1
EXHIBIT 10.1
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of September 30, 1999 amending the $375,000,000 Amended
and Restated Credit Agreement dated as of April 30, 1998 (the "CREDIT
AGREEMENT") among ▇▇▇▇▇▇▇ ENTERPRISES, INC. (the "BORROWER"), the BANKS listed
therein (the "BANKS"), ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK, as Issuing
Bank (the "ISSUING BANK"), and ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK, as
Agent (the "AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower and certain of its Subsidiaries propose to enter into
a Settlement (the "SETTLEMENT") referred to in the Waiver dated as of June 30,
1999 to the Credit Agreement;
WHEREAS, in connection with its entry into the Settlement, the parties
hereto wish to amend the Credit Agreement as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically defined
herein, each capitalized term used herein which is defined in the Credit
Agreement shall have the meaning assigned to such term in the Credit Agreement.
Each reference to "HEREOF", "HEREUNDER", "HEREIN" and "HEREBY" and each other
similar reference and each reference to "THIS AGREEMENT" and each other similar
reference contained in the Credit Agreement shall from and after the Amendment
No. 1 Effective Date refer to the Credit Agreement as amended and restated
hereby.
SECTION 2. Definitions. Section 1.01 of the Credit Agreement is hereby
amended by:
(a) amending the definition of "ADJUSTED CONSOLIDATED DEBT" to read in its
entirety as follows:
"'ADJUSTED CONSOLIDATED DEBT' means at any date the sum, without
duplication, of (i) all liabilities of the Borrower and its Subsidiaries at
such date of the types classified as "current liabilities: short-term
borrowings", "current liabilities: current portion of long-term
obligations," "long-term obligations" and, to the extent arising out of
claims made by governmental authorities relating to reimbursement
obligations or settlements thereof, "other liabilities and deferred items"
on the consolidated balance sheet included in the Base Financials, (ii) all
guarantees at such date of obligations of other issuers (other than
guarantees outstanding on the Effective Date of obligations outstanding on
the Effective Date, in amounts not in excess of $79,375,000 and reported in
the Base
2
Financials) and (iii) an amount equal to the product of eight multiplied by
the Consolidated Rental Expense for the four fiscal quarters of the
Borrower most recently completed on or prior to such date.";
(b) amending the definition of "BASE FINANCIALS" by deleting each reference
to the year "1997" and substituting therefor a reference to the year "1998";
(c) amending the definition of "Borrower's 1997 Form 10-K" by deleting in
such defined term and in such definition each reference to the year "1997" and
substituting therefor a reference to a reference to the year "1998";
(d) amending the definition of "Financing Documents" by (A) deleting the
word "and" and substituting therefor a comma and (B) inserting at the end of
such definition the phrase ", the Mortgages and the Pledge Agreement"; and
(e) adding the following new definitions in the appropriate alphabetical
order:
"AMENDMENT NO. 1 EFFECTIVE DATE" means the date upon which Amendment
No. 1 to the Credit Agreement dated as of September 30, 1999 became
effective in accordance with its terms.
"ATTRIBUTABLE DEBT" means, on any date, in respect of any lease of the
Borrower or any of its Subsidiaries entered into as part of a Sale and
Leaseback Transaction, (i) if such lease is a lease that is required to be
capitalized in accordance with GAAP, the capitalized amount thereof that
would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP, and (ii) if such lease is not a lease that is
required to be capitalized in accordance with GAAP, the capitalized amount
of the remaining lease payments under such lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with
GAAP if such lease were a lease that is required to be capitalized in
accordance with GAAP.
"BANK OF MONTREAL SYNTHETIC LEASE" means the Amended and Restated
Participation Agreement (the "PARTICIPATION AGREEMENT"), dated as of August
28, 1998, as amended, among certain Subsidiaries of the Borrower, the
Borrower as Representative, Construction Agent and Parent Guarantor
therein, Bank of Montreal Global Capital Solutions, Inc. as Agent Lessor
and Lessor therein, The Long-Term Credit Bank of Japan, Ltd., Los Angeles
Agency, Bank of America National Trust and Savings Associations and Bank of
Montreal as Lenders therein, The Long-Term Credit Bank of Japan, Ltd., Los
Angeles Agency as Arranger therein and Bank of Montreal as Co-Arranger,
Syndication Agent and Administrative Agent for the Lenders therein and the
Operative Documents (as defined in the Participation Agreement).
2
3
"▇▇▇▇▇▇▇ HEALTH" means ▇▇▇▇▇▇▇ Health and Rehabilitation Services,
Inc., a California corporation, and its successors.
"BORROWER'S JUNE 30, 1999 FORM 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended June 30, 1999, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended.
"COLLATERAL" means the property in which the Agent is granted, or is
purported to be granted, a lien or security interest from time to time
under any Security Document, which lien or security interest has not been
released in accordance with the terms hereof or thereof.
"ENCORE FACILITY" means the Term Loan Agreement, dated as of December
30,1985, as amended, among Encore Nursing Center Partners, Ltd. - 85, a New
York limited partnership, ▇▇▇▇▇▇▇ Health, the Borrower and the Bank of New
York.
"FINAL SETTLEMENT" means the execution and delivery of settlement
agreements among the Borrower (and, in some cases, certain of its
Subsidiaries), the United States Department of Health and Human Services
and the United States Department of Justice finally settling the claims and
allegations referred to in the first four paragraphs under "Item 1. Legal
Proceedings" of the Borrower's June 30, 1999 Form 10-Q.
"ISSUER" has the meaning set forth in the Pledge Agreement.
"MORTGAGES" means the deeds of trust relating to the real property
collateral described in Schedule V hereto, in form and substance reasonably
satisfactory to the Agent, in each case as the same may be amended from
time to time.
"OTHER FINANCING AGREEMENTS" means the Bank of Montreal Synthetic
Lease, the PNC Facility and the Encore Facility.
"OTHER FINANCING AGREEMENTS LIENS" means the (i) Liens created under
the mortgages granted by the Borrower and certain of its Subsidiaries in
connection with the Final Settlement to secure the obligations of the
Borrowers and certain of its Subsidiaries under the Other Financing
Agreements; provided that the value (determined on the basis of an amount
equal to (A) annualized Consolidated EBITDA for such property based on the
two consecutive fiscal quarters most recently completed prior to the date
upon which such Liens are granted for which financial statements have been
delivered pursuant to Section 5.01(a) or (b) multiplied by (B) 7) of the
property subject to such Liens shall not exceed (x) in the case of the
Liens securing the Bank of Montreal Synthetic Lease $27,000,000, (y) in the
case of Liens securing the PNC Facility, $47,000,000 and (z) in the case
3
4
of Liens securing the Encore Facility $20,000,000 and (ii) Liens on
property ("SUBSTITUTE COLLATERAL") substituted for property (the "ORIGINAL
COLLATERAL") subject to a Lien referred to in clause (i) above; provided
that (x) such Lien on Substitute Collateral secures the same obligations as
the Lien on the Original Collateral for which it is substituted and (y) the
value (determined on the basis of an amount equal to (A) Consolidated
EBITDA for such Substituted Property for the four consecutive fiscal
quarters most recently completed prior to the date upon which such
substitution is made for which financial statements have been delivered
pursuant to Section 5.01(a) or (b) (or, in the case of any substitution
prior to the delivery of financial statements for the fiscal year ending
December 31, 1999 pursuant to Section 5.01(a), the annualized Consolidated
EBITDA for such Substitute Collateral based on the 1999 fiscal quarters for
which financial statements have been delivered pursuant to Section 5.01(b))
multiplied by (B) 7) of such Substitute Collateral shall not exceed the
value (as so determined) of the Original Collateral for which it is
substituted.
"PERMITTED ENCUMBRANCES" has the meaning set forth in the Mortgages.
"PLEDGE AGREEMENT" means the Pledge Agreement dated as of the Amendment
No. 1 Effective Date among the Borrower, ▇▇▇▇▇▇▇ Health and the Agent,
substantially in the form of Exhibit D hereto, as the same has been or may
be amended from time to time.
"PLEDGED STOCK" has the meaning set forth in the Pledge Agreement.
"PNC FACILITY" means the Amended and Restated Reimbursement Agreement,
dated as of June 20, 1997, as amended, by and among ▇▇▇▇▇▇▇ Health, ▇▇▇▇▇▇▇
Enterprises - Massachusetts, Inc., ▇▇▇▇▇▇▇ Enterprises - Pennsylvania, Inc.
and ▇▇▇▇▇▇▇ Enterprises - Ohio, Inc. as Borrowers therein and PNC Bank,
National Association as the Issuer of Letters of Credit therein.
"SALE AND LEASEBACK TRANSACTION" has the meaning set forth in Section
5.19.
"SECURED OBLIGATIONS" has the meaning set forth in the Pledge
Agreement and the Mortgages.
"SECURED PARTIES" has the meaning set forth in the Pledge Agreement
and the Mortgages.
"SECURITY DOCUMENTS" means the Pledge Agreement and the Mortgages,
together with all related filings, assignments, instruments, mortgages and
other papers.
"SEGREGATED COLLATERAL ACCOUNT" has the meaning set forth in the
Pledge Agreement.
4
5
"UCC" means the Uniform Commercial Code as in effect in the State of
New York.
SECTION 3. Accounting Terms and Determinations. Section 1.02 of the Credit
Agreement is hereby amended by deleting the reference to the year "1997" and
substituting therefor a reference to the year "1998".
SECTION 4. Representations and Warranties. (a) Section 4.02 of the Credit
Agreement is hereby amended by (i) adding immediately after the expression "or
filing" on the fifth line thereof, the parenthetical expression "(other than
filings necessary to perfect the Liens granted by the Security Documents)" and
(ii) adding, at the end thereof, the expression "(except the Liens created
pursuant to the Security Documents)".
(b) Section 4.03 of the Credit Agreement is hereby amended by (i) adding at
the end of the title thereof the phrase "; Liens", (ii) designating the
paragraph immediately following such title as paragraph "(a)" and (iii) adding
immediately after such paragraph the following new paragraph (b):
"(b) The Security Documents create valid security interests in and
Mortgage liens on the Collateral purported to be covered thereby, which
security interests and mortgage liens are and will remain perfected
security interests and mortgage liens, prior to all Liens other than
Permitted Encumbrances, and as to which, in the case of the Pledged Stock,
the Agent has control (within the meaning of Sections 8-110 and 9-115 of
the UCC), subject, in the case of the Pledged Stock, to the Agent's
maintaining possession thereof, and, in the case of the Mortgages, to the
recording of the Mortgages in the county recording offices set forth on
Schedules 1 thereto and the filing of Uniform Commercial Code financing
statements in the Uniform Commercial Code filing offices and county
recording offices set forth or Schedules 2 thereto."
(c) Subsection 4.04(a) of the Credit Agreement is hereby amended by
deleting the reference to the year "1997" and substituting therefor a reference
to the year "1998".
(d) Subsection 4.04(b) of the Credit Agreement is hereby redesignated as
Subsection 4.04(c) and amended to read in its entirety as follows:
"(c) Except for the matters referred to in the first four paragraphs
under "Item 1. Legal Proceedings" in the Borrower's June 30, 1999 Form
10-Q, since December 31, 1998 there has been no material adverse change in
the business, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole."
(e) Section 4.04 of the Credit Agreement is hereby amended by adding,
immediately after Subsection 4.04(a), the following new Subsection 4.04(b):
5
6
"(b) The unaudited consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries as of June 30, 1999 and the related unaudited
consolidated statements of operations, stockholders' equity and cash flows
for the six months then ended, set forth in the Borrower's June 30, 1999
Form 10-Q, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles
applied on a basis consistent with the Base Financials, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for
such six month period (subject to normal year-end adjustments, the absence
of footnote disclosure and condensation pursuant to the rules of the
Securities and Exchange Commission)."
