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EXHIBIT 10.2
$460,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
MARINER HEALTH GROUP, INC.
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Agent
Dated as of May 18, 1994, as amended
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TABLE OF CONTENTS
ARTICLE I - CERTAIN DEFINITIONS.................................................................................. 1
1.01 Certain Definitions................................................................................. 1
1.02 Construction........................................................................................ 27
1.03 Accounting Principles............................................................................... 28
ARTICLE II - REVOLVING CREDIT FACILITY........................................................................... 29
2.01 Revolving Credit Commitments; Limitation on Borrowings.............................................. 29
(a) Revolving Credit Commitments.................................................................. 29
Intentionally Omitted............................................................................. 29
(c) Limitation on Borrowings...................................................................... 29
2.02 Nature of Banks' Obligations With Respect to Revolving Credit Loans................................. 30
2.03 Commitment Fees..................................................................................... 30
2.04 Special Fee......................................................................................... 31
2.05 Revolving Credit Loan Requests...................................................................... 31
2.06 Making Revolving Credit Loans....................................................................... 32
2.07 Revolving Credit Note............................................................................... 32
2.08 Use of Proceeds..................................................................................... 32
2.09 Letter of Credit Subfacility........................................................................ 33
2.10 Voluntary Reduction of Revolving Credit Commitments................................................. 38
ARTICLE III - COLLATERAL......................................................................................... 38
3.01 Collateral.......................................................................................... 38
ARTICLE IV - INTEREST RATES...................................................................................... 38
4.01 Interest Rate Options............................................................................... 38
(a) Revolving Credit Interest Rate Options........................................................ 39
(b) Rate Quotations............................................................................... 40
4.02 Interest Periods.................................................................................... 40
4.03 Interest After Default.............................................................................. 41
4.04 Euro-Rate Unascertainable........................................................................... 41
4.05 Selection of Interest Rate Options.................................................................. 42
ARTICLE V - PAYMENTS............................................................................................. 43
5.01 Payments............................................................................................ 43
5.02 Pro Rata Treatment of Banks......................................................................... 43
5.03 Interest Payment Dates.............................................................................. 43
5.04 Voluntary Prepayments............................................................................... 43
5.05 Mandatory Prepayments............................................................................... 44
(a) Sale of Assets................................................................................ 44
(b) Application Among Interest Rate Options....................................................... 45
5.06 Additional Compensation in Certain Circumstances.................................................... 45
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc................................................................ 45
(b) Indemnity..................................................................................... 46
ARTICLE VI - REPRESENTATIONS AND WARRANTIES...................................................................... 47
6.01 Representations and Warranties - Effective On and After Date of This Agreement...................... 47
(a) Organization and Qualification................................................................ 47
(b) [Intentionally Omitted]....................................................................... 47
(c) Excluded Entities; Subsidiaries............................................................... 47
(d) Power and Authority........................................................................... 48
(i)
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(e) Validity and Binding Effect................................................................... 48
(f) No Conflict................................................................................... 48
(g) Litigation.................................................................................... 48
(h) Title to Properties........................................................................... 49
(i) Financial Statements.......................................................................... 49
(j) Margin Stock.................................................................................. 50
(k) Full Disclosure............................................................................... 50
(l) Taxes......................................................................................... 50
(m) Consents and Approvals........................................................................ 50
(n) Compliance with Instruments................................................................... 51
(o) Patents, Trademarks, Copyrights, Etc.......................................................... 51
(p) Security Interests in the Collateral.......................................................... 51
(q) [Intentionally Omitted.]...................................................................... 52
(r) Status of the Pledged Collateral.............................................................. 52
(s) Insurance..................................................................................... 52
(t) Compliance with Laws.......................................................................... 52
(u) Material Contracts, Licenses, Permits and Approvals........................................... 52
(v) Investment Companies.......................................................................... 53
(w) Plans and Benefit Arrangements................................................................ 54
(x) Employment Matters............................................................................ 55
(y) Environmental Matters......................................................................... 55
(z) Senior Debt Status............................................................................ 56
(aa) Matters Regarding Leased Facilities and Certain Indebtedness of Subsidiaries................ 57
(bb) Mortgage and Leasehold Mortgage Liens........................................................ 58
6.02 Updates to Schedules................................................................................ 58
ARTICLE VII - CONDITIONS OF LENDING.............................................................................. 58
7.01 Each Additional Loan................................................................................ 58
ARTICLE VIII - COVENANTS......................................................................................... 59
8.01 Affirmative Covenants............................................................................... 59
(a) Preservation of Existence, Etc................................................................ 59
(b) Payment of Liabilities, Including Taxes, Etc.................................................. 59
(c) Maintenance of Insurance...................................................................... 59
(d) Maintenance of Properties and Leases.......................................................... 60
(e) Maintenance of Patents, Trademarks, Etc....................................................... 60
(f) Visitation Rights............................................................................. 60
(g) Keeping of Records and Books of Account....................................................... 60
(h) Plans and Benefit Arrangements................................................................ 60
(i) Compliance with Laws.......................................................................... 61
(j) Use of Proceeds............................................................................... 61
(k) [Intentionally Omitted.]...................................................................... 61
(l) Subordination of Intercompany Loans, Other Loans and Advances to the Borrower................. 61
(m) Approval of Financial Statements in Permitted Acquisitions; Notice of Permitted
Acquisition................................................................................ 61
(n) Dissolution of Certain Subsidiaries........................................................... 63
(o) [Intentionally Omitted]....................................................................... 63
(p) Further Assurances............................................................................ 63
(q) Owned Facilities - Termination of Liens; Intercreditor Agreements............................. 63
(r) Leased Facilities - Termination of Liens; Intercreditor Agreements; Trustee Agreements........ 64
8.02 Negative Covenants.................................................................................. 65
(a) Indebtedness.................................................................................. 65
(b) Liens......................................................................................... 66
(ii)
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(c) Guaranties.................................................................................... 66
(d) Loans and Investments......................................................................... 67
(e) Amounts Paid by the Borrower to Paragon; Dividends and Related Distributions.................. 68
(f) Liquidations, Mergers, Consolidations, Acquisitions........................................... 70
(g) Dispositions of Assets or Subsidiaries........................................................ 71
(h) Affiliate Transactions........................................................................ 72
(i) Subsidiary, Partnerships and Joint Ventures................................................... 72
(j) Continuation of or Change in Business......................................................... 73
(k) Plans and Benefit Arrangements................................................................ 73
(l) Fiscal Year................................................................................... 74
(m) Issuance of Stock............................................................................. 74
(n) [Intentionally Omitted.]...................................................................... 74
(o) [Intentionally Omitted.]...................................................................... 74
(p) Capital Expenditures and Leases............................................................... 74
(q) Minimum Fixed Charge Coverage Ratio........................................................... 74
(r) Maximum Leverage Ratio........................................................................ 75
(s) [Intentionally Omitted.]...................................................................... 75
(t) Minimum Net Worth............................................................................. 75
(u) Senior Indebtedness to Cash Flow From Operations Ratio........................................ 76
(v) Incurrence of Indebtedness Permitted By the Indenture......................................... 76
(w) [Intentionally Omitted.]...................................................................... 76
(x) Negative Pledges.............................................................................. 76
(y) Prohibition of Defeasance of Subordinated Notes............................................... 76
8.03 Reporting Requirements.............................................................................. 77
(a) [Intentionally Omitted.]...................................................................... 77
(b) Quarterly Financial Statements................................................................ 77
(c) Annual Financial Statements................................................................... 77
(d) Certificate of the Borrower................................................................... 77
(e) Notice of Default............................................................................. 78
(f) Notice of Litigation.......................................................................... 78
(g) Certain Events................................................................................ 78
(h) Budgets, Forecasts, Other Reports and Information............................................. 78
(i) Notices Regarding Plans and Benefit Arrangements.............................................. 79
(j) Notices with Respect to Indenture............................................................. 80
ARTICLE IX - DEFAULT............................................................................................. 81
9.01 Events of Default................................................................................... 81
9.02 Consequences of Event of Default.................................................................... 84
9.03 Notice of Sale...................................................................................... 86
ARTICLE X - THE AGENT............................................................................................ 87
10.01 Appointment........................................................................................ 87
10.02 Delegation of Duties............................................................................... 87
10.03 Nature of Duties; Independent Credit Investigation................................................. 87
10.04 Actions in Discretion of Agent; Instructions from the Banks........................................ 87
10.05 Reimbursement and Indemnification of Agent by the Borrower......................................... 88
10.06 Exculpatory Provisions............................................................................. 88
10.07 Reimbursement and Indemnification of Agent by Banks................................................ 89
10.08 Reliance by Agent.................................................................................. 89
10.09 Notice of Default.................................................................................. 90
10.10 Notices............................................................................................ 90
10.11 Banks in Their Individual Capacities............................................................... 90
10.12 Holders of Notes................................................................................... 90
(iii)
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10.13 Equalization of Banks.............................................................................. 90
10.14 Successor Agent.................................................................................... 91
10.15 Agent's Fee........................................................................................ 91
10.16 Availability of Funds.............................................................................. 91
10.17 Calculations....................................................................................... 92
10.18 Beneficiaries...................................................................................... 92
10.19 Holding of Loan Documents.......................................................................... 92
ARTICLE XI - MISCELLANEOUS....................................................................................... 92
11.01 Modifications, Amendments or Waivers............................................................... 92
11.02 No Implied Waivers; Cumulative Remedies; Writing Required.......................................... 93
11.03 Reimbursement and Indemnification of Banks by the Borrower; Taxes.................................. 93
11.04 Holidays........................................................................................... 94
11.05 Funding by Branch, Subsidiary or Affiliate......................................................... 94
(a) Notional Funding.............................................................................. 94
(b) Actual Funding................................................................................ 94
11.06 Notices............................................................................................ 95
11.07 Severability....................................................................................... 95
11.08 Governing Law...................................................................................... 95
11.09 Prior Understanding................................................................................ 95
11.10 Duration; Survival................................................................................. 95
11.11 Successors and Assigns............................................................................. 96
11.12 Confidentiality.................................................................................... 97
11.13 Counterparts....................................................................................... 97
11.14 Agent's or Bank's Consent.......................................................................... 97
11.15 Exceptions......................................................................................... 97
11.16 Consent to Forum; Waiver of Jury Trial............................................................. 98
11.17 Tax Withholding Clause............................................................................. 98
(iv)
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SCHEDULES
SCHEDULE 1.01(P) PERMITTED LIENS
SCHEDULE 1.01(R)(2) COMMITMENTS OF BANKS
SCHEDULE 2.09(a) EXISTING LETTERS OF CREDIT; LOANS, INTEREST AND
OTHER OBLIGATIONS UNDER PRIOR CREDIT
AGREEMENT
SCHEDULES 6.01(a) QUALIFICATIONS TO DO BUSINESS, SUBSIDIARIES AND
and 6.01(c) EXCLUDED ENTITIES
SCHEDULES 6.01(cc) CERTAIN AFFILIATE TRANSACTIONS
SCHEDULE 6.01(u) MATERIAL CONTRACTS
SCHEDULE 6.01(y) ENVIRONMENTAL DISCLOSURES
SCHEDULE 6.01(z) CERTAIN DISCLOSURES REGARDING OTHER DEBT OF
THE BORROWER
SCHEDULE 6.01(aa) MATTERS REGARDING CERTAIN LEASED FACILITIES AND
INDEBTEDNESS OF CERTAIN SUBSIDIARIES
SCHEDULE 8.01(l) CERTAIN DISCLOSURES REGARDING SUBORDINATION
OF INDEBTEDNESS
SCHEDULE 8.02(a) PERMITTED INDEBTEDNESS
SCHEDULE 8.02(c) CERTAIN GUARANTIES
SCHEDULE 8.02(x) EXISTING NEGATIVE PLEDGE COVENANTS
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EXHIBITS
EXHIBIT 1.01(A) ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.01(C) CONDITIONS FOR INCURRENCE OF CERTAIN LIENS AND
CERTAIN INDEBTEDNESS
EXHIBIT 1.01(G) GUARANTY AND SURETYSHIP AGREEMENT
EXHIBITS 1.01(I)(1) INTERCREDITOR AGREEMENT - LEASED FACILITY
(A) and (B)
EXHIBITS 1.01(I)(2) INTERCREDITOR AGREEMENT - OWNED FACILITY
(A) and (B)
EXHIBIT 1.01(L) LEASEHOLD MORTGAGE
EXHIBIT 1.01(M) MORTGAGE
EXHIBIT 1.01(P)(1) PLEDGE AGREEMENT (Borrower)
EXHIBIT 1.01(P)(2) PLEDGE AGREEMENT (Subsidiaries Pledging Stock)
EXHIBIT 1.01(P)(3) PLEDGE AGREEMENT (Subsidiaries Pledging Partnership
Interests)
EXHIBIT 1.01(R) REVOLVING CREDIT NOTE
EXHIBIT 1.01(S) SUBORDINATION AGREEMENT (Intercompany)
EXHIBIT 1.01(T) TRUSTEE AGREEMENT
EXHIBIT 2.05 REVOLVING CREDIT LOAN REQUEST
EXHIBIT 8.01(l) TERMS OF CERTAIN SUBORDINATED INDEBTEDNESS
EXHIBIT 8.01(m)(i) ACQUISITION APPROVAL CERTIFICATE
EXHIBIT 8.01(m)(ii) ACQUISITION NOTICE CERTIFICATE
EXHIBIT 8.03(d) COMPLIANCE CERTIFICATE
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of May 18, 1994, as amended and is
made by and among MARINER HEALTH GROUP, INC., a Delaware corporation (the
"Borrower"), the BANKS (as hereinafter defined), and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as agent for the Banks under this Agreement
(hereinafter referred to in such capacity as the "Agent").
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$460,000,000; and
WHEREAS, the Banks are willing to provide such credit upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. In addition to words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context hereof clearly requires
otherwise:
Acquisition Approval Certificate shall have the meaning set
forth in Section 8.01(m)(i).
Acquisition Income Reporting Period shall mean the period
during which Borrower shall measure Consolidated Cash Flow from Operations
pursuant to Section 8.01(m) for purposes of computing Borrower's leverage ratio
and its other financial covenants on the date on which Borrower makes any
Permitted Acquisition, which period shall be either:
(1) the four fiscal quarters ending immediately
before the date of such Permitted Acquisition (the "Immediately Preceding Four
Quarters") if such Permitted Acquisition occurs after the Delivery Date for the
financial statements of Borrower for such Immediately Preceding Four Quarters,
or
(2) the four fiscal quarters ending one quarter
period prior to the end of the Immediately Preceding Four Quarters (the "Second
Preceding Four Quarters") if such Permitted Acquisition occurs before the
Delivery Date for the financial statements of Borrower for the Immediately
Preceding Four Quarters.
Acquisition Notice Certificate shall have the meaning given to
such term in Section 8.01(m)(ii).
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Acquisition Reporting Certification shall mean any Permitted
Acquisition with respect to which Borrower delivers or is required to deliver
either an Acquisition Notice Certificate or an Acquisition Approval Certificate
pursuant to Section 8.01(m).
Adjusted Consolidated Net Income shall mean for any period of
determination an amount equal to the net income of the Borrower and its
Subsidiaries for such period determined and consolidated in accordance with
GAAP, plus such extraordinary nonrecurring charges as are approved by the
Required Banks pursuant to Section 8.01(m), to the extent such expenses are
deducted in computing such net income.
Adjusted Net Income shall mean for any period of determination
an amount equal to the net income (loss) of the Borrower and its Subsidiaries
for such period determined and consolidated in accordance with GAAP; provided,
however, that there shall not be included in such Adjusted Net Income any
non-recurring items related to costs and expenses incurred in connection with
acquisitions and dispositions of assets, merger transactions or other business
combinations, any extraordinary gain or loss, the cumulative effect of a change
in accounting principles and costs related to the discharge of legal judgments
or settlement costs related to the settlement of a bona fide dispute between the
Borrower or any of its Subsidiaries and any other Person.
Affiliate as to any person shall mean any other person (i)
which directly or indirectly controls, is controlled by, or is under common
control with such person, (ii) which beneficially owns or holds 50% or more of
any class of the voting stock of the Borrower, or (iii) 50% or more of the
voting stock (or in the case of a person which is not an individual or a
corporation, 50% or more of the equity interest) of which is beneficially owned
or held, directly or indirectly, by the Borrower. Control, as used herein, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.
Agent shall mean PNC Bank, National Association and its
successors.
Agent's Fee shall have the meaning assigned to that term in
Section 10.15 hereof.
Agreement shall mean this Credit Agreement as the same may be
supplemented, amended, modified or restated from time to time including all
schedules and exhibits hereto.
Amendment No. 15 shall mean that certain Amendment No. 15 to
Credit Agreement dated October 3, 1997 among Borrower, the Banks and Agent,
together with schedules and exhibits thereto.
Amendment No. 17 to Credit Agreement dated July 14, 1998 among
Borrower, the Banks and Agent, together with schedules and exhibits thereto.
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Amendment No. 16 shall mean that certain Amendment No. 16 to
Credit Agreement dated January 2, 1998 among Borrower, the Banks and Agent,
together with schedules and exhibits thereto.
Ansonia shall mean Mariner Health Care of Southern
Connecticut, a corporation organized and existing under the laws of the State of
Connecticut.
Applicable Percentage Over Euro-Rate shall have the meaning
assigned to such term in Section 4.01(a)(ii).
Assignment and Assumption Agreement shall mean an Assignment
and Assumption Agreement by and among a Purchasing Bank, the Transferor Bank and
the Agent, as Agent and on behalf of the remaining Banks, substantially in the
form of Exhibit 1.01(A) hereto.
Authorized Officer shall mean with respect to each Loan Party
those persons designated by written notice to the Agent from the Borrower,
authorized to execute notices, reports and other documents required hereunder.
The Borrower may amend such list of persons from time to time by giving written
notice of such amendment to the Agent.
Banks shall mean the financial institutions named on Schedule
1.01(R)(2) hereto and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Bank.
Base Rate shall mean the greater of (i) the interest rate per
annum announced from time to time by the Agent at its Principal Office as its
then prime rate, which rate may not necessarily be the lowest rate then being
charged commercial borrowers by the Agent, or (ii) the Federal Funds Effective
Rate plus one-half percent (0.5%) per annum.
Base Rate Option shall mean Loans subject to the Revolving
Credit Base Rate Option.
Benefit Arrangement shall mean at any time an "employee
benefit plan," within the meaning of Section 3(3) of ERISA, which is neither a
Plan or a Multiemployer Plan and which is maintained, sponsored or otherwise
contributed to, by any member of the ERISA Group.
Borrower shall mean Mariner Health Group, Inc., a corporation
organized and existing under the laws of the State of Delaware.
Borrowing Date shall mean, with respect to any Loan, the date
for the making thereof or the renewal thereof or conversion thereof to the same
or a different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean (i) with respect to the Revolving
Credit Euro-Rate Portion of the Loans, Loans to which a Euro-Rate Option applies
by reason of the selection of, conversion to or renewal of such Interest Rate
Option on the same day and having
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the same Euro-Rate Interest Period, and (ii) with respect to the Revolving
Credit Base Rate Portion of the Loans, Loans to which the Base Rate Option
applies by reason of the selection of or conversion of such Interest Rate
Option.
Business Day shall mean (i) with respect to matters relating
to the Euro-Rate Option, a day on which banks in the London interbank market are
dealing in U.S. Dollar deposits and on which commercial banks are open for
domestic and international business in Pittsburgh, Pennsylvania and New York,
New York, and (ii) with respect to any other matter, a day on which commercial
banks are open for business in Pittsburgh, Pennsylvania and New York, New York.
Capital Stock shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants, rights or options to purchase any of
the foregoing.
Change in Ownership shall mean the occurrence of any of the
following: (i) if, from and after the Seventeenth Amendment Effective Date, any
person or group within the meaning of Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") excluding the Permitted
Investors, shall at any time designate or obtain the right to designate a
percentage (the "Third Party Board Percentage") equal to 25% or more of the
members of the Board of Directors of Paragon unless at such time the percentage
of the members of the Board of Directors of Paragon designated by the Permitted
Investors is greater than the Third Party Board Percentage; (ii) any "person" or
"group" (as such terms are defined above), excluding the Permitted Investors,
shall at any time become, or obtain rights (whether by means of warrants,
options or otherwise) to become, the "beneficial owner" (as defined in Rule
13(d) 3 and 13(d) 5 under the Exchange Act), directly or indirectly, of a
percentage (the "Third Party Stock Percentage") equal to 33-1/3% or more of the
Voting Stock of Paragon unless at such time the percentage of outstanding Voting
Stock of Paragon beneficially owned by the Permitted Investors (determined on a
fully diluted basis) is equal to or greater than the Third Party Stock
Percentage, provided, that for the purposes of this clause (ii), Voting Stock
that a Permitted Investor has the power to vote in its sole discretion pursuant
to contract or proxy shall be deemed to be beneficially owned by such Permitted
Investor and not by any other "person or "group"; (iii) a Specified Change of
Control shall occur; or (iv) Paragon shall cease to own, directly or indirectly,
one hundred percent (100%) of all Voting Stock of the Borrower.
Class A Excluded Entities shall mean collectively those
Excluded Entities which have not incurred any Restricted Indebtedness nor are
subject to or bound by the terms of any agreement with respect to Restricted
Indebtedness, and Class A Excluded Entity shall mean separately any Class A
Excluded Entity.
Closing Date shall mean May 18, 1994, which is the Business
Day on which the first Loan was made.
Collateral shall mean the Pledged Collateral, all of the
collateral under the Mortgages and the Leasehold Mortgages and any other
collateral security in which any of the
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Loan Parties may hereafter grant a security interest or other lien to the Agent
for the benefit of the Banks as security for their obligations under the Loan
Documents.
Commitment shall mean as to any Bank its Revolving Credit
Commitment, and Commitments shall mean the aggregate of the Revolving Credit
Commitments of all of the Banks.
Commitment Fee shall have the meaning assigned to that term in
Section 2.03 hereof.
Conditions for Incurrence of Certain Liens and Certain
Indebtedness shall mean those conditions set forth on Exhibit 1.01(C).
Consolidated Cash Flow from Operations for any period of
determination shall mean the difference between the amounts determined under the
following clauses (i) and (ii): (i) the sum of (X) the sum of Consolidated Net
Income, depreciation, amortization, other non-cash charges to Consolidated Net
Income, interest expense, and income tax expense of the Borrower and its
Restricted Subsidiaries for such period determined in accordance with GAAP, plus
(Y) the sum of the Consolidated Cash Flow from Operations Adjustment Amount for
all Class A Excluded Entities, minus (ii) non-cash credits to net income of the
Borrower and its Restricted Subsidiaries for such period determined in
accordance with GAAP, subject to the adjustments described in this definition
below.
If the Loan Parties make a Permitted Acquisition and the Banks
approve of the historical and pro forma financial statements of the business
acquired in such Permitted Acquisition pursuant to Section 8.01(m) hereof,
Consolidated Cash Flow from Operations shall be adjusted as set forth in
paragraphs (A), (B) and (C) below. The adjustments in Paragraphs (A), (B) and
(C) below shall apply to computations of the ratios in Sections 2.01, 2.03,
4.01(a), 8.02(f), 8.02(r) and 8.02(u) on the date of such Permitted Acquisition
and at the end of each of the four fiscal quarters after such Permitted
Acquisition. (The adjustments described in Paragraphs (A) and (B) below shall
not apply to computations of such ratios made as of the end of the fiscal
quarter immediately preceding the date of such Permitted Acquisition.)
(A) Consolidated Cash Flow from Operations for
periods prior to such Permitted Acquisition shall include (i) the sum of net
income, depreciation, amortization, other non-cash charges to net income,
interest expense and income tax expense of the acquired business, plus the
adjustment, if any pursuant to clause (C) below, minus (ii) non-cash credits to
net income of such business, in each case as determined in accordance with GAAP,
(B) Extraordinary or nonrecurring expenses under GAAP
incurred in connection with such Permitted Acquisition shall be excluded from
the net income of the acquired business when computing Consolidated Cash Flow
from Operations in the preceding sentence if the Required Banks have agreed to
such exclusion pursuant to Section 8.01(m), and
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(C) To the extent, in the determination of net income
of the acquired business utilized in clause (A) above, deductions were taken in
respect of rental expense pursuant to operating leases in accordance with GAAP
and following the consummation of a Permitted Acquisition the Borrower
appropriately amends such leases so that, in accordance with GAAP, such rental
expense pursuant to operating leases may properly be treated as rental expense
pursuant to capital leases (and the Borrower treats such leases as capital
leases for periods following the consummation by the Borrower of such Permitted
Acquisition) then, such net income for purposes of clause (A) above shall be
increased by the deductions taken in respect of rental expense pursuant to such
operating leases during the period of determination.
Consolidated Cash Flow from Operations Adjustment Amount shall
mean, for each Class A Excluded Entity, for any period of determination, the
amount equal to the product of (A) a percentage, as determined by the Agent in
its reasonable discretion, multiplied by (B) the difference between (i) the sum
of net income, depreciation, amortization, other non-cash charges to such net
income, interest expense and income tax expense of such Class A Excluded Entity
for such period, as determined in accordance with GAAP, minus (ii) non-cash
credits to net income of such Class A Excluded Entity for such period, as
determined in accordance with GAAP. In determining the applicable percentage
under clause (A) above, the Agent shall review with the Borrower the constituent
documents of each Excluded Entity, including without limitation, partnership
agreements, shareholder agreements and other relevant documents which the
Borrower agrees to provide as the Agent may reasonably request, and the Agent
shall also review the equity ownership interests of the Loan Parties in each
Excluded Entity and the actual cash flow available to be distributed to the Loan
Parties from the operations of each Excluded Entity.
Consolidated Net Income shall mean for any period of
determination an amount equal to the net income of the Borrower and its
Restricted Subsidiaries for such period determined in accordance with GAAP, but
without regard to net income attributable to Excluded Entities, plus such
extraordinary nonrecurring charges as approved by the Required Banks pursuant to
Section 8.01(m), to the extent such expenses are deducted in computing such net
income.
Consolidated Net Worth shall mean as of any date of
determination total stockholders' equity of the Borrower and its Subsidiaries as
of such date determined and consolidated in accordance with GAAP.
Control Investment Affiliate shall mean as to any Person, any
other Person which (a) directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person and (b) is organized by such
Person primarily for the purpose of making equity or debt investments in one or
more companies. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
Corporate Shares shall have the meaning assigned to that term
in Section 6.01(c).
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Corporate Subsidiaries shall mean collectively the
Subsidiaries of Borrower which are corporations, and Corporate Subsidiary shall
mean individually any of them.
Delivery Date shall mean the date which is the earlier of (i)
the date on which the Borrower delivers its consolidated financial statements to
the Agent and the Banks pursuant to Sections 8.03(b) and (c), or (ii) one
Business Day following the date on which such financial statements are due to be
delivered pursuant to such Sections.
Dollar Dollars U.S. Dollars and the symbol $ shall mean lawful
money of the United States of America.
Drawing Date shall have the meaning assigned to that term in
Section 2.09(d).
Environmental Complaint shall mean any written complaint
setting forth a cause of action for personal, property or natural resource
damage or equitable relief, order, notice of violation, citation, request for
information issued pursuant to any Environmental Laws by an Official Body,
subpoena or other written notice of any type relating to, arising out of, or
issued pursuant to any of the Environmental Laws or any Environmental
Conditions, as the case may be, in each case with respect to any violation or
alleged violation of Environmental Laws or release or threatened release of a
Regulated Substance.
Environmental Conditions shall mean any conditions of the
environment, including, without limitation, the work place, the ocean, natural
resources (including flora or fauna), soil, surface water, ground water, any
actual or potential drinking water supply sources, substrata or the ambient air,
relating to or arising out of, or caused by the use, handling, storage,
treatment, recycling, generation, transportation, release, spilling, leaking,
pumping, emptying, discharging, injecting, escaping, leaching, disposal,
dumping, threatened release or other management or mismanagement of Regulated
Substances resulting from the use of, or operations on, the Property.
Environmental Laws shall mean all federal, state, local and
foreign laws and regulations, including without limitation permits, licenses,
authorizations, bonds, orders, judgments, consent decrees issued, or entered
into, pursuant thereto, relating to pollution or protection of human health or
the environment or employee safety in the work place or the operation of the
activities of the Borrower and its Subsidiaries.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
ERISA Group shall mean, at any time, the Borrower and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with the Borrower, are treated as a single employer under Section 414
of the Internal Revenue Code.
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Euro-Rate shall mean with respect to the Loans comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Euro-Rate
Interest Period, the interest rate per annum determined by the Agent by dividing
(the resulting quotient rounded upward to the nearest 1/100 of 1% per annum) (i)
the rate of interest determined by the Agent in accordance with its usual
procedures (which determination shall be conclusive absent manifest error) to be
the "offered" eurodollar rate as quoted by Exco-▇▇▇▇▇▇ Incorporated (or
appropriate successor or, if Exco-▇▇▇▇▇▇ or its successor ceases to provide such
quotes, a comparable replacement as determined by the Agent) as evidenced on Dow
▇▇▇▇▇ Markets Service (formerly known as Telerate) display page 4756 (or such
other display page on the Dow ▇▇▇▇▇ Markets Service system as may replace Dow
▇▇▇▇▇ Markets Service display page 4756), two (2) Business Days prior to the
first day of such Euro-Rate Interest Period for an amount comparable to such
Borrowing Tranche and having a borrowing date and maturity comparable to such
Euro-Rate Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate
Reserve Percentage. The Euro-Rate may also be expressed by the following
formula:
Dow ▇▇▇▇▇ Markets Service page 4756 as quoted by Exco-▇▇▇▇▇▇,
Euro-Rate = (or appropriate successor)
-----------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option outstanding
on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Agent shall give prompt notice to the Borrower of the
Euro-Rate as determined or adjusted in accordance herewith, which determination
shall be conclusive absent manifest error.
Euro-Rate Interest Period shall have the meaning assigned to
that term in Section 4.02 hereof.
Euro-Rate Option shall mean Loans subject to the Revolving
Credit Euro-Rate Option.
Euro-Rate Reserve Percentage shall mean the maximum percentage
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined
by the Agent (which determination shall be conclusive absent manifest error)
which is in effect during any relevant period, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
reserve requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities") of a member bank in such System.
Event of Default shall mean any of the Events of Default
described in Section 9.01 of this Agreement.
