EXHIBIT 10.96
================================================================================
REVOLVING CREDIT AND GUARANTY AGREEMENT
================================================================================
Among
MARINER POST-ACUTE NETWORK, INC.
a Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code
as Borrower
-----------
and
THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
each a Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code
as Guarantors
-------------
and
THE BANKS PARTY HERETO,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent, Documentation Agent
--------------------------------------------
and Collateral Agent
--------------------
CHASE SECURITIES INC.,
as Book Manager
---------------
and
---
Lead Arranger
-------------
================================================================================
Dated as of January 18, 2000
================================================================================
REVOLVING CREDIT AND GUARANTY AGREEMENT
TABLE OF CONTENTS
Page No.
SECTION 1. DEFINITIONS...................................................................... 3
SECTION 1.01 Defined Terms..................................................... 3
SECTION 1.02 Terms Generally................................................... 21
SECTION 2. AMOUNT AND TERMS OF CREDIT....................................................... 21
SECTION 2.01 Commitment of the Banks........................................... 21
SECTION 2.02 Borrowing Base.................................................... 22
SECTION 2.03 Letters of Credit................................................. 22
SECTION 2.04 Issuance.......................................................... 24
SECTION 2.05 Nature of Letter of Credit Obligations Absolute................... 24
SECTION 2.06 Making of Loans................................................... 24
SECTION 2.07 Repayment of Loans; Evidence of Debt.............................. 25
SECTION 2.08 Interest on Loans................................................. 26
SECTION 2.09 Default Interest.................................................. 26
SECTION 2.10 Optional Termination or Reduction of Commitment................... 26
SECTION 2.11 Mandatory Prepayment; Commitment Termination;
Cash Collateral................................................... 27
SECTION 2.12 Optional Prepayment of Loans...................................... 27
SECTION 2.13 Reserve Requirements; Change in Circumstances..................... 27
SECTION 2.14 Pro Rata Treatment, etc........................................... 28
SECTION 2.15 Taxes............................................................. 28
SECTION 2.16 Certain Fees...................................................... 31
SECTION 2.17 Commitment Fee.................................................... 31
SECTION 2.18 Letter of Credit Fees............................................. 31
SECTION 2.19 Nature of Fees.................................................... 31
SECTION 2.20 Priority and Liens................................................ 32
SECTION 2.21 Right of Set-Off.................................................. 33
SECTION 2.22 Security Interest in Letter of Credit Account..................... 34
SECTION 2.23 Payment of Obligations............................................ 34
SECTION 2.24 No Discharge; Survival of Claims.................................. 34
SECTION 2.25 Use of Cash Collateral............................................ 34
SECTION 3. REPRESENTATIONS AND WARRANTIES................................................... 34
SECTION 3.01 Organization and Authority........................................ 34
SECTION 3.02 Due Execution..................................................... 35
SECTION 3.03 Statements Made................................................... 35
SECTION 3.04 Financial Statements.............................................. 36
SECTION 3.05 Ownership......................................................... 36
i
SECTION 3.06 Liens............................................................. 36
SECTION 3.07 Compliance with Law............................................... 37
SECTION 3.08 Insurance......................................................... 37
SECTION 3.09 The Orders........................................................ 37
SECTION 3.10 Use of Proceeds................................................... 37
SECTION 3.11 Litigation........................................................ 38
SECTION 3.12 Year 2000 Matters................................................. 38
SECTION 3.13 Health Care Permits............................................... 38
SECTION 4. CONDITIONS OF LENDING............................................................ 39
SECTION 4.01 Conditions Precedent to Initial Loans and
Initial Letters of Credit......................................... 39
SECTION 4.02 Conditions Precedent to Each Loan and Each
Letter of Credit.................................................. 43
SECTION 5. AFFIRMATIVE COVENANTS............................................................ 45
SECTION 5.01 Financial Statements, Reports, etc................................ 45
SECTION 5.02 Corporate Existence............................................... 47
SECTION 5.03 Insurance......................................................... 48
SECTION 5.04 Obligations and Taxes............................................. 48
SECTION 5.05 Notice of Event of Default, Investigations,
Violations, etc................................................... 48
SECTION 5.06 Borrowing Base Certificate........................................ 49
SECTION 5.07 Maintenance of Concentration Accounts............................. 49
SECTION 5.08 Books and Records, Inspection and Collateral
Review Rights..................................................... 49
SECTION 5.09 Conduct of Business and Maintenance of Existence,................. 50
etc.
SECTION 5.10 Health Care Permits and Approvals................................. 50
SECTION 5.11 Financial Advisor................................................. 51
SECTION 6. NEGATIVE COVENANTS............................................................... 51
SECTION 6.01 Liens............................................................. 51
SECTION 6.02 Merger, etc....................................................... 51
SECTION 6.03 Indebtedness...................................................... 51
SECTION 6.04 Capital Expenditures.............................................. 52
SECTION 6.05 EBITDA............................................................ 52
SECTION 6.06 Guarantees and Other Liabilities.................................. 53
SECTION 6.07 Chapter 11 Claims................................................. 53
SECTION 6.08 Dividends; Capital Stock.......................................... 53
SECTION 6.09 Transactions with Affiliates...................................... 53
SECTION 6.10 Investments, Loans and Advances................................... 53
SECTION 6.11 Disposition of Assets............................................. 53
SECTION 6.12 Nature of Business................................................ 54
SECTION 6.13 Health Care Permits and Approvals................................. 54
ii
SECTION 6.14 Census............................................................ 54
SECTION 6.15 Assumption of Provider Agreements................................. 55
SECTION 7. EVENTS OF DEFAULT................................................................ 55
SECTION 7.01 Events of Default................................................. 55
SECTION 8. THE AGENT........................................................................ 59
SECTION 8.01 Administration by Agent........................................... 59
SECTION 8.02 Advances and Payments............................................. 59
SECTION 8.03 Sharing of Setoffs................................................ 59
SECTION 8.04 Agreement of Required Banks....................................... 60
SECTION 8.05 Liability of Agent................................................ 60
SECTION 8.06 Reimbursement and Indemnification................................. 61
SECTION 8.08 Independent Banks................................................. 61
SECTION 8.09 Notice of Transfer................................................ 61
SECTION 8.10 Successor Agent................................................... 62
SECTION 9. GUARANTY......................................................................... 62
SECTION 9.01 Guaranty.......................................................... 62
SECTION 9.02 No Impairment of Guaranty......................................... 63
SECTION 9.03 Subrogation....................................................... 63
SECTION 10. MISCELLANEOUS.................................................................... 64
SECTION 10.01 Notices........................................................... 64
SECTION 10.02 Survival of Agreement, Representations and
Warranties, etc................................................... 64
SECTION 10.03 Successors and Assigns............................................ 64
SECTION 10.04 Confidentiality................................................... 67
SECTION 10.05 Expenses.......................................................... 67
SECTION 10.06 Indemnity......................................................... 67
SECTION 10.07 CHOICE OF LAW..................................................... 68
SECTION 10.08 No Waiver......................................................... 68
SECTION 10.09 Extension of Maturity............................................. 68
SECTION 10.10 Amendments, etc................................................... 68
SECTION 10.11 Severability...................................................... 69
SECTION 10.12 Headings.......................................................... 69
SECTION 10.13 Execution in Counterparts......................................... 70
SECTION 10.14 Prior Agreements.................................................. 70
SECTION 10.15 Further Assurances................................................ 70
SECTION 10.16 WAIVER OF JURY TRIAL.............................................. 70
iii
ANNEX A - Commitment Amounts
EXHIBIT A-1- Form of First Day Order
EXHIBIT A-2- Form of Interim Order
EXHIBIT A-3- Form of Final Order
EXHIBIT B - Form of Security and Pledge Agreement
EXHIBIT C - Form of Opinion of Counsel
EXHIBIT D - Form of Assignment and Acceptance
EXHIBIT E - Form of Borrowing Base Certificate
SCHEDULE 1.01 - Existing Agreements
SCHEDULE 3.05 - Subsidiaries
SCHEDULE 3.06 - Liens
SCHEDULE 6.09 - Transactions with Affiliates
iv
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of January 18, 2000
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of January 18, 2000,
among MARINER POST-ACUTE NETWORK, INC., a Delaware corporation (the "Borrower"),
--------
a debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code, and each of the direct or indirect subsidiaries of the Borrower
signatory hereto (each a "Guarantor" and collectively, the "Guarantors"), each
--------- ----------
of which Guarantors referred to in this paragraph is a debtor and debtor-in-
possession in a case pending under Chapter 11 of the Bankruptcy Code (the cases
of the Borrower and the Guarantors, each a "Case" and collectively, the
----
"Cases"), THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"),
----- -----
each of the other financial institutions from time to time party hereto
(together with Chase, the "Banks") and THE CHASE MANHATTAN BANK, as agent (in
-----
such capacity, the "Agent") for the Banks.