(f) Section 4.05 of the Credit Agreement is hereby amended by substituting
the phrase "1998 Form 10-K or the first four paragraphs under "Item 1. Legal
Proceedings" in the Borrower's June 30, 1999 Form 10-Q" for the phrase "1997
Form 10-K".
(g) Section 4.12 of the Credit Agreement is hereby amended by (i) adding at
the end of the title thereof the phrase "and the Pledge Agreement" and (ii)
inserting immediately following the reference to "Subsidiary Guaranty" the
phrase "or the Pledge Agreement".
(h) Article 4 of the Credit Agreement is hereby amended by adding the
following new Section 4.13 immediately following Section 4.12 of the Credit
Agreement:
"Section 4.13. Year 2000 Compliance. The Borrower has (i) initiated a
review and assessment of all areas within the business and operations of
the Borrower and each of its Subsidiaries (including those areas affected
by suppliers and vendors) that could be adversely affected by the "YEAR
2000 PROBLEM" (that is, the risk that computer applications used by it or
any of its Subsidiaries (or their respective suppliers and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii)
developed a plan and timeline for addressing the Year 2000 Problem on a
timely basis and (iii) to date, implemented such plan in accordance with
such timetable. The Borrower reasonably believes that all computer
applications (including those of suppliers and vendors) that are material
to the business or operations of the Borrower or any of its Subsidiaries
will on a timely basis be able to perform properly date-sensitive functions
for all dates before and from and after January 1, 2000 (that is, be "YEAR
2000 COMPLIANT"), except to the extent that a failure to do so could not
reasonably be expected to have a material adverse effect on the business,
financial position, results of operations or prospects of the Borrower and
its Consolidated Subsidiaries, taken as a whole."
6
7
SECTION 5. Information. Section 5.01(d) of the Credit Agreement is hereby
amended by (i) replacing the word "and" after the expression "5.11" on the fifth
line thereof with a comma and (ii) replacing the word "hereof", following the
expression "5.13" on such fifth line, with the expression ", 5.18 and 5.19
hereof and Section 5(C) of the Pledge Agreement".
SECTION 6. Maintenance of Property; Insurance. Section 5.02(b) of the
Credit Agreement is hereby amended by adding at the end of the first sentence
thereof but before the period the following proviso:
"; provided that physical damage insurance with respect to all real
and personal property subject to a Mortgage shall, subject to reasonable
deductibles, be in an amount sufficient to cover the repair and replacement
cost of all such property and shall include a lenders loss payable
endorsement. The Borrower will furnish to the Banks, upon request from the
Agent, information presented in reasonable detail as to the insurance so
carried."
SECTION 7. Minimum Consolidated Net Worth. Section 5.05 of the Credit
Agreement is hereby amended to read in its entirety as follows:
"Consolidated Net Worth shall be at least 90% of Consolidated Net Worth
at June 30, 1999 plus (i) 50% of the aggregate positive Consolidated Net
Income (excluding any consolidated net loss) of the Borrower and its
Consolidated Subsidiaries for each fiscal quarter ending after June 30,
1999 plus (ii) 50% of the aggregate net proceeds, including the fair market
value of property other than cash (as determined in good faith by the
Borrower's board of directors), received by the Borrower from the issuance
and sale after June 30, 1999 of any capital stock of the Borrower (other
than the proceeds of any issuance and sale of any capital stock (x) to a
Subsidiary or (y) which is required to be redeemed, or is redeemable at the
option of the holder, if certain events or conditions occur or exist or
otherwise) or in connection with the conversion or exchange of any Debt of
the Borrower into capital stock of the Borrower after June 30, 1999.".
SECTION 8. Fixed Charge Coverage Ratio. Section 5.06 of the Credit
Agreement is hereby amended by (i) deleting the phrase "the ratio set forth
below opposite the period in which such date falls:" and substituting therefor
the phrase "1.15 to 1.0." and (ii) deleting the table set forth therein.
7
8
SECTION 9. Leverage Ratio. Section 5.07 of the Credit Agreement is hereby
amended by (i) inserting immediately before the reference to "EBITDAR" the word
"Consolidated" and (ii) deleting the table set forth therein and substituting
therefor the following table:
Period Ratio
------ -----
------------------------------------------------------------------------------------------------
Amendment No. 1 Effective Date through September 29, 2000 ........................ 5.75 to 1.0
------------------------------------------------------------------------------------------------
September 30, 2000 and thereafter ................................................ 5.50 to 1.0
------------------------------------------------------------------------------------------------
SECTION 10. Restricted Payments on Stock. Clause (v) of the proviso in
Section 5.10 of the Credit Agreement is hereby amended to read in its entirety
as follows:
"(v) the Borrower may make any such payment or distribution if, after
giving effect thereto, the aggregate amount of all such payments or
distributions made after the Amendment No. 1 Effective Date (including,
without limitation, any such payments or distributions permitted under
subclause (ii)(A) or clause (iv) above) does not exceed (A) on any date on
and after the Final Settlement on which (x) no Event of Default shall have
occurred and be continuing or shall result from such payment and (y) the
ratio of (x) Adjusted Consolidated Debt to (y) Consolidated EBITDAR is (I)
less than 5.00 to 1.00 but not less than 4.75 to 1.00, $25,000,000, (II)
less than 4.75 to 1.00 but not less than 4.50 to 1.00, $30,000,000, and
(III) less than 4.50 to 1.00, $40,000,000 and (B) on any other date,
$10,000,000."
SECTION 11. Negative Pledge. Section 5.11 of the Credit Agreement is hereby
amended by:
(a) inserting, prior to the existing paragraph thereof, the expression
"(a)";
(b) adding, at the end of clause (i) thereof, the expression "and Liens
(other than Liens of the types referred to in clauses (v), (vi), (viii) (to the
extent such Liens constitute refinancing of Liens permitted under such clauses
(v) and (vi)) or (xi)) existing on the Amendment No. 1 Effective Date securing
Debt and other obligations outstanding on the Amendment No. 1 Effective Date".
(c) replacing the amount "$50,000,000" in clauses (xii) and (xiii) thereof
with the amount "$25,000,000";
(d) deleting the word "and" at the end of clause (xii) thereof;
(e) replacing the period at the end of clause (xiii) thereof with a
semicolon;
(f) adding a new clause (xiv) to read in its entirety "(xiv) Liens created
under the Security Documents; and";
8
9
(g) adding a new clause (xv) to read in its entirety "(xv) the Other
Financing Agreements Liens."; and
(h) adding a new clause (b) at the end thereof, to read in its entirety as
follows:
"(b) The Borrower will not permit any Issuer or any Subsidiary of an
Issuer to create, assume or suffer to exist any Lien on any asset now owned
or hereafter acquired by it except (i) Liens permitted by clauses (i),
(ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xiv) and (xv) of
Section 5.11(a) above, (ii) Liens on nursing homes and related real estate
improvements and equipment of Issuers and their Subsidiaries ("PLEDGED
SUBSIDIARY MORTGAGE ASSETS") given in substitution for Liens on Pledged
Subsidiary Mortgage Assets incurred pursuant to this clause (ii) or clause
(iii) below, provided that the sum of (A) the excess of the Appraised Value
of all Pledged Subsidiary Mortgage Assets subjected to Liens pursuant to
this clause (ii) on or after the Amendment No. 1 Effective Date over the
Appraised Value of all such Pledged Subsidiary Mortgage Assets released
from Liens on or after the Amendment No. 1 Effective Date and (B) all Debt
incurred after the Amendment No. 1 Effective Date and secured by Liens
permitted under clause (iii) below shall not at any time exceed $25,000,000
and (iii) Liens not otherwise permitted under clauses (i) and (ii) of this
subsection (b), provided, that the sum of the amounts set forth in
subclause (A) of clause (ii) above and the aggregate principal amount of
all Debt incurred after the Amendment No. 1 Effective Date and secured by
Liens permitted under this clause (iii) shall not exceed $25,000,000.".
SECTION 12. Incurrence of Debt. (a) Subsection 5.13(i) of the Credit
Agreement is hereby amended by adding, at the end thereof but before the
semicolon, the expression "and Debt (other than Debt of the types referred to in
clauses (ii) through (xii) hereof) outstanding on the Amendment No. 1 Effective
Date".
(b) (i) Subsection 5.13(vi) of the Credit Agreement is hereby amended by
deleting the reference to the amount $150,000,000 and substituting therefor a
reference to the amount "$100,000,000".
(ii) Subsection 5.13(xiii) of the Credit Agreement is hereby amended
by deleting the reference to the amount "$75,000,000" and substituting
therefor a reference to the amount "$20,000,000".
(c) Section 5.13 of the Credit Agreement is hereby amended by (i) inserting
the subsection designation "(a)" immediately after the title thereof and (ii)
adding the following new Subsection (b) at the end of Section 5.13:
"(b) The Borrower will not permit any Issuer or any Subsidiary of any
Issuer to incur, assume or suffer to exist Debt other than (A) Debt
permitted under clauses (i), (ii) (but only to the extent that the Lease
Cancellation Payments relate
9
10
to a facility operated by any such Issuer or Subsidiary), (iii), (iv), (v)
(to the extent the Refinanced Debt referred to therein is Debt referred to
in clauses (i), (ii) (but only to the extent that the Lease Cancellation
Payments relate to a facility operated by any such Issuer or Subsidiary),
(iii) and (iv)), (vi), (vii), (viii), (ix), (x), (xi) (but only to the
extent that the assets acquired, constructed or approved with the proceeds
of such Debt are assets of such Issuer or such Subsidiary) and (xiii) of
subsection 5.13(a) above; provided that the aggregate principal amount of
Debt of such Issuers and Subsidiaries permitted under clauses (viii) (other
than guarantees by an Issuer or any of its Subsidiaries of Debt of an
Issuer or any of its Subsidiaries) and (xiii) shall not exceed, in the
aggregate, $20,000,000 and (B) guarantees of obligations of Subsidiaries of
the Borrower, which obligations are permitted under clause (xi) of Section
5.13(a) above and arise under any of the Other Financing Agreements and
refinancings, extensions, replacements and increases of any of the
foregoing, provided that the aggregate principal amount of Debt permitted
under this clause (B) may not exceed $178,000,000.".
SECTION 13. Consolidated Capital Expenditures. Article 5 of the Credit
Agreement is hereby amended by adding, immediately after Section 5.17, new
Sections 5.18, 5.19 and 5.20, to read in their entirety as follows:
"SECTION 5.18. Consolidated Gross Capital Expenditures. Consolidated
Gross Capital Expenditures will not, for any of the fiscal years set forth
below, exceed the amount indicated opposite such fiscal year:
Fiscal Year Ending Amount
------------------ ------
--------------------------------------------------------------------------------
December 31, 1999 $120,000,000
--------------------------------------------------------------------------------
December 31, 2000 $120,000,000
--------------------------------------------------------------------------------
December 31, 2001 $125,000,000
--------------------------------------------------------------------------------
To the extent that Consolidated Gross Capital Expenditures for any fiscal
year set forth above are less than the applicable amount specified in the
table, the difference may be carried forward to the next fiscal year (and
for this purpose, Consolidated Gross Capital Expenditures in any subsequent
fiscal year shall be applied, first, to any such carry-forward amount and,
second, to the specified amount for such year).
SECTION 5.19. Sale and Leaseback Transactions. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or
hereafter acquired, which property has been owned by the Borrower and its
Subsidiaries for more than 180 days, and
10
11
thereafter rent or lease such property or other property that it intends to
use for substantially the same purpose or purposes as the property sold or
transferred (each, a "SALE AND LEASEBACK TRANSACTION"), except for Sale and
Leaseback Transactions the aggregate amount of Attributable Debt in respect
of which does not exceed $20,000,000 at any time outstanding.