Excluded Entities shall mean (i) any partnership, corporation
or limited liability company which is neither Paragon nor a Paragon Subsidiary
nor a Subsidiary of any Loan Party and with respect to which a Loan Party has
made a Restricted Investment permitted by Section 8.02(d)(iv), and (ii) any
Unrestricted Subsidiary of the Borrower which the Borrower has designated as one
of the Excluded Entities and with respect to which a Loan Party has made
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a Restricted Investment permitted by Section 8.02(d)(iv), and Excluded Entity
shall mean separately any Excluded Entity.
Existing Letters of Credit shall have the meaning given to
such term in Section 2.09.
Expiration Date shall mean, with respect to the Revolving
Credit Commitment, January 3, 2000.
Facility Purchase Option shall mean an option provided by a
Lessor Lender or Owned Facility Lender in an Intercreditor Agreement giving the
Agent or the Banks the right to purchase the Lessor Indebtedness or Owned
Facility Indebtedness from such Lessor Lender or Owned Facility Lender upon
certain events of default relating to such Indebtedness.
Federal Funds Effective Rate for any day shall mean the rate
per annum (based on a year of 360 days and actual days elapsed and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New
York (or any successor) on such day as being the weighted average of the rates
on overnight Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day of which such rate was announced.
Fixed Charge Coverage Ratio shall mean, for any period of
determination, the ratio of (a) the sum of Adjusted Consolidated Net Income,
interest expense, depreciation, amortization, income tax expense and operating
lease expense, for such period for the Borrower and its Subsidiaries, as
determined and consolidated in accordance with GAAP, to (b) the sum of interest
expense, operating lease expense, current maturities of long-term Indebtedness
(other than current maturities of obligations in respect of capital leases), all
dividends and distributions paid or for pro-forma calculation purposes, proposed
to be paid, by the Borrower to Paragon pursuant to Section 8.02(e)(vi), all for
such period for the Borrower and its Subsidiaries, as determined and
consolidated in accordance with GAAP.
GAAP shall mean generally accepted accounting principles as
are in effect on the Closing Date, subject to the provisions of Section 1.03
hereof, and applied on a consistent basis (except for changes in application in
which the Borrower's independent certified public accountants concur) both as to
classification of items and amounts.
Guaranty of any person shall mean any obligation of such
person guaranteeing or in effect guaranteeing any liability or obligation of any
other person in any manner, whether directly or indirectly, including, without
limiting the generality of the foregoing, any agreement to indemnify or hold
harmless any other person, any performance bond or other suretyship arrangement
and any other form of assurance against loss, except
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endorsement of negotiable or other instruments for deposit or collection in the
ordinary course of business.
Guaranty Agreements shall mean collectively the Guaranty and
Suretyship Agreements, in substantially the form attached hereto as Exhibit
1.01(G) executed and delivered by the Subsidiaries of Borrower except for
Pinnacle Rehab of Gwinnette and Pinnacle's Kansas Joint Venture to the Agent for
the benefit of the Banks, and Guaranty Agreement shall mean separately any
Guaranty Agreement.
Historical Statements shall have the meaning given to such
term in Section 6.01(i)(i).
Indebtedness shall mean as to any person at any time, any and
all indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such person for or in respect of: (i) borrowed money, including,
without limitation the Subordinated Notes, (ii) amounts raised under or
liabilities in respect of any note purchase or acceptance credit facility, (iii)
reimbursement obligations under any letter of credit, currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
protection agreement, (iv) any other transaction (including without limitation
forward sale or purchase agreements, capitalized (not operating) leases required
under GAAP to be disclosed as a liability on the Loan Party's balance sheet and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such person to finance its operations or capital
requirements (but not including the deferred portion of any Restricted
Investment in an Excluded Entity if such amount is to be paid from available
cash flow from operations of the Borrower and its Subsidiaries and also not
including trade payables and accrued expenses incurred in the ordinary course of
business which are not represented by a promissory note, instrument or other
evidence of indebtedness and which are not more than ninety (90) days past due
(unless such past due indebtedness is being disputed in good faith and an
appropriate reserve has been established with respect to such indebtedness in
accordance with GAAP)), provided that, for purposes of this clause (iv) the
phrase "other evidence of indebtedness" shall not include any ordinary course
evidence of trade accounts payable of the Borrower or any Subsidiary such as
purchase orders or invoices, or (v) any Guaranty of Indebtedness for borrowed
money.
Indenture shall mean that certain Indenture dated April 4,
1996, between the Borrower and State Street Bank and Trust Company, as trustee,
in respect of the Subordinated Notes, as the same may be amended, modified,
supplemented or restated from time to time in accordance with this Agreement.
Insolvency Proceedings shall mean, with respect to any Person,
(a) a case, action or proceeding with respect to such Person (i) before any
court or any other Official Body under any bankruptcy, insolvency,
reorganization or other, similar Law now or hereafter in effect, or (ii) for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of any Loan Party or otherwise
relating to the liquidation, dissolution, winding-up or relief of such Person,
or (b) any general assignment for
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the benefit of creditors, composition, marshaling of assets for creditors, or
other, similar arrangement in respect of such Person's creditors generally or
any substantial portion of its creditors; undertaken under any Law.
Intercreditor Agreements shall mean collectively, as of any
date of determination, each Intercreditor Agreement entered into between the
Agent and a Lessor Lender, each Intercreditor Agreement entered into between the
Agent and an Owned Facility Lender, each Intercreditor Agreement entered into as
required by Section 8.02(d)(iv), and each other Intercreditor Agreement entered
into between the Agent and any other Person, as required pursuant to this
Agreement, and Intercreditor Agreement shall mean, individually, any of the
Intercreditor Agreements.
Interest Payment Date shall mean each date specified for the
payment of interest in Section 5.03.
Interest Rate Option shall mean the Revolving Credit Euro-Rate
Option or Revolving Credit Base Rate Option.
Internal Revenue Code shall mean the Internal Revenue Code of
1986, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
Labor Contracts shall have the meaning assigned to that term
in Section 6.01(u).
Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
Leased Facilities shall mean collectively all health care
facilities leased by a Subsidiary of Borrower, as lessee, and Leased Facility
shall mean any of the Leased Facilities, individually.
Leasehold Mortgages shall mean collectively, as of any date of
determination, each Leasehold Mortgage granted by a Subsidiary Lessee in favor
of the Agent for the benefit of the Banks with respect to the Leased Facility
leased by such Subsidiary Lessee, and Leasehold Mortgage shall mean individually
any of the Leasehold Mortgages.
Lessor shall mean with respect to a Leased Facility, the
person which owns such facility and leases such facility to a Subsidiary Lessee.
Lessor Indebtedness shall mean Indebtedness of a Lessor either
secured by the assets of or related to the Leased Facility owned by such Lessor
or which includes restrictive covenants or other provisions related or
applicable to such Leased Facility.
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Lessor Lender shall mean, with respect to any Lessor
Indebtedness, the obligee thereof.
Letter of Credit shall have the meaning assigned to that term
in Section 2.09.
Letter of Credit Borrowing shall mean an extension of credit
resulting from a drawing under any Letter of Credit which shall not have been
reimbursed on the date when made and shall not have been converted into a
Revolving Credit Loan under Section 2.09(d).
Letter of Credit Fee shall have the meaning assigned to that
term in Section 2.09.
Letters of Credit Outstanding shall mean at any time the sum
of (i) the aggregate undrawn face amount of outstanding Letters of Credit and
(ii) the aggregate amount of all unpaid and outstanding Reimbursement
Obligations.
Lien shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, whether voluntarily or involuntarily given, including but not
limited to any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or capitalized lease intended as, or having the
effect of, security and any filed financing statement or other notice of any of
the foregoing (whether or not a lien or other encumbrance is created or exists
at the time of the filing).
Loan Documents shall mean this Agreement, the Notes, the
Guaranty Agreements, the Pledge Agreements, the Mortgages, the Leasehold
Mortgages, the Intercreditor Agreements, the Trustee Agreement, the
Subordination Agreement (Intercompany), and any other instruments, certificates
or documents delivered or contemplated to be delivered hereunder or thereunder
or in connection herewith or therewith, as the same may have previously been or
in the future be supplemented or amended from time to time in accordance
herewith or therewith, and Loan Document shall mean any of the Loan Documents.
Loan Parties shall mean the Borrower and its Subsidiaries,
other than those Subsidiaries which are permitted Excluded Entities.
Loan Request shall mean a request for Revolving Credit Loans
made in accordance with Section 2.05 hereof or a request to select, convert to
or renew a Euro-Rate Option in accordance with Section 4.02 hereof.
Loans shall mean collectively and Loan shall mean separately
all Revolving Credit Loans or any Revolving Credit Loan.
Mariner Maryland shall mean Mariner Health Care of Baltimore,
Inc., a corporation organized and existing under the laws of the Commonwealth of
Massachusetts.
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Mariner Nashville shall mean Mariner Health Care of Nashville,
Inc., a Delaware corporation, a Subsidiary of the Borrower and the successor by
merger to Convalescent Services Inc., a Georgia corporation.
Material Adverse Change shall mean any set of circumstances or
events which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any other Loan Document, (b) is or could reasonably be expected to be
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Borrower and its Subsidiaries taken as
a whole, (c) impairs materially or could reasonably be expected to impair
materially the ability of the Borrower or any of its Subsidiaries to duly and
punctually pay or perform its Indebtedness, or (d) impairs materially or could
reasonably be expected to impair materially the ability of the Agent or any of
the Banks, to the extent permitted, to enforce their legal remedies pursuant to
this Agreement or any other Loan Document.
Material Subsidiary shall mean any Subsidiary the revenue or
net income of which represented more than five percent (5%) of the Borrower's
consolidated revenues or consolidated net income during the preceding four (4)
fiscal quarters.
Member Interests shall have the meaning assigned to that term
in Section 6.01(c).
month, with respect to a Euro-Rate Interest Period, shall mean
the interval between the days in consecutive calendar months numerically
corresponding to the first day of such Euro-Rate Interest Period. The last day
of a calendar month shall be deemed to be such numerically corresponding day for
such calendar month (i) if there is no such numerically corresponding day in
such calendar month, or (ii) if the first day of such Euro-Rate Interest Period
is the last Business Day of a calendar month.
Mortgages shall mean collectively, as of any date of
determination, the second lien Mortgages granted by a Subsidiary Owner in favor
of the Agent for the benefit of the Banks with respect to the Owned Facility of
such Subsidiary Owner, and Mortgage shall mean individually any of the
Mortgages.
Multiemployer Plan shall mean any employee benefit plan which
is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and
to which the Borrower or any member of the ERISA Group is then making or
accruing an obligation to make contributions or, within the preceding five Plan
years, has made or had an obligation to make such contributions.
Multiple Employer Plan shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
NBG shall mean NationsBank of Georgia, N.A.
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NBT shall mean NationsBank of Tennessee, N.A.
Ninth Amendment Effective Date shall mean April 30, 1996,
which shall be the effective date of the Amendment No. 9 to this Agreement.
Non-Disturbance Agreements shall mean collectively, as of any
date of determination, the non-disturbance agreements executed by a Lessor
Lender and the applicable Subsidiary Lessee, each providing in part that the
Lessor Lender shall recognize the rights of the Subsidiary Lessee which is
lessee of the Leased Facility so financed by such Lessor Lender should such
Lessor Lender foreclose upon such Leased Facility.
Notes shall mean collectively the Revolving Credit Notes.
Official Body shall mean any national, federal, state, local
or other government or political subdivision thereof or any agency, authority,
bureau, central bank, commission, department or instrumentality of any
government or political subdivision thereof, or any court, tribunal, grand jury
or arbitrator, in each case whether foreign or domestic.
Owned Facilities shall mean all health care facilities
acquired by a Subsidiary of the Borrower (or the health care facilities which
are owned by a person which is acquired by a Loan Party and such person thereby
becomes a Subsidiary of the Borrower), which facilities (as of the date of
acquisition by a Loan Party or the date the owner of such facility becomes a
Subsidiary of the Borrower) have outstanding Indebtedness payable to a lender,
other than Indebtedness payable to the Banks pursuant to the Loan Documents, and
Owned Facility shall mean any Owned Facilities, individually.
Owned Facility Indebtedness shall mean with respect to an
Owned Facility, the Indebtedness of the Subsidiary Owner thereof payable to a
lender other than the Banks under this Agreement, which Indebtedness is secured
by the assets of such Owned Facility.
Owned Facility Lender shall mean with respect to a Subsidiary
Owner, the obligee of the Owned Facility Indebtedness payable by such Subsidiary
Owner.
Paragon shall mean Paragon Health Network, Inc., a corporation
organized and existing under the laws of the State of Delaware, which on the
effective date of the consummation of the Paragon Acquisition will change its
name to Mariner Post-Acute Network, Inc.
Paragon Acquisition shall mean the merger of Paragon
Acquisition Sub with and into the Borrower, with the Borrower being the
surviving corporation, whereupon the shareholders of the Borrower will receive
shares of Paragon common stock in exchange for their outstanding shares of the
Borrower's capital stock, and the Borrower will become a wholly-owned subsidiary
of Paragon, all pursuant to the Paragon Merger Agreement.
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Paragon Acquisition Sub shall mean Paragon Acquisition Sub,
Inc., a Delaware corporation and a wholly-owned Subsidiary of Paragon.
Paragon Credit Agreement shall mean that certain Credit
Agreement dated as of November 4, 1997, by and among Paragon, as borrower, the
lenders party thereto as lenders, The Chase Manhattan Bank, as administrative
agent, swing line lender and letter of credit bank, and NationsBank, N.A., as
documentation agent, as the same may be amended, supplemented or restated from
time to time.
Paragon Merger Agreement shall mean the Agreement and Plan of
Merger, dated as of April 13, 1998, among Paragon, Paragon Acquisition Sub and
the Borrower, as amended, supplemented, restated or otherwise modified from time
to time.
Paragon Senior Subordinated Note Indenture shall mean that
certain Indenture, dated November 4, 1997, with Paragon as issuer and IBJ
▇▇▇▇▇▇▇▇ Bank & Trust Company as trustee, with respect to the issuance by
Paragon of its 9 1/2% Senior Subordinated Notes due 2007 and its 10 1/2% Senior
Subordinated Discount Notes due 2007.
Paragon Subsidiary shall mean any Subsidiary of Paragon other
than the Borrower or any Subsidiary of the Borrower.
Participation Advance shall mean, with respect to any Bank,
such Bank's payment in respect of its participation in a Letter of Credit
Borrowing according to its Ratable Share pursuant to Section 2.09(g).
Partnership Interest shall have the meaning given to such term
in Section 6.01(c).
Partnership Subsidiaries shall mean collectively the
Subsidiaries of Borrower which are general or limited partnerships and
Partnership Subsidiary shall mean individually any of them.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Acquisition shall mean any merger, consolidation or
acquisition after the Closing Date described in and permitted under clause (iii)
or (iv) of Section 8.02(f).
Permitted Distribution Amount shall mean:
(A) for any Subsidiary (the "Payor Subsidiary"),
other than those Subsidiaries listed in (B) below, the permitted amount of
distributions to be made by the Payor Subsidiary which shall equal the
applicable amount so that the ratio of the following (x) to (y) shall be at
least equal to or greater than 2.0 to 1.0: (x) the sum of (i) net income, plus
(ii) to the extent deducted in determining net income for the applicable period
of determination under the preceding clause (i), interest expense, income tax
expense, depreciation, amortization, operating
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lease expense, and expense in respect of capital leases of the Payor Subsidiary,
plus (iii) capital expenditures, all for the Payor Subsidiary, as determined in
accordance with GAAP, for the four fiscal quarters of the Payor Subsidiary
immediately preceding the date of the proposed distribution, to (y) the sum of
(i) all payments of principal and other amounts due in respect of Indebtedness
(without limitation, prepayment fees, penalties or other amounts) of the Payor
Subsidiary during the fiscal quarter when the proposed distribution shall be
made and the following three fiscal quarters, plus (ii) the sum of the amounts
in respect of income tax expense, operating lease expense, expense in respect of
capital leases, and capital expenditures under clauses (x)(ii) and (iii) above
for the Payor Subsidiary for the four fiscal quarters immediately preceding the
date of the proposed distribution, plus (iii) the aggregate amount of the
proposed distribution by the Payor Subsidiary; and
(B) for each of Alimar Physicians resources, LLC.
Mariner Health of Forest Hills, LLC, Mariner Health of Bel Air, LLC, Medwin of
Connecticut, LLC, Tampa Health Properties, LTD (Bay-to-Bay), Westbury
Associates, New Hanover/Mariner Health, LLC (Wilmington), and Global Healthcare
Center - Bethesda, LLC, the permitted amount of distributions to be made by each
of them shall equal the amount permitted to be made in accordance with the
distribution provisions of their respective joint venture agreement, limited
liability company agreement, partnership agreement or similar agreement in
effect on the Sixteenth Amendment Effective Date ( a copy of which has been
delivered to the Agent), and no amendment shall be made to such provisions
regarding distributions in such joint venture agreements, limited liability
company agreements, partnership agreements or similar agreements following the
Sixteenth Amendment Effective Date without the prior written approval of the
Agent unless any distributions by such Subsidiary are permitted by the
provisions of clause (A) above and distributions by such Subsidiary are
otherwise in compliance with Section 8.02(e).
Permitted General Intangibles shall mean licenses, permits,
certificates or Medicare/Medicaid reimbursement contracts.
Permitted Investments shall mean:
(i) direct obligations of the United States of
America or any agency or instrumentality thereof or obligations backed by the
full faith and credit of the United States of America maturing in twelve months
or less from the date of acquisition;
(ii) commercial paper maturing in 180 days or less
rated not lower than A-1 by Standard & Poor's Corporation or P-1 by ▇▇▇▇▇'▇
Investors Service on the date of acquisition;
(iii) demand deposits, time deposits or certificates
of deposit maturing within one year in commercial banks whose obligations are
rated A-1, A or the equivalent or better by Standard & Poor's Corporation or
▇▇▇▇▇'▇ Investors Service on the date of acquisition;
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(iv) publicly traded debt securities or preferred
stocks rated at least A or better by either Standard & Poor's Corporation or by
▇▇▇▇▇'▇ Investors Service which in the aggregate do not have, at any time, a
cost basis under GAAP in excess of $1,000,000;
(v) common stocks, or mutual funds which invest in
common stocks provided that (A) such stocks are of corporations organized and
existing under the laws of the United States of America, (B) such stocks are
traded publicly on a national securities exchange or the "over the counter
market", (C) the Borrower or its Subsidiaries do not have a cost basis in excess
of $15,000,000 in the aggregate in such stocks and mutual funds, (D) the
Borrower or its Subsidiaries invest in such stocks or mutual funds using funds
obtained from sources other than, directly or indirectly, proceeds of Loans
hereunder and (E) the cost basis of the Borrower or its Subsidiaries in such
stocks and mutual funds does not exceed at any time the amount of cash invested
in investments described in clauses (i) through (iv) and (vi) of this definition
of Permitted Investments; and
(vi) investments in money market funds rated AA or
AAm-G or higher by Standard & Poor's Corporation (or equivalent rating) whose
net asset value remains a constant $1.00 per share.
Permitted Investors shall mean Apollo Management L.P., a
Delaware limited partnership and its Control Investment Affiliates.
Permitted Leased Facility Liens shall mean, with respect to a
Subsidiary Lessee, Liens, meeting all of the criteria specified below, solely on
certain of the Permitted General Intangibles of such Subsidiary Lessee, granted
in favor of the Lessor Lender providing financing to the Lessor which is the
lessor of such Subsidiary Lessee's Leased Facility, and such Liens secure the
Lessor Indebtedness provided by such Lessor Lender. Such Liens are permitted
under this Agreement and shall be deemed to be "Permitted Leased Facility Liens"
only if the following limitations are satisfied:
(i) Such Liens must be terminated on or before the
earlier of: (i) the maturity of the Lessor Indebtedness which such Liens secure
(without giving effect to any extension of such maturity after the Sixteenth
Amendment Effective Date , unless the extension of such maturity is otherwise
permitted by and is in accordance with this Agreement) or (ii) any refinancing,
replacement or substitution of such Lessor Indebtedness which such Lien secures;
(ii) Such Subsidiary Lessee shall have granted to
Agent perfected security interests in each of the assets of such Subsidiary
Lessee encumbered by such Liens, and the Agent's security interests shall have
priority over all other Liens on such assets, except that they shall be
subordinate to the Liens in favor of the Lessor Lender unless the Lessor Lender
is listed on Schedule 6.01(aa) hereto and such Schedule states that such Lessor
Lender has refused to consent to the grant to Agent of such second Liens;
(iii) The amount of Lessor Indebtedness secured by
such Liens may not be increased after the date such Subsidiary Lessee becomes a
Subsidiary of the
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Borrower, and any reductions in the amount of such Lessor Indebtedness after
such date shall be permanent; and
(iv) Any termination by such Lessor Lender of such
Liens in an asset after the date such Subsidiary Lessee becomes a Subsidiary of
the Borrower shall be permanent, and no Loan Party shall thereafter grant any
new Lien on assets of any Loan Party in favor of such Lessor Lender.
Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business and which are not yet due and
payable;
(ii) Pledges or deposits made in the ordinary course
of business to secure payment of workers' compensation, or to participate in any
fund in connection with workers' compensation, unemployment insurance, old-age
pensions or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen,
carriers, or other like Liens, securing obligations incurred in the ordinary
course of business that are not yet due and payable and Liens of landlords
securing obligations to pay lease payments that are not yet due and payable or
in default;
(iv) Good faith pledges or deposits made in the
ordinary course of business to secure performance of bids, tenders, progress or
advance payments, contracts (other than for the repayment of borrowed money) or
leases, not in excess of the aggregate amount due thereunder, or to secure
statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;
(v) Encumbrances consisting of zoning restrictions,
easements, reservations, rights of way or other restrictions on the use of real
property, none of which materially impairs the use of such property as currently
used or the value thereof, and none of which is violated in any material respect
by existing or proposed structures or land use;
(vi) Liens, security interests and mortgages in favor
of the Agent for the benefit of the Banks;
(vii) Liens in respect of capital leases as and to
the extent permitted in Section 8.02(p) and Liens in respect of operating
leases;
(viii) Any Lien existing on the Sixteenth Amendment
Effective Date and described on Schedule 1.01(P) hereto (excluding Permitted
Leased Facility Liens and Permitted Owned Facility Liens which are addressed in
clauses (xi) and (xii) below) provided that the principal amount secured thereby
is not hereafter increased and no additional assets become subject to such Lien
(other than through after-acquired property clauses in effect on the date
hereof);
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(ix) Purchase Money Security Interests or other
liens, provided that the aggregate amount of loans and deferred payments secured
by such Purchase Money Security Interests or other liens shall not exceed
$10,000,000 (excluding for the purpose of this computation any loans or deferred
payments secured by Liens described on Schedule 1.01(P) hereto);
(x) The following, (A) if the validity or amount
thereof is being contested in good faith by appropriate and lawful proceedings
diligently conducted so long as levy and execution thereon have been stayed and
continue to be stayed or (B) if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry, and in either case they do not
materially affect the Collateral or, in the aggregate, materially impair the
ability of any Loan Party to perform its obligations hereunder or under the
other Loan Documents:
(1) Claims or Liens for taxes, assessments
or charges due and payable and subject to interest or penalty, provided
that such Loan Party maintains such reserves or other appropriate
provisions as shall be required by GAAP and pays all such taxes,
assessments or charges forthwith upon the commencement of proceedings
to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and
defects of title to, real or personal property other than a material
portion of the Collateral, including any attachment of personal or real
property or other legal process prior to adjudication of a dispute on
the merits; or
(3) Claims or Liens of mechanics,
materialmen, warehousemen, carriers, or other statutory nonconsensual
Liens;
(xi) Permitted Leased Facility Liens existing as of
the Sixteenth Amendment Effective Date which are described on Schedule 6.01(aa)
as of such date, and, after the Sixteenth Amendment Effective Date, subject to
the approval of the Required Banks (including without limitation satisfaction of
all applicable conditions set forth on Exhibit 1.01(C)), additional Permitted
Leased Facility Liens;
(xii) Permitted Owned Facility Liens existing as of
the Sixteenth Amendment Effective Date which are described on Schedule 6.01(aa)
as of such date, and, after the Sixteenth Amendment Effective Date, subject to
the approval of the Required Banks (including without limitation, satisfaction
of all applicable conditions set forth on Exhibit 1.01(C)), additional Permitted
Owned Facility Liens; and
(xiii) With respect to an Unrestricted Subsidiary
which is an Excluded Entity, Liens securing Indebtedness incurred by such
Unrestricted Subsidiary, provided that the sole assets subject to such Lien are
assets of such Unrestricted Subsidiary or assets of a person other than any Loan
Party or other Unrestricted Subsidiary.
Permitted Owned Facility Liens shall mean, with respect to a
Subsidiary Owner, Liens, meeting all of the criteria specified below, on real
and personal property of such
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Subsidiary Owner relating to the Owned Facility of such Subsidiary Owner,
granted in favor of the Owned Facility Lender providing financing with respect
to such Owned Facility, and such Liens secure the Owned Facility Indebtedness
provided by such Owned Facility Lender. Such Liens are permitted under this
Agreement and shall be deemed to be "Permitted Owned Facility Liens" only if the
following limitations are satisfied:
(i) Such Liens must be terminated on or before the
earlier of: (i) the maturity of the Owned Facility Indebtedness which such Liens
secure (without giving effect to any extension of such maturity after the
Sixteenth Amendment Effective Date, unless the extension of such maturity is
otherwise permitted by and is in accordance with this Agreement) or (ii) any
refinancing, replacement or substitution of the Owned Facility Indebtedness
which such Lien secures;
(ii) The Subsidiary Owner shall have granted to Agent
second priority mortgage liens and security interests in each of the assets
which is encumbered by such Liens;
(iii) The amount of Owned Facility Indebtedness
secured by such Liens may not be increased after the earlier of the date such
Owned Facility was acquired by a Loan Party or the person owning such facility
becomes a Subsidiary of the Borrower and any reductions in the amount of such
Owned Facility Indebtedness after such date shall be permanent; and
(iv) Any termination by an Owned Facility Lender of
such Liens in an asset after the earlier of the date such Owned Facility was
acquired by a Loan Party or the person owning such facility becomes a Subsidiary
of the Borrower shall be permanent and the Subsidiaries of Borrower may not
thereafter grant any new Lien on assets of any Loan Party in favor of such Owned
Facility Lender.
Permitted Redemption Period shall have the meaning as set
forth in Section 8.02(e).
Permitted Subordinated Indebtedness shall mean Indebtedness of
the Borrower in an amount and on terms and conditions (including provisions
subordinating such Indebtedness to the Indebtedness and all other obligations of
the Loan Parties to the Agent and the Banks under the Loan Documents)
satisfactory to the Agent (whose approval will not be unreasonably withheld),
designated by the Agent as "Permitted Subordinated Indebtedness" and which
refinances, in whole or in part, the Subordinated Notes; provided however that,
in addition to the approval of the Agent, the prior written approval of the
Required Banks (which shall not be unreasonably withheld) shall be required for
the Borrower to incur Indebtedness which refinances, in whole or in part, the
Subordinated Notes, if and only if the terms of such new Indebtedness include
any of the following: (x) a provision that amortizes any principal of such new
Indebtedness prior to the Expiration Date, (y) a principal amount of such
Indebtedness in excess of $151.5 million, or (z) any financial covenant which is
more restrictive than any financial covenant contained in this Agreement. It is
acknowledged and agreed that in accordance with Section 2.08 and the other
provisions of this Agreement (including, without
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limitation the provisions of Sections 2.05 and 7.01), up to $25 million of
proceeds of Loans may be used to purchase a portion of the Subordinated Notes.
It is expressly agreed that in no event shall proceeds of Loans used to purchase
Subordinated Notes be deemed to be "Permitted Subordinated Indebtedness".
Person shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, government or political subdivision or agency thereof, or any other
entity.
Pinnacle shall mean Pinnacle Care Corporation, a corporation
organized and existing under the laws of the State of Delaware.
Pinnacle Rehab of Gwinnette shall mean Pinnacle Rehab of
Gwinnette, a general partnership formed and existing under the laws of the State
of Georgia, with Pinnacle Rehabilitation of Georgia, Inc., a Georgia
corporation, ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ as its general partners.
Pinnacle's Kansas Joint Venture shall mean Pinnacle's Kansas
Joint Venture, a general partnership formed and existing under the laws of the
State of Kansas, with Pinnacle Rehabilitation of Missouri, Inc., a Missouri
corporation, and Jusker Corporation, a Kansas corporation as its general
partners.
Plan shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
Pledge Agreements shall mean collectively the Pledge
Agreements in substantially the form attached hereto as: (i) Exhibit 1.01(P)(1)
executed and delivered by the Borrower to the Agent for the benefit of the
Banks; (ii) Exhibit 1.01(P)(2) executed and delivered by any Subsidiary which
owns any equity ownership interest in another Corporate Subsidiary to the Agent
for the benefit of the Banks; (iii) Exhibit 1.01(P)(3) executed by any
Subsidiary which owns any interest in a Partnership Subsidiary; and (iv) any
other agreement pledging equity interests of a Subsidiary to the Agent for the
benefit of the Banks, in form and substance satisfactory to the Agent, as any
such Pledge Agreement may hereinafter be modified, amended, restated or replaced
from time to time in form and substance satisfactory to the Agent, and Pledge
Agreement shall mean separately any Pledge Agreement.
Pledged Collateral shall have the meaning assigned to that
term in the respective Pledge Agreements.
PNC Bank shall mean PNC Bank, National Association, a national
banking association, its successors and assigns.
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Potential Default shall mean any event or condition which with
notice, passage of time or a determination by the Agent or the Required Banks,
or any combination of the foregoing, would constitute an Event of Default.
Principal Office shall mean the main banking office of the
Agent, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
Prior Credit Agreement shall mean that certain Credit
Agreement dated as of October 6, 1993 among Borrower, certain of the Banks and
PNC Bank, as Agent.
Prior Security Interest shall mean a valid and enforceable
perfected first priority security interest under the Uniform Commercial Code in
the UCC Collateral which is subject only to Permitted Liens.
Prohibited Transaction shall mean any prohibited transaction
as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
for which neither an individual nor a class exemption has been issued by the
United States Department of Labor.
Property shall mean all real property, both owned and leased,
of the Loan Parties.
Purchase Money Security Interest shall mean Liens upon
tangible personal property securing loans to a Loan Party or deferred payments
by a Loan Party for the purchase of such tangible personal property.
