MHG individually referred to herein as a
"Borrower" and, collectively, on a joint and several basis, as the "Borrowers");
THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"); FIRST UNION NATIONAL BANK
("First Union"), as Syndication Agent; PNC CAPITAL MARKETS, INC. and FIRST UNION
SECURITIES, INC., as Co-Arrangers; and PNC BANK, NATIONAL ASSOCIATION ("PNC"),
as Collateral Agent and Administrative Agent, and as an issuing bank for Letters
of Credit hereunder.
RECITALS
WHEREAS, on January 18, 2000 (the "Petition Date"), each Borrower
filed a voluntary petition for relief under the Bankruptcy Code (such term and
other capitalized terms used in these Recitals without definition have the
meanings set forth in Section 1.01 of this Agreement) with the United States
Bankruptcy Court for the District of Delaware (the "Court") (such proceedings
being jointly administered under Case No. 00-215 (MFW) are hereinafter referred
to as the "Chapter 11 Cases"). Each Borrower continues to operate its businesses
and manage its properties as a debtor-in-possession pursuant to Sections 1107
and 1108 of the Bankruptcy Code; and
WHEREAS, the Borrowers have requested Lenders to provide revolving
credit facilities in an aggregate amount of up to $50,000,000 on a post-petition
basis on the terms and conditions set forth herein; and
WHEREAS, Lenders are willing to provide such financing only if, as set
forth herein, all Obligations (i) shall constitute allowed super-priority
administrative expense claims in the Chapter 11 Cases and (ii) are secured by a
first priority Lien on substantially all of the Borrowers' real, personal and
mixed property, including a pledge of all of the capital stock of each of the
Subsidiaries of each Borrower;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Borrowers, Lenders and Agents
hereby agree as follows:
ARTICLE 1. Definitions
Section 1.01 Defined Terms. The following terms, as used herein,
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have the following meanings:
1
"Account Party" means the party identified as the Account Party for a
Letter of Credit pursuant to Section 2.05(c).
"Accounts Receivable" means any right to payment that is due within one
year from any invoice date for goods sold or leased or for services rendered no
matter how evidenced, all as determined in conformity with GAAP.
"Adjusted Consolidated Net Income" means, for any period, Consolidated Net
Income for such period, adjusted to exclude therefrom, without duplication, (i)
gains or losses from Asset Sales net of related tax effects and (ii) any net
income (or loss) of any Person other than a Borrower in which any Person other
than a Borrower has an ownership interest, except that such Person's net income
shall not be excluded if (and to the extent that) such Person pays dividends or
distributions in cash to a Borrower during such period.
"Administrative Agent" means PNC, in its capacity as Administrative Agent
for the Lenders under the Financing Documents, and any successor thereto in such
capacity.
"Administrative Questionnaire" means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Administrative Agent,
duly completed by such Lender and submitted to the Administrative Agent (with a
copy to the Borrowers).
"Affiliate" means any Person (other than a Subsidiary) directly or
indirectly controlling, controlled by or under common control with MHG. As used
in this definition, the term "control" means possession, directly or indirectly,
of the power to vote 10% or more of any class of voting securities of a Person
or to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Notwithstanding anything to the contrary in this definition, no individual shall
be deemed an Affiliate of any Person solely by reason of his or her being an
employee, officer or director of such Person.
"Agents" means the Syndication Agent, the Administrative Agent and the
Collateral Agent, collectively.
"Aggregate LC Exposure" means, at any time, the sum, without duplication,
of (i) the aggregate amount that is (or may thereafter become) available for
drawing under all Letters of Credit outstanding at such time and (ii) the
aggregate unpaid principal amount of all LC Reimbursement Obligations
outstanding at such time.
"Agreement" means this Debtor-In-Possession Credit Agreement dated as of
January 18, 2000, as it may hereafter be amended, supplemented, extended or
otherwise modified from time to time.
"Applicable Laws" means all applicable provisions of constitutions,
statutes, laws, rules, treaties, regulations and orders of all Governmental
Authorities and all applicable orders, rules and decrees of courts and
arbitrators.
2
"Approvals" has the meaning set forth in Section 4.09(c).
"Asset Sale" means any sale, lease or other transfer (including any such
transaction effected by way of merger or consolidation) of any asset by any MHG
Company, including without limitation any sale-leaseback transaction, whether or
not involving a capital lease, but excluding (i) any sale of inventory, cash,
cash equivalents and other cash management investments and obsolete, unused or
unnecessary equipment, in each case in the ordinary course of business, (ii) any
transfer of assets by any Borrower to another Borrower, (iii) any sub-lease, in
the ordinary course of business and consistent with MHG's past practices, to
another Person (for use by such Person in connection with a business related to
the operation of the applicable Healthcare Facility) of a portion of the floor
space and related property at any Healthcare Facility, and (iv) any sale of
equipment or other goods for which the sales price does not exceed $250,000 for
any single sale or related series of sales, and $500,000 for all such sales in
the aggregate.
"Assignee" has the meaning set forth in Section 11.06(c).
"Assignment Agreement" means an Assignment Agreement in substantially the
form of Exhibit I annexed hereto.
---------
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate" means, for any day, a rate per annum equal to the higher of (i)
the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Borrower" and "Borrowers" have the respective meanings set forth in the
introduction to this Agreement.
"Borrowing" means an aggregation of Tranche A Loans or of Tranche B Loans,
as the case may be, made or to be made to the Borrowers by the Lenders pursuant
to Section 2.01(a) or 2.01(b), respectively, on the same day.
"Borrowing Base" means, as of any date of determination during any calendar
month, the sum of (i) $7,500,000 and (ii) the amount shown in the Year 2000 DIP
Budget's projected monthly balance sheets as "Working Capital Facility"
borrowings for such calendar month.
"Borrowing Order" means an order of the Court entered in the Chapter 11
Cases after a final hearing under Bankruptcy Rule 4001(c)(2) in the form
attached hereto as Exhibit K with any modifications thereto on or prior to the
---------
entry thereof as are approved by Agents in their sole discretion, as the same
may thereafter be amended, supplemented, extended or otherwise modified from
time to time with the express written consent or joinder of Required Lenders.
"Business Day" means any day except a Saturday, Sunday or other day on
which either (i) in the case of any action to be taken by the Court or any
filing with the Court, the Court is unable or unwilling to act or is observing a
"legal holiday" as provided in Rule 9006(a) of the Federal Rules of
3
Bankruptcy Procedure, or (ii) in all other cases, commercial banks in
Pittsburgh, Pennsylvania, Charlotte, North Carolina, or New York, New York are
authorized by law to close.
"Capital Lease" means a lease that would be capitalized on a balance sheet
of the lessee prepared in accordance with GAAP.
"Carve-Out" has the meaning set forth in Section 2.13.
"Carve-Out Notice" has the meaning set forth in Section 2.13.
"Cash Balance" means, as at any time of determination, the sum of the
dollar amount of all money, currency, Temporary Cash Investments and credit
balances held or carried in the Concentration Accounts, after giving effect to
checks issued and outstanding and any administrative holds assessed by the
financial institution maintaining the Concentration Accounts.
"Cash Budget" means the consolidated cash forecast for the Borrowers for
the 13-week period commencing with the week beginning January 8, 2000, delivered
by the Borrowers to the Agents pursuant to Section 3.01(r), as it may be amended
or supplemented pursuant to Section 5.01(q).
"Cash Management System" means the cash management system of the Borrowers
described in Schedule 10 hereto.
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"Casualty Event" means (i) any Condemnation Event with respect to any
property owned by or leased to any MHG Company or (ii) any damage to, or
destruction of, any property owned by or leased to any MHG Company.
"Casualty Proceeds" means (i) with respect to any Condemnation Event, all
awards or payments received by any MHG Company or the Collateral Agent by reason
of such Condemnation Event, including all amounts received with respect to any
transfer in lieu or anticipation of such Condemnation Event or in settlement of
any proceeding relating to such Condemnation Event and (ii) with respect to any
other Casualty Event, all insurance proceeds or payments (excluding payments
with respect to business interruption) which any MHG Company or the Collateral
Agent receive by reason of such other Casualty Event.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, and the regulations
promulgated thereunder.
"Chapter 11 Cases" has the meaning set forth in the recitals to this
Agreement.
"Closing" means the closing hereunder on the Closing Date.
"Closing Date" means the date on which the Agents shall have received the
documents specified in or pursuant to Section 3.01 and the other conditions
specified in Section 3.01 shall have been satisfied or waived in accordance with
the terms hereof.
4
"Co-Arrangers" means PNC Capital Markets, Inc. and First Union Securities,
Inc. in their capacities as Co-Arrangers under the Financing Documents.
"Collateral" means all property, real and personal, tangible and
intangible, with respect to which Liens are created or purportedly created for
the benefit of Lenders pursuant to the Collateral Documents.
"Collateral Agent" means PNC, in its capacity as Collateral Agent for the
holders of the Secured Obligations under the Collateral Documents, and any
successor thereto in such capacity.
"Collateral Documents" means the Security Agreement, the Mortgages and all
other supplemental or additional security agreements, mortgages or similar
instruments delivered pursuant hereto or thereto or pursuant to an applicable
order of the Court.
"Commitment" means, as to any Lender, the aggregate amount of such Lender's
Tranche A Commitment and Tranche B Commitment, and "Commitments" means all such
Commitments of all Lenders, in the aggregate.
"Commitment Schedule" means the Commitment Schedule attached hereto.
"Commitment Termination Date" means the earliest of (i) the Stated Maturity
Date, (ii) the effective date of a joint plan of reorganization in the Chapter
11 Cases, as specified in such plan, (iii) the date of (x) termination of the
Borrowers' exclusive right to file a plan or plans of reorganization in any of
the Chapter 11 Cases other than as a result of the filing of a plan or plans of
reorganization in the Chapter 11 Cases acceptable to the Required Lenders or (y)
filing of any plan of reorganization or any modification to any previously filed
plan of reorganization, in any such case without the prior written approval of
the Required Lenders, (iv) the date of termination in whole of the Commitments
pursuant to Article 8, (v) the date that is 15 days after the Petition Date, if
neither the Interim Borrowing Order nor the Borrowing Order has been entered by
the Court by such date; (vi) the date that is 30 days after the Petition Date if
the Borrowing Order has not been entered by the Court by such date, unless
Required Lenders agree in their sole discretion to extend such date by no more
than 15 additional days; and (vii) the date of any sale, transfer or other
disposition of all or substantially all of the assets or stock of the MHG
Companies.
"Concentration Accounts" means the Concentration Accounts for the Cash
Management System as identified in Schedule 10 hereto.
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"Condemnation Event" means any condemnation or other taking or temporary or
permanent requisition of any property, any interest therein or right appurtenant
thereto, or any change of grade affecting any property, as the result of the
exercise of any right of condemnation or eminent domain. A transfer to a
governmental authority in lieu or anticipation of condemnation shall be deemed
to be a Condemnation Event.
5
"Consolidated Capital Expenditures" means, for any period, the gross
additions to property, plant and equipment and other capital expenditures of MHG
and its Consolidated Subsidiaries for such period, as the same are or would be
reflected in a consolidated statement of cash flows of MHG and its Consolidated
Subsidiaries for such period.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent deducted in determining Adjusted
Consolidated Net Income for such period, the sum of (i) Consolidated Interest
Expense, (ii) income tax expense and (iii) depreciation, amortization and other
similar non-cash charges.
"Consolidated EBITDAR" means, for any period, Consolidated EBITDA for such
period plus, to the extent deducted in determining Consolidated EBITDA for such
period, the sum (without duplication) of (i) Consolidated Rental Expense, (ii)
Overhead Payments and (iii) non-cash compensation expense and minus (iv) any
cash paid during such period in respect of non-cash compensation expense accrued
during any prior period; provided that Consolidated EBITDAR shall be calculated
so as to exclude the effect of any income or expense that (A) is classified as
extraordinary, (B) is reported separately as an unusual or non-recurring item,
(C) is attributable to discontinued operations or (D) represents the effect of
an accounting change on prior periods, in each case in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the interest expense
of MHG and its Consolidated Subsidiaries, determined on a consolidated basis for
such period; provided that Consolidated Interest Expense shall not (i) include
interest capitalized in accordance with GAAP or (ii) be reduced by any interest
income.
"Consolidated Net Income" means, for any period, the net income of MHG and
its Consolidated Subsidiaries, determined on a consolidated basis for such
period.
"Consolidated Rental Expense" means, for any period, the total rental
expense for operating leases of MHG and its Consolidated Subsidiaries,
determined on a consolidated basis for such period; provided that Consolidated
Rental Expense shall not be reduced by any rental income.
"Consolidated Subsidiary" means, as to any Person at any date, any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date. Unless otherwise specified, "Consolidated
Subsidiary" means a Consolidated Subsidiary of MHG; provided that the
Consolidated Subsidiaries of MHG shall not include any Excluded Subsidiaries.
"Court" has the meaning set forth in the recitals to this Agreement.
"Credit and Collection Policy" means the policies and procedures existing
as of the Closing Date for the MHG Companies in respect of creating,
administering and collecting accounts receivable, including without limitation
the policy for creating reserves in accordance with GAAP
6
and writing down or writing off accounts receivables, delivered to the Agents on
or prior to the Closing Date pursuant to Section 3.01(t).
"Credit Event" means (i) the making of a Loan, (ii) the issuance of a
Letter of Credit or (iii) the extension of the expiry date of a Letter of
Credit.
"Credit Exposure" means, as to any Lender, (i) at any time before the
termination of its Commitment in its entirety, the amount of its Commitment at
such time; or (ii) at any time thereafter, if the Commitments have terminated in
their entirety, its Outstanding Credit Amount, all determined at such time after
giving effect to any prior assignments by or to such Lender pursuant to Section
11.06(c).
"Credit Facilities" means the credit facilities provided to the Borrowers
under Sections 2.01(a), 2.01(b) and 2.05 and the other provisions hereof
relating to Loans and Letters of Credit.
"Credit Parties" means the Borrowers, collectively.
"Debt" of any Person means, without duplication, (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services, (iv) all
obligations of such Person as lessee under Capital Leases, (v) all obligations
of such Person to purchase securities which arise out of or in connection with
the sale of the same or substantially similar securities, (vi) all obligations
of such Person (whether contingent or non-contingent) to reimburse any Lender or
other Person in respect of amounts paid under a letter of credit, banker's
acceptance or similar instrument, (vii) all obligations secured by a Lien on any
asset of such Person, whether or not such Debt is otherwise an obligation of
such Person, and (viii) all Guarantees by such Person of obligations of another
Person (each such Guarantee to constitute Debt in an amount equal to the maximum
amount of such other Person's obligations Guaranteed thereby); provided that
neither trade accounts payable nor amounts owed to patients or residents arising
after the Petition Date in the ordinary course of business nor obligations
arising after the Petition Date in the ordinary course of business in respect of
insurance policies or performance or surety bonds which are not themselves
Guarantees of Debt (nor drafts, acceptances or similar instruments evidencing
the same nor obligations in respect of letters of credit supporting the payment
of the same) shall constitute Debt.
"Default" means any condition or event that constitutes an Event of Default
or that with the giving of notice or lapse of time or both would, unless cured
or waived, become an Event of Default.
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"Eastern Time" means local time in the Eastern time zone of the United
States.
7
"Eligible Assignee" means any Person which is a holder of Prepetition
Indebtedness at the time of the relevant assignment and which is either (A) (i)
a commercial bank organized under the laws of the United States or any state
thereof having unimpaired capital and surplus of not less than $500,000,000;
(ii) a savings and loan association or savings bank organized under the laws of
the United States or any state thereof having unimpaired capital and surplus of
not less than $500,000,000; (iii) a commercial bank organized under the laws of
any other country or a political subdivision thereof having unimpaired capital
and surplus of not less than $500,000,000; provided that (x) such bank is acting
through a branch or agency located in the United States or (y) such bank is
organized under the laws of a country that is a member of the Organization for
Economic Cooperation and Development or a political subdivision of such country;
or (iv) an "accredited investor" (as defined in Regulation D under the
Securities Act of 1933, as amended) which extends credit as one of its
businesses including, but not limited to, insurance companies, mutual funds and
lease financing companies and having unimpaired capital and surplus of not less
than $100,000,000; or (B) a Lender or an Affiliate of a Lender; provided that no
MHG Company or Affiliate of any of them shall be an Eligible Assignee; and
provided further that Eligible Assignee shall mean and include any other Person
designated as such pursuant to the prior written consent of (y) the Agents (such
consent not to be unreasonably withheld or delayed) and (z) as long as no Event
of Default has occurred or is continuing, MHG, acting on behalf of itself and
all other Borrowers (such consent not to be unreasonably withheld or delayed).
"Enforceable Judgment" means a judgment or order of a court or arbitral or
regulatory authority as to which the period, if any, during which the
enforcement of such judgment or order is stayed shall have expired. A judgment
or order which is under appeal or as to which the time in which to perfect an
appeal has not expired shall not be deemed an Enforceable Judgment so long as
enforcement thereof is effectively stayed pending the outcome of such appeal or
the expiration of such period, as the case may be.
"Enforcement Notice" means a notice delivered by the Administrative Agent
to the Collateral Agent pursuant to Section 8.03 directing the Collateral Agent
to exercise one or more specific rights or remedies under the Collateral
Documents.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions relating to the
environment or to the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment, including ambient air, surface water, ground water
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any and all liabilities of or relating to
any of the MHG Companies (including any entity which is, in whole or in part, a
predecessor of any of the MHG
8
Companies), whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which arise under or relate to matters covered by
Environmental Laws.
"Equity Interest" means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof or
(v) any warrant, option or other right to acquire any Equity Interest described
in the foregoing clauses (i), (ii), (iii) and (iv).
"Equity Issuance" means any issuance or sale by any MHG Company of any
Equity Interest in such MHG Company, other than any issuance or sale of such
Equity Interests to any other MHG Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the MHG Companies and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any MHG Company, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Event of Default" means any event defined as an "Event of Default" in
Section 8.01.
"Excess Cash Amount" has the meaning set forth in Section 2.08(f).
"Excess Casualty Proceeds" has the meaning set forth in Section 5.08(a).
"Excluded Subsidiaries" means each of the Subsidiary joint ventures of MHG
identified on Schedule 3 hereto as an Excluded Subsidiary.
----------
"Executive Officer" means any "executive officer" (within the meaning of
Rule 3b-7 under the Securities Exchange Act) of any of the Borrowers.
"Existing Credit Facilities" means, collectively, (i) the Term Loan
Facility Credit Agreement dated as of December 23, 1998, as amended through the
Closing Date, among MHG and the lenders and agents named therein, (ii) the
Revolving Credit Facility Credit Agreement dated as of May 18, 1994, as amended
through the Closing Date, among MHG and the lenders and agents named therein,
(iii) all agreements, documents and instruments pursuant to which any interest
in collateral is granted or purported to be granted, created, evidenced or
perfected in connection with any of such Credit Agreements, including without
limitation, all deeds of trust, mortgages, security agreements, pledge
agreements, assignments, licenses, landlord consents and releases, financing
statements, fixture filings, registrations or similar documents and (iv) all
ancillary agreements as to which any holder of any of the obligations evidenced
by any of the foregoing is a party or a beneficiary and all other agreements,
instruments, documents and certificates including promissory
9
notes, consents, assignments, contracts, and notices delivered in connection
with any of the foregoing or the transactions contemplated thereby, in each case
as any of the foregoing may be in effect as of the Closing Date and as the same
may be amended, supplemented or otherwise modified from time to time to the
extent permitted hereunder.
"Existing Lender" means each of the "Banks" party to any of the Existing
Credit Facilities.
"Existing Lender Lien" means, collectively, the adequate protection Liens
provided to the Existing Lenders as set forth in the Interim Borrowing Order and
the Borrowing Order.
"Existing Note Indenture" means the indenture dated as of April 4, 1996, as
amended through the Closing Date, pursuant to which indenture the Existing Notes
were issued.
"Existing Notes" means the 9-1/2% subordinated notes of MHG in the
aggregate outstanding principal amount of $150,000,000 issued pursuant to the
Existing Note Indenture.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to the
Administrative Agent on such day on such transactions as determined by the
Administrative Agent.
"Fee Mortgages" means fee mortgages in favor of the Collateral Agent in
form and substance satisfactory to the Collateral Agent relating to any real
property now or hereafter owned in fee by any MHG Company which is required to
be so encumbered to secure the Obligations pursuant to Section 5.07.
"Final Order" means an order, judgment or other decree of the Court or any
other court or judicial body with proper jurisdiction, as the case may be, which
(i) in the case of any order, judgment or decree other than the Interim
Borrowing Order and the Borrowing Order, is in full force and effect and has not
been reversed, stayed, modified or amended and as to which (a) any right to
appeal or seek certiorari, review or rehearing has been waived or (b) the time
to appeal or seek certiorari, review or rehearing has expired and as to which no
appeal or petition for certiorari, review or rehearing is pending, and (ii) in
the case of the Interim Borrowing Order and the Borrowing Order, is in full
force and effect and has not been reversed or stayed or, without the consent of
Required Lenders, modified or amended.
"Financial Accommodations" means arrangements for the extension of credit
or other financial accommodation to one or more of the MHG Companies, including
committed or uncommitted lines of credit for advances or other financial
accommodation, letters of credit, performance and surety bonds and the like,
committed or uncommitted agreements for the purchase
10
of accounts receivable or other financial assets, with or without recourse or
repurchase obligation, forward and future contracts for purchase of bullion or
foreign currencies and other similar arrangements and interest rate swaps and
other similar arrangements, but excluding (i) trade accounts payable and amounts
owed to patients or residents arising after the Petition Date, in each case
arising in the ordinary course of business, and obligations arising after the
Petition Date in the ordinary course of business in respect of insurance
policies or performance or surety bonds which are not themselves Guarantees of
Debt (and drafts, acceptances or similar instruments evidencing the same and
obligations in respect of letters of credit supporting the payment of the same)
and (ii) Debt, Letters of Credit and Commitments under this Agreement.
"Financial Officer" means, with respect to any Person, the principal
financial officer (which, if so identified by the Borrowers, may include a vice
president principally responsible for financial matters), principal accounting
officer or treasurer of such Person, in each case acceptable to the
Administrative Agent.
"Financing Documents" means this Agreement (including the Schedules and
Exhibits hereto), the Notes and the Collateral Documents.
"First Day Orders" means those orders entered by the Court as a result of
motions and applications filed by the Borrowers with the Court on or about the
Petition Date, in each case in form and substance as approved by the
Administrative Agent pursuant to Section 3.01.
"First Union" has the meaning set forth in the introduction to this
Agreement.
"Fiscal Quarter" means a fiscal quarter of MHG.
"Fiscal Year" means a fiscal year of MHG.
"GAAP" means at any time generally accepted accounting principles as then
in effect in the United States, applied on a basis consistent (except for
changes concurred in by MHG's independent public accountants) with the Most
Recent Audited Financial Statements.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Grantor" means a MHG Company that grants a Lien on any of its property
pursuant to the Collateral Documents.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt (the "primary
obligation") of any other Person (the
11
"primary obligor") and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services primarily for the
purpose of assuring the owner of such primary obligation of the ability of the
primary obligor to pay such primary obligation, to take-or-pay, or to maintain
financial statement conditions or otherwise), (ii) to reimburse a bank for
drawings under a letter of credit for the purpose of paying such Debt or (iii)
entered into for the purpose of assuring in any other manner the holder of such
Debt of the payment thereof or to protect such holder against loss in respect
thereof (in whole or in part); provided that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee", when used as a verb, has a corresponding
meaning.
"Hazardous Substances" means any toxic, radioactive, corrosive or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics, whether or not regulated under Environmental
Laws.
"Healthcare Event" means (i) the termination (without reinstatement) of the
Medicare or Medicaid contract or license for any three or more Healthcare
Facilities (other than Managed Facilities); or (ii) the involuntary receivership
or involuntary management of any Healthcare Facility (other than a Managed
Facility) by any applicable Governmental Authority; or (iii) the imposition by
any applicable Governmental Authority, with respect to four or more Healthcare
Facilities (other than Managed Facilities) in the aggregate, of administrative
holds or similar restrictions or limitations on the admission of patients (but
only for so long as such holds, restrictions or limitations shall be in effect).
"Healthcare Facility" means any of the following to the extent owned,
leased, managed or operated by an MHG Company: (i) a hospital, outpatient
clinic, nursing center, assisted or independent living community, long-term care
facility or any other facility that is used or useful in the provision of
healthcare or custodial care services, (ii) any healthcare business affiliated
or associated with a Healthcare Facility (as described in clause (i)) or (iii)
any business related or ancillary to the provision of healthcare services or the
operation of a Healthcare Facility (as described in clause (i)) including, but
not limited to, pharmaceutical services, respiratory and infusion management,
contract therapy services, as well as hospice and home care services.
"Healthcare Status Report" has the meaning set forth in Section 5.01(l).
"HHS Stipulation" means the Stipulation Between the United States
Department of Health and Human Services and the Debtors in the form provided to
the Agents on or prior to the Closing Date, with any modifications thereto on or
prior to the Closing Date or entry thereof, which modifications are approved by
the Agents in their sole discretion, as the same may thereafter be amended,
supplemented or otherwise modified from time to time with the express written
consent of Required Lenders.
12
"Indemnitee" has the meaning set forth in Section 11.03(b).
"Insolvency Proceeding" shall mean, with respect to any Person, (a) a case,
action or proceeding with respect to such Person (i) before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any such Person or otherwise relating to the
liquidation, dissolution, winding-up or relief of such Person, or (b) any
general assignment for the benefit of creditors, composition, marshaling of
assets of creditors, or other, similar arrangements in respect of such Person's
creditors generally or any substantial portion of its creditors; undertaken
under any law.
"Interim Borrowing Order" means an order of the Court entered in the
Chapter 11 Cases after a hearing under Bankruptcy Rule 4001(c)(2) in the form
attached hereto as Exhibit J, with any modifications thereto on or prior to the
---------
Closing Date or entry thereof as are approved by the Agents in their sole
discretion, as the same may thereafter be amended, supplemented or otherwise
modified from time to time with the express written consent or joinder of
Required Lenders.
"Interim Order Date" means the date that the Court signs the Interim
Borrowing Order.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
"Investment" means, with respect to any Person (the "Investor"), any
investment by the Investor in any other Person, whether by means of share
purchase, capital contribution, loan, advance, purchase of Debt, payment in
respect of a Guarantee of Debt, time deposit or otherwise.
"Investor" has the meaning set forth in the definition of "Investment" in
this Section 1.01.
"LC Exposure" means, with respect to any Lender at any time, its Percentage
of the Aggregate LC Exposure at such time.
"LC Fee Rate" means a per annum rate equal to 4.50% or, upon the occurrence
and during the continuation of any Event of Default, 7.00%.
"LC Indemnitees" has the meaning set forth in Section 2.05(n).
"LC Issuing Bank" means (i) PNC and (ii) any other Lender designated as an
"LC Issuing Bank" for purposes hereof in a notice to the Administrative Agent
signed by MHG (acting on its own behalf and on behalf of all other Borrowers)
and such Lender, acting in each case in the capacity of an LC Issuing Bank under
the letter of credit facility described in Section 2.05, and their respective
successors.
13
"LC Issuing Bank Fee Letter" means the letter agreement dated the Closing
Date by and among PNC and the Borrowers regarding fees to be paid by the
Borrowers to PNC as LC Issuing Bank with respect to Letters of Credit.
"LC Office" means, with respect to any LC Issuing Bank, the office at which
it books any Letter of Credit issued by it.
"LC Payment Date" has the meaning set forth in Section 2.05(h).
"LC Reimbursement Obligations" means, at any time, all obligations of the
Borrowers to reimburse the LC Issuing Banks pursuant to Section 2.05 for amounts
paid by the LC Issuing Banks in respect of drawings under Letters of Credit,
including any portion of any such obligation to which a Lender has become
subrogated pursuant to Section 2.05(j)(i).
"LC Request" has the meaning set forth in Section 2.05(c).
"Leasehold Mortgages" means leasehold mortgages in favor of, and in form
and substance satisfactory to, the Collateral Agent, relating to the leases of
any real properties leased by any MHG Company which are required to be
encumbered to secure the Obligations pursuant to Section 5.07.
"Lender" means each bank or other financial institution listed on the
Commitment Schedule, each Assignee which becomes a "Lender" for purposes hereof
pursuant to Section 11.06, and their respective successors.
"Lender Parties" means the Lenders, each LC Issuing Bank and the Agents.
"Lending Office" means, as to each Lender, its office located at its
address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Lending Office) or such other office as such
Lender may hereafter designate as its Lending Office by notice to the Borrowers
and the Administrative Agent.
"Letter of Credit" means any letter of credit issued pursuant to Section
2.05 by an LC Issuing Bank.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset or
any other arrangement (other than a right of set-off, recoupment, counterclaim
or similar right) the economic effect of which is to give a creditor
preferential access to such asset to satisfy its claim. For purposes of this
Agreement, any MHG Company shall be deemed to own subject to a Lien any asset
that it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement or other title retention agreement relating
to such asset or any Capital Lease.
"Loan" or "Loans" means one or more of the Tranche A Loans or Tranche B
Loans or any combination thereof.