Section 5.20. Mortgages. On or prior to the date (the "MORTGAGE DUE
DATE") that is on or prior to October 31, 1999,
(a) each party to any Mortgage shall have delivered to the Agent
duly executed counterparts of each Mortgage to which it is a party;
(b) the Borrower shall deliver, or cause to be delivered, to the
Agent legal opinions of local counsel reasonably satisfactory to the
Agent with respect to each of the Mortgages, which legal opinions
shall be in form and in substance reasonably satisfactory to the
Agent;
(c) the Borrower shall deliver, or cause to be delivered, to the
Agent evidence satisfactory to the Agent that such action (including,
without limitation, the filing of appropriately completed and duly
executed Uniform Commercial Code financing statements and the
recording of Mortgages) as may be necessary or as the Agent shall have
reasonably requested to perfect the Liens created pursuant to the
Mortgages shall have been taken, or that arrangements therefor
satisfactory to the Agent shall have been made;
(d) the Borrower shall deliver, or cause to be delivered, to the
Agent policies of title insurance (or commitments therefor with all
conditions marked satisfied), in form and substance satisfactory to
the Agent and issued by an insurance company or companies as are
acceptable to the Agent (the "TIC"), insuring the perfection,
enforceability and priority of the Liens created under the Mortgages
in amounts acceptable to the Agent, subject only to prior liens
permitted by the applicable Mortgage and to such exceptions as are
satisfactory to the Agent, containing such endorsements and
affirmative assurances as have been previously agreed to by, or are
otherwise satisfactory to, the Agent, and reinsured in amounts and
under reinsurance agreements in form and substance satisfactory to the
Agent; and the Borrower shall have paid or made arrangements
satisfactory to the Agent to pay to the TIC all expenses and premiums
of the TIC in connection with the issuance of such policies and in
addition shall have paid or made arrangements satisfactory to the
Agent to pay to the TIC an amount equal to the recording and stamp
taxes payable in connection with recording the Mortgages in the
appropriate county land offices;
11
12
(e) the Borrower shall deliver, or cause to be delivered, to the
Agent copies of file search reports from the Uniform Commercial Code
filing office in each jurisdiction (i) in which is located any
Collateral (other than Pledged Stock) or (ii) in which is located the
chief executive office of any Subsidiary of the Borrower that owns or
holds any right, title or interest in any property that constitutes
Collateral (other than the Pledged Stock), setting forth the results
of Uniform Commercial Code file searches conducted in the name of the
Borrower or such Subsidiary, as the case may be;
(f) the Borrower shall deliver, or cause to be delivered, to the
Agent all documents the Agent may reasonably request relating to the
existence of each Subsidiary of the Borrower party to any Mortgage,
the corporate authority for and the validity of the Mortgages, and any
other matters relevant thereto, all in form and substance satisfactory
to the Agent; and
(g) the Borrower shall have paid all other costs, fees and
expenses (including, without limitation, reasonable legal fees and
expenses), and other compensation payable to the Agent with respect to
the Mortgages, in each case invoiced prior to the Mortgage Due Date.".
SECTION 14. Events of Default. (a) Section 6.01 of the Credit Agreement is
amended by:
(i) replacing the word "or" on the second line of clause (b) thereof
with a comma;
(ii) adding, following the expression "5.16" on the second line of
clause (b) thereof, the expression "5.18, 5.19 or 5.20";
(iii) deleting the word "or" at the end of subsection (k); and
(iv) inserting immediately after Subsection (l), the following new
subsections (m), (n) and (o):
"(m) the Borrower or any of the Borrower's Subsidiaries party thereto
shall fail to observe or perform any of its obligations under any of the
Security Documents within any applicable grace period;
(n)(i) the Security Documents shall at any time after the Amendment
No. 1 Effective Date (or, in the case of any Mortgage, the date upon which
such Mortgage is executed and delivered in accordance with Section 5.20),
for any reason (other than solely due to actions taken by the Agent or any
Bank) fail to create Liens in favor of the Secured Parties on the
Collateral, securing all of the Secured Obligations purported to be secured
thereby, and as to which, in the case of Pledged Stock, the Agent has
control (within the meaning of Sections 8-110
12
13
and 9-115 of the UCC), subject to no other Liens other than, in the case of
Collateral covered by any Mortgage, Permitted Encumbrances, or, in the case
of any Collateral other than Pledged Stock, Liens permitted under Section
5.11(a)(x) as to which the Liens created under the Security Documents have
priority; (ii) in the case of Collateral consisting of Pledged Stock, at
any time after the Amendment No. 1 Effective Date, such Liens shall fail to
be perfected or the Agent shall fail to have control (within the meaning of
Sections 8-110 and 9-115 of the UCC) of such Pledged Stock or (iii) in the
case of Collateral not constituting Pledged Stock, at any time after the
filing of the Mortgages and UCC financing statements delivered by the
Borrower and its Subsidiaries to the Agent pursuant to Section 5.20 in the
recording or filing offices indicated thereon, such Liens shall fail to be
perfected; or
(o) the terms of the Final Settlement shall require payments by the
Borrower and its Subsidiaries to the United States Federal government and
agencies and instrumentalities thereof (i) in the aggregate in excess of
$225,000,000, (ii) up-front in excess of $30,000,000 or (iii) with a final
maturity of less than eight (8) years;"
SECTION 15. Indemnification. Section 9.03(a) of the Credit Agreement is
hereby amended by (i) inserting immediately after the word "against" in the last
sentence thereof the clause designation "(A)" and (ii) adding at the end of such
sentence but before the period the following phrase:
", (B) all costs, expenses and taxes, assessments or other charges
incurred in connection with any filing, registration, recording or
perfection of any Lien contemplated by any of the Financing Documents or
any document referred to therein or the filing or recording of any
termination statement with respect to the release of any Lien on any
Collateral and (C) all costs, expenses and other charges in respect of
title insurance procured with respect to the Liens created pursuant to the
Mortgages".
SECTION 16. Amendments and Waivers. Section 9.05 of the Credit Agreement is
hereby amended by (i) replacing the word "or" at the end of clause (iv) thereof
with a comma and (ii) inserting, immediately after clause (v) thereof but before
the period, the following expression:
"or (vi) agree to release all or substantially all of the Collateral".
SECTION 17. Consent to Execution and Deliver of Certain Financing
Documents. Section 9.09 of the Credit Agreement is hereby amended by (i)
deleting the phrase "; Release of Existing Collateral" in the title of such
Section, (ii) deleting the subsection designation "(a)" immediately after the
title of such Section, (iii) adding, at the end of the first sentence of such
Section but before the period, the expression ", each of the Mortgages and the
Pledge Agreement" and (iv) deleting in its entirety subsection (b) thereof.
13
14
SECTION 18. Counterparts; Integration. Section 9.10 of the Credit Agreement
is hereby amended by (i) deleting the word "and" immediately after the word
"Notes" and substituting therefor a comma and (ii) inserting immediately after
the reference to "Subsidiary Guaranty" the phrase ", the Pledge Agreement and
the Mortgages".
SECTION 19. Amendments to Pricing Schedule. Schedule I of the Credit
Agreement is hereby replaced in its entirety by Schedule I hereto.
SECTION 20. Additional Schedule and Exhibits. Schedule V and Exhibit D
hereto are hereby added as Schedule V and Exhibit D to the Credit Agreement.
SECTION 21. New Subsidiary Guarantors. Each Subsidiary of the Borrower
listed as a "New Subsidiary Guarantor" on the signature pages hereof (each a
"NEW SUBSIDIARY GUARANTOR") hereby agrees that, as of the Amendment No. 1
Effective Date, such New Subsidiary Guarantor shall be a party to the Subsidiary
Guaranty and shall be bound for all purposes by the obligations of a Subsidiary
Guarantor set forth therein as if each such New Subsidiary Guarantor was an
original party to the Subsidiary Guaranty. In addition, the Borrower agrees it
shall cause each New Subsidiary Guarantor to sign and deliver to the Agent an
originally executed Subsidiary Guaranty no later than the Mortgage Due Date.
SECTION 22. Representations and Warranties. The Borrower represents and
warrants that as of the date hereof and after giving effect hereto:
(i) no Default has occurred and is continuing; and
(ii) each representation and warranty of the Borrower set forth in the
Credit Agreement after giving effect to this Amendment is true and correct
as though made on and as of such date.
SECTION 23. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 24. Counterparts; Effectiveness. This Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective on the date upon which each of the
following conditions shall have been satisfied (the "AMENDMENT NO. 1 EFFECTIVE
DATE"):
(i) the Agent shall have received duly executed counterparts hereof
signed by the Borrower, the Subsidiary Guarantors, the Agent and the
Required Banks (or, in the case of any party as to which an executed
counterpart shall not have been received, the Agent shall have received
telegraphic, telex or other written confirmation from such party of
execution of a counterpart hereof by such party);
14
15
(ii) the Agent shall have received, for the ratable accounts of the
Banks, a fee in an amount equal to 0.20% of the aggregate Commitments.
(iii) the Agent shall have received duly executed counterparts of the
Pledge Agreement signed by each of the parties thereto (or, in the case of
any such party as to which an executed counterpart shall not have been
received, receipt by the Agent in form satisfactory to it of telegraphic,
telex, facsimile transmission or other written confirmation from such party
of execution of a counterpart thereof by such party), together with all
certificates evidencing Pledged Stock required to be delivered thereunder;
(iv) the Agent shall have received, with sufficient copies for each
Bank, opinions of Weil, Gotshal & ▇▇▇▇▇▇ LLP, special New York counsel to
the Borrower, and the Vice President and Deputy General Counsel of the
Borrower, substantially in the forms of Exhibit A hereto and in each case
covering such other matters relating to the Amendment and the Pledge
Agreement as the Agent may reasonably request;
(v) the Agent shall have received a certificate signed by the chief
financial officer or treasurer of the Borrower to the effect set forth in
clauses (viii) and (ix) of this Section 24;
(vi) the Agent shall have received evidence satisfactory to it that
such action (including, without limitation, the filing of appropriately
completed and duly executed Uniform Commercial Code financing statements)
as may be necessary or as the Agent shall have reasonably requested to
perfect the Liens created pursuant to the Pledge Agreement shall have been
taken, or that arrangements therefor satisfactory to the Agent shall have
been made;
(vii) the Agent shall have received all documents it may reasonably
request relating to the existence of the Borrower and each of its
Subsidiaries party to any Financing Document, the corporate authority for
and the validity of the Financing Documents, and any other matters relevant
thereto, all in form and substance satisfactory to the Agent;
(viii) the fact that, immediately after the effectiveness of this
Amendment, no Default shall have occurred and be continuing;
(ix) the fact that the representations and warranties of the Borrower
or any of its Subsidiaries contained in the Financing Documents shall be
true in all material respects on and as of the Amendment No. 1 Effective
Date after giving effect to this Amendment;
15
16
(x) the Agent shall have received copies of all amendments, waivers
and other modifications entered into in connection with the Final
Settlement to any documents (other than the Financing Documents) under
which the Borrower and any of its Subsidiaries has or may incur Debt, in
each case in form and substance satisfactory to the Required Banks in their
sole discretion; and
(xi) the Agent shall have received payment of all other costs, fees
and expenses (including, without limitation, reasonable legal fees and
expenses), and other compensation payable to the Agent on or prior to the
Amendment No. 1 Effective Date in connection with this Amendment, in each
case invoiced prior to the Amendment No. 1 Effective Date.
The Agent shall promptly notify the Borrower and the Banks of the effectiveness
of this Amendment, and such notice shall be conclusive and binding on all
parties hereto.