-----
INTRODUCTORY STATEMENT
----------------------
On January 18, 2000, the Borrower and the Guarantors filed voluntary
petitions with the Bankruptcy Court initiating the Cases and have continued in
the possession of their assets and in the management of their business pursuant
to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower has applied to the Banks for a revolving credit and
letter of credit facility in an aggregate principal amount not to exceed
$100,000,000, all of the Borrower's obligations under which are to be guaranteed
by the Guarantors.
The proceeds of the Loans will be used for working capital and other
general corporate purposes of the Borrower and the Guarantors consistent with
the Budget hereinafter referred to (including periodic updates thereof).
To provide guarantees and security for the repayment of the Loans, the
reimbursement of any draft drawn under a Letter of Credit and the payment of the
other obligations of the Borrower and the Guarantors hereunder and under the
other Loan Documents (including, without limitation, the Obligations of the
Borrower under Section 6.03(vi)), the Borrower and the Guarantors will provide
to the Agent and the Banks the following (each as more fully described herein):
(1) a guaranty from each of the Guarantors of the due and punctual
payment and performance of the obligations of the Borrower hereunder;
(2) an allowed administrative expense claim in each of the Cases
pursuant to Section 364(c)(1) of the Bankruptcy Code having priority over all
administrative expenses of the kind specified in Sections 503(b) and 507(b) of
the Bankruptcy Code;
(3) perfected first priority Liens, pursuant to Section 364(c)(2) of
the Bankruptcy Code, upon all unencumbered property of the Borrower and the
Guarantors (including, without limitation, all Accounts arising on and after the
Filing Date (except as otherwise provided in the
Orders, it being understood that any such Accounts on which the Agent and the
Banks do not have such perfected first priority Liens shall be excluded from the
Borrowing Base) but excluding assets subject to Permitted Adequate Protection
Liens and other Permitted Liens and also excluding bankruptcy causes of action
(it being understood that, notwithstanding such exclusion, the proceeds of such
causes of action shall be available for the repayment of the Obligations)) and
on all cash and cash equivalents in the Letter of Credit Account, provided that
--------
following the Termination Date, amounts in the Letter of Credit Account shall
not be subject to the Carve-Out hereinafter referred to;
(4) perfected Liens, pursuant to Section 364(c)(3) of the Bankruptcy
Code, upon all property of the Borrower and the Guarantors (other than the
property referred to in paragraph (e) below that is subject to the existing
Liens that presently secure the Borrower's and Guarantors' pre-petition
Indebtedness under the Existing Agreements) that is subject to valid and
perfected Liens in existence on the Filing Date (including without limitation,
Accounts in existence as of the Filing Date that are subject to valid and
perfected Liens in favor of the Real Estate Financiers) and to Permitted Liens,
junior to such valid and perfected Liens; and
(5) perfected first priority priming Liens, pursuant to Section
364(d)(1) of the Bankruptcy Code, upon all property of the Borrower and the
Guarantors that is subject to (A) the existing Liens that presently secure the
Borrower's and Guarantors' pre-petition Indebtedness under or in connection with
(x) the Existing Credit Agreement (y) the Synthetic Guarantee and (z) the
Deficiency Note (but subject to any Liens to which the Liens being primed hereby
are subject on the Filing Date) and (B) any Liens granted after the Filing Date
to provide adequate protection in respect of the Existing Agreements, which
first priority priming Liens in favor of the Agent and the Banks shall be senior
in all respects to all of such existing Liens under or in connection with the
Existing Agreements, and to any Liens granted after the Filing Date to provide
adequate protection in respect thereof.
All of the claims and the Liens granted hereunder in the Cases to the
Agent and the Banks shall be subject to the Carve-Out to the extent provided in
Section 2.20.
Accordingly, the parties hereto hereby agree as follows:
SECTION 2. DEFINITIONS
SECTION 2.1 Defined Terms
-------------
As used in this Agreement, the following terms shall have the meanings
specified below:
"Account" means with respect to any Account Debtor, any right to
-------
payment for goods sold or leased or for services rendered, whether or not earned
by performance.
"Account Debtor" shall mean, with respect to any Account, the obligor
--------------
with respect to such Account.
2
"Additional Interim Credit" shall have the meaning given such term in
-------------------------
Section 4.02(d) hereof.
"Adjusted Eligible Accounts Receivable" shall mean Eligible Accounts
-------------------------------------
Receivable minus the Dilution Reserve.
-----
"Affiliate" shall mean, as to any Person, any other Person which,
---------
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
-----------------
"Controlling Person") if the Controlling Person possesses, directly or
------------------
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the Introduction.
-----
"Agreement" shall mean this Revolving Credit and Guaranty Agreement,
---------
as the same may from time to time be further amended, modified or supplemented.
"Alternate Base Rate" shall mean, for any day, a rate per annum
-------------------
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest
----------
per annum publicly announced from time to time by the Agent as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective on the date such change is publicly announced. "Base CD
-------
Rate" shall mean the sum of (a) the quotient of (i) the Three-Month Secondary CD
----
Rate divided by (ii) a percentage expressed as a decimal equal to 100% minus
Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary CD Rate"
-----------------------------
shall mean, for any day, the secondary market rate for three-month certificates
of deposit reported as being in effect on such day (or, if such day shall not be
a Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it. "Federal Funds Effective Rate" shall mean, for any day, the
----------------------------
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.
If for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective
3
Rate or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively. "Assessment Rate" shall mean for any date the
---------------
annual rate (rounded upwards, if necessary, to the next 1/100 of 1%) most
recently estimated by the Agent as the then current net annual assessment rate
that will be employed in determining amounts payable by the Agent to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or any successor) of time deposits made in dollars at the Agent's
domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
-------------------------
entered into by a Bank and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit D.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
---------------
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.
-- ---
"Bankruptcy Court" shall mean the United States Bankruptcy Court for
----------------
the District of Delaware or any other court having jurisdiction over the Cases
from time to time.
"Banks" shall have the meaning set forth in the Introduction.
-----
"Board" shall mean the Board of Governors of the Federal Reserve
-----
System of the United States.
"Borrower" shall have the meaning set forth in the Introduction.
--------
"Borrowing" shall mean the incurrence of Loans made from all the Banks
---------
on a single date.
"Borrowing Base" means, an amount equal to the sum, without
--------------
duplication of (i) 80% of "Inpatient" Eligible Accounts Receivable minus (a) the
Reserve for Cost Report Liabilities in Excess of the Medicaid Contra and (b) the
Reserve for Cost Report Liabilities in Excess of the Medicare Contra, (ii) 80%
of "LTAC" Eligible Accounts Receivable minus (a) the Reserve for Cost Report
Liabilities in Excess of the Medicaid Contra and (b) the Reserve for Cost Report
Liabilities in Excess of the Medicare Contra, (iii) 75% of APS "Part B" Adjusted
Eligible Accounts Receivable, (iv) 75% of APS "Private" Adjusted Eligible
Accounts Receivable, (v) 75 % of APS "Medicaid" Adjusted Eligible Accounts
Receivable, provided that (x) in no event shall the contribution to the
Borrowing Base for any Division be less than zero; and (y) the sum contribution
of "Part B", "Private" and "Medicaid" shall not be greater than 25% of the sum
contribution of "Inpatient" and "LTAC". The Borrowing Base shall be computed as
of the end of each fiscal month; provided that the Borrowing Base in effect at
any time shall be determined by reference to the most recent
4
Borrowing Base Certificate delivered to the Agent, absent any error in such
Borrowing Base Certificate. Borrowing Base component definitions may be fixed
and revised from time to time solely by the Agent in the exercise of its
reasonable judgment, with any changes in such definitions to be effective 10
days after delivery of notice thereof to the Borrower.