14
"Managed Facility" means a Healthcare Facility (i) which is neither owned
nor leased by any MHG Company, (ii) which the relevant MHG Company either
manages or operates primarily in its capacity as a manager, and (iii) with
respect to which no MHG Company would have liability as a result of any event or
occurrence of any type described in the definition of Healthcare Event.
"Management and Service Agreements" means all agreements or arrangements
between any Borrower and any Person other than a Borrower for employment
(including agreements with employees of any Borrower), management consulting
services, or the provision of any other management services to any MHG Company.
"Management Employee" has the meaning set forth in Section 4.23.
"Margin Stock" has the meaning set forth in Regulation U.
"Material Adverse Effect" means (i) any material adverse effect upon the
condition (financial or otherwise), results of operations, business or prospects
of MHG and its Consolidated Subsidiaries, taken as a whole, (ii) a material
adverse effect on the validity, binding effect or enforceability of any
Financing Document or (iii) a material adverse effect on the validity,
perfection or priority of any Lien on any of the Collateral created or
purportedly created under the Collateral Documents; provided that a Material
Adverse Effect shall not be deemed to have occurred solely on account of (x) the
events, occurrences and circumstances disclosed in writing in detail prior to
the date hereof to the Existing Lenders or (y) the filing of the petitions in
the Chapter 11 Cases.
"Material Contract" means any contract or other arrangement to which any
MHG Company is a party (other than the Financing Documents) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect.
"Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $1,000,000.
"Medicaid" means the medical assistance program established by Title XIX of
the Social Security Act (42 U.S.C. (S)(S) 1396 et seq.) and any statutes
-- ---
succeeding thereto.
"Medicaid Regulations" means, collectively, (a) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting Medicaid, (b) all applicable provisions of all federal rules,
regulations, manuals and orders of Governmental Authorities promulgated pursuant
to or in connection with the statutes described in clause (a) above and all
federal administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law promulgated pursuant to or in connection
with the statutes described in clause (a) above, (c) all state statutes and
plans for medical assistance enacted in connection with the statutes and
provisions described in clauses (a) and (b) above, and (d) all applicable
provisions of all rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (c) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant
15
to or in connection with the statutes described in clause (c) above, in each
case as may be amended or supplemented.
"Medicare" means the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. (S)(S) 1995 et
--
seq.) and any statutes succeeding thereto.
---
"Medicare Regulations" means, collectively, all federal statutes (whether
set forth in Title XVIII of the Social Security Act or elsewhere) affecting
Medicare, together with all applicable provisions of all rules, regulations,
manuals and orders and administrative, reimbursement and other guidelines having
the force of law of all Governmental Authorities (including without limitation,
Health and Human Services ("HHS"), Health Care Finance Administration, the
Office of the Inspector General for HHS, or any Person succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection with
any of the foregoing having the force of law, in each case as may be amended or
supplemented.
"MHG" has the meaning set forth in the introduction to this Agreement.
"MHG Company" means MHG or any Subsidiary of MHG (other than an Excluded
Subsidiary).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgages" means the Leasehold Mortgages and Fee Mortgages, collectively.
"Most Recent Audited Financial Statements" means the audited consolidated
financial statements of MHG and its Consolidated Subsidiaries as of December 31,
1998.
"MPAN" means Mariner Post-Acute Network, Inc., a Delaware corporation, and
each of its Subsidiaries and Affiliates (other than the MHG Companies and the
Excluded Subsidiaries).
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Amount of Eligible Accounts" means, the dollar value of all trade
Accounts Receivable of MHG and the Consolidated Subsidiaries that are payable in
United States Dollars and are generated in the ordinary course of the rendition
of healthcare services at the Healthcare Facilities by the MHG Companies, stated
on a basis consistent with the Credit and Collection Policy, less, without
duplication, the sum of the following: (a) any account receivable or portion
thereof that is payable (1) by an individual beneficiary, recipient or
subscriber individually and not directly to a Borrower by (v) the United States
of America acting under Medicaid or Medicare (w) any State or the District of
Columbia acting pursuant to a health plan adopted pursuant to Title XIX of the
Social
16
Security Act, (x) a commercial insurer, (y) the Veterans Administration or (z)
any agent, carrier, administrator or intermediary for any of the foregoing
(provided that in the case of MHG's "inpatient" division no account receivable
shall be excluded as a result of this clause (1) unless either 30 days have
passed from the applicable invoice date or Medicare coverage of such account
receivable has been declined), or (2) by a commercial medical insurance carrier
that is not acceptable to the Administrative Agent in its sole discretion; (b)
any account receivable that remains unpaid more than 120 days after the
applicable claim, statement or invoice date; (c) any account receivable to the
extent that it is subject to any asserted or claimed defense, set-off,
counterclaim, deduction, discount, credit, charge-back, allowance or adjustment
of any kind (whether issued, owing, granted or outstanding); (d) any account
receivable that is subject to a Lien other than a Lien permitted hereunder or
that is subject to a Lien described on Schedule 13 hereto; (e) any
-----------
account receivable which is due from an account debtor that is (w) the debtor in
any bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceeding under any federal or state law, (x) has a principal place of business
or chief executive office outside the United States, (y) is an Affiliate of any
MHG Company or (z) is otherwise unacceptable to Administrative Agent acting in
good faith.
"Net Cash Proceeds" means, with respect to any Asset Sale, Equity Issuance
or incurrence of Debt other than Debt incurred pursuant to the Financing
Documents, an amount equal to the cash proceeds received by the MHG Companies in
respect of such Asset Sale, Equity Issuance or incurrence of Debt (including any
cash proceeds received as income or other cash proceeds of any noncash proceeds
of such Asset Sale), less (a) any expenses reasonably incurred by the MHG
Companies in respect of such Asset Sale, Equity Issuance or incurrence of Debt
(including reasonable attorneys' fees and expenses and including any payment
with respect to taxes actually paid or to become payable by the MHG Companies
(as reasonably estimated by the Financial Officer) in respect of such Asset
Sale, Equity Issuance or incurrence of Debt) and approved by the Court, if such
approval is necessary pursuant to the Bankruptcy Code or any applicable order of
the Court, and (b) amounts required to be applied against Debt (other than Debt
incurred pursuant to the Financing Documents) secured by a Lien on the assets so
sold.
"Note" means one or more of the Tranche A Notes or Tranche B Notes or any
combination thereof.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Nursing Home Census" has the meaning set forth in Section 5.01(r).
"Nursing Home Facility" means any Healthcare Facility constituting a
licensed nursing home center as set forth and identified as a "Nursing Home
Facility" in Schedule 12 hereto.
-----------
"Nursing Home Occupancy" means, as of any week of determination, the amount
expressed as a percentage obtained by dividing (i) the Nursing Home Census for
such week by (ii) the average of the aggregate patient capacity of all Nursing
Home Facilities (other than Managed Facilities) as of each day of such week.
17
"Oakwood Facilities" means, collectively, the Healthcare Facilities known
as Cape Heritage Rehabilitation and Nursing Center, Cape Regency Rehabilitation
and Nursing Center, East Lincoln Rehabilitation and Nursing Center, Mayflower
Rehabilitation and Nursing Center, Northbridge Rehabilitation and Nursing
Center, Northwood Rehabilitation and Nursing Center and Oakwood Rehabilitation
and Nursing Center.
"Obligations" means all obligations of every nature of each of the
Borrowers under the Financing Documents, including, without limitation, any
liability of any such Borrower on any claim, whether or not the right to payment
in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed
or contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any bankruptcy, insolvency, reorganization or other similar
proceeding. Without limiting the generality of the foregoing, the Obligations of
the Borrowers under the Financing Documents include (i) the obligation to pay
principal, interest, charges, expenses, fees, actual and reasonable attorneys'
fees and disbursements, indemnities and other amounts payable by any Borrower
under any Financing Document and (ii) the obligation to reimburse any amount in
respect of any of the foregoing that any Agent or any Lender, in its sole
discretion, may elect to pay or advance on behalf of any Borrower. In addition
to the foregoing, "Obligations" means all obligations of any Borrower owed to
any Lender arising in the ordinary course of operation of the Cash Management
System, without regard to whether such obligations arise or have arisen with
respect to items deposited, collected, presented, paid, returned or reversed
pre-petition or post-petition, and including without limitation obligations for
overdrafts, returned items, fees, expenses, indemnities and similar charges;
provided that this sentence shall not be construed to include within the
definition of "Obligations" any obligation for prepetition loans or other
prepetition obligations other than obligations incurred by any Borrower in the
ordinary course of operation of the Cash Management System and approved by order
of the Court.
"Official Body" shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, board, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Organizational Documents" means (i) with respect to any corporation, its
certificate or articles of incorporation, by-laws and other constitutional
documents, including the certificate of designation for any series of its
preferred stock, (ii) with respect to any limited liability company, its
articles of organization and operating agreement, or other comparable documents
however named, and (iii) with respect to any partnership, its partnership
agreement and any certificate of limited partnership or statement of partnership
filed with a Governmental Authority.
"Outstanding Credit Amount" means, with respect to any Lender at any time,
the sum of (i) the Outstanding Tranche A Amount of such Lender and (ii) the
Outstanding Tranche B Amount of such Lender.
18
"Outstanding Tranche A Amount" means, with respect to any Lender at any
time, the sum of (i) the aggregate outstanding principal amount of its Tranche A
Loans and (ii) its LC Exposure, all determined at such time after giving effect
to any prior assignments by or to such Lender pursuant to Section 11.06(c).
"Outstanding Tranche B Amount" means, with respect to any Lender at any
time, the aggregate outstanding principal amount of its Tranche B Loans,
determined at such time after giving effect to any prior assignments by or to
such Lender pursuant to Section 11.06(c).
"Overhead Payment" has the meaning set forth in Section 7.07.
"Parent" means, with respect to any Lender, any Person controlling such
Lender.
"Participant" has the meaning set forth in Section 11.06(b).
"Patient Trust Accounts" means the accounts of the Borrowers holding solely
funds that residents of Nursing Home Facilities receive as income (whether from
government or private sources) which are required to be held in such accounts
pursuant to the Omnibus Budget and Reconciliation Act of 1987, 28 U.S.C.
(S)483.10(c) and the regulations of the Health Care Financing Administration.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Percentage" means, with respect to any Lender at any time, the percentage
which the amount of its Commitment at such time represents of the aggregate
amount of all the Commitments at such time. At any time after the Commitments
shall have terminated, the term "Percentage" shall refer to a Lender's
Percentage immediately before such termination, adjusted to reflect any
subsequent assignments pursuant to Section 11.06(c).
"Permitted Adequate Protection Liens" means Liens for "adequate protection"
(as such term is used in Sections 361 through 364 of the Bankruptcy Code) which
are approved in writing by Required Lenders and the Court.
"Permitted Encumbrances" means, with respect to any property (including any
leasehold interest) owned by any MHG Company:
(a) Liens for taxes, assessments or other governmental charges not
yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of such MHG Company in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', materialmens', repairmens'
or other like Liens arising by operation of law in the ordinary course of
business so long as (A) the
19
underlying obligations are not overdue for a period of more than 30 days or
(B) such Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained on
the books of such MHG Company in accordance with GAAP;
(c) Liens consisting of rights of patients in respect of Patient
Trust Accounts;
(d) other Liens or title defects (including matters which an accurate
survey might disclose and exceptions to title set forth in title insurance
with respect to the Fee Mortgages) which (x) do not secure Debt and (y) do
not materially detract from the value of such property or materially impair
the use thereof by such MHG Company in the operation of its business;
(e) pledges or deposits made in the ordinary course of business to
secure payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age
pensions or other social security programs; and
(f) good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, progress or advance
payments, contracts (other than for the repayment of borrowed money) or
leases, not in excess of the aggregate amount due thereunder, or to secure
statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business.
"Permitted Intercompany Debt" means Debt owed by any Borrower to any other
Borrower; provided that such Debt is either evidenced by a promissory note or
maintained in the form of open account balances in which, in either case, the
Collateral Agent has a first priority, perfected security interest under the
Interim Borrowing Order, the Borrowing Order or the Security Agreement at all
times until such security interest is released pursuant to Section 18 thereof.
"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Petition Date" has the meaning set forth in the recitals to this
Agreement.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PNC" has the meaning set forth in the introduction to this Agreement.
20
"Prepayment Notice" means a properly completed Prepayment Notice,
substantially in the form of Exhibit E hereto.
---------
"Prepetition Indebtedness" means Debt of any Credit Party outstanding on
the Petition Date, including Debt under the Existing Credit Facilities and the
Existing Notes.
"Prime Rate" means the rate of interest established by the PNC from time to
time as its Prime Rate, which may not be the lowest rate then being charged
commercial borrowers by PNC.
"Register" has the meaning set forth in Section 11.06(e).
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Related Fund" means, with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed by the same investment advisor as such Lender or by an affiliate of
such investment advisor.
"Reporting Event" has the meaning set forth in Section 5.01(l).
"Required Cash Flow Amount" has the meaning set forth in Section 6.04.
"Required Lenders" means, at any time, Lenders having outstanding Credit
Exposures in an aggregate amount (excluding accrued interest) equal to more than
66-2/3% of the aggregate amount of the Credit Exposures of all Lenders at such
time.
"Restricted Payment" means (i) any dividend or other distribution on any
Equity Interests of MHG (except dividends payable solely in Equity Interests of
the same class), (ii) any payment on account of the purchase, redemption,
retirement or acquisition of any Equity Interests of MHG, (iii) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Prepetition Indebtedness
and (iv) any payment, dividend or other distribution to, or on behalf of, MPAN.
"S&P" means Standard and Poor's Rating Services, a division of The ▇▇▇▇▇▇-
▇▇▇▇ Companies, Inc.
"SEC" means the United States Securities and Exchange Commission.
"Secured Obligations" has the meaning set forth in Section 1 of the
Security Agreement.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
21
"Security Agreement" means the Security Agreement dated as of the Closing
Date among the Borrowers and the Collateral Agent, substantially in the form of
Exhibit F hereto, as amended from time to time.
---------
"Security Interests" has the meaning set forth in Section 1 of the Security
Agreement.
"Settlement Letter" means the letter dated July 20, 1999 by the Health Care
Financing Administration of the Department of Health and Human Services,
acknowledged and agreed to by Mariner Post Acute Network, Inc. and MHG, in form
and substance acceptable to the Agents.
"Specified Change" has the meaning set forth in Section 11.05(b).
"Specified Default" means (i) any Healthcare Event affecting 10% or more of
the Healthcare Facilities (excluding any Managed Facilities), and (ii) any Event
of Default (a) under Section 8.01(a), 8.01(j)(iii) (excluding, at all times
after the Obligations have been paid in full and no Lender has any Credit
Exposure hereunder, Section 8.01(j)(i)(b)(2)) or 8.01(k)(iii), or (b) arising as
a result of any breach of any provision under the first paragraph of Section
5.01 or under Section 5.01(a), 5.01(b)(ii), 5.01(l), 5.01(n), 5.01(q), 5.01(r),
5.03(a), 5.11, 5.13, 7.07 or 7.17; provided, that an Event of Default arising
under the first paragraph of Section 5.01 or under Section 5.01(a), 5.01(b)(ii),
5.01(l), 5.01(n), 5.01(q), 5.01(r), 5.03(a), 5.11 or 5.13 shall constitute a
Specified Default only in the event not less than 15 days' prior written notice
from the Administrative Agent to MPAN setting forth the details of such
Specified Default shall have been delivered (which notice may be delivered
during the pendency of any applicable cure period with respect to any Default
which, if not cured, would constitute any such Event of Default) and such
Specified Default shall not be cured prior to the later of (x) the expiration of
such 15-day period and (y) the date of occurrence of such Event of Default.
"Stated Maturity Date" means January 19, 2001.
"Subsidiary" means, as to any Person, (i) any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person or (ii)
any limited liability company or partnership that, in accordance with GAAP, is a
Consolidated Subsidiary of such Person. Unless otherwise specified, "Subsidiary"
means a Subsidiary of MHG.
"Supermajority Lenders" means, at any time, Lenders having outstanding
Credit Exposures in an aggregate amount (excluding accrued interest) equal to
more than 75% of the aggregate amount of the Credit Exposures of all Lenders at
such time.
"Syndication Agent" means First Union in its capacity as Syndication Agent
under the Financing Documents.
22
"Temporary Cash Investment" means any Investment in (i) 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, (ii) time deposit accounts,
bankers' acceptances, certificates of deposit and money market deposits maturing
within 30 days of the date of acquisition thereof issued by any office located
in the United States of a bank or trust company which is organized or licensed
under the laws of the United States or any State thereof and which bank or trust
company has capital, surplus and undivided profits aggregating more than
$1,000,000,000 and has outstanding debt which is rated "P-1" (or higher) by
Moody's or "A-1" (or higher) by S&P or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with an office located in
the United States of a bank or trust company meeting the qualifications
described in clause (ii) above, (iv) commercial paper, maturing not more than 30
days after the date of acquisition, issued by a corporation (other than any MHG
Company or any Affiliate) organized under the laws of the United States or any
State thereof with a rating, at the date of acquisition, of "P-1" (or higher) by
Moody's or "A-1" (or higher) by S&P, (v) securities with maturities of 30 days
or less from the date of acquisition issued or fully and unconditionally
guaranteed by any State, commonwealth or territory of the United States, or by a
political subdivision or taxing authority thereof, and rated at least "P-1" (or
higher) by Moody's or "A-1" (or higher) by S&P and (vi) money market funds which
invest substantially all of their assets in securities described in the
preceding clauses (i) through (v).
"Total Utilization of Commitments" means, as at any date of determination,
the aggregate Outstanding Credit Amounts of all Lenders.
"Tranche A Commitment Fee Rate" means 0.75% per annum.
"Tranche A Commitments" means (i) with respect to any Lender listed on the
Commitment Schedule, the amount (if any) set forth therein opposite the name of
such Lender under the heading "Tranche A Commitment" and (ii) with respect to
any Assignee of a Tranche A Commitment, the amount of the transferor Lender's
Tranche A Commitment assigned to such Assignee pursuant to Section 11.06(c), in
each case as such amount may be reduced from time to time pursuant to Section
2.08 or 2.10 or changed as a result of an assignment pursuant to Section
11.06(c).
"Tranche A Default Rate" has the meaning set forth in Section 2.04.
"Tranche A Exposure" means, as to any Lender, (i) at any time before the
termination of its Tranche A Commitment in its entirety, the amount of its
Tranche A Commitment at such time; or (ii) at any time thereafter, if its
Tranche A Commitment has terminated in its entirety, its Outstanding Tranche A
Amount, all determined at such time after giving effect to any prior assignments
by or to such Lender pursuant to Section 11.06(c).
"Tranche A Interest Rate" has the meaning set forth in Section 2.04.
"Tranche A Loan" means a loan made by a Lender pursuant to Section 2.01(a).
23
"Tranche A Note" means a promissory note of the Borrowers payable to the
order of a Lender evidencing the Borrowers' obligation to repay the Tranche A
Loans made by such Lender. Each Tranche A Note shall be substantially in the
form of Exhibit A hereto. "Tranche A Notes" means any or all of such promissory
---------
notes, as the context may require.
"Tranche B Commencement Date" has the meaning set forth in Section 2.01(b).
"Tranche B Commitment Fee Rate" means (i) until the Tranche B Commencement
Date, 0.25% per annum and (ii) on and after the Tranche B Commencement Date,
0.75% per annum.
"Tranche B Commitments" means (i) with respect to any Lender listed on the
Commitment Schedule, the amount (if any) set forth therein opposite the name of
such Lender under the heading "Tranche B Commitment" and (ii) with respect to
any Assignee of a Tranche B Commitment, the amount of the transferor Lender's
Tranche B Commitment assigned to such Assignee pursuant to Section 11.06(c), in
each case as such amount may be reduced from time to time pursuant to Section
2.08 or 2.10 or changed as a result of an assignment pursuant to Section
11.06(c).
"Tranche B Default Rate" has the meaning set forth in Section 2.04.
"Tranche B Exposure" means, as to any Lender, (i) at any time before the
termination of its Tranche B Commitment in its entirety, the amount of its
Tranche B Commitment at such time; or (ii) at any time thereafter, if its
Tranche B Commitment has terminated in its entirety, its Outstanding Tranche B
Amount, all determined at such time after giving effect to any prior assignments
by or to such Lender pursuant to Section 11.06(c).
"Tranche B Interest Rate" has the meaning set forth in Section 2.04.
"Tranche B Loan" means a loan made by a Lender pursuant to Section 2.01(b).
"Tranche B Note" means a promissory note of the Borrowers payable to the
order of a Lender evidencing the Borrowers' obligation to repay the Tranche B
Loans made by such Lender. Each Tranche B Note shall be substantially in the
form of Exhibit B hereto. "Tranche B Notes" means any or all of such promissory
---------
notes, as the context may require.
"UCC" has the meaning set forth in Section 1 of the Security Agreement.
"UCP" means the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, or any
successor publication governing the rights and obligations of the parties in
connection with Letters of Credit.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title I of ERISA
24
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"Unscheduled Mandatory Prepayment" has the meaning set forth in Section
2.08(h).
"Year 2000 DIP Budget" means the projected financial statements with
respect to MHG and its Consolidated Subsidiaries for the Fiscal Year ending
December 31, 2000 delivered to the Agents on or prior to the Closing Date
pursuant to Section 3.01(r)(ii); provided, that such projected financial
statements may be amended, supplemented, replaced or otherwise modified with the
approval of the Required Lenders.
Section 1.02 Accounting Terms and Determinations. Unless otherwise
-----------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP;
provided that, if the Borrowers notify the Administrative Agent that the
Borrowers wish to amend any provision hereof to eliminate the effect of any
change in GAAP on the operation of such provision (or if the Administrative
Agent notifies the Borrowers that the Required Lenders wish to amend any
provision hereof for such purpose), then such provision shall be applied on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such provision is amended in
a manner satisfactory to the Borrowers and the Required Lenders.
Section 1.03 Other Definitional Provisions. References in this
-----------------------------
Agreement to "Articles", "Sections", "Schedules" or "Exhibits" are to Articles,
Sections, Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided. Any of the terms defined in Section 1.01 may, unless the
context otherwise requires, be used in the singular or plural depending on the
reference. "Include", "includes" and "including" are deemed to be followed by
"without limitation" whether or not they are in fact followed by such words or
words of like import. "Writing", "written" and comparable terms refer to
printing, typing, facsimile and other means of reproducing words on paper.
References to any agreement or contract are to such agreement or contract as
amended, modified or supplemented from time to time (whether before, on or after
the Closing Date) in accordance with the terms hereof and thereof. "Hereto",
"herein" and "hereof" refer to this Agreement as amended from time to time.
ARTICLE 2. The Credit Facilities
Section 2.01 Commitments to Lend.
-------------------
(a) Tranche A Loans. Subject to the terms and conditions set forth in
this Agreement, each Lender severally agrees to make Tranche A Loans to the
Borrowers from time to
25
time during the period from and including the Closing Date to but excluding the
Commitment Termination Date; provided that, immediately after each such Tranche
A Loan is made, such Lender's Outstanding Tranche A Amount shall not exceed its
Tranche A Commitment. Each Borrowing of Tranche A Loans shall be borrowed from
the several Lenders ratably in proportion to their respective Tranche A
Commitments. The initial aggregate amount of the Tranche A Commitments of all
Lenders as of the Closing Date is $40,000,000. Within the limits specified
herein, the Borrowers may borrow Tranche A Loans, repay such borrowing and
reborrow Tranche A Loans pursuant to the terms of this Agreement.
(b) Tranche B Loans. Subject to the terms and conditions set forth in
this Agreement, each Lender severally agrees to make Tranche B Loans to the
Borrowers from time to time during the period from and including the Tranche B
Commencement Date to but excluding the Commitment Termination Date; provided
that, immediately after each such Tranche B Loan is made, such Lender's
Outstanding Tranche B Amount shall not exceed its Tranche B Commitment. Each
Borrowing of Tranche B Loans shall be borrowed from the several Lenders ratably
in proportion to their respective Tranche B Commitments. The initial aggregate
amount of the Tranche B Commitments of all Lenders as of the Closing Date is
$10,000,000. Within the limits specified herein, the Borrowers may borrow
Tranche B Loans, repay such borrowing and reborrow Tranche B Loans pursuant to
the terms of this Agreement. As used in this Section 2.01(b), "Tranche B
Commencement Date" means the date, if any, on which Supermajority Lenders in
their sole discretion shall have consented in writing to a request by the
Borrowers (delivered to the Administrative Agent and the Lenders) that Lenders
permit Tranche B Loans to be borrowed hereunder. Notwithstanding anything to
the contrary contained herein, Supermajority Lenders may in their sole
discretion, together with any consent described in the preceding sentence,
prescribe additional limitations on the aggregate amount of Tranche B Loans
permitted to be borrowed from time to time, the increments for borrowing Tranche
B Loans and the times such Borrowings may be made hereunder and other terms and
conditions relating to the availability of the Tranche B Loans.
(c) Borrowing Limitations. Anything contained in this Agreement to
the contrary notwithstanding, (A) in no event shall the Total Utilization of
Commitments at any time outstanding exceed the lesser of (x) the Commitments and
(y) the amount permitted to be outstanding hereunder pursuant to the Interim
Borrowing Order or the Borrowing Order, as applicable, in each case as the
foregoing limits may be in effect from time to time; (B) in no event shall the
Outstanding Tranche A Amount of all Lenders exceed the lesser of (x) the Tranche
A Commitments and (y) the Borrowing Base, in each case as the foregoing limits
may be in effect from time to time; (C) in no event shall the Outstanding
Tranche B Amounts of all Lenders exceed the Tranche B Commitments in effect from
time to time; (D) the Borrowers shall comply with any additional limitations on
Tranche B Loan Borrowings prescribed by Supermajority Lenders pursuant to the
last sentence of Section 2.01(b) and incorporated into this Agreement by
amendment; and (E) the Borrowers agree to immediately prepay the Loans in the
amounts and at the times as may be necessary to comply with the foregoing
clauses (A), (B), (C) and (D).
(d) Amount of Each Borrowing. Each Borrowing under this Section 2.01
shall be in an aggregate principal amount of $1,000,000 or any larger multiple
of $500,000; provided that any
26
Borrowing of Tranche A Loans or Tranche B Loans may be in an aggregate amount
equal to the aggregate unused amount of the Tranche A Commitments or Tranche B
Commitments, respectively.
Section 2.02 Notice of Borrowing. The Borrowers shall give the
-------------------
Administrative Agent notice, substantially in the form of Exhibit C hereto (a
---------
"Notice of Borrowing"), not later than 1:00 P.M. (Eastern Time) on the date
which is one Business Day immediately preceding the date of the proposed
borrowing (provided that no such Notice of Borrowing for Tranche B Loans shall
be given to the Administrative Agent prior to obtaining the consent of
Supermajority Lenders described in clause (i) of the definition of Tranche B
Commencement Date) specifying:
(i) the proposed date of such borrowing, which shall be a Business
Day; and
(ii) the amount of Tranche A Loans and/or the amount of Tranche B
Loans requested.
Section 2.03 Notice to Lenders; Funding of Loans.
-----------------------------------
(a) Upon receipt of a Notice of Borrowing, the Administrative Agent
shall promptly notify each Lender of the contents thereof and of such Lender's
ratable share of such Borrowing. Such Notice of Borrowing shall not thereafter
be revocable by the Borrowers.
(b) Not later than 12:00 Noon (Eastern Time) on the date of each
Borrowing, each Lender shall make available its ratable share of such Borrowing,
in Federal or other funds immediately available in Pittsburgh, Pennsylvania, to
the Administrative Agent at its address for payments specified in or pursuant to
Section 11.01. Unless the Administrative Agent determines that any applicable
condition specified in Article 3 has not been satisfied, the Administrative
Agent shall promptly make such funds received from Lenders available to the
Borrowers on such date at the Administrative Agent's aforesaid address.
(c) Unless the Administrative Agent shall have received, prior to the
date of any Borrowing, notice from a Lender that such Lender will not make
available to the Administrative Agent such Lender's share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
to the Administrative Agent on the date of such Borrowing in accordance with
Section 2.03(b) and, in reliance upon such assumption, Administrative Agent may
(but shall not be obligated to) make available to the Borrowers on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such share available to the Administrative Agent, such Lender and the
Borrowers severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the day such amount is made available to the Borrowers until the day such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrowers, a rate per annum equal to the Tranche A Interest Rate or Tranche B
Interest Rate, as applicable, and (ii) in the case of such Lender, a rate per
annum equal to (x) for each day from the day such amount is made available to
the Borrowers to the third succeeding Business Day, inclusive, the Federal Funds
Rate for such day as determined by the Administrative Agent and (y) for each day
thereafter until the day such amount is repaid to the Administrative Agent, the
Base Rate for such day. If such Lender shall repay such corresponding
27
amount to the Administrative Agent, the amount so repaid shall constitute such
Lender's Loan included in such Borrowing for purposes of this Agreement.
(d) Each Lender's Tranche A Loans shall be evidenced by a single
Tranche A Note, and each Lender's Tranche B Loans (if any) shall be evidenced by
a single Tranche B Note, in each case payable to the order of such Lender for
the account of its Lending Office.