16
17
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
▇▇▇▇▇▇▇ ENTERPRISES, INC.
By:
------------------------------
Title:
▇▇▇▇▇
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK
By:
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By:
------------------------------
Name:
Title:
BANK OF AMERICA, N.A.
By:
------------------------------
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
By:
------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA, ATLANTA AGENCY
By:
------------------------------
Name:
Title:
PNC BANK, N.A.
By:
------------------------------
Name:
Title:
BANK OF MONTREAL
By:
------------------------------
Name:
Title:
BANK OF HAWAII
By:
------------------------------
Name:
Title:
19
BHF (USA) CAPITAL CORPORATION
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
------------------------------
Name:
Title:
20
AGENT
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By:
------------------------------
Name:
Title:
ISSUING BANK
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK, as Issuing Bank
By:
------------------------------
Name:
Title:
21
NEW SUBSIDIARY GUARANTORS
Associated Physical Therapy Practitioners, Inc.
▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇ Holdings, Inc.
▇▇▇▇▇▇▇ - Indianapolis, LLC
▇▇▇▇▇▇▇ - Plant City Holdings, Inc.
▇▇▇▇▇▇▇ - Tamarac Holdings, Inc.
▇▇▇▇▇▇▇ - Tampa Holdings, Inc.
▇▇▇▇▇▇▇ Clinical, Inc.
▇▇▇▇▇▇▇ Healthcare, LLC
▇▇▇▇▇▇▇ Healthcare - California, Inc.
▇▇▇▇▇▇▇ Rehabilitation, Inc.
Carrollton Physical Therapy Clinic, Inc.
Greenville Rehabilitation Services, Inc.
Home Health and Rehabilitation Services, Inc.
Las Colinas Physical Therapy, Inc.
Network for Physical Therapy, Inc.
North Dallas Physical Therapy Associates, Inc.
PT NET, Inc.
PT Net (Colorado), Inc.
Rehabilitation Associates of Lafayette, Inc.
The Parks Physical Therapy and Work Hardening Center, Inc.
Theraphysics Corp.
Theraphysics of New York IPA, Inc.
Theraphysics Partners of Colorado, Inc.
Theraphysics Partners of Louisiana, Inc.
Theraphysics Partners of Western Pennsylvania, Inc.
Theraphysics Partners of Texas, Inc.
All by
----------------------------------
Name:
Title:
22
The undersigned Subsidiary Guarantors each
hereby consents to the foregoing Amendment:
SUBSIDIARY GUARANTORS
A-1 Home Health Services, Inc.
AGI-Camelot, Inc.
Arborland Management Company, Inc.
▇▇▇▇▇▇▇ Assisted Living, Inc.
▇▇▇▇▇▇▇ - ▇▇▇▇▇ Vista Holding, Inc.
▇▇▇▇▇▇▇ - Missouri Valley Holding, Inc.
▇▇▇▇▇▇▇ - Rapid City Holding, Inc.
▇▇▇▇▇▇▇ Enterprises International Limited
▇▇▇▇▇▇▇ Enterprises - Alabama, Inc.
▇▇▇▇▇▇▇ Enterprises - Arizona, Inc.
▇▇▇▇▇▇▇ Enterprises - Arkansas, Inc.
▇▇▇▇▇▇▇ Enterprises - California, Inc.
▇▇▇▇▇▇▇ Enterprises - Colorado, Inc.
▇▇▇▇▇▇▇ Enterprises - Connecticut, Inc.
▇▇▇▇▇▇▇ Enterprises - Delaware, Inc.
▇▇▇▇▇▇▇ Enterprises - Distribution Services, Inc
▇▇▇▇▇▇▇ Enterprises - District of Columbia, Inc.
▇▇▇▇▇▇▇ Enterprises - Florida, Inc.
▇▇▇▇▇▇▇ Enterprises - Garden Terrace, Inc.
▇▇▇▇▇▇▇ Enterprises - Georgia, Inc.
▇▇▇▇▇▇▇ Enterprises - Hawaii, Inc.
▇▇▇▇▇▇▇ Enterprises - Idaho, Inc.
▇▇▇▇▇▇▇ Enterprises - Illinois, Inc.
▇▇▇▇▇▇▇ Enterprises - Indiana, Inc.
▇▇▇▇▇▇▇ Enterprises - Iowa, Inc.
▇▇▇▇▇▇▇ Enterprises - Kansas, Inc.
▇▇▇▇▇▇▇ Enterprises - Kentucky, Inc.
▇▇▇▇▇▇▇ Enterprises - Louisiana, Inc.
▇▇▇▇▇▇▇ Enterprises - Maine, Inc.
▇▇▇▇▇▇▇ Enterprises - Maryland, Inc.
▇▇▇▇▇▇▇ Enterprises - Massachusetts, Inc.
▇▇▇▇▇▇▇ Enterprises - Michigan, Inc.
▇▇▇▇▇▇▇ Enterprises - Minnesota, Inc.
▇▇▇▇▇▇▇ Enterprises - Mississippi, Inc.
▇▇▇▇▇▇▇ Enterprises - Missouri, Inc.
▇▇▇▇▇▇▇ Enterprises - Montana, Inc.
▇▇▇▇▇▇▇ Enterprises - Nebraska, Inc.
23
▇▇▇▇▇▇▇ Enterprises - Nevada, Inc.
▇▇▇▇▇▇▇ Enterprises - New Hampshire, Inc.
▇▇▇▇▇▇▇ Enterprises - New Jersey, Inc.
▇▇▇▇▇▇▇ Enterprises - New Mexico, Inc.
▇▇▇▇▇▇▇ Enterprises - North Carolina, Inc.
▇▇▇▇▇▇▇ Enterprises - North Dakota, Inc.
▇▇▇▇▇▇▇ Enterprises - Ohio, Inc.
▇▇▇▇▇▇▇ Enterprises - Oklahoma, Inc.
▇▇▇▇▇▇▇ Enterprises - Oregon, Inc.
▇▇▇▇▇▇▇ Enterprises - Pennsylvania, Inc.
▇▇▇▇▇▇▇ Enterprises - Rhode Island, Inc.
▇▇▇▇▇▇▇ Enterprises - South Carolina, Inc.
▇▇▇▇▇▇▇ Enterprises - Tennessee, Inc.
▇▇▇▇▇▇▇ Enterprises - Texas, Inc.
▇▇▇▇▇▇▇ Enterprises - Utah, Inc.
▇▇▇▇▇▇▇ Enterprises - Vermont, Inc.
▇▇▇▇▇▇▇ Enterprises - Virginia, Inc.
▇▇▇▇▇▇▇ Enterprises - Washington, Inc.
▇▇▇▇▇▇▇ Enterprises - West Virginia, Inc.
▇▇▇▇▇▇▇ Enterprises - Wisconsin, Inc.
▇▇▇▇▇▇▇ Enterprises - Wyoming, Inc.
▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc.
▇▇▇▇▇▇▇ Holdings I, Inc.
▇▇▇▇▇▇▇ Indemnity, Ltd.
▇▇▇▇▇▇▇ Manor Inc. of Hawaii
▇▇▇▇▇▇▇ Real Estate Holdings, Inc.
▇▇▇▇▇▇▇ Savana Cay Manor, Inc.
Columbia-Valley Nursing Home, Inc.
Commercial Management, Inc.
Community Care, Inc.
Compassion and Personal Care Services, Inc.
Continental Care Centers of Council Bluffs, Inc.
Eastern Home Health Supply & Equipment Co., Inc.
Forest City Building Ltd.
Hallmark Convalescent Homes, Inc.
HomeCare Preferred Choice, Inc.
Home Technology Healthcare - Mid Cumberland, Inc.
Home Technology Healthcare - Mid South, Inc.
Home Technology Healthcare - Nursing, Inc.
Home Technology Healthcare - St. Louis, Inc.
HTHC Holdings, Inc.
Hospice of Eastern Carolina, Inc.
Hospice Preferred Choice, Inc.
Hospital Facilities Corporation
24
Kenwood View Nursing Home, Inc.
Liberty Nursing Homes, Incorporated
MATRIX Occupational Health, Inc.
MATRIX Rehabilitation, Inc.
Medical Arts Health Facility of Lawrenceville, Inc.
Moderncare of Lumberton, Inc.
Nebraska City S-C-H, Inc.
Nursing Home Operators, Inc.
▇▇▇▇▇▇▇▇ Health Care, Inc.
South Alabama Nursing Home, Inc.
South Dakota - ▇▇▇▇▇▇▇ Enterprises, Inc.
Spectra Healthcare Alliance, Inc.
Tar Heel Holdings, Inc.
Tar Heel Home Health, Inc.
Tar Heel Home Health of Cape Fear, Inc.
Tar Heel Home Health of Dare County, Inc.
Tar Heel Home Health of North Central North Carolina, Inc.
Tar Heel Infusion Company, Inc.
TMD Disposition Company
Vantage Healthcare Corporation
▇▇▇▇▇▇ Home Health Care & Services, Inc.
All by
--------------------------------------
Name:
Title:
25
SCHEDULE I
PRICING SCHEDULE
The "EURO-DOLLAR MARGIN", "CD MARGIN", "BASE RATE MARGIN", "LETTER OF
CREDIT COMMISSION RATE" and "COMMITMENT FEE RATE" for any day are the respective
rates per annum set forth below in the applicable row in the column
corresponding to the Pricing Level that applies on such day:
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ Level V
===========================================================================
Euro-Dollar Margin 1.125 1.375 1.750 2.000 2.250%
---------------------------------------------------------------------------
CD Margin 1.250 1.500 1.875 2.125 2.375%
---------------------------------------------------------------------------
Base Rate Margin 0.125 0.375 0.750 1.000 1.250%
---------------------------------------------------------------------------
Letter of Credit
Commission Rate 1.125 1.375 1.750 2.000 2.250%
---------------------------------------------------------------------------
Commitment Fee Rate 0.250 0.275 0.300 0.350 0.375%
---------------------------------------------------------------------------
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"PRICING RATIO" means the ratio of Adjusted Consolidated Debt to
Consolidated EBITDAR.
"LEVEL I PRICING" applies on any day if, as of the last day of the fiscal
quarter of the Borrower most recently ended on or prior to such day and as to
which the Borrower shall have delivered, or been required to deliver, on or
prior to such day a certificate pursuant to Section 5.01(d), the Pricing Ratio
is less than 3.50 to 1.0.
"LEVEL II PRICING" applies on any day if, as of the last day of the fiscal
quarter of the Borrower most recently ended on or prior to such day and as to
which the Borrower shall have delivered, or been required to deliver, on or
prior to such day a certificate pursuant to Section 5.01(d), (i) the Pricing
Ratio is less than 4.0 to 1.0 and (ii) Level I Pricing does not apply.
26
"LEVEL III PRICING" applies on any day if, as of the last day of the fiscal
quarter of the Borrower most recently ended on or prior to such day and as to
which the Borrower shall have delivered, or been required to deliver, on or
prior to such day a certificate pursuant to Section 5.01(d), (i) the Pricing
Ratio is less than 4.5 to 1.0 and (ii) neither Level I Pricing nor Level II
Pricing applies.
"LEVEL IV PRICING" applies on any day if, as of the last day of the fiscal
quarter of the Borrower most recently ended on or prior to such day and as to
which the Borrower shall have delivered, or been required to deliver, on or
prior to such day a certificate pursuant to Section 5.01(d), (i) the Pricing
Ratio is less than 5.0 to 1.0 and (ii) none of Level I Pricing, Level II Pricing
or Level III Pricing applies.
"LEVEL V PRICING" applies on any day if, on such day, no other Pricing
Level applies.