Purchase Price shall mean, with respect to any Permitted
Acquisition by the Loan Parties, the sum of (i) cash paid at closing, (ii) the
amount of any deferred payments, which are not contingent on the financial
performance of the business being acquired, (iii) the projected amount of any
deferred payments which are contingent on the financial performance of the
business being acquired following the acquisition, provided that it shall be
assumed for purposes of such projection that the cash flow and other financial
performance of the acquired business in each year after the acquisition date
shall be the same as the financial performance of such business during the
twelve (12) months preceding such date, (iv) the amount of any debt assumed or
guaranteed by any Loan Party, (v) if the Loan Parties are acquiring stock of
another person (whether by purchase, merger or otherwise) the amount of debt of
such person outstanding after the acquisition, plus (vi) the value of any stock,
securities or other consideration given by any of the Loan Parties in connection
therewith. If the consideration to be paid in connection with a Permitted
Acquisition includes deferred payments which are contingent on the financial
performance of the acquired business after the acquisition, the Loan Parties
shall compare the amount of deferred payments which the Loan Parties actually
pay (or which become ascertainable if the Loan Parties can ascertain the amount
of any deferred payments before paying them) with the amount which the Loan
Parties projected they would pay pursuant to clause (iii) in the preceding
sentence. The Purchase Price in connection with such acquisition shall be deemed
to increase by the amount of such excess for purposes of determining the
aggregate Purchase Price paid by the Loan Parties in connection with Permitted
Acquisitions pursuant to Sections 8.02(f)(iii)(v) and 8.02(f)(iv)(x).
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Purchasing Bank shall mean a Bank which becomes a party to
this Agreement by executing an Assignment and Assumption Agreement.
Ratable Share shall mean the proportion that a Bank's
Revolving Credit Commitment bears to the Revolving Credit Commitments of all of
the Banks, respectively.
Redemption Amount shall mean the amount, determined as of the
last Business Day of each fiscal quarter of the Borrower for such fiscal quarter
then ended, equal to the sum of the amounts determined under the following items
(A) and (B):
(A) the difference between (x) $150,000,000 (which is the
aggregate original principal amount of the Subordinated Notes), minus (y) the
sum of (i) the aggregate original principal amount of the Subordinated Notes
outstanding as of the last day of such fiscal quarter, plus (ii) the aggregate
original principal amount of Permitted Subordinated Indebtedness outstanding as
of the last day of such fiscal quarter, plus (iii) the aggregate original
principal amount of the Subordinated Notes purchased by the Borrower during such
fiscal quarter with either the cash proceeds of common stock or other equity
securities issued by the Borrower to Paragon during such fiscal quarter for such
purpose or the cash proceeds of a loan by Paragon to the Borrower permitted by
Section 8.02(a)(iv) during such fiscal quarter for such purpose; and
(B) the aggregate amount of any distributions or dividends
made by the Borrower to Paragon pursuant to Section 8.02(e)(vii) hereof during
such fiscal quarter using proceeds of Loans.
Regulated Substances shall mean any substance, including
without limitation any solid, liquid, gaseous, thermal or thoriated material,
refuse, garbage, wastes, chemicals, petroleum products or by-products, dust,
scrap, PCB's, heavy metals, any substances defined as "hazardous substances,"
"pollutants," "pollution," "contaminant," "hazardous or toxic substances,"
"toxic wastes," "regulated substances," "industrial waste," "residual waste,"
"solid wastes," "municipal wastes," "infectious waste," "chemotherapeutic
waste," "medical waste" or any related materials or substances as now or
hereafter defined pursuant to any Environmental Laws, ordinances, rules or
directives of any Official Body, the generation, manufacture, processing,
distribution, treatment, storage, disposal, transport, recycling, reclamation,
use, reuse or other management or mismanagement of which is regulated by the
Environmental Laws.
Regulation U shall mean Regulation U, T or X as promulgated by
the Board of Governors of the Federal Reserve System, as amended from time to
time.
Reimbursement Obligations shall have the meaning assigned to
such term in Section 2.09(d).
Reportable Event means a reportable event described in Section
4043 of ERISA and regulations thereunder with respect to a Plan or Multiemployer
Plan.
Required Banks shall mean: (i) if there are no Loans
outstanding, Banks whose Commitments aggregate at least 51% of the Commitments
of all of the Banks, or (ii) if
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there are Loans outstanding, Banks whose Loans outstanding aggregate at least
51% of the total principal amount of the Loans outstanding hereunder.
Restricted Indebtedness shall mean with respect to the
Excluded Entities, Indebtedness secured by any Liens, other than Indebtedness
not to exceed $250,000 in the aggregate for all Excluded Entities secured by
Purchase Money Security Interests.
Restricted Investments shall mean collectively the following
with respect to the Excluded Entities: (i) investments or contributions by any
of the Loan Parties directly or indirectly in or to the capital of or other
payments to (except in connection with transactions for fair value in the
ordinary course of business) an Excluded Entity, (ii) loans by any of the Loan
Parties directly or indirectly to an Excluded Entity, (iii) guaranties by any of
the Loan Parties directly or indirectly of the obligations of an Excluded
Entity, or (iv) other obligations, contingent or otherwise, of any of the Loan
Parties to or for the benefit of an Excluded Entity. If the nature of a
Restricted Investment is tangible property then the amount of such Restricted
Investment shall be determined by valuing such property at fair value in
accordance with the past practice of the Loan Parties and such fair values shall
be satisfactory to the Agent, in its sole discretion.
Restricted Subsidiaries shall mean all Subsidiaries of the
Borrower other than the Unrestricted Subsidiaries of the Borrower which as of
the date of determination are Excluded Entities.
Revolving Credit Base Rate Option shall have the meaning
assigned to that term in Section 4.01(a)(i).
Revolving Credit Base Rate Portion shall mean the portion of
the Revolving Credit Loans bearing interest at any time under the Revolving
Credit Base Rate Option.
Revolving Credit Commitment shall mean as to any Bank at any
time, the amount initially set forth opposite its name on Schedule 1.01(R)(2)
hereto in the column labeled "Amount of Commitment for Revolving Credit Loans,"
and thereafter on Schedule I to the most recent Assignment and Assumption
Agreement, as such amount shall be reduced from time to time pursuant to
Sections 2.01 and 2.10 hereof, and Revolving Credit Commitments shall mean the
aggregate Revolving Credit Commitments of all of the Banks.
Revolving Credit Euro-Rate Option shall have the meaning
assigned to that term in Section 4.01(a)(ii).
Revolving Credit Euro-Rate Portion shall mean the portion of
the Revolving Credit Loans bearing interest at any time under the Revolving
Credit Euro-Rate Option.
Revolving Credit Loan Request shall have the meaning set forth
in Section 2.05.
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Revolving Credit Loans shall mean collectively and Revolving
Credit Loan shall mean separately all Revolving Credit Loans or any Revolving
Credit Loan made by the Banks or one of the Banks to the Borrower pursuant to
Section 2.01 hereof.
Revolving Credit Notes shall mean collectively all the
Revolving Credit Notes of the Borrower in the form of Exhibit 1.01(R) hereto
evidencing the Revolving Credit Loans together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in part
and Revolving Credit Note shall mean separately any Revolving Credit Note.
Revolving Facility Usage shall mean at any time the sum of the
Revolving Credit Loans outstanding and the Letters of Credit Outstanding.
Seventeenth Amendment Effective Date shall mean July 31, 1998.
Sixteenth Amendment Effective Date shall mean January 2, 1998.
Solvent shall mean, with respect to any person on a particular
date, that on such date (i) the fair value of the property of such person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such person, (ii) the present fair saleable value of
the assets of such person is not less than the amount that will be required to
pay the probable liability of such person on its debts as they become absolute
and matured, (iii) such person is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (iv) such person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
person's ability to pay as such debts and liabilities mature, and (v) such
person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
Special Distributions shall mean as of any date of
determination, the aggregate amount of all dividends or other distributions made
by the Loan Parties and their Subsidiaries to Paragon from and after the
Seventeenth Amendment Effective Date through such date of determination, as
permitted by Section 8.02(e) clauses (iv), (vi) or (vii).
Special Fee shall have the meaning set forth in Section 2.04.
Specified Change of Control shall mean a "Change of Control"
as defined in the Paragon Senior Subordinated Note Indenture, as in effect on
the Seventeenth Amendment Effective Date, without regard to any amendments to
such definition subsequent to such date.
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Subordinated Indebtedness Incurrence Date shall mean March 28,
1996, the date of issuance by the Borrower of the Subordinated Notes pursuant to
and in accordance with the Indenture.
Subordinated Notes shall mean the $150 million in original
principal amount of Subordinated Notes due 2006 issued by the Borrower pursuant
to the Indenture. It is acknowledged that prior to the Exchange Offer, the
Subordinated Notes shall consist of the Series A Securities, and following the
Exchange Offer, the Subordinated Notes shall consist of the Series B Securities
and any Series A Securities which are not exchanged in the Exchange Offer, as
such terms are defined in the Indenture.
Subordination Agreement (Intercompany) shall mean that certain
Subordination Agreement (Intercompany) in the form of Exhibit 1.01(S) hereto
executed and delivered by each Loan Party to the Agent for the benefit of the
Banks.
Subsidiary of any person at any time shall mean (i) any
corporation, limited liability company or trust of which more than 50% (by
number of shares or number of votes) of the outstanding capital stock, member
interests or shares of beneficial interest normally entitled to vote for the
election of one or more directors or trustees (regardless of any contingency
which does or may suspend or dilute the voting rights) is at such time owned
directly or indirectly by such Person or one or more of such Person's
Subsidiaries, or any partnership of which such Person is a general partner or of
which more than 50% of the general or voting partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, and (ii) any corporation, trust, limited liability company,
partnership or other entity which is controlled or capable of being controlled
by such Person or one or more of such Person's Subsidiaries.
Subsidiary Lessee shall mean each Subsidiary of Borrower which
is the lessee of a Leased Facility.
Subsidiary Owner shall mean, with respect to an Owned
Facility, the Subsidiary of Borrower which is the owner thereof.
Total Indebtedness shall mean as of any date of determination,
without duplication, the total Indebtedness of the Borrower and its
Subsidiaries.
Transferor Bank shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.
Tri-State shall mean Tri-State Health Care, Inc., a West
Virginia corporation, which is a Subsidiary of Pinnacle and the sole general
partner of Seventeenth Street Partnership.
Trustee Agreement shall mean, as of any date of determination,
collectively (i) that certain Paying Agency Agreement executed by Mariner
Nashville, PNC Bank and certain of the Lessors listed on Schedule 6.01(aa), in
the form of Exhibit 1.01(T)
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providing for the payment by Mariner Nashville to PNC Bank, as trustee for
Mariner Nashville and such Lessors, of monies due to such Lessors under the
leases between such Lessors and Mariner Nashville, and the subsequent payment of
such monies by PNC Bank to the Lessors; and (ii) in accordance with the
requirements of this Agreement, each other similar agreement, in form and
substance satisfactory to the Agent relating to certain Subsidiaries of the
Borrower and certain Lessors.
UCC Collateral shall mean the Pledged Collateral and that
portion of the Collateral under the Mortgages and the Leasehold Mortgages which
consists of personal property in which a security interest may be granted under
the Uniform Commercial Code.
Uniform Commercial Code shall have the meaning assigned to
that term in Section 6.01(p).
Unrestricted Subsidiary of any person at any time shall mean
any corporation or limited liability company of which more than 50% but less
than 80% (by number of shares or number of votes) of the outstanding capital
stock or member interests normally entitled to vote for the election of one or
more directors (regardless of any contingency which does or may suspend or
dilute the voting rights) is at such time owned directly or indirectly by such
Person or one or more of such Person's Subsidiaries, or any partnership of which
such Person is a general partner or of which more than 50% but less than 80% of
the general or voting partnership interests is at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries.
Voting Stock shall mean, with respect to any Person, any class
or series of Capital Stock of such Person that is ordinarily entitled to vote in
the election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
1.02 Construction. Unless the context of this Agreement otherwise
clearly requires, references to the plural include the singular, the singular
the plural and the part the whole, "or" has the inclusive meaning represented by
the phrase "and/or," and "including" has the meaning represented by the phrase
"including without limitation." References in this Agreement to "determination"
of or by the Agent or the Banks shall be deemed to include good faith
calculations by the Agent or the Banks (in the case of quantitative
determinations) and good faith beliefs by the Agent or the Banks (in the case of
qualitative determinations). Whenever the Agent or the Banks are granted the
right herein to act in its or their sole discretion or to grant or withhold
consent such right shall be exercised in good faith. The words "hereof,"
"herein," "hereunder" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
section and other headings contained in this Agreement and the Table of Contents
preceding this Agreement are for reference purposes only and shall not control
or affect the construction of this Agreement or the interpretation thereof in
any respect. Section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
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1.03 Accounting Principles. Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP. In the event of: (i) any
dissolution or liquidation of any Subsidiary pursuant to Section 8.02(f) of this
Agreement, (ii) any consolidation or merger of any Subsidiary with or into any
person (other than the Borrower or another Subsidiary) pursuant to Section
8.02(f) of this Agreement, or (iii) the sale, transfer, lease or disposition of
assets of the Borrower or any Subsidiary permitted pursuant to Section
8.02(g)(v) of this Agreement, then, in the case of any of the foregoing clauses
(i), (ii) or (iii), any financial covenant to be calculated hereunder
(including, without limitation, those set forth in Sections 2.01(c), 4.01, and
8.02(q) through 8.02(u), inclusive) shall be calculated for the period during
which such sale, transfer, lease or other disposition occurs, excluding all
financial items (for example and without limitation, all cash flow, revenues,
expenses, and income) attributable to the assets sold, transferred, leased or
otherwise disposed of. It is expressly agreed that for all periods ending after
the consummation of the Paragon Acquisition, all cash expenses (other than
expenses directly related to the Paragon Acquisition) paid by Paragon on behalf
of or for the benefit of the Borrower or any Subsidiary of the Borrower and
reimbursed by the Borrower pursuant to Section 8.02(e)(v) shall be treated as an
expense of the Borrower or such Subsidiary of the Borrower (whether or not GAAP
would require such amount to be included as an expense of the Borrower or such
Subsidiary) for the purpose of determining "net income of the Borrower and its
Subsidiaries in accordance with GAAP" under this Agreement in connection with
the calculation of the applicable financial covenants under this Agreement
(including without limitation in the determination of Adjusted Consolidated Net
Income, Consolidated Cash Flow from Operations, Consolidated Net Income, the
numerator of the Fixed Charge Coverage Ratio and the calculations set forth in
Section 8.02(e)), it being the express intent of the Borrower, the Agent and the
Banks that notwithstanding payment of expenses by Paragon on behalf of or for
the benefit of the Borrower or Subsidiaries of the Borrower that consolidated
net income of the Borrower and its Subsidiaries shall continue to be determined
after the consummation of the Paragon Acquisition as if all expenses of the
Borrower and its Subsidiaries are paid by them.
ARTICLE II
REVOLVING CREDIT FACILITY
2.01 Revolving Credit Commitments; Limitation on Borrowings.
(a) Revolving Credit Commitments. Subject to the terms and
conditions hereof and relying upon the representations and warranties herein set
forth, each Bank severally agrees to make revolving credit loans (the "Revolving
Credit Loans") to the Borrower at any time and from time to time on or after the
date hereof to, but not including, the Expiration Date in an aggregate principal
amount not to exceed at any one time such Bank's Revolving Credit Commitment
minus such Bank's Ratable Share of the Letters of Credit Outstanding. Within
such limits of time and amount and subject to the other provisions of this
Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section
2.01. In no event shall the
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aggregate of outstanding Revolving Credit Loans and Letters of Credit
Outstanding as of any date exceed the Revolving Credit Commitments as of such
date, and the entire outstanding principal amount of the Revolving Credit Loans
shall be due and payable on the Expiration Date.
(b) [INTENTIONALLY OMITTED]
(c) Limitation on Borrowings. Notwithstanding the provisions
of Sections 2.01(a) and 2.01(b) of this Agreement, the outstanding principal
amount of Revolving Credit Loans to the Borrower shall not exceed at any time an
amount such that after giving effect to such borrowings, the ratio of (i) Total
Indebtedness to (ii) Consolidated Cash Flow from Operations exceeds: (A) 5.25 to
1.0 through and including September 30, 1998; (B) 5.00 to 1.0 from October 1,
1998 through and including September 30, 1999; (C) 4.75 to 1.0 from October 1,
1999 through and including September 30, 2000; and (D) 4.5 to 1.0 from October
1, 2000 and thereafter.
For purposes of such ratio, the amount determined under clause
(i) shall be as of the date of determination and the amount determined under
clause (ii) shall be for the twelve-month period ending on the last day of the
month which precedes such date of determination.
Notwithstanding the provisions of this subsection (c), at no
time shall the outstanding principal amount of proceeds of Revolving Credit
Loans made to the Borrower which are used by the Borrower or any Subsidiary of
the Borrower to, directly or indirectly, make an investment in or loan to
Ansonia, exceed Two Million Dollars ($2,000,000). Notwithstanding the provisions
of this subsection (c), at no time shall proceeds of Revolving Credit Loans be
used by the Borrower or any Subsidiary of the Borrower to, directly or
indirectly, make an investment in or loan to Pinnacle Rehab of Gwinnette or
Pinancle's Kansas Joint Venture.
2.02 Nature of Banks' Obligations With Respect to Revolving Credit
Loans. Each Bank shall be obligated to participate in each request for Revolving
Credit Loans pursuant to Section 2.05 hereof in accordance with its Ratable
Share. The aggregate of each Bank's Revolving Credit Loans outstanding hereunder
to the Borrower at any time shall never exceed its Revolving Credit Commitment
minus its Ratable Share of Letters of Credit Outstanding. The obligations of
each Bank hereunder are several. The failure of any Bank to perform its
obligations hereunder shall not affect the obligations of the Borrower to any
other party nor shall any other party be liable for the failure of such Bank to
perform its obligations hereunder. The Banks shall have no obligation to make
Revolving Credit Loans hereunder on or after the Expiration Date.
2.03 Commitment Fees. Accruing from January 1, 1998 until the
Expiration Date, the Borrower agrees to pay to the Agent for the account of each
Bank, as consideration for such Bank's Revolving Credit Commitment hereunder, a
commitment fee (the "Commitment Fee") equal to the applicable percentage set
forth below based on the ratio of Total Indebtedness to Consolidated Cash Flow
from Operations.
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Ratio of Total Indebtedness
to Consolidated Commitment Fee
Cash Flow From Operations (per annum)
------------------------------------- --------------
Greater than 5.0 to 1.0 .350%
Greater than 4.5 to 1.0 but .300%
less than or equal to 5.0 to 1.0
Greater than 4.0 to 1.0 but .275%
less than or equal to 4.5 to 1.0
Greater than 3.5 to 1.0 but .250%
less than or equal to 4.0 to 1.0
Greater than 3.0 to 1.0 .225%
but less than or equal to 3.5 to 1.0
Greater than 2.5 to 1.0 .200%
but less than or equal to 3.0 to 1.0
Less than or equal to 2.5 to 1.0 .150%
Such ratio shall be computed on the date of each Acquisition Requiring
Certification as more fully set forth in the third sentence of Section
8.01(m)(i) or the second sentence of Section 8.01(m)(ii), as applicable, and any
adjustment to the Commitment Fee attributable to such computation shall be
effective on the date of such Acquisition Requiring Certification. If Borrower
does not make any Acquisition Requiring Certification during any fiscal quarter,
(1) such ratio shall also be computed as of the end of such fiscal quarter, with
Consolidated Cash Flow from Operations computed for the four fiscal quarters
then ended and Total Indebtedness computed as of the end of such fiscal quarter,
and (2) any increase in the Commitment Fee attributable to a change in such
ratio shall be effective as of the Delivery Date for the Borrower's consolidated
financial statements for such quarter and (3) any decrease of the Commitment
Fees attributable to a change in such ratio shall be effective as of the later
of the Delivery Date for such financial statements and the date on which such
financial statements are actually delivered to the Agent and the Banks.
Commitment Fees shall be computed on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed on the average daily unborrowed amount
of such Bank's Revolving Credit Commitment (less its Ratable Share of the
Letters of Credit Outstanding) as the same may be constituted from time to time.
All Commitment Fees shall be payable in arrears on the first Business Day of
each April, July, October and January after the date hereof commencing on April
1, 1998 and on the Expiration Date or upon acceleration of maturity of the
Notes.
2.04 Special Fee Accruing from the Seventeenth Amendment Effective Date
until the Expiration Date, the Borrower agrees to pay to the Agent for the
account of each Bank in accordance with the Ratable Share of each Bank, a fee
(the "Special Fee") equal to the product of (x) the per annum rate of 1.50%,
multiplied by (y) the lesser of $25 million or the applicable
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Redemption Amount. The Special Fee shall be computed as of the end of each
fiscal quarter of the Borrower and shall be payable in arrears on the first
Business Day of each April, July, October and January after the date hereof,
commencing on October 1, 1998, and on the Expiration Date or upon acceleration
of maturity of the Notes.
2.05 Revolving Credit Loan Requests. Except as otherwise provided
herein, the Borrower may from time to time prior to the Expiration Date request
the Banks to make Revolving Credit Loans, or renew or convert the Interest Rate
Option applicable to existing Revolving Credit Loans, by the delivery to the
Agent, not later than 10:00 A.M. Pittsburgh time (i) three (3) Business Days
prior to the proposed Borrowing Date with respect to the making of Revolving
Credit Loans to which the Revolving Euro-Rate Option applies or the conversion
to or the renewal of the Euro-Rate Option for any Revolving Credit Loans; and
(ii) on the Business Day which is the proposed Borrowing Date with respect to
the making of a Revolving Credit Loan to which the Revolving Credit Base Rate
Option applies or the last day of the preceding Euro-Rate Interest Period with
respect to the conversion to the Revolving Credit Base Rate Option for any
Revolving Credit Loan, of a duly completed request therefor substantially in the
form of Exhibit 2.05 hereto or a request by telephone immediately confirmed in
writing by letter, facsimile or telex in such form (each, a "Revolving Credit
Loan Request"), it being understood that the Agent may rely in good faith on the
authority of any person making such a telephonic request and purporting to be an
Authorized Officer. Each Revolving Credit Loan Request shall be irrevocable and
shall (i) specify the proposed Borrowing Date; (ii) specify the aggregate amount
of the proposed Revolving Credit Loans comprising the Borrowing Tranche, which
shall be in integral multiples of $500,000 and not less than $5,000,000 for
Revolving Credit Loans to which the Revolving Credit Euro-Rate Option applies
and not less than the lesser of $500,000 or the maximum amount available for
Revolving Credit Loans to which the Revolving Credit Base Rate Option applies;
(iii) specify whether the Revolving Euro-Rate Option or Base Rate Option shall
apply to the proposed Revolving Credit Loans comprising the Borrowing Tranche;
(iv) specify in the case of Revolving Credit Loans to which the Revolving
Euro-Rate Option applies, an appropriate Euro-Rate Interest Period for the
proposed Revolving Credit Loans comprising the Borrowing Tranche; (v) specify
the use by the Borrower of the Loan proceeds; (vi) certify that no Event of
Default or Potential Default has occurred and is continuing after giving effect
to the proposed Revolving Credit Loan and without limiting the generality of
this clause (vi), certify compliance with Section 2.01(c) of this Agreement; and
(vii) in the event that the proceeds of the proposed Revolving Credit Loan will
be used to acquire a new health care facility or other business, permitted to be
acquired pursuant to this Agreement, certify, in detail satisfactory to the
Agent, a calculation of the ratio specified in Section 2.01(c).
2.06 Making Revolving Credit Loans. The Agent shall, promptly after
receipt by it of a Loan Request pursuant to Section 2.05, notify the Banks of
its receipt of such Loan Request specifying: (i) the proposed Borrowing Date and
the time and method of disbursement of such Revolving Credit Loan; (ii) the
amount and type of such Revolving Credit Loan and the applicable Euro-Rate
Interest Period (if any); and (iii) the apportionment among the Banks of the
Revolving Credit Loans as determined by the Agent in accordance with Section
2.02 hereof. Each Bank shall remit the principal amount of each Revolving Credit
Loan to the Agent such that the Agent is able to, and the Agent shall, to the
extent the Banks have made funds available
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to it for such purpose, fund such Revolving Credit Loan to the Borrower in U.S.
Dollars and immediately available funds at the Principal Office prior to 2:00
P.M. Pittsburgh time on the Borrowing Date, provided that if any Bank fails to
remit such funds to the Agent in a timely manner the Agent may elect in its sole
discretion to fund with its own funds the Revolving Credit Loan of such Bank on
the Borrowing Date.
2.07 Revolving Credit Note. The obligation of the Borrower to repay the
aggregate unpaid principal amount of the Revolving Credit Loans made to it by
each Bank, together with interest thereon, shall be evidenced by a promissory
note of the Borrower dated the Closing Date in substantially the form attached
hereto as Exhibit 1.01(R) payable to the order of each Bank in a face amount
equal to the Revolving Credit Commitment of such Bank.
2.08 Use of Proceeds. The proceeds of the Revolving Credit Loans shall
be used for (a) the acquisition and development of health care related
businesses and facilities and (b) general corporate purposes, which, among other
things, may include working capital (including but not limited to the
reimbursement of Paragon by the Borrower of ordinary course business expenses
pursuant to Section 8.02(e)(v)) or intercompany loans to a Subsidiary of the
Borrower provided the Borrower and such Subsidiary comply with Section 8.01(1)
hereof, and (c) up to $25,000,000 may be used, in the aggregate, for the
purchase of Subordinated Notes (so long as such purchase is otherwise in
accordance with the provisions of Section 8.02(d)(vii) hereof) and the
reimbursement of expenses of the Borrower paid by Paragon in connection with the
Paragon Acquisition (so long as such reimbursement of expenses is otherwise in
accordance with the provisions of Section 8.02(e)(vii) hereof).
2.09 Letter of Credit Subfacility.
(a) Borrower may request the issuance of, on the terms and
conditions hereinafter set forth, standby letters of credit (each a "Letter of
Credit" and collectively, "Letters of Credit") by delivering to the Agent a
completed application and agreement for letters of credit in such form as the
Agent may specify from time to time by no later than 10:00 a.m., Pittsburgh
time, at least three (3) Business Days, or such shorter period as may be agreed
to by the Agent, in advance of the proposed date of issuance. Subject to the
terms and conditions hereof and in reliance on the agreements of the other Banks
set forth in this Section 2.09, the Agent will issue a Letter of Credit provided
that each Letter of Credit shall (A) have a maximum maturity of twelve (12)
months from the date of issuance, and (B) in no event expire later than ten (10)
Business Days prior to the Expiration Date and providing that in no event shall
(i) the Letters of Credit Outstanding exceed, at any one time, $30,000,000 or
(ii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit
Commitments. Schedule 2.09(a) hereto lists letters of credit which PNC Bank
issued for the accounts of certain of the Loan Parties prior to the date hereof
pursuant to the Prior Credit Agreement and which shall remain outstanding after
the Closing Date (the "Existing Letters of Credit"). Each Existing Letter of
Credit shall be a Letter of Credit hereunder on and after the Closing Date and
the provisions of this Section 2.09 shall apply to such Existing Letter of
Credit. (Schedule 2.09(a) also lists all amounts of Loans, interest and expenses
outstanding under the Prior Credit Agreement.)
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(b) The Borrower shall pay to the Agent for the ratable
account of the Banks a fee (the "Letter of Credit Fee") equal to the applicable
interest rate per annum then in effect for Revolving Credit Loans which are
subject to the Euro-Rate Option less the Euro-Rate, which fee shall be computed
on the daily average Letters of Credit Outstanding (computed on the basis of a
year of 360 days and actual days elapsed) and shall be payable quarterly in
arrears commencing with the first Business Day of each April, July, October and
January following issuance of the first Letter of Credit and on the expiration
date for the last Letter of Credit then outstanding, with such fees accruing
through and including the expiration date for each Letter of Credit. The
Borrower shall pay to the Agent for its own account a fronting fee equal to 1/8%
per annum, which fee shall be computed on the daily average Letters of Credit
Outstanding (computed on the basis of a year of 360 days and actual days
elapsed) and shall be payable quarterly in arrears commencing with the first
business day of each October, January, April and July following issuance of the
first Letter of Credit and on the expiration date for the last Letter of Credit
then outstanding. The Borrower shall also pay to the Agent the Agent's then in
effect customary fees and administrative expenses payable with respect to
Letters of Credit as the Agent may generally charge or incur from time to time
in connection with the issuance, maintenance, modification (if any), assignment
or transfer (if any), negotiation and administration of Letters of Credit.
(c) Immediately upon the issuance of each Letter of Credit,
each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the Agent a participation in such Letter of Credit and each
drawing thereunder in an amount equal to such Bank's Ratable Share of the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively.
(d) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Agent will promptly
notify the Borrower. Provided that it shall have received such notice, the
Borrower shall reimburse (such obligation to reimburse the Agent shall sometimes
be referred to as a "Reimbursement Obligation") the Agent prior to 11:00 a.m.,
Pittsburgh time on each date that an amount is paid by the Agent under any
Letter of Credit (each such date, a "Drawing Date") in an amount equal to the
amount so paid by the Agent. In the event the Borrower fails to reimburse the
Agent for the full amount of any drawing under any Letter of Credit by 11:00
a.m., Pittsburgh time, on the Drawing Date, the Agent will promptly notify each
Bank thereof, and the Borrower shall be deemed to have requested that Revolving
Credit Loans be made by the Banks under the Base Rate Option to be disbursed on
the Drawing Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Revolving Credit Commitment and subject to the
conditions set forth in Section 7.1 [Each Additional Loan] other than any notice
requirements. Any notice given by the Agent pursuant to this Section 2.09(d) may
be oral if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
(e) Each Bank shall upon any notice pursuant to Section
2.09(d) make available to the Agent an amount in immediately available funds
equal to its Ratable Share of the amount of the drawing, whereupon the
participating Banks shall (subject to Section 2.09(f)) each
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be deemed to have made a Revolving Credit Loan under the Base Rate Option to the
Borrower in that amount. If any Bank so notified fails to make available to the
Agent for the account of the Agent the amount of such Bank's Ratable Share of
such amount by no later than 2:00 p.m., Pittsburgh time on the Drawing Date,
then interest shall accrue on such Bank's obligation to make such payment, from
the Drawing Date to the date on which such Bank makes such payment at a rate per
annum equal to the Federal Funds Effective Rate. The Agent will promptly give
notice of the occurrence of the Drawing Date, but failure of the Agent to give
any such notice on the Drawing Date or in sufficient time to enable any Bank to
effect such payment on such date shall not relieve such Bank from its obligation
under this Section 2.09(e).