(e) Upon receipt of each Lender's Tranche A Note and Tranche B Note
pursuant to Section 3.01(b), the Administrative Agent shall forward such Notes
to such Lender. Each Lender shall record the date and amount of each Loan made
by it and the date and amount of each payment of principal made by the Borrowers
with respect thereto, and may, in connection with any transfer or enforcement of
either of its Notes, endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to the then
outstanding Loans evidenced by such Note; provided that neither the failure of
any Lender to make any such recordation or endorsement nor any error therein
shall affect the obligations of the Borrowers under any Financing Document.
Each Lender is hereby irrevocably authorized by the Borrowers so to endorse each
of its Notes and to attach to and make a part of such Note a continuation of any
such schedule as and when required.
Section 2.04 Interest Rate; Default Rate. Each Loan shall bear
---------------------------
interest on the outstanding principal amount thereof, for each day from and
including the day such Loan is made to but excluding the day it becomes due, (i)
in the case of Tranche A Loans, at a rate per annum equal to the sum of 2.50%
plus the Base Rate for such day (the "Tranche A Interest Rate"), and (ii) in the
case of Tranche B Loans, at a rate per annum equal to the sum of 3.00% plus the
Base Rate for such day (the "Tranche B Interest Rate"). Such interest shall be
payable monthly in arrears on the last Business Day of each month. Upon the
occurrence and during the continuation of any Event of Default, the outstanding
principal amount of all Loans and, to the extent permitted by Applicable Law,
any interest payments thereon not paid when due and any fees and other amounts
then due and payable hereunder, shall thereafter bear interest payable upon
demand at a rate that is (a) in the case of Tranche A Loans and such amounts
related thereto, 2.50% per annum in excess of the Tranche A Interest Rate (the
"Tranche A Default Rate"), and (b) in the case of Tranche B Loans and such
amounts related thereto, 2.50% per annum in excess of the Tranche B Interest
Rate (the "Tranche B Default Rate"). Payment or acceptance of the increased
rates of interest provided for herein is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of any Agent or any Lender.
Section 2.05 Letters of Credit.
-----------------
(a) Issuance of Letters of Credit. Any LC Issuing Bank may, but shall
not be obligated to, issue a letter of credit (other than a trade letter of
credit) at the request of the Borrowers pursuant to this subsection, from time
to time during the period from and including the Closing Date to but excluding
the earlier of (x) the Commitment Termination Date and (y) the date which is 60
days prior to the Stated Maturity Date; provided that, immediately after each
such letter of credit is issued and participations therein are sold to the
Lenders as provided in this subsection:
28
(i) the Aggregate LC Exposure shall not exceed $5,000,000; and
(ii) in the case of each Lender, its Outstanding Tranche A Amount
shall not exceed its Tranche A Commitment.
Upon the issuance by any LC Issuing Bank of a Letter of Credit pursuant to this
subsection, such LC Issuing Bank shall be deemed, without further action by any
party hereto, to have sold to each other Lender, and each such Lender shall be
deemed, without further action by any party hereto, to have purchased from such
LC Issuing Bank, a participation in such Letter of Credit, on the terms
specified in this Section 2.05, equal to such Lender's Percentage thereof.
(b) Expiry Dates. No Letter of Credit shall have an expiry date
later than the tenth Business Day before the Stated Maturity Date.
(c) Notice of Proposed Issuance. With respect to each Letter of
Credit, the Borrowers shall give the relevant LC Issuing Bank and the
Administrative Agent at least five Business Days' prior notice, substantially in
the form of Exhibit D hereto (a "LC Request") (i) specifying the date such
---------
Letter of Credit is to be issued, (ii) describing the proposed terms of such
Letter of Credit and the nature of the transactions proposed to be supported
thereby and (iii) specifying the Account Party for such Letter of Credit, which
may be any Borrower. Upon receipt of an LC Request, the Agents shall promptly
notify each Lender of the contents thereof.
(d) Conditions to Issuance. No LC Issuing Bank shall issue any Letter
of Credit unless:
(i) such Letter of Credit shall be satisfactory in form and
substance to such LC Issuing Bank in its sole discretion;
(ii) the Borrowers shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit as such LC
Issuing Bank shall have reasonably requested;
(iii) such LC Issuing Bank shall have confirmed with the Agents on
the date of such issuance that the limitations specified in clauses (i) and
(ii) of subsection (a) of this Section 2.05 will not be exceeded
immediately after such Letter of Credit is issued; and
(iv) such LC Issuing Bank shall not have been notified in writing
by any MHG Company, any Agent or the Required Lenders expressly to the
effect that any condition specified in Section 3.02 is not satisfied at the
time such Letter of Credit is to be issued.
(e) Notice of Proposed Extensions of Expiry Dates. The relevant LC
Issuing Bank or the Borrowers shall give the Administrative Agent at least five
Business Days' notice before such LC Issuing Bank extends the expiry date of any
Letter of Credit issued by it. Such notice shall (i) identify such Letter of
Credit, (ii) specify the date on which such extension is to be made (or the last
day on which such LC Issuing Bank can give notice to prevent such extension from
occurring)
29
and (iii) specify the date to which such expiry date is to be so extended. Upon
receipt of such notice, the Administrative Agent shall promptly notify each
Lender of the contents thereof. No LC Issuing Bank shall extend (or allow the
extension of) the expiry date of any Letter of Credit if (x) the extended expiry
date would be after the tenth Business Day before the Stated Maturity Date or
(y) such LC Issuing Bank shall have been notified by any MHG Company, any Agent
or the Required Lenders expressly to the effect that any condition specified in
Section 3.02 is not satisfied at the time such Letter of Credit is to be
extended.
(f) Notice of Actual Issuances and Extensions. Promptly upon issuing any
Letter of Credit or extending any Letter of Credit, the relevant LC Issuing Bank
will notify the Administrative Agent of the date of such Letter of Credit, the
amount thereof, the beneficiary or beneficiaries thereof and the expiry date or
extended expiry date thereof. Upon receipt of such notice the Administrative
Agent shall promptly notify each Lender of the contents thereof and the amount
of such Lender's participation in the relevant Letter of Credit. Promptly upon
issuing any Letter of Credit, the relevant LC Issuing Bank will send a copy of
such Letter of Credit to the Administrative Agent.
(g) Fees. The Borrowers shall pay to the Administrative Agent, for the
account of the Lenders ratably in accordance with their respective Percentages,
a letter of credit fee, calculated for each day at the LC Fee Rate for such day,
on the aggregate amount available for drawings (whether or not conditions for
drawing thereunder have been satisfied) under all Letters of Credit outstanding
at the close of business on such day. Such letter of credit fee shall be
payable with respect to each Letter of Credit in arrears on the last Business
Day of each month for so long as such Letter of Credit is outstanding and on the
final expiry date thereof. The Borrowers shall pay to each LC Issuing Bank
additional fronting fees, monthly in arrears, and reasonable expenses in the
amounts and at the times agreed between the Borrowers and such LC Issuing Bank.
(h) Drawings. Upon receiving a demand for payment under any Letter of
Credit from the beneficiary thereof, the relevant LC Issuing Bank shall
determine in accordance with the terms of such Letter of Credit whether such
demand for payment should be honored. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof, the
LC Issuing Bank shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit. If such LC Issuing Bank determines that any such demand for
payment should be honored, such LC Issuing Bank shall (i) promptly notify the
Borrowers and the Administrative Agent as to the amount to be paid by such LC
Issuing Bank as a result of such demand and the date on which such amount is to
be paid (an "LC Payment Date") and (ii) on such LC Payment Date make available
to such beneficiary in accordance with the terms of such Letter of Credit the
amount of the drawing under such Letter of Credit.
(i) Reimbursement and Other Payments by the Borrowers. If any amount is
drawn under any Letter of Credit:
(i) the Borrowers irrevocably and unconditionally agree to reimburse
the relevant LC Issuing Bank for all amounts paid by such LC Issuing Bank
upon such drawing,
30
together with any and all reasonable charges and expenses which such LC
Issuing Bank may pay or incur relative to such drawing and interest on the
amount drawn at the Federal Funds Rate for each day from and including the
date such amount is drawn to but excluding the date such reimbursement
payment is due and payable. Such reimbursement payment shall be due and
payable at or before 3:00 P.M. (Eastern Time) (x) on the relevant LC
Payment Date if such LC Issuing Bank notifies the Borrowers of such drawing
before 11:00 A.M. (Eastern Time) on such date or (y) on the date such
notice is given, if such notice is given after the LC Payment Date;
provided that any notice given to the Borrowers after 11:00 A.M. (Eastern
Time) on any day shall be deemed for purposes of the foregoing clause (y)
to have been given on the next succeeding Business Day; and
(ii) in addition, the Borrowers agree to pay to the relevant LC
Issuing Bank interest on any and all amounts not paid by the Borrowers when
due hereunder with respect to a Letter of Credit, for each day from and
including the date when such amount becomes due to but excluding the date
such amount is paid in full, payable on demand, at a rate per annum equal
to the Default Rate for such day.
Each payment to be made by the Borrowers pursuant to this subsection
(i) shall be made to the relevant LC Issuing Bank in Federal or other funds
immediately available to it at its address specified in or pursuant to Section
11.01.
(j) Payments by Lenders with Respect to Letters of Credit. If the
Borrowers fail to reimburse the relevant LC Issuing Bank as and when required by
subsection (i) above for all or any portion of any amount drawn under a Letter
of Credit issued by it:
(i) such LC Issuing Bank may notify the Administrative Agent of
such unreimbursed amount and request that the Lenders reimburse such LC
Issuing Bank for their respective Percentages thereof. Upon receiving any
such notice from an LC Issuing Bank, the Administrative Agent shall
promptly notify each Lender of the unreimbursed amount and such Lender's
Percentage thereof, but the failure of the Administrative Agent to give
such notice on the drawing date or in sufficient time to enable any Lender
to effect payment on such date shall not relieve such Lender from its
obligations under this Section 2.05(j)(i). Upon receiving such notice from
the Administrative Agent, each Lender shall make available to such LC
Issuing Bank, at its address specified in or pursuant to Section 11.01, an
amount equal to such Lender's Percentage of such unreimbursed amount as set
forth in such notice, in Federal or other funds immediately available to
such LC Issuing Bank, by 3:00 P.M. (Eastern Time) (A) on the day such
Lender receives such notice if it is received at or before 12:00 Noon
(Eastern Time) on such day or (B) on the first Business Day following such
Lender's receipt of such notice if it is received after 12:00 Noon (Eastern
Time) on the date of receipt. Upon payment in full thereof, such Lender
shall be subrogated to the rights of such LC Issuing Bank against the
Borrowers to the extent of such Lender's Percentage of the related LC
Reimbursement Obligation (including interest accrued thereon). Nothing in
this subsection (j) shall affect any rights any Lender may have against any
LC Issuing Bank for any action or omission for which such LC Issuing Bank
is not indemnified under subsection (n) of this Section 2.05; and
31
(ii) if any Lender fails to pay any amount required to be paid by
it pursuant to clause (i) of this subsection (j) on the date on which such
payment is due, interest shall accrue on such Lender's obligation to make
such payment, for each day from and including the date such payment became
due to but excluding the date such Lender makes such payment, at a rate per
annum equal to (x) for each day from the day such payment is due to the
third succeeding Business Day, inclusive, the Federal Funds Rate for such
day as determined by the relevant LC Issuing Bank and (y) for each day
thereafter the Base Rate for such day. Any payment made by any Lender after
3:00 P.M. (Eastern Time) on any Business Day shall be deemed for purposes
of the preceding sentence to have been made on the next succeeding Business
Day.
If the Borrowers shall reimburse any LC Issuing Bank for any drawing
with respect to which any Lender shall have made funds available to such LC
Issuing Bank in accordance with clause (i) of this subsection (j), such LC
Issuing Bank shall promptly upon receipt of such reimbursement distribute to
such Lender its pro rata share thereof, including interest, to the extent
received by such LC Issuing Bank.
If the LC Issuing Bank is required at any time to return to any
Borrower, or to a trustee, receiver, liquidator, custodian, or any official in
any Insolvency Proceeding, any portion of the payments made by any Borrower to
the LC Issuing Bank pursuant to Section 2.05(i) in reimbursement of a payment
made under any Letter of Credit or interest or fee thereon, each Lender shall,
on demand of the LC Issuing Bank, forthwith return to the LC Issuing Bank the
amount equal to such Lender's Percentage of any amounts so returned by the LC
Issuing Bank plus interest thereon from the date such demand is made to the date
such amounts are returned by such Lender to the LC Issuing Bank, at a rate per
annum equal to (x) for each day from the day such payment is due to the third
succeeding Business Day, inclusive, the Federal Funds Rate for such day as
determined by the relevant LC Issuing Bank and (y) for each day thereafter the
Base Rate for such day. Any payment made by any Lender after 3:00 p.m. (Eastern
time) on any Business Day shall be deemed for purposes of the preceding sentence
to have been made on the next succeeding Business Day.
(k) Increased Cost and Reduced Return. If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change in
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender or LC Issuing Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall impose, modify or deem applicable any tax, reserve, special
deposit or similar requirement against or with respect to or measured by
reference to letters of credit or participations therein, and the result of any
of the foregoing is to increase the cost to such Lender or LC Issuing Bank of
issuing or maintaining any Letter of Credit or any participation therein, or to
reduce any amount receivable by any Lender or LC Issuing Bank under this Section
2.05 in respect of any Letter of Credit or any participation therein (which
increase in cost, or reduction in amount receivable, shall be the result of such
Lender's or LC Issuing Bank's reasonable allocation of the aggregate of such
increases or reductions resulting from such event), then, within 15 days after
written demand by such Lender or LC Issuing
32
Bank (with a copy to the Administrative Agent), the Borrowers agree to pay to
such Lender or LC Issuing Bank, from time to time as specified by such Lender or
LC Issuing Bank, such additional amounts as shall be sufficient to compensate
such Lender or LC Issuing Bank for such increased cost or reduction. A
certificate of such Lender or LC Issuing Bank submitted to the Borrowers
pursuant to this subsection (k) and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error.
(l) Exculpatory Provisions. The Borrowers' obligations under this
Section 2.05 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which any MHG
Company or any Account Party may have or have had against any LC Issuing Bank,
any Lender, the beneficiary of any Letter of Credit or any other Person. The
Borrowers assume all risks of the acts or omissions of, or misuse of any Letter
of Credit by, any beneficiary of any Letter of Credit with respect to the use of
such Letter of Credit by such beneficiary. None of the LC Issuing Banks, the
Lenders and their respective officers, directors, employees and agents shall be
responsible for, and the obligations of each Lender to make payments to each LC
Issuing Bank and of the Borrowers to reimburse each LC Issuing Bank for drawings
pursuant to this Section 2.05 (except to the extent such obligations result from
the gross negligence or willful misconduct of the relevant LC Issuing Bank)
shall not be excused or affected by, among other things, (i) the use which may
be made of any Letter of Credit or any acts or omissions of any beneficiary or
transferee in connection therewith; (ii) the form, validity, sufficiency, legal
effect or genuineness of documents presented under any Letter of Credit or of
any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged (even if the LC
Issuing Bank shall have been notified thereof); (iii) payment by any LC Issuing
Bank against presentation of documents to it which do not comply with the terms
of the relevant Letter of Credit; (iv) any dispute between or among any of the
MHG Companies or their Affiliates, the beneficiary of any Letter of Credit or
any other Person or any claims or defenses whatsoever of any of the MHG
Companies or their Affiliates or any other Person against the beneficiary of any
Letter of Credit; (v) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any such Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (vi) the failure of
the beneficiary of any such Letter of Credit, or any other party to which such
Letter of Credit may be transferred, to comply fully with any conditions
required in order to draw upon such Letter of Credit or any other claim of any
Borrower against any beneficiary of such Letter of Credit, or any such
transferee, or any dispute between or among any Borrower and any beneficiary of
any Letter of Credit or any such transferee; (vii) errors in interpretation of
technical terms; (viii) any loss or delay in the transmission or otherwise of
any documents required in order to make a drawing under any such Letter of
Credit or of the proceeds thereof; (ix) the misapplication by the beneficiary of
any such Letter of Credit of the proceeds of any drawing under any such Letter
of Credit; or (x) any consequences arising from causes beyond the control of the
LC Issuing Bank, including any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or governmental authority,
and none of the above shall affect or impair, or prevent the vesting of, any of
the LC Issuing Bank's rights or powers hereunder. No LC Issuing Bank shall be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit. Any action taken
33
or omitted by any LC Issuing Bank or any Lender under or in connection with any
Letter of Credit and the related drafts and documents, if done without willful
misconduct or gross negligence, shall be binding upon the Borrowers and shall
not place any LC Issuing Bank or any Lender under any liability to any MHG
Company.
(m) Reliance, Etc. Subject to Section 2.05(d), each LC Issuing Bank
shall be entitled (but not obligated) to rely, and shall be fully protected in
relying, on the representation and warranty by the Borrowers set forth in the
last sentence of Section 3.02 to establish whether the conditions specified in
Section 3.02 are met in connection with any issuance or extension of a Letter of
Credit. The rights and obligations of each LC Issuing Bank under each Letter of
Credit issued by it shall be governed by the provisions thereof and the
provisions of the UCP and/or UCC referred to therein or otherwise applicable
thereto.
(n) Indemnification by the Borrowers. The Borrowers agree to
protect, indemnify, pay and hold harmless each Lender, each LC Issuing Bank and
each Agent and their respective directors, officers, agents and employees
(collectively, the "LC Indemnitees") from and against any and all claims,
demands, liabilities, charges, damages, losses, liabilities, costs or expenses
(including, without limitation, the reasonable fees and disbursements of counsel
and allowed costs of internal counsel) which such LC Indemnitee may reasonably
incur (or which may be claimed against any such LC Indemnitee by any Person) by
reason of or in connection with the execution and delivery or transfer of or
payment or failure to pay under any Letter of Credit or any actual or proposed
use of any Letter of Credit, including any claims, demands, liabilities,
charges, damages, losses, liabilities, costs or expenses which any LC Issuing
Bank may incur by reason of or in connection with the failure of any Lender to
fulfill or comply with its obligations to such LC Issuing Bank hereunder in
connection with any Letter of Credit (but nothing herein contained shall affect
any rights the Borrowers may have against any such defaulting Lender); provided
that the Borrowers shall not be required to indemnify any LC Indemnitee for any
claims, demands, liabilities, charges, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of any LC Indemnitee as determined by a final
judgment of a court with competent jurisdiction in determining whether a request
presented under any Letter of Credit issued by it complied with the terms of
such Letter of Credit or (ii) any LC Issuing Bank's failure to pay under any
Letter of Credit issued by it after the presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit. Nothing in
this subsection (n) is intended to limit the obligations of the Borrowers under
any other provision of this Section 2.05.
(o) Indemnification by Lenders. Each Lender shall, ratably in
accordance with its Percentage, indemnify each LC Issuing Bank, its affiliates
and their respective directors, officers, agents and employees (to the extent
not reimbursed by the MHG Companies) against any cost, expense (including
reasonable fees and disbursements of counsel), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct or such LC Issuing Bank's failure to pay under any Letter of
Credit issued by it after the presentation to it of a request strictly complying
with the terms and conditions of such Letter of Credit) that any such indemnitee
may suffer or incur in connection with this Section 2.05 or any action taken or
omitted by such indemnitee under this Section 2.05. Each Lender's obligation in
accordance with
34
this Agreement to reimburse the LC Issuing Bank for its respective Percentage,
as contemplated by Section 2.05(j), as a result of a drawing under a Letter of
Credit, and the Obligations of any Borrower to reimburse the LC Issuing Bank
upon a draw under a Letter of Credit, shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Section 2.05 under all circumstances, including the following
circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the LC Issuing Bank, any Borrower or other
Person for any reason whatsoever;
(ii) any lack of validity or enforceability of any Letter of Credit;
(iii) the existence of any claim, set-off, defense or other right
which any Borrower or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), the LC Issuing Bank or any Lender or any other Person
or, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying transaction
between any MHG Companies or their Affiliates and the beneficiary for which any
Letter of Credit was procured);
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect even if the LC Issuing Bank has been notified thereof;
(v) payment by the LC Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
(vi) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of any Borrower or
Subsidiaries of a Borrower;
(vii) any breach of this Agreement or any other Financing Document by
any party thereto;
(viii) the occurrence or continuance of an Insolvency Proceeding with
respect to any Borrower;
(ix) the fact that an Event of Default shall have occurred and be
continuing;
(x) the fact that the Commitment Termination Date shall have passed
or this Agreement or the Commitments hereunder shall have been terminated; and
(xi) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing.
(p) Liability for Damages. Nothing in this Section 2.05 shall
preclude the Borrowers or any Lender from asserting against any LC Issuing Bank
any claim for direct (but not
35
consequential) damages suffered by the Borrowers or such Lender to the extent,
but only to the extent, caused by (i) the willful misconduct or gross negligence
of such LC Issuing Bank or its directors, officers, employees or agents in
determining whether a request presented under any Letter of Credit issued by it
complied with the terms thereof or (ii) such LC Issuing Bank's failure to pay
under any such Letter of Credit after the presentation to it of a request
strictly complying with the terms and conditions thereof.
(q) Dual Capacities. In its capacity as a Lender, each LC Issuing
Bank shall have the same rights and obligations under this Section 2.05 as any
other Lender.
(r) Information to be Provided to Administrative Agent. The LC
Issuing Banks shall furnish to the Administrative Agent upon request such
information as the Administrative Agent shall reasonably request in order to
calculate (i) the Aggregate LC Exposure existing from time to time and (ii) the
amount of any fee payable for the account of the Lenders under Section 2.05(g).
Section 2.06 Fees.
----
(a) Closing Date Financing Fee. The Borrowers shall pay to the
Administrative Agent for distribution to each Lender on the Closing Date
financing fees in an amount equal to 2.50% of the aggregate Commitments.
(b) Arrangement Fee. The Borrowers shall pay on the Closing Date to
the Co-Arrangers, for their own accounts to be shared equally by the Co-
Arrangers, an arrangement fee in an aggregate amount equal to 1.00% of the
aggregate Commitments.
(c) Administrative Agent's Fee. The Borrowers shall pay to the
Administrative Agent, for its own account, a monthly Administrative Agent's fee
of $5,000, payable in advance on the Closing Date (for the remainder of the
month in which such date falls) and on the last Business Day of each month
thereafter (for the next succeeding month).
(d) Commitment Fee. The Borrowers shall pay to the Administrative
Agent for the account of each Lender a commitment fee, calculated for each day
and equal to the sum of (i) the Tranche A Commitment Fee Rate for such day
(expressed as a daily rate), multiplied by the amount by which such Lender's
Tranche A Commitment on such day exceeds its Outstanding Tranche A Amount on
such day, plus (ii) the Tranche B Commitment Fee Rate for such day (expressed as
a daily rate), multiplied by the amount by which such Lender's Tranche B
Commitment on such day exceeds its Outstanding Tranche B Amount on such day,
regardless of whether the Tranche B Commencement Date shall have occurred. Such
commitment fees shall accrue from and including the Interim Order Date to but
excluding the Commitment Termination Date and shall be payable monthly in
arrears on the last Business Day of each month after the Closing Date, and on
the Commitment Termination Date .
Section 2.07 Final Maturity of Loans. The Loans shall mature, and
-----------------------
the outstanding principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Commitment Termination Date.
36
Section 2.08 Unscheduled Mandatory Prepayments of Loans; Reduction
-----------------------------------------------------
of Commitments.
--------------
(a) Asset Sales. If after the Closing Date any MHG Company receives
any Net Cash Proceeds of any Asset Sale, the Borrowers shall prepay (subject to
subsection (g) below) an aggregate principal amount of Loans and permanently
reduce the Commitments in an amount equal to 100% of such Net Cash Proceeds of
such Asset Sale.
(b) Incurrence of Debt. If after the Closing Date any MHG Company
receives any Net Cash Proceeds from the issuance or other incurrence of any
Debt, the Borrowers shall prepay (subject to subsection (g) below) an aggregate
principal amount of Loans and permanently reduce the Commitments in an amount
equal to 100% of such Net Cash Proceeds; provided that this subsection (b) shall
not apply to any Net Cash Proceeds of (i) Debt under this Agreement or (ii)
Permitted Intercompany Debt.
(c) Equity Issuances. If after the Closing Date any MHG Company
receives any Net Cash Proceeds from any Equity Issuance, the Borrowers shall
prepay (subject to subsection (g) below) an aggregate principal amount of Loans
and permanently reduce the Commitments in an amount equal to 100% of such Net
Cash Proceeds.
(d) Tax Refunds. If after the Closing Date any MHG Company receives
any cash refund or rebate of any federal, state or other tax, the Borrowers
shall prepay (subject to subsection (g) below) an aggregate principal amount of
Loans and permanently reduce the Commitments in an amount equal to 100% of such
tax refund or rebate; provided that this Section 2.08(d) shall not require any
such prepayment unless the aggregate amount of such refunds and rebates received
after the Closing Date shall exceed $100,000.
(e) Excess Casualty Proceeds. The Borrowers (or the Collateral Agent
on its behalf) shall apply any Excess Casualty Proceeds to prepay (subject to
subsection (g) below) an aggregate principal amount of Loans and permanently
reduce the Commitments in an amount equal to 100% of such Excess Casualty
Proceeds; provided that this Section 2.08(e) shall not require any such
prepayment unless the aggregate amount of such Excess Casualty Proceeds received
after the Closing Date shall exceed $100,000.
(f) Prepayments from Cash Balances. The Borrowers shall on each
Business Day prepay (subject to subsection (g) below) an aggregate principal
amount of Loans in an amount equal to the excess (such excess, as of any date of
determination, being the "Excess Cash Amount"), if any, of (x) the amount of the
Cash Balances of the Borrowers outstanding on such date over (y) the sum of (a)
$5,000,000 and (b) the aggregate amount of cash required to be maintained on
deposit as a minimum balance by the applicable financial institutions for the
disbursement accounts, payroll accounts, depository accounts, concentration
accounts and sub-concentration accounts as described in Schedule 10 hereto.
-----------
(g) Timing of Prepayment. Each prepayment required by subsection (a),
(b), (c), (d) or (e) of this Section 2.08 shall be made within one Business Day
after any MHG Company
37
receives the relevant Net Cash Proceeds, and each prepayment required by
subsection (f) of this Section 2.08 shall be made on the Business Day on which
any excess Cash Balance which is required to be prepaid under such subsection is
outstanding.
(h) Allocation of Prepayments; Ratable Application. Each prepayment
of the Loans required under Section 2.08(a) through (e) above (an "Unscheduled
Mandatory Prepayment") shall be applied (i) prior to the Tranche B Commencement
Date, first, to prepay the outstanding Tranche A Loans to the full extent
-----
thereof and permanently reduce the Tranche A Commitments by the amount of such
prepayments, second, to permanently reduce the Tranche A Commitments to the full
------
extent thereof, and third, to permanently reduce the Tranche B Commitments to
-----
the full extent thereof; and (ii) on and after the Tranche B Commencement Date,
first, to prepay the outstanding Tranche B Loans to the full extent thereof and
-----
permanently reduce the Tranche B Commitments by the amount of such prepayments,
second, to prepay the outstanding Tranche A Loans to the full extent thereof and
------
permanently reduce the Tranche A Commitments by the amount of such prepayments,
third, to the extent of any remaining amount of such prepayment, to further
-----
permanently reduce the Tranche B Commitments to the full extent thereof, and
fourth, to further permanently reduce the Tranche A Commitments to the full
------
extent thereof. Each prepayment of the Loans required under Section 2.08(f)
shall be applied, without reducing the Commitments, (i) prior to the Tranche B
Commencement Date, to prepay the outstanding Tranche A Loans to the full extent
thereof; and (ii) on and after the Tranche B Commencement Date, first, to prepay
-----
the outstanding Tranche B Loans to the full extent thereof, and second, to
------
prepay the outstanding Tranche A Loans to the full extent thereof. Each
prepayment of Loans or reduction of Commitments pursuant to this Section 2.08
shall be applied in accordance with this Agreement ratably to the applicable
Loans and Commitments, respectively, of the several Lenders. The Borrowers
shall give the Administrative Agent notice of any such prepayment as if it were
an optional prepayment made pursuant to Section 2.09. Any amounts required to
be applied to reduce Tranche A Commitments under this Section 2.08 to an amount
below the aggregate LC Exposure of all Lenders shall be applied to cash
collateralize Letters of Credit in accordance with the Security Agreement.
(i) Interest. Each prepayment of principal of the Loans under this
Section 2.08, other than prepayments pursuant to Section 2.08(f), shall be made
together with interest accrued on the amount prepaid to the date of payment.
Section 2.09 Optional Prepayments.
--------------------
(a) Notice to Administrative Agent. The Borrowers may, upon giving a
Prepayment Notice to the Administrative Agent before 12:00 Noon (Eastern Time)
on the date of prepayment, prepay the Tranche A Loans or Tranche B Loans (as
specified in such Prepayment Notice) outstanding on any Business Day in whole or
in part in amounts aggregating $1,000,000 or any larger multiple of $100,000.
(b) Notice to Lenders. Upon receiving a Prepayment Notice pursuant to
this Section 2.09, the Administrative Agent shall promptly notify each Lender of
the contents thereof and of such Lender's share of such prepayment and such
Prepayment Notice shall not thereafter be revocable by the Borrowers.
38
(c) Ratable Application. Each prepayment of Tranche A Loans or
Tranche B Loans pursuant to this Section 2.09 shall be applied ratably to the
Tranche A Loans or Tranche B Loans, respectively, of the several Lenders.