"PRICING LEVEL" means any one of the five pricing levels denominated Level
I Pricing, Level II Pricing, Level III Pricing, Level IV Pricing or Level V
Pricing.
27
SCHEDULE V
FACILITY NAME ADDRESS COUNTY TOTAL OWNER
# BEDS
------------------------------------------------------------------------------------------------------------------------------------
208 Valley Nursing & ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Auglaize 100 Nursing Home Operators, Inc.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
209 Community Nursing Home ▇▇▇ ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ 100 Nursing Home Operators, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
210 Northcrest Nursing Home ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇▇▇ 100 Nursing Home Operators, Inc.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
261 ▇▇▇▇▇▇▇ Health & Rehab ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 125 ▇▇▇▇▇▇▇ Enterprises-Washington, Inc.
Center-Pasco ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
2132 ▇▇▇▇▇▇ Heights Rehab ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ 91 ▇▇▇▇▇▇▇ Enterprises-Washington, Inc.
▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
2554 ▇▇▇▇'▇ Harbor Health & ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 136 ▇▇▇▇▇▇▇ Enterprises-Washington, Inc.
Rehab Center ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
660 ▇▇▇▇▇▇▇ Manor-Honolulu ▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Manor Inc. of Hawaii
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Nursing ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Health and Rehabilitation Services,
Facility ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Inc.
------------------------------------------------------------------------------------------------------------------------------------
984 ▇▇▇▇▇▇▇ Health & Old Soldiers ▇▇▇▇ ▇▇▇▇▇▇▇▇ 100 Beverly Health and Rehabilitation Services,
Rehab-Frankfort ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Inc.
------------------------------------------------------------------------------------------------------------------------------------
28
EXHIBIT A
OPINION OF SPECIAL NEW YORK COUNSEL
TO THE BORROWER
September 30, 1999
To the Banks, the Issuing
Bank and the Agent
referred to below
c/▇ ▇▇▇▇▇▇ Guaranty Trust
Company of New York, as Agent,
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as special counsel to ▇▇▇▇▇▇▇ Enterprises, Inc., a Delaware
corporation (the "BORROWER"), and certain subsidiaries of the Borrower, in
connection with the preparation, authorization, execution and delivery of, and
the consummation of the transactions contemplated by (i) the Amended and
Restated Credit Agreement, dated as of April 30, 1998, as amended by Amendment
No. 1 to the Credit Agreement dated as of September 30, 1999 ("AMENDMENT NO. 1")
(as so amended, the "CREDIT AGREEMENT"), among the Borrower, the banks listed on
the signature pages thereto (the "BANKS"), ▇▇▇▇▇▇ Guaranty Trust Company of New
York, as Issuing Bank (the "ISSUING BANK"), and ▇▇▇▇▇▇ Guaranty Trust Company of
New York, as Agent (the "AGENT"), and (ii) the Pledge Agreement, dated as of
September 30, 1999 (the "PLEDGE AGREEMENT"), among the Borrower, ▇▇▇▇▇▇▇ Health
and Rehabilitation Services, Inc., a California corporation ("BHRS"), and the
Agent. Amendment No. 1, the Credit Agreement and the Pledge Agreement are
collectively referred to in this opinion as the "FINANCING DOCUMENTS" and the
Borrower, BHRS and the other Subsidiaries of the Borrower party to any Financing
Document are collectively referred to in this opinion as the "LOAN PARTIES".
Capitalized terms defined in the Credit Agreement and used but not otherwise
defined herein are used herein as so defined.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of each of the Financing Documents and such
corporate records, agreements, documents, and other instruments, and such
certificates or comparable documents of public officials and of officers and
representatives of each of the Loan Parties, and have made such inquiries of
such officers and representatives as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
29
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Loan Parties and upon the representations and warranties
of each of the Loan Parties contained in the Financing Documents. We have also
assumed (i) the valid existence of each of the Loan Parties, (ii) that each of
the Loan Parties has the requisite corporate power and authority to enter into
and perform each of the Financing Documents to which it is a party and (iii) the
due authorization, execution and delivery of each of the Financing Documents by
each party thereto.
Based on the foregoing, and subject to the qualifications stated herein, we
are of the opinion that:
1. Each Financing Document constitutes the legal, valid and binding
obligation of each Loan Party which is a party thereto, in each case enforceable
against them in accordance with its terms, and subject to the qualification that
certain remedial provisions of the Pledge Agreement are or may be unenforceable
in whole or in part under the laws of the State of New York, but the inclusion
of such provisions does not affect the validity of the Pledge Agreement, and the
Pledge Agreement contains adequate provisions for the practical realization of
the rights and benefits afforded thereby. No opinion is expressed in this
paragraph as to the attachment, perfection or priority of any liens granted
pursuant to the Financing Documents.
2. Assuming (i) delivery in New York to, and continued possession in
New York by, the Agent (the "PLEDGEE") of all certificates that represent the
Pledged Stock (as defined in the Pledge Agreement), together with stock powers
properly executed in blank with respect thereto, and (ii) that the Pledgee was
without notice of any adverse claim (as such term is defined in Section 8-105 of
the Uniform Commercial Code in effect in the State of New York (the "UCC")) with
respect to the Pledged Stock, the execution and delivery of the Pledge Agreement
creates a valid and duly perfected lien on and security interest in the Pledged
Stock, as security for the Secured Obligations, as defined in the Pledge
Agreement, which is free of any adverse claim and as to which the Pledgee has
control (within the meaning of Section 8-106 of the UCC).
3. The security interests created under the Pledge Agreement validly
secure the Secured Obligations in respect of all future Loans made by the Banks,
and all future Letters of Credit issued by the Issuing Bank, under the Credit
Agreement, whether or not at the time such Loans are made or such Letters of
Credit are issued any Event of Default or other condition or event not within
the control of the Banks or, in the case of Letters of Credit only, the Issuing
Bank, has relieved or may relieve the Banks from their obligations to make such
Loans or the Issuing Bank from its
30
obligations to issue such Letters of Credit, and are perfected to the extent set
forth in paragraph 2 above and have the same priority with respect to Secured
Obligations in respect of future Loans and future Letters of Credit as they do
with respect to Loans made or Letters of Credit issued on the date hereof.
The opinions in paragraphs 2 and 3 are subject to the following exceptions:
A. that with respect to BHRS's rights in or title to the Collateral,
we express no opinion, and have assumed that BHRS has title to the Collateral
pledged by it;
B. that with respect to (i) existing and future federal tax liens
accorded priority under law and (ii) liens created under Title IV of the
Employee Retirement Income Security Act of 1974 which are properly filed after
the date hereof, we express no opinion as to the relative priority of such liens
and the security interests created by the Pledge Agreement; and
C. that with respect to any claim (including for taxes) in favor of any
state or any of its respective agencies, authorities, municipalities or
political subdivisions which claim is given lien status and/or priority under
any law of such state, we express no opinion as to the relative priority of such
liens and the security interests created by the Pledge Agreement.
In addition, the opinions in paragraphs 2 and 3 are subject to (i) the
limitations on perfection of security interests in proceeds resulting from the
operation of Section 9-306 of the UCC; (ii) the limitations with respect to
buyers in the ordinary course of business imposed by Sections 9-307 and 9-308 of
the UCC; (iii) the limitations with respect to documents, instruments and
securities imposed by Sections 8-302, 9-304 and 9-309 of the UCC; (iv) the
provisions of Section 9-203 of the UCC relating to the time of attachment; and
(v) Section 552 of Title 11 of the United States Code (the "BANKRUPTCY CODE")
with respect to any Collateral acquired by BHRS subsequent to the commencement
of a case against or by BHRS under the Bankruptcy Code.
4. No New York or Federal governmental registration, recordation or
filing by any Loan Party is required in connection with the execution or
delivery of the Financing Documents or is necessary for the validity or
enforceability thereof.
5. The execution and delivery of the Financing Documents, the
consummation of the transactions contemplated thereby and compliance by each
Loan Party party thereto with any of the provisions thereof will not conflict
with, constitute a default under, or violate any of the terms, conditions or
provisions of the Senior Note Agreement on the date hereof.
The opinions expressed above are subject to the following comments and
qualifications.
The opinions set forth above are subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting
31
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
We wish to point out that provisions of the Financing Documents that permit
any party to take action or make determinations or benefit from indemnities and
similar undertakings may be subject to a requirement that such action be taken
or such determinations be made, or that any action or inaction by any party that
may give rise to a request for payment under such undertaking be taken or not
taken, as the case may be, on a reasonable basis and in good faith.
The opinions expressed herein are limited to the laws of the State of New
York and the federal laws of the United States, and we express no opinion as to
the effect on the matters covered by this letter of the laws of any other
jurisdiction.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. Those opinions are delivered
to you pursuant to Section 24 of Amendment No. 1 and may not be used or relied
upon by any other person (other than a Participant or Assignee permitted under
Section 9.06 of the Credit Agreement), nor may this letter or any copies hereof
be furnished to a third party (other than any such Participant or Assignee or
prospective Participant or Assignee), filed with a governmental agency, quoted,
cited or otherwise referred to without our prior written consent.
Very truly yours,
32
OPINION OF VICE PRESIDENT AND
DEPUTY GENERAL COUNSEL OF THE BORROWER
September 30, 1999
To the Banks, the Issuing
Bank and the Agent
referred to below
c/▇ ▇▇▇▇▇▇ Guaranty Trust Company
of New York, as Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I am Vice President, Deputy General Counsel and Assistant Secretary of
▇▇▇▇▇▇▇ Enterprises, Inc., a Delaware corporation (the "BORROWER"), and have
acted as counsel for the Borrower and the Subsidiaries of the Borrower in
connection with the preparation, authorization, execution and delivery of, and
the consummation of the transactions contemplated by (i) the Amended and
Restated Credit Agreement, dated as of April 30, 1998, as amended by Amendment
No. 1 to the Credit Agreement dated as of September 30, 1999 ("AMENDMENT NO. 1")
(as so amended, the "CREDIT AGREEMENT"), among the Borrower, the banks listed on
the signature pages thereto (the "BANKS"), ▇▇▇▇▇▇ Guaranty Trust Company of New
York, as Issuing Bank (the "ISSUING BANK"), and ▇▇▇▇▇▇ Guaranty Trust Company of
New York, as Agent (the "AGENT"), and (ii) the Pledge Agreement, dated as of
September 30, 1999 (the "PLEDGE AGREEMENT"), among the Borrower, ▇▇▇▇▇▇▇ Health
and Rehabilitation Services, Inc., a California corporation, and the Agent.
Amendment No. 1, the Credit Agreement and the Pledge Agreement are collectively
referred to in this opinion as the "FINANCING DOCUMENTS" and the Borrower and
its Subsidiaries party to any Financing Document are collectively referred to in
this opinion as the "LOAN PARTIES". Capitalized terms defined in the Credit
Agreement and used but not otherwise defined herein are used herein as so
defined.
I, or other lawyers in the law department of the Borrower under my
supervision, have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and officers of the Loan Parties and other
instruments as I have deemed appropriate and, subject to the limitations
expressed below, have conducted such other investigations of fact and law as I
have deemed necessary or advisable for purposes of this opinion. I have assumed
the due authorization, execution and delivery of the documents referred to in
paragraph 2 below by each party thereto other than the Loan Parties.
33
I am opining herein only to the application of United States Federal law
and the General Corporation Law of the State of Delaware. Based upon the
foregoing, I am of the opinion that:
1. Each Loan Party is a corporation duly incorporated, validly existing
and in good standing under the laws of its state of incorporation, and has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted except where the
failure to obtain such governmental licenses, authorizations, consents and
approvals would not, in my reasonable judgment, have a material adverse effect
on the consolidated financial position of the Borrower and its Consolidated
Subsidiaries.