(f) With respect to any unreimbursed drawing that is not
converted into Revolving Credit Loans under the Base Rate Option to the Borrower
in whole or in part as contemplated by Section 2.09(d), because of the
Borrower's failure to satisfy the conditions set forth in Section 7.1 [Each
Additional Loan] other than any notice requirements or for any other reason, the
Borrower shall be deemed to have incurred from the Agent a Letter of Credit
Borrowing in the amount of such drawing. Such Letter of Credit Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
the rate per annum applicable to the Revolving Credit Loans under the Base Rate
Option. Each Bank's payment to the Agent pursuant to Section 2.09(e) shall be
deemed to be a payment in respect of its participation in such Letter of Credit
Borrowing and shall constitute a Participation Advance from such Bank in
satisfaction of its participation obligation under this Section 2.09.
(g)(i) Upon (and only upon) receipt by the Agent for its
account of immediately available funds from the Borrower (i) in reimbursement of
any payment made by the Agent under the Letter of Credit with respect to which
any Bank has made a Participation Advance to the Agent, or (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, the
Agent will pay to each Bank, in the same funds as those received by the Agent,
the amount of such Bank's Ratable Share of such funds, except the Agent shall
retain the amount of the Ratable Share of such funds of any Bank that did not
make a Participation Advance in respect of such payment by Agent.
(g)(ii) If the Agent is required at any time to return to any
Loan Party, or to a trustee, receiver, liquidator, custodian, or any official in
any Insolvency Proceeding, any portion of the payments made by any Loan Party to
the Agent pursuant to Section 2.09(g)(i) in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each Bank shall, on
demand of the Agent, forthwith return to the Agent the amount of its Ratable
Share of any amounts so returned by the Agent plus interest thereon from the
date such demand is made to the date such amounts are returned by such Bank to
the Agent, at a rate per annum equal to the Federal Funds Effective Rate in
effect from time to time.
(h) Each Loan Party agrees to be bound by the terms of the
Agent's application and agreement for letters of credit and the Agent's written
regulations and customary practices relating to letters of credit, though such
interpretation may be different from the such Loan Party's own. In the event of
a conflict between such application or agreement and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
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gross negligence or willful misconduct, the Agent shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following any Loan Party's instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.
(i) In determining whether to honor any request for drawing
under any Letter of Credit by the beneficiary thereof, the Agent shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit.
(j) Each Bank's obligation in accordance with this Agreement
to make the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.09, as a result of a drawing under a Letter of Credit, and the
Obligations of the Borrower to reimburse the Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Section 2.09 under all
circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the Agent, the Borrower or any
other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other
Person to comply, in connection with a Letter of Credit Borrowing, with the
conditions set forth in Section 2.01 [Revolving Credit Commitments], 2.05
[Revolving Credit Loan Requests], 2.06 [Making Revolving Credit Loans] or 7.1
[Each Additional Loan] or as otherwise set forth in this Agreement for the
making of a Revolving Credit Loan, it being acknowledged that such conditions
are not required for the making of a Letter of Credit Borrowing and the
obligation of the Banks to make Participation Advances under Section 2.09;
(iii) any lack of validity or enforceability of any
Letter of Credit;
(iv) the existence of any claim, set-off, defense or
other right which any Loan Party or any Bank may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such transferee may be acting), the Agent or any Bank or any other Person
or, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying transaction
between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for
which any Letter of Credit was procured);
(v) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect even if the Agent has been notified thereof;
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(vi) payment by the Agent under any Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
(vii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any Loan
Party or Subsidiaries of a Loan Party;
(viii) any breach of this Agreement or any other Loan
Document by any party thereto;
(ix) the occurrence or continuance of an Insolvency
Proceeding with respect to any Loan Party;
(x) the fact that an Event of Default or a Potential
Default shall have occurred and be continuing;
(xi) the fact that the Expiration Date shall have
passed or this Agreement or the Commitments hereunder shall have been
terminated; and
(xii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
(k) In addition to amounts payable as provided in Section
10.05 [Reimbursement of Agent by Borrower, Etc.], the Borrower hereby agrees to
protect, indemnify, pay and save harmless the Agent from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and allocated
costs of internal counsel) which the Agent may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit,
other than as a result of (A) the gross negligence or willful misconduct of the
Agent as determined by a final judgment of a court of competent jurisdiction or
(B) subject to the following clause (ii), the wrongful dishonor by the Agent of
a proper demand for payment made under any Letter of Credit, or (ii) the failure
of the Agent to honor a drawing under any such Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts or
omissions herein called "Governmental Acts").
(l) As between any Loan Party and the Agent, such Loan Party
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Agent shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if the Agent shall have been notified thereof); (ii)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits
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thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit may
be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of any Loan Party against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among any Loan Party and any beneficiary of any Letter of Credit or
any such transferee; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control of the Agent,
including any Governmental Acts, and none of the above shall affect or impair,
or prevent the vesting of, any of the Agent's rights or powers hereunder.
Nothing in the preceding sentence shall relieve the Agent from liability for the
Agent's gross negligence or willful misconduct in connection with actions or
omissions described in such clauses(i) through (viii) of such sentence.
In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by the Agent
under or in connection with the Letters of Credit issued by it or any documents
and certificates delivered thereunder, if taken or omitted in good faith, shall
not put the Agent under any resulting liability to the Borrower or any Bank.
2.10 Voluntary Reduction of Revolving Credit Commitments. The Borrower
shall have the right at any time and from time to time upon not less than three
(3) Business Days' prior written notice (which notice shall be irrevocable) to
the Agent to terminate or to permanently and ratably reduce, in an aggregate
amount of not less than $1,000,000 or an integral multiple thereof, the
respective Revolving Credit Commitments without penalty or premium, except as
hereinafter set forth. The Agent shall promptly advise each Bank of the date and
amount of each such reduction. After each such reduction, the Commitment Fee
shall be calculated upon the unused portion of the Revolving Credit Commitments
as so reduced and the amount of reduction may not be reinstated.
ARTICLE III
COLLATERAL
3.01 Collateral. The Borrower shall execute and deliver the Pledge
Agreement in the form of Exhibit 1.01(P)(1) pledging all of the stock,
partnership interests or other ownership interests owned by the Borrower in each
existing or hereafter formed or acquired Subsidiary and in each existing or
hereafter formed or acquired Excluded Entity. Each of the Borrower's Restricted
Subsidiaries (whether now existing or hereafter formed or acquired, including
without limitation any Excluded Entity which becomes a Restricted Subsidiary,
upon
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so becoming a Restricted Subsidiary) shall execute and deliver a Guaranty
Agreement in the form of Exhibit 1.01(G). Each of the Borrower's Subsidiaries
(whether now owned or hereafter acquired) owning stock, partnership interests or
other ownership interests of each existing or hereafter formed or acquired
Subsidiary or each existing or hereafter formed or acquired Excluded Entity
shall execute a Pledge Agreement in the form of Exhibit 1.01(P)(2) or (3), as
the case may be or other Pledge Agreement in form and substance satisfactory to
the Agent.
ARTICLE IV
INTEREST RATES
4.01 Interest Rate Options. The Borrower shall pay interest in respect
of the outstanding unpaid principal amount of the Loans as selected by it from
the Base Rate Option or Euro-Rate Option set forth below applicable to the Loans
(it being understood that, subject to the provisions of this Agreement, the
Borrower may select different Interest Rate Options and different Euro-Rate
Interest Periods to apply simultaneously to the Loans comprising different
Borrowing Tranches and may convert to or renew one or more Interest Rate Options
with respect to all or any portion of the Loans comprising any Borrowing
Tranche; provided that there shall not be at any one time outstanding more than
fourteen (14) Borrowing Tranches in the aggregate among all the Loans accruing
interest at a Euro-Rate Option). The Agent's determination of a rate of interest
and any change therein shall in the absence of manifest error be conclusive and
binding upon all parties hereto. If at any time the designated rate applicable
to any Loan made by any Bank exceeds such Bank's highest lawful rate, the rate
of interest on such Bank's Loan shall be limited to such Bank's highest lawful
rate.
(a) Revolving Credit Interest Rate Options. The Borrower shall
have the right to select from the following Interest Rate Options applicable to
the Loans for the period commencing on January 1, 1998 and thereafter:
(i) Revolving Credit Base Rate Option: A fluctuating
rate per annum (computed on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed) equal to the Base Rate plus the applicable
percentage set forth below, based upon the ratio of (a) Total Indebtedness, to
(b) Consolidated Cash Flow from Operations, such interest rate to change
automatically from time to time effective as of the effective date of each
change in the Base Rate.
Ratio of Total
Indebtedness to
Consolidated
Cash Flow from Applicable
Operations Interest Rate
--------------- -------------
Greater than 5.0 to 1.0 Base Rate plus 1/4%
Less than or equal to 5.0 to 1.0 Base Rate
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(ii) Revolving Credit Euro-Rate Option: A fluctuating
rate per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus the applicable percentage (such percentage
is sometimes hereafter referred to as the "Applicable Percentage Over
Euro-Rate") set forth below, based upon the ratio of (a) Total Indebtedness, to
(b) Consolidated Cash Flow from Operations.
(iii) The ratios pursuant to clauses (i) and (ii)
above shall be computed on the date of each Acquisition Requiring Certification
as more fully set forth in the third sentence of Section 8.01(m)(i) or the
second sentence of Section 8.01(m)(ii), as applicable, and any interest rate
adjustment attributable to such computation shall be effective on the date of
such Acquisition Requiring Certification. If Borrower does not make any
Acquisition Requiring Certification during any fiscal quarter, such ratio shall
also be computed as of the end of such quarter with Consolidated Cash Flow from
Operations computed for the four fiscal quarters then ended and Total
Indebtedness computed as of the end of such fiscal quarter, but any interest
adjustments attributable to a change in such ratio shall be effective (a) with
respect to an increase of the applicable interest rate, as of the Delivery Date
for the Borrower's consolidated financial statements for such quarter and (b)
with respect to a decrease of the applicable interest rate, as of the later of
the Delivery Date for such financial statements and the date on which such
financial statements are actually delivered to the Agent and the Banks.
Ratio of Total Indebtedness
to Consolidated
Cash Flow from Operations Applicable Interest Rate
--------------------------- ------------------------
Greater than 5.0 to 1.0 Euro-Rate plus 1.75%
Greater than 4.5 to 1.0 but less than or
equal to 5.0 to 1.0 Euro-Rate plus 1.50%
Greater than 4.0 to 1.0 but less than or
equal to 4.5 to 1.0 Euro-Rate plus 1.25%
Greater than 3.5 to 1.0 but less than or
equal to 4.0 to 1.0 Euro-Rate plus 1%
Greater than 3.0 to 1.0 but less than or
equal to 3.5 to 1.0 Euro-Rate plus .875%
Greater than 2.5 to 1.0 but less than or
equal to 3.0 to 1.0 Euro-Rate plus .625%
Less than or equal to 2.5 to 1.0 Euro-Rate plus .500%
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(b) Rate Quotations. The Borrower may call the Agent on or
before the date on which a Loan Request is to be delivered to receive an
indication of the rates then in effect, but it is acknowledged that such
indication shall not be binding on the Agent or the Banks nor affect the rate of
interest which thereafter is actually in effect when the election is made.
4.02 Interest Periods. At any time when the Borrower shall select,
convert to or renew a Euro-Rate Option, the Borrower shall notify the Agent
thereof at least three (3) Business Days prior to the effective date of such
Euro-Rate Option by delivering a Loan Request. The notice shall specify an
interest period during which such Interest Rate Option shall apply, such periods
to be one, two, three or six months in the event of a Euro-Rate Option
("Euro-Rate Interest Period"), provided, that:
(a) any Euro-Rate Interest Period which would otherwise end on
a date which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar month, in which
case such Euro-Rate Interest Period shall end on the next preceding Business
Day;
(b) any Euro-Rate Interest Period which begins on the last day
of a calendar month for which there is no numerically corresponding day in the
subsequent calendar month during which such Euro-Rate Interest Period is to end
shall end on the last Business Day of such subsequent month;
(c) the Revolving Credit Euro-Rate Portion for each Euro-Rate
Interest Period shall be in integral multiples of $500,000 and not less than
$5,000,000;
(d) the Borrower shall not select, convert to or renew a
Euro-Rate Interest Period for any portion of the Loans that would end after the
Expiration Date; and
(e) in the case of the renewal of a Euro-Rate Option at the
end of a Euro-Rate Interest Period, the first day of the new Euro-Rate Interest
Period shall be the last day of the preceding Euro-Rate Interest Period, without
duplication in payment of interest for such day.
4.03 Interest After Default. To the extent permitted by Law, upon the
occurrence and during the continuation of an Event of Default, any principal,
interest, fee or other amount payable hereunder shall bear interest for each day
thereafter until paid in full (before and after judgment) at a rate per annum
which shall be equal to two hundred (200) basis
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points (2% per annum) above the rate of interest otherwise applicable with
respect to such amount or two hundred (200) basis points (2% per annum) above
the Base Rate if no rate of interest is otherwise applicable, but in no event in
excess of the highest rate permitted under applicable law. The Borrower
acknowledges that such increased interest rate reflects, among other things, the
fact that such Loans or other amounts have become a substantially greater risk
given their default status and that the Banks are entitled to additional
compensation for such risk. If an Event of Default shall occur and be
continuing, the Agent may in its discretion limit the Borrower to the Base Rate
Option.
4.04 Euro-Rate Unascertainable.
(a) If on any date on which a Euro-Rate would otherwise be
determined, the Agent shall have determined (which determination shall be
conclusive absent manifest error) that:
(i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially and
adversely affects the London interbank market relating to the Euro-Rate, or
(b) if at any time any Bank shall have determined (which
determination shall be conclusive absent manifest error) that:
(i) the making, maintenance or funding of any Loan to
which a Euro-Rate Option applies has been made impracticable or unlawful by
compliance by such Bank in good faith with any Law or any interpretation or
application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately and
fairly reflect the cost to such Bank of the establishment or maintenance of any
such Loan, or
(iii) after making all reasonable efforts that
deposits of the relevant amount in Dollars for the relevant Euro-Rate Interest
Period for a Loan to which a Euro-Rate Option applies, respectively, are not
available to such Bank with respect to a proposed Euro-Rate Loan in the London
interbank market, in the case of any event specified in subsection (a) above,
then the Agent shall promptly so notify the Banks and the Borrower thereof and
in the case of an event specified in subsection (b) above, such Bank shall
promptly so notify the Agent and endorse a certificate to such notice as to the
specific circumstances of such notice and the Agent shall promptly send copies
of such notice and certificate to the other Banks and the Borrower. Upon such
date as shall be specified in such notice (which shall not be earlier than the
date such notice is given) the obligation of (A) the Banks in the case of such
notice given by the Agent or (B) such Bank in the case of such notice given by
such Bank to allow the Borrower to select, convert to or renew a Euro-Rate
Option shall be suspended until the Agent shall have later notified the Borrower
or such Bank shall have later notified the Agent, of the Agent's or such
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Bank's, as the case may be, determination (which determination shall be
conclusive absent manifest error) that the circumstances giving rise to such
previous determination no longer exist. If at any time the Agent makes a
determination under subsection (a) or (b) of this Section 4.04 and the Borrower
has previously notified the Agent of its selection of, conversion to or renewal
of a Euro-Rate Option and such Interest Rate Option has not yet gone into
effect, such notification shall be deemed to provide for selection of,
conversion to or renewal of the Base Rate Option otherwise available with
respect to such Loans. If any Bank notifies the Agent of a determination under
subsection (b) of this Section 4.04, the Borrower shall, subject to the
Borrower's indemnification obligations under Section 5.06(b), as to any Loan of
the Bank to which a Euro-Rate Option applies, on the date specified in such
notice either convert such Loan to the Base Rate Option otherwise available with
respect to such Loan or prepay such Loan in accordance with Section 5.04 hereof.
Absent due notice from the Borrower of conversion or prepayment such Loan shall
automatically be converted to the Base Rate Option otherwise available with
respect to such Loan upon such specified date.
4.05 Selection of Interest Rate Options. If the Borrower fails to
select a Euro-Rate Interest Period in accordance with the provisions of Section
4.02 in the case of renewal of the Revolving Credit Euro-Rate Portion, the
Borrower shall be deemed to have converted such Loan or portion thereof to the
Base Rate Option otherwise available with respect to such Loans, commencing upon
the last day of that Euro-Rate Interest Period. If an Event of Default shall
occur and be continuing, the Agent may in its discretion limit the Borrower to
the Base Rate Option hereunder.
ARTICLE V
PAYMENTS
5.01 Payments. All payments and prepayments to be made in respect of
principal, interest, Commitment Fees, Closing Fee, Letter of Credit Fees,
Agent's Fee or other fees or amounts due from the Borrower hereunder shall be
payable prior to 11:00 A.M. (Pittsburgh time) on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without setoff, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue. Such
payments shall be made to the Agent at the Principal Office for the ratable
accounts of the Banks with respect to the Loans in U.S. Dollars and in
immediately available funds, and the Agent shall promptly distribute such
amounts to the Banks in immediately available funds, provided that in the event
payments are received by 11:00 A.M. (Pittsburgh time) by the Agent with respect
to the Loans and such payments are not distributed to the Banks on the same day
received by the Agent, the Agent shall pay the Banks the Federal Funds Effective
Rate with respect to the amount of such payments for each day held by the Agent
and not distributed to the Banks. The Agent's and each Bank's statement of
account, ledger or other relevant record shall, in the absence of manifest
error, be conclusive as the statement of the amount of principal of and interest
on the Loans and other amounts owing under this Agreement and shall be deemed an
"account stated."
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5.02 Pro Rata Treatment of Banks. Each borrowing, and each selection
of, conversion to or renewal of any Interest Rate Option and each payment or
prepayment by the Borrower with respect to principal, interest, Commitment Fees,
Closing Fee, Letter of Credit Fees, or other fees or amounts due from the
Borrower hereunder to the Banks with respect to the Loans, shall (except as
provided in Section 4.04(b) [Euro-Rate Unascertainable], 5.04(b) [Voluntary
Prepayments] or 5.06(a) [Additional Compensation in Certain Circumstances]
hereof) be made in proportion to the Loans outstanding from each Bank and if no
such Loans are then outstanding, in proportion to the Ratable Share of each
Bank.
5.03 Interest Payment Dates. Interest on Loans to which the Base Rate
Option applies shall be due and payable in arrears on the first Business Day of
each April, July, October and January after the date hereof and on the
Expiration Date or upon acceleration of the Notes. Interest on Loans to which a
Euro-Rate Option applies shall be due and payable on the last day of each
Euro-Rate Interest Period for those Loans, and if any such Euro-Rate Interest
Period is longer than three months, also on the last day of every third month
during such period.
5.04 Voluntary Prepayments.
(a) The Borrower shall have the right at its option from time
to time to prepay the Loans in whole or part without premium or penalty (except
as provided in subsection (b) below or in Section 5.06 hereof):
(i) at any time with respect to any Loan to which the
Base Rate Option applies,
(ii) on the last day of the applicable Euro-Rate
Interest Period with respect to Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any Bank
pursuant to Section 4.04(b) [Euro-Rate Unascertainable] hereof with respect to
any Loan to which a Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the Loans, it shall
provide a prepayment notice to the Agent at least one (1) Business Day prior to
the date of prepayment of Loans setting forth the following information:
(x) the date, which shall be a Business Day,
on which the proposed prepayment is to be made; and
(y) the total principal amount of such
prepayment, which shall not be less than $5,000,000.
All prepayment notices shall be irrevocable. The principal amount of
the Loans for which a prepayment notice is given, together with interest on such
principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be
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made. Unless otherwise specified by the Borrower with respect to prepayments of
the Revolving Credit Euro-Rate Portion of the Loans permitted under (ii) or
(iii) above, all prepayments shall be applied first to the Revolving Credit Base
Rate Portion of such Loans, and then to the Revolving Credit Euro-Rate Portion
of such Loans, subject to Section 5.06(b) hereof.
(b) In the event any Bank gives notice under Section 4.04(b)
[Euro-Rate Unascertainable] or Section 5.06(a) [Additional Compensation in
Certain Circumstances] hereof, the Borrower shall have the right, with the
consent of the Agent, which shall not be unreasonably withheld, to: (y) prepay
the Loans of such Bank, in whole together with all interest accrued thereon and
thereby permanently and irrevocably terminate the Revolving Credit Commitment of
such Bank, or (z) replace such Bank, so long as, in the case of (y) or (z), such
replacement or prepayment occurs within ninety (90) days after receipt of such
Bank's notice under Section 4.04(b) or 5.06(a), provided the Borrower shall also
pay to such Bank in the case of either the foregoing (y) or (z) at the time of
such prepayment or replacement any amounts required under Section 5.06 and
accrued Commitment Fees due on such amount and all other costs, fees and any
amounts due to such Bank being prepaid or replaced.
5.05 Mandatory Prepayments.
(a) Sale of Assets. Within five (5) Business Days of any sale
of assets authorized by Section 8.02(g)(v) hereof, the Borrower shall make a
mandatory prepayment of principal on the Revolving Credit Loans in the amount,
if any, necessary to bring the Borrower into compliance with Section 8.02(r)
[Maximum Leverage Ratio] after giving effect to such disposition. In addition to
the foregoing mandatory prepayment provisions, in the event that any sale of
assets will result in the Borrower or any Subsidiary receiving "Net Cash
Proceeds" which would otherwise become "Excess Proceeds" (as each of those terms
are defined in the Indenture), then at least sixty (60) days prior to the date
any Net Cash Proceeds would become Excess Proceeds under the Indenture, the
Borrower shall give written notice to the Agent thereof setting forth the amount
of Net Cash Proceeds at issue. Upon the direction of the Agent with the consent
of the Required Banks, the Borrower shall make a permanent payment of principal
on the Revolving Credit Loans in the amount of said Net Cash Proceeds, and the
Revolving Credit Commitment of each Bank shall be reduced by its Ratable Share
of the principal payment made to such Bank from the Net Cash Proceeds.
(b) Application Among Interest Rate Options. All prepayments
required pursuant to this Section 5.05 shall first be applied among the Interest
Rate Options to the principal amount of the Loans subject to a Base Rate Option,
then to Loans subject to Euro-Rate Option. In accordance with Section 5.06(b),
the Borrower shall indemnify the Banks for any loss or expense including loss of
margin incurred with respect to any such prepayments applied against Loans
subject to a Euro-Rate Option on any day other than the last day of the
applicable Euro-Rate Interest Period.
5.06 Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc. If any Law, guideline or
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interpretation or any change in any Law, guideline or interpretation or
application thereof by any Official Body charged with the interpretation or
administration thereof or compliance with any request or directive (whether or
not having the force of Law) of any central bank or other Official Body:
(i) subjects any Bank to any tax or changes the basis
of taxation with respect to this Agreement, the Notes, the Loans or payments by
the Borrower of principal, interest, Commitment Fees, or other amounts due from
the Borrower hereunder or under the Notes (except for taxes on the overall net
income of such Bank),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with
or for the account of, or other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or letters of credit, other credits or commitments to extend
credit extended by, any Bank, or (B) otherwise applicable to the obligations of
any Bank under this Agreement,
and the result under any of the foregoing clauses (i), (ii) or (iii) is to
increase the cost to, reduce the income receivable by, or impose any expense
(including loss of margin) upon any Bank with respect to this Agreement, the
Notes or the making, maintenance or funding of any part of the Loans (or, in the
case of any capital adequacy or similar requirement, to have the effect of
reducing the rate of return on any Bank's capital, taking into consideration
such Bank's customary policies with respect to capital adequacy) by an amount
which such Bank in its sole discretion deems to be material, such Bank shall
from time to time notify the Borrower and the Agent of the amount determined in
good faith (using any averaging and attribution methods employed in good faith)
by such Bank (which determination shall be conclusive absent manifest error) to
be necessary to compensate such Bank for such increase in cost, reduction of
income or additional expense. Such notice shall set forth in reasonable detail
the basis for such determination. Such amount shall be due and payable by the
Borrower to such Bank ten (10) Business Days after such notice is given.
(b) Indemnity. In addition to the compensation required by
subsection (a) of this Section 5.06, the Borrower shall indemnify each Bank
against all liabilities, losses or expenses (including loss of margin, any loss
or expense incurred in liquidating or employing deposits from third parties and
any loss or expense incurred in connection with funds acquired by a Bank to fund
or maintain Loans subject to the Euro-Rate Option) which such Bank sustains or
incurs as a consequence of any:
(i) payment, prepayment, conversion or renewal of any
Loan to which the Euro-Rate Option applies on a day other than the last day of
the corresponding Euro-Rate Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic and whether or not such payment
or prepayment is then due),
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(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any notice relating to Loan
Requests under Section 2.05 or Section 4.02 or prepayments under Section 5.04,
or reductions of Revolving Credit Commitments under Section 2.10, or
(iii) Event of Default by the Borrower in the performance or
observance of any covenant or condition contained in this Agreement or any other
Loan Document, including without limitation any failure of the Borrower to pay
when due (by acceleration or otherwise) any principal, interest, Commitment Fee
or any other amount due hereunder.
If any Bank sustains or incurs any such loss or expense it
shall from time to time notify the Borrower of the amount determined in good
faith by such Bank (which determination shall be conclusive absent manifest
error and may include such assumptions, allocations of costs and expenses and
averaging or attribution methods as such Bank shall deem reasonable) to be
necessary to indemnify such Bank for such loss or expense. Such notice shall set
forth in reasonable detail the basis for such determination. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans, subject
to the Euro-Rate Option provided for herein (excluding, however, the Applicable
Percentage Over Euro-Rate included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Bank) which would have accrued to
such Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder. Such amount shall be due and payable by the
Borrower to such Bank ten (10) Business Days after such notice is given.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties - Effective On and After
Date of This Agreement. The Borrower represents and warrants to the Agent and
each of the Banks as follows:
(a) Organization and Qualification. The Borrower,
each Restricted Subsidiary of the Borrower and each Excluded Entity in which a
Restricted Investment has been made are duly organized, validly existing and in
good standing under the laws of their respective jurisdiction of organization;
the Borrower, each Restricted Subsidiary of the Borrower and each Excluded
Entity in which a Restricted Investment has been made have the power to own or
lease their properties and to engage in the business they presently conduct or
propose to conduct; and the Borrower and each Subsidiary of the Borrower are
duly qualified as a foreign corporation, limited liability company or
partnership and in good standing in each jurisdiction listed on
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Schedule 6.01(a) hereto and in all other jurisdictions where the property owned
or leased by them or the nature of the business transacted by them or both makes
such qualification necessary, except where the failure to so qualify would not
have a material adverse effect on the Borrower or any Subsidiary.
(b) [Intentionally Omitted.]
(c) Excluded Entities; Subsidiaries. Schedule 6.01(c)
attached hereto states (i) the name of each of the Borrower's Restricted
Subsidiaries and each Excluded Entity in which a Restricted Investment has been
made, (ii) in the case of each Corporate Subsidiary or Excluded Entity which is
a corporation, its jurisdiction of incorporation, its authorized capital stock,
the issued and outstanding shares (referred to herein as the "Corporate Shares")
and the owners thereof, (iii) in the case of each Partnership Subsidiary or
Excluded Entity which is a partnership, the jurisdiction in which it is
organized, the type of organization (limited or general partnership) and the
owners of its partnership interests (the "Partnership Interests"), and (iv) in
the case of each Subsidiary or Excluded Entity which is a limited liability
company, the jurisdiction in which it is organized, its authorized member
interests, the issued and outstanding member interests (the "Member Interests")
and the owners thereof. The Borrower and each Subsidiary have good and valid
title to all of the Corporate Shares, Partnership Interests or Member Interests
they purport to own, free and clear in each case of any Lien other than under
the Loan Documents. All Corporate Shares, Partnership Interests and Member
Interests have been validly issued. All Corporate Shares are fully paid and
nonassessable. There are no options, warrants or other rights outstanding to
purchase any Member Interests, Corporate Shares or Partnership Interests except
as indicated on Schedule 6.01(c).
(d) Power and Authority. Each Loan Party has full
power to enter into, execute, delivery and carry out this Agreement, the other
Loan Documents to which it is a party, to incur the Indebtedness contemplated by
the Loan Documents and to perform its obligations under the Loan Documents to
which it is a party and all such actions have been duly authorized by all
necessary proceedings on its part.
(e) Validity and Binding Effect. This Agreement has
been duly executed and delivered by each Loan Party that is a party hereto, and
each other Loan Document, when duly executed and delivered by each Loan Party
which is a party thereto, will have been duly executed and delivered by such
Loan Party. This Agreement and each other Loan Document delivered by the Loan
Parties pursuant to the provisions hereof will constitute legal, valid and
binding obligations of the Loan Parties thereto, enforceable against such Loan
Party in accordance with their respective terms, except to the extent that (i)
enforceability of any of the foregoing Loan Documents may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance or by general equitable principles and (ii) the
exercise by the Banks of their rights with respect to the Collateral would be
subject to the prior approval of health care regulatory authorities.
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(f) No Conflict. Neither the execution and delivery
of this Agreement or the other Loan Documents by the Loan Parties nor the
consummation of the transactions herein or therein contemplated or compliance
with the terms and provisions hereof or thereof by them will conflict with,
constitute a default under or result in any breach of (i) the terms and
conditions of the certificate of incorporation, by-laws or other organizational
documents of any Loan Party or (ii) of any Law or of any material agreement or
instrument or order, writ, judgment, injunction or decree to which any Loan
Party is a party or by which it is bound or to which it is subject, or result in
the creation or enforcement of any Lien, charge or encumbrance whatsoever upon
any property (now or hereafter acquired) of any Loan Party (other than Liens
granted under the Loan Documents).
(g) Litigation. Except as previously disclosed to the
Agent in that certain letter dated January 2, 1996 by the Borrower, there are no
actions, suits, proceedings or investigations pending or, to the knowledge of
the Borrower, threatened against the Borrower or any Subsidiary of the Borrower
at law or equity before any Official Body which individually or in the aggregate
would constitute a Material Adverse Change. Neither the Borrower nor any
Subsidiary of the Borrower is in violation of any order, writ, injunction or any
decree of any Official Body which would constitute a Material Adverse Change.
(h) Title to Properties. The Borrower and each
Subsidiary of the Borrower have good and marketable title to or valid leasehold
interest in all material properties, assets and other rights which they purport
to own or lease or which are reflected as owned or leased on their respective
books and records, free and clear of all Liens and encumbrances except Permitted
Liens, and subject to the terms and conditions of the applicable leases. All
material leases of real property are in full force and effect without the
necessity for any consent which has not previously been obtained for the
consummation of the transactions contemplated hereby.
(i) Financial Statements.