(d) Payment of Accrued Interest. Each prepayment of principal of the
Loans under this Section 2.09 shall be made together with interest accrued on
the amount prepaid to the date of payment.
Section 2.10 Termination or Reduction of Commitments. The Borrowers
---------------------------------------
may, upon at least three Business Days' notice to the Administrative Agent, (i)
terminate the Commitments at any time, if no Lender has any Outstanding Tranche
A Amount or Outstanding Tranche B Amount, respectively, after such termination,
or (ii) ratably reduce the Tranche A Commitments or Tranche B Commitments from
time to time by an aggregate amount of $5,000,000 or any larger multiple of
$1,000,000; provided that immediately after such reduction no Lender's
Outstanding Tranche A Amount or Outstanding Tranche B Amount shall exceed its
Tranche A Commitment or Tranche B Commitment, respectively, as so reduced.
Unless previously terminated, the Commitments shall terminate in their entirety
on the Commitment Termination Date. Once reduced or terminated the Commitments
may not be reinstated. The Borrowers' notice to the Administrative Agent shall
designate the date (which shall be a Business Day) of such termination or
reduction, whether the Tranche A Commitments or the Tranche B Commitments are to
be terminated or reduced, and the amount of any partial reduction of the Tranche
A Commitments or the Tranche B Commitments, and such termination or reduction of
the Tranche A Commitments or Tranche B Commitments shall be effective on the
date specified in the Borrowers' notice and shall be applied ratably to the
Tranche A Commitments or Tranche B Commitments (as specified by the Borrowers in
such notice), respectively, of the several Lenders.
Section 2.11 General Provisions as to Payments.
---------------------------------
(a) The Borrowers shall make each payment of principal of, and
interest on, the Loans and the LC Reimbursement Obligations and each payment of
facility fees, commitment fees and letter of credit fees (other than fees
payable directly to the LC Issuing Banks) hereunder not later than 1:00 P.M.
(Eastern Time) on the date when due, in Federal or other funds immediately
available in Pittsburgh, Pennsylvania, to the Administrative Agent at its
address for payments specified in or pursuant to Section 11.01. Upon receiving
a payment for the account of the Lenders, the Administrative Agent will promptly
distribute to each such Lender its ratable share of such payment. Whenever any
payment of principal of, or interest on, Loans or LC Reimbursement Obligations
or any payment of commitment fees or letter of credit fees shall be due on a day
which is not a Business Day, the date for payment thereof shall be extended to
the next succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
(b) Unless the Administrative Agent shall have received notice from
the Borrowers before the date on which any payment is due to any of the Lenders
hereunder that the Borrowers will not make such payment in full, the
Administrative Agent may assume that the Borrowers have made such payment in
full to the Administrative Agent on such date and, in reliance
39
upon such assumption, the Administrative Agent may (but shall not be obligated
to) cause to be distributed to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent that the Borrowers shall
not have so made such payment, each such Lender shall repay to the
Administrative Agent forthwith on demand any such amount distributed to such
Lender together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Rate.
Section 2.12 Computation of Interest and Fees.
--------------------------------
(a) Interest and fees hereunder shall be computed on the basis of a
year of 365 days (or 366 days in a leap year) and paid for the actual number of
days elapsed (including the first day but excluding the last day).
(b) The Administrative Agent shall determine the Tranche A Interest
Rate, the Tranche B Interest Rate, the Tranche A Default Rate, the Tranche B
Default Rate and the LC Fee Rate applicable hereunder and the amount of accrued
interest and fees. The Administrative Agent shall give prompt notice to the
Borrowers and the Lenders of each Tranche A Interest Rate, Tranche B Interest
Rate, Tranche A Default Rate, Tranche B Default Rate and LC Fee Rate and the
amount of accrued interest and fees so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
Section 2.13 Superpriority Nature of Obligations. All Obligations
-----------------------------------
under the Financing Documents shall constitute allowed administrative expense
claims in the Chapter 11 Cases against Borrowers with priority under Section
364(c)(1) of the Bankruptcy Code over any and all other administrative expenses
of the kind specified or ordered pursuant to any provision of the Bankruptcy
Code, including, but not limited to, Sections 105, 326, 328, 503(b), 506(c),
507(a), 507(b) and 726 of the Bankruptcy Code; provided that, the superpriority
administrative claim status of the Obligations, and the Liens and security
interests securing the same, shall be subject only to the "Carve-Out",
consisting of: (i) unpaid professional fees and expenses incurred (x) prior to
the date of the delivery of a notice from the Administrative Agent or Required
Lenders to the Borrowers of the occurrence of an Event of Default and specifying
that the limitation on professional fees and expenses referred to in the
following clause (ii) is in effect (such notice being the "Carve-Out Notice") or
(y) after the earlier of (1) such time as no Event of Default shall be
continuing or (2) such time as such Carve-Out Notice shall be rescinded by the
Administrative Agent at the direction of Required Lenders in their sole
discretion, to the extent such fees and expenses described in this clause (i)
are allowed by the Court in the Chapter 11 Cases (including on an interim basis
and subject to final allowance), (ii) after and from the date of the delivery of
a Carve-Out Notice, professional fees and expenses allowed by the Court in the
Chapter 11 Cases (including on an interim basis and subject to final allowance)
in an aggregate amount (determined without regard to fees and expenses incurred
prior to the date of the delivery of such Carve-Out Notice and which are at any
time allowed by the Court (including on an interim basis and subject to final
allowance)) not to exceed $2,000,000 (for any period commencing at the time a
Carve-Out Notice shall have been so delivered and ending at the earlier of (1)
such subsequent time as no Event of Default shall be continuing and (2) such
time as such Carve-Out Notice shall be rescinded by the Administrative
40
Agent at the direction of Required Lenders in their sole discretion), and (iii)
fees payable to the Clerk of the Court and to the United States Trustee pursuant
to 28 U.S.C. (S)1930(a)(6).
Section 2.14 Joint and Several Liability; Payment Indemnifications.
-----------------------------------------------------
(a) All Obligations of Borrowers under the Financing Documents shall
be the joint and several Obligations of the Borrowers. The Obligations of and
the Liens granted by any such Borrower under the Financing Documents shall not
be impaired or released by any action or inaction on the part of any Agent or
any Lender with respect to any Credit Party, including any action or inaction
which would otherwise release a surety.
(b) In order to provide for just and equitable contribution between
the Borrowers if any payment is made by a Borrower (a "Funding Borrower") in
discharging any of the Obligations, each of the Funding Borrowers shall be
entitled to a contribution from the other Borrowers for all payments, damages
and expenses incurred by such Funding Borrower in discharging the Obligations,
in the manner and to the extent required to allocate liabilities in an equitable
manner among the Borrowers on the basis of the relative benefits received by the
Borrowers. If and to the extent that a Funding Borrower makes any payment to
any Lender or any other Person in respect of the Obligations, any claim which
said Funding Borrower may have against the other Borrowers by reason thereof
shall be subject and subordinate to the prior Cash payment in full of the
Obligations. The parties hereto acknowledge that the right to contribution
hereunder shall constitute an asset of the party to which such contribution is
owing. Notwithstanding any of the foregoing to the contrary, such contribution
arrangements shall not limit in any manner the joint and several nature of the
Obligations, limit, release or otherwise impair any rights of any Agent or any
Lender under the Financing Documents, or alter, limit or impair the obligation
of each Borrower, which is absolute and unconditional and joint and several with
the other Borrowers, to repay the Obligations. The obligation of any Borrower
to make any contribution to another Borrower under this Section 2.14(b) shall be
deemed an expense of administration of such Borrower arising under Section
503(b) of the Bankruptcy Code and shall be junior in priority to all Obligations
of such Borrower and of the Borrowers under the Financing Documents.
ARTICLE 3. Conditions
Section 3.01 Effectiveness of this Agreement; Closing. This
----------------------------------------
Agreement will become effective, and the Closing will occur, when (i) the Agents
shall have received the following documents, each dated the Closing Date unless
otherwise indicated, and (ii) the other conditions specified below shall have
been satisfied or waived in accordance with the terms hereof:
(a) with respect to each party listed on the signature pages hereof,
either a counterpart of this Agreement signed by such party or facsimile or
other written confirmation satisfactory to the Administrative Agent that
such party has signed a counterpart hereof;
(b) a duly executed Tranche A Note and a duly executed Tranche B Note
complying with the provisions of Section 2.03 payable to each Lender;
41
(c) a counterpart of the Security Agreement, signed by each of the
Borrowers, together with (to the extent not previously delivered to
Collateral Agent in its capacity as collateral agent under the Existing
Credit Facilities) certificates evidencing all the certificated Equity
Interests listed in Schedule 3 hereto and signed stock powers or other
----------
appropriate instruments of transfer relating thereto;
(d) all signed UCC financing statements requested by the Collateral
Agent to perfect its security interests in the Collateral;
(e) to the extent received by the Collateral Agent on or prior to the
Closing Date, the results of Lien and tax and judgment Lien searches with
respect to the personal, mixed and real properties of the Borrowers in the
jurisdictions and with the scope requested by the Collateral Agent, which
results shall be satisfactory to the Collateral Agent;
(f) written wire transfer instructions signed by MHG on behalf of the
Borrowers and in form and substance satisfactory to the Administrative
Agent for application of the proceeds of the initial Borrowing hereunder on
the date of initial Borrowing, including providing for the payment on the
date of initial Borrowing of (1) all fees, expenses and other amounts
payable by the Borrowers on or before such date to the Agents, Co-Arrangers
and the Lenders in connection with this Agreement, and (2) all fees and
expenses of each counsel and advisor to the Agents, the Lenders and the
Existing Lenders in connection with this Agreement, the Existing Credit
Facilities, the Existing Notes and the transactions contemplated thereby
(including without limitation O'Melveny & ▇▇▇▇▇ LLP, counsel to the Agents,
Lenders and Existing Lenders, ▇▇▇▇▇▇▇▇ Ingersoll, P.C., special counsel to
the Administrative Agent and the administrative agent under the Existing
Credit Facilities, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., special
counsel to the Syndication Agent and the syndication agent under the
Existing Credit Facilities, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and Care
Consulting, L.L.C.), incurred and invoiced but not yet paid through the
Petition Date;
(g) an opinion of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special
counsel for the Borrowers, substantially in the form of Exhibit H hereto
---------
(and Borrowers hereby request such counsel to deliver such opinions to
Lenders);
(h) all approvals, consents and other actions by or in respect of, or
filings with, any governmental body, agency, official, authority or other
Person (including stockholders) required in connection with the
transactions contemplated by the Financing Documents shall have been
obtained, taken or made (except for any such approvals, consents, actions
or filings with any Person (other than any governmental body, agency,
official or authority) (1) as to which the failure to have obtained, taken
or made them is not, in the aggregate, material or (2) which have been
rendered unnecessary, in the reasonable judgment of the Agents, due to the
entry of the Interim Borrowing Order);
(i) the Interim Borrowing Order (or if there is no Interim Borrowing
Order, the Borrowing Order) shall have been entered by the Court;
42
(j) no pleading, application or objection sought by any party in
interest (including any Existing Lender) shall have been filed with and
granted by the Court (or shall have been filed with the Court by or on
behalf of an official committee of creditors) which has not been withdrawn,
stayed, dismissed or denied seeking (i) to dismiss or convert any of the
Chapter 11 Cases to cases under Chapter 7 of the Bankruptcy Code, (ii) the
appointment of a Chapter 11 trustee in any of the Chapter 11 Cases or of a
trustee of any Borrower under Chapter 7, (iii) the appointment of an
examiner (with expanded powers beyond those set forth in Sections
1106(a)(3) and (4) of the Bankruptcy Code) for any Borrower under Section
1106(b) of the Bankruptcy Code, (iv) the granting of an administrative
expense or priority claim or a Lien in either case pari passu or senior to
that of the Collateral Agent granted pursuant to the Collateral Documents,
the Interim Borrowing Order and the Borrowing Order, other than the Carve-
Out, (v) to stay, reverse, vacate, or otherwise modify the Interim
Borrowing Order or the Borrowing Order without the prior written consent of
the Agents and Required Lenders, or (vi) relief from the automatic stay (or
any other injunction having similar effect) so as to allow a third party to
proceed against any property or assets of the Borrowers deemed material by
the Agents;
(k) all First Day Orders shall be in form and substance satisfactory
to the Agents, and the Agents shall have received copies of all orders, if
any, entered by the United States Bankruptcy Court in the bankruptcy cases
of MPAN as a result of motions and applications filed by the relevant
debtors with such court on the relevant petition date;
(l) since the date of the Most Recent Audited Financial Statements,
no Material Adverse Effect (in the sole opinion of Required Lenders) shall
have occurred;
(m) the Agents shall have received, in form and substance
satisfactory to the Agents, a certificate from an appropriate officer of
each of the Credit Parties (i) attaching copies of the Organizational
Documents of such Credit Party and copies of resolutions or consents of the
board of directors of such Credit Party or of its applicable partner or
member authorizing the applicable Financing Documents, the Chapter 11 Cases
and the other transactions contemplated hereby, and (ii) certifying (A)
that such copies are true, correct and complete copies thereof and that
such resolutions and Organizational Documents are in full force and effect
as of the Closing Date and have been duly adopted in accordance with the
Organizational Documents of such Credit Party, and (B) as to the signatures
and incumbency of the Persons executing Financing Documents on behalf of
such Credit Party;
(n) the Agents shall have received copies of all Management and
Service Agreements, including all employment agreements (if any) with the
administrator, facility director, and director of nursing for each
Healthcare Facility, which shall be (i) in form and substance satisfactory
to the Agents and (ii) certified as true, correct and complete and in full
force and effect as of the Closing Date by an appropriate officer of the
Credit Parties;
(o) the Lenders shall have received (i) unaudited consolidated
financial statements of MHG and its Consolidated Subsidiaries for the nine-
month period ended September 30, 1999 and the one-month period ended
October 31, 1999, consisting of
43
consolidated balance sheets and the related consolidated statements of
income, stockholders' equity and cash flows for such Fiscal Year, which
unaudited financial statements shall be in form and substance satisfactory
to the Agents and Lenders and shall be certified by a Financial Officer of
MHG that they fairly present the financial condition of MHG and its
Consolidated Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, and (ii)
drafts of the audited consolidated balance sheet of Mariner Post-Acute
Network, Inc. and its Subsidiaries for the fiscal year ended September 30,
1999 and the related audited consolidated statements of income,
stockholders' equity and cash flows of Mariner Post-Acute Network, Inc. and
its Subsidiaries for such fiscal year, in reasonable detail and certified
by a financial officer of MPAN that they fairly present the financial
condition of Mariner Post-Acute Network, Inc. and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated;
(p) the Lenders shall have received (i) a detailed written
description of all outstanding claims asserted by, and disputes with, the
United States with respect to Medicare and/or under the False Claims Act or
with any State or with any fiscal intermediary or agent for any of the
foregoing, in any such case involving or against any of the MHG Companies
and their Subsidiaries, and the amounts involved or claimed, (ii) a copy of
the Settlement Letter, which Settlement Letter shall be in full force and
effect, with no modifications thereto, and (iii) a copy of the HHS
Stipulation, which shall be duly executed by all parties purported to be
bound thereby;
(q) the Agents shall have received a written instrument, in form and
substance satisfactory to the Agents, executed by MPAN for the benefit of
the Agents and Lenders (i) evidencing MPAN's acknowledgment of and
agreement to the provisions of Sections 5.13 and 7.07 and (ii) undertaking
to comply with the obligations of the Borrowers and MPAN set forth in such
Sections;
(r) the Agents shall have received (i) the Cash Budget and (ii) the
Year 2000 DIP Budget, in each case in form and substance satisfactory to
the Agents;
(s) the LC Issuing Bank shall have received a counterpart to the LC
Issuing Bank Fee Letter, signed by each of the Borrowers;
(t) the Agents shall have received the Credit and Collection Policy,
in form and substance satisfactory to the Agents;
(u) the Agents shall have received a schedule of actions, suits or
proceedings pending or threatened against the Borrowers as of the Closing
Date, which schedule shall be in form and substance satisfactory to the
Agents; and
(v) the Agents shall have received all other documents that any Agent
may reasonably request relating to the existence of the MHG Companies, the
corporate or other authority for and the validity of the Financing
Documents, the creation and perfection
44
of the Liens contemplated by the Collateral Documents and any other matters
relevant thereto, all in form and substance satisfactory to the Agents.
Promptly after the Closing occurs, the Agents shall notify the Borrowers and the
Lenders thereof, and such notice shall be conclusive and binding on all parties
hereto.
Section 3.02 Credit Events. The obligations (i) of each Lender to
-------------
make a Loan on the occasion of each Borrowing, (ii) of an LC Issuing Bank to
sell and of each Lender to purchase each participation in a Letter of Credit as
and when provided in Section 2.05, and (iii) of each LC Issuing Bank to extend
(or allow the extension of) the expiry date of a Letter of Credit issued by it
hereunder as and when provided in Section 2.05 are each subject to the
satisfaction (or waiver in accordance with the terms hereof) of the following
conditions:
(a) the fact that the Closing Date shall have occurred;
(b) receipt by the Administrative Agent of notice of the relevant
Credit Event as required by Section 2.02 or 2.05(c), as the case may be;
(c) the fact that, immediately before and after such Credit
Event, no Default shall have occurred and be continuing;
(d) the fact that each of the representations and warranties made
by any of the Borrowers in or pursuant to any Financing Document to which
it is a party shall be true on and as of the date of such Credit Event as
if made on and as of such date, unless such representation or warranty was
expressly made solely as of an earlier date, in which case such
representation or warranty was true and correct on such earlier date;
(e) no order, judgment or decree of any court (including, without
limitation, the Court), arbitrator or governmental authority shall purport
to enjoin or restrain such Lender from making any such Loan or extending or
issuing any such Letter of Credit on the date of such Credit Event;
(f) immediately after giving effect to such Credit Event, the
limitations on borrowing set forth in Section 2.01(c) shall have been
complied with;
(g) the making of the Loans requested in connection with any such
Borrowing shall not violate any law including Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System;
(h) no pleading, application or objection sought by any party in
interest (including any Existing Lender) shall have been filed with and
granted by the Court (or shall have been filed with the Court by or on
behalf of an official committee of creditors) which has not been withdrawn,
stayed, dismissed or denied seeking (i) to dismiss or convert any of the
Chapter 11 Cases to cases under Chapter 7 of the Bankruptcy Code, (ii) the
appointment of a Chapter 11 trustee in any of the Chapter 11 Cases or of a
trustee of any Borrower under Chapter 7, (iii) the appointment of an
examiner (with expanded powers beyond those set
45
forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code) for any
Borrower under Section 1106(b) of the Bankruptcy Code, (iv) the granting of
an administrative expense or priority claim or a Lien in either case pari
passu or senior to that of the Collateral Agent granted pursuant to the
Collateral Documents, the Interim Borrowing Order and the Borrowing Order,
other than the Carve-Out, (v) to stay, reverse, vacate, or otherwise modify
the Interim Borrowing Order or the Borrowing Order, as the case may be,
without the prior written consent of the Agents and Required Lenders, or
(vi) relief from the automatic stay (or any other injunction having similar
effect) so as to allow a third party to proceed against any property or
assets of the Borrowers having an aggregate value in excess of $500,000;
(i) there shall not be pending or, to the knowledge of any
Executive Officer of the Borrowers, threatened, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
any MHG Company that would be required to be, but has not been, disclosed
by the Borrowers in writing pursuant to Section 4.06 or 5.01(h) prior to
the making of the last preceding Loans (or, in the case of the initial
Loans, prior to the execution of this Agreement), and there shall have
occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration whether or not
required to be so disclosed, that, in either event, in the opinion of
Required Lenders, in any manner questions the validity of any Financing
Document or could be expected to have a Material Adverse Effect or in which
there is a reasonable possibility of an adverse decision that could be
expected to have a Material Adverse Effect seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated by this Agreement or the making
of Loans hereunder; and
(j) The Interim Borrowing Order and/or the Borrowing Order, as
the case may be, shall be Final Orders.
Each Credit Event under this Agreement shall be deemed to be a
representation and warranty by the Borrowers on the date of such Credit Event
that all of the conditions set forth in this Section 3.02 have been satisfied
and that each certification contained in the relevant Notice of Borrowing or LC
Request, as the case may be, is true, correct and complete on the date of such
Credit Event.
ARTICLE 4. Representations and Warranties
Each of the Borrowers represents and warrants to the Lender Parties that:
Section 4.01 Corporate Existence and Power. Each MHG Company is a
-----------------------------
corporation, limited liability company or partnership duly incorporated,
organized or formed, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and, subject to compliance with
any applicable provisions of the Bankruptcy Code, has all corporate or other
powers and all material Governmental Approvals (including without limitation
those required by Medicaid Regulations and Medicare Regulations) required to
carry on its business as now
46
conducted and as proposed to be conducted, except for such Governmental
Approvals the failure of which to have in the aggregate could not be expected to
have a Material Adverse Effect. Each Borrower is in compliance with its
Organizational Documents and all orders of the Court.
Section 4.02 Corporate and Governmental Authorization; No
--------------------------------------------
Contravention. The execution and delivery by each MHG Company of the Financing
-------------
Documents to which it is a party, its performance of its obligations thereunder
and, with respect to each of the Borrowers, the issuance and payment of the
Notes are within its corporate, partnership or limited liability company or
other powers, have been duly authorized by all necessary corporate, partnership,
limited liability company or other action, require no action by or in respect
of, or filing with, any governmental body, agency or official (except for the
Court and such as shall have been made at or before the time required by the
Financing Documents and shall be in full force and effect on and after the date
when made to the extent required by the Financing Documents) and do not
contravene or violate any Applicable Laws (including an applicable order of the
Court) or any provision of its Organizational Documents, or contravene or
constitute a default under any agreement or other instrument binding upon it
(which contravention or default, in the case of such instruments or agreements,
would give rise to rights enforceable on a post-Petition Date basis) or result
in or require the imposition of any Lien (other than the Liens created by the
Collateral Documents) on any of its assets.
Section 4.03 Binding Effect. This Agreement constitutes a valid and
--------------
binding agreement of the Borrowers, and the other Financing Documents, when
executed and delivered as contemplated by this Agreement, will constitute valid
and binding obligations of each MHG Company that is a party thereto, in each
case enforceable in accordance with its terms, except as limited by general
principles of equity.
Section 4.04 Security Interests. On the Closing Date, the Collateral
------------------
Documents will create valid Security Interests in the Collateral to the extent
set forth therein. At all times after the Closing, the Collateral Documents, in
conjunction with the entry of the Interim Borrowing Order and/or the Borrowing
Order, will create valid and perfected Security Interests in the Collateral of
the Borrowers from time to time covered or purportedly covered thereby. Such
Security Interests will be prior to all other Liens (except as set forth in the
Interim Borrowing Order and the Borrowing Order) on such Collateral until the
applicable Security Interest is released pursuant to Section 18 of the Security
Agreement.
Section 4.05 Financial Information.
---------------------
(a) The Most Recent Audited Financial Statements, reported on by Ernst
& Young, LLP, fairly present in all material respects, in conformity with GAAP,
the consolidated financial position of MHG and its Consolidated Subsidiaries as
of December 31, 1998 and their consolidated results of operations and cash flows
for the twelve-month period ending as of such date.
(b) The unaudited consolidated balance sheets of MHG and its
Consolidated Subsidiaries as of September 30, 1999 and October 31, 1999 and the
related unaudited consolidated statements of operations, cash flows and
shareholders' equity for the nine-month period and one-month period then ended,
respectively, as delivered to the Lenders on or prior to the Closing Date,
47
fairly present in all material respects, in conformity with GAAP, the
consolidated financial position of MHG and its Consolidated Subsidiaries as of
such dates and their consolidated results of operations and cash flows for such
periods, subject to audit and normal year-end adjustments.
(c) Since the date of the Most Recent Audited Financial Statements, no
event has occurred and no condition has come into existence which has had, or is
likely to have, a Material Adverse Effect.
Section 4.06 Litigation. Except as disclosed in the schedule
----------
delivered on or prior to the Closing Date pursuant to Section 3.01(u) or
pursuant to Section 5.01(h), there is no action, suit or proceeding pending
against, or to the knowledge of any Executive Officer of the Borrowers
threatened against or affecting, any MHG Company before any court or arbitrator
or any governmental body, agency or official (i) in which there is a reasonable
possibility of an adverse decision that could be expected to have a Material
Adverse Effect or (ii) which in any manner questions the validity of any
Financing Document.
Section 4.07 Compliance with ERISA. Each member of the ERISA Group
---------------------
has fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or made any amendment
to any Plan, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
Section 4.08 Taxes. The MHG Companies have filed all United States
-----
federal income tax returns that are required to be filed by them (or have filed
appropriate extensions for filing such tax returns) and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by any of them,
except (i) such taxes, if any, as are being contested in good faith and as to
which reserves have been provided and (ii) taxes the liability for which does
not exceed, in the aggregate, $50,000. The charges, accruals and reserves on
the books of the MHG Companies in respect of taxes or other similar governmental
charges are, in the opinion of MHG, adequate.
Section 4.09 Compliance with Laws. (a) The MHG Companies are in
--------------------
compliance in all material respects with all Applicable Laws (including without
limitation Medicaid Regulations and Medicare Regulations), other than such laws,
rules or regulations (i) the validity or applicability of which the relevant MHG
Company is contesting in good faith or (ii) the failure to comply with which
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) As of the date hereof Schedule 9 hereto lists the following
----------
contracts relating to the business operations of the MHG Companies: (i) all
employee benefit plans, employment agreements where the compensation paid by any
MHG Company exceeds $250,000 in any fiscal year, collective bargaining
agreements and labor contracts (the "Labor Contracts"), (ii) all written
48
provider or similar agreements (the "Provider Agreements") pursuant to which the
MHG Companies have received or may claim any entitlement to receive
reimbursement from or as a result of (1) Medicaid, Medicare or Blue Cross
programs, or (2) any other public or private reimbursement programs where the
payments received by any MHG Company exceeded or are expected to exceed
$6,000,000 in the current fiscal year; (iii) all leases of real property where
the payments made by any MHG Company in the current fiscal year exceed or are
expected to exceed $250,000, (iv) any contract or series of contracts with the
same person for the furnishing or purchase of machinery, equipment, goods or
services, where the payments made by any MHG Company exceeded or are expected to
exceed $1,000,000 in the aggregate in the current fiscal year; (v) all
management contracts pursuant to which any MHG Company provides management
services to any other person where the payments received or expected to be
received by any MHG Company exceed $500,000 in the current fiscal year, and all
other Management and Service Agreements; and (vi) all material contracts filed
as exhibits to any report filed by MHG with the SEC during the past twelve
months. All contracts listed on Schedule 9 and any Provider Agreements which
----------
provide for annual payments in excess of $6,000,000 which are not listed on
Schedule 9 are valid, binding and enforceable upon each of the parties thereto
----------
in accordance with their respective terms and there is no default thereunder.
There are no patient care agreements with patients or any other person or
organization which deviate in such a material respect from the standard patient
care forms used by the MHG Companies.
(c) As of the date hereof, Schedule 12 hereto sets forth an accurate
-----------
description of all of the Healthcare Facilities (including without limitation
all of the Nursing Home Facilities) together with a list of their location and a
general description of the services provided by each such Healthcare Facility.
Except as set forth on Schedule 9, each MHG Company has all material
----------
accreditations, authorizations, approvals, certificates of need, consents,
agreements, licenses, permits and qualifications (collectively, "Approvals")
required for them to (i) construct, acquire, own, manage, lease and/or operate
their facilities and services, and (ii) receive payment and reimbursement from
any patient or third party payor. The MHG Companies have all other material
Approvals required for the lawful operation of their businesses. All material
Approvals of each MHG Company are in full force and effect and have not been
amended or otherwise modified (except for modifications which would not have a
material adverse effect upon any MHG Company) rescinded, revoked or assigned,
and no notice has been received of any violation of Applicable Laws or any
refusal to renew any Approval which could reasonably be expected to cause any of
such Approvals to be modified, rescinded or revoked (except for modifications,
rescissions or revocations which could not reasonably be expected have a
Material Adverse Effect). No MHG Company knows of any reason why any of them
will not be able to maintain all material Approvals necessary or appropriate to
construct, own, lease, manage and operate all of their facilities and to
otherwise conduct their businesses as now conducted and presently proposed to be
conducted. There are no deficiencies to the conditions for participation by any
MHG Company in any Medicare, Medicaid, Veterans Administration or other
reimbursement programs which would preclude such participation.
Section 4.10 No Regulatory Restrictions on Borrowing. No MHG Company
---------------------------------------
is (i) an "investment company", within the meaning of the Investment Company Act
of 1940, as amended, (ii) a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as
49
amended or (iii) otherwise subject to any regulatory scheme (other than the
Bankruptcy Code) which restricts its ability to incur Debt hereunder.
Section 4.11 Environmental Matters.
---------------------
(a) From time to time after the Closing, MHG will review the effect of
Environmental Laws on the business, operations and properties of the MHG
Companies, in the course of which reviews it will identify and evaluate
associated liabilities and costs. On the basis of such reviews, MHG has
reasonably concluded that the foregoing associated liabilities and costs are
unlikely to have a Material Adverse Effect.