2. The execution, delivery and performance by each Loan Party of each
Financing Document to which it is a party (i) are within the corporate powers of
such Loan Party and have been duly authorized by all necessary corporate action
of such Loan Party, (ii) except for the filing and recording necessary to
perfect a Lien or security interest in the Collateral, require no action by or
in respect of, or filing with, any governmental body, agency or official by any
Loan Party, (iii) do not contravene the certificate of incorporation or by-laws
of any Loan Party, (iv) to the best of my knowledge, do not contravene any
material provision of law or regulation applicable to any Loan Party, (v) to the
best of my knowledge, do not contravene or constitute a default under any
agreement, judgment, injunction, order, decree or other instrument that is
material individually or in the aggregate and that is binding upon any Loan
Party, and (vi) to the best of my knowledge, will not result in the creation or
imposition of any Lien on any asset of any Loan Party (except the Liens created
or to be created pursuant to the Pledge Agreement).
3. Each Loan Party owns the Pledged Stock delivered by it pursuant to
the Pledge Agreement, free and clear of all Liens (other than Liens created or
to be created pursuant to the Pledge Agreement).
4. Except as disclosed in the Borrower's 1998 Form 10-K or the
Borrower's June 30, 1999 Form 10-Q, to the best of my knowledge, there is no
action, suit or proceeding pending against, or threatened against or affecting,
any Loan Party before any court or arbitrator or any governmental body, agency
or official in which, in my judgment, there is a reasonable possibility of an
adverse decision which could materially adversely affect the business,
consolidated financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries or which in any manner draws into
question the validity of any of the Financing Documents.
The opinions expressed above should be read in conjunction with the
following:
(A) The opinion expressed in paragraph 1 above as to due incorporation,
valid existence, good standing and corporate power, and the opinion expressed in
clauses (i) and (iii) of paragraph 2 above as to corporate powers and
non-contravention of the certificate of incorporation or by-laws, insofar as
such opinions apply to Subsidiaries of the Borrower that are incorporated under
the laws of any jurisdiction other than
34
the State of Delaware, is based upon my general knowledge and experience rather
than upon the opinions or advice of counsel licensed to practice law in
jurisdictions other than the State of Delaware.
(B) The opinion as to governmental licenses, governmental
authorizations, governmental consents and governmental approvals expressed in
paragraph 1 above is based upon my general knowledge and experience rather than
upon the opinions or advice of counsel licensed to practice law in the
applicable jurisdictions.
(C) The opinions as to filings and actions, contravention of law and
creation or imposition of Liens expressed in clauses (ii), (iv) and (vi) of
paragraph 2 are based upon my general knowledge and experience and are to the
best of my knowledge rather than based upon the opinions or advice of counsel
licensed to practice law in the applicable jurisdictions.
(D) Please be advised that several of the instruments described in
clause (v) of paragraph 2 provide that they are governed by the laws of
jurisdictions in which I am not licensed to practice law. I have not obtained
opinions or advice of counsel licensed to practice law in these jurisdictions in
rendering the opinion expressed in clause (v) of paragraph 2. I am not aware of
any provision in the instruments described in clause (v) of paragraph 2 which
the execution, delivery or performance of the Financing Documents would violate.
Please be further advised that there may be law or other precedent in
jurisdictions governing such documents which would expand or contradict the
plain meaning of the language contained in the documents.
In giving the foregoing opinions, I express no opinion as to the effect (if
any) of any law of any jurisdiction in which any Bank is located which limits
the rate of interest that such Bank may charge or collect.
This opinion is delivered to you pursuant to Section 24 of Amendment
No. 1 and is not to be used, quoted or relied upon by any other person or entity
(other than Participants and Assignees permitted under Section 9.06 of the
Credit Agreement), without my prior written consent.
Very truly yours,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Vice President,
Deputy General Counsel and
Assistant Secretary
35
EXHIBIT D
FORM OF PLEDGE AGREEMENT
AGREEMENT dated as of September 30, 1999 among ▇▇▇▇▇▇▇ ENTERPRISES, INC., a
Delaware corporation (the "BORROWER"), ▇▇▇▇▇▇▇ HEALTH AND REHABILITATION
SERVICES, INC., a California corporation (the "PLEDGOR"), and ▇▇▇▇▇▇ Guaranty
Trust Company of New York, as Agent (the "AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower, certain banks (the "BANKS"), ▇▇▇▇▇▇ Guaranty Trust
Company of New York, as issuing bank (the "ISSUING BANK"), and the Agent have
entered into an Amended and Restated Credit Agreement dated as of April 30,
1998, as amended by Amendment No. 1 dated as of September 30, 1999 ("AMENDMENT
NO. 1") (as so amended and as may be further amended from time to time, the
"CREDIT AGREEMENT");
WHEREAS, in order to induce the Banks, the Agent and the Issuing Bank to
enter into Amendment No. 1, the Borrower has agreed to cause the Pledgor to
grant a continuing security interest in and to the Collateral (as hereafter
defined) to secure the Borrower's obligations under the Credit Agreement and the
Notes issued pursuant thereto:
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions.
Terms defined in the Credit Agreement and not otherwise defined herein
have, as used herein, the respective meanings provided for therein. Unless
otherwise defined herein, or unless the context otherwise requires, all terms
used herein which are defined in the New York Uniform Commercial Code as in
effect on the date hereof shall have the meanings therein stated. The following
additional terms, as used herein, have the following respective meanings:
"COLLATERAL" has the meaning set forth in Section 3(A).
"COLLATERAL ACCOUNT" has the meaning set forth in Section 9(A).
"CONTINGENT DEBT" means any obligation of any Obligor in respect of any
undrawn Letter of Credit.
36
"FINANCIAL ASSET" means:
(i) a Security; or
(ii) an obligation of a person or a share, participation, or other
interest in a person or in property or an enterprise of a person, which is,
or is of a type, dealt in or traded on financial markets, or which is
recognized in any area in which it is issued or dealt in as a medium for
investment.
As context requires, the term means either the interest itself or the means
by which a person's claim to it is evidenced, including a certificated or
uncertificated Security, a Security certificate, or a Security Entitlement.
"ISSUER" means each company listed on Schedule I hereto;
"LIQUID INVESTMENTS" has the meaning set forth in Section 9(B).
"OBLIGORS" means the Borrower and the Pledgor.
"OUTSTANDING" means, when used with respect to Contingent Debt at any time,
the aggregate Letter of Credit Exposures of the Banks at such time.
"PLEDGED STOCK" means (i) the Schedule Shares and (ii) any other capital
stock required to be pledged to the Agent pursuant to Section 3(B).
"PLEDGOR" means ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc., a
California corporation, and its successors.
"PROCEEDS" means, with respect to any property or assets, all proceeds of
such property or assets, within the meaning of the UCC, together with all
interest, dividends, profits, cash and other property from time to time
received, receivable or otherwise distributed in respect of such property or
assets.
"SCHEDULE SHARES" means the shares of capital stock of the Issuers listed
on Schedule I hereto; provided that upon the consummation of any merger of any
Issuer into any other Issuer that is permitted under the Credit Agreement, the
Schedule Shares shall not include any capital stock of such Issuer that is
canceled or extinguished upon the consummation of such merger.
"SECURED OBLIGATIONS" means the obligations secured under this Agreement,
including (i) all obligations of the Obligors in respect of principal of and
interest on the Loans and the Notes, (ii) all Reimbursement Obligations
(including interest thereon) and other obligations of the Obligors in respect of
Letters of Credit, (iii) all other amounts payable by the Obligors under the
Credit Agreement or any other Financing Document and (iv) any renewals or
extensions of any of the foregoing. The Secured Obligations shall include,
without limitation, any interest, costs, fees and expenses which accrue on or
with respect to any of the foregoing, whether before or
37
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of any Obligor, and any such interest,
costs, fees and expenses that would have accrued but for the commencement of any
such case, proceeding or other action.
"SECURED PARTIES" means the Banks, the Issuing Bank and the Agent.
"SECURITY" means an obligation of an issuer or a share, participation, or
other interest in an issuer or in property or an enterprise of an issuer:
(i) which is represented by a Security certificate in bearer or
registered form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the issuer;
(ii) which is one of a class or series or by its terms is divisible
into a class or series of shares, participations, interests, or
obligations; and
(iii) which:
(A) is, or is of a type, dealt in or traded on securities
exchanges or securities markets; or
(B) is a medium for investment and by its terms expressly
provides that it is a security governed by Article 8 of the UCC.
"SECURITY ENTITLEMENT" means the rights and property interest of an
entitlement holder with respect to a Financial Asset specified in Part 5 of
Article 8 of the UCC.
"SECURITY INTERESTS" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
"SEGREGATED COLLATERAL ACCOUNT" has the meaning set forth in Section 9(C).
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of New York; provided that if, by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
38
SECTION 2. Representations and Warranties.
Each Obligor represents and warrants as follows:
(a) Title to Pledged Stock. The Pledgor owns all of the Pledged Stock, free
and clear of any Liens other than the Security Interests. The Pledged Stock
described on Schedule I hereto constitutes all of the issued and outstanding
capital stock of each Issuer as of the date hereof and the Pledged Stock will
constitute all of the issued and outstanding capital stock of each Issuer at all
times hereafter. All of the Pledged Stock has been duly authorized and validly
issued, is fully paid and non-assessable and is subject to no options to
purchase or similar rights of any Person. The Obligors are not and will not
become a party to or otherwise bound by any agreement, other than this Agreement
and the Credit Agreement, which restricts in any manner the rights of any
present or future holder of any of the Pledged Stock with respect thereto,
except for (x) restrictions on the ability of the Borrower and its Subsidiaries
to sell, transfer or otherwise dispose of all or substantially all of their
assets, taken as a whole, or (y) negative pledge provisions, provided that such
provisions permit Liens on the Collateral securing the Secured Obligations.
(b) Validity, Perfection and Priority of Security Interests. (i) Upon the
delivery of the certificates representing the Pledged Stock to the Agent in
accordance with Section 4 hereof, the Agent will have valid and perfected
security interests in the Collateral subject to no prior Lien. No registration,
recordation or filing with any governmental body, agency or official is required
in connection with the execution or delivery of this Agreement or necessary for
the validity or enforceability hereof or for the perfection or enforcement of
the Security Interests, except for any filing that may be required to continue
the perfection of the Security Interests in proceeds under Section 9-306 of the
UCC. Neither Obligor and none of their respective Subsidiaries has performed or
will perform any acts which might prevent the Agent from enforcing any of the
terms and conditions of this Agreement or which would limit the Agent in any
such enforcement. (ii) If and when any Financial Asset or Security Entitlement
is held in the Collateral Account, the Agent will have "control" (as defined in
Article 8 of the UCC) thereof and will be a "protected purchaser" (as defined in
said Article 8) thereof.
(c) UCC Filing Locations. The chief executive office of each Obligor is
located at its address set forth on Schedule II hereto. Under the Uniform
Commercial Code as in effect in the State in which such office is located, no
filing (other than in the county in which such office is located and the office
of the secretary of state of such State) is required to perfect a security
interest in collateral consisting of general intangibles.
39
SECTION 3. The Security Interests.
(a) In order to secure the full and punctual payment of (i) in the case of
the Pledgor, its obligations with respect to any Secured Obligation arising
under or in respect of the Subsidiary Guaranty or this Agreement or (ii) in the
case of the Borrower, its obligations with respect to any Secured Obligation, in
each case in accordance with the terms thereof, each Obligor hereby assigns and
pledges to and with the Agent for the benefit of the Secured Parties and grants
to the Agent for the benefit of the Secured Parties, security interests in all
of the following property of such Obligor, whether now owned or existing or
hereafter acquired or arising (all being collectively referred to as the
"COLLATERAL"):
(xii) the Pledged Stock, all of its rights and privileges with respect
to the Pledged Stock and all Proceeds of the foregoing;
(xiii) the Collateral Account, all cash deposited therein from time to
time, the Liquid Investments made pursuant to Section 9(B) and all Proceeds
of such Liquid Investments; and
(xiv) the Segregated Collateral Account, all cash deposited therein
from time to time, the Liquid Investments made pursuant to Section 9(C) and
all Proceeds of such Liquid Investments.