"Borrowing Base Certificate" shall have the meaning set forth in
--------------------------
Section 5.06.
"Budget" shall have the meaning set forth in Section 4.01(i).
------
"Business Day" shall mean any day except a Saturday, Sunday or other
------------
day on which either (i) in the case of any action to be taken by the Bankruptcy
Court or any filing with the Bankruptcy Court, the Court is "inaccessible" or is
observing a "legal holiday" as provided in Rule 9006(a) of the Federal Rules of
Bankruptcy Procedure, or (ii) in all other cases, any day on which banks in the
State of New York are required or permitted to close (and, for a Letter of
Credit, other than a day on which the Fronting Bank issuing such Letter of
Credit is closed).
"Capital Expenditures" shall mean, for any period, the aggregate of
--------------------
all expenditures (whether (1) paid in cash and not theretofore accrued
subsequent to the date of this Agreement or (2) not previously paid in cash but
accrued as liabilities during such period and including that portion of
Capitalized Leases which is capitalized on the consolidated balance sheet of the
Borrower and the Guarantors) net of cash amounts received by the Borrower and
the Guarantors from other Persons during such period in reimbursement of Capital
Expenditures made by the Borrower and the Guarantors, excluding interest
capitalized during construction, by the Borrower and the Guarantors during such
period that, in conformity with GAAP, are required to be included in or
reflected by the property, plant, equipment or intangibles or similar fixed
asset accounts reflected in the consolidated balance sheet of the Borrower and
the Guarantors (including equipment which is purchased simultaneously with the
trade-in of existing equipment owned by the Borrower or any of the Guarantors to
the extent of the gross amount of such purchase price less the book value of the
equipment being traded in at such time), but excluding expenditures made in
connection with the replacement or restoration of assets, to the extent
reimbursed or financed from insurance proceeds paid on account of the loss of or
the damage to the assets being replaced or restored, or from awards of
compensation arising from the taking by condemnation or eminent domain of such
assets being replaced.
"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.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
-----------------
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.20.
---------
5
"Cases" shall mean the Chapter 11 Cases of the Borrower and each of
-----
the Guarantors pending in the Bankruptcy Court.
"Change of Control" shall mean (i) the acquisition of ownership,
-----------------
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof),
of shares representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower; or (ii)
the occupation of a majority of the seats (other than vacant seats) on the Board
of Directors of the Borrower, after the Filing Date, by Persons who were neither
(A) nominated by the Board of Directors of the Borrower nor (B) appointed by
directors so nominated.
"Chase" shall have the meaning set forth in the Introduction.
-----
"Closing Date" shall mean the date on which this Agreement has been
------------
executed and the conditions precedent to the making of the initial Loans set
forth in Section 4.01 have been satisfied or waived, which date shall occur
promptly upon entry of the First Day Order, but not later than 15 days following
the Filing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Collateral" shall mean the Collateral under the Security and Pledge
----------
Agreement.
"Commitment" shall mean, with respect to each Bank, the commitment of
----------
each Bank hereunder in the amount set forth opposite its name on Annex A hereto
or as may subsequently be set forth in the Register from time to time, as the
same may be reduced from time to time pursuant to this Agreement.
"Commitment Fee" shall have the meaning set forth in Section 2.17.
--------------
"Commitment Letter" shall mean that certain Commitment Letter dated
-----------------
December 22, 1999 among the Agent, Chase Securities Inc. and the Borrower.
"Commitment Percentage" shall mean at any time, with respect to each
---------------------
Bank, the percentage obtained by dividing its Commitment at such time by the
Total Commitment at such time.
"Consummation Date" shall mean the date of the substantial
-----------------
consummation (as defined in Section 1101 of the Bankruptcy Code and which for
purposes of this Agreement shall be no later than the effective date) of a
Reorganization Plan of the Borrower or any of the Guarantors that is confirmed
pursuant to an order of the Bankruptcy Court.
"Contractual Obligation" shall mean, as to any Person, any provision
----------------------
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
6
"Deficiency Note" shall mean that certain Deficiency Note, made by the
---------------
Borrower, dated August 16, 1999 in the principal amount of $26,485,562.79 held
by Bank of America, N.A.
"Dilution Factor" shall mean with respect to any period, (a) the
---------------
aggregate amount of all deductions, contractual adjustments, other negative
adjustments, credit memos and write-offs with respect to Accounts during such
period, divided by (b) the aggregate gross charges attributable to Accounts
during such period.
"Dilution Reserve" shall mean, as of any date, (a) the Dilution Factor
----------------
for the immediately preceding twelve-month period (ending as of the date of the
calculation of the Borrowing Base then in effect, which such date is set forth
on the applicable Borrowing Base Certificate) multiplied by the (b) Eligible
Accounts Receivable on such date.
"Division" shall mean, as of any date, a functional entity of the
--------
Borrower such as "Inpatient", "LTAC", or "APS".
"Dollars" and "$" shall mean lawful money of the United States of
---------------
America.
"EBITDA" shall mean, for any period, all as determined in accordance
------
with GAAP, the consolidated net income (or net loss) of the Borrower and the
Guarantors for such period, plus (a) the sum of (i) depreciation expense, (ii)
amortization expense, (iii) other non-cash expenses, (iv) provision for LIFO
adjustment for inventory valuation, (v) net total Federal, state and local
income tax expense, (vi) gross interest expense for such period less gross
interest income for such period, (vii) extraordinary losses, (viii) any non-
recurring charge or restructuring charge, (ix) the cumulative effect of any
change in accounting principles and (x) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on the
Borrower's consolidated statement of income for such period less (b)
----
extraordinary gains plus or minus (c) the amount of cash received or expended,
---- -----
as the case may be, in such period in respect of any amount which, under clauses
(iii) and (viii) above, was taken into account in determining EBITDA for such or
any prior period.
"Eligible Accounts Receivable" means, at the time of any determination
----------------------------
thereof, each Account that satisfies the following criteria at the time of
creation and continues to meet the same at the time of such determination: such
Account (i) arose from a completed, outright and lawful sale of goods or from
the completed performance of patient-related services by the Borrower, any
Guarantor or any Division in the ordinary course of business of the Borrower,
any Guarantor or Division and in a manner consistent with current and historical
business practices and (ii) is not ineligible for inclusion in the calculation
of the Eligible Accounts Receivable pursuant to any of clauses (a) through (o)
below or otherwise reasonably deemed by the Agent in good faith to be ineligible
for inclusion in the calculation of Eligible Accounts Receivable as described
below.