(b) Except to the extent that the Environmental Liabilities of the MHG
Companies that relate to or could result from the matters referred to in this
Section 4.11(b) would not exceed $1,000,000 for any one occurrence, no material
notice, notification, demand, request for information, citation, summons,
complaint or order with respect to Hazardous Substances or any violation of
Environmental Laws is in existence or, to the knowledge of MHG, proposed,
threatened or anticipated with respect to or in connection with the operation of
any properties to be owned, leased or operated after the Closing Date by any MHG
Company.
Section 4.12 Full Disclosure. All information heretofore furnished
---------------
in writing by any MHG Company to any Agent or any Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby was, and
all such information hereafter furnished in writing by the MHG Companies to any
Agent or Lender will be, true and accurate in every material respect or based on
reasonable estimates on the date as of which such information is or was stated
or certified. MHG has disclosed to the Lenders in writing any and all facts
which are known to it and which have had or could be expected to have a Material
Adverse Effect.
Section 4.13 Information as to Equity Interests and Instruments
--------------------------------------------------
Owned by MHG Companies. Schedule 3 hereto sets forth a correct and complete list
----------------------- ----------
of each Subsidiary of MHG, its outstanding Equity Interests, the owner thereof
and the percentage thereof owned by such owner. Neither MHG nor any of its
Subsidiaries owns any interest in any Subsidiary which is not a Borrower (other
than the Excluded Subsidiaries). Except for the notes specified on Schedule 1 to
the Security Agreement, no Debt (including Permitted Intercompany Debt) owed to
any Grantor is evidenced by an instrument (as such term is defined in the UCC)
that is not held in a Concentration Account or pledged to the Collateral Agent
as part of the Collateral.
Section 4.14 Representations in Other Financing Documents. The
--------------------------------------------
representations of each Grantor in Section 2 of the Security Agreement are true
and correct in all material respects.
Section 4.15 Year 2000 Compliance. The MHG Companies have completed
--------------------
all remediation and upgrades of their respective computer hardware and software,
information systems and devices incorporating embedded chips so that all such
systems, equipment and applications (including those of its suppliers and
vendors) that are material to any MHG Company's businesses and operations will
be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000.
50
Section 4.16 Margin Stock. The Borrowers do not, as of the date
------------
hereof, expect that the MHG Companies will acquire any Margin Stock in the
future. Even if they do, Margin Stock will not at any time represent more than
25% of the value (as determined by any reasonable method) of the assets subject
to any provision of the Financing Documents that restricts the right or ability
of the MHG Companies to sell, pledge or otherwise dispose of Margin Stock owned
by them or requires a prepayment of Loans upon the exercise of any such right.
Section 4.17 Representations Concerning Cash Management System;
--------------------------------------------------
Credit and Collection Policy. The summaries of the Cash Management System set
----------------------------
forth in Schedule 10 and the Credit and Collection Policy are accurate and
-----------
complete in all material respects as of the Closing Date and do not omit to
state any material fact necessary to make the statements set forth therein not
misleading. No Borrower owns any Deposit Account (other than Patient Trust
Accounts) which is not subject to the liens granted under the Security
Agreement. There has been no material change to the Cash Management System or
Credit and Collection Policy since the Closing Date except such changes as have
been disclosed to and approved by the Agents in writing.
Section 4.18 Prepetition Indebtedness. All Prepetition Indebtedness
------------------------
as of the Petition Date, including, without limitation, the Debt under the
Existing Credit Facilities and the Existing Notes, is set forth on Schedule 6
----------
hereto. All such amounts in respect of the Existing Credit Facilities are
absolute, due and owing as of the Closing Date and are not subject to any
defense, setoff, counterclaim, or reduction of any kind.
Section 4.19 Chapter 11 Cases. The Chapter 11 Cases were commenced
----------------
on the Petition Date in accordance with Applicable Law and proper notice thereof
has been given to third-party health insurers and creditors to the extent
required by Applicable Law. The Borrowers constitute all debtors and debtors-in-
possession subject to the Chapter 11 Cases.
Section 4.20 Cash Budget; Year 2000 DIP Budget. The Borrowers have,
---------------------------------
in connection with the preparation of the Cash Budget and the Year 2000 DIP
Budget, made all investigations and inquiries as the Borrowers deem necessary
and prudent therefor. A summary of the significant assumptions upon which the
Cash Budget and the Year 2000 DIP Budget are based are stated therein. The
projections and financial information contained in the Cash Budget and the Year
2000 DIP Budget are based upon good faith estimates and assumptions believed by
the Borrowers to be reasonable at the time made, it being recognized by the
Lender Parties that such financial information as it relates to future
performance is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount.
Section 4.21 Liens. As of the Closing Date, the Liens created in
-----
favor of the Existing Lenders under the Existing Credit Facilities in accounts
receivable of the Borrowers are not subject to defenses, claims of set-off or
recoupment or consensual encumbrances or Liens of any kind except for the Liens
described on Schedule 13 hereto with respect to the Healthcare Facilities
-----------
described thereon. As of the Closing Date, (a) the Borrowers have no knowledge
of any adverse interests (except for the Liens described on such Schedule and
the Liens created in favor of the Existing Lenders under the Existing Credit
Facilities) with respect to such accounts receivable, and (b) the
51
Borrowers (1) have not created or suffered to exist any Liens on their
respective property other than as set forth on Schedule 7 hereto and Permitted
----------
Encumbrances and (2) are not subject to any unpaid judgments in excess of
$1,000,000 in the aggregate.
Section 4.22 Government Claims. As of the date hereof, all cost
-----------------
reports of the MHG Companies and their Subsidiaries have been audited for all
periods ending on or prior to December 31, 1996.
Section 4.23 Management Employees. Each Person serving as (or
--------------------
performing the functions of) a facility administrator or director of nursing for
any of the Healthcare Facilities (any such Person serving in such capacity as of
any date of determination being referred to herein as a "Management Employee")
is an employee of an MHG Company and performs such services exclusively for
and/or on behalf of such MHG Company and accepts no compensation for employment
from any Person other than an MHG Company and other than as set forth on
Schedule 4 hereto. Each Management Employee as of the Closing Date and the MHG
----------
Company which employs such Person on the Closing Date are set forth on Schedule
--------
15 annexed hereto. To the best of the Borrowers' knowledge after due inquiry,
--
during the 90-day period preceding the Closing Date no Person who was a
Management Employee during such period became an employee of or rendered
services of a similar nature to MPAN.
ARTICLE 5. Affirmative Covenants
Each of the Borrowers agrees that, so long as any Lender has any
Credit Exposure hereunder or any Obligation remains unpaid:
Section 5.01 Information. MHG and the other Borrowers will maintain
-----------
(i) a system of accounting (including complete and accurate records of all
intercompany accounts) established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP and preparation of the other statements and reports required under
Sections 5.01(a), (b) and (c), and (ii) separate books and records (including
but not limited to separate financial and accounting records, patient
information, personnel information and census information) for each Healthcare
Facility, which books and records, together with any applicable computer
programs and computer materials, shall be at all times owned by (or, in the case
of computer programs, licensed to) the relevant Healthcare Facility and copies
of which shall be kept at the relevant Healthcare Facility to the extent
consistent with practices of the Borrowers in effect on the Petition Date. MHG
will deliver the following information to the Administrative Agent (with copies
thereof for each Lender) and, promptly upon receipt thereof, the Administrative
Agent will deliver a copy thereof to each Lender (provided that the items
described in Sections 5.01(a), (b), (c), (d), (j), (q), (r) and (s) shall be
delivered by MHG directly to the Administrative Agent and each Lender, and not
solely to the Administrative Agent):
(a) (i) as soon as available and in any event not later than 5:00
p.m. (Eastern Time) on the 15/th/ day of each calendar month commencing February
15, 2000, consolidated cash flow reports for MHG and its Consolidated
Subsidiaries, consistent with the Cash Budget and
52
otherwise substantially in the form and scope of the Cash Budget reflecting on a
line-item basis cash receipts and disbursements for the Borrowers for the
preceding four weeks, and (ii) on a monthly basis after the Closing Date, as
soon as available and in any event not later than 5:00 p.m. (Eastern Time) on
the monthly due date for such information set forth below in each case for the
month preceding such due date (A) a detailed inpatient income statement and (B)
a detailed income statement for each Healthcare Facility, all of the foregoing
to be satisfactory in form and substance to Administrative Agent:
-------------------------------------------------------------
Information Monthly Due Date
----------- ----------------
-------------------------------------------------------------
Inpatient income statement 25/th/
-------------------------------------------------------------
Healthcare Facility income statement 25/th/
-------------------------------------------------------------
(b) as soon as available and in any event no later than the forty-
fifth (45/th/) day after the end of each month for the first two calendar months
ending after the Closing Date and the thirtieth (30/th/) day after the end of
each month ending thereafter, (i) an unaudited condensed consolidated balance
sheet of MHG and its Consolidated Subsidiaries and the related condensed
consolidated statements of operations for such month, and for the portion of the
Fiscal Year ended at the end of such month, and of cash flows for the portion of
the Fiscal Year ended at the end of such month, setting forth in each case in
comparative form the unaudited consolidated statements of operations and cash
flows (to the extent available) for the corresponding month and the
corresponding portion of the previous Fiscal Year, all prepared in accordance
GAAP, (ii) a calculation of the Net Amount of Eligible Accounts as of the end of
the preceding month, and (iii) a certificate (subject to normal year-end
adjustments) of the Financial Officer as to the fairness of presentation and
consistency of such financial statements;
(c) as soon as available and in any event within 90 days after the end
of each Fiscal Year (including the Fiscal Year ended December 31, 1999), (i) the
consolidated balance sheet of MHG and its Consolidated Subsidiaries as at the
end of such Fiscal Year and the related consolidated statements of income,
stockholders' equity and cash flows of MHG and its Consolidated Subsidiaries for
such Fiscal Year, all in reasonable detail and certified by a Financial Officer
of MHG that they fairly present the financial condition of MHG and its
Consolidated Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated and (ii) a report
thereon of Ernst & Young, LLP or other nationally recognized firm of independent
public accountants, which report shall state that such consolidated financial
statements fairly present the consolidated financial position of MHG and its
Consolidated Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP (except as otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards;
(d) simultaneously with the delivery of each set of financial
statements referred to in Section 5.01(b) and (c), a certificate of a Financial
Officer of MHG, substantially in the form of
53
Exhibit G hereto, (i) setting forth in reasonable detail such calculations as
---------
are required to establish whether the Borrowers were in compliance with the
requirements of Article 6 on the date of such financial statements, (ii) stating
whether, to the knowledge of such Financial Officer, any Default exists on the
date of such certificate and, if any Default then exists, setting forth the
details thereof and the action that MHG is taking or proposes to take with
respect thereto, (iii) stating whether, since the date of the Most Recent
Audited Financial Statements, an event has occurred or condition arisen which
has had a Material Adverse Effect which is not reflected in the financial
statements delivered simultaneously therewith and, if so, the nature of such
Material Adverse Effect, and (iv) stating whether, since the date of the Most
Recent Audited Financial Statements, there has been a change in the GAAP applied
in preparing the financial statements then being delivered from those applied in
preparing the Most Recent Audited Financial Statements which is material to the
financial statements then being delivered;
(e) within two Business Days after any Executive Officer or a
Financial Officer of MHG obtains knowledge of any Default, if such Default is
then continuing, a certificate of a Financial Officer or Executive Officer
setting forth the details thereof and the action that the Borrowers are taking
or propose to take with respect thereto;
(f) within two Business Days after any Executive Officer or a
Financial Officer of MHG obtains knowledge of any failure by a MHG Company to
comply with the provisions (enforceable or actionable on a post-Petition Date
basis) of any third party lease or mortgage and such failure could be expected
to result in an Event of Default or Material Adverse Effect, if such failure is
then continuing, a certificate of a Financial Officer or Executive Officer
setting forth the details thereof and the action that such MHG Company is taking
or proposes to take with respect thereto;
(g) promptly after any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the Financial Officer setting forth details as to
such occurrence and the action, if any, which the Borrowers or the applicable
member of the ERISA Group is required or proposes to take;
54
(h) as soon as reasonably practicable after any Executive Officer
obtains knowledge of the commencement of an action, suit or proceeding against
any MHG Company before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an adverse decision
which could have a Material Adverse Effect or which in any manner questions the
validity of any Financing Document, a certificate of the Financial Officer
setting forth the nature of such action, suit or proceeding and such additional
information as may be reasonably requested by any Lender through the
Administrative Agent;
(i) promptly upon MHG's receipt from its independent public
accountants of any management letter which indicates a material weakness in the
reporting practices of any MHG Company, a description of such material weakness
and any action being taken with respect thereto;
(j) promptly upon their becoming available, copies of all press
releases and other statements made available generally by any MHG Company to the
public concerning material developments in its business;
(k) promptly after the same is completed and prior to the filing
thereof, all pleadings, motions, applications, judicial information, financial
information and other documents (with a copy to counsel to the Administrative
Agent) proposed to be filed by or on behalf of the Borrowers with the Court or
the United States Trustee in the Chapter 11 Cases or distributed by or on behalf
of Borrowers to any official committee appointed in the Chapter 11 Cases; and
without limiting the generality of the foregoing, the Borrowers shall promptly
deliver to, and discuss with, the Administrative Agent and its counsel any and
all information and developments in connection with any event or condition which
is likely to have a material effect on the Borrowers or the Chapter 11 Cases,
including, without limitation, the progress of any disclosure statement or any
proposed Chapter 11 plan of reorganization, except where such information is
protected as attorney work product or is attorney-client privileged;
(l) no later than 5:00 p.m. (Eastern Time) of the second Business Day
of each month following the Closing Date, (i) a status report indicating (x) any
Healthcare Facilities which are subject to terminated Medicare or Medicaid
contracts, "fast track" 23-day termination of Medicare or Medicaid contracts or
denial of payment for new Medicare or Medicaid admissions or are subject to or
under involuntary receivership or involuntary management and (y) any admissions
hold or current civil money penalties in excess of $2,000 per day or are
operating under involuntary receivership or involuntary management, in
substantially the form of Exhibit L hereto (a "Healthcare Status Report", and
---------
any of the foregoing events required to be disclosed thereon being a "Reporting
Event") and (ii) a report indicating (x) any Asset Sales, the dates of such
sales, the gross proceeds and Net Cash Proceeds received from each such sale and
any Asset Sales which are being negotiated or are otherwise pending on the date
of such report and (y) any properties subject to a Casualty Event or a
Condemnation Event, the amount of any Casualty Proceeds from any Casualty Event
received by the Borrowers, and the date of receipt thereof;
(m) within two Business Days after any Executive Officer or a
Financial Officer of MHG obtains knowledge of a change in status with respect to
any Reporting Event (other than current civil money penalties) or any Healthcare
Facility becoming subject to an additional
55
Reporting Event (other than a current civil money penalty), written notice
thereof setting forth the nature of such Reporting Event and what action the
Borrowers have taken, are taking or propose to take with respect thereto;
(n) with reasonable notice and upon the reasonable request of any
Lender from time to time, each MHG Company shall make available for inspection
by such Lender at the chief executive office or the Houston, Texas office of
MHG, promptly after the same is available or received, (a) copies of each cost
report or interim cost report filed by any Borrower with Medicare, Medicaid or
any other third party payor or any summaries thereof prepared by any Borrower
and a copy, when received, of any response to such reports by the recipient
thereof; (b) copies of any and all statements, audits, studies or reports
submitted by or on behalf of any Borrower to any Governmental Authority or any
nationally-recognized accreditation association or commission; (c) copies of any
and all audits, studies, or reports prepared by any Governmental Authority or
nationally recognized accreditation association or commission relating
specifically to the business or operations of any Borrower; and (d) any claims
by any Governmental Authority for Medicaid/Medicare overpayments or under the
False Claims Act, in each case except to the extent that making such items or
information available for such inspection is prohibited by Applicable Laws
(notwithstanding the above, neither the Agents, the Lenders nor any of their
respective advisors shall be given access to any attorney work product, or any
attorney-client privileged communication);
(o) promptly upon any Person becoming or ceasing to be a Subsidiary of
MHG, an update to Schedule 3 hereto setting forth the information described in
----------
Section 4.13 with respect to each Subsidiary of MHG (it being understood that
nothing in this Section 5.01(o) shall be deemed to permit or authorize the
creation, dissolution, liquidation or acquisition of a Subsidiary of MHG not
otherwise permitted under this Agreement);
(p) from time to time such additional information regarding the
financial position, results of operations or business of any MHG Company or the
Chapter 11 Cases or such other matters relating to any MHG Company as any Lender
may reasonably request through the Administrative Agent;
(q) promptly after the same is available but in no event later than
5:00 p.m. (Eastern time) (i) on the fifteenth day of every calendar month
commencing February 15, 2000, (ii) five Business Days after a Financial Officer
of MHG has delivered a statement pursuant to Section 5.01(r)(ii)(B) indicating
that the Borrowers believe that the projections and financial information set
forth in the Cash Budget do not represent reasonable good faith estimates as of
the date of such statement, and (iii) on the fifth Business Day after the end of
each week ending after November 30, 2000, a supplement to the Cash Budget
setting forth, for the period commencing the week immediately following the date
such delivery is required and ending thirteen weeks later (or on the Stated
Maturity Date, if earlier), a consolidated cash forecast for the Borrowers in
substantially the form of the Cash Budget and in substance satisfactory to
Required Lenders;
(r) as soon as available and in any event not later than 5:00 p.m.
(Eastern Time) on the second Business Day of each week after the Closing Date,
(i) a report setting forth the weekly
56
average census (the "Nursing Home Census") in each Nursing Home Facility (other
than any Managed Facilities) and the Nursing Home Occupancy (all such
calculations to be made in a manner consistent with MHG's historical practices
in compiling and reporting such data), and (ii) a report setting forth
cumulative net cash flow of the Borrowers for the preceding week, together with
a statement of a Financial Officer of MHG as to (A) whether the "Cash Receipts"
amount set forth in such report varies adversely from the amount of the
corresponding "Cash Receipts" amount set forth in the Cash Budget for the
corresponding week by an amount exceeding 20% of such amount set forth in the
Cash Budget, and (B) whether the Borrowers believe that the projections and
financial information set forth in the Cash Budget with respect to periods
following such date represent, as of such date, reasonable good faith estimates
and that the estimates and assumptions on which the Cash Budget is based are
reasonable as of such date, all of the foregoing to be in form and substance
satisfactory to Administrative Agent; and
(s) promptly after the filing thereof, copies of (i) all pleadings,
motions, applications and other documents filed by or on behalf of MPAN with the
United States Bankruptcy Court with jurisdiction over MPAN's bankruptcy cases or
the United States trustee in such cases and (ii) all pleadings served on the
debtors in such cases; provided, however, that in the case of any such pleading,
motion or application described in clause (i) which affects any of the MHG
Companies, a copy of such filing shall be provided to the Administrative Agent
promptly after the same is completed and prior to the filing thereof.
Section 5.02 Maintenance of Property. Each MHG Company will keep all
-----------------------
property useful and necessary in its business in good working order and
condition, ordinary wear and tear and casualty excepted. Each MHG Company will
maintain all property leased to it and all property operated by it under a
management contract as required by the provisions of the applicable lease or
management contract.
Section 5.03 Insurance.
---------
(a) Each MHG Company will maintain insurance with responsible
companies in such amounts and against such risks as is usually carried by owners
of similar businesses and properties in the same general areas in which it
operates, including self-insurance consistent with past practice. In addition,
each MHG Company will insure all property leased to it and all property operated
by it under a management contract as required by the provisions of the
applicable lease or management contract.
(b) If any MHG Company fails to maintain any insurance policy required
to be maintained under this Section 5.03, the Collateral Agent shall have the
right to maintain such policy or obtain a comparable policy, and in either case
pay the premiums therefor. If the Collateral Agent maintains or obtains any
such policy and pays the premiums therefor, Borrowers will reimburse the
Collateral Agent upon demand for its expenses in connection therewith, including
interest thereon for each day at a rate per annum equal to the Default Rate.
Section 5.04 Compliance with Law. Each MHG Company will comply in
-------------------
all material respects with all Applicable Laws (including Medicare Regulations,
Medicaid Regulations,
57
Environmental Laws and ERISA and the rules and regulations thereunder), except
where (i) the necessity of compliance therewith is contested in good faith by
appropriate measures or proceedings, in which case adequate and reasonable
reserves will be established in accordance with GAAP and notice of each such
contest relating to Medicare Regulations, Medicaid Regulations, Environmental
Regulations and ERISA (other than contests in the ordinary course of business
set forth in the form of footnotes to cost reports) shall be given to the
Administrative Agent, or (ii) failures to comply therewith could not, in the
aggregate, be expected to have a Material Adverse Effect.
Section 5.05 Maintenance of Existence, Rights, Etc. Each MHG Company
-------------------------------------
will preserve, renew and keep in full force and effect its existence and its
rights, privileges, licenses and franchises necessary or desirable in the normal
conduct of business; provided, however, that MHG Companies may consolidate or
merge to the extent permitted under Section 7.03.
Section 5.06 Use of Proceeds and Letters of Credit. Subject to the
-------------------------------------
provisions of this Section 5.06, the proceeds of all Loans shall be applied in
accordance with this Agreement and the Cash Budget. The proceeds of the Loans
and the benefits of the Letters of Credit shall be applied to fund working
capital requirements and general corporate purposes relating to Borrowers' post-
Petition Date operations, all in accordance with, and limited by, those items
set forth in the Cash Budget; provided that no portion of the Loans or any cash
Collateral or the benefits of the Letters of Credit shall be used, directly or
indirectly, to (i) finance or make or support any Restricted Payment except as
permitted under Section 7.15; (ii) make or support any payment or prepayment
that is prohibited under this Agreement, including any payment or prepayment in
respect of Prepetition Indebtedness to the extent prohibited hereunder; (iii)
make or support any payment in settlement of any pre-Petition Date claim, action
or proceeding, before any court, arbitrator or other governmental body other
than as permitted by a First Day Order or Required Lenders; (iv) make or support
any payment on behalf or for the benefit of any Excluded Subsidiary (except
Investments permitted under Section 7.04(f) and reflected in the Cash Budget) or
(v) make or support any payment in respect of (y) (a) investigating, objecting
to, challenging in any manner, or raising any defenses to, the validity,
perfection, priority or enforceability of the security interests granted in
favor of the Existing Lenders and Lenders pursuant to the Existing Credit
Facilities, the Financing Documents or any order of the Court or (b) the
enforceability of any of the obligations of any Borrower owing to the Existing
Lenders, the agents of the Existing Lenders, the Agents or Lenders under the
Existing Credit Facilities or the Financing Documents (although, subject to the
Carve-Out, the professionals for an official creditors' committee may be paid
(to the extent allowed by the Court) fees and expenses incurred in analyzing
such liens or claims under the Existing Credit Facilities in an aggregate amount
not to exceed $25,000), or (z) otherwise investigating, commencing or
prosecuting any claim or cause of action against any Agent, Existing Lender, or
DIP Lender.
Section 5.07 Future Actions with Respect to Collateral.
-----------------------------------------
(a) Subject to obtaining any third party approvals which are required
under the Bankruptcy Code, the Borrowers shall as soon as reasonably practicable
after the Closing Date deliver to the Collateral Agent a Fee Mortgage or
Leasehold Mortgage with respect to any real property interest (whether owned or
leased) of any of the MHG Companies that the Collateral Agent
58
shall request from time to time on or after the Closing Date, and the
appropriate UCC form for the related fixture filing, all in form and substance
satisfactory to the Collateral Agent.
(b) Without expense or cost to any Agent or Lenders, each Borrower
shall from time to time hereafter execute, acknowledge, file, record, do and
deliver all and any further acts, deeds, conveyances, mortgages, deeds of trust,
deeds to secure debt, security agreements, hypothecations, pledges, charges,
assignments, financing statements and continuations thereof, notices of
assignment, transfers, certificates, assurances and other instruments as any
Agent may from time to time reasonably request and that do not involve a
material expansion of the Borrowers' obligations or liabilities hereunder in
order to carry out more effectively the purposes of this Agreement, the other
Financing Documents, the Interim Borrowing Order or the Borrowing Order,
including to subject any Collateral, intended to now or hereafter be covered, to
the Liens created by the Collateral Documents, to perfect and maintain such
Liens, and to assure, convey, assign, transfer and confirm unto the Collateral
Agent the property and rights thereby conveyed and assigned or intended to now
or hereafter be conveyed or assigned or that any Borrower may be or may
hereafter become bound to convey or to assign to the Collateral Agent or for
carrying out the intention of or facilitating the performance of the terms of
this Agreement, any other Financing Documents, the Interim Borrowing Order or
the Borrowing Order, registering or recording this Agreement or any other
Financing Document. Without limiting the generality of the foregoing, the
Borrowers shall deliver to the Collateral Agent, promptly upon receipt thereof,
all promissory notes or similar instruments received by the Borrowers after the
Closing Date and take all actions and execute all endorsements or documents
necessary or reasonably requested by the Collateral Agent to perfect the
Collateral Agent's Liens in any such promissory note or other instrument or any
other Investment acquired by any Borrower.
(c) The Borrowers shall jointly and severally pay all filing,
registration and recording fees and all expenses incident to the execution and
acknowledgement of any Mortgage or other Financing Document, including any
instrument of further assurance described in Section 5.07(b), and shall pay all
fees and expenses, mortgage recording taxes, transfer taxes, general intangibles
taxes and governmental stamp and other taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution, delivery, filing,
recording or registration of any Mortgage or other Financing Document, including
any instrument of further assurance described in Section 5.07(b), or by reason
of its interest in, or measured by amounts payable under, the Notes, the
Mortgages or any other Financing Document, including any instrument of further
assurance described in Section 5.07(b), (excluding income, franchise and doing
business Taxes), and shall pay all stamp Taxes and other Taxes required to be
paid on the Notes or any other Financing Document; provided, however, that such
Borrower may contest in good faith and through appropriate proceedings, any such
Taxes, duties, imposts, assessments and charges; provided further, however, that
such Borrower shall pay all such Taxes, duties, imposts and charges when due to
the appropriate taxing authority during the pendency of any such proceedings if
required to do so to stay enforcement thereof. If any Borrower fails to make
any of the payments described in the preceding sentence within 10 days after
notice thereof from the Collateral Agent (or such shorter period as is necessary
to protect the loss of or diminution in value of any Collateral by reason of tax
foreclosure or otherwise, as determined by the Collateral Agent) accompanied by
documentation verifying the nature and amount of such payments, the Collateral
Agent may (but shall not be obligated to) pay the
59
amount due and Borrowers shall jointly and severally reimburse all amounts in
accordance with the terms hereof.
(d) The Collateral Agent may, upon at least five days' prior written
notice to the Borrowers, (i) appear in and defend any action or proceeding, in
the name and on behalf of the Administrative Agent, Lenders or any Borrower, in
which any Agent or any Lender is named or which the Collateral Agent in its sole
discretion determines is likely to materially adversely affect any Collateral,
any Collateral Document, the Lien thereof or any other Financing Document and
(ii) institute any action or proceeding which the Collateral Agent determines
should be instituted to protect the interest or rights of the Administrative
Agent and Lenders in any Collateral or under this Agreement or any other
Financing Document. The Borrowers, jointly and severally, agree that all
reasonable and actual costs and expenses expended or otherwise incurred pursuant
to this subsection (including reasonable attorneys' fees and disbursements) by
any Agent shall be paid pursuant to Section 11.03 hereof.
(e) Whenever any asset is added to the Collateral pursuant to this
Section 5.07, the Borrowers shall deliver to the Agents such legal opinions and
other documents as any Agent may reasonably request relating to the existence of
the relevant Grantor, the corporate or other authority for and validity of the
Collateral Documents applicable thereto, the creation and perfection (or proper
place and form for filing or recordation) of the Lien purportedly created
thereby and any other matters relevant thereto, all in form and substance
reasonably satisfactory to the Agents.
Section 5.08 Casualty Events.
---------------
(a) All Casualty Proceeds received by the Collateral Agent or any MHG
Company shall be deposited in the appropriate Casualty Proceeds Account (as
defined in the Security Agreement) established pursuant to Section 7(b) of the
Security Agreement and applied as follows:
(i) such Casualty Proceeds will be released by the Collateral
Agent from time to time, in accordance with Section 18 of the Security
Agreement, to restore, repair, replace or rebuild the asset in respect of
which such Casualty Proceeds were received; and
(ii) if within 60 days after such Casualty Proceeds are received,
the relevant MHG Company shall not have expended or committed to expend the
full amount of such Casualty Proceeds to restore, repair, replace or
rebuild the asset in respect of which such Casualty Proceeds were received
(the excess of the amount of such Casualty Proceeds over the amount of such
expenditures and commitments, being "Excess Casualty Proceeds"), then such
Excess Casualty Proceeds shall be applied to prepay Loans to the extent
required pursuant to Section 2.08(e) within two Business Days after the end
of such 60-day period.
(b) If any Condemnation Event occurs with respect to property owned or
leased by any MHG Company, or if any negotiation or proceeding is commenced
which might result in such a Condemnation Event, or if any such Condemnation
Event is proposed or threatened, such MHG Company (i) will, promptly after
receiving notice or obtaining knowledge thereof, do all
60
things deemed necessary or appropriate by it to preserve its interest in such
property and promptly make claim for awards payable with respect thereto and
diligently pursue to conclusion such claim and any suit, action or other
proceeding necessary or appropriate to obtain payment thereof and (ii) will not
settle any such claim, negotiation or proceeding without the consent of the
Collateral Agent if an Enforcement Notice is in effect.