The security interests granted pursuant to clauses (i) and (ii) of the preceding
sentence shall be for the benefit of all Secured Parties and the security
interests granted pursuant to clause (iii) of the preceding sentence shall be
solely for the benefit of the Issuing Bank and, to the extent that amounts held
in the Segregated Collateral Account are subject to transfer to the Collateral
Account pursuant to Section 9(C), for the benefit of all Secured Parties.
Contemporaneously with the execution and delivery hereof, the Pledgor is
delivering certificates representing the Schedule Shares in pledge hereunder.
(b) In the event that any Issuer at any time issues any additional or
substitute shares of capital stock of any class, the Pledgor will immediately
pledge and deposit with the Agent certificates representing all such shares as
additional security for the Secured Obligations of the Pledgor. All such shares
constitute Pledged Stock and are subject to all provisions of this Agreement.
(c) The Security Interests are granted as security only and shall not
subject any Secured Party to, or transfer or in any way affect or modify, any
obligation or liability of any Obligor or any of its Subsidiaries with respect
to any of the Collateral or any transaction in connection therewith.
40
SECTION 4. Delivery of Pledged Stock.
All certificates representing Pledged Stock delivered to the Agent by the
Pledgor pursuant hereto shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, with (if requested by the Agent) signatures guaranteed, and accompanied
by any required transfer tax stamps, all in form and substance satisfactory to
the Agent.
SECTION 5. Further Assurances.
(a) Each Obligor agrees that it will, at its expense and in such manner and
form as the Agent may require, execute, deliver, file and record any financing
statement, specific assignment or other paper and take any other action that may
be necessary or desirable, or that the Agent may request, in order to create,
preserve, perfect or validate any Security Interest or to enable the Agent to
exercise and enforce its rights hereunder with respect to any of the Collateral.
To the extent permitted by applicable law, each Obligor hereby authorizes the
Agent to execute and file, in the name of such Obligor or otherwise, Uniform
Commercial Code financing statements (which may be carbon, photographic,
photostatic or other reproductions of this Agreement or of a financing statement
relating to this Agreement) which the Agent in its sole discretion may deem
necessary or appropriate to further perfect the Security Interests.
(b) Each Obligor agrees that it will not change (i) its name, identity or
corporate structure in any manner or (ii) the location of its chief executive
office, in each case, unless it shall have given the Agent not less than 30
days' prior notice thereof.
(c) The Pledgor will not permit any Issuer or any Subsidiary of any Issuer
to (i) consolidate or merge with or into any other Person, unless (I) an Issuer
is the surviving corporation, (II) all of the outstanding capital stock of such
Issuer remains pledged hereunder and (III) no consideration other than capital
stock of such Issuer is paid to any Person or (ii) sell, lease or otherwise
transfer (including by merger or dividend or distribution), in one or more
transactions (other than (I) transactions each of which, together with any
related transactions, relates to assets with a fair market value of less than
$10,000,000 and (II) assignments or grants of security interests in receivables
permitted under clause (B) of the proviso to Section 5.12 of the Credit
Agreement), assets with an aggregate fair market value of more than $50,000,000,
unless either (x) prior to such sale, lease or transfer, the Borrower reduces
the aggregate amount of the Commitments by at least 50% of the amount of the net
proceeds received by the Borrower and its Subsidiaries in connection with such
sale, lease or transfer or (y) the Borrower and its Subsidiaries grant to the
Agent Liens on property reasonably acceptable to the Required Banks having an
aggregate value (determined on the basis of an amount equal to (1) Consolidated
EBITDA for such property for the four consecutive fiscal quarters most recently
completed prior to the date upon which such Liens are granted for which
financial statements have been delivered pursuant to Section 5.01(a) or (b) of
the Credit Agreement (or, if such determination is being made prior to the
delivery of financial statements for the fiscal
41
year ending December 31, 1999 pursuant to Section 5.01(a) of the Credit
Agreement, the annualized Consolidated EBITDA for such property based on the
1999 fiscal quarters for which such financial statements have been delivered
pursuant to Section 5.01(b) of the Credit Agreement) multiplied by (2) 7) at
least equal to the value (as so determined) of the property so sold, leased or
transferred; provided that if, prior to such sale, lease or transfer, the
Borrower gives the Agent written notice that it, in good faith, intends to
acquire or construct additional operating assets of the Issuers and their
Subsidiaries in an amount at least equal to the net proceeds of such sale, lease
or transfer within 180 days after the consummation of such sale, lease or
transfer, then no such Commitment reduction or new Liens shall be required on or
prior to the date of consummation of such sale, lease or transfer so long as the
Borrower and its Subsidiaries (A) expend an amount at least equal to the amount
of such net proceeds to acquire or construct operating assets owned by the
Issuers and their Subsidiaries within 180 days following such consummation or
(B) the Borrower shall reduce the Commitments or provide Liens in the amounts
and in the manner provided in clauses (x) and (y) above on the earlier of the
180th day following such consummation and the date upon which it shall determine
that it will not make the expenditures provided for in clause (A) above.
SECTION 6. Record Ownership of Pledged Stock.
The Agent may at any time or from time to time, in its sole discretion,
cause any or all of the Pledged Stock to be transferred of record into the name
of the Agent or its nominee. The Pledgor will promptly give to the Agent copies
of any notices or other communications received by it with respect to Pledged
Stock registered in the name of the Pledgor and the Agent will promptly give to
the Pledgor copies of any notices and communications received by the Agent with
respect to Pledged Stock registered in the name of the Agent or its nominee.
SECTION 7. Right to Receive Distributions on Collateral.
(a) Unless an Event of Default shall have occurred and be continuing, the
Pledgor shall have the right to retain all dividends and other payments and
distributions made upon or with respect to the Pledged Stock other than:
(xv) dividends paid or payable other than in cash in respect of, or
instruments or other property received, receivable or otherwise distributed
in respect of, or in exchange for, any Pledged Stock,
(xvi) dividends or other distributions paid or payable in cash in
respect of any Pledged Stock in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, or
(xvii) cash paid, payable or otherwise distributed in redemption of,
or in exchange for, any Pledged Stock, all of which shall be forthwith
delivered to the Agent to hold as Collateral.
42
(b) Upon the occurrence and during the continuance of an Event of Default
all rights of the Pledgor to receive dividends and other payments and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 7(A) above shall cease, and all such rights shall thereupon
become vested in the Agent who shall thereupon have the sole right to receive
and hold as Collateral all Proceeds on the Collateral.
(c) All amounts which are received by the Pledgor contrary to the
provisions of this Section shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Agent as Collateral in the same form as received
(with any necessary endorsement).
SECTION 8. Right to Vote Pledged Stock.
Unless an Event of Default shall have occurred and be continuing, the
Pledgor shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Stock, and the Agent
shall, upon receiving a written request from the Pledgor accompanied by a
certificate signed by its principal financial officer stating that no Event of
Default has occurred and is continuing, deliver to the Pledgor or as specified
in such request such proxies, powers of attorney, consents, ratifications and
waivers in respect of any of the Pledged Stock which is registered in the name
of the Agent or its nominee as shall be specified in such request and be in form
and substance satisfactory to the Agent.
If an Event of Default shall have occurred and be continuing, the Agent
shall have the right to the extent permitted by law and the Pledgor shall take
all such action as may be necessary or appropriate to give effect to such right,
to vote and to give consents, ratifications and waivers, and take any other
action with respect to any or all of the Pledged Stock with the same force and
effect as if the Agent were the absolute and sole owner thereof. The Agent will
promptly notify the Borrower of any action taken by it pursuant to this Section,
provided that the absence of such notification shall not limit any right of the
Agent hereunder.
SECTION 9. Collateral Account.
(a) There is hereby established with the Agent a cash collateral account
(the "COLLATERAL ACCOUNT") in the name and under the control of the Agent into
which there shall be deposited from time to time the cash proceeds of the
Collateral required to be delivered to the Agent pursuant to any provision of
the Financing Documents, but not moneys received by the Agent for deposit in the
Segregated Collateral Account. Any income received by the Agent with respect to
the balance from time to time standing to the credit of the Collateral Account,
including any interest or capital gains on Liquid Investments, shall remain, or
be deposited, in the Collateral Account. All right, title and interest in and to
the cash amounts on deposit from time to time in the Collateral Account together
with any Liquid Investments from time to time made pursuant to Section 9(B)
shall vest in the Agent, shall constitute part of the Collateral
43
hereunder and shall not constitute payment of the Secured Obligations until
applied thereto as hereinafter provided.
(b) Amounts on deposit in the Collateral Account shall be invested and
re-invested from time to time in such Liquid Investments as the Borrower shall
determine, which Liquid Investments shall be held in the name and be under the
control of the Agent, provided that, if an Event of Default has occurred and is
continuing, the Agent shall, if instructed by the Required Banks, liquidate any
such Liquid Investments and apply or cause to be applied the proceeds thereof to
the payment of the Secured Obligations in the manner specified in Section 14.
For this purpose, "LIQUID INVESTMENTS" means Temporary Cash Investments;
provided that (i) each Liquid Investment shall mature within 30 days after it is
acquired by the Agent and (ii) in order to provide the Agent, for the benefit of
itself, the Issuing Bank and the Banks, with a perfected security interest
therein, each Liquid Investment shall be either:
(xviii) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Agent, which (together with
any appropriate instruments of transfer) are delivered to, and held by, the
Agent or an agent thereof (which shall not be the Borrower or any of its
affiliates) in the State of New York; or
(xix) in book-entry form and issued by the United States and subject to
pledge under applicable state law and Treasury regulations and as to which
(in the opinion of counsel to the Agent) appropriate measures shall have
been taken for perfection of the Security Interests.
(c) Amounts otherwise distributable by the Agent in accordance with Section
14 in respect of any Outstanding Contingent Debt shall (in lieu of being
distributed in accordance with Section 14), and amounts paid to the Agent
pursuant to Section 2.07(g) of the Credit Agreement shall, be deposited in a
segregated collateral account (the "SEGREGATED COLLATERAL ACCOUNT") for the
benefit of the Issuing Bank. If all or any portion of any Outstanding Contingent
Debt thereafter becomes due and payable and is not timely paid by any Obligor,
the Agent, upon notice from the Issuing Bank of the amount so due and unpaid,
shall pay to the Issuing Bank an amount equal to the product of (i) such due and
unpaid amount multiplied by (ii) a fraction, the numerator of which is the
balance in the Segregated Collateral Account immediately prior to such payment
and the denominator of which is the aggregate principal amount of all Contingent
Debt Outstanding immediately prior to the time at which the applicable
Outstanding Contingent Debt became due and payable. If at any time when an Event
of Default has occurred and is continuing the aggregate principal amount of all
Outstanding Contingent Debt shall be reduced other than by such Contingent Debt
becoming due, the excess of (i) the balance in the Segregated Collateral Account
over (ii) an amount equal to the product of (A) the balance in the Segregated
Collateral Account multiplied by (B) a fraction, the numerator of which is the
aggregate principal amount of Contingent Debt Outstanding immediately after such
reduction and the denominator of which is the aggregate principal amount of all
Contingent
44
Debt Outstanding immediately prior to such reduction, shall be withdrawn from
the Segregated Collateral Account and deposited in the Collateral Account for
distribution in accordance with the terms of Section 14. If at any time when
there is no Event of Default which has occurred and is continuing the balance in
the Segregated Collateral Account exceeds the greater of (i) the aggregate
Revolving Commitments of all Banks and (ii) the aggregate Revolving Exposures of
all Banks, such excess shall be withdrawn from the Segregated Collateral Account
and paid over to the Borrower. The Agent shall invest and reinvest moneys on
deposit in the Segregated Collateral Account in such Liquid Investments as
directed by the Issuing Bank or, in the absence of such direction, in such
Liquid Investments as the Agent shall deem appropriate in its sole discretion
and, in the absence of gross negligence or willful misconduct, the Agent shall
not be responsible for any loss resulting from any such investment. The Agent
shall pay into the Segregated Collateral Account any interest or other income
derived from the investment or reinvestment of moneys from such account.