Without limiting the foregoing, to qualify as an Eligible Accounts
Receivable, an Account shall indicate as sole payee and as sole remittance party
the Borrower, any Guarantor or any Division. In determining the amount to be so
included, the face amount of an Account or Accounts shall be reduced by, without
duplication, to the extent not reflected in such face amount, (a) the amount of
all accrued and actual returns, contractual adjustments, discounts, claims,
credits or credits
7
pending, charges, price adjustments, freight or other allowances (including any
amount that the Borrower or a Division, as applicable, may be obligated to
rebate to a customer pursuant to the terms of any agreement or understanding
(written or oral)), (b) the aggregate amount of all limits and deductions
provided for in this definition and elsewhere in this Agreement, (c) the
aggregate amount of all cash received in respect of such Account but not yet
applied by the Borrower or the applicable Division to reduce the amount of such
Account; and (d) the aggregate amount, without duplication, of reconciling items
which reduce otherwise Eligible Accounts Receivable to the amounts shown on the
Borrower's consolidating financial statements. Unless otherwise approved from
time to time in writing by the Agent, no Account shall be an Eligible Accounts
Receivable if, without duplication:
(1) such Account represents charges for which a ▇▇▇▇, claim, or other
similar form used for billing purposes has not been generated; or
(2) such Account arises out of a cost report settlement or other
similar transaction; or
(3) such Account arises out of a sale made by the Borrower or a
Division to an Affiliate of the Borrower or a Division or an Affiliate of any
subsidiary of the Borrower or Division; or
(4) such Account (i) is unpaid more than 120 days with respect to an
invoice date aging; (ii) is unpaid more than 90 days with respect to a due date
aging; (iii) is unpaid more than 60 days with respect to a balance forward
aging; or (iv) has been written off the accounting records of the Borrower or a
Division or has been otherwise designated on such accounting records as
uncollectible; or
(5) the Account Debtor with respect to such Account (i) is a creditor
of the Borrower, Guarantor or the respective Division, (ii) has or has asserted
a right of set off against the Borrower, Guarantor or its respective Division
and (iii) has disputed its liability (whether by chargeback or otherwise) or
made any claim with respect to the Account which has not been resolved, in each
case, without duplication, only to the extent of the amount owed to each Account
Debtor by the Borrower, Guarantor or respective Division, provided that the
--------
total amount deducted from Eligible Accounts Receivable with respect to such
Account Debtor shall not exceed the aggregate amount of all Accounts owed by
such Account Debtor to the Borrower, Guarantor or respective Division (for
calculation of this ineligible, for Medicare and Medicaid purposes, refer to
Schedule 1, page 2 of the Borrowing Base Certificate); or
(6) the Account Debtor is insolvent or the subject of any bankruptcy
case or insolvency proceeding of any kind; or
(7) the Account is not payable in Dollars or the Account Debtor is
either not incorporated under the laws of the United States of America, any
state thereof or the District of Columbia or is located outside or has its
principal place of business or substantially all of its assets outside the
United States; or
8
(8) the sale to the Account Debtor is on a ▇▇▇▇-and-hold, guaranteed
sale, extended terms or consignment or other similar basis; or
(9) such Account does not comply in all material respects with the
requirements of any applicable laws and regulations, whether federal, state or
local (including Health Care Laws such as the rules and regulations of
Governmental Authorities, JCAHO and other organizations exercising similar
quasi-governmental or accreditation authority over hospitals or other
facilities, the federal Consumer Credit Protection Act, the federal Truth in
Lending Act and Regulation Z of the Board); or,
(10) such Account represents an amount due directly from a patient (a
natural person) and not a third party reimbursement agency, provided that in the
case of the "Inpatient" Division no Account shall be excluded as a result of
this clause (j) unless it is unpaid more than 30 days after the date of invoice;
or
(11) such Account represents an amount for which the third-party
reimbursement agency is not obligated to pay because it has not yet been
determined whether the patient meets all eligibility requirements, provided that
in the case of the "Inpatient" Division no Account shall be excluded as a result
of this clause (k) unless it is unpaid more than 60 days after the service date
and the anticipated reimbursement agency is Medicaid from any state; or
(12) such Account (i) is not solely and lawfully owned by the
Borrower, Guarantor or a Division or the Borrower, Guarantor or Division does
not have absolute title to such Account, (ii) is not subject to a valid and
perfected first priority Lien in favor of the Agent for the benefit of the
Banks, or (iii) does not otherwise conform in all material respects to the
representations and warranties contained in the Loan Documents relating to
Accounts; or
(13) as to all or any part of such Account, a check, promissory note,
draft, trade acceptance or other instrument for the payment of money has been
received, presented for payment and returned uncollected for any reason; or
(14) all Accounts of any single Account Debtor other than a Medicaid
or Medicare Account Debtor which, in the aggregate, exceed 15% of the total
amount of all gross Accounts for the applicable Division to the extent of such
excess; or
(15) such Medicaid Account with respect to the APS Division is billed
utilizing a system other than the Borrower's QS1 system or other system so
approved by the Agent.
Notwithstanding the foregoing, "Eligible Accounts Receivable" shall
not include: (a) a "credit reclass reserve" equal to the greater of 1% of
"Inpatient's" gross Accounts aging balance or $2,000,000 and (b) any individual
Account that (i) arises from discontinued operations of the Borrower, Guarantor
or any Division or (ii) was generated through the provision of goods or services
at any hospital that (x) has lost its accreditation from JCAHO, (y) has lost its
ability to provide reimbursed services for federally or state funded programs or
(z) is closed, abandoned or no longer
9
operating (other than pursuant to a sale of such Health Care Facility in an
arms-length transaction permitted under this Agreement.)
"Eligible Assignee" shall mean (i) a commercial bank having total
-----------------
assets in excess of $1,000,000,000; (ii) a finance company, insurance company or
other financial institution or fund, in each case acceptable to the Agent, which
in the ordinary course of business extends credit of the type contemplated
herein and has total assets in excess of $200,000,000 and whose becoming an
assignee would not constitute a prohibited transaction under Section 4975 of
ERISA; and (iii) any other financial institution satisfactory to the Borrower
and the Agent.
"Environmental Lien" shall mean a Lien in favor of any Governmental
------------------
Authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from or costs incurred by such Governmental
Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
---------------
incorporated) which is a member of a group of which the Borrower is a member and
which is under common control within the meaning of Section 414(b) or (c) of the
Code and the regulations promulgated and rulings issued thereunder.
"Event of Default" shall have the meaning given such term in Section
----------------
7.
"Existing Agreements" shall mean the Existing Credit Agreement, the
-------------------
Synthetic Guarantee, the Deficiency Note, and all of the other agreements
granting security interests and Liens in property and assets of the Borrower and
the Guarantors to the Existing Lenders, including without limitation, the
security agreements, mortgages and leasehold mortgages listed on Schedule 1.01
hereto, each of which documents was executed and delivered (to the extent party
thereto) by the Borrower and the Guarantors prior to the Filing Date, as each
may have been amended or modified from time to time.
"Existing Credit Agreement" shall mean that certain Credit Agreement
-------------------------
dated as of November 4, 1997 among the Borrower (formerly known as Paragon
Health Network, Inc.), the several lenders from time to time party thereto,
Chase, as administrative agent, and Bank of America, N.A. (formerly known as
Nationsbank, N.A.), as documentation agent, as heretofore amended.
"Existing Lenders" shall mean, collectively, those certain lenders to
----------------
the Borrower and the Guarantors (to the extent party thereto) under any of the
Existing Agreements, together with any successors or assigns thereof.
"Fees" shall collectively mean the Commitment Fees, Letter of Credit
----
Fees and other fees referred to in Sections 2.16, 2.17 and 2.18.
10
"Filing Date" shall mean January 18, 2000.
-----------
"Final Order" shall have the meaning given such term in Section
-----------
4.02(d).
"Financial Officer" shall mean the Chief Financial Officer, Treasurer
-----------------
or Assistant Treasurer of the Borrower (or, in the case of a Guarantor, any Vice
President in charge of financial matters).
"First Day Order" shall have the meaning given such term in Section
---------------
4.01(b).
"Fronting Bank" shall mean Chase or such other Bank (which other Bank
-------------
shall be reasonably satisfactory to the Borrower) as may agree with Chase to act
in such capacity.
"Further Additional Credit" shall have the meaning given such term in
-------------------------
Section 4.02(d).
"GAAP" shall mean generally accepted accounting principles applied in
----
accordance with Section 1.02.
"Governmental Authority" shall mean any federal, state, municipal or
----------------------
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Guarantor" shall have the meaning set forth in the Introduction.
---------
"Health Care Facility" shall mean any ownership or leasehold interest
--------------------
in a facility which provides any level of geriatric care, home care, medical
care (including, without limitation, sub-acute care), assisted living or
rehabilitative services, whether licensed as a skilled nursing facility,
intermediate care facility, personal care facility, out-patient clinic or
hospital (including, without limitation, any long-term acute care hospital) or
any products or services reasonably related thereto.
"Health Care Law" shall mean any and all applicable current and future
---------------
laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions or binding agreements issued, promulgated or entered into by the
Food and Drug Administration, the Health Care Financing Administration, the
Department of Health and Human Services ("HHS"), the Office of Inspector General
---
of HHS, the Drug Enforcement Administration or any other Governmental Authority,
including any state and/or local professional licensing laws, certificate of
need laws and state reimbursement laws, in each case relating in any way to the
conduct of the business of the Borrower or any Subsidiary and the provision of
health care services generally.
"Health Care Permit" shall mean every accreditation, authorization,
------------------
certificate of need, license or permit that is required by any applicable
Governmental Authority to own, lease, operate or manage a Health Care Facility
of the Borrower or any of its Subsidiaries.