Section 5.09 Cash Management System; Credit and Collection Policy. The
----------------------------------------------------
Borrowers shall maintain the Cash Management System (including through timely
compliance with their obligations to pay returned items and other Obligations
arising in the ordinary course of operation of the Cash Management System) and
the Credit and Collection Policy.
Section 5.10 Certain Orders. On or before the date which is four months
--------------
after the Petition Date, the Borrowers shall file with the Court a joint plan of
reorganization and disclosure statement for the Borrowers and an appropriate
motion, application or other pleading and other material documents requesting
(i) the confirmation and consummation of a joint plan of reorganization for the
Borrowers, all of the foregoing (including without limitation the terms and
conditions of such plan of reorganization and all payments and distributions to
be made in connection therewith) to be in form and substance satisfactory to
Required Lenders in their sole discretion or (ii) definitive agreements for the
sale of all, substantially all, or a material portion of their assets, all in
form and substance satisfactory to Required Lenders in their sole discretion.
Section 5.11 Inspection Rights; Lender Meeting.
---------------------------------
(a) Each Borrower shall permit, and shall cause each of its Subsidiaries
to permit any authorized representatives designated by any Lender and
consultants and advisors identified by the Administrative Agent or Required
Lenders to visit and inspect any of the properties of Borrowers, to inspect,
copy and take extracts from its and their books and records (including but not
limited to separate financial and accounting records, patient information (to
the extent such information is of the type customarily disclosed in connection
with a disposition of a healthcare facility), personnel information (to the
extent permitted under Applicable Law) and census information), and to discuss
its and their affairs, finances and accounts with its and their officers,
employees, consultants (including, without limitation, any personnel or
consultants engaged for the benefit or on behalf of any Borrower) and
independent public accountants (provided that Borrowers may, if they choose, be
present at or participate in any such discussion), all upon reasonable notice
and at such reasonable times during normal business hours and as often as may
reasonably be requested; provided that any such consultants and advisors
identified by the Administrative Agent or Required Lenders shall have signed a
written agreement to comply with Section 11.11. In addition to the foregoing,
the Borrowers will, as promptly as practicable after any request therefor by the
Administrative Agent, provide to the Administrative Agent and the Lenders copies
of the records of any Healthcare Facility referred to in clause (ii) of the
first sentence of Section 5.01.
(b) The Borrowers and each of their Subsidiaries will, upon the request of
the Administrative Agent or Required Lenders, participate in meetings of the
Agents and Lenders to be held at Borrowers' corporate offices (or at such other
location as may be agreed to by Borrowers and
61
the Administrative Agent) at such times as may be agreed to by Borrowers and the
Administrative Agent.
Section 5.12 Creditor Schedule. The Borrowers, promptly from time to time
-----------------
upon the request of the Administrative Agent, shall provide to the
Administrative Agent a schedule describing the creditors (in detail (including
names and addresses thereof) reasonably satisfactory to the Administrative
Agent) of any MHG Company or Healthcare Facility specified by the Administrative
Agent in such request and the amount and nature of the obligations owed to each
such creditor.
Section 5.13 Transition Management.
---------------------
(a) The Borrowers shall not permit MPAN to cease for any reason to
supervise those aspects of the management of each Healthcare Facility which MPAN
supervises as of the Closing Date in substantially the same manner in which MPAN
supervises such aspects of management as of the Closing Date, except as set
forth in this Section 5.13.
(b) In the event that (i) the Required Lenders or the Administrative
Agent on behalf of the Required Lenders shall have notified the Borrowers that
MPAN is to be replaced in its supervisory capacity with respect to any or all
Healthcare Facilities (the date of any such notice with respect to any
Healthcare Facility being a "Lender Termination Notice Date"), or (ii) MPAN
shall have notified the Borrowers and the Administrative Agent that MPAN intends
to cease acting in its supervisory capacity with respect to any or all
Healthcare Facilities (the date of any such notice with respect to any
Healthcare Facility being a "MPAN Termination Notice Date"), the Borrowers shall
cause MPAN to cease performing its functions as such supervisor of the relevant
Healthcare Facility or Healthcare Facilities 90 days after the relevant Lender
Termination Notice Date or the relevant MPAN Termination Notice Date, subject in
each case to receipt of the approval from any regulatory agency (if such
approval is required) (such date of cessation being the "Termination Effective
Date" with respect to such Healthcare Facility); provided, that no such notice
may be given until after the date which is five months after the Petition Date.
The Borrowers hereby agree that on a Termination Effective Date with respect to
a Healthcare Facility with respect to which an MPAN Termination Notice Date has
occurred, the automatic stay of Section 362 of the Bankruptcy Code with respect
to such Healthcare Facility (and all Collateral related thereto) in favor of the
Collateral Agent shall be deemed terminated for the benefit of the Lenders and
in favor of the Existing Lenders. At all times after the Petition Date until
MPAN is permitted under this Section to cease performing its supervisory
services with respect to any Healthcare Facility, the Borrowers shall and shall
cause MPAN to (A) without limiting Section 5.11, cooperate fully with the
Administrative Agent and the Required Lenders and any consultants or advisors or
other Persons identified by the Administrative Agent or the Required Lenders in
providing reasonable access to such Healthcare Facility, employees of the
Borrowers and the Borrowers' books and records, and (B) supervise aspects of the
management of such Healthcare Facility with substantially the same diligence and
standard of care which MPAN exercises with respect to its own healthcare
facilities similar to such Healthcare Facility, including with respect to
providing for the proper care, safety, and well being of the patients in such
Healthcare Facility.
62
(c) At all times after a Lender Termination Notice Date or a MPAN
Termination Notice Date with respect to a Healthcare Facility, the Borrowers
shall and shall cause MPAN to (i) consent to the entry of an order reasonably
satisfactory to the Administrative Agent in the Chapter 11 Cases authorizing the
retention of a Replacement Manager (as defined below) with respect to such
Healthcare Facility and (ii) promptly perform or cause to be performed any and
all acts which are reasonably necessary or that Agent may reasonably request to
transfer as of the Termination Effective Date the supervisory and management
functions performed by MPAN and MHG in an orderly and effective manner to any
Person or Persons identified by the Administrative Agent or the Required Lenders
with respect to such Healthcare Facility (such Person or Persons so identified
being the "Replacement Manager" with respect to such Healthcare Facility).
Without limiting the generality of the foregoing, the Borrowers shall not permit
any of the books and records (including but not limited to separate financial
and accounting records, patient information, personnel information and census
information) or any applicable computer programs and computer materials for any
such Healthcare Facility to be removed from such Healthcare Facility. After a
MPAN Termination Notice Date with respect to any Healthcare Facility, the
Borrowers shall and shall cause MPAN to, at the request of the Administrative
Agent or the Required Lenders, promptly perform or cause to be performed any all
acts which are reasonably necessary or that the Administrative Agent may
reasonably request to sell or otherwise dispose of such Healthcare Facility (and
all Collateral related thereto) under Section 363 of the Bankruptcy Code or
otherwise as of the Termination Effective Date with respect thereto.
(d) Anything contained herein or in any Financing Document to the contrary
notwithstanding, no provision of this Agreement or any other Financing Document
shall be construed as or deemed a waiver, release or discharge by any Agent or
Lender of any right or claim against MPAN based upon or arising out of its
supervision of any aspect of the management of any of the Healthcare Facilities
or any other event, occurrence, act or omission, in each case whether before or
after the Closing Date.
Section 5.14 Overhead Payments. The Borrowers shall make Overhead
-----------------
Payments to MPAN at the times and in accordance with the terms set forth in
Section 7.07 so long as and to the extent that MPAN provides supervisory
services with respect to certain aspects of the management of the Healthcare
Facilities in substantially the same manner in which MPAN supervises such
aspects of management as of the Closing Date.
Section 5.15 Post Closing Deliveries. The Borrowers shall deliver to the
-----------------------
Administrative Agent as soon as possible after receipt by the Borrowers and in
any event within 30 days after the Closing Date, to the extent not delivered on
or prior to the Closing Date, personal property Lien and tax and judgment Lien
searches with respect to all personal, mixed and real properties of the
Borrowers in all jurisdictions and filing offices where, in the case of personal
property Liens, the filing of a financing statement is required in order to
perfect a security interest in such property and, in the case of tax Liens and
judgment Liens, recordation of such Liens is necessary to give notice to other
creditors. The results of such searches shall not reflect any Liens not
described in Schedule 7 hereto and shall otherwise be reasonably satisfactory to
----------
the Administrative Agent. The Borrowers shall also deliver to the
Administrative Agent promptly after the Closing Date copies of the management
agreements relating to the Oakwood Facilities.
63
ARTICLE 6. Financial Covenants
Each of the Borrowers agrees that, so long as any Lender has any Credit
Exposure hereunder or any interest or fee accrued hereunder remains unpaid:
Section 6.01 Consolidated EBITDAR.
--------------------
Consolidated EBITDAR, calculated on a cumulative basis from January 1, 2000
through the last day of each month set forth below, shall not be less than the
amount set forth below opposite such month:
Month Amount
----- ------
January 2000 $ 2,934,000
February 2000 $ 6,879,000
March 2000 $11,890,000
April 2000 $16,339,000
May 2000 $20,558,000
June 2000 $24,577,000
July 2000 $28,547,000
August 2000 $32,226,000
September 2000 $35,552,000
October 2000 $40,378,000
November 2000 $45,233,000
December 2000 $49,710,000
Section 6.02 Nursing Home Occupancy. The Borrowers shall not permit
----------------------
Nursing Home Occupancy as of any week during any month set forth below to be
less than the minimum Nursing Home Occupancy amount corresponding to such month
as set forth below:
64
Month Minimum Nursing
----- ---------------
Home Occupancy
--------------
January 2000 87.40%
February 2000 87.79%
March 2000 88.04%
April 2000 88.17%
May 2000 88.22%
June 2000 88.09%
July 2000 88.87%
August 2000 88.20%
September 2000 88.49%
October 2000 88.00%
November 2000 88.00%
December 2000 88.00%
Section 6.03 Receivables. The Borrower shall not permit the Net Amount
-----------
of Eligible Accounts at any time to be less than $40,000,000.
Section 6.04 Compliance with Cash Budget. Each Borrower agrees that if
---------------------------
the "Cash Receipts" amount set forth in the report for any four consecutive week
period delivered pursuant to Section 5.01(a)(i) (it being understood that only a
four-week period covered by such a report shall be the basis for determining
compliance with this Section 6.04) varies adversely from the amount of the
corresponding "Cash Receipts" amount set forth in the Cash Budget (the "Required
Cash Receipts Amount") for each of the corresponding weeks by an amount
exceeding 20% of the Required Cash Receipts Amount for each of the corresponding
weeks, such variance shall constitute an immediate Event of Default under this
Agreement.
Section 6.05 Capital Expenditures. The Borrowers shall not make any
--------------------
Consolidated Capital Expenditures, calculated on a cumulative basis from January
1, 2000 through the last day of each month set forth below, in excess of the
correlative maximum amount set forth below:
65
Maximum Consolidated
--------------------
Month Capital Expenditures
----- --------------------
Amount
------
March 2000 $4,777,000
June 2000 $6,021,000
September 2000 $7,653,000
December 2000 $9,285,000
; provided, that the Borrowers shall not make any Consolidated Capital
Expenditures other than (i) necessary maintenance capital expenditures, (ii)
capital expenditures which are (x) required as a result of surveys, inspections
or reviews of such properties by Governmental Authorities or (y) necessary to
avoid negative results of such surveys, inspections or reviews, which results
would require such expenditures, (iii) capital expenditures with respect to
"owned buildings" of the Borrowers so long as such expenditures are disclosed
and reasonably identified in advance to the Lenders and the Administrative Agent
or the Required Lenders do not determine, in their sole discretion, that such
expenditures would not be favorable to the economic interests of the Lenders and
the Existing Lenders, and (iv) other capital expenditures with the prior written
approval of the Required Lenders; and provided further, that, in any event, all
Consolidated Capital Expenditures shall be set forth in the Cash Budget.
ARTICLE 7. Negative Covenants
Each of the Borrowers agrees that, so long as any Lender has any Credit
Exposure hereunder or any Obligation remains unpaid:
Section 7.01 Limitation on Debt. The Borrowers and their Subsidiaries
------------------
(other than the Excluded Subsidiaries) will not incur or be liable with respect
to (i) any Debt of a type described in clause (i), (ii) or (iv) of the
definition of "Debt" in Section 1.01 or (ii) any Guarantee of any such Debt,
except:
(a) Debt outstanding under the Financing Documents;
(b) Permitted Intercompany Debt;
(c) Prepetition Indebtedness without giving effect to any extensions,
renewals, refinancings, supplemental borrowings or other incurrences thereof;
66
(d) Debt consisting of trade obligations arising in the ordinary course of
business after the Petition Date; and
(e) Guarantees by MHG of post-Petition Date obligations of other Borrowers
in the ordinary course of business;
(f) Debt incurred in connection with the rejection of unexpired leases
and executory contracts in the Chapter 11 Cases; provided, that the obligation
of any Borrower in respect of such Debt shall qualify as a general, unsecured,
non-priority claim pursuant to appropriate order of the Court;
(g) Not more than $500,000 of unsecured Debt at any time outstanding
which is not otherwise permitted pursuant to this Section 7.01; and
(h) Debt (x) in respect of Capital Leases or (y) secured by Liens
permitted under Section 7.02(g), provided that (i) such Debt is incurred to
finance necessary capital expenditures of the MHG Companies in the ordinary
course of business, (ii) the aggregate principal amount of such Debt, together
(without duplication) with any Consolidated Capital Expenditures made during the
relevant period, shall not exceed the maximum amount set forth in Section 6.05
for the relevant period, and (iii) the incurrence of such Debt and the
expenditures made in connection therewith shall be set forth in the Cash Budget.
Section 7.02 Negative Pledge. No MHG Company (other than the Excluded
---------------
Subsidiaries) will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it (or any income therefrom or any right to
receive income therefrom), or apply to the Court for authority to do any of
the foregoing, except:
(a) Liens existing as of the Petition Date which (i) were created in
favor of the Existing Lenders under the Existing Credit Facilities or (ii) are
set forth on Schedule 7 hereto;
----------
(b) Permitted Encumbrances;
(c) Liens (i) created in favor of the Collateral Agent (for the benefit of
Lenders) pursuant to the Collateral Documents or (ii) authorized by the
Interim Borrowing Order or the Borrowing Order;
(d) the Existing Lender Lien;
(e) Permitted Adequate Protection Liens;
(f) Liens arising in connection with Capital Leases permitted under
Section 7.01(h)(x); provided that no such Lien shall extend to or cover any
Collateral or assets other than the assets subject to such Capital Leases; and
(g) Liens securing Debt permitted by Section 7.01(h)(y) incurred to
finance the acquisition, construction or improvement of any real property or
tangible personal property
67
assets acquired or held by any MHG Company in the ordinary course of business;
provided that (1) such Liens shall be created within 30 days after the
acquisition, construction or improvement of such assets, and (2) the principal
amount of Debt secured by any such Liens shall at no time exceed 100%, and the
proceeds of such Debt shall be used to provide not less than 75%, of the
original purchase price of such asset or the amount expended to construct or
improve such asset, as the case may be; and provided further, (i) such Liens
attach solely to the assets financed with such Debt, (ii) no recourse may be
had under the Debt secured by such Lien against any Person other than the
borrower of such Debt for the payment of principal, interest, fees, costs or
premium on such Debt or for any claim based thereon, and (iii) the financial
covenants under any Debt secured by such Liens are, in each case, no more
restrictive than those set forth in this Agreement.
Section 7.03 Consolidations, Mergers and Asset Sales. No MHG Company
---------------------------------------
will consolidate or merge with or into, or sell, lease or otherwise dispose of
any Healthcare Facility or any of its other assets outside the ordinary course
of business to any other Person without (i) prior written approval of Required
Lenders and (ii) an appropriate approval of the Court, to the extent such Court
approval is required pursuant to the Bankruptcy Code or any order of the Court;
provided that (i) any Borrower may merge or consolidate with and into any other
Borrower or any Borrower may be liquidated, wound up or dissolved, or all or
substantially all of any Borrower's business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, to any Borrower,
so long as the Borrowers shall have taken all actions and executed all documents
necessary or reasonably requested by the Collateral Agent to preserve and
protect the Collateral Agent's Lien (and the perfection and priority thereof) in
the assets of such Borrower after giving effect to such transaction, and such
transaction shall not adversely affect the Collateral Agent's Lien in the assets
of the MHG Companies involved in such transaction or the value thereof and (ii)
Borrowers may sell Healthcare Facilities, so long as such sales are approved by
Required Lenders, for purchase prices acceptable to Required Lenders (subject to
customary purchase price adjustments and allowances for transaction expenses)
pursuant to asset sale agreements and an order of the Court in each case in form
and substance satisfactory to Required Lenders and as long as the Net Cash
Proceeds of such Asset Sale are applied as required by Section 2.08(a).
Section 7.04 Limitations on Investments. After the Closing, neither the
--------------------------
Borrowers nor any of their Subsidiaries (other than the Excluded Subsidiaries)
will make, acquire or hold any Investment, except:
(a) Investments (including Investments in Excluded Subsidiaries)
existing on the Closing Date and set forth in Schedule 8 hereto;
----------
(b) Investments by the Borrowers in any of the other Borrowers;
(c) advances to employees of the MHG Companies to meet expenses incurred
by such employees in the ordinary course of business;
(d) trade credit extended on usual and customary terms in the ordinary
course of business;
68
(e) Investments consisting of contributions, loans or advances to Excluded
Subsidiaries, provided that the aggregate amount so contributed, loaned or
advanced after the Closing Date shall not exceed $1,000,000; and
(f) Temporary Cash Investments.
Section 7.05 Limitations on Transactions with Affiliates. No MHG Company
-------------------------------------------
will, directly or indirectly, pay any funds to or for the account of, make any
Investment in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate; provided that the foregoing shall not prohibit any MHG Company from
(a) engaging in transactions with any other MHG Company; (b) engaging in
transactions described on Schedule 4 hereto; (c) making sales to or purchases
----------
from any Affiliate and, in connection therewith, extending credit or making
payments, or from making payments for services rendered by any Affiliate (other
than payments to MPAN for supervising the management of Healthcare Facilities)
if such sales or purchases are made or such services are (i) rendered in the
ordinary course of business and on terms and conditions at least as favorable to
such MHG Company as the terms and conditions which would apply in a similar
transaction with a Person not an Affiliate; (ii) approved in writing by Required
Lenders (which approval may relate to categories or groups of transactions); and
(iii) are approved by the Court to the extent such approval is required pursuant
to the Bankruptcy Code or an order of the Court; or (d) making payments to MPAN
permitted under Section 7.07.
Section 7.06 Limitation on Restrictions Affecting Subsidiaries. No MHG
-------------------------------------------------
Company will enter into, or suffer to exist, any agreement (other than the
Financing Documents) which is binding or enforceable after the Petition Date,
which prohibits or limits the ability of any Subsidiary of the Borrowers (except
an Excluded Subsidiary) to (i) pay dividends or make other distributions or pay
any Debt owed to any MHG Company, (ii) make loans or advances to any MHG Company
or (iii) create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, to secure
the obligations of any MHG Company under any Financing Document, except
agreements for Debt permitted under Section 7.01(h) which prohibit the creation
of Liens upon the property securing such Debt.
Section 7.07 Restricted Payments. No MHG Company will declare or make
-------------------
any Restricted Payment on or after the Closing Date other than (i) as permitted
by Section 7.15 and clauses (a), (b) and (c) of the proviso to Section 7.05; and
(ii) as long as no Specified Default has occurred and is continuing or would
result therefrom, MHG may make weekly payments to MPAN on the last Business Day
of each of the first four weeks of each month after the Closing Date, in an
amount in each such week not to exceed 1.25% of "Revenues" projected in the Year
2000 DIP Budget for the month in which such week occurs (the amount so payable
in each such week being the "Overhead Payment" payable for such week); provided,
however, that (a) in the event 5% of "net inpatient revenues" of the Borrowers
for any month, as reflected in the inpatient income statement delivered pursuant
to Section 5.01(a)(ii)(A), exceeds the aggregate amount of Overhead Payments
payable during such month, the Borrowers shall pay the amount of such excess to
MPAN at the time of the next Overhead Payment, and (b) in the event 5% of "net
inpatient revenues" of the Borrowers for any month, as reflected in the
inpatient income statement delivered pursuant to
69
Section 5.01(a)(ii)(A), is less than the aggregate amount of Overhead Payments
payable during such month, the Borrowers shall deduct the amount of the
difference from the payments of the next succeeding Overhead Payment or Overhead
Payments payable to the full extent thereof; provided, that if the Borrowers
fail to deliver the inpatient income statement required at the time required
pursuant to Section 5.01(a)(ii)(A), no further payment of Overhead Payments
shall be made until such statement is delivered; provided, further, that if
payment of Overhead Payments shall be prohibited hereunder solely pursuant to
the preceding proviso or due to the occurrence and the continuation of a
Specified Default, the amount of such prohibited payments may accrue at the rate
set forth above and may be deemed owing and may be paid only at any subsequent
time that no Specified Default shall have occurred and be continuing or the
statement referred to in the preceding proviso is delivered, as the case may be;
and provided, further, that the calculation of the total Overhead Payments
payable in any given month for purposes of the first proviso to this Section
shall not give effect to any payment pursuant to clause (a) of such proviso made
in such month or any deduction pursuant to clause (b) of such proviso made in
such month, or any payment of Overhead Payments accrued in respect of a prior
month pursuant to the third proviso to this Section but paid during the given
month; and (iii) payment to MPAN of any management fees from the Oakwood
Facilities as and when received by the Borrowers, net of any costs of the
Borrowers incurred with respect to the Oakwood Facilities. In the event of a
sale of or other termination of MPAN's supervisory services with respect to any
Healthcare Facility in any month, the aggregate amount of any Overhead Payments
payable with respect to such month shall be adjusted to reflect the exclusion of
the "Revenues" attributable to such Healthcare Facility from the amount of
"Revenues" on which Overhead Payments are calculated. Anything contained herein
or in any other Financing Document to the contrary notwithstanding, the
provisions of this Section 7.07 restricting payment of Overhead Payments by the
Borrowers during the continuance of Specified Defaults and permitting payment of
Overhead Payments by the Borrowers during the continuance of other Events of
Default shall not be deemed or construed as in any way limiting the rights and
remedies otherwise available to the Agents and the Lenders under the Financing
Documents and under Applicable Law upon and after the occurrence of any Default
or Event of Default. Nothing in this Agreement or any of the other Financing
Documents shall be construed as or deemed a waiver, release or discharge by any
party hereto of any right to modify, assume or assign the management agreement
of the Borrowers with respect to the Oakwood Facilities. The Borrowers shall not
make any Investments (including any working capital investments) in the Oakwood
Facilities after the Closing Date.
Section 7.08 No Modification of Certain Documents Without Consent.
----------------------------------------------------
(a) No MHG Company will consent to or solicit any amendment or
supplement to, or any waiver or other modification of, any Management and
Service Agreement or enter into any new Management and Service Agreement without
the prior written consent of Required Lenders.
(b) Without the prior written consent of the Required Lenders, the
Borrowers will not modify or amend, or waive or solicit any waiver of, any
provision of the Existing Note Indenture or the Existing Credit Facilities in
any manner that could be expected to be adverse in any material respect to the
interests of the Lenders under the Financing Documents.
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Section 7.09 No Change of Fiscal Periods. MHG will not change the date
---------------------------
on which any of its Fiscal Years or Fiscal Quarters ends, unless the Required
Lenders shall have consented to such change (which consent may be conditioned on
the amendment of any covenant herein that would be affected by such change to
eliminate the effect thereof).
Section 7.10 Margin Stock. None of the proceeds of the Loans or the
------------
Letters of Credit will be used in violation of any applicable law or regulation
and, without limiting the generality of the foregoing, no use of any such
proceeds or Letters of Credit will include any use thereof, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any Margin Stock.
Section 7.11 Limitation on Business.
----------------------
(a) MHG will at all times own, directly or indirectly, 100% of the
outstanding Equity Interests of the Borrowers and will not engage in any
activities other than owning such Equity Interests and Equity Interests in other
MHG Subsidiaries and financing activities and other activities reasonably
related to such ownership.
(b) Not more than 10% of the consolidated assets of the MHG Companies
(excluding assets used in connection with the institutional pharmacy business
line of the Borrowers) shall be used in any business or businesses other than
the business of owning, operating or managing Healthcare Facilities (including
accepting risk for the cost of long term care) and not more than 10% of their
consolidated revenues in any Fiscal Quarter shall be attributable to such other
businesses (excluding the institutional pharmacy business).
(c) The Borrowers shall not consent to, cause or (to the extent it is
within the control of any Borrower) permit the Excluded Subsidiaries to, engage
in any activities other than in the ordinary course of the Excluded
Subsidiaries' respective businesses, consistent with their respective past
practices.
Section 7.12 Leases. No MHG Company shall lease or sublease any facility
------
pursuant to any lease agreement entered into after the Closing Date except on
arm's length terms; provided that this Section 7.12 shall not apply to any lease
or sublease from a Borrower to any other Borrower.
Section 7.13 Limitation on Cash Not Held in Collateral Accounts or
-----------------------------------------------------
Concentration Accounts. The Borrowers will not permit the aggregate amount of
----------------------
all collected funds and Temporary Cash Investments held by the MHG Companies in
accounts, other than the Collateral Accounts (as defined in the Security
Agreement) and the Concentration Accounts, to exceed $4,000,000 at the close of
business on any two consecutive Business Days.
Section 7.14 Chapter 11 Claims. Without limiting the provisions of
-----------------
Section 7.02 hereof, no Borrower shall incur, create, assume, suffer or permit
any claim or Lien or encumbrance against it or any of its property or assets in
any Chapter 11 Case (other than (i) the claims specifically referred to in
Section 2.13, the Interim Borrowing Order and the Borrowing Order but only to
the extent therein described and (ii) Permitted Encumbrances) to be pari passu
---- -----
with or senior to the
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claims of the Agents and Lenders against any Borrower in respect of the
Obligations hereunder, or apply to the Courts for authority to do so, except to
the extent permitted herein.
Section 7.15 Limitation on Repayments; Prepetition Obligations. The
-------------------------------------------------
Borrowers shall not, except as otherwise allowed pursuant to the Interim
Borrowing Order or the Borrowing Order, (i) make any payment or prepayment on or
redemption or acquisition for value (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) of any Prepetition Indebtedness or other
pre-Petition Date obligations of any Borrower, (ii) pay any interest on any
Prepetition Indebtedness of any Borrower (whether in cash, in kind securities or
otherwise), or (iii) except as provided in the Interim Borrowing Order or the
Borrowing Order, make any payment or create or permit any Lien pursuant to
Section 361 of the Bankruptcy Code (or pursuant to any other provision of the
Bankruptcy Code authorizing adequate protection), or apply to the Court for the
authority to do any of the foregoing; provided that (a) the Borrowers may make
payments permitted under Section 2.14, (b) the Borrowers may make payments for
administrative expenses that are allowed and payable under Sections 330 and 331
of the Bankruptcy Code, (c) the Borrowers may make payments permitted by the
First Day Orders, (d) the Borrowers may make rental payments with respect to
leased properties to the extent permitted under Section 7.12, (e) the Borrowers
may permit Permitted Adequate Protection Liens, and (f) the Borrowers may make
payments to such other claimants and in such amounts as may be consented to by
the Required Lenders and approved by the Court.
Section 7.16 Agreements. Without the consent of Required Lenders, the
----------
Borrowers shall not assume, reject, cancel, terminate or modify (whether
pursuant to Section 365 of the Bankruptcy Code, or any other applicable law),
(i) any Prepetition Indebtedness or (ii) any Material Contract.
Section 7.17 Management Employees. The Borrowers shall not, without the
--------------------
written consent (not to be unreasonably withheld) of the Agents, (i) cause or
permit the transfer of any Management Employee to MPAN and (ii) enter into any
new employment agreement with, or make any change in the compensation or other
terms of employment of, any Management Employee other than changes consistent
with the normal business practices of the Borrowers prior to the Petition Date
or consistent with changes made by MPAN with respect to comparable employees of
MPAN; provided that, in any event, no retention or severance policy may be
implemented after the Closing Date without written approval of the Agents.