(i) Historical Statements.
The Borrower has delivered to the
Agent copies of its audited consolidated year-end financial statements for and
as of the end of the fiscal years ended December 31, 1992, 1993, 1994, 1995,
1996, 1997 and the unaudited consolidated statements for 1998 for the fiscal
quarter ending on March 31 , 1998 (collectively the "Historical Statements").
The Mariner Historical Statements were compiled from the books and records
maintained by the Borrower's management, fairly present the consolidated
financial condition of the Loan Parties (which were Loan Parties as of the date
of the respective Mariner Historical Statements) as of their dates and the
results of operations for the fiscal periods then ended and have been prepared
in accordance with GAAP consistently applied, subject (in the case of the
interim statements) to normal year-end audit adjustments.
(ii) Accuracy of Financial Statements.
Neither the Borrower nor any Subsidiary of Borrower has any liabilities,
contingent or otherwise, or material forward or long-term commitments that are
not disclosed in the Historical Statements or in the notes thereto or that are
required to be disclosed under GAAP, and except as disclosed therein there are
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no unrealized or anticipated losses from any commitments of the Borrower or any
Subsidiary which may cause a Material Adverse Change. Since December 31, 1997,
no Material Adverse Change has occurred; provided, however, that with the
written approval of the Required Banks, express disclosures to the Banks by the
Borrower in the reports provided by the Borrower to the Banks, pursuant to
Section 8.03 hereof, shall be deemed to be an update and an exception to the
representation made in the foregoing portion of this sentence.
(iii) Projections. The Borrower has
delivered to the Agent financial projections of the Borrower, Paragon and their
respective Subsidiaries prepared on a combined pro-forma basis for the two
fiscal years ending September 30, 1998 and September 30, 1999 (the "Financial
Projections") derived from various assumptions of the Borrower's management. The
Financial Projections represent a reasonable range of possible results in light
of the history of the business, present and forseeable conditions and the
intentions of the management of the Borrower. The Financial Projections
accurately reflect the liabilities of the Borrower and its Subsidiaries upon
consummation of the transactions contemplated hereby as of the Seventeenth
Amendment Effective Date.
(j) Margin Stock. Neither the Borrower nor any
Subsidiary engages or intends to engage principally, or as one of its important
activities, in the business of extending credit for the purpose, immediately,
incidentally or ultimately, of purchasing or carrying margin stock (within the
meaning of Regulation U). No part of the proceeds of any Loan has been or will
be used, immediately, incidentally or ultimately, to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock or to refund Indebtedness originally incurred for such
purpose, or for any purpose which entails a violation of or which is
inconsistent with the provisions of the regulations of the Board of Governors of
the Federal Reserve System.
(k) Full Disclosure. Neither this Agreement nor any
other Loan Document contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein, in light of the circumstances under which they were made, not
misleading considered as a whole; provided that any information provided after
the date hereof shall be deemed to supersede any prior inconsistent information.
There is no fact known to the Borrower or any Subsidiary which materially
adversely affects the business, property, assets, financial condition, results
of operations or prospects of the Borrower or any Material Subsidiary, which:
(i) prior to or at the date hereof, has not been set forth in the Agreement or
in the certificates, statements, agreements or other documents furnished in
writing to the Agent and the Banks in connection with the transactions
contemplated hereby or in the Borrower's public filings with the Securities and
Exchange Commission, or (ii) following the date hereof and with the written
approval of the Required Banks, has not been set forth in other documents
furnished in writing to the Agent and the Banks.
(l) Taxes. All material federal, state, local and
other tax returns required to have been filed with respect to the Borrower or
any Subsidiary have been filed and payment or adequate provision has been made
for the payment of all taxes, fees, assessments and
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other governmental charges which have or may become due pursuant to said returns
or to assessments received except to the extent that such taxes, fees,
assessments and other charges are being contested in good faith by appropriate
proceedings diligently conducted and for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made. As of the date hereof, there are no agreements or waivers extending the
statutory period of limitations applicable to any federal income tax return of
the Borrower or any Subsidiary for any period.
(m) Consents and Approvals. No consent, approval,
exemption, order or authorization of, or a registration or filing with any
Official Body or any other person is required by any Law or any agreement in
connection with the execution, delivery and carrying out of this Agreement, or
the other Loan Documents by any Loan Party, all of which have been obtained or
made; provided, however, that it is acknowledged that consent of health care
regulatory authorities issuing any licenses or regulating any health care
facilities may be required if the Agent on behalf of the Banks exercises the
rights and remedies in respect of the Pledged Collateral and such exercise of
remedies results in or constitutes an assignment of any health care license
issued by a health care regulatory authority or constitutes a change of control
with respect to the ownership of a health care facility.
(n) Compliance With Instruments. Neither the Borrower
nor any Subsidiary is in violation of (i) any term of its certificate of
incorporation, by-laws, or other organizational documents or (ii) any material
agreement or instrument to which it is a party or by which it or any of its
properties may be subject or bound where such violation would constitute a
Material Adverse Change.
(o) Patents, Trademarks, Copyrights, Etc. The
Borrower and each Subsidiary owns or possesses all the material patents,
trademarks, service marks, trade names, copyrights and other intellectual
property rights necessary to own and operate its properties and to carry on its
business as presently conducted and planned to be conducted by the Borrower and
each Subsidiary, without known conflict with the rights of others.
(p) Security Interests in the Collateral. The Liens
and security interests granted to the Agent for the benefit of the Banks
pursuant to the Pledge Agreements, Mortgages and Leasehold Mortgages in the UCC
Collateral constitute, and will continue to constitute, Prior Security Interests
under the Uniform Commercial Code as in effect in each applicable jurisdiction
(the "Uniform Commercial Code") or other applicable Law entitled to all the
rights, benefits and priorities provided by the Uniform Commercial Code or such
Law to the fullest extent permitted by applicable law, except that the security
interests in the Collateral under the Mortgages and Leasehold Mortgages may be
subordinated to the security interests granted to certain of the Lessor Lenders
or Owned Facility Lenders, as indicated on Schedule 6.01 (aa). Upon the filing
of financing statements relating to said security interests in each office and
in each jurisdiction where required in order to perfect the security interests
described above and taking possession of the stock certificates or certificates
of ownership of member interests in a limited liability company, as the case may
be, evidencing the Pledged Collateral which constitutes stock of a corporation
or member interests of a limited liability company, as the case
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may be, all such action as is necessary or advisable to establish such rights of
the Agent will have been taken, and there will be upon execution and delivery of
the Pledge Agreements, Mortgages and Leasehold Mortgages, such filings, and such
taking of possession no necessity for any further action in order to preserve,
protect and continue such rights, except for maintaining possession of such
certificates and filing continuation statements with respect to such financing
statements within six (6) months prior to each five-year anniversary of the
filing of such financing statements. Any expenses in connection with each such
action have been or will be paid by the Borrower. It is acknowledged that the
exercise by the Banks of their rights and remedies in respect of the Pledged
Collateral which would result in or constitute any assignment of any license
issued by a health care regulatory authority or any change of control with
respect to a health care facility may be subject to the prior approval of such
health care regulatory authorities.
(q) [Intentionally Omitted.]
(r) Status of the Pledged Collateral. All the shares
of capital stock, partnership interests, or member interests in a limited
liability company, as the case may be, included in the Pledged Collateral to be
pledged pursuant to the Pledge Agreements are or will be upon issuance duly
authorized and validly issued. All shares of capital stock included in the
Pledged Collateral are or will be upon issuance fully paid and nonassessable.
All of the Pledged Collateral is owned beneficially and of record by the pledgor
free and clear of any Lien or restriction on transfer, except as otherwise
provided in the Pledge Agreements and except as the right of the Banks to
dispose of the Pledged Collateral may be limited by the Securities Act of 1933,
as amended, and the regulations promulgated by the Securities and Exchange
Commission thereunder and by applicable state securities laws. Except as
otherwise disclosed to the Banks, in writing, there are no shareholder or other
agreements or understandings with respect to the Pledged Collateral.
(s) Insurance. The insurance policies and bonds to
which the Borrower or any Subsidiary is a party provide adequate coverage from
reputable and financially sound insurers in amounts sufficient to insure the
assets and risks of the Borrower and its Subsidiaries in accordance with prudent
business practice in the industry of the Borrower and its Subsidiaries,
including self-insurance to the extent customary, and such policies and bonds
are valid and in full force and effect.
(t) Compliance with Laws. The Borrower and its
Subsidiaries are in compliance in all material respects with all applicable Laws
(other than Environmental Laws which are specifically addressed in subsection
(y)) in all jurisdictions in which the Borrower or any Subsidiary is presently
or will be doing business except where the failure to do so would not constitute
a Material Adverse Change.
(u) Material Contracts, Licenses, Permits and
Approvals.
(A) As of the date hereof, Schedule 6.01(u) hereto
lists the following contracts relating to the business operations of the
Borrower and its Subsidiaries: (i) all employee benefit plans, employment
agreements where the compensation paid by the
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Borrower or any Subsidiary exceeds $250,000 in any fiscal year, collective
bargaining agreements and labor contracts (the "Labor Contracts"), (ii) all
written provider or similar agreements (the "Provider Agreements") pursuant to
which the Borrower and its Subsidiaries have received or may claim any
entitlement to receive reimbursement from or as a result of (1) Medicaid,
Medicare or Blue Cross programs, or (2) any other public or private
reimbursement programs where the payments received by the Borrower or any
Subsidiary exceeded or are expected to exceed $6,000,000 in the current fiscal
year, (iii) all leases of real property where the payments made by the Borrower
or any Subsidiary in the current fiscal year exceed or are expected to exceed
$250,000, (iv) any contract or series of contracts with the same person for the
furnishing or purchase of machinery, equipment, goods or services, where the
payments made by the Borrower or any Subsidiary exceeded or are expected to
exceed $1,000,000 in the aggregate in the current fiscal year; (v) all
management contracts pursuant to which the Borrower or a Subsidiary provides
management services to any other person where the payments received or expected
to be received by the Borrower or any Subsidiary exceed $500,000 in the current
fiscal year; and (vi) all other material contracts filed as exhibits to any
report filed by the Borrower with the SEC during the past twelve months. All
contracts listed on Schedule 6.01(u) and any Provider Agreements which provide
for annual payments in excess of $6,000,000 which are not listed on Schedule
6.01(u) are valid, binding and enforceable upon the Borrower or its
Subsidiaries, as the case may be, and, to the best knowledge of the Borrower,
each of the other parties thereto in accordance with their respective terms and
there is no default thereunder, to the knowledge of the Borrower and of its
Subsidiaries, with respect to parties other than the Borrower or any of its
Subsidiaries. There are no patient care agreements with patients or any other
person or organization which deviate in such a material respect from the
standard patient care forms used by the Borrower or any of its Subsidiaries as
to constitute a Material Adverse Change.
(B) Except as set forth on Schedule 6.01(u), the Borrower and
each of its Subsidiaries has all material accreditations, authorizations,
approvals, certificates of need, consents, licenses, permits and qualifications
(collectively, "Approvals") required (i) for them to construct, acquire, own,
manage, lease and/or operate their facilities and services, (ii) for them to
receive payment and reimbursement from any patient or third party payor, to the
extent in the case of (i) and (ii) such Approvals are presently required. The
Borrower and each of its Subsidiaries have all other material Approvals required
for the lawful operation of their businesses. All material Approvals of the
Borrower and each of its Subsidiaries are in full force and effect and have not
been amended or otherwise modified (except for modifications which would not
have a material adverse effect upon the Borrower or any Subsidiary) rescinded,
revoked or assigned, and no notice has been received of any violation of
applicable Laws or any refusal to renew any Approval which could reasonably be
expected to cause any of such Approvals to be modified, rescinded or revoked
(except for modifications, rescissions or revocations which would not have a
material adverse effect upon the Borrower and its Subsidiaries taken as a
whole). The continuation, validity and effectiveness of all such Approvals will
in no way be adversely affected by the transactions contemplated by this
Agreement. Neither the Borrower nor any of its Subsidiaries knows of any reason
why any of them will not be able to maintain all material Approvals necessary or
appropriate to construct, own, lease, manage and operate all of their facilities
and to otherwise conduct their businesses as
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now conducted and presently proposed to be conducted. There are no deficiencies
to the conditions for participation by the Borrower or any Subsidiary in any
Medicare, Medicaid or other reimbursement programs which would preclude such
participation.
(v) Investment Companies; Public Utility Holding Company. The
Borrower is not an "investment company" registered or required to be registered
under the Investment Company Act of 1940 or under the "control" of an
"investment company" as such terms are defined in the Investment Company Act of
1940 and shall not become such an "investment company" or under such "control."
The Borrower is not a "holding company" nor a "subsidiary" or "affiliate" of any
Person that is a "holding company" as those terms are defined in the Public
Utility Holding Company Act of 1935.
(w) Plans and Benefit Arrangements.
(i) The Borrower and each member of the
ERISA Group are in compliance in all material respects with any applicable
provisions of ERISA with respect to all Benefit Arrangements, Plans and
Multiemployer Plans. There has been no Prohibited Transaction with respect to
any Benefit Arrangement or any Plan or, to the best knowledge of the Borrower,
with respect to any Multiemployer Plan or Multiple Employer Plan, which could
result in any material liability of the Borrower or any other member of the
ERISA Group. The Borrower and all members of the ERISA Group have made when due
any and all payments required to be made under any agreement relating to a
Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto.
With respect to each Plan and Multiemployer Plan, the Borrower and each member
of the ERISA Group (i) have fulfilled in all material respects their obligations
under the minimum funding standards of ERISA, (ii) have not incurred any
liability to the PBGC and (iii) have not had asserted against them any penalty
for failure to fulfill the minimum funding requirements of ERISA.
(ii) To the best of the Borrower's
knowledge, each Multiemployer Plan and Multiple Employer Plan is able to pay
benefits thereunder when due.
(iii) Neither the Borrower nor any other
member of the ERISA Group has instituted or intends to institute proceedings to
terminate any Plan.
(iv) No event requiring notice to the PBGC
under Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to
occur with respect to any Plan, and no amendment with respect to which security
is required under Section 307 of ERISA has been made or is reasonably expected
to be made to any Plan.
(v) The aggregate actuarial present value of
all benefit liabilities (whether or not vested) under each Plan, determined on a
plan termination basis, as disclosed in, and as of the date of, the most recent
actuarial report for such Plan, does not exceed the aggregate fair market value
of the assets of such Plan by an amount in excess of $250,000.
(vi) Neither the Borrower nor any other
member of the ERISA Group has incurred or reasonably expects to incur any
material withdrawal liability under ERISA
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to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor
any other member of the ERISA Group has been notified by any Multiemployer Plan
or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan
has been terminated within the meaning of Title IV of ERISA and, to the best
knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan is
reasonably expected to be reorganized or terminated, within the meaning of Title
IV of ERISA.
(vii) To the extent that any Benefit
Arrangement is insured, the Borrower and all members of the ERISA Group have
paid when due all premiums required to be paid for all periods. To the extent
that any Benefit Arrangement is funded other than with insurance, the Borrower
and all members of the ERISA Group have made when due all contributions required
to be paid for all periods.
(x) Employment Matters. The Borrower and each of its
Subsidiaries are in compliance with the Labor Contracts and all applicable
federal, state and local labor and employment Laws including, but not limited
to, those related to equal employment opportunity and affirmative action, labor
relations, minimum wage, overtime, child labor, medical insurance continuation,
worker adjustment and relocation notices, immigration controls and worker and
unemployment compensation, where the failure to comply would constitute a
Material Adverse Change. There are no outstanding grievances, arbitration awards
or appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at
facilities of the Borrower or any of its Subsidiaries which in any case would
constitute a Material Adverse Change. The Borrower has delivered to the Agent
true and correct copies of each of the Labor Contracts in effect as of the date
hereof.
(y) Environmental Matters. Except as disclosed on Schedule
6.01(y) hereto:
(i) Neither the Borrower nor any of its Subsidiaries
has received any Environmental Complaint from any Official Body or private
person alleging that the Borrower, any of its Subsidiaries or any prior or
subsequent owner of the Property is a potentially responsible party under the
Comprehensive Environmental Response, Cleanup and Liability Act ("CERCLA"), 42
U.S.C. Section 9601, et seq., or is potentially liable under the Solid Waste
Disposal Act, as amended, ("SWDA") 42 U.S.C. Section 6901, et seq., or any
comparable state or foreign law, statute or regulation of either CERCLA or SWDA
and the Borrower has no reason to believe that such an Environmental Complaint
might be received. There are no pending or, to the Borrower's knowledge,
threatened Environmental Complaints relating to the Borrower, any of its
Subsidiaries or, to the Borrower's knowledge, any prior or subsequent owner of
the Property pertaining to, or arising out of, any Environmental Conditions
which, individually or in the aggregate, if adversely determined could
reasonably be expected to have a material adverse effect on the Borrower or any
Subsidiary of the Borrower taken as a whole.
(ii) Except for conditions, violations or failure
which individually and in the aggregate are not reasonably likely to result in a
Material Adverse Change, there are no circumstances at, on or, to the best of
the Borrower's knowledge, under the
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Property that constitute a breach of or non-compliance with any of the
Environmental Laws, and there are, to the best of the Borrower's knowledge, no
past or present Environmental Conditions at, on or under the Property or, to the
Borrower's knowledge, at, on or, to the best of the Borrower's knowledge, under
adjacent property, that prevent compliance with the Environmental Laws at the
Property.
(iii) Neither the Property nor any structures,
improvements, equipment, fixtures, activities or facilities thereon or
thereunder contain or use Regulated Substances except in compliance in all
material respects with Environmental Laws. There are no processes, facilities,
operations, equipment or any other activities at, on or, to the best of the
Borrower's knowledge, under the Property, or, to the Borrower's knowledge, at,
on or under adjacent property, that currently result in the release or
threatened release of Regulated Substances onto the Property, except to the
extent that such releases or threatened releases are not a material breach of or
otherwise not a material violation of the Environmental Laws, or are not likely
to result in a Material Adverse Change.
(iv) There are no above ground storage tanks,
underground storage tanks, or underground piping associated with such tanks,
used for the management of Regulated Substances at, on or under the Property
that (a) do not have, to the extent required by applicable Environmental Laws, a
full operational secondary containment system in place, and (b) are not
otherwise in compliance in all material respects with all Environmental Laws. To
Borrower's best knowledge, there are no abandoned underground storage tanks or
underground piping associated with such tanks, previously used for the
management of Regulated Substances at, on or under the Property that have not
been either abandoned in place, or removed, in accordance with the Environmental
Laws.
(v) The Borrower and each of its Subsidiaries have
all material permits, licenses, authorizations, plans and approvals necessary
under the Environmental Laws for the conduct of the business of the Borrower and
each such Subsidiary as presently conducted. The Borrower and each such
Subsidiary have submitted all material notices, reports and other filings
required by the Environmental Laws to be submitted to an Official Body which
pertain to past and current operations on the Property.
(vi) Except for violations which individually and in
the aggregate are not likely to result in a Material Adverse Change, all present
and, to the best knowledge of the Borrower, past on-site generation, storage,
processing, treatment, recycling, reclamation or disposal of Regulated
Substances at, on, or under the Property and, to the best knowledge of the
Borrower, all off-site transportation, storage, processing, treatment,
recycling, reclamation or disposal of Regulated Substances has been done in
accordance with the Environmental Laws.
(z) Senior Debt Status. The obligations of the Borrower under
this Agreement and the Notes and the obligations of the Subsidiaries of Borrower
under the Guaranties do rank and will rank at least pari passu in priority of
payment with all other Indebtedness of the Borrower or such Subsidiaries, as the
case may be, except Indebtedness of
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the Borrower or its Subsidiaries to the extent secured by Permitted Liens. The
obligations of the Borrower under this Agreement and the Notes constitute
"Designated Senior Indebtedness" as such term is defined in the Indenture. There
is no Lien upon or with respect to any of the properties or income of the
Borrower or any of its Subsidiaries which secures Indebtedness or other
obligations of any person except for Permitted Liens.
(aa) Matters Regarding Leased Facilities and Certain
Indebtedness of Subsidiaries.
(i) Indebtedness Related to Leased Facilities.
Schedule 6.01(aa) describes each Leased Facility and with respect thereto: (1)
the Subsidiary Lessee which is the lessee thereof; (2) the Lessor thereof; (3)
the amount of Lessor Indebtedness secured by any assets of such Leased Facility;
(4) the Lessor Lender which is the obligee under such Lessor Indebtedness; (5)
any assets of the Subsidiary Lessee leasing such Leased Facility which relate to
such facility in which such Subsidiary Lessee has granted Liens in favor of the
Lessor (it is acknowledged that the Lessor has assigned such Liens to the Lessor
Lender) or Lessor Lender and confirmation that such Liens are Permitted Leased
Facility Liens and Permitted Liens; (6) the original maturity date of such
Lessor Indebtedness, without giving effect to subsequent amendments unless
permitted by this Agreement; (7) whether a Facility Purchase Option has been
granted as part of an Intercreditor Agreement between the Agent and the Lessor
Lender with respect to such Leased Facility; (8) whether the Lessor Lender and
Lessor have consented to the grant by the Subsidiary Lessee of a Leasehold
Mortgage, in favor of the Agent for the benefit of the Banks and Liens on the
assets of such Subsidiary Lessee (such Liens to be second in priority to the
Liens granted by such Subsidiary Lessee to such Lessor Lender in such assets if
such Subsidiary granted Liens in such assets to such Lessor Lender) with respect
to such Leased Facility; (9) whether the applicable Lessor Lender has agreed to
release its liens in the assets of the applicable Subsidiary Lessee leasing such
Leased Facility related to such facility; (10) whether the applicable Lessor
Lender has entered into a Non-Disturbance Agreement; (11) whether the applicable
Lessor Lender has entered into an Intercreditor Agreement with the Agent; and
(12) whether the applicable Lessor Lender has entered into a Trustee Agreement
with the Agent.
(ii) Indebtedness Related to Subsidiary Owned
Facilities. Schedule 6.01(aa) describes each Owned Facility and with respect
thereto: (1) the Subsidiary Owner; (2) the amount of the Owned Facility
Indebtedness, secured by any assets of such Owned Facility; (3) the Owned
Facility Lender which is the obligee under such Owned Facility Indebtedness; (4)
the assets of the Subsidiary Owner relating to such Owned Facility in which the
Subsidiary Owner has granted Liens in favor of such Owned Facility Lender and
confirmation that such Liens are Permitted Owned Facility Liens and Permitted
Liens; (5) the original maturity date of such Owned Facility Indebtedness,
without giving effect to subsequent amendments unless permitted by this
Agreement; (6) whether a Facility Purchase Option has been granted as part of an
Intercreditor Agreement between the Agent and the Owned Facility Lender with
respect to such Owned Facility; (7) whether the Owned Facility Lender has
consented to the grant by the Subsidiary Owner of a Mortgage, in favor of the
Agent for the benefit of the Banks and Liens on the assets of such Subsidiary
Owner (such Liens to be second
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in priority to the Liens granted by such Subsidiary Owner to such Owned Facility
Lender in such assets if such Subsidiary Owner granted Liens in such assets to
such Owned Facility Lender) with respect to such Owned Facility; and (8) whether
the applicable Owned Facility Lender entered into an Intercreditor Agreement
with Agent.
(bb) Mortgage and Leasehold Mortgage Liens. The Liens
granted to the Agent for the benefit of the Banks pursuant to the Mortgages and
the Leasehold Mortgages constitute valid Liens under applicable law having
priority over all other Liens except that if otherwise permitted by this
Agreement they may be subordinate to Liens in favor of the Owned Facility
Lenders and Lessor Lenders, as the case may be, and Schedule 6.01(aa) indicates
if such Liens are subordinated. All such action as will be necessary or
advisable to establish such Liens of the Agent and its priority as described in
the preceding sentence will be taken at or prior to the time required for such
purpose, and there will be as of the date of execution and delivery of the
Mortgages and Leasehold Mortgages no necessity for any further action in order
to protect, preserve and continue such Liens and such priority.
(cc) Affiliate Transactions. Schedule 6.01(cc) hereto
sets forth a true and complete list of all transactions between the Borrower or
any Subsidiary of the Borrower and Paragon or any Affiliate of Paragon.
6.02 Updates to Schedules. Should any of the information or
disclosures provided on any of the Schedules attached hereto (other than
Schedules relating solely to representations and warranties made solely as of
the date expressly specified therein, which representations and warranties shall
be true and correct as of such specified date) become outdated or incorrect in
any material respect, the Borrower shall promptly provide the Agent in writing
with such revisions or updates to such Schedule as may be necessary or
appropriate to update or correct the same; provided, however that no Schedule
shall be deemed to have been amended, modified or superseded by any such
correction or update that would disclose the occurrence of an event or condition
which constitutes a Potential Default or Event of Default, nor shall any breach
of warranty or representation resulting from the inaccuracy or incompleteness of
any such Schedule be deemed to have been cured thereby, unless and until the
Required Banks, in their sole and absolute discretion, shall have accepted in
writing such revisions or updates to such Schedule.
ARTICLE VII
CONDITIONS OF LENDING
The obligation of each Bank to make Loans and of the Agent to
issue Letters of Credit hereunder is subject to the performance by the Borrower
of its obligations to be performed hereunder at or prior to the making of any
such Loans or issuance of such Letters of Credit and to the satisfaction of the
following conditions:
7.01 Each Additional Loan. At the time of making any Loans or
issuing any Letters of Credit other than the Loan made on the Closing Date
hereunder and after giving effect to the proposed borrowings: the
representations and warranties of the Borrower contained in Article VI hereof
shall be true on and as of the date of such additional Loan with the same effect
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as though such representations and warranties had been made on and as of such
date (except representations and warranties which expressly relate solely to an
earlier date or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein) and the
Borrower shall have performed and complied with all covenants and conditions
hereof; no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; the making of the Loans or issuing of such Letters of
Credit shall not contravene any Law applicable to the Borrower or any of the
Banks; and the Borrower shall have delivered to the Agent a duly executed and
completed Loan Request.
ARTICLE VIII
COVENANTS
8.01 Affirmative Covenants. The Borrower covenants and agrees
that until payment in full of the Loans and interest thereon, satisfaction of
all of the Borrower's other obligations hereunder and termination of the
Revolving Credit Commitments, the Borrower shall comply at all times with the
following affirmative covenants:
(a) Preservation of Existence, Etc. The Borrower
shall, and shall cause each of its Subsidiaries to, maintain its corporate
existence and its qualification to do business as a foreign corporation and good
standing in each jurisdiction in which its ownership or lease of property or the
nature of its business makes such qualification necessary, except where the
failure to be so qualified or in such good standing would not constitute a
Material Adverse Change.
(b) Payment of Liabilities, Including Taxes, Etc. The
Borrower shall, and shall cause each of its Subsidiaries to, duly pay and
discharge all liabilities to which it is subject or which are asserted against
it, promptly as and when the same shall become due and payable, including all
taxes, assessments and governmental charges upon it or any of its properties,
assets, income or profits, prior to the date on which penalties attach thereto,
except to the extent that such liabilities, including taxes, assessments or
charges, are being contested in good faith and by appropriate and lawful
proceedings diligently conducted and for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made, but only
to the extent that failure to discharge any such liabilities would not result in
any additional liability which would adversely affect to a material extent the
financial condition of the Borrower and its Subsidiaries taken as a whole and
which would affect the Collateral.
(c) Maintenance of Insurance. The Borrower shall, and
shall cause each of its Subsidiaries to, insure its properties and assets
against loss or damage by fire and such other insurable hazards as such assets
are commonly insured (including fire, extended coverage, property damage,
worker's compensation, public liability and business interruption insurance) and
against other risks (including errors and omissions) in such amounts as similar
properties and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially sound
insurers, including self-insurance to the extent customary. At the request of
the Agent, the Borrower shall deliver (x) on the Closing Date and annually
thereafter an original certificate of insurance signed by the Borrower's
independent
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insurance broker describing and certifying as to the existence of the insurance
on the Collateral required to be maintained by this Agreement and the other Loan
Documents and (y) from time to time a summary schedule indicating all insurance
then in force with respect to the Borrower. The insurance requirements set forth
herein may be satisfied through blanket insurance obtained and maintained by
Paragon.
(d) Maintenance of Properties and Leases. The
Borrower shall, and shall cause each of its Subsidiaries to, maintain in good
repair, working order and condition (ordinary wear and tear excepted) in
accordance with the general practice of other businesses of similar character
and size, all of those properties useful or necessary to its business, and from
time to time, the Borrower will make or cause to be made all appropriate
repairs, renewals or replacements thereof.
(e) Maintenance of Patents, Trademarks, Etc. The
Borrower shall, and shall cause each of its Subsidiaries to, maintain in full
force and effect all patents, trademarks, trade names, copyrights, licenses,
franchises, permits and other authorizations necessary for the ownership and
operation of its properties and business if the failure so to maintain the same
would constitute a Material Adverse Change.
(f) Visitation Rights. The Borrower shall, and shall
cause each of its Subsidiaries to, permit any of the officers or authorized
employees or representatives of the Agent or any of the Banks to visit and
inspect any of its properties and to examine and make excerpts from its books
and records and discuss its business affairs, finances and accounts with its
officers, all in such detail and at such times during normal business hours and
as often as any of the Banks may reasonably request, provided that each Bank
shall provide the Borrower and the Agent with reasonable notice prior to any
visit or inspection. In the event any Bank desires to conduct an audit of the
Borrower, such Bank shall make a reasonable effort to conduct such audit
contemporaneously with any audit to be performed by the Agent.
(g) Keeping of Records and Books of Account. The
Borrower shall, and shall cause each of its Subsidiaries to, maintain and keep
proper books of record and account which enable the Borrower and its
Subsidiaries to issue financial statements in accordance with GAAP and as
otherwise required by applicable Laws of any Official Body having jurisdiction
over the Borrower or any of its Subsidiaries, and which accurately and fairly
reflect the transactions and dispositions of assets of the Borrower or such
Subsidiary.
(h) Plans and Benefit Arrangements. The Borrower
shall, and shall cause each member of the ERISA Group to, comply with ERISA, the
Internal Revenue Code and other applicable Laws applicable to Plans and Benefit
Arrangements except where such failure, alone or in conjunction with any other
failure, would not result in a Material Adverse Change. Without limiting the
generality of the foregoing, the Borrower shall cause all of its Plans and all
Plans maintained by any member of the ERISA Group to be funded in accordance
with the minimum funding requirements of ERISA and shall make, and cause each
member of the ERISA Group to make, in a timely manner, all contributions due to
Plans, Benefit Arrangements and Multiemployer Plans.