11
"HRPT" shall mean SPTMNR Properties Trust, a Maryland real estate
----
investment trust, as successor in interest to Health and Retirement Properties
Trust, a real estate investment trust organized under the laws of the State of
Maryland.
"Indebtedness" shall mean, at any time and with respect to any Person,
------------
and without duplication (i) all indebtedness of such Person for borrowed money,
(ii) all indebtedness of such Person for the deferred purchase price of property
or services (other than property, including inventory, and services purchased,
and expense accruals and deferred compensation items arising, in the ordinary
course of business), (iii) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments (other than performance, surety
and appeal bonds arising in the ordinary course of business), (iv) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (v) all obligations of such Person under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, to the extent
required to be so recorded, (vi) all reimbursement, payment or similar
obligations of such Person, contingent or otherwise, under acceptance, letter of
credit or similar facilities and all obligations of such Person in respect of
(x) currency swap agreements, currency future or option contracts and other
similar agreements designed to hedge against fluctuations in foreign interest
rates and (y) interest rate swap, cap or collar agreements and interest rate
future or option contracts; (vii) all Indebtedness referred to in clauses (i)
through (vi) above guaranteed directly or indirectly by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (A)
to pay or purchase such Indebtedness or to advance or supply funds for the
payment or purchase of such Indebtedness, (B) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss in respect of such Indebtedness,
(C) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (D) otherwise to assure a
creditor against loss in respect of such Indebtedness, and (viii) all
Indebtedness referred to in clauses (i) through (vii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
-------------
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA.
"Interim Order" shall have the meaning given such term in Section
-------------
4.02(d).
"Investments" shall have the meaning given such term in Section 6.10.
-----------
"JCAHO" shall mean the Joint Commission on Accreditation of Healthcare
-----
Organizations, or any similar successor organization thereto.
12
"Letter of Credit" shall mean any irrevocable letter of credit issued
----------------
pursuant to Section 2.03, which letter of credit shall be (i) a standby letter
of credit, (ii) issued for purposes that are consistent with the ordinary course
of business of the Borrower or any Guarantor, or for such other purposes as are
reasonably acceptable to the Agent (including, without limitation, the
replacement at the request of the Borrower of any expiring standby letter of
credit issued under the Existing Credit Agreement), (iii) denominated in Dollars
and (iv) otherwise in such form as may be reasonably approved from time to time
by the Agent and the applicable Fronting Bank.
"Letter of Credit Account" shall mean the account established by the
------------------------
Borrower under the sole and exclusive control of the Agent maintained at the
office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ designated as
the "Mariner Post-Acute Network, Inc. Letter of Credit Account" that shall be
used solely for the purposes set forth in Sections 2.03(b) and 2.11.
"Letter of Credit Fees" shall mean the fees payable in respect of
---------------------
Letters of Credit pursuant to Section 2.18.
"Letter of Credit Outstandings" shall mean, at any time, the sum of
-----------------------------
(i) the aggregate undrawn stated amount of all Letters of Credit then
outstanding plus (ii) all amounts theretofore drawn under Letters of Credit and
----
not then reimbursed.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind whatsoever (including any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loan" shall have the meaning given such term in Section 2.01.
----
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
--------------
Security and Pledge Agreement and any other instrument or agreement executed and
delivered in connection herewith.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, assets, property, condition (financial or otherwise) or prospects
of the Borrower and the Guarantors taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Agent or the Banks hereunder or thereunder; provided,
--------
that a Material Adverse Effect shall not be deemed to have occurred solely on
account of the commencement of the Cases or on account of facts and
circumstances disclosed in writing to the Banks prior to the Filing Date.
"Maturity Date" shall mean January 19, 2001.
-------------
"MHG" shall mean Mariner Health Group, Inc., a Delaware corporation.
---
"Medicaid or Medicare Account Debtor" shall mean any Account Debtor
-----------------------------------
which is (i) the United States of America acting under the Medicaid/Medicare
program established pursuant to the Social Security Act, (ii) any state or the
District of Columbia acting pursuant to a health plan
13
adopted pursuant to Title XIX of the Social Security Act or (iii) any agent,
carrier, administrator or intermediary for any of the foregoing.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" shall mean a Single Employer Plan, which (i)
----------------------
is maintained for employees of the Borrower or an ERISA Affiliate and at least
one Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such Plan has been or
were to be terminated.
"Net Proceeds" shall mean, in respect of any sale of assets, the
------------
proceeds of such sale after the payment of or reservation for (i) expenses that
are directly related to (or the need for which arises as a result of) the
transaction of sale, including, but not limited to, related severance costs,
taxes payable, brokerage commissions, professional expenses, escrow fees, title
insurance fees, and other similar costs that are directly related to the sale
and (ii) the amount secured by valid and perfected Liens, if any, that are
senior to the Liens on such assets held by the Agent on behalf of the Banks.
"NHP" shall mean Nationwide Health Properties, Inc., a Maryland
---
corporation.
"Obligations" shall mean (a) the due and punctual payment of principal
-----------
of and interest on the Loans and the reimbursement of all amounts drawn under
Letters of Credit, and (b) the due and punctual payment of the Fees and all
other present and future, fixed or contingent, monetary obligations of the
Borrower and the Guarantors to the Banks and the Agent under the Loan Documents.
"Omega" shall mean Omega Healthcare Investors, Inc., a Maryland
-----
corporation.
"Orders" shall mean the First Day Order, the Interim Order and the
------
Final Order of the Bankruptcy Court referred to in Sections 4.01(b) and 4.02(d).
"Original Required Banks" shall mean the Banks party to this Agreement
-----------------------
on the date hereof having Commitments representing in excess of 50% of the Total
Commitment, provided that, for the purposes of this definition, Highland Capital
--------
Management, L.P. (or any of its Affiliates) shall be included as a Bank in
determining the Original Required Banks, from and after the time at which it
shall have received an assignment of a portion of Chase's Commitment hereunder,
but only if such assignment shall have occurred within 30 days of the Filing
Date.
"Other Taxes" shall have the meaning given such term in Section 2.15.
-----------
14
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
----
successor agency or entity performing substantially the same functions.
"Pension Plan" shall mean a defined benefit pension or retirement plan
------------
which meets and is subject to the requirements of Section 401(a) of the Code.
"Permitted Adequate Protection Lien" shall mean (i) a Lien in favor of
----------------------------------
any of the Real Estate Financiers in the postpetition inventory, Accounts or
other rights to payment relating to a particular Health Care Facility, Borrower,
or Guarantor, as approved by the Bankruptcy Court after notice to the Agent, for
the sole purpose of providing such holder of Indebtedness with "adequate
protection" (as that term is used in Bankruptcy Code sections 361 through 364)
to the extent (x) such holder as of the Filing Date held valid, enforceable and
non-avoidable Liens in the prepetition inventory, Accounts or other rights to
payment relating to such Health Care Facility, Borrower or Guarantor (as
applicable), and (y) such holder's interests in such prepetition inventory,
Accounts or other rights to payment are impaired or diminished as a result of
the use, sale or lease of such inventory, Accounts or other rights to payment by
the Borrower or Guarantors during the Cases; or (ii) other Liens for adequate
protection approved by Required Lenders and by the Bankruptcy Court.
"Permitted Investments" shall mean:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within twelve months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within six months from the date of
acquisition thereof and having, at such date of acquisition, a rating of at
least "A-2" or the equivalent thereof from Standard & Poor's Corporation or of
at least "P-2" or the equivalent thereof from ▇▇▇▇▇'▇ Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits (including Eurodollar time deposits) maturing within six months
from the date of acquisition thereof issued or guaranteed by or placed with (i)
any domestic office of the Agent or the bank with whom the Borrower and the
Guarantors maintain their cash management system, provided, that if such bank is
not a Bank hereunder, such bank shall have entered into an agreement with the
Agent pursuant to which such bank shall have waived all rights of setoff and
confirmed that such bank does not have, nor shall it claim, a security interest
therein, except to the extent of chargebacks for returned items and for fees
charged for maintaining such cash management system, or (ii) any domestic office
of any other commercial bank of recognized standing organized under the laws of
the United States of America or any State thereof that has a combined capital
and surplus and undivided profits of not less than $250,000,000 and is the
principal banking Subsidiary of a bank holding company having a long-term
unsecured debt rating of at least "A-2" or the equivalent thereof from Standard
& Poor's Corporation or at least "P-2" or the equivalent thereof from ▇▇▇▇▇'▇
Investors Service, Inc.;
15
(d) investments in commercial paper maturing within six months from
the date of acquisition thereof and issued by (i) the holding company of the
Agent or (ii) the holding company of any other commercial bank of recognized
standing organized under the laws of the United States of America or any State
thereof that has (A) a combined capital and surplus in excess of $250,000,000
and (B) commercial paper rated at least "A-2" or the equivalent thereof from
Standard & Poor's Corporation or of at least "P-2" or the equivalent thereof
from ▇▇▇▇▇'▇ Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (a)
above entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above;
(f) investments in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (a) through
(e) above; and
(g) to the extent owned on the Filing Date, investments in the
capital stock of any direct or indirect Subsidiary of the Borrower.