ARTICLE 8. Defaults
Section 8.01 Events of Default. If one or more of the following events
-----------------
(each, an "Event of Default") shall have occurred and be continuing:
(a) any principal of any Loan or LC Reimbursement Obligation shall not be
paid when due, or any interest thereon or any fee or other amount payable
hereunder to or for the account of any Agent or any Lenders shall not be paid
within two Business Days after the due date thereof; or
72
(b) the Borrowers shall fail to observe or perform any covenant contained
in Section 5.01(d), Section 5.10, Article 6 or Article 7; or
(c) any MHG Company shall fail to observe or perform any of its covenants
or agreements contained in the Financing Documents (other than those covered by
clause (a) or (b) above) for 30 days after written notice thereof has been given
to the Borrowers by the Administrative Agent at the request of any Lender; or
(d) any representation, warranty, certification or statement made by any
MHG Company in any Financing Document or in any certificate, financial statement
or other document delivered pursuant thereto shall prove to have been incorrect
in any material respect when made; or
(e) any event or condition shall occur that (i) results in the
acceleration of the maturity of any Financial Accommodation which is binding or
enforceable on a post-Petition Date basis or (ii) enables (or, with the giving
of notice or lapse of time or both, would enable) the holder or holders of such
Financial Accommodation or any Person acting on behalf of such holder or holders
to accelerate the maturity thereof (where such acceleration would be binding or
enforceable on a post-Petition Date basis), and the aggregate amount that would
be payable by the MHG Companies upon the acceleration of all Financial
Accommodations referred to in clauses (i) and (ii) above equals or exceeds
$1,000,000; or
(f) any member of the ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of $1,000,000 which it shall have become liable to
pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $1,000,000; or
(g) one or more Enforceable Judgments for the payment of money aggregating
in excess of $1,000,000 shall be rendered against one or more of the MHG
Companies and shall not have been satisfied; or
(h) any Lien created by any of the Collateral Documents shall at any time
fail to constitute a valid and perfected Lien on all of the Collateral purported
to be subject to such Lien, subject to no prior or equal Lien (except as set
forth in the Interim Borrowing Order and the Borrowing Order, and except Liens
permitted to be equal or prior to such Liens by this Agreement), or any MHG
Company shall so assert in writing; or
(i) the obligations of each MHG Company with respect to the Existing Notes
shall, for any reason, not be or cease to be validly subordinated as provided in
the Existing Note
73
Indenture to the monetary obligations of such MHG Companies under the Existing
Credit Facilities; or
(j) With respect to the Chapter 11 Cases, (i) the entry of an order which
has not been stayed, withdrawn, dismissed or reversed (a) authorizing any
Borrower in any of the Chapter 11 Cases to obtain additional financing under
Section 364(c) or (d) of the Bankruptcy Code except for financings permitted
under Section 7.01, or (b) (1) authorizing any Person to recover from any
portion of the Collateral any costs or expenses of preserving or disposing of
such Collateral under Section 506(c) of the Bankruptcy Code, or (2) (except as
provided in the Interim Borrowing Order or the Borrowing Order) authorizing the
use of cash collateral under Section 363(c) of the Bankruptcy Code; (c)
appointing an interim or permanent trustee in any of the Chapter 11 Cases or the
appointment of an examiner with expanded powers in any of the Chapter 11 Cases
beyond those set forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code;
(d) dismissing any of the Chapter 11 Cases or converting any of the Chapter 11
Cases to a case under Chapter 7 of the Bankruptcy Code; (e) granting relief from
or modifying the automatic stay of Section 362 of the Bankruptcy Code (x) to
allow any creditor to execute upon or enforce a Lien on any Collateral or on any
other property or assets of any Borrower the aggregate value of which, together
with the value of any other property or assets subject to such executed or
enforced Liens, exceeds $500,000 or (y) with respect to any Lien of, or the
granting of any Lien on any Collateral or any other property or assets of any
Borrower to, any State or local environmental or regulatory agency or authority,
where the aggregate value of such property or assets, together with the value of
any other property or assets subject to such a Lien, exceeds $500,000; (f)
staying, reversing, vacating, amending, supplementing, or otherwise modifying
any of the Interim Borrowing Order or the Borrowing Order, or any of any Agent's
or Lender's rights, benefits, privileges or remedies under the Interim Borrowing
Order or the Borrowing Order; (g) staying, reversing, vacating, amending,
supplementing or otherwise modifying this Agreement or any other Financing
Document or any of Agent's or Lenders' rights, benefits, privileges or remedies
under this Agreement or any other Financing Document; (h) consolidating or
combining any Borrower with any other Person (other than another Borrower)
except pursuant to a confirmed plan of reorganization as contemplated in the
plan of reorganization; or (i) approving any other administrative expense claim
(other than those specifically referred to in Section 2.13) having any priority
over, or being pari passu with the administrative expense priority of the
---- -----
Obligations in respect of any of the Chapter 11 Cases; or (ii) termination of
the Borrowers' exclusive right to file a plan or plans of reorganization in any
of the Chapter 11 Cases other than as a result of the filing of a plan or plans
of reorganization in the Chapter 11 Cases acceptable to the Required Lenders; or
(iii) the filing by any Borrower of a motion, application or other petition to
effect or consent to any order referred to in clause (i) of this subsection (j);
or (iv) the filing of any plan of reorganization or any modification to any
previously filed plan of reorganization, in any such case without the prior
written approval of Required Lenders; or
(k) (i) any Healthcare Event shall have occurred; or (ii) any Governmental
Authority shall (y) assert any claim against any MHG Company with respect to any
healthcare regulatory violation, overpayment (including without limitation with
respect to Medicare or the False Claims Act) or similar violation or liability
in excess of $4,000,000, individually or in the aggregate (exclusive of claims
which are subject to the provisions of the HHS Stipulation) or (z) make or give
notice (which notice shall not be rescinded or withdrawn within 15 days) of its
intent or
74
right to make any reduction from or otherwise withhold through setoff,
recoupment or otherwise, an amount in excess of $1,000,000 in the aggregate from
any account receivable arising from healthcare services; or (iii) any MHG
Company shall settle any dispute with any Governmental Authority or any claim
asserted by a Governmental Authority against any MHG Company with respect to any
healthcare regulatory violation, overpayment (other than routine, periodic
settlements of overpayments in the ordinary course) or similar violation or
liability in excess of $100,000 in any individual case or $1,000,000 in the
aggregate (x) in a manner not approved in writing by Required Lenders or (y)
with respect to the claims and disputes which are the subject of the Settlement
Letter, other than in accordance with the terms of the Settlement Letter; or
(iv) any Governmental Authority shall act in a manner which constitutes a breach
or violation of any term of the Settlement Letter or the HHS Stipulation, where
such breach or violation could reasonably be expected to have a Material Adverse
Effect, and such breach or violation is not cured within 30 days after the
occurrence thereof; or (v) the HHS Stipulation shall fail to be approved by the
Court on or before the entry by the Court of the Borrowing Order; or
(l) any Person employed by MPAN and performing services as a regional
manager with respect to the operations of the Healthcare Facilities (any such
Person being a "Regional Manager") shall enter into or be bound by any
contractual arrangement or agreement that has the effect of prohibiting such
Regional Manager from accepting employment with the Borrowers or the Healthcare
Facilities; or
then, and in every such event:
(i) if requested by the Required Lenders, the Administrative Agent shall
(notwithstanding the provisions of Section 362 of the Bankruptcy Code and
without application or motion to, or order from, the Court) by notice to the
Borrowers terminate the Commitments and they shall thereupon terminate;
(ii) if requested by the Required Lenders, the Administrative Agent
shall (notwithstanding the provisions of Section 362 of the Bankruptcy Code and
without application or motion to, or order from, the Court) by notice to each LC
Issuing Bank instruct such LC Issuing Bank not to extend the expiry date of any
outstanding Letter of Credit, whereupon such LC Issuing Bank shall deliver
notice to that effect promptly (or as soon thereafter as is permitted by the
provisions of the relevant Letter of Credit) to the beneficiary of each such
Letter of Credit and the Borrowers; and
(iii) if requested by the Required Lenders, the Administrative Agent shall
(notwithstanding the provisions of Section 362 of the Bankruptcy Code and
without application or motion to, or order from, the Court) by notice to the
Borrowers declare the Loans, all amounts in respect of the Letters of Credit and
all other amounts in respect of the Obligations (in each case together with
accrued interest thereon) to be, and they shall thereupon become, immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrowers.
75
Section 8.02 Notice of Default. The Administrative Agent shall give
-----------------
notice to the Borrowers under Section 8.01 promptly upon being requested to do
so by the Required Lenders and shall thereupon notify all the Lenders thereof.
Section 8.03 Enforcement Notice. If the Administrative Agent is (i)
------------------
instructed to do so by the Required Lenders at any time after the Loans become
immediately due and payable pursuant to Section 8.01, or (ii) instructed to do
so by the Required Lenders at any time after the Loans have been declared due
and payable pursuant to Section 8.01, the Administrative Agent shall deliver to
the Collateral Agent an Enforcement Notice directing the Collateral Agent to
exercise one or more specific remedies under the Collateral Documents, the
Interim Borrowing Order, the Borrowing Order, or any other right or remedy
available at law or in equity; provided that, any other provision of this
Agreement or any other Financing Document to the contrary notwithstanding, with
respect to the foregoing, the Collateral Agent shall give the Borrowers and
counsel to any official committees in respect of the Chapter 11 Cases and the
office of the United States Trustee five Business Days' prior written notice
(which notice shall be delivered by facsimile or overnight courier) of the
exercise of its rights and remedies with respect to the Collateral (excluding
the acceleration of the Loans or other Obligations and the termination of the
Commitments, but including exercise of any rights of set-off or counterclaim
hereunder or under any other Financing Document) and file a copy of such notice
with the Clerk of the Court. Neither any Agent nor any Lender shall have any
obligation of any kind to make a motion or application to the Court to exercise
their rights and remedies set forth or referred to in this Agreement or in the
other Financing Documents. Concurrently with the delivery of any such
Enforcement Notice to the Collateral Agent, all outstanding Loans and other
amounts in respect of the Obligations not theretofore declared due and payable
shall (notwithstanding the provisions of Section 362 of the Bankruptcy Code and
without application or motion to, or order from, the Court) automatically become
immediately due and payable.
Other than the notice to the Borrowers described in the preceding
paragraph, Borrowers waive (i) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties or other property at any
time held by any Agent or any Lender on which Credit Parties may in any way be
liable and hereby ratify and confirm whatever any Agent and any Lender may
lawfully do in this regard, (ii) subject to the notice provisions of the
preceding paragraph, all rights to notice and hearing prior to any Agent's
taking possession or control of, or to any Agent's or any Lender's reply,
attachment or levy upon, the Collateral, or any bond or security which might be
required by any court prior to allowing any Agent or any Lender to exercise any
of their remedies, and (iii) the benefit of all valuation, appraisal and
exemption laws. Borrowers acknowledge they have been advised by counsel of
their choice with respect to the effect of the foregoing waivers and this
Agreement, the other Financing Documents and the transactions evidenced by this
Agreement and the other Financing Documents.
Section 8.04 Cash Cover. The Borrowers agree that, if any Event of
----------
Default shall have occurred and be continuing, the Borrowers shall, if requested
by the Administrative Agent upon instruction from the Required Lenders, pay to
the Collateral Agent an amount in immediately
76
available funds equal to 105% of the then aggregate amount available for
subsequent drawings under all outstanding Letters of Credit to be held for the
benefit of the Lenders and the LC Issuing Banks in accordance with the
Collateral Documents to secure the payment of all LC Reimbursement Obligations
arising from subsequent drawings under such Letters of Credit.
ARTICLE 9. The Agents
Section 9.01 Appointment and Authorization.
-----------------------------
(a) Each Lender irrevocably designates, appoints and authorizes the
Administrative Agent, the Collateral Agent and the Syndication Agent to act as
its agent in connection herewith and authorizes the Administrative Agent, the
Collateral Agent and the Syndication Agent to take such action as agent on such
Lender's behalf, to execute and deliver or accept on behalf of the Lenders the
other Financing Documents and to exercise such powers under the Financing
Documents as are delegated to the Administrative Agent, the Collateral Agent and
the Syndication Agent, respectively, by the terms thereof, together with all
such powers as are reasonably incidental thereto. Notwithstanding anything
contained herein to the contrary, the Co-Arrangers shall not have any rights
(other than the right to receive and retain the fees described in Section 2.06
payable to it), duties or obligations hereunder or under the other Financing
Documents solely in such capacity.
(b) Each of the Lenders, the LC Issuing Banks and the Agents irrevocably
authorize, and each holder of a Note by its acceptance of such Note shall be
deemed to irrevocably authorize, the Collateral Agent to execute the Collateral
Documents and irrevocably appoints and authorizes the Collateral Agent to take
such action as agent on its behalf and to exercise such powers and perform such
duties under the Collateral Documents as are delegated to the Collateral Agent
by the terms thereof, together with all such powers as are reasonably incidental
thereto.
Section 9.02 Agents and Affiliates. Each of PNC and First Union
---------------------
shall have the same rights and powers under the Financing Documents as any other
Lender and may exercise or refrain from exercising the same as though it were
not the Administrative Agent and the Collateral Agent, in the case of PNC, or
the Syndication Agent, in the case of First Union. Each of PNC, First Union and
their respective affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with any of the MHG Companies or their
Affiliates as if it were not the Administrative Agent and the Collateral Agent,
in the case of PNC, or the Syndication Agent, in the case of First Union.
Section 9.03 Action by Agents.
----------------
(a) The obligations of each of the Agents under the Financing Documents
are only those expressly set forth therein with respect to it. Without limiting
the generality of the foregoing, none of the Agents shall be required to take
any action with respect to any Default, except as expressly provided in Article
8 hereof and in the Collateral Documents. The Agents shall have no duties or
responsibilities except those expressly set forth in this Agreement and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this
77
Agreement or otherwise exist. The duties of the Agents shall be mechanical and
administrative in nature; the Agents shall not have by reason of this Agreement
a fiduciary or trust relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon any Agent any obligations in respect of this Agreement except as
expressly set forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to any of the
Agents is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any Applicable Law. Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties.
(b) As to any matters not expressly provided for in the Financing
Documents (including the timing and methods of realization upon the Collateral),
the Agents shall act or refrain from acting in accordance with written
instructions from the Required Lenders or, in the absence of such instructions,
in accordance with its discretion; provided that no Agent shall be obligated to
take any action if such Agent believes that such action is or may be contrary to
any applicable law or might cause such Agent to incur any loss or liability for
which it has not been indemnified to its satisfaction.
(c) The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of any Lien on any of the Collateral, whether
impaired by operation of law or by reason of any action or omission to act on
its part under the Collateral Documents. The Collateral Agent shall have no
duty to ascertain or inquire as to the performance or observance of any of the
terms of the Collateral Documents by the MHG Companies.
Section 9.04 Delegation of Duties; Consultation with Experts. Each of
-----------------------------------------------
the Agents may perform any of its duties hereunder or under any other Financing
Document through agents or employees. Each of the Agents may consult with legal
counsel (who may be counsel for any MHG Company), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
Section 9.05 Liability of Agents. None of the Agents or their respective
-------------------
affiliates or their respective directors, officers, attorneys, agents or
employees shall be liable for any action taken or not taken by it in connection
with the Financing Documents (A) with the consent or at the request of the
Required Lenders or (B) in the absence of its own gross negligence or willful
misconduct. None of the Agents or their respective affiliates or their
respective directors, officers, attorneys, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, recital, warranty or representation made in connection with any
Financing Document or any Credit Event; (ii) the performance or observance of
any of the terms, conditions, covenants or agreements of any MHG Company under
any Financing Document or the financial condition of any Credit Party or the
existence or possible existence of any Event of Default; (iii) the satisfaction
of any condition specified in Article 3 except, in the case of any of the
Agents, receipt of items required to be delivered to it; (iv) the validity,
effectiveness, enforceability, due execution or genuineness of any Financing
Document or any other instrument or writing furnished in connection therewith;
or (v)
78
the existence, genuineness or value of any of the Collateral or the validity,
perfection, recordation, priority or enforceability of any Lien on any of the
Collateral. None of the Agents shall incur any liability by acting in reliance
upon any notice, consent, certificate, statement, or other writing (which may be
a bank wire, telex, facsimile copy or similar writing) believed by it to be
genuine or to be signed by the proper party or parties. No claim may be made by
any MHG Company, any Lender, any Agent or any of their respective Subsidiaries
against the Agents, any Lender or any of their respective directors, officers,
employees, agents, attorneys or Affiliates, or any of them, for any special,
indirect or consequential damages or, to the fullest extent permitted by Law,
for any punitive damages in respect of any claim or cause of action (whether
based on contract, tort, statutory liability, or any other ground) based on,
arising out of or related to any Financing Document or the transactions
contemplated hereby or any act, omission or event occurring in connection
therewith, including the negotiation, documentation, administration or
collection of the Loans, and each of the Borrowers (for itself and on behalf of
each of its Subsidiaries), the Agents and the Lenders hereby waives, releases
and agrees never to ▇▇▇ upon any claim for any such damages, whether such claim
now exists or hereafter arises and whether or not it is now known or suspected
to exist in its favor. Each Lender agrees that, except for notices, reports and
other documents expressly required to be furnished to the Lender by the Agents
hereunder or given to the Agents for the account of or with copies for the
Lenders, the Agents and each of their directors, officers, employees, agents,
attorneys or Affiliates shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrowers which may come into the possession of any Agent or any of their
directors, officers, employees, agents, attorneys or Affiliates.
Section 9.06 Indemnification. The Lenders shall, ratably in accordance
---------------
with their respective Credit Exposures, reimburse and indemnify each Agent,
their respective affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the MHG Companies and without
limiting the obligation of the MHG Companies to do so) against any cost, expense
(including reasonable counsel fees and disbursements and reasonable fees and
costs of appraisers, accountants and consultants), claim, demand, action,
obligations, damages, penalties, judgments, suits, disbursements, loss or
liability (except such as result from such indemnitee's gross negligence or
willful misconduct) that such indemnitee may suffer or incur in connection with
the Financing Documents or any action taken or omitted by such indemnitees
thereunder.
Section 9.07 Credit Decision. Each Lender acknowledges (i) that the
---------------
Agents have not made any representations or warranties to it and that no act by
the Agents hereafter taken, including any review of the affairs of the
Borrowers, shall be deemed to constitute any representation or warranty by the
Agents to any Lender and (ii) that it has, independently and without reliance on
any Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under the Financing Documents and except as expressly provided herein, that the
Agents shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other
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information with respect thereto, whether coming into its possession before the
making of any Loan or at any time or times thereafter.
Section 9.08 Successor Agents. Any Agent may resign at any time (a
----------------
"Retiring Agent") by giving notice thereof to the Lenders, the other Agents and
the Borrowers. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor for the Retiring Agent (a "Successor Agent"). If
no Successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the Retiring Agent
gives notice of resignation, then the Retiring Agent may, on behalf of the
Lenders, appoint a Successor Agent, which shall be a Lender or any other
commercial bank organized or licensed under the laws of the United States or any
State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as a Successor Agent, such
Successor Agent shall thereupon, without order of the Court, succeed to and
become vested with all the rights and duties of the Retiring Agent, and the
Retiring Agent shall be discharged from its duties and obligations hereunder.
After any Retiring Agent resigns as an Agent hereunder, the provisions of this
Article 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was one of the Agents.
ARTICLE 10. Changes In Circumstances
Section 10.01 Increased Cost and Reduced Return.
---------------------------------
(a) If, on or after the date hereof, the adoption of any applicable law,
rule or regulation, or any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender Party (other than the
Administrative Agent in its capacity as such) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency, shall impose, modify or deem applicable any reserve, special
deposit, insurance assessment or similar requirement (including any such
requirement imposed by the Board of Governors of the Federal Reserve System)
against assets of, deposits with or for the account of, or credit extended by,
any Lender Party (other than the Administrative Agent in its capacity as such)
or shall impose on any Lender Party (other than the Administrative Agent in its
capacity as such) any other condition affecting its Notes or its obligation to
participate in any Letter of Credit, and the result of any of the foregoing is
to increase the cost to such Lender Party of participating in any Letter of
Credit or to reduce the amount of any sum received or receivable by such Lender
Party under this Agreement or under its Notes with respect thereto, by an amount
deemed by such Lender Party to be material, then, within 15 days after demand by
such Lender Party (with a copy to the Administrative Agent), the Borrowers shall
pay to such Lender Party such additional amount or amounts as will compensate
such Lender Party for such increased cost or reduction; provided that the
Borrowers shall not be liable to any Lender Party in respect of any such
increased cost or reduction with respect to any period of time more than three
months before the Borrowers receive the notice required by the first sentence of
Section 10.01(c) or more than six months before the Borrowers receive the
relevant certificate referred to in the second sentence of Section 10.01(c).
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(b) If any Lender Party (other than the Administrative Agent in its
capacity as such) shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Lender Party (or its Parent) as a consequence of such Lender Party's
obligations hereunder to a level below that which such Lender Party (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Lender Party to be material, then from time to time,
within 15 days after demand by such Lender Party (with a copy to the
Administrative Agent), the Borrowers shall pay to such Lender Party such
additional amount or amounts as will compensate it for such reduction; provided
that the Borrowers shall not be liable to any Lender Party in respect of any
such reduction with respect to any period of time more than three months prior
to the date of the notice required by the first sentence of Section 10.01(c).
(c) Each Lender Party (other than the Administrative Agent in its
capacity as such) will promptly notify the Borrowers and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle it to compensation pursuant to this Section and will
designate a different Lending Office or LC Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender Party, be otherwise disadvantageous to it. A
certificate of any such Lender Party claiming compensation under this Section
10.01 and setting forth the additional amount or amounts to be paid to it
hereunder, showing the calculation thereof in reasonable detail, shall be
conclusive in the absence of manifest error. In determining such amount, such
Lender Party may use any reasonable averaging and attribution methods.
Section 10.02 Taxes.
-----
(a) Any and all payments by the MHG Companies to or for the account
of any Lender Party under any Financing Document shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender Party, taxes imposed on its net income,
and franchise or similar taxes imposed on it, by (i) the jurisdiction under the
laws of which it is organized or any political subdivision thereof, (ii) in the
case of each Lender, the jurisdiction of its Lending Office or any political
subdivision thereof and (iii) in the case of each LC Issuing Bank, the
jurisdiction of its LC Office or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If any MHG Company
shall be required by law to deduct any Taxes from or in respect of any sum
payable under any Financing Document to any Lender Party, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 10.02) such Lender Party receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the relevant MHG
Company shall make such deductions, (iii) such MHG Company shall pay the full
amount
81
deducted to the relevant taxation authority or other authority in accordance
with applicable law, and (iv) such MHG Company shall furnish to the
Administrative Agent, at its address specified in or pursuant to Section 11.01,
the original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes or any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any other
Financing Document or from the execution or delivery of, or otherwise with
respect to, any Financing Document (hereinafter referred to as "Other Taxes").
(c) The Borrowers agree to indemnify each Lender Party for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section 10.02) paid
by such Lender Party and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 15 days from the date such Lender Party makes demand therefor.
(d) Each Lender Party organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Lender Party listed on the signature pages
hereof and on or prior to the date on which it becomes a Lender Party in the
case of each other Lender Party, and from time to time thereafter if requested
in writing by the Borrowers (but only so long as such Lender Party remains
lawfully able to do so), shall provide the Borrowers and the Administrative
Agent with (i) Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender Party is entitled to benefits under an income tax treaty to which
the United States is a party which reduces the rate of withholding tax on
payments of interest under the Financing Documents or certifying that the income
receivable pursuant to the Financing Documents is effectively connected with the
conduct of a trade or business in the United States or (ii) if such Lender is
not a "bank" within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, Internal Revenue Service form W-8 or any successor form prescribed by the
Internal Revenue Service claiming complete exemption from, or a reduced rate of,
withholding tax on payments of interest under the Financing Documents. If the
form provided by a Lender Party at the time such Lender Party first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be excluded from "Taxes"
as defined in Section 10.02(a).
(e) For any period with respect to which a Lender Party has failed to
provide the Borrowers and the Administrative Agent with the appropriate form
pursuant to Section 10.02(d) (unless such failure is due to a change in treaty,
law or regulation occurring subsequent to the date on which a form originally
was required to be provided), such Lender Party shall not be entitled to
indemnification under Section 10.02(a) with respect to Taxes imposed by the
United States; provided that should a Lender Party, which is otherwise exempt
from or subject to a reduced rate of withholding tax, become subject to Taxes
because of its failure to deliver a form required hereunder, the relevant MHG
Company shall take such steps as such Lender Party shall reasonably request to
assist such Lender Party to recover such Taxes.
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(f) If any MHG Company is required to pay additional amounts to or
for the account of any Lender Party pursuant to this Section 10.02, then such
Lender Party will change the jurisdiction of its Lending Office or LC Office, as
the case may be, so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the sole judgment of such Lender Party,
is not otherwise disadvantageous to such Lender Party.
(g) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the MHG Companies
contained in this Section 10.02 shall survive the payment in full of the
principal of and interest on the Loans and the LC Reimbursement Obligations.
ARTICLE 11. Miscellaneous
Section 11.01 Notices. Unless otherwise specified herein, all notices,
-------
requests and other communications to any party under any Financing Document
shall be in writing (including bank wire, facsimile copy or similar writing) and
shall be given to such party at its address or facsimile number set forth on the
signature pages hereof (or, in the case of any Lender, in its Administrative
Questionnaire) or such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Administrative Agent and the
Borrowers. Each such notice, request or other communication shall be effective
(i) if given by facsimile transmission, when transmitted to the facsimile number
specified in or pursuant to this Section 11.01 and confirmation of receipt is
received, (ii) if given by mail, ten days after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid, or (iii)
if given by any other means, when delivered at the address specified in or
pursuant to this Section 11.01, provided that notices and requests to any Agent
under Article 2, 8 or 10 shall not be effective until received. NOTICE TO UNDER
THIS AGREEMENT OR UNDER ANY OTHER FINANCING DOCUMENT SHALL CONSTITUTE NOTICE TO
ALL BORROWERS FOR ALL PURPOSES HEREUNDER AND THEREUNDER, AND NOTICE FROM UNDER
THIS AGREEMENT OR UNDER ANY OTHER FINANCING DOCUMENT PURPORTING TO BE NOTICE
FROM ALL BORROWERS SHALL CONSTITUTE NOTICE FROM ALL BORROWERS FOR ALL PURPOSES
HEREUNDER AND THEREUNDER.
Section 11.02 No Waiver. No failure or delay by the Lender Parties, or
---------
any of them, in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in the
Financing Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 11.03 Expenses; Indemnification.
-------------------------
(a) In addition to any expenses set forth in and required to be paid
to any Persons pursuant to the Interim Borrowing Order or the Borrowing Order or
any other applicable order of the Court, the Borrowers shall pay on demand all
the actual and reasonable costs, fees and expenses of
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(i) preparation of the Financing Documents and any consents, amendments, waivers
or other modifications thereto; (ii) furnishing all opinions by counsel for MHG
and its Subsidiaries (including any opinions reasonably requested by the
Administrative Agent or Required Lenders as to any legal matters arising
hereunder) and of MHG's and its Subsidiaries' performance of and compliance with
all agreements and conditions on its part to be performed or complied with under
this Agreement and the other Financing Documents, including with respect to
confirming compliance with environmental and insurance requirements; (iii)
counsel to the Administrative Agent (including allocated costs of internal
counsel and fees and expenses of O'Melveny & ▇▇▇▇▇ LLP, counsel to the Agents,
Lenders and Existing Lenders, ▇▇▇▇▇▇▇▇ Ingersoll, P.C., special counsel to the
Administrative Agent and the administrative agent under the Existing Credit
Facilities, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., special counsel to
the Syndication Agent and the syndication agent under the Existing Credit
Facilities) in connection with the negotiation, preparation, execution,
administration and enforcement of the Financing Documents and any consents,
amendments, waivers or other modifications thereto and any other documents or
matters requested by MHG or its Subsidiaries; (iv) creating and perfecting Liens
in favor of Collateral Agent on behalf of Lenders pursuant to any Collateral
Document, including filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, and reasonable fees, expenses and disbursements
of counsel to any Agent and of counsel providing any opinions that any Agent or
Required Lenders may reasonably request in respect of the Collateral Documents
or the Liens created pursuant thereto; (v) any advisors, auditors, accountants
or appraisers or other consultants or agents employed or retained by any Agent,
the Lenders or their counsel or the Existing Lenders or their counsel,
including, without limitation, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, Care Consulting,
L.L.C. and any other financial, accounting or valuation advisors; (vi) the
Collateral Agent in connection with the custody or preservation of any of the
Collateral; (vii) any Agent in connection with the syndication of the
Commitments and the negotiation, preparation and execution of the Financing
Documents and any consents, amendments, waivers or other modifications thereto
and the transactions contemplated thereby, and (viii) if any Event of Default
occurs, any Lender Party, including actual and reasonable costs, fees and
expenses of counsel, in connection with such Event of Default and collection,
bankruptcy, insolvency (including pursuant to the Chapter 11 Cases) and other
enforcement proceedings resulting therefrom, including the negotiation of any
plan of reorganization, restructuring or "workout" of the Borrowers' obligations
under the Financing Documents. Without limiting the generality of the foregoing,
if, at any time or times, regardless of the existence of an Event of Default,
any Agent or any Lender or any of the Existing Lenders or their counsel shall
incur actual and reasonable fees, costs and expenses itself or employ counsel or
other professional advisors, including, but not limited to, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, Care Consulting, L.L.C. and other environmental, financial and
management consultants, for advice or other representation or shall incur legal,
appraisal, accounting, consulting or other actual and reasonable fees, costs and
expenses in connection with:
(i) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by any Agent, any Lender, any Existing Lender, any
Borrower or any other Person) in any way relating to the Collateral, any of
the Financing Documents, or any other agreements to be executed or
delivered in connection therewith or herewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or
review thereof, in
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connection with a case or proceeding commenced by or against any Borrower
or any other Person that may be obligated to any Agent or any Lender or any
Existing Lender by virtue of the Financing Documents, under the Bankruptcy
Code, or any other applicable Federal, state, or foreign bankruptcy or
other similar law;
(ii) any attempt to enforce any rights or remedies of any Agent, any
Lender or any Existing Lender against any Borrower, or any other Person
that may be obligated to any Agent, any Lender or any Existing Lender by
virtue of being a party to any of the Financing Documents;
(iii) any attempt by any Person (including, without limitation, the
Agents and the Lenders) (A) to appraise, inspect, verify, protect, collect,
sell, liquidate or otherwise dispose of the Collateral, including any
Healthcare Facility, or (B) to negotiate the terms of, and to facilitate
and implement, the replacement of MPAN in its supervisory capacity with
respect to any Healthcare Facility; or
(iv) any Chapter 11 Case (including, without limitation, (A) the on-
going monitoring by any Agent, any Lender or any Existing Lender of any
Chapter 11 Case, including attendance by any Agent and its counsel at
hearings or other proceedings, (B) the on-going review of documents filed
with a Court in respect thereof, and (C) the negotiation, preparation and
development of a plan or plans of reorganization) and each Agent's and the
Lenders' and the Existing Lenders' interests with respect to any Borrower
(including, without limitation, the on-going review of any Borrower's
business, assets, operations, prospects or financial condition as any Agent
shall deem necessary), the Collateral or the Obligations;
then, and in any such event, the actual and reasonable fees and expenses
incurred by any Agent, such Lender, such Existing Lender and such attorneys and
other professional advisors and consultants arising from such services,
including those of any appellate proceedings, and all actual and reasonable
expenses, costs, charges and other fees incurred by such counsel or other
professionals in any way or respect arising in connection with or relating to
any of the events or actions described in this Section 11.03 shall be payable,
on demand, by the Borrowers to any Agent, such Lender and such Existing Lender
and shall be additional Obligations secured under the Collateral Documents and
the other Financing Documents. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' and experts' fees, costs and expenses;
appraisers' fees, costs and expenses; management and other consultants' fees,
costs and expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance telephone
charges; communication charges, air express charges; telegram charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other professional
services.