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(i) Compliance With Laws. The Borrower shall, and
shall cause each of its Subsidiaries to, comply with all applicable Laws,
including all Environmental Laws, in all respects provided that it shall not be
deemed to be a violation of this Section 8.01(i) if any failure to comply with
any Law would not result in fines, penalties, other similar liabilities or
injunctive relief which in the aggregate would constitute a Material Adverse
Change. Upon the reasonable request of the Required Banks, the Borrower shall
deliver to the Agent and the Banks such opinions of counsel regarding the Loan
Parties' compliance with the representations set forth in Sections 6.01(m) and
6.01(u)(B) hereof and other customary matters regarding the compliance of the
Loan Parties with applicable healthcare regulatory Laws.
(j) Use of Proceeds. The Borrower will use the
proceeds of the Loans only for lawful purposes in accordance with Section 2.08
hereof as applicable and such uses shall not contravene any applicable Law or
any other provision hereof.
(k) [Intentionally Omitted.]
(l) Subordination of Intercompany Loans, Other Loans
and Advances to the Borrower. Except for Indebtedness described on Schedule
8.01(l), the Borrower shall cause any intercompany Indebtedness, and shall cause
any other Indebtedness, loans or advances owed by any Loan Party to any other
person (other than a Loan Party) to be subordinated to the Loan Parties'
obligations under the Loan Documents on the terms set forth in Exhibit 8.01(l),
with such revisions thereto as are reasonably satisfactory to the Agent.
(m) Approval of Financial Statements in Permitted
Acquisitions; Notice of Permitted Acquisition.
(i) Approval of Financial Statements. The
Borrower shall deliver to the Banks a certificate in the form of Exhibit
8.01(m)(i) hereof (the "Acquisition Approval Certificate") before making a
Permitted Acquisition if they desire that the cash flow of the business to be
acquired during periods prior to the acquisition shall be included when they
compute Cash Flow from Operations under this Agreement. The Borrower shall
attach to such Acquisition Approval Certificate copies of the historical
financial statements of the business to be acquired including the annual and
interim balance sheets and income statements for at least three (3) fiscal years
prior to the Permitted Acquisition and pro forma statements which shall include
a combined balance sheet as of the acquisition date and cash flow statements for
the preceding year. The pro forma statements shall set forth: (1) Consolidated
Cash Flow from Operations of the Loan Parties and the acquired business,
adjusted in accordance with clause (A) of the definition of Consolidated Cash
Flow from Operations, for the Acquisition Income Reporting Period in connection
with such Permitted Acquisition, and (2) Total Indebtedness on the date of the
Permitted Acquisition after giving effect to the acquisition and the Loans to be
made on such date, and (3) the ratio of the amount in clause (2) to the amount
in clause (1), which ratio shall not exceed (A) 5.25 to 1.0 through and
including September 30, 1998; (B) 5.00 to 1.0 from October 1, 1998 through and
including September 30, 1999; (C) 4.75 to 1.0 from October 1, 1999 through and
including September 30, 2000; and (D) 4.5 to 1.0 from October 1, 2000 and
thereafter. The Acquisition Approval Certificate shall confirm the accuracy of
the
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foregoing computations and that, after giving effect to the Permitted
Acquisition and the Loans made on the date thereof, no Event of Default shall
exist and the Loan Parties shall be in compliance with all of their covenants
hereunder, assuming, for purposes of Borrower's financial covenants, that all
items of income, expense and cash flow are reported for the Acquisition Income
Reporting Period and that all balance sheet items (such as Indebtedness) are
measured on the date of such Permitted Acquisition. The Loan Parties may make
the Permitted Acquisition prior to receiving the Required Banks' approval of
Borrower's Acquisition Approval Certificate with respect thereto; provided that
the Loan Parties may not, until they have received such approval, include the
cash flow of the business to be acquired for periods prior to the acquisition in
their net income when they compute Consolidated Cash Flow from Operations. The
Banks shall use their best efforts to respond to the Borrower's request for
approval of each Acquisition Approval Certificate within two (2) Business Days
following the Banks' receipt of such certificate and shall not unreasonably
withhold or delay such approval. The Borrower may request that extraordinary,
nonrecurring expenses under GAAP incurred in connection with such Permitted
Acquisition be excluded from the Consolidated Net Income of the Loan Parties and
from the net income of the business to be acquired when they compute
Consolidated Cash Flow from Operations pursuant to clause (1) above. Examples of
such expenses include, without limitation, transaction costs, debt prepayments
and similar charges, brokers' fees, attorneys' fees and accountants' fees. The
foregoing expenses shall be excluded from net income in such computations of
Consolidated Cash Flow from Operations if the Required Banks agree in writing to
such request.
(ii) Notice. The Borrower shall deliver to
the Banks a notice in the form of Exhibit 8.01(m)(ii) (the "Acquisition Notice
Certificate") at least two (2) Business Days before making any Permitted
Acquisition except for: (1) a Permitted Acquisition described in Section
8.01(m)(i) with respect to which the Borrower is delivering an Acquisition
Approval Certificate, or (2) a Permitted Acquisition if the Purchase Price in
connection therewith is less than $2,500,000. The Acquisition Notice Certificate
shall set forth the ratio of (1) Consolidated Cash Flow From Operations
(excluding the cash flow of the acquired business) for the Acquisition Income
Reporting Period in connection with such Permitted Acquisition, and (2) Total
Indebtedness on the date of the Permitted Acquisition after giving effect to the
acquisition and the Loans to be made on such date, which ratio shall not exceed
(A) 5.25 to 1.0 through and including September 30, 1998; (B) 5.00 to 1.0 from
October 1, 1998 through and including September 30, 1999; (C) 4.75 to 1.0 from
October 1, 1999 through and including September 30, 2000; and (D) 4.5 to 1.0
from October 1, 2000 and thereafter. The Acquisition Notice Certificate also
shall confirm that, after giving effect to the Permitted Acquisition and the
Loans made on the date thereof, no Event of Default shall exist and the Loan
Parties shall be in compliance with all of their covenants hereunder, assuming,
for purposes of Borrower's financial covenants, that all items of income,
expense and cash flow are reported for the Acquisition Income Reporting Period
and that all balance sheet items (such as Indebtedness) are measured on the date
of such Permitted Acquisition.
(iii) Additional Information. With respect
to any Acquisition Approval Certificate or Acquisition Notice Certificate, the
Borrower shall provide to the Banks,
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as the Banks may reasonably request detailed calculations and information
supporting the financial calculations therein and the financial statements
attached thereto.
(n) Dissolution of Certain Subsidiaries. Borrower shall cause
Pinnacle Rehab of Gwinnette and Pinnacle's Kansas Joint Venture to be dissolved
on or before December 31, 1998. Borrower shall not, directly or indirectly, make
any capital contributions or other investments in, loans to, guarantees or other
obligations on behalf of, or other payments, distributions or contributions to
or for the benefit of, Pinnacle Rehab of Gwinnette or Pinnacle's Kansas Joint
Venture on or after the Closing Date, except for payment of immaterial expenses
on behalf of such entities relating to their dissolution. or dividend. [REVIEW
STATUS]
(o) [Intentionally Omitted].
(p) Further Assurances. Each Loan Party shall, from time to
time, at its expense, faithfully preserve and protect the Agent's Lien on or
perfected security interest in the Collateral as a continuing perfected Lien,
subject only to Permitted Liens, and shall do such other acts and things as the
Agent in its sole discretion may deem necessary or advisable from time to time
in order to preserve, perfect and protect the Liens granted under the Loan
Documents and to exercise and enforce its rights and remedies thereunder with
respect to the Collateral.
(q) Owned Facilities - Termination of Liens; Intercreditor
Agreements.
The Borrower shall:
(i) Cause any Lien securing any Owned Facility
Indebtedness to be terminated on or before the earlier of: the maturity of such
Owned Facility Indebtedness (without giving effect to any extension of such
maturity after the Sixteenth Amendment Effective Date, unless such extension of
maturity is otherwise approved in accordance with this Agreement) or any
refinancing, replacement or substitution of such Owned Facility Indebtedness,
unless, in the case of a refinancing, such refinancing is otherwise approved in
accordance with this Agreement;
(ii) Not permit the amount of Owned Facility
Indebtedness secured by Liens in favor of an Owned Facility Lender to exceed the
amount of such Owned Facility Indebtedness existing on the Sixteenth Amendment
Effective Date;
(iii) Cause each Subsidiary Owner not to ▇▇▇▇▇ ▇ ▇▇▇▇
on any asset of such Subsidiary Owner if the Owned Facility Lender has
previously terminated its Liens or has never obtained a Lien on such asset; and
(iv) Cause each Owned Facility Lender and any other
person which loans money to any Subsidiary Owner, or otherwise obtains a Lien in
any of the assets of any Subsidiary Owner relating to any of the Owned
Facilities (whether by assignment of the Owned Facility Indebtedness or
otherwise), on the date of such loan or lien to execute and deliver to Agent an
Intercreditor Agreement and Borrower shall deliver or cause to be delivered
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to Agent a true and correct copy of the original of each Intercreditor Agreement
within one (1) Business Day after such agreement has been executed. The Borrower
shall use its best efforts to obtain each Intercreditor Agreement in the form of
Exhibit 1.01(I)(2)(A), and if the Borrower is not successful in obtaining such
form of Intercreditor Agreement after using best efforts, then the Borrower
shall use best efforts to obtain an Intercreditor Agreement in the form of
Exhibit 1.01(I)(2)(B). If the Borrower is not successful, after using best
efforts, in obtaining either such form of Intercreditor Agreement, then the
Borrower shall negotiate such other Intercreditor Agreement as is reasonably
satisfactory, in form and substance, to the Agent.
(r) Leased Facilities - Termination of Liens;
Intercreditor Agreements; Trustee Agreements.
The Borrower shall:
(i) Cause any Lien securing any Lessor Indebtedness
to be terminated on or before the earlier of: (i) the maturity of such Lessor
Indebtedness (without giving effect to any extension of such maturity after the
Sixteenth Amendment Effective Date unless such extension of maturity is
otherwise approved in accordance with this Agreement) or (ii) any refinancing,
replacement or substitution of such Lessor Indebtedness unless, in the case of a
refinancing, such refinancing is otherwise approved in accordance with this
Agreement;
(ii) Not permit the amount of Lessor Indebtedness
secured by Liens in favor of the Lessor Lenders to exceed the amount of such
Indebtedness existing on the Sixteenth Amendment Effective Date; and
(iii) Cause each Subsidiary Lessee not to ▇▇▇▇▇ ▇
▇▇▇▇ on any asset of such Subsidiary Lessee if the applicable Lessor or Lessor
Lender has previously terminated its Liens or has never obtained a Lien on such
asset;
(iv) Deliver to the Agent for the benefit of the
Banks an Intercreditor Agreement with respect each Lessor Lender and, if
reasonably requested by the Agent, a Non-Disturbance Agreement. Each
Non-Disturbance Agreement shall be satisfactory, in form and substance to the
Agent. Borrower shall deliver or cause to be delivered to Agent a true and
correct copy of each Non-Disturbance Agreement and the original of each
Intercreditor Agreement within one (1) Business Day after such agreement has
been executed pursuant to the preceding sentence. The Borrower shall use its
best efforts to obtain each Intercreditor Agreement in the form of Exhibit
1.01(I)(1)(A), and if the Borrower is not successful in obtaining such form of
Intercreditor Agreement after using best efforts, then the Borrower shall use
best efforts to obtain an Intercreditor Agreement in the form of Exhibit
1.01(I)(1)(B). If the Borrower is not successful, after using best efforts, in
obtaining either such form of Intercreditor Agreement, then the Borrower shall
negotiate such other Intercreditor Agreement as is reasonably satisfactory, in
form and substance, to the Agent; and
(v) Cause if reasonably requested by the Agent, each
Lessor listed on Schedule 6.01(aa) to execute and deliver to the Agent a Trustee
Agreement; provided, however, that if, with respect to Leased Facilities leased
by Loan Parties prior to the Sixteenth
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Amendment Effective Date, following the Sixteenth Amendment Effective Date the
Loan Parties are otherwise in compliance with all requirements under this
Agreement relating to Lessor Indebtedness, Leased Facilities and Permitted
Leased Facility Liens, then no additional Trustee Agreements will be required
with respect to such Leased Facilities so long as the lease of such facility
continues following the Sixteenth Amendment Effective Date on terms and
conditions identical to those approved by the Required Banks prior to the
Sixteenth Amendment Effective Date. Each Trustee Agreement shall be
satisfactory, in form and substance to the Agent.
8.02 Negative Covenants. The Borrower covenants and agrees
that until payment in full of the Loans and interest thereon, satisfaction of
all of the Borrower's other obligations hereunder and termination of the
Revolving Credit Commitments, the Borrower shall comply with the following
negative covenants:
(a) Indebtedness. Subject to Section 8.02(v), the
Borrower shall not, and shall not permit any of its Restricted Subsidiaries to,
at any time create, incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as of the
Sixteenth Amendment Effective Date as set forth on Schedule 8.02(a) hereto
(including, subject to the other provisions of this Agreement, any extensions or
renewals thereof provided there is no increase in the amount thereof or other
significant change in the terms thereof adverse to any Loan Party or to any Bank
unless otherwise specified on Schedule 8.02(a)); provided further that the Owned
Facility Indebtedness and Lessor Indebtedness are also subject to the covenants
and limitations described in Sections 8.01(q) and (r) and any refinancing,
extension or renewal of any Owned Facility Indebtedness or Lessor Indebtedness
is also subject to satisfaction of the conditions set forth in Exhibit 1.01(C)
hereto;
(iii) Capitalized leases as and to the
extent permitted under Section 8.02(p);
(iv) Indebtedness which is subordinated in
accordance with the provisions of Section 8.01(1);
(v) Indebtedness secured by Purchase Money
Security Interests in an aggregate amount for the Borrower and its Subsidiaries
on a consolidated basis at any time not exceeding $10,000,000;
(vi) Indebtedness of a Loan Party to the
Borrower or to a wholly-owned Subsidiary of the Borrower;
(vii) the Subordinated Notes, provided that
neither the subordination provisions contained in the Indenture nor Section 1008
[Limitation on Indebtedness] of the Indenture shall be amended after the
Subordinated Indebtedness Incurrence Date and provided further that the
Indenture is not otherwise amended after the Subordinated
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Indebtedness Incurrence Date if the effect thereof would (i) accelerate the due
date or increase the amount of any payment due from the Borrower thereunder,
(ii) change the rate at which interest is charged thereunder, or (iii) impose
material restrictions or obligations on the Borrower or the other Loan Parties
which are not imposed thereunder on the Closing Date or add any term thereto
which is less favorable in any material respect to the Loan Parties than the
terms of the Indenture on the Subordinated Indebtedness Incurrence Date or which
is more restrictive to any of the Loan Parties than the terms of the Credit
Agreement;
(viii) Guaranties which constitute
Indebtedness as permitted pursuant to Section 8.02(c);
(ix) Indebtedness not exceeding $500,000 of
the Borrower to CoreStates Bank, N.A. in respect of an overnight unsecured
overdraft facility at any time;
(x) Owned Facility Indebtedness incurred
after the Sixteenth Amendment Effective Date, if the principal amount of and
other terms and conditions with respect to such Owned Facility Indebtedness are
acceptable to the Required Banks, (including, without limitation, satisfaction
of all conditions set forth on Exhibit 1.01(C)); provided, that all Owned
Facility Indebtedness is subject to the covenants and limitations set forth in
Section 8.01(q); and
(xi) the Permitted Subordinated
Indebtedness.
(b) Liens. The Borrower shall not, and shall not
permit any of the other Loan Parties or Unrestricted Subsidiary which is an
Excluded Entity with respect to which Restricted Investments have been made as
permitted pursuant to Section 8.02(d)(iv) to, at any time create, incur, assume
or suffer to exist any Lien on any of its or their property or assets, tangible
or intangible, now owned or hereafter acquired, or agree or become liable to do
so, except Permitted Liens.
(c) Guaranties. Except as described in Schedule
8.02(c), the Borrower shall not, and shall not permit any of the other Loan
Parties to, at any time, directly or indirectly, become or be liable in respect
of any Guaranty except: (i) Guaranties of any obligation or liability of another
Loan Party that is permitted under the other provisions of this Agreement, (ii)
Guaranties which are not required by GAAP to be disclosed in the Borrower's
audited consolidated financial statements (including the footnotes thereto),
(iii) Guaranties of Indebtedness incurred as part of a permitted Restricted
Investment pursuant to Section 8.02(d)(iv), and (iv) Guaranties which are
subordinated on terms reasonably acceptable to the Agent.
(d) Loans and Investments. The Borrower shall not,
and shall not permit any of the other Loan Parties, to, at any time make or
suffer to remain outstanding any loan or advance to, or purchase, acquire or own
any stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) in, or any other investment or interest in, or make any
capital contribution to, any other person, or agree, become or remain liable to
do any of the foregoing, except:
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(i) trade credit extended on usual and customary
terms in the ordinary course of business;
(ii) advances to employees to meet expenses incurred
by such employees in the ordinary course of business;
(iii) Permitted Investments;
(iv) Restricted Investments ; provided that (i) the
Excluded Entity in which the Restricted Investment is made is engaged in a
business which is ancillary and related to the business of the Loan Parties;
(ii) the Loan Party making a Restricted Investment is either a shareholder,
member or partner of the Excluded Entity in which a Restricted Investment is
made; (iii) the stock, equity interests in a limited liability company or
partnership interests owned by a Loan Party in the Excluded Entity in which a
Restricted Investment is made are pledged to the Agent on a first priority basis
for the benefit of the Banks; (iv) to the extent that any Excluded Entity incurs
Indebtedness payable to any person other than a Loan Party (the "Third Party
Lender") in excess of $5,000,000, prior to incurring such Indebtedness, the
Borrower shall cause the Third Party Lender to enter into an intercreditor
agreement with the Agent on behalf of the Banks, in form and substance
satisfactory to the Agent in its sole discretion with respect to the
Indebtedness of such Excluded Entity payable to the Third Party Lender and any
Indebtedness of such Excluded Entity payable to either the Banks or any Loan
Party; (v) to the extent that any individual Restricted Investment exceeds
$7,500,000 or any series of related Restricted Investments in the aggregate
exceed $7,500,000 prior to making any such Restricted Investment, the Borrower
shall have obtained the written approval of the Required Banks; and (vi) the sum
of (x) the aggregate amount of Restricted Investments outstanding at any time,
plus (y) the aggregate amount of Special Distributions made from and after the
Seventeenth Amendment Effective Date, shall not exceed in the aggregate for the
Borrower and the other Loan Parties Seventy-Five Million Dollars ($75,000,000);
(v) loans, advances and investments in Restricted
Subsidiaries; and
(vi) loans and advances in the aggregate not to
exceed $8,000,000 at any time outstanding to officers and senior management of
the Loan Parties, so long as each such advance is on terms and conditions
reasonably satisfactory to the Agent and so long as the Borrower gives five (5)
Business Days' prior notice to the Agent of each loan or advance and the
recipient of each loan or advance is reasonably satisfactory to the Agent.
(vii) the purchase by the Borrower in whole or in
part of an aggregate amount not to exceed $150,000,000 of the Subordinated Notes
put to the Borrower under Section 1015 of the Indenture as a result of the
"change of control" (as defined in the Indenture) resulting from the
consummation of the Paragon Acquisition so long as after giving effect to each
such purchase the Borrower is in pro-forma compliance with the financial
covenants set forth in Sections 8.02(q) [Minimum Fixed Charge Coverage Ratio],
8.02(r) [Maximum Leverage Ratio], 8.02(t) [Minimum Net Worth] and 8.02(u)
[Senior Indebtedness to Cash Flow from Operations Ratio], no Event of Default or
Potential Default exists and is
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continuing, not more than $25,000,000 in the aggregate of proceeds of Loans
shall have been used for purchases of Subordinated Notes from and after the
Seventeenth Amendment Effective Date, and the Borrower demonstrates and
certifies such pro-forma compliance and that no Event of Default or Potential
Default exists and is continuing to the Agent, to the satisfaction of the Agent.
[NOTE: QUARTERLY COMPLIANCE CERTIFICATE TO INCLUDE DETAIL OF REPURCHASES.]
(e) Amounts Paid by the Borrower to Paragon;
Dividends and Related Distributions. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make or pay, or agree to become or remain
liable to make or pay, any dividend or other distribution of any nature (whether
in cash, property, securities or otherwise) on account of or in respect of their
respective shares of capital stock or partnership interests, as the case may be,
or on account of the purchase, redemption, retirement or acquisition of their
respective shares of capital stock (or warrants, options or rights therefor) or
partnership interests, as the case may be, except (i) dividends or distributions
in respect of a partnership interest or capital stock payable by any Subsidiary
to the Borrower or any other Restricted Subsidiary, (ii) dividends payable by
the Borrower solely in shares of capital stock of the Borrower, (iii) up to the
Permitted Distribution Amount of distributions per year payable in the aggregate
by any Subsidiary of the Borrower which is a limited liability company or
partnership to non-Affiliate members of such limited liability company or
non-Affiliate limited partners of such partnership, so long as after giving
effect thereto no Event of Default or Potential Default has occurred and is
continuing and so long as at least five (5) Business Days prior to the making of
any such distribution the Borrower provides written notice to the Agent,
together with a detailed calculation, certified by the Chief Financial Officer
of Borrower, setting forth in detail the relevant Subsidiary's compliance with
the ratio set forth in clause (A) of the definition of Permitted Distribution
Amount or, as the case may be, such Subsidiary's compliance with clause (B) of
the definition of Permitted Distribution Amount, in either case with respect to
the proposed distribution as of the date of the making thereof, (iv) so long as
no Event of Default or Potential Default exists and is continuing after giving
effect thereto, a one-time dividend by the Borrower to Paragon payable on such
date as the Borrower elects (so long as on the date of payment, but prior to
such payment, the Borrower has delivered to the Agent a certification that after
giving effect to such dividend or distribution no Event of Default or Potential
Default exists and is continuing and that the Borrower is in compliance with the
financial covenants set forth in Section 8.02(r) [Maximum Leverage Ratio] and
Section 8.02(u) [Senior Indebtedness to Cash Flow from Operations Ratio]), in an
amount not exceeding, as of the date of payment, the Adjusted Net Income of the
Borrower and its Subsidiaries determined in accordance with GAAP for the most
recent twelve fiscal calendar months prior to such date of payment; (v) amounts
payable by the Borrower to Paragon as reimbursement of ordinary course business
expenses of the Borrower paid by Paragon on behalf of the Borrower; (vi) other
dividends or distributions payable by the Borrower to Paragon from time to time
in an aggregate amount (including all dividends and distributions made or
proposed to be made pursuant to this clause (vi) from and after the Seventeenth
Amendment Effective Date through the proposed date of payment) not to exceed 50%
of the Adjusted Net Income of the Borrower and its Subsidiaries determined in
accordance with GAAP, for each fiscal quarter ending from and after the
Seventeenth Amendment Effective Date through the last day of the fiscal quarter
ended prior to the proposed date of payment of such dividend or distribution so
long as after
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giving effect to each such dividend or distribution the Fixed Charge Coverage
Ratio is equal to or greater than 2.25 to 1.0, the Borrower is in compliance
with the financial covenants set forth in Sections 8.02(r) [Maximum Coverage
Ratio], 8.02(t) [Minimum Net Worth] and 8.02(u) [Senior Indebtedness to Cash
Flow from Operations Ratio], no Event of Default or Potential Default exists and
is continuing, and prior to making each such permitted dividend or distribution
pursuant to this clause (vi) the Borrower shall have certified and demonstrated,
in writing, satisfactory to the Agent, pro-forma compliance with such financial
covenants and that no Event of Default or Potential Default exists or is
continuing; and (vii) dividends or distributions by the Borrower to Paragon not
to exceed in the aggregate $25 million from and after the Seventeenth Amendment
Effective Date to reimburse Paragon for costs and expenses incurred in
connection with the Paragon Acquisition.
For purposes of demonstrating compliance with the financial
covenant set forth in Section 8.02(r), Total Indebtedness shall be calculated as
of each date of determination (after giving effect to each purchase or
redemption of the Borrower's stock) and Consolidated Cash Flow from Operations
shall be calculated as of each date of determination (after giving effect to
each purchase or redemption of the Borrower's stock) for the four fiscal
quarters then ended.
It is expressly agreed that, in accordance with Section
8.02(d)(iv), the aggregate amount of Restricted Investments outstanding at any
time, plus the aggregate amount of Special Distributions made from and after the
Seventeenth Amendment Effective Date, shall not exceed in the aggregate for the
Borrower and the other Loan Parties Seventy-Five Million Dollars ($75,000,000).
It is expressly agreed that notwithstanding the foregoing
provision of this Section 8.02(e) at no time shall the Borrower make a dividend
or distribution to Paragon otherwise permitted by Section 8.02(e)(vi) or (vii)
above if after giving effect to such dividend or distribution the aggregate
Commitments would exceed the aggregate outstanding Loans as of the time of such
proposed dividend or distribution by less than Twenty Five Million Dollars
($25,000,000).
(f) Liquidations, Mergers, Consolidations,
Acquisitions. The Borrower shall not, and shall not permit any of the other Loan
Parties to, dissolve, liquidate or wind-up its affairs, or become a party to any
merger or consolidation, or acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any other person, provided
that:
(i) any wholly owned Subsidiary of the
Borrower may consolidate or merge into the Borrower (so long as the Borrower is
the survivor) or any other wholly owned Subsidiary of the Borrower;
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(ii) a Subsidiary of the Borrower that is
not a Material Subsidiary may be dissolved, liquidated or wound up provided that
from the date of this Agreement through the Expiration Date, the total assets of
the non-Material Subsidiaries which so dissolve, liquidate or wind up shall not
exceed $25,000,000 in the aggregate;
(iii) the Borrower or a Restricted
Subsidiary of the Borrower may acquire all of the capital stock of another
corporation so long as (u) the Purchase Price for such acquisition shall not
exceed $100,000,000, (v) the aggregate Purchase Price for such acquisition
together with all previous acquisitions permitted under clauses (iii) and (iv)
of this Section 8.02(f) shall not exceed $200,000,000 in any fiscal year of
Borrower, (v) such acquired corporation, simultaneous with the acquisition
thereof by a Loan Party, executes and delivers to the Agent for the benefit of
the Banks a Guaranty Agreement and a Pledge Agreement substantially in the form
of Exhibits 1.01(G) and 1.01(P), respectively, and also delivers to the Agent
such opinions of counsel and other documents in connection therewith as the
Agent may reasonably request, (w) all of the issued and outstanding capital
stock of such acquired corporation owned by a Loan Party is pledged to the Agent
for the benefit of the Banks pursuant to a Pledge Agreement substantially in the
form of Exhibit 1.01(P) hereto, (x) after giving effect to such proposed
acquisition, no Event of Default shall have occurred and be continuing, (y)
after giving effect to such proposed acquisition (and without limiting the
generality of the preceding clause (iii)(x)), the Borrower is in compliance with
the Leverage Ratio set forth in Section 8.02(r) and the Borrower demonstrates
such compliance pursuant to Section 8.01(m) (if Section 8.01(m) requires such
demonstration of compliance), and (z) in the case of a merger involving the
Borrower, the Borrower shall be the survivor of such merger, and in the case of
a merger involving any Restricted Subsidiary the survivor of such merger shall
be either such Restricted Subsidiary or a Person which, effective upon
consummation of such merger shall have become a Restricted Subsidiary of the
Borrower, shall have joined this Agreement and the other Loan Documents as a
Loan Party (including , without limitation, execution and delivery of a Guaranty
Agreement substantially in the form of Exhibit 1.01(G)), shall have delivered
such opinions of counsel and other documents as the Agent may reasonably request
and whose equity interests shall have been pledged to the Agent for the benefit
of the Banks on a first priority perfected basis pursuant to a Pledge Agreement;
(iv) the Borrower or any Restricted
Subsidiary may merge or consolidate with, or acquire all or substantially all of
the assets of another person so long as (w) the Purchase Price for such
acquisition, merger or consolidation shall not exceed $100,000,000, (x) the
aggregate Purchase Price for such acquisition together with all previous
acquisitions permitted under clauses (iii) and (iv) of this Section 8.02(f)
shall not exceed $200,000,000 in any fiscal year of Borrower, (y) after giving
effect to such proposed acquisition, merger or consolidation the Borrower or a
Restricted Subsidiary of the Borrower is the survivor entity and no Event of
Default shall have occurred and be continuing, and (z) after giving effect to
such proposed acquisition, merger or consolidation, the Borrower is in
compliance with the Leverage Ratio set forth in Section 8.02(r) and the Borrower
demonstrates such compliance pursuant to Section 8.01(m) (if Section 8.01(m)
requires such demonstration of compliance); and
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(v) the Borrower may consummate the Paragon
Acquisition, without regard for any of the dollar imitations set forth in
Section 8.02(f)(iv) hereof and without counting against any dollar limitations
contained in such Section.
For purposes of the preceding clauses
(iii)(z) and (iv)(z), the Leverage Ratio set forth in Section 8.02(r) shall be
calculated as follows: (i) Total Indebtedness shall be determined as of the date
of the proposed acquisition, after giving effect thereto, and (ii) Consolidated
Cash Flow from Operations shall be calculated for the twelve-month period ending
on the last day of the fiscal quarter of the Borrower which precedes such date
of acquisition.