"Permitted Liens" shall mean (i) Liens imposed by law (other than
---------------
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed under ERISA) in existence on the Filing Date or
thereafter imposed by law and created in the ordinary course of business; (iii)
Liens (other than any Lien imposed under ERISA) incurred or deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts; (iv) easements (including, without
limitation, reciprocal easement agreements and utility agreements), rights-of-
way, covenants, consents, reservations, encroachments, variations and zoning and
other restrictions, charges or encumbrances (whether or not recorded) and
interest of ground lessors, which do not interfere materially with the ordinary
conduct of the business of the Borrower or any Guarantor, as the case may be,
and which do not materially detract from the value of the property to which they
attach or materially impair the use thereof to the Borrower or any Guarantor, as
the case may be; (v) purchase money Liens (including Capitalized Leases) upon or
in any property acquired or held in the ordinary course of business to secure
the purchase price of such property or to secure Indebtedness permitted by
Section 6.03(iii) solely for the purpose of financing the acquisition of such
property; (vi) Liens consisting of rights of patients in respect of patient
trust accounts held pursuant to the Omnibus Budget and Reconciliation Act of
1987, 28 U.S.C., (S)483.10(C) and the regulations of the Health Care Financing
Administration; (vii) Liens on unearned premium refunds and policy proceeds
incurred in the ordinary course of business in connection with the purchase of
casualty, health, and
16
other types of insurance; (viii) Permitted Adequate Protection Liens; (ix) other
Liens securing other obligations of the Borrower and the Guarantors in an amount
not to exceed $500,000 in the aggregate and (x) extensions, renewals or
replacements of any Lien referred to in paragraphs (i) through (ix) above,
provided that the principal amount of the obligation secured thereby is not
--------
increased and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby.
"Person" shall mean any natural person, corporation, division of a
------
corporation, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer Plan.
----
"Prepayment Date" shall mean the first Business Day that is at least
---------------
thirty (30) days after the entry of the First Day Order (or if no First Day
Order is entered, the Interim Order) or such later date as is satisfactory to
the Original Required Banks by the Bankruptcy Court if the Final Order has not
been entered by the Bankruptcy Court prior to the expiration of such thirty (30)
day period.
"Pre-Petition Agent" shall mean The Chase Manhattan Bank, as
------------------
administrative agent under the Existing Credit Agreement.
"Pre-Petition Payment" shall mean a payment (by way of adequate
--------------------
protection or otherwise) of principal or interest or otherwise on account of any
pre-petition Indebtedness or trade payables or other pre-petition claims against
the Borrower or any Guarantor.
"Property" shall mean any right or interest in or to property of any
--------
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Real Estate Financiers" shall mean, collectively, HRPT, Omega,
----------------------
SouthTrust, NHP (insofar as inventory, but not Accounts or other rights to
payment, are concerned) and holders of other Indebtedness in an aggregate amount
for all such other Indebtedness not in excess of $1,000,000, as to which such
holders as of the Filing Date hold valid, enforceable and non-avoidable Liens in
the prepetition inventory, Accounts or other rights to payment relating to a
Health Care Facility, the Borrower or a Guarantor (as applicable).
"Register" shall have the meaning set forth in Section 10.03(d).
--------
"Reorganization Plan" shall mean a plan of reorganization in any of
-------------------
the Cases.
"Required Banks" shall mean, at any time, Banks holding Loans
--------------
representing in excess of 50% of the aggregate principal amount of such Loans
outstanding or, if no such Loans are outstanding, Banks having Commitments
representing in excess of 50% of the Total Commitment.
17
"Requirement of Law" shall mean, as to any Person, the Certificate or
------------------
Articles of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Reserve for Cost Report Liabilities in Excess of the Medicaid Contra"
--------------------------------------------------------------------
shall mean all net cost report liabilities remaining after excluding net cost
report liabilities equal to or lesser than the Eligible Account Receivable for
Medicaid (for calculation of this amount, see Schedule 1, page 2 of the
Borrowing Base Certificate).
"Reserve for Cost Report Liabilities in Excess of the Medicare Contra"
--------------------------------------------------------------------
shall mean all net cost report liabilities remaining after excluding net cost
report liabilities equal to or lesser than the Eligible Account Receivable for
Medicare (for calculation of this amount, see Schedule 1, page 2 of the
Borrowing Base Certificate).
"Responsible Officer" shall mean, with respect to the Borrower or any
-------------------
Guarantor, the chief executive officer, president, chief financial officer,
treasurer or vice president in charge of financial matters thereof, but in any
event, with respect to financial matters, the treasurer or vice president in
charge of financial matters thereof.
"Security and Pledge Agreement" shall have the meaning set forth in
-----------------------------
Section 4.01(c).
"Single Employer Plan" shall mean a single employer plan, as defined
--------------------
in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of which
the Borrower could have liability under Section 4069 of ERISA in the event such
Plan has been or were to be terminated.
"Social Security Act" shall mean the Social Security Act as codified
-------------------
at 42 U.S.C. (S)1395 et. seq.
"SouthTrust" shall mean SouthTrust Bank of Alabama, National
----------
Association, a national banking association, and its successors and assigns
(including LaSalle National Bank, as trustee).
"Statutory Reserves" shall mean on any date the percentage (expressed
------------------
as a decimal) established by the Board and any other banking authority which is
for purposes of the definition of Base CD Rate, the then stated maximum rate of
all reserves (including, but not limited to, any emergency, supplemental or
other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City, for new three month negotiable nonpersonal time
deposits in dollars of $100,000 or more. Such reserve percentages shall
include, without limitation, those imposed pursuant to said Regulation. The
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in such percentage.
18
"Subsidiary" shall mean, with respect to any Person (herein referred
----------
to as the "parent"), any corporation, association or other business entity
------
(whether now existing or hereafter organized) of which at least a majority of
the securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Super-majority Banks" shall have the meaning given such term in
--------------------
Section 10.10(b).
"Superpriority Claim" shall mean a claim against the Borrower and any
-------------------
Guarantor in any of the Cases which is an administrative expense claim having
priority over any or all administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
"Synthetic Guarantee" shall mean that certain Amended and Restated
-------------------
Guarantee dated as of November 4, 1997, as heretofore amended, made by the
Borrower and the Guarantors signatory thereto in favor of Chase, as
administrative agent for the lenders under that certain Amended and Restated
Credit Agreement dated as of November 4, 1997, as heretofore amended, to which
FBTC Leasing Corp., among others, is a party, and the instruments and agreements
executed in connection therewith (it being understood that the obligations of
the Borrower and such Guarantors signatory thereto under or in connection with
the Synthetic Guarantee and the instruments and agreements executed in
connection therewith shall include, without limitation, such direct obligations
as the Borrower and such Guarantors may have to FBTC Leasing Corp. and the other
lenders party to such Amended and Restated Credit Agreement upon and after the
entry of an order approving that certain Stipulation Acknowledging Ownership of
Properties Subject to "Synthetic Lease Transactions" among certain parties
including FBTC Leasing Corp., Chase as administrative agent, the Borrower and
the Guarantors (including Living Centers Holding Corp.), as described in Section
4.02(e)).
"Taxes" shall have the meaning given such term in Section 2.15.