SECTION 10. General Authority.
Each Obligor hereby irrevocably appoints the Agent its true and lawful
attorney, with full power of substitution, in the name of such Obligor, the
Agent, the Issuing Bank, the Banks or otherwise, for the sole use and benefit of
the Agent, the Issuing Bank and the Banks, but at the expense of such Obligor,
to the extent permitted by law to exercise, at any time and from time to time
while an Event of Default has occurred and is continuing, all or any of the
following powers with respect to all or any of the Collateral:
(xx) to demand, ▇▇▇ for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof,
(xxi) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(xxii) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the Agent
were the absolute owner thereof, and
(xxiii) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Agent shall give the applicable Obligor not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral of such Obligor except any Collateral which
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Agent and the Obligors agree that
such notice constitutes "REASONABLE NOTIFICATION" within the meaning of Section
9-504(3) of the Uniform Commercial Code.
45
SECTION 11. Remedies upon Event of Default.
If any Event of Default shall have occurred and be continuing, the Agent
may exercise on behalf of the Banks all the rights of a secured party under the
UCC (whether or not in effect in the jurisdiction where such rights are
exercised) and, in addition, the Agent may, without being required to give any
notice, except as herein provided or as may be required by mandatory provisions
of law, (i) withdraw all cash and Liquid Investments in the Collateral Account
and apply such cash and Liquid Investments and other cash, if any, then held by
it as Collateral as specified in Section 14 and (ii) if there shall be no such
cash or Liquid Investments or if such cash and Liquid Investments shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
any part thereof at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at such
price or prices as the Agent may deem satisfactory. Any Bank may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations, at any
private sale). The Agent is authorized, in connection with any such sale, if it
deems it advisable so to do, (i) to restrict the prospective bidders on or
purchasers of any of the Pledged Stock to a limited number of sophisticated
investors who will represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution or sale of any of
such Pledged Stock, (ii) to cause to be placed on certificates for any or all of
the Pledged Stock or on any other securities pledged hereunder a legend to the
effect that such security has not been registered under the Securities Act of
1933 and may not be disposed of in violation of the provisions of said Act, and
(iii) to impose such other limitations or conditions in connection with any such
sale as the Agent deems necessary or advisable in order to comply with said Act
or any other law. Each Obligor covenants and agrees that it will execute and
deliver such documents and take such other action as the Agent deems necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each purchaser at any
such sale shall hold the Collateral so sold absolutely and free from any claim
or right of whatsoever kind, including any equity or right of redemption of any
Obligor which may be waived, and each Obligor, to the extent permitted by law,
hereby specifically waives all rights of redemption, stay or appraisal which it
has or may have under any law now existing or hereafter adopted. The notice (if
any) of such sale required by Section 10 shall (1) in case of a public sale,
state the time and place fixed for such sale, (2) in case of sale at a broker's
board or on a securities exchange, state the board or exchange at which such
sale is to be made and the day on which the Collateral, or the portion thereof
so being sold, will first be offered for sale at such board or exchange, and (3)
in the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix in the
notice of such sale. At any such sale the Collateral may be sold in one lot as
an entirety or in separate parcels, as the Agent
46
may determine. The Agent shall not be obligated to make any such sale pursuant
to any such notice. The Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so adjourned. In case of any sale
of all or any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Agent until the selling price is paid
by the purchaser thereof, but the Agent shall not incur any liability in case of
the failure of such purchaser to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may again be sold upon like notice.
The Agent, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
SECTION 12. Expenses.
Each Obligor agrees that it will forthwith upon demand pay to the Agent:
(i) the amount of any taxes which the Agent may have been required to
pay by reason of the Security Interests or to free any of the Collateral
from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses, including the
fees and disbursements of counsel and of any other experts, which the Agent
may incur in connection with (w) the administration or enforcement of this
Agreement, including such expenses as are incurred to preserve the value of
the Collateral and the validity, perfection, rank and value of any Security
Interest, (x) the collection, sale or other disposition of any of the
Collateral, (y) the exercise by the Agent of any of the rights conferred
upon it hereunder or (z) any Default or Event of Default.
Any such amount not paid on demand shall bear interest for each day until
paid at 2% plus the rate applicable to Base Rate Loans for such day.
SECTION 13. Limitation on Duty of Agent in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, the Agent
shall have no duty as to any Collateral in its possession or control or in the
possession or control of any agent or bailee or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal
47
to that which it accords its own property, and shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any agent
or bailee selected by the Agent in good faith.
SECTION 14. Application of Proceeds.
Upon the occurrence and during the continuance of an Event of Default, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in the Collateral Account shall be applied (subject
to Section 9(C)) by the Agent in the following order of priorities:
first, to payment of the expenses of such sale or other realization, including
reasonable compensation to agents and counsel for the Agent, and all expenses,
liabilities and advances incurred or made by the Agent in connection therewith,
and any other unreimbursed expenses for which the Agent or any Bank is to be
reimbursed pursuant to Section 9.03 of the Credit Agreement or Section 12 hereof
and unpaid fees owing to the Agent under the Credit Agreement;
second, to the ratable payment of accrued but unpaid interest, commitment fees,
letter of credit fees or commissions or similar charges in respect of the
Secured Obligations in accordance with the provisions of the Credit Agreement;
third, to the ratable payment of unpaid principal of the Secured Obligations;
provided that for purposes of this clause, the unpaid principal amount of the
Secured Obligations in respect of Contingent Debt at any time shall be deemed to
be equal to the aggregate Letter of Credit Exposures of all Banks at such time
less the balance held at such time in the Segregated Collateral Account;
fourth, to the ratable payment of all other Secured Obligations, until all
Secured Obligations shall have been paid in full; and
finally, to payment to the applicable Obligor or its successors or assigns, or
as a court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 15. Concerning the Agent.
The provisions of Article 7 of the Credit Agreement shall inure to the
benefit of the Agent in respect of this Agreement and shall be binding upon the
parties to the Credit Agreement in such respect. In furtherance and not in
derogation of the rights, privileges and immunities of the Agent therein set
forth:
(a) The Agent is authorized to take all such action as is provided to be
taken by it as Agent hereunder and all other action reasonably incidental
thereto. As to any matters not expressly provided for herein (including, without
limitation, the timing and
48
methods of realization upon the Collateral) the Agent shall act or refrain from
acting in accordance with written instructions from the Required Banks or, in
the absence of such instructions, in accordance with its discretion.
(b) The 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 the Security Interests in any of the Collateral, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder. The Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by any
Obligor.
SECTION 16. Appointment of Co-Agents.
At any time or times, in order to comply with any legal requirement in any
jurisdiction, the Agent may appoint another bank or trust company or one or more
other persons, either to act as co-agent or co-agents, jointly with the Agent,
or to act as separate agent or agents on behalf of the Banks with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment (which may, in the
discretion of the Agent, include provisions for the protection of such co-agent
or separate agent similar to the provisions of Section 15).
SECTION 17. Termination of Security Interests; Release of Collateral.
(a) Upon the repayment in full of all Secured Obligations and the
termination of the Commitments under the Credit Agreement, the Security
Interests shall terminate and all rights to the Collateral shall revert to the
Obligors. At any time and from time to time prior to such termination of the
Security Interests, the Agent may release any of the Collateral with the prior
written consent of the Required Banks (or, if required under Section 9.05 of the
Credit Agreement, all the Banks). Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the expense of the
Borrower, execute and deliver to the Obligors such documents as the Borrower
shall reasonably request to evidence the termination of the Security Interests
or the release of such Collateral, as the case may be.
(b) Upon the consummation of any merger of any Issuer into any other Issuer
that is permitted under the Credit Agreement, the Agent will, upon the request
and at the expense of the Borrower, deliver to the Borrower any certificates
then held by it evidencing exclusively capital stock of such Issuer canceled or
extinguished upon the consummation of such merger.
SECTION 18. Notices.
All notices hereunder shall be given, in the case of the Borrower or the Agent,
in accordance with Section 9.01 of the Credit Agreement and, in the case of any
other party hereto, in accordance with Section 5.01 of the Subsidiary Guaranty.
49
SECTION 19. Waivers, Non-Exclusive Remedies.
No failure on the part of the Agent to exercise, and no delay in exercising
and no course of dealing with respect to, any right under this Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Agent of any right under the Credit Agreement or this Agreement preclude any
other or further exercise thereof or the exercise of any other right. The rights
in this Agreement and the Credit Agreement are cumulative and are not exclusive
of any other remedies provided by law.
SECTION 20. Successors and Assigns.
This Agreement is for the benefit of the Agent, the Issuing Bank and the
Banks and their successors and assigns, and in the event of an assignment of all
or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Agreement shall be binding on the Obligors and their
respective successors and assigns.
SECTION 21. Changes in Writing.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by or on behalf of
the Obligors and the Agent with the consent of the Required Banks.
SECTION 22. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION. EACH OBLIGOR 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 THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH OBLIGOR 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 HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OBLIGOR AND
THE AGENT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
50
SECTION 23. Severability.
If any provision hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Agent and the Banks in order to carry out
the intentions of the parties hereto as nearly as may be possible; and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
SECTION 24. Effectiveness.
This Agreement shall become effective immediately at such time as the Agent
shall have received duly executed counterparts hereof signed by each Obligor and
the Agent (or, in the case of any party as to which an executed counterpart
hereof shall not have been received, the Agent shall have received, in form
satisfactory to it, telegraphic, telex or other written confirmation from such
party of the execution of a counterpart hereof by such party).
SECTION 25. Counterparts.
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 and
hereto were upon the same instrument.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
▇▇▇▇▇▇▇ ENTERPRISES, INC.
By:
--------------------------
Name:
Title:
▇▇▇▇▇▇▇ HEALTH AND
REHABILITATION
SERVICES, INC.
By:
--------------------------
Name:
Title:
▇▇▇▇▇▇ GUARANTY TRUST
COMPANY OF NEW YORK,
as Agent
By:
--------------------------
Name:
Title:
52
Schedule I to Pledge Agreement
Pledged Stock
NUMBER OF NUMBER PERCENTAGE
ISSUER HOLDER CLASS OF SHARES OF SHARES OWNED BY
STOCK AUTHORIZED ISSUED ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Enterprises-Alabama, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 1,000,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Arkansas, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Florida, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 1,000,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Georgia, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Massachusetts, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Minnesota, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 1,000,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Mississippi, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 1,000,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Missouri, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Nebraska, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-North Carolina, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 1,000,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Ohio, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Pennsylvania, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-South Carolina, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
South Dakota-▇▇▇▇▇▇▇ Enterprises, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 10,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Virginia, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 50,000 10,000 100%
▇▇▇▇▇▇▇ Enterprises-Wisconsin, Inc. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. Common 1,000,000 10,000 100%
53
SCHEDULE II
The chief executive office of the Obligors is located at:
Prior to October 15, 1999:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇-▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
On and after October 15, 1999:
▇▇▇▇▇▇▇ Corporate Center
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