(g) Dispositions of Assets or Subsidiaries. The
Borrower shall not, and shall not permit any of the other Loan Parties to, sell,
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily, any of its properties or assets, tangible or intangible
(including but not limited to sale, assignment, discount or other disposition of
accounts, contract rights, chattel paper, equipment or general intangibles with
or without recourse or of capital stock, shares of beneficial interest or
partnership interests of a Subsidiary of the Borrower), except:
(i) any sale, transfer or lease of assets in
the ordinary course of business which are no longer necessary or required in, or
which are not material to, the conduct of the Borrower's or such Subsidiary's
business;
(ii) any sale, transfer or lease of assets
by any wholly-owned Loan Party to the Borrower or any other wholly owned Loan
Party (or by the Borrower to a wholly owned Loan Party);
(iii) any sale, transfer or lease of assets
in the ordinary course of business which are replaced by substitute assets
acquired or leased within the parameters of Section 8.02(p) provided such
substitute assets are subject to the Banks' Prior Security Interest;
(iv) any sale or transfer of assets which
are obsolete or no longer used or useful in the business of the Borrower or its
Subsidiaries; provided that such sales, transfers or dispositions shall not
exceed, in any fiscal year, $1 million in the aggregate for the Borrower and its
Subsidiaries;
(v) any sale, transfer or lease of assets,
other than those specifically excepted pursuant to clauses (i) through (iv)
above, which is approved by the Required Banks so long as (x) the proceeds of
such sale, transfer or lease are applied as a mandatory prepayment of the Loans
to the extent required by the provisions of Section 5.05 of this Agreement, (y)
after giving effect to such proposed disposition, no Event of Default shall have
occurred and be continuing, and (z) after giving effect to such proposed
disposition (and without limiting the generality of the foregoing clause (y)),
the Borrower is in compliance (and, with respect to sales, transfers or leases
of assets of Subsidiaries which are not Material Subsidiaries, which sales,
transfers or leases individually or in the aggregate exceed $35 million for the
period from October 1, 1997 through and including the Expiration Date, the
Borrower demonstrates such compliance to the Agent in detail reasonably
satisfactory to the Agent) with
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the leverage ratio set forth in Section 8.02(r). For purposes of this Section
8.02(g)(v), the leverage ratio set forth in Section 8.02(r) shall be calculated
as follows: (i) Indebtedness of the Borrower and its Subsidiaries shall be
determined as of the date of the proposed disposition, after giving effect
thereto, and (ii) Consolidated Cash Flow from Operations shall be calculated for
the twelve-month period ending on the last day of the fiscal quarter of the
Borrower which precedes such date of disposition but shall exclude therefrom all
amounts attributable to the assets which are sold, transferred or leased; or
(vi) any Special Distribution permitted
under Section 8.02(e) hereof or any other dividend or distribution permitted
under Section 8.02 (e)(v) hereof.
(h) Affiliate Transactions. The Borrower shall not,
and shall not permit any of its Subsidiaries to, enter into or carry out any
transaction with any Affiliate (including, without limitation, purchasing
property or services from or selling property or services) unless such
transaction is entered into in the ordinary course of business upon terms and
conditions that are no less favorable to the Borrower or such Subsidiary than
those that would be available in comparable transactions in arms-length dealings
with unrelated third parties or unless such transaction is not otherwise
prohibited by this Agreement.
(i) Subsidiary, Partnerships and Joint Ventures. The
Borrower shall not, and shall not permit any Subsidiary to, own or create
directly or indirectly any Subsidiaries other than those listed in Schedule
6.01(c); provided, however, that the Borrower or a Restricted Subsidiary may
acquire a Subsidiary pursuant to Section 8.02(f) or form a new Subsidiary so
long as (A) if such Subsidiary is a Restricted Subsidiary it executes and
delivers to the Agent for the benefit of the Banks a Guaranty Agreement
substantially in the form of Exhibit 1.01(G), and also delivers to the Agent
such opinions of counsel and other documents as the Agent may reasonably
request; and (B) all of the issued and outstanding capital stock or other equity
interests of such Subsidiary owned by a Loan Party are pledged to the Agent for
the benefit of the Banks, such pledge to be a first priority perfected pledge
pursuant to a Pledge Agreement. If Borrower is forming a new Subsidiary (as
opposed to acquiring a Subsidiary) the obligations set forth in clauses (A) and
(B) of the preceding sentence shall arise only at such time as such new
Subsidiary either commences construction of a health care facility or related
health care business, acquires a health care facility or makes another
acquisition permitted under this Agreement or has a net book value, as
determined under GAAP, of at least $250,000. Except for investments permitted
under Section 8.02(d)(iv), neither the Borrower nor any Subsidiary shall become
or agree to become a general or limited partner in any general or limited
partnership or a joint venturer in any joint venture.
(j) Continuation of or Change in Business. The
Borrower shall not, and shall not permit any Subsidiary to, engage in any
business other than (i) its existing business, substantially as conducted and
operated as of the Closing Date and (ii) related health care businesses.
(k) Plans and Benefit Arrangements. The Borrower
shall not, and shall not permit any of its Subsidiaries to:
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(i) fail to satisfy the minimum funding requirements
of ERISA and the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the
Internal Revenue Service with respect to any Plan;
(iii) engage in a Prohibited Transaction with any
Plan, Benefit Arrangement or Multiemployer Plan which, alone or in conjunction
with any other circumstances or set of circumstances resulting in liability
under ERISA, would constitute a Material Adverse Change;
(iv) permit the aggregate actuarial present value of
all benefit liabilities (whether or not vested) under each Plan, determined on a
plan termination basis, as disclosed in the most recent actuarial report
completed with respect to such Plan, to exceed, as of any actuarial valuation
date, the fair market value of the assets of such Plan by an amount in excess of
$250,000;
(v) fail to make when due any contribution to any
Multiemployer Plan that the Borrower or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan, or any
Law pertaining thereto;
(vi) withdraw (completely or partially) from any
Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA to
withdraw) from any Multiple Employer Plan, where any such withdrawal is likely
to result in a material liability of Borrower or any member of the ERISA Group;
(vii) terminate, or institute proceedings to
terminate, any Plan, where such termination is likely to result in a material
liability to the Borrower or any member of the ERISA Group;
(viii) make any amendment to any Plan with respect to
which security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make all
disclosures and governmental filings required under ERISA or the Internal
Revenue Code, where such failure is likely to result in a Material Adverse
Change.
(l) Fiscal Year. The Borrower shall not permit any of
its Subsidiaries to, change its fiscal year from the twelve-month period
beginning October 1 and ending September 30.
(m) Issuance of Stock. The Borrower shall not permit
any of its Subsidiaries to issue any additional shares of capital stock,
partnership interests or member interests in a limited liability company or any
options, warrants or other rights in respect thereof; provided, however, that an
Unrestricted Subsidiary which is an Excluded Entity may issue additional capital
stock, partnership interests or member interests in a limited liability company
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so long as all such capital stock, partnership interests or member interests in
a limited liability company which are owned, beneficially, of record, or
otherwise, by any Loan Party are pledged to the Banks as a first priority
perfected pledge pursuant to a Pledge Agreement, and provided further that any
Restricted Subsidiary may issue additional capital stock, partnership interests
or member interests in a limited liability company so long as such capital
stock, partnership interests or member interests in a limited liability company
are pledged to the Banks as a first priority perfected pledge pursuant to a
Pledge Agreement.
(n) [Intentionally Omitted.]
(o) [Intentionally Omitted.]
(p) Capital Expenditures and Leases. The Borrower
shall not, and shall not permit any of its Subsidiaries to make any payments on
account of the purchase of any assets which if purchased would constitute fixed
assets or on account of the lease of any assets which if leased would constitute
a capital lease, in the aggregate exceeding (i) $82,000,000 during the fiscal
year of January 1, 1997 through December 31, 1997; and (ii) $75,000,000 in each
fiscal year thereafter, and all such purchases of fixed assets or payments
pursuant to such capital leases shall be made under usual and customary terms
and in the ordinary course of business.
(q) Minimum Fixed Charge Coverage Ratio. The Borrower
shall not at any time permit the ratio of (x) the sum of Adjusted Consolidated
Net Income, interest expense, depreciation, amortization, income tax expense and
operating lease expense to (y) the sum of its interest expense, operating lease
expense and current maturities of long-term Indebtedness (other than current
maturities of obligations in respect of capital leases) in each case determined
and consolidated in accordance with GAAP to be less than 2.00 to 1.0. Such ratio
shall be calculated as of the end of each fiscal quarter. Calculations as of the
end of each fiscal quarter shall be for the four fiscal quarters then ended.
(r) Maximum Leverage Ratio. The Borrower shall not at
any time permit the ratio of Total Indebtedness to Consolidated Cash Flow from
Operations to exceed (A) 5.25 to 1.0 from October 1, 1997 through and including
September 30, 1998; (B) 5.0 to 1.0 from October 1, 1998 through and including
September 30, 1999; (C) 4.75 to 1.0 from October 1, 1999 through and including
September 30, 2000; and (D) 4.5 to 1.0 from October 1, 2000 and thereafter. For
purposes of this Section 8.02(r), Total Indebtedness shall be calculated as of
each date of determination and Consolidated Cash Flow from Operations shall be
calculated as of each date of determination for the four fiscal quarters then
ended.
(s) [Intentionally Omitted.]
(t) Minimum Net Worth. The Borrower shall not at any
time permit Consolidated Net Worth to be less than the amount under the
following clause (A) reduced by the amount under the following clause (B).
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(A) The sum of (i) the consolidated net worth of the
Borrower and its Subsidiaries (as mutually agreed to by the Borrower and the
Agent but not less than $310 million) determined as of the last day of the
fiscal quarter during which the Paragon Acquisition is consummated, reduced by
$10 million , plus (ii) fifty percent (50%) of Adjusted Consolidated Net Income
of the Borrower and its Subsidiaries for each fiscal quarter in which net income
was earned (as opposed to a net loss) during the period from the "Measurement
Date" (as hereinafter defined) through (and including) the date of
determination, plus (iii) one hundred percent (100%) of all increases in capital
stock and additional paid-in capital from issuances for cash of equity
securities and other equity capital investments on or after the Measurement
Date, plus (iv) one hundred percent (100%) of all increases in capital stock and
additional paid-in capital from issuances of equity securities in connection
with the acquisition of a Subsidiary on or after the Measurement Date (so long
as the fair market value at the time of acquisition of the Subsidiary so
acquired is at least equal to the value of the capital stock or other equity
securities so issued, reduced by
(B) The sum of (i) the amount of any dividend or
other distribution actually paid by the Borrower to Paragon on or after the
Measurement Date pursuant to Section 8.02(e)(iv), plus (ii) the amount of any
dividend or other distribution actually paid by the Borrower to Paragon on or
after the Measurement Date pursuant to Section 8.02(e)(vii) in respect of costs
or expenses incurred by Paragon in connection with the Paragon Acquisition to
the extent that the reimbursed item is not deducted as an expense in the
determination of Adjusted Consolidated Net Income of the Borrower and its
Subsidiaries.
For purposes of this Section 8.02(t), "Measurement
Date" shall mean the first day of the fiscal quarter following the fiscal
quarter during which the consummation of the Paragon Acquisition occurs.
(u) Senior Indebtedness to Cash Flow From Operations
Ratio. The Borrower shall not at any time permit the ratio of (i) Total
Indebtedness, other than the outstanding principal amount of the Subordinated
Notes (and other than the outstanding principal amount of any Permitted
Subordinated Indebtedness which refinances or is used to purchase Subordinated
Notes) and other than the outstanding principal amount of Indebtedness permitted
pursuant to Section 8.02(a)(iv), to (ii) Consolidated Cash Flow from Operations
to exceed 4.0 to 1.0. For purposes of this Section 8.02(u), Total Indebtedness,
the outstanding principal amount of the Subordinated Notes (and the outstanding
principal amount of any Permitted Subordinated Indebtedness issued or incurred
to purchase or refinance the Subordinated Notes) and the outstanding principal
amount of Indebtedness permitted pursuant to Section 8.02(a)(iv) shall be
calculated as of each date of determination and Consolidated Cash Flow from
Operations shall be calculated as of each date of determination for the four
fiscal quarters then ended.
(v) Incurrence of Indebtedness Permitted by the
Indenture. So long as any Indebtedness or other obligations (monetary or
otherwise) are outstanding under the Indenture the Borrower shall not, and shall
not permit any of its Subsidiaries to, at any time
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create, incur, assume or suffer to exist any Indebtedness unless the incurrence
thereof complies with the provisions of Section 1008. [Limitation on
Indebtedness] of the Indenture as in effect on the Ninth Amendment Effective
Date without giving any effect to any grace period under the Indenture or waiver
under the Indenture of any default of such covenant.
(w) [Intentionally Omitted.]
(x) Negative Pledges. Except as set forth on Schedule
8.02(x), Borrower shall not and shall not permit any of its Subsidiaries to
enter into any agreement with any person which prohibits the Loan Parties from
granting Liens to the Agent or the Banks.
(y) Prohibition of Defeasance of Subordinated Notes.
The Borrower shall not and shall not permit any of its Subsidiaries to make any
payments to the trustee under the Indenture or to any holders of Subordinated
Notes in payment of the defeasance or covenant defeasance of the Subordinated
Notes pursuant to Section 402 or 403 of the Indenture or any similar provision
in any supplement to the Indenture. Nothing in this subsection (y) shall
prohibit the purchase by the Borrower of Subordinated Notes pursuant to Section
8.02(d)(vi) or the refinancing of the Subordinated Notes with Permitted
Subordinated Indebtedness.
8.03 Reporting Requirements. The Borrower covenants and agrees
that until payment in full of the Loans and interest thereon, satisfaction of
all of the Borrower's other obligations hereunder and termination of the
Revolving Credit Commitments, the Borrower will furnish or cause to be furnished
to the Agent and each of the Banks:
(a) [Intentionally Omitted.]
(b) Quarterly Financial Statements. As soon as
available and in any event within forty-five (45) calendar days after the end of
each fiscal quarter in each fiscal year, financial statements of the Borrower,
consisting of a consolidated balance sheet as of the end of such fiscal quarter
and related consolidated statements of income, retained earnings and cash flows
for the fiscal quarter then ended and the fiscal year through that date, all in
reasonable detail and certified by the Chief Executive Officer, President or
Chief Financial Official of the Borrower as having been prepared in accordance
with GAAP, consistently applied (subject to normal year-end audit adjustments),
and setting forth in comparative form the respective financial statements for
the corresponding date and period in the previous fiscal year.
(c) Annual Financial Statements. As soon as available
and in any event within ninety (90) days after the end of each fiscal year of
the Borrower, financial statements of the Borrower consisting of a consolidated
balance sheet as of the end of such fiscal year, and related consolidated
statements of income, retained earnings and cash flows for the fiscal year then
ended, all in reasonable detail and setting forth in comparative form the
financial statements as of the end of and for the preceding fiscal year, and
certified by independent certified public accountants of nationally recognized
standing satisfactory to the Agent. The certificate or report of accountants
shall be free of qualifications (other than any consistency qualification that
may result from a change in the method used to prepare the financial statements
as to which such accountants concur) and shall not include a statement which
indicates the
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occurrence or existence of any event, condition or contingency which would
materially impair the prospect of payment or performance of any covenant,
agreement or duty of the Borrower or any of its Subsidiaries under any of the
Loan Documents, together with a letter of such accountants substantially to the
effect that, based upon their ordinary and customary examination of the affairs
of the Borrower and its Subsidiaries, performed in connection with the
preparation of such consolidated financial statements, and in accordance with
generally accepted auditing standards, they are not aware of the existence of
any condition or event which constitutes an Event of Default or Potential
Default or, if they are aware of such condition or event, stating the nature
thereof.
(d) Certificate of the Borrower. Concurrent with the
financial statements of the Borrower furnished to the Agent and to the Banks
pursuant to Sections 8.03(b) and 8.03(c) hereof, a certificate of the Borrower
signed by its Chief Executive Officer, President, Chief Financial Officer or
Vice President and Treasurer or Vice President and Controller, in the form of
Exhibit 8.03(d) hereto, to the effect that, except as described pursuant to
Section 8.03(e) below, (i) the representations and warranties of the Borrower
contained in Article VI hereof are true on and as of the date of such
certificate with the same effect as though such representations and warranties
had been made on and as of such date (except representations and warranties
which expressly relate solely to an earlier date or time) and the Borrower has
performed and complied with all covenants and conditions hereof, (ii) no Event
of Default or Potential Default exists and is continuing on the date of such
certificate, (iii) containing calculations in sufficient detail to demonstrate
compliance as of the date of the financial statements with all financial
covenants contained in Section 8.02 hereof and with the covenant contained in
Section 1008 [Limitation on Indebtedness] of the Indenture and (iv) setting
forth a list of payments summarized by category only made by the Borrower to
Paragon as reimbursement of ordinary course business expenses paid by Paragon on
behalf of the Borrower during the period applicable to such certificate.
(e) Notice of Default. Promptly after any officer of
the Borrower has learned of the occurrence of an Event of Default or Potential
Default, a certificate signed by the Chief Executive Officer, President or Chief
Financial Officer of the Borrower or by Vice President and Treasurer or Vice
President and Controller of the Borrower, setting forth the details of such
Event of Default or Potential Default and the action which the Borrower proposes
to take with respect thereto.
(f) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, proceedings or
investigations before or by any Official Body or any other person against the
Borrower which relate to the Collateral, involve a claim or series of related
claims in excess of $1,000,000 or which if adversely determined would constitute
a Material Adverse Change.
(g) Certain Events. Written notice to the Agent (and
upon the Agent's receipt of such notice, the Agent shall provide a copy thereof
to each Bank) at least thirty (30) calendar days prior thereto, with respect to
any proposed sale or transfer of assets pursuant to Section 8.02(g)(iii) or
(iv).
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(h) Budgets, Forecasts, Other Reports and Information.
Promptly upon their becoming available to the Borrower:
(i) the annual budget of the Borrower, to be supplied
not later than November 1, 1998 with respect to the fiscal year ended September
30, 1999 and thereafter not later than the commencement of the fiscal year to
which such budget relates,
(ii) any reports including management letters
submitted to the Borrower by independent accountants in connection with any
annual, interim or special audit,
(iii) any reports, notices or proxy statements
generally distributed by the Borrower to its stockholders on a date no later
than the date supplied to the stockholders,
(iv) regular or periodic reports, including Forms
10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the
Borrower with the Securities and Exchange Commission,
(v) a copy of any material order in any proceeding to
which the Borrower or any of its Subsidiaries is a party issued by any Official
Body,
(vi) regular, periodic utilization reports including
in detail reasonably satisfactory to the Agent for the period of such reports
the patient census, the number of occupied beds, the payment source (Medicare,
Medicaid, private pay or otherwise) for each patient,
(vii) such other reports and information as the Banks
may from time to time reasonably request. The Borrower shall also notify the
Banks promptly of the enactment or adoption of any Law which may result in a
Material Adverse Change with respect to the Borrower after the Borrower becomes
aware or should reasonably have become aware thereof, and
(viii) annual reports in detail satisfactory to the
Agent setting forth the real property owned, leased or managed by the Borrower
or any Subsidiary, to be supplied not later than December 31, 1998 with respect
to the fiscal year ended September 30, 1998 and thereafter not later than ninety
(90) days after the commencement of the fiscal year to which any of the
foregoing may be applicable.
(i) Notices Regarding Plans and Benefit Arrangements. (i)
Promptly upon becoming aware of the occurrence thereof, notice (including the
nature of the event and, when known, any action taken or threatened by the
Internal Revenue Service or the PBGC with respect thereto) of:
(A) any Reportable Event with respect to the Borrower
or any member of the ERISA Group (regardless of whether the obligation to report
said Reportable Event to the PBGC has been waived),
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(B) any Prohibited Transaction which could be subject
the Borrower or any member of the ERISA Group to a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Plan, Benefit Arrangement or any
trust created thereunder,
(C) any assertion of material withdrawal liability
with respect to any Multiemployer Plan,
(D) any partial or complete withdrawal from a
Multiemployer Plan by the Borrower or any member of the ERISA Group under Title
IV of ERISA (or assertion thereof), where such withdrawal is likely to result in
material withdrawal liability,
(E) any cessation of operations (by the Borrower or
any member of the ERISA Group) at a facility in the circumstances described in
Section 4063(e) of ERISA,
(F) withdrawal by the Borrower or any member of the
ERISA Group from a Multiple Employer Plan,
(G) a failure by the Borrower or any member of the
ERISA Group to make a payment to a Plan required to avoid imposition of a lien
under Section 302(f) of ERISA,
(H) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to Section 307 of ERISA, or
(I) any change in the actuarial assumptions or
funding methods used for any Plan, where the effect of such change is to
materially increase or materially reduce the unfunded benefit liability or
obligation to make periodic contributions.
(ii) Promptly after receipt thereof, copies of (a) all notices
received by the Borrower or any member of the ERISA Group of the PBGC's intent
to terminate any Plan administered or maintained by the Borrower or any member
of the ERISA Group, or to have a trustee appointed to administer any such Plan;
and (b) at the request of the Agent or any Bank each annual report (IRS Form
5500 series) and all accompanying schedules, the most recent actuarial reports,
the most recent financial information concerning the financial status of each
Plan administered or maintained by the Borrower or any member of the ERISA
Group, and schedules showing the amounts contributed to each such Plan by or on
behalf of the Borrower or any member of the ERISA Group in which any of their
personnel participate or from which such personnel may derive a benefit, and
each Schedule B (Actuarial Information) to the annual report filed by the
Borrower or any member of the ERISA Group with the Internal Revenue Service with
respect to each such Plan.
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(iii) Promptly upon the filing thereof, copies of
Form 5310, or any successor or equivalent form to Form 5310, filed with the PBGC
in connection with the termination of any Plan.
(j) Notices With Respect to Indenture. Written notice to the
Agent (and upon the Agent's receipt of each such notice, the Agent shall provide
a copy thereof to each Bank):
(i) immediately upon the occurrence of a "Default" or
an "Event of Default," as such terms are defined in the Indenture;
(ii) immediately upon a "Change of Control," as such
term is defined in the Indenture;
(iii) immediately upon receipt of a "notice of
acceleration" from either the trustee for the Subordinated Notes or the holders
of the Subordinated Notes pursuant to Section 502 of the Indenture or any
similar provision in any supplement to the Indenture;
(iv) simultaneous with the sending thereof, all
notices required to be sent to the trustee or the holders of the Subordinated
Notes under the Indenture; and
(v) immediately upon the receipt thereof, all notices
received from the trustee under the Indenture.
ARTICLE IX
DEFAULT
9.01 Events of Default. An Event of Default shall mean the
occurrence or existence of any one or more of the following events or conditions
(whatever the reason therefor and whether voluntary, involuntary or effected by
operation of Law):
(a) The Borrower shall fail to pay any principal of
any Loan (including scheduled or mandatory prepayments or the payment due at
maturity) or shall fail to pay any interest on any Loan or any other amount
owing hereunder or under the other Loan Documents after such principal or within
three (3) Business Days after such interest or other amount becomes due in
accordance with the terms hereof or thereof;
(b) Any representation or warranty made at any time
by the Borrower herein or by the Borrower or any of its Subsidiaries in any
other Loan Document, or in any certificate, other instrument or statement
furnished pursuant to the provisions hereof or thereof, shall prove to have been
false or misleading in any material respect as of the time it was made or
furnished regardless of whether such representation or warranty was qualified as
to Borrower's knowledge or best knowledge;
(c) The Borrower shall default in the observance or
performance of any covenant contained in Section 8.01(f) or Section 8.02 hereof;
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(d) The Borrower or any of its Subsidiaries shall
default in the observance or performance of any other covenant, condition or
provision hereof or of any other Loan Document and such default shall continue
unremedied for a period of thirty (30) Business Days after any officer of the
Borrower or any Subsidiary becomes aware of the occurrence thereof (such grace
period to be applicable only in the event such default can be remedied by
corrective action of the Borrower or such Subsidiary as determined by the Agent
in its sole discretion);
(e) A default or event of default shall occur at any
time under the terms of any other agreement involving borrowed money or the
extension of credit or any other Indebtedness under which the Borrower or any of
its Subsidiaries may be obligated as borrower or guarantor in excess of
$10,000,000 in aggregate principal amount, and such breach, default or event of
default consists of the failure to pay (beyond any period of grace permitted
with respect thereto, whether waived or not) any indebtedness when due (whether
at stated maturity, by acceleration or otherwise) or if such breach or default
permits or causes the acceleration of any indebtedness (whether or not such
right shall have been waived) or the termination of any commitment to lend;
(f) Any final judgments or orders for the payment of
money in excess of $1,000,000 in the aggregate (not paid or fully covered by
insurance) shall be entered against the Borrower or any of its Subsidiaries by a
court having jurisdiction in the premises which judgment is not discharged,
vacated, bonded or stayed pending appeal within a period of thirty (30) days
from the date of entry;
(g) Any of the Loan Documents shall cease to be
legal, valid and binding agreements enforceable against the party executing the
same or such party's successors and assigns (as permitted under the Loan
Documents) in accordance with the respective terms thereof or shall in any way
be terminated (except in accordance with its terms) or shall in any way be
challenged or contested or cease to give or provide the respective Liens,
security interests, rights, titles, interests, remedies, powers or privileges
intended to be created thereby;
(h) The Collateral or any other of the Borrower's or
any of its Subsidiaries' assets are attached, seized, levied upon or subject to
a writ or distress warrant; or such come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors and the same is not
cured within thirty (30) days thereafter;
(i) A notice of lien or assessment in excess of
$1,000,000 is filed of record with respect to all or any part of the Borrower's
or any of its Subsidiaries' assets by the United States, or any department,
agency or instrumentality thereof, or by any state, county, municipal or other
governmental agency, including, without limitation, the Pension Benefit Guaranty
Corporation, or if any taxes or debts owing at any time or times hereafter to
any one of these becomes payable and the same is not paid within thirty (30)
days after the same becomes payable unless the same is being contested in good
faith in accordance with Section 8.01(b);
(j) The Borrower or any of its Material Subsidiaries
ceases to be solvent or admits in writing its inability to pay its debts as they
mature;
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(k) Any of the following occurs: The Agent determines
in good faith that the amount of Borrower's liability is likely to exceed 10% of
its Consolidated Net Worth upon the occurrence of (i), (ii), (iii) or (iv)
below: (i) any Reportable Event constitutes grounds for the termination of any
Plan by the PBGC or the appointment of a trustee to administer or liquidate any
Plan, shall have occurred and be continuing; (ii) proceedings shall have been
instituted or other action taken to terminate any Plan or a termination notice
shall have been filed with respect to any Plan; (iii) a trustee shall be
appointed to administer or liquidate any Plan; or (iv) the PBGC shall give
notice of its intent to institute proceedings to terminate any Plan or Plans or
to appoint a trustee to administer or liquidate any Plan; or, with respect to
any of the events specified in (v), (vi), (vii), (viii) or (ix) below, the Agent
determines in good faith that any such occurrence could be reasonably likely to
materially and adversely affect the total enterprise represented by the Borrower
and the other members of the ERISA Group; (v) the Borrower or any member of the
ERISA Group shall fail to make any contributions when due to a Plan or a
Multiemployer Plan; (vi) the Borrower or any member of the ERISA Group shall
make any amendment to a Plan with respect to which security is required under
Section 307 of ERISA; (vii) the Borrower or any member of the ERISA Group shall
withdraw completely or partially from a Multiemployer Plan; (viii) the Borrower
or any member of the ERISA Group shall withdraw (or shall be deemed under
Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any
applicable Law is adopted, changed or interpreted by any Official Body with
respect to or otherwise affecting one or more Plans, Multiemployer Plans or
Benefit Arrangements;
(l) The Borrower ceases to conduct its business as
contemplated or the Borrower or any of its Material Subsidiaries is enjoined,
restrained or in any way prevented by court order from conducting all or any
material part of its business and such injunction, restraint or other
preventative order is not dismissed within thirty (30) days after the entry
thereof;
(m) A Change of Ownership occurs;
(n) An event of default shall occur at any time under
the terms of the Paragon Credit Agreement which causes the acceleration of any
indebtedness thereunder, or an event of default shall occur at any time under
the terms of the Paragon Senior Subordinated Note Indenture which causes the
acceleration of any indebtedness thereunder;
(o) A proceeding shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for relief
in respect of Paragon, the Borrower or any Subsidiary of the Borrower in an
involuntary case under any applicable bankruptcy, insolvency, reorganization or
other similar law now or hereafter in effect, or a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar official) of
Paragon, the Borrower, or any Subsidiary of the Borrower for any substantial
part of its property, or for the winding-up or liquidation of its affairs, and
such proceeding shall remain undismissed or unstayed and in effect for a period
of sixty (60) consecutive days or such court shall enter a decree or order
granting any of the relief sought in such proceeding; or
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(p) Paragon, the Borrower, or any Subsidiary of the
Borrower shall commence a voluntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case under
any such law, or shall consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or other similar official) of itself or for any substantial part of its
property or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
action in furtherance of any of the foregoing.
9.02 Consequences of Event of Default
(a) If an Event of Default specified under
subsections (a) through (n) of Section 9.01 hereof shall occur and be
continuing, the Banks shall be under no further obligation to make Loans
hereunder and the Agent upon the request of the Required Banks, shall (i) by
written notice to the Borrower, declare the unpaid principal amount of the Notes
then outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Banks hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Agent for the benefit of each Bank without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, and (ii) require the Borrower to, and the Borrower
shall thereupon, deposit in a non-interest bearing account with the Agent, as
cash collateral for its obligations under the Loan Documents, an amount equal to
the maximum amount currently or at any time thereafter available to be drawn on
all outstanding Letters of Credit, and the Borrower hereby pledges to the Agent
and the Banks, and grants to the Agent and the Banks a security interest in, all
such cash as security for such obligations. Upon the curing of all existing
Events of Default to the satisfaction of the Required Banks, the Agent shall
return such cash collateral to the Borrower; and
(b) If an Event of Default specified under
subsections (o) or (p) of Section 9.01 hereof shall occur, the Banks shall be
under no further obligations to make Loans hereunder and the unpaid principal
amount of the Notes then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder
and thereunder shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived;
and
(c) If an Event of Default shall occur and be
continuing, any Bank to whom any obligation is owed by any Loan Party hereunder
or under any other Loan Document or any participant of such Bank which has
agreed in writing to be bound by the provisions of Section 10.13 hereof and any
branch, subsidiary or affiliate of such Bank or participant anywhere in the
world shall have the right, in addition to all other rights and remedies
available to it, without notice to such Loan party, to set-off against and apply
to the then unpaid balance of all the Loans and all other obligations of such
Loan party hereunder or under any other Loan Document any debt owing to, and any
other funds held in any manner for the account of, such Loan Party by such Bank
or participant or by such branch, subsidiary or affiliate, including, without
limitation, all funds in all deposit accounts (whether time or demand, general
or special,
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provisionally credited or finally credited, or otherwise) now or hereafter
maintained by such Loan Party for its own account (but not including funds held
in custodian or trust accounts) with such Bank or participant or such branch,
subsidiary or affiliate. Such right shall exist whether or not any Bank or the
Agent shall have made any demand under this Agreement or any other Loan
Document, whether or not such debt owing to or funds held for the account of
such Loan Party is or are matured or unmatured and regardless of the existence
or adequacy of any Collateral, Guaranty or any other security, right or remedy
available to any Bank or the Agent; and
(d) If an Event of Default shall occur and be continuing, and
whether or not the Agent shall have accelerated the maturity of Loans of the
Borrower pursuant to any of the foregoing provisions of this Section 9.02, the
Agent or any Bank, if owed any amount with respect to the Notes, may proceed to
protect and enforce its rights by suit in equity, action at law and/or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement or the Notes, including as permitted by
applicable Law the obtaining of the ex parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of the agent
or such Bank; and
(e) From and after the date on which the Agent has taken any
action pursuant to this Section 9.02 and until all obligations of the Loan
Parties have been paid in full, any and all proceeds received by the Agent from
any sale or other disposition of the Collateral, or any part thereof, or the
exercise of any other remedy by the Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the Banks for
reasonable out-of-pocket costs, expenses and disbursements, including without
limitation reasonable attorneys' fees and legal expenses, incurred by the Agent
or the Banks in connection with realizing on the Collateral or collection of any
obligations of the Loan Parties under any of the Loan Documents, including
advances made by the Banks or any one of them or the Agent for the reasonable
maintenance, preservation, protection or enforcement of, or realization upon,
the Collateral, including without limitation, advances for taxes, insurance,
repairs and the like and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale or other realization on, any of the Collateral;
(ii) second, to the repayment of all Indebtedness
then due and unpaid of the Loan Parties to the Banks incurred under this
Agreement or any of the Loan Documents, whether of principal, interest, fees,
expenses or otherwise, in such manner as the Agent may reasonably determine in
its discretion and with respect to principal, interest, and fees, shall be made
in proportion to the Ratable Share of each Bank; and
(iii) the balance, if any, as required by Law.