-----
"Termination Date" shall mean the earliest to occur of (i) the
----------------
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
"Termination Event" shall mean (i) a "reportable event", as such term
-----------------
is described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "reportable event" not subject to the provision for 30-day notice
to the PBGC under Section 4043 of ERISA or such regulations) or an event
described in Section 4068 of ERISA excluding events described in Section
4043(c)(9) of ERISA or 29 CFR (S)(S)2615.21 or 2615.23 and excluding events
which would not be reasonably likely (as reasonably determined by the Agent) to
have a material adverse effect on the financial condition, operations, business,
properties or assets of the Borrower and the Guarantors taken as a whole, or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year in which it was a "substantial employer", as
such term is defined in Section 4001(c) of ERISA, or the incurrence of liability
by the Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the
termination of a Multiple Employer Plan, or (iii) providing
19
notice of intent to terminate a Plan pursuant to Section 4041(c) of ERISA or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA, or
(iv) the institution of proceedings to terminate a Plan by the PBGC under
Section 4042 of ERISA, or (v) any other event or condition (other than the
commencement of the Cases and the failure to have made any contribution accrued
as of the Filing Date but not paid) which would reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the imposition of any
liability under Title IV of ERISA (other than for the payment of premiums to the
PBGC).
"Total Commitment" shall mean, at any time, the sum of the Commitments
----------------
at such time.
"Transferee" shall have the meaning given such term in Section 2.18.
----------
"Unused Total Commitment" shall mean, at any time, (i) the Total
-----------------------
Commitment less (ii) the sum of (x) the aggregate outstanding principal amount
of all Loans and (y) the aggregate Letter of Credit Outstandings.
"Withdrawal Liability" shall have the meaning given such term under
--------------------
Part I of Subtitle E of Title IV of ERISA.
SECTION 2.2 Terms Generally. The definitions in Section 1.01 shall apply
---------------
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Sections, Exhibits and
Schedules shall be deemed references to Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that for purposes of determining compliance with any
-------- -------
covenant set forth in Section 6, such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement applied on a basis
consistent with the application used in the Borrower's audited financial
statements referred to in Section 3.04.
SECTION 3. AMOUNT AND TERMS OF CREDIT.
SECTION 3.1 Commitment of the Banks.
-----------------------
20
(1) Each Bank severally and not jointly with the other Banks agrees,
upon the terms and subject to the conditions herein set forth (including,
without limitation, the provisions of Section 2.25), to make revolving credit
loans (each a "Loan" and collectively, the "Loans") to the Borrower at any time
---- -----
and from time to time during the period commencing on the date hereof and ending
on the Termination Date (or the earlier date of termination of the Total
Commitment) in an aggregate principal amount not to exceed, when added to such
Bank's Commitment Percentage of the then aggregate Letter of Credit Outstandings
(in excess of the ratable portion of the amount of cash then held in the Letter
of Credit Account pursuant to Section 2.03(b) and allocable to such Bank), the
Commitment of such Bank, which Loans may be repaid and reborrowed in accordance
with the provisions of this Agreement. At no time shall the sum of the then
outstanding aggregate principal amount of the Loans plus the then aggregate
----
Letter of Credit Outstandings exceed the lesser of (i) the Total Commitment of
$100,000,000, as the same may be reduced from time to time pursuant to Section
2.10, and (ii) the Borrowing Base.
(2) Each Borrowing shall be made by the Banks pro rata in accordance
--- ----
with their respective Commitments; provided, however, that the failure of any
-------- -------
Bank to make any Loan shall not in itself relieve the other Banks of their
obligations to lend.
SECTION 3.2 Borrowing Base. Notwithstanding any other provision of this
--------------
Agreement to the contrary, the aggregate principal amount of all outstanding
Loans plus the then aggregate Letter of Credit Outstandings shall not at any
----
time exceed the Borrowing Base and no Loan shall be made or Letter of Credit
issued in violation of the foregoing.
SECTION 3.3 Letters of Credit.
-----------------
(1) Upon the terms and subject to the conditions herein set forth,
the Borrower may request a Fronting Bank, at any time and from time to time
after the date hereof and prior to the Termination Date, to issue, and, subject
to the terms and conditions contained herein, such Fronting Bank shall issue,
for the account of the Borrower or a Guarantor one or more Letters of Credit,
provided that no Letter of Credit shall be issued if after giving effect to such
--------
issuance (i) the aggregate Letter of Credit Outstandings shall exceed
$10,000,000 or (ii) the aggregate Letter of Credit Outstandings, when added to
the aggregate outstanding principal amount of the Loans, would exceed the Total
Commitment and, provided further that no Letter of Credit shall be issued if the
-------- -------
Fronting Bank shall have received notice from the Agent or the Required Banks
that the conditions to such issuance have not been met.
(2) No Letter of Credit shall expire later than 60 days after the
Maturity Date, provided that if any Letter of Credit shall be outstanding on the
--------
Termination Date, the Borrower shall, at or prior to the Termination Date,
except as the Agent may otherwise agree in writing, (i) cause all Letters of
Credit which expire after the Termination Date to be returned to the Fronting
Bank undrawn and marked "canceled" or (ii) if the Borrower is unable to do so in
whole or in part, either (x) provide a "back-to-back" letter of credit to one or
more Fronting Banks in a form satisfactory to such Fronting Bank and the Agent
(in their sole discretion), issued by a bank satisfactory to such Fronting Bank
and the Agent (in their sole discretion), is in an amount equal to
21
105% of the then undrawn stated amount of all outstanding Letters of Credit
issued by such Fronting Banks and/or (y) deposit cash in the Letter of Credit
Account in an amount equal to 105% of the then undrawn stated amount of all
outstanding Letters of Credit as collateral security for the Borrower's
reimbursement obligations in connection therewith, such cash to be remitted to
the Borrower upon the expiration, cancellation or other termination or
satisfaction of such reimbursement obligations.
(3) The Borrower shall pay to each Fronting Bank, in addition to such
other fees and charges as are specifically provided for in Section 2.18 hereof,
such fees and charges in connection with the issuance and processing of the
Letters of Credit issued by such Fronting Bank as are customarily imposed by
such Fronting Bank from time to time in connection with letter of credit
transactions.
(4) Drafts drawn under each Letter of Credit shall be reimbursed by
the Borrower in Dollars not later than the first Business Day following the date
such draw is honored and shall bear interest from the date such draw is honored
until the first Business Day following the date such draw is honored at a rate
per annum equal to the Alternate Base Rate plus 3% and thereafter until
----
reimbursed in full at a rate per annum equal to the Alternate Base Rate plus 5%
----
(computed on the basis of the actual number of days elapsed over a year of 360
days). The Borrower shall effect such reimbursement (x) if such draw occurs
prior to the Termination Date (or the earlier date of termination of the Total
Commitment), in cash or through a Borrowing initiated by the Agent without the
satisfaction of the conditions precedent set forth in Section 4.02 or (y) if
such draw occurs on or after the Termination Date (or the earlier date of
termination of the Total Commitment), in cash. Each Bank agrees to make the
Loans described in clause (x) of the preceding sentence notwithstanding a
failure to satisfy the applicable lending conditions thereto or the provisions
of Sections 2.02 or 2.25. If such draw occurs on or after the Termination Date,
the Borrower shall reimburse the Fronting Bank first from any cash deposit or
cash proceeds of a back-to-back letter of credit in accordance with Section
2.03(b), and then from the Borrower's other assets.
(5) Immediately upon the issuance of any Letter of Credit by any
Fronting Bank, such Fronting Bank shall be deemed to have sold to each Bank
other than such Fronting Bank and each such other Bank shall be deemed
unconditionally and irrevocably to have purchased from such Fronting Bank,
without recourse or warranty, an undivided interest and participation, to the
extent of such Bank's Commitment Percentage, in such Letter of Credit, each
drawing thereunder and the obligations of the Borrower and the Guarantors under
this Agreement with respect thereto. Upon any change in the Commitments
pursuant to Section 10.03, it is hereby agreed that with respect to all Letter
of Credit Outstandings, there shall be an automatic adjustment to the
participations hereby created to reflect the new Commitment Percentages of the
assigning and assignee Banks. Any action taken or omitted by a Fronting Bank
under or in connection with a Letter of Credit, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for such
Fronting Bank any resulting liability to any other Bank.