(b) In addition to the payment of expenses pursuant to Section
11.03(a), whether or not the transactions contemplated hereby shall be
consummated, the Borrowers agree to defend (subject to Indemnitee's selection of
counsel), indemnify, pay and hold harmless each Agent, each of
85
the Lenders and their counsel and each of the Existing Lenders and their counsel
(including, without limitation, O'Melveny & ▇▇▇▇▇ LLP, counsel to the Agents,
Lenders and Existing Lenders, ▇▇▇▇▇▇▇▇ Ingersoll, P.C., special counsel to the
Administrative Agent and the administrative agent under the Existing Credit
Facilities, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. special counsel to
the Syndication Agent and the syndication agent under the Existing Credit
Facilities), and the officers, directors, employees, advisors, auditors,
accountants, appraisers, consultants (including, without limitation, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and Care Consulting, L.L.C.), agents and affiliates of each
Agent, each of the Lenders and their counsel and each of the Existing Lenders
and their counsel (collectively called the "Indemnitees"), from and against any
and all Indemnified Liabilities (as hereinafter defined); provided, that the
Borrowers shall not have any obligation to any Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified Liabilities arise
solely from the gross negligence or willful misconduct of that Indemnitee as
determined by a final judgment of a court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including environmental
claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, clean-up, removal, remediation or other response action
necessary to remove, remediate, clean up or ▇▇▇▇▇ any hazardous materials
activity), expenses and disbursements of any kind or nature whatsoever
(including the actual and reasonable fees and disbursements of counsel for
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statues, rules or regulations (including securities and commercial
laws, statutes, rules or regulations and environmental laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Financing Documents or the
transactions contemplated hereby or thereby including Lenders' agreement to make
the Loans hereunder or the use or intended use of the proceeds thereof or the
issuance of letters of credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Financing Documents including any sale
of, collection from, or other realization upon any of the Collateral, or (ii)
any environmental claim or any hazardous materials activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of Borrowers and their Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this Section 11.03(b) may be unenforceable in whole or in
part because they are violative of any law or public policy, the Borrowers shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them. Without prejudice to the survival of any
other agreement of the Borrowers hereunder, the agreements and obligations of
the Borrowers contained in this Section 11.03 shall survive termination of the
Commitments, the payment in full of the principal of and interest on the Loans
and the LC Reimbursement Obligations.
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Section 11.04 Sharing of Set-offs.
-------------------
(a) Each Lender agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, or as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Code, receive payment of a
proportion of the aggregate amount of principal and interest then due (or
overdue) with respect to the Loans and participations in LC Reimbursement
Obligations (if any) held by it which is greater than the proportion received by
any other Lender in respect of the aggregate amount of principal and interest
then due (or overdue) with respect to the Loans and participations in LC
Reimbursement Obligations (if any) held by such other Lender, the Lender
receiving such proportionately greater payment shall purchase such
participations in the Loans and participations in LC Reimbursement Obligations
(if any) held by the other Lenders, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with respect
to the Loans and participations in LC Reimbursement Obligations held by the
Lenders shall be shared by the Lenders pro rata, subject to Section 2.11.
(b) Nothing in this Section 11.04 shall impair the right of any
Lender, and notwithstanding the provisions of Section 362 of the Bankruptcy Code
and without application or motion to, or order from, the Court, to exercise any
right of set-off or counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of the relevant MHG Company other
than its indebtedness in respect of the Loans and LC Reimbursement Obligations.
(c) The Borrowers agree, to the fullest extent they may effectively
do so under applicable law, that any holder of a participation in a Loan or LC
Reimbursement Obligation, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrowers in the amount of such participation.
Section 11.05 Amendments and Waivers.
----------------------
(a) Neither this Agreement nor any other Financing Document, nor any
terms hereof or thereof, may be amended, supplemented or modified except in
accordance with the provisions of this Section 11.05.
(b) Except as set forth in subsections (c) through (j) of this
Section 11.05, the Required Lenders (or the Administrative Agent with their
written consent) may from time to time (i) enter into written amendments,
supplements or modifications of any Financing Document (which shall not be
effective unless signed by each MHG Company party thereto) for the purpose of
adding any provisions to such Financing Document or changing in any manner the
rights or obligations of the parties hereunder or thereunder or (ii) waive, on
such terms and conditions as the Required Lenders (or the Administrative Agent
with their written consent) may specify in such instrument, any of the
requirements of any Financing Document or any Default or Event of Default and
its consequences (any such amendment, supplement, modification or waiver, a
"Specified Change"); provided that
87
(1) without the written consent of the relevant LC Issuing Bank,
no Specified Change shall amend, supplement or otherwise modify any
Letter of Credit or any provision of this Agreement governing the
rights or obligations of such LC Issuing Bank;
(2) without the written consent of the then Administrative
Agent, no Specified Change shall amend, modify or waive any provision
of Article 9 or any other provision of this Agreement governing the
rights or obligations of the Administrative Agent; and
(3) without the written consent of all the Lenders, no Specified
Change shall reduce the percentage specified in the definitions of
"Required Lenders", and "Supermajority Lenders".
(c) Without the written consent of the Required Lenders, no Specified
Change shall (i) waive any of the conditions precedent set forth in Section 3.01
(except that the making of a Loan by any Lender on the date of initial Borrowing
shall be deemed to constitute a waiver of such conditions precedent by such
Lender), (ii) waive any Default or Event of Default and its consequences or
(iii) amend, supplement or otherwise modify any provision of Section 8.01.
(d) Without the written consent of all the Lenders, no Specified
Change shall take any action which has the effect of releasing all or
substantially all of the Collateral, except as expressly provided or permitted
in this Agreement or any Collateral Document.
(e) Without the written consent of all the Lenders, no Specified
Change shall (i) consent to the assignment or transfer by any Borrower of any of
its rights and obligations under the Financing Documents, other than in
connection with any merger or consolidation permitted by this Agreement, (ii)
increase the aggregate amount of the Credit Exposure of all Lenders or include,
as indebtedness under this Agreement, any indebtedness of the MHG Companies
other than the Borrowers' indebtedness under the Credit Facilities, (iii) permit
the Tranche A Loans and Tranche A Commitment of any Lender, on the one hand, and
the Tranche B Loans and Tranche B Commitment of such Lender, on the other hand,
to be assigned on a non-pro rata basis, (iv) change the definition of "Tranche B
Commencement Date", or (v) change the priority claim status of the Obligations.
(f) Without the written consent of each Lender directly affected
thereby, no Specified Change shall reduce the amount or extend the scheduled
date of maturity of any Loan, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof, or
increase the amount or extend the expiration date of any Commitment (it being
understood that no amendment, modification or waiver of any condition precedent,
covenant or Default shall (subject to clause (h) below) constitute an increase
in or extension of the expiration date of any Commitment of any Lender, and that
no increase in the available portion of any Commitment of any Lender shall
constitute an increase in such Commitment of such Lender) or amend, modify or
waive any provision of this subsection (f).
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(g) Without the written consent of each Lender directly affected
thereby, no Specified Change shall change (i) any provision hereof requiring
payments with respect to the Tranche A Commitments and the Tranche A Loans to be
allocated on a pro rata basis among the Lenders having Tranche A Exposure or
(ii) any provision hereof requiring payments with respect to the Tranche B
Commitments and the Tranche B Loans to be allocated on a pro rata basis among
the Lenders having Tranche B Exposure.
(h) Without the written consent of Supermajority Lenders, no
Specified Change shall (i) waive, reduce or postpone any Unscheduled Mandatory
Prepayment or unscheduled mandatory reduction of the Tranche A Commitments or
the Tranche B Commitments pursuant to Section 2.08, (ii) change the definition
of "Commitment Termination Date" if the effect of such change would be to extend
the date of termination of the Commitments beyond the date on which the
Commitments would terminate in the absence of such change, except as such dates
may be extended by Required Lenders as expressly provided in such definition,
(iii) increase the amount set forth in the definition of "Borrowing Base" for
any period, or (iv) change Section 5.10 if the effect of such change would be to
extend the date for filing a joint plan of reorganization acceptable to the
Required Lenders to a date later than four months after the Petition Date.
(i) Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Lenders, the Administrative Agent, all future holders of the Loans, and
the Borrowers.
Section 11.06 Successors and Assigns.
----------------------
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrowers may not assign or otherwise transfer any of
their rights under this Agreement (other than in connection with any merger or
consolidation permitted by this Agreement) without the prior written consent of
all the Lenders and the LC Issuing Banks. Any attempted assignment or transfer
in contravention of the foregoing shall be null and void.
(b) Any Lender may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in any or all of its
Loans and/or its Tranche A Commitment and its Tranche B Commitment (on a pro
rata basis) or its LC Exposure. If any Lender grants a participating interest
to a Participant, whether or not upon notice to the MHG Companies and the
Administrative Agent, such Lender shall remain responsible for the performance
of its obligations hereunder, and the Borrowers and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Financing Documents. Any
agreement pursuant to which any Lender may grant such a participating interest
shall provide that such Lender shall retain the sole right and responsibility to
enforce the obligations of the MHG Companies or any other party under the
Financing Documents, including the right to approve any Specified Change;
provided that such participation agreement may provide that (A) such Lender will
not agree to any Specified Change described in Section 11.05(f) without the
consent of the Participant and (B) such Lender will agree to vote the
Participant's participating interest with respect to any matter requiring a vote
of all Lenders under the Security Agreement as
89
the Participant may direct. Each of the Borrowers agrees that each Participant
shall, to the extent provided in its participation agreement, be entitled to the
benefits of Section 2.05(k) and Article 10 with respect to its participating
interest. An assignment or other transfer which is not permitted by Section
11.06(c) or (d) shall be given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance with this subsection
(b).
(c) Any Lender may at any time on or after the Closing Date assign
to one or more (x) Eligible Assignees or (y) affiliates or Related Funds of such
transferor Lender (each such Eligible Assignee, affiliate or Related Fund being
an "Assignee") all, or a ratable portion (i.e., a pro rata assignment (based on
the respective principal amounts thereof then outstanding or in effect) of both
the Tranche A Commitment and the Tranche A Loans of the assigning Lender, on the
one hand, and the Tranche B Commitment and the Tranche B Loans of such assigning
Lender, on the other hand) of all, of its rights and obligations under the
Credit Facilities, and such Assignee shall assume such rights and obligations,
with notice to the Borrowers and with (and subject to) the consent of the
Administrative Agent and each LC Issuing Bank (each such consent to be given or
withheld in the sole discretion of the Administrative Agent or such LC Issuing
Bank, as the case may be); provided that:
(i) any assignment of only a ratable portion of the transferor
Lender's rights and obligations shall be equivalent, in the case of each
Assignee, to an initial Tranche A Commitment and Tranche B Commitment of not
less than $5,000,000 in the aggregate;
(ii) no such consent shall be required if (x) the Assignee is an
affiliate or Related Fund of such transferor Lender, (y) the Assignee is already
a Lender immediately prior to such assignment or (z) an Event of Default shall
have occurred and be continuing when such assignment is made; provided that in
each of the foregoing cases written notice of such assignment shall be given to
the Administrative Agent and the Borrowers;
(iii) such assignment may be made to an Assignee that is already a
Lender, or made by a Lender to one of its Related Funds, without regard to the
foregoing minimum assignment amount;
(iv) the parties to each such assignment shall execute and deliver to
the Administrative Agent an Assignment Agreement for its acceptance and
recording in the Register at least two Business Days prior to the proposed
effective date of such assignment; and
(v) the Assignee under each such assignment (unless it is already a
Lender) shall deliver to the Administrative Agent a completed Administrative
Questionnaire.
When (A) such an Assignment Agreement (together with an Administrative
Questionnaire, if required) has been delivered to the Administrative Agent, (B)
such assignment has been recorded in the Register, and (C) such Assignee has
paid to such transferor Lender an amount equal to the purchase price agreed
between them, such Assignee shall be a Lender party to this Agreement and shall
have all the rights and obligations of a Lender with outstanding Loans and/or
Commitments as set forth in such instrument of assignment, and the transferor
Lender shall be released from its
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obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), (x) the Administrative Agent shall notify the
Collateral Agent thereof and (y) the transferor Lender, the Administrative Agent
and the Borrowers shall make appropriate arrangements so that, if required, a
new Tranche A Note and a new Tranche B Note complying with the provisions of
Section 2.03 is issued to the Assignee. In connection with any such assignment,
the transferor Lender shall pay to the Administrative Agent an administrative
fee for processing such assignment in the amount of $3,500. If the Assignee is
organized under the laws of a jurisdiction outside the United States, it shall
deliver to the Borrowers and the Administrative Agent certification as to
exemption from deduction or withholding of United States federal income taxes in
accordance with Section 10.02. Anything contained herein to the contrary
notwithstanding, the Administrative Agent shall not be required to accept and
record assignments hereunder on more than one day during each week, and each
assigning Lender shall coordinate each assignment with the Administrative Agent
so that the proposed effective date of such assignment shall be the same date as
the effective date of each other assignment during the relevant week by each
other assigning Lender.
(d) Any Lender may at any time assign all or any portion of its Loans
or its Notes as security to a Federal Reserve Bank. No such assignment or
pledge shall release the transferor Lender from its obligations hereunder.
(e) The Administrative Agent shall maintain at its address at which
notices are to be given to it pursuant to Section 11.01 a copy of each
instrument of assignment delivered to it pursuant to subsection (c) of this
Section 11.06 and a register for the recordation of the names and addresses of
the Lenders, their respective Tranche A Commitments and Tranche B Commitments
and the principal amounts of their respective Tranche A Loans and Tranche B
Loans outstanding from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender for all purposes of this Agreement.
The Register shall be available for inspection by the Borrowers or any Lender
Party at any reasonable time and from time to time upon reasonable prior notice.
(f) No Assignee, Participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under Section 2.05(k),
10.01 or 10.02 than such Lender would have been entitled to receive with respect
to the rights transferred, unless such transfer is made with the Borrowers'
prior written consent or by reason of the provisions of Section 10.01, or 10.02
requiring such Lender to designate a different Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
Section 11.07 Margin Stock. Each of the Lenders represents to the
------------
Administrative Agent and each of the other Lenders that it in good faith is not
relying upon any Margin Stock as collateral in the extension or maintenance of
the credit provided for in this Agreement.
Section 11.08 Governing Law; Submission to Jurisdiction. THIS
-----------------------------------------
AGREEMENT, THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
91
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE BANKRUPTCY CODE (WITH RESPECT
ONLY TO THOSE PROVISIONS OF THIS AGREEMENT WHICH, BY THEIR EXPRESS TERMS, ARE
GOVERNED BY THE BANKRUPTCY CODE) AND THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. SUBJECT TO THE
JURISDICTION OF THE COURT, EACH OF THE BORROWERS HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO ANY OF THE
FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. EACH OF THE
BORROWERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 11.09 Counterparts; Integration. This Agreement and any
-------------------------
amendment to this Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument. This Agreement (together with the other Financing
Documents) constitutes the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
Section 11.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
--------------------
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 11.10.
Section 11.11 Confidentiality. Each Lender Party agrees to keep any
---------------
non-public information delivered or made available by any MHG Company to it
confidential and to use such information only for the purpose of evaluating,
approving, structuring and administering the Loans and Letters of Credit and
negotiating and effectuating any plan of reorganization or any sale of assets
under Bankruptcy Code Section 363; provided that nothing herein shall prevent
any Lender Party from disclosing such information (i) to Persons employed or
retained by such Lender Party who are engaged or expected to be engaged in
evaluating, approving, structuring or administering the Loans and Letters of
Credit or evaluating, negotiating or effectuating any plan of reorganization or
any sale
92
of assets under Bankruptcy Code Section 363, (ii) to any other Person if
reasonably incidental to the administration of the Loans or Letters of Credit,
(iii) to any other Lender Party or to any Existing Lender, (iv) pursuant to any
subpoena or express direction of any court or other authorized government agency
or as otherwise required by law, (v) upon the request or demand of any bank
regulatory agency, bank examiner or comparable authority, (vi) which has
theretofore been publicly disclosed or is otherwise available to such Lender
Party on a non-confidential basis from a source that is not, to its knowledge,
subject to a confidentiality agreement with any MHG Company, (vii) in connection
with any litigation to which any Lender Party or its subsidiaries or Parent may
be a party, (viii) to the extent necessary in connection with the exercise of
any remedy hereunder, (ix) to such Lender Party's affiliates, legal counsel and
independent auditors, (x) to any actual or proposed Participant or Assignee that
has signed a written agreement containing provisions substantially similar to
this Section 11.11; (xi) any prospective acquirer of any Borrower, Healthcare
Facility or other assets of any Borrower provided such Person agrees to keep
such information confidential and use the same only for the purpose of
evaluating and implementing such prospective acquisition; (xii) so long as
consistent with Section 5.13, any replacement manager or potential replacement
manager for any of the Healthcare Facilities that has signed a written agreement
containing provisions substantially similar to this Section 11.11; or (xiii) any
other Person approved by the Borrowers in writing. Any Lender Party that
discloses confidential information to other Persons as contemplated by clause
(i), (ii) or (ix) of the foregoing proviso shall inform such other Persons of
the confidential nature of such information and shall instruct them to keep such
information confidential (except for disclosures permitted by the foregoing
proviso). Before any Lender Party discloses confidential information pursuant to
clause (iv) or (vii) of the foregoing proviso, such Lender Party shall, to the
extent permitted by law, use its best efforts to advise MHG of such proposed
disclosure so that MHG may, in its discretion, seek an appropriate protective
order. If and to the extent requested to do so by the Borrowers, the
Administrative Agent may deliver copies of information supplied to it pursuant
to Section 5.01 to any Person referred to in clause (x) or (xi) of the foregoing
proviso. Anything herein to the contrary notwithstanding, no Lender Party shall
have any liability with respect to disclosure of confidential information by
electronic transmission, including, without limitation, facsimile, e-mail and
internet communication, as long as such Lender Party exercises reasonable care
in effecting such transmission.
Section 11.12 Parties Including Trustees; Court Proceedings. This
---------------------------------------------
Agreement and the other Financing Documents shall be binding upon, and inure to
the benefit of, the successors of each Agent and each Lender, and the assigns,
transferees and endorsees of each Agent and each Lender. The security interests
and Liens created in this Agreement, the Collateral Documents and the other
Financing Documents shall be and remain valid and perfected, and the claims of
the Agents and Lenders hereunder valid and enforceable in accordance with the
terms hereof, notwithstanding the discharge of any Borrower pursuant to 11
U.S.C. (S) 1141, the conversion of any Chapter 11 Case or any other bankruptcy
case of any Credit Party to a case under Chapter 7 of the Bankruptcy Code, the
dismissal of any Chapter 11 Case or any subsequent Chapter 7 case or the release
of any Collateral from the property of any Credit Party. The security interests
and Liens created in this Agreement, the Collateral Documents and the other
Financing Documents shall be and remain valid and perfected without the
necessity that any Agent or any Lender file financing statements or otherwise
perfect its security interests or Liens under applicable law. This Agreement,
the claims of
93
the Agents and Lenders hereunder, and all security interests or Liens created
hereby or pursuant hereto or by or pursuant to the Collateral Documents or any
other Financing Document shall at all times be binding upon Credit Parties, the
estates of Credit Parties and any trustee appointed in any Chapter 11 Case or
any Chapter 7 case, or any other successor in interest to Borrowers. This
Agreement shall not be subject to Section 365 of the Bankruptcy Code.
Section 11.13 MHG Appointed Attorney-In-Fact. Each Borrower other than
------------------------------
MHG hereby irrevocably appoints MHG as such Borrower's agent and attorney-in-
fact, with full authority in the place and stead of such Borrower and in the
name of such Borrower, the Borrowers, MHG or otherwise, from time to time in 's
discretion to execute and deliver (and receive, where applicable) Notices of
Borrowing, LC Requests, Prepayment Notices and other written notices and
communications hereunder on behalf of the Borrowers to the Administrative Agent
and the Lenders, and to deliver written and unwritten notices and communications
to the foregoing effect, and each Lender Party shall be entitled to rely upon
any such Notice of Borrowing, LC Request, Prepayment Notice, notice or
communication as a notice, communication or consent, as the case may be, of the
Borrowers, and shall incur no liability to any Borrower or the Borrowers in
acting upon any such notice or communication, that such Lender Party believes in
good faith to have been given by a duly authorized officer or other person
authorized by MHG.
Section 11.14 No Waiver. Anything contained herein or in any other
---------
Financing Document to the contrary notwithstanding, no provision of this
Agreement or any other Financing Document shall be construed as or deemed a
waiver of (i) any claim by the Existing Lenders for substantive consolidation of
MPAN and any of the MHG Companies or (ii) any defense to substantive
consolidation of MPAN and any of the MHG Companies.
Section 11.15 Survival of Agreements. The Borrowers hereby agree that,
----------------------
notwithstanding anything contained herein or in any other Financing Document and
the repayment of the Obligations hereunder, (a) no Borrower shall obtain any
additional financing in any of the Chapter 11 Cases under Section 364(d) of the
Bankruptcy Code, and (b) the agreements of the Borrowers set forth in the
preceding clause (a) and in Sections 5.01(k), 5.01(s), 5.11, 5.13, 7.05, 7.07,
7.17 and 11.03 shall survive the payment in full of the Obligations and the
termination of the Commitments and shall not terminate until the effective date
of a plan of reorganization in the Chapter 11 Cases.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
BORROWERS: Mariner Health Group, Inc.
Aid & Assistance, Inc.
Beechwood Heritage Retirement Community, Inc.
Bride Brook Nursing & Rehabilitation Center,
Inc.
Compass Pharmacy Services, Inc.
Compass Pharmacy Services of Maryland, Inc.
Compass Pharmacy Services of Texas, Inc.
Cypress Nursing Facility, Inc.
Long Ridge Nursing and Rehabilitation Center,
Inc.
Longwood Rehabilitation Center, Inc.
Mariner Health at Bonifay, Inc.
Mariner Health Care, Inc.
Mariner Health Care of Atlantic Shores, Inc.
Mariner Health Care of Deland, Inc.
Mariner Health Care of Fort ▇▇▇▇▇, Inc.
Mariner Health Care of Greater Laurel, Inc.
Mariner Health Care of Inverness, Inc.
Mariner Health Care of Lake Worth, Inc.
Mariner Health Care of MacClenny, Inc.
Mariner Health Care of Metrowest, Inc.
Mariner Health Care of Nashville, Inc.
Mariner Health Care of North Hills, Inc.
Mariner Health Care of Orange City, Inc.
Mariner Health Care of Palm City, Inc.
Mariner Health Care of Pinellas Point, Inc.
Mariner Health Care of Port Orange, Inc.
Mariner Health Care of Southern Connecticut,
Inc.
Mariner Health Care of Toledo, Inc.
Mariner Health Care of Tuskawilla, Inc.
Mariner Health Care of West Hills, Inc.
Mariner Health Central, Inc.
Mariner Health Home Care, Inc.
Mariner Health of Florida, Inc.
Mariner Health of Jacksonville, Inc.
Mariner Health of Maryland, Inc.
Mariner Health of Orlando, Inc.
Mariner Health of Palmetto, Inc.
Mariner Health of Seminole County, Inc.
Mariner Health of Tampa, Inc.
Mariner Health Resources, Inc.
Mariner Physician Services, Inc.
Mariner Practice Corporation
S-1
Mariner - Regency Health Partners, Inc.
MarinerSelect Staffing Solutions, Inc.
Mariner Supply Services, Inc.
MedRehab, Inc.
MedRehab of Indiana, Inc.
MedRehab of Louisiana, Inc.
MedRehab of Missouri, Inc.
Merrimack Valley Nursing & Rehabilitation
Center, Inc.
Methuen Nursing & Rehabilitation Center, Inc.
MHC Rehab. Corp.
MHC Transportation, Inc.
Mystic Nursing & Rehabilitation Center, Inc.
National Health Strategies, Inc.
Park Terrace Nursing & Rehabilitation Center,
Inc.
▇▇▇▇▇▇▇▇▇ Nursing & Rehabilitation Center,
Inc.
Pinnacle Care Corporation
Pinnacle Care Corporation of Huntington
Pinnacle Care Corporation of Nashville
Pinnacle Care Corporation of Seneca
Pinnacle Care Corporation of Sumter
Pinnacle Care Corporation of ▇▇▇▇▇▇▇▇ Bay
Pinnacle Care Corporation of Wilmington
Pinnacle Care Management Corporation
Pinnacle Pharmaceuticals, Inc.
Pinnacle Pharmaceutical Services, Inc.
Pinnacle Rehabilitation, Inc.
Pinnacle Rehabilitation of Missouri, Inc.
Prism Care Centers, Inc.
Prism Health Group, Inc.
Prism Home Care Company, Inc.
Prism Home Care, Inc.
Prism Home Health Services, Inc.
Prism Hospital Ventures, Inc.
Prism Rehab Systems, Inc.
Regency Health Care Center of Seminole County
Inc.
Sassaquin Nursing & Rehabilitation Center,
Inc.
Tampa Medical Associates, Inc.
The Ocean Pharmacy, Inc.
Tri-State Health Care, Inc.
Windward Health Care, Inc.
By: ________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President for each of the foregoing
Borrowers
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IHS Rehab Partnership, Ltd.
By: Mariner Health Care of Nashville, Inc.,
its General Partner
By:___________________________________
Name:
Title:
Mariner Health Properties IV, Ltd.
By: Mariner Health of Florida, Inc., its
General Partner
By:___________________________________
Name:
Title:
Mariner Health Properties VI, Ltd.
By: Mariner Health of Florida, Inc., its
General Partner
By:___________________________________
Name:
Title:
Seventeenth Street Associates Limited
Partnership
By: Tri-State Health Care, Inc., its General
Partner
By:___________________________________
Name:
Title:
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Allegis Health and Living Center at Heritage
Harbour, L.L.C.
By: Mariner Health of Maryland, Inc., its
General Partner
By:___________________________________
Name:
Title:
Notice Address for each Borrower:
Mariner Post-Accute Network, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Professional Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
K. ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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AGENTS AND LENDERS: PNC Bank, National Association, individually
and as Administrative Agent, Collateral Agent
and LC Issuing Bank
By:___________________________________
Name:
Title:
Notice Address:
One PNC Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Ingersoll
Professional Corporation
One Oxford Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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First Union National Bank,
individually and as Syndication Agent
By:___________________________________
Name:
Title:
Notice Address:
First Union Securities, Inc.
First Union Securities
NC0737
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
Nations Bank Corporate Center
Suite 4200
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-6
[INTENTIONALLY DELETED]
S-7
[INTENTIONALLY DELETED]
S-8
Bank One, N.A., as a Lender
By:___________________________________
Name:
Title:
Notice Address:
American National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Comerica Bank,
as a Lender
By:___________________________________
Name:
Title:
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-10
Credit Lyonnais New York Branch,
as a Lender
By:___________________________________
Name:
Title:
Notice Address:
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇-▇▇▇▇▇▇▇ van Essche
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-11
[INTENTIONALLY DELETED]
S-12
Bank Austria Creditanstalt-Corporate Finance,
Inc.,
as a Lender
By:___________________________________
Name:
Title:
Notice Address:
Two ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
S-13
[INTENTIONALLY DELETED]
S-14