(f) In addition to all of the rights and remedies contained in
this Agreement or in any of the other Loan Documents, the Agent shall have all
of the rights and remedies with respect to the Collateral of a secured party
under the Uniform Commercial Code or other applicable Law, all of which rights
and remedies shall be cumulative and non-exclusive, to the extent permitted by
Law. The Agent may, and upon the request of the Required Banks
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shall, exercise all post-default rights granted to the Agent and the Banks under
the Loan Documents or applicable Law.
(g) Following the occurrence and continuance of an
Event of Default, the Borrower, at its cost and expense (including the cost and
expense of obtaining any of the following referenced consents, approvals, etc.)
will promptly execute and deliver or cause the execution and delivery of all
applications, certificates, instruments, registration statements, and all other
documents and papers the Agent may request in connection with the obtaining of
any consent, approval, registration, qualification, permit, license,
accreditation, or authorization of any other Official Body or other person
necessary or appropriate for the effective exercise of any rights hereunder or
under the other Loan Documents. Without limiting the generality of the
foregoing, the Borrower agrees that in the event the Agent on behalf of the
Banks shall exercise its rights, hereunder or pursuant to the other Loan
Documents, to sell, transfer, or otherwise dispose of, or vote, consent,
operate, or take any other action in connection with any of the Collateral, the
Borrower shall execute and deliver (or cause to be executed and delivered) all
applications, certificates, assignments, and other documents that the Agent
requests to facilitate such actions and shall otherwise promptly, fully, and
diligently cooperate with the Agent and any other necessary persons in making
any application for the prior consent or approval of any Official Body or any
other person to the exercise by the Agent on behalf of the Banks of any of such
rights relating to all or any of the Collateral. Furthermore, because the
Borrower agrees that the remedies at law, of the Agent on behalf of the Banks,
for failure of the Borrower to comply with the provisions of Section 8.01(f) and
of this Section 9.02(g) would be inadequate and that any such failure would not
be adequately compensable in damages, the Borrower agrees that the covenants of
Sections 8.01(f) and 9.02(g) may be specifically enforced.
(h) Upon the occurrence and continuance of an Event
of Default, the Agent may request, without limiting the rights and remedies of
the Agent on behalf of the Banks otherwise provided hereunder and under the
other Loan Documents, that the Borrower do any of the following: (i) give the
Agent on behalf of the Banks specific assignments of the accounts receivable of
the Borrower and each Subsidiary after such accounts receivable come into
existence, and schedules of such accounts receivable, the form and content of
such assignment and schedules to be satisfactory to the Agent, (ii) immediately
notify the Agent if any of such accounts receivable arise out of contracts with
the U.S. Government or any department, agency or instrumentality thereof, and
execute any instruments and take any steps required by the Agent in order that
all moneys due and to become due under such contract shall be assigned (to the
extent permitted by law) to the Agent on behalf of the Banks and notice thereof
given to the government under the Federal Assignment of Claims Act, if
applicable, or any other applicable law or regulation; and in order to better
secure the Agent on behalf of the Banks, in relation to such accounts
receivable, and (iii) to the extent permitted by Law, enter into such lockbox
agreements and establish such lockbox accounts as the Agent may require, with
the local banks in areas in which the Borrower and its Subsidiaries may be
operating (in such cases, all local lockbox accounts shall be depository
transfer accounts entitled "In trust for PNC Bank, National Association, as
Agent") which shall have agreed in writing to the Agent's requirements for the
handling of such accounts and the transfer of account funds to the Agent on
behalf of the Banks, all at the Borrower's sole expense, and shall direct all
payments from Medicare, Medicaid, Blue
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Cross and Blue Shield, private payors, health maintenance organizations, all
commercial payors and all other payors due to the Borrower or any Subsidiary, to
such lockbox accounts.
9.03 Notice of Sale. Any notice required to be given by the
Agent of a sale, lease, or other disposition of the Collateral or any other
intended action by the Agent, if given ten (10) days prior to such proposed
action, shall constitute commercially reasonable and fair notice thereof to the
relevant Loan Party.
ARTICLE X
THE AGENT
10.01 Appointment. Each Bank hereby irrevocably designates,
appoints and authorizes PNC Bank to act as Agent for such Bank under this
Agreement to execute and deliver or accept on behalf of each of the Banks the
other Loan Documents. Each Bank hereby irrevocably authorizes, and each holder
of any Note by the acceptance of a Note shall be deemed irrevocably to
authorize, the Agent to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein, and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. PNC Bank agrees to act as the Agent on behalf of the Banks to the
extent provided in this Agreement.
10.02 Delegation of Duties. The Agent may perform any of its
duties hereunder by or through agents or employees (provided such delegation
does not constitute a relinquishment of its duties as Agent) and, subject to
Sections 10.05 and 10.06 hereof, shall be entitled to engage and pay for the
advice or services of any attorneys, accountants or other experts concerning all
matters pertaining to its duties hereunder and to rely upon any advice so
obtained.
10.03 Nature of Duties; Independent Credit Investigation. The
Agent shall have no duties or responsibilities except those expressly set forth
in this Agreement and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or otherwise
exist. The duties of the Agent shall be mechanical and administrative in nature;
the Agent shall not have by reason of this Agreement a fiduciary or trust
relationship in respect of any Bank; and nothing in this Agreement, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligation in respect of this Agreement except as expressly set forth herein.
Each Bank expressly acknowledges (i) that the Agent has not made any
representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of the Loan Parties, shall be deemed
to constitute any representation or warranty by the Agent to any Bank; (ii) that
it has made and will continue to make, without reliance upon the Agent, its own
independent investigation of the financial condition and affairs and its own
appraisal of the creditworthiness of the Loan Parties is connection with this
Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto,
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whether coming into its possession before the making of any Loan or at any time
or times thereafter.
10.04 Actions in Discretion of Agent; Instructions From the
Banks. The Agent agrees, upon the written request of the Required Banks, to take
or refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, provided that the Agent shall not
be required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Document or applicable
Law. In the absence of a request by the Required Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any such action,
unless this Agreement specifically requires the consent of the Required Banks or
all of the Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Banks, subject to Section
10.06 hereof. Subject to the provisions of Section 10.06, no Bank shall have any
right of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Banks, or in the absence of such instructions, in the absolute
discretion of the Agent so long as the Agent is otherwise authorized to act
within its rights and powers as provided in this Agreement.
10.05 Reimbursement and Indemnification of Agent by the
Borrower. The Borrower unconditionally agrees to pay or reimburse the Agent and
save the Agent harmless against (a) liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including but not limited to
reasonable fees and expenses of counsel, appraisers and environmental
consultants, incurred by the Agent (i) in connection with the development,
negotiation, preparation, execution, performance by a Loan Party or an Excluded
Entity and interpretation of this Agreement and the other Loan Documents, (ii)
relating to any requested amendments, waivers or consents pursuant to the
provisions hereof, (iii) in connection with the enforcement of this Agreement or
any other Loan Document or collection of amounts due hereunder or thereunder or
the proof and allowability of any claim arising under this Agreement or any
other Loan Document, whether in bankruptcy or receivership proceedings or
otherwise, and (iv) in any workout, restructuring or in connection with the
protection, preservation, exercise or enforcement of any of the terms hereof or
of any rights hereunder or under any other Loan Document or in connection with
any foreclosure, collection or bankruptcy proceedings, and (b) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder, provided that
the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements if the same results from the Agent's gross negligence
or willful misconduct, or if the Borrower was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense,
or if the same results from a compromise or settlement agreement entered into
without the consent of the Borrower. In addition, upon the occurrence of an
Event of Default, the Borrower agrees to reimburse and pay all reasonable
out-of-pocket expenses of the Agent's regular employees and agents engaged
periodically to perform audits of the Borrower's books, records and business
properties.
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10.06 Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, employees, agents, attorneys or affiliates shall (a) be
liable to any Bank for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith including without limitation pursuant to
any Loan Document, unless caused by its or their own gross negligence or willful
misconduct, (b) be responsible in any manner to any of the Banks for the
effectiveness, enforceability, genuineness, validity or the due execution of
this Agreement or any other Loan Documents or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Agreement or any other Loan Documents, unless
caused by its or their own gross negligence or willful misconduct, or (c) be
under any obligation to any of the Banks to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Loan Parties or any Excluded Entity, or the financial
condition of the Loan Parties or any Excluded Entity, or the existence or
possible existence of any Event of Default or Potential Default, unless caused
by its or their own gross negligence or willful misconduct. Neither the Agent
nor any Bank nor any of their respective directors, officers, employees, agents,
attorneys or affiliates shall be liable to the Loan Parties or any Excluded
Entity for consequential damages resulting from any breach of contract, tort or
other wrong in connection with the negotiation, documentation, administration or
collection of the Loans or any of the Loan Documents.
10.07 Reimbursement and Indemnification of Agent by Banks.
Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder, provided that
no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (a) if the same results from the Agent's gross negligence or
willful misconduct, or (b) if such Bank was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense,
or (c) if the same results from a compromise and settlement agreement entered
into without the consent of such Bank. In addition, each Bank agrees promptly to
reimburse the Agent (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so) in proportion to its Ratable
Share for all amounts due and payable by the Borrower to the Agent in connection
with the Agent's periodic audit of the Borrower's books, records and business
properties. In the event the Banks reimburse or indemnify the Agent pursuant to
this Section 10.07 and subsequent thereto the Agent is reimbursed or indemnified
by the Borrower with respect to the same matter for which indemnification or
reimbursement was previously made by the Banks, the Agent will promptly refund
to the Banks, in accordance with each Bank's Ratable Share, the duplicative
amount.
10.08 Reliance by Agent. The Agent shall be entitled to rely
upon any writing, telegram, telex or teletype message, resolution, notice,
consent, certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper person or persons, and
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upon the advice and opinions of counsel and other professional advisers selected
by the Agent. The Agent shall be fully justified in failing or refusing to take
any action hereunder unless it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.
10.09 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Potential Default or Event of
Default unless the Agent has received written notice from a Bank or the Borrower
referring to this Agreement, describing such Potential Default or Event of
Default and stating that such notice is a "notice of default."
10.10 Notices. The Agent shall promptly send to each Bank a
copy of all notices received from any Loan Party pursuant to the provisions of
this Agreement or the other Loan Documents promptly upon receipt thereof. The
Agent shall promptly notify the Borrower and the other Banks of each change in
the Base Rate and the effective date thereof.
10.11 Banks in Their Individual Capacities. With respect to
its Revolving Credit Commitments and the Revolving Credit Loans made by it, the
Agent shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not the Agent, and the term "Banks" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. PNC Bank and its affiliates and each of the Banks and their respective
affiliates may, without liability to account, except as prohibited herein, make
Loans to, accept deposits from, discount drafts for, act as trustee under
indentures of, and generally engage in any kind of banking or trust business
with, the Borrower and its affiliates, in the case of the Agent, as though it
were not acting as Agent hereunder and in the case of each Bank, as though such
Bank were not a Bank hereunder.
10.12 Holders of Notes. The Agent may deem and treat any payee
of any Note as the owner thereof for all purposes hereof unless and until
written notice of the assignment or transfer thereof shall have been filed with
the Agent. Any request, authority or consent of any person who at the time of
making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
10.13 Equalization of Banks. The Banks and the holders of any
participations in any Notes agree among themselves that, with respect to all
amounts received by any Bank or any such holder for application on any
obligation hereunder or under any Note or under any such participation, whether
received by voluntary payment, by realization upon security, by the exercise of
the right of set-off or banker's lien, by counterclaim or by any other non-pro
rata source, equitable adjustment will be made in the manner stated in the
following sentence so that, in effect, all such excess amounts will be shared
ratably among the Banks and such holders in proportion to their interests in
payments under the Notes, except as otherwise provided in Sections [4.04(b),
5.04(b) or 5.06(a)] hereof. The Banks or any such holder receiving any such
amount shall purchase for cash from each of the other Banks an interest in such
Bank's Loans in such amount as shall result in a ratable participation by the
Banks and each such holder in the aggregate unpaid amount under the Notes,
provided that if all or any portion of such excess
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amount is thereafter recovered from the Bank or the holder making such purchase,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, together with interest or other amounts, if any, required by
law (including court order) to be paid by the Bank or the holder making such
purchase.
10.14 Successor Agent. The Agent (i) may resign as Agent, or
(ii) shall resign if such resignation is requested by the Required Banks, in the
case of either (i) or (ii) upon not less than thirty (30) days' prior written
notice to the Borrower and the Banks. If the Agent shall resign under this
Agreement, then either (a) the Required Banks shall appoint from among the Banks
a successor Agent for the Banks, or (b) if a successor agent shall not be so
appointed and approved within the thirty (30) day period following the Agent's
notice to the Banks of its resignation, then the Agent shall appoint, with the
consent of the Borrower, such consent not to be unreasonably withheld, a
successor agent who shall serve as Agent until such time as the Required Banks
appoint a successor agent. Upon its appointment pursuant to either clause (a) or
(b) above, such successor agent shall succeed to the rights, powers and duties
of the agent and the term "Agent" shall mean such successor agent, effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement. After the resignation of
any Agent hereunder, the provisions of this Article X shall inure to the benefit
of such former Agent and such former Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was an Agent under this Agreement.
10.15 Agent's Fee. The Borrower shall pay to the Agent a non
refundable, annual fee (the "Agent's Fee") as set forth in the agreement dated
September 8, 1997 between the Borrower and the Agent, such fee to be payable in
the manner and on the dates set forth in such letter agreement.
10.16 Availability of Funds. Unless the Agent shall have been
notified by a Bank prior to the date upon which a Loan is to be made that such
Bank does not intend to make available to the Agent such Bank's portion of such
Loan, the Agent may assume that such Bank has made or will make such proceeds
available to the Agent on such date and the Agent may, in reliance upon such
assumption (but shall not be required to), make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Bank, the Agent shall be entitled to recover such amount on
demand from such Bank (or, if such Bank fails to pay such amount forthwith upon
such demand from the Borrower) together with interest thereon, in respect of
each day during the period commencing on the date such amount was made available
to the Borrower and ending on the date the Agent recovers such amount, at a rate
per annum equal to the Federal Funds Effective Rate in respect of the Loan.
10.17 Calculations. In the absence of gross negligence or
willful misconduct, the Agent shall not be liable for any error in computing the
amount payable to any Bank whether in respect of the Loans, fees or any other
amounts due to the Banks under this Agreement. In the event an error in
computing any amount payable to any Bank is made, the Agent, the Borrower and
each affected Bank shall, forthwith upon discovery of such error, make such
adjustments as
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shall be required to correct such error, and any compensation therefor will be
calculated at the Federal Funds Effective Rate.
10.18 Beneficiaries. Except as expressly provided herein, the
provisions of this Article X are solely for the benefit of the Agent and the
Banks, and the Borrower shall not have any rights to rely on or enforce any of
the provisions hereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as agent of the Banks and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for the Borrower.
10.19 Holding of Loan Documents. Agent agrees that all
original Loan Documents retained by it shall be retained for the benefit of the
Banks, and Agent shall make available copies of such documents retained by it
upon the reasonable request of any of the Banks.
ARTICLE XI
MISCELLANEOUS
11.01 Modifications, Amendments or Waivers. With the written
consent of the Required Banks, the Agent, acting on behalf of all the Banks, and
the Borrower or the other applicable Loan Party may from time to time enter into
written agreements amending or changing any provision of this Agreement or any
other Loan Document or the rights of the Banks or the Borrower or such Loan
Party hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the obligations of the Borrower or such
Loan Party hereunder or thereunder. Any such agreement, waiver or consent made
with such written consent shall be effective to bind all the Banks; provided
that, without the written consent of all the Banks, no such agreement, waiver or
consent may be made which will:
(a) Reduce the amount of the Commitment Fee or any
other fees payable to any Bank hereunder, or amend Sections 5.02 [Pro Rata
Treatment of Banks], 10.06 [Exculpatory Provisions] and 10.13 [Equalization of
Banks] hereof;
(b) Whether or not any Loans are outstanding, extend
the time for payment of principal or interest of any Loan, or reduce the
principal amount of or the rate of interest borne by any Loan, or otherwise
affect the terms of payment of the principal of or interest of any Loan;
(c) Except for sales of assets permitted by Section
8.02(g), release any Collateral or other security, if any, for the Borrower's
obligations hereunder;
(d) Release or terminate any Guaranty Agreement of
any Loan party;
(e) Amend Sections 2.01(c), 4.01(a), 8.02(r), or
11.01, change the definitions or the method of computing the ratios contained
within such foregoing sections, change the definition of Required Banks, or
change any requirement providing for the Banks or the Required Banks to
authorize the taking of any action hereunder; or
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(f) Extend the Expiration Date or increase the amount
of the Revolving Credit Commitment of any Bank hereunder.
11.02 No Implied Waivers; Cumulative Remedies; Writing
Required. No course of dealing and no delay or failure of the Agent or any Bank
in exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or operate
as a waiver thereof; nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Agent and the Banks under
this Agreement and any other Loan Documents are cumulative and not exclusive of
any rights or remedies which they would otherwise have. Any waiver, permit,
consent or approval of any kind or character on the part of any Bank of any
breach or default under this Agreement or any such waiver of any provision or
condition of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing.
11.03 Reimbursement and Indemnification of Banks by the
Borrower; Taxes. The Borrower agrees unconditionally upon demand to pay or
reimburse to each Bank (other than the Agent, as to which the Borrower's
obligations are set forth in Section 9.05) and to save such Bank harmless
against (i) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements (including reasonable fees and expenses of counsel
for each Bank except with respect to (a) and (b) below), incurred by such Bank
(a) in connection with the interpretation of this Agreement, and other
instruments and documents to be delivered hereunder, (b) relating to any
requested amendments, waivers or consents pursuant to the provisions hereof, (c)
in connection with the enforcement of this Agreement or any other Loan Document,
or collection of amounts due hereunder or thereunder or the proof and
allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and
(d) in any workout, restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, or (ii) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against such Bank, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by such Bank hereunder or thereunder, provided that
the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (A) if the same results from such Bank's gross
negligence or willful misconduct, or (B) if the Borrower was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense, or (C) if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower. The Banks will
attempt to minimize the fees and expenses of legal counsel for the Banks which
are subject to reimbursement by the Borrower hereunder by considering the usage
of one law firm to represent the Banks and the Agent if appropriate under the
circumstances. The Borrower agrees unconditionally to pay all stamp, document,
transfer, recording or filing taxes or fees and similar impositions now or
hereafter determined by the Agent or any Bank to be payable in connection
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with this Agreement or any other Loan Document, and the Borrower agrees
unconditionally to save the Agent and the Banks harmless from and against any
and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions.
11.04 Holidays. Whenever any payment or action to be made or
taken hereunder shall be stated to be due on a day which is not a Business Day,
such payment or action shall be made or taken on the next following Business Day
(except as provided in Section 4.02(a) with respect to Euro-Rate Interest
Periods), and such extension of time shall be included in computing interest or
fees, if any, in connection with such payment or action.
11.05 Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding. Each Bank shall have the right
from time to time, without notice to the Borrower, to deem any branch,
subsidiary or affiliate (which for the purposes of this Section 11.05 shall mean
any corporation or association which is directly or indirectly controlled by or
is under direct or indirect common control with any corporation or association
which directly or indirectly controls such Bank) of such Bank to have made,
maintained or funded any Loan to which the Euro-Rate Option applies at any time,
provided that immediately following (on the assumption that a payment were then
due from the Borrower to such other office) and as a result of such change the
Borrower would not be under any greater financial obligation pursuant to Section
5.06 hereof than it would have been in the absence of such change. Notional
funding offices may be selected by each Bank without regard to the Bank's actual
methods of making, maintaining or funding the Loans or any sources of funding
actually used by or available to such Bank.
(b) Actual Funding. Each Bank shall have the right
from time to time to make or maintain any Loan by arranging for a branch,
subsidiary or affiliate of such Bank to make or maintain such Loan subject to
the last sentence of this Section 11.05(b). If any Bank causes a branch,
subsidiary or affiliate to make or maintain any part of the Loans hereunder, all
terms and conditions of this Agreement shall, except where the context clearly
requires otherwise, be applicable to such part of the Loans to the same extent
as if such Loans were made or maintained by such Banks but in no event shall any
Bank's use of such a branch, subsidiary or affiliate to make or maintain any
part of the Loans hereunder cause such Bank or such branch, subsidiary or
affiliate to incur any cost or expenses payable by the Borrower hereunder or
require the Borrower to pay any other compensation to any Bank (including,
without limitation, any expenses incurred or payable pursuant to Section 5.06
hereof) which would otherwise not be incurred.
11.06 Notices. All notices, requests, demands, directions and
other communications (collectively "notices") given to or made upon any party
hereto under the provisions of this Agreement shall be by telephone or in
writing (including telex or facsimile communication) unless otherwise expressly
permitted hereunder and shall be delivered or sent by telex or facsimile to the
respective parties at the addresses and numbers set forth under their respective
names on the signature pages hereof or in accordance with any subsequent
unrevoked
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written direction from any party to the others. All notices shall, except as
otherwise expressly herein provided, be effective (a) in the case of telex or
facsimile, when received, (b) in the case of hand-delivered notice, when hand
delivered, (c) in the case of telephone, when telephoned, provided, however,
that in order to be effective, telephonic notices must be confirmed in writing
no later than the next day by letter, facsimile or telex, (d) if given by mail,
four (4) days after such communication is deposited in the mails with first
class postage prepaid, return receipt requested, and (e) if given by any other
means (including by air courier), when delivered; provided, that notices to the
Agent shall not be effective until received. Any Bank giving any notice to the
Borrower shall simultaneously send a copy thereof to the Agent, and the Agent
shall promptly notify the other Banks of the receipt by it of any such notice.
11.07 Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
11.08 Governing Law. This Agreement shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and for all purposes
shall be governed by and construed and enforced in accordance with the laws of
the Commonwealth of Pennsylvania without regard to its conflict of laws
principles.
11.09 Prior Understanding. This Agreement supersedes all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
11.10 Duration; Survival. All representations and warranties
of the Borrower contained herein or made in connection herewith shall survive
the making of Loans and shall not be waived by the execution and delivery of
this Agreement, any investigation by the Agent or the Banks, the making of
Loans, or payment in full of the Loans. All covenants and agreements of the
Borrower contained in Sections 8.01, 8.02 and 8.03 herein shall continue in full
force and effect from and after the date hereof so long as the Borrower may
borrow hereunder and until termination of the Revolving Credit Commitments and
payment in full of the Loans. All covenants and agreements of the Borrower
contained herein relating to the payment of principal, interest, premiums,
additional compensation or expenses and indemnification, including those set
forth in the Notes, Article V and Sections 10.05, 10.07 and 11.03 hereof, shall
survive payment in full of the Loans and termination of the Revolving Credit
Commitments.
11.11 Successors and Assigns.
(i) This Agreement shall be binding upon and shall
inure to the benefit of the Banks, the Agent, the Borrower and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights and obligations hereunder or any interest herein. Each Bank may,
at its own cost, make assignments of or sell participations in all or any
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part of its Revolving Credit Commitment and the Loans made by it to one or more
banks or other entities, subject in the case of assignments prior to the
occurrence of an Event of Default to the consent of the Borrower and the Agent
with respect to any assignee, such consent not to be unreasonably withheld, and
provided that assignments may not be made in amounts less than $1,000,000. It is
expressly agreed that upon and after the occurrence and during the continuation
of an Event of Default the consent of the Agent shall be required, however the
consent of the Borrower shall not be required for a Bank to make an assignment
of all or any part of its Revolving Credit Commitment. In order for a Bank, at
any time to sell a participation in all or any part of its Revolving Credit
Commitment, the consent of the Agent shall be required, however the consent of
the Borrower shall not be required. In the case of an assignment, upon receipt
by the Agent of the Assignment and Assumption Agreement and payment to the Agent
of a fee in the amount of $3,500, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, benefits and
obligations as it would have if it had been a signatory Bank hereunder, the
Commitments in Section 2.01 shall be adjusted accordingly, and upon surrender of
any Note subject to such assignment, the Borrower shall execute and deliver a
new Note to the assignee in an amount equal to the amount of the Revolving
Credit Commitment or Loan assumed by it and a new Revolving Credit Note to the
assigning Bank in an amount equal to the Revolving Credit Commitment or Loan
retained by it hereunder. In the case of a participation, the participant shall
only have the rights specified in Section 9.02(c) (the participant's rights
against such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto and
not to include any voting rights except with respect to changes of the type
referenced in clauses (a), (b), or (c) under Section 11.01 hereof), all of such
Bank's obligations under this Agreement or any other Loan Document shall remain
unchanged and all amounts payable by any Loan party hereunder or thereunder
shall be determined as if such Bank had not sold such participation. Each Bank
may furnish any publicly available information concerning any Loan Party and any
other information concerning any Loan Party in the possession of such Bank from
time to time to assignees and participants (including prospective assignees or
participants) provided such assignees and participants agree to be bound by the
provisions of Section 11.12 hereof.
(ii) Notwithstanding any other provision in this
Agreement, any Bank may at any time pledge or grant a security interest in all
or any portion of its rights under this Agreement, its Note and the other Loan
Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent
of the Borrower or the Agent. No such pledge or grant of a security interest
shall release the transferor Bank of its obligations hereunder or under any
other Loan Document.
11.12 Confidentiality. The Agent and the Banks each agree to
keep confidential all information obtained from any Loan party which is
nonpublic and confidential or proprietary in nature (including any information
any Loan Party specifically designates as confidential), except as provided
below, and to use such information only in connection with their respective
capacities under this Agreement and for the purposes contemplated hereby. The
Agent and the Banks shall be permitted to disclose such information (i) to
outside legal counsel, accountants and other professional advisors who need to
know such information in connection with the
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administration and enforcement of this Agreement, subject to agreement of such
persons to maintain the confidentiality, (ii) assignees and participants as
contemplated by Section 11.11, (iii) to the extent requested by any bank
regulatory authority or, with notice to the Borrower, as otherwise required by
applicable Law or by any subpoena or similar legal process, or in connection
with any investigation or proceeding arising out of the transactions
contemplated by this Agreement, (iv) if it becomes publicly available other than
as a result of a breach of this Agreement or becomes available from a source not
subject to confidentiality restrictions, or (v) the Borrower shall have
consented to such disclosure.
11.13 Counterparts. This Agreement may be executed by
different parties hereto on any number of separate counterparts, each of which,
when so executed and delivered, shall be an original, and all such counterparts
shall together constitute one and the same instrument.
11.14 Agent's or Bank's Consent. Whenever the Agent's or any
Bank's consent is required to be obtained under this Agreement or any of the
other Loan Documents as a condition to any action, inaction, condition or event,
the Agent and each Bank shall be authorized to give or withhold such consent in
its sole and absolute discretion and to condition its consent upon the giving of
additional collateral, the payment of money or any other matter.
11.15 Exceptions. The representations, warranties and
covenants contained herein shall be independent of each other and no exception
to any representation, warranty or covenant shall be deemed to be an exception
to any other representation, warranty or covenant contained herein unless
expressly provided, nor shall any such exceptions be deemed to permit any action
or omission that would be in contravention of applicable Law.
11.16 Consent to Forum; Waiver of Jury Trial. The Borrower
hereby irrevocably consents to the nonexclusive jurisdiction of the Court of
Common Pleas of Allegheny County and the United States District Court for the
Western District of Pennsylvania, and waives personal service of any and all
process upon it and consents that all such service of process be made by
certified or registered mail directed to the Borrower at the addresses provided
for in Section 11.06 hereof and service so made shall be deemed to be completed
upon actual receipt thereof. The Borrower waives any objection to jurisdiction
and venue of any action instituted against it as provided herein and agrees not
to assert any defense based on lack of jurisdiction or venue. The Borrower, the
Agent and the Banks hereby waive trial by jury in any action, suit, proceeding
or counterclaim of any kind arising out of or related to this Agreement, any
other Loan Document or the Collateral to the full extent permitted by Law.
11.17 Tax Withholding Clause. At least five (5) Business Days
prior to the first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank that is not incorporated under the laws of the
United States of America or a state thereof agrees that it will deliver to each
of the Borrower and the Agent two (2) duly completed copies of (i) Internal
Revenue Service Form W-9, 4224 or 1001, or other applicable form prescribed by
the Internal Revenue Service, certifying in either case that such Bank is
entitled to receive payments under this Agreement and the other Loan Documents
without deduction or withholding of any United States federal income taxes, or
is subject to such tax at a reduced rate under an applicable tax
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treaty, or (ii) Form W-8 or other applicable form or a certificate of the Bank
indicating that no such exemption or reduced rate is allowable with respect to
such payments. Each Bank which so delivers a Form W-8, W-9, 4224 or 1001 further
undertakes to deliver to each of the Borrower and the Agent two (2) additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Agent, either certifying that such Bank is entitled to receive payments
under this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes or is subject to such tax
at a reduced rate under an applicable tax treaty or stating that no such
exemption or reduced rate is allowable. The Agent shall be entitled to withhold
United States federal income taxes at the full withholding rate unless the Bank
establishes an exemption or at the applicable reduced rate as established
pursuant to the above provisions.
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EXHIBIT 1
AMENDED AND RESTATED RECITALS AND ARTICLES I THROUGH XI
OF THE REVOLVING CREDIT AGREEMENT
(Cover Page, table of contents and first
paragraph are also attached for convenience)