(6) In the event that a Fronting Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Fronting Bank pursuant to this Section, the Fronting Bank shall promptly
notify the Agent, which shall promptly
22
notify each Bank of such failure, and each Bank shall promptly and
unconditionally pay to the Agent for the account of the Fronting Bank the amount
of such Bank's Commitment Percentage of such unreimbursed payment in Dollars and
in same day funds. If the Fronting Bank so notifies the Agent, and the Agent so
notifies the Banks prior to 11:00 a.m. (New York City time) on any Business Day,
such Banks shall make available to the Fronting Bank such Bank's Commitment
Percentage of the amount of such payment on such Business Day in same day funds.
If and to the extent such Bank shall not have so made its Commitment Percentage
of the amount of such payment available to the Fronting Bank, such Bank agrees
to pay to such Fronting Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Agent for the account of such Fronting Bank at the Federal Funds
Effective Rate. The failure of any Bank to make available to the Fronting Bank
its Commitment Percentage of any payment under any Letter of Credit shall not
relieve any other Bank of its obligation hereunder to make available to the
Fronting Bank its Commitment Percentage of any payment under any Letter of
Credit on the date required, as specified above, but no Bank shall be
responsible for the failure of any other Bank to make available to such Fronting
Bank such other Bank's Commitment Percentage of any such payment. Whenever a
Fronting Bank receives a payment of a reimbursement obligation as to which it
has received any payments from the Banks pursuant to this paragraph, such
Fronting Bank shall pay to each Bank which has paid its Commitment Percentage
thereof, in Dollars and in same day funds, an amount equal to such Bank's
Commitment Percentage thereof.
SECTION 3.4 Issuance. Whenever the Borrower desires a Fronting Bank to
--------
issue a Letter of Credit, it shall give to such Fronting Bank and the Agent at
least two Business Days' prior written (including telegraphic, telex, facsimile
or cable communication) notice (or such shorter period as may be agreed upon by
the Agent, the Borrower and the Fronting Bank) specifying the date on which the
proposed Letter of Credit is to be issued (which shall be a Business Day), the
stated amount of the Letter of Credit so requested, the expiration date of such
Letter of Credit and the name and address of the beneficiary thereof.
SECTION 3.5 Nature of Letter of Credit Obligations Absolute. The
-----------------------------------------------
obligations of the Borrower to reimburse the Banks for drawings made under any
Letter of Credit shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation (it being understood that any such payment by the
Borrower shall be without prejudice to, and shall not constitute a waiver of,
any rights the Borrower might have or might acquire as a result of the payment
by the Fronting Bank of any draft or the reimbursement by the Borrower thereof):
(i) any lack of validity or enforceability of any Letter of Credit; (ii) the
existence of any claim, setoff, defense or other right which the Borrower or any
Guarantor may have at any time against a beneficiary of any Letter of Credit or
against any of the Banks, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction; (iii) 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; (iv) payment by a
Fronting Bank of 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; (v) any other circumstance or happening
23
whatsoever, which is similar to any of the foregoing; or (vi) the fact that any
Event of Default shall have occurred and be continuing.
SECTION 3.6 Making of Loans.
----------------
(1) Each Bank may fulfill its Commitment with respect to any Loan by
causing any lending office of such Bank to make such Loan; provided that any
--------
such use of a lending office shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement. Each Bank
shall, subject to its overall policy considerations, use reasonable efforts (but
shall not be obligated) to select a lending office which will not result in the
payment of increased costs by the Borrower pursuant to Section 2.13.
(2) The Borrower shall give the Agent prior notice of each Borrowing
hereunder of at least one Business Day (except as provided in the last sentence
of this Section 2.06(b)), such notice shall be irrevocable and shall specify the
amount of the proposed Borrowing (which shall not be less than $1,000,000) and
the date thereof (which shall be a Business Day) and shall contain disbursement
instructions. Such notice, to be effective, must be received by the Agent not
later than 1:00 p.m., New York City time, on the first Business Day preceding
the date on which such Borrowing is to be made except as provided in the last
sentence of this Section 2.06(b). The Agent shall promptly notify each Bank of
its proportionate share of such Borrowing and the date of such Borrowing. On
the borrowing date specified in such notice, each Bank shall make its share of
the Borrowing available at the office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, no later than 12:00 noon, New York City time, in immediately
available funds. Upon receipt of the funds made available by the Banks to fund
any Borrowing hereunder, the Agent shall disburse such funds in the manner
specified in the notice of borrowing delivered by the Borrower and shall use
reasonable efforts to make the funds so received from the Banks available to the
Borrower no later than 2:00 p.m. New York City time (other than as provided in
the following sentence). With respect to Loans of $5,000,000 or less, the Banks
shall make such Borrowings available to the Borrower by 4:00 p.m., New York City
time, on the same Business Day that the Borrower gives notice to the Agent of
such Borrowing by 12:00 noon, New York City time, provided that the Agent has
--------
notified the Banks thereof by 2:00 p.m., New York City time, on such day.
SECTION 3.7 Repayment of Loans; Evidence of Debt.
------------------------------------
(1) The Borrower hereby unconditionally promises to pay to the Agent
for the account of each Bank the then unpaid principal amount of each Loan on
the Termination Date.
(2) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan made by such Bank, including the amounts of principal
and interest payable and paid to such Bank from time to time hereunder.
(3) The Agent shall maintain accounts in which it shall record (i)
the amount of each Loan made hereunder, (ii) the amount of any principal or
interest due and payable or to become
24
due and payable from the Borrower to each Bank hereunder and (iii) the amount of
any sum received by the Agent hereunder for the account of the Banks and each
Bank's share thereof.
(4) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Bank or the Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.
(5) Any Bank may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall execute and deliver to such
Bank a promissory note payable to the order of such Bank (or, if requested by
such Bank, to such Bank and its registered assigns) in a form furnished by the
Agent and reasonably acceptable to the Borrower. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 10.03) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
SECTION 3.8 Interest on Loans.
-----------------
(1) Subject to the provisions of Section 2.09, each Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal to the Alternate Base Rate plus 3%.
----
(2) Accrued interest on all Loans shall be payable in arrears on the
last calendar day of each month, at maturity (whether by acceleration or
otherwise), after such maturity on demand and upon any repayment or prepayment
thereof (on the amount prepaid).
SECTION 3.9 Default Interest. If the Borrower or any Guarantor, as the
----------------
case may be, shall default in the payment of the principal of or interest on any
Loan or in the payment of any other amount becoming due hereunder (including,
without limitation, the reimbursement pursuant to Section 2.03(d) of any draft
drawn under a Letter of Credit), whether at stated maturity, by acceleration or
otherwise, the Borrower or such Guarantor, as the case may be, shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the Alternate
Base Rate plus 5%.
----
SECTION 3.10 Optional Termination or Reduction of Commitment. Upon at
-----------------------------------------------
least two Business Days' prior written notice to the Agent, the Borrower may at
any time in whole permanently terminate, or from time to time in part
permanently reduce, the Unused Total Commitment. Each such reduction of the
Unused Total Commitment shall be in the principal amount of $5,000,000 or any
integral multiple thereof. Simultaneously with each reduction or termination of
the Total Commitment, the Borrower shall pay to the Agent for the account of
each Bank the Commitment Fee accrued on the amount of the Commitment of such
Bank so terminated
25
or reduced through the date thereof. Any reduction of the Total Commitment
pursuant to this Section shall be applied pro rata to reduce the Commitment of
--- ----
each Bank.
SECTION 3.11 Mandatory Prepayment; Commitment Termination; Cash
--------------------------------------------------
Collateral.
----------
(1) If at any time the aggregate principal amount of the outstanding
Loans plus the aggregate Letter of Credit Outstandings exceeds the lesser of (x)
the Total Commitment and (y) the Borrowing Base, the Borrower will within three
Business Days (i) prepay the Loans in an amount necessary to cause the aggregate
principal amount of the outstanding Loans plus the aggregate Letter of Credit
----
Outstandings to be equal to or less than the Total Commitment and/or the
Borrowing Base, as the case may be, and (ii) if, after giving effect to the
prepayment in full of the Loans, the aggregate Letter of Credit Outstandings in
excess of the amount of cash held in the Letter of Credit Account exceeds the
Total Commitment and/or the Borrowing Base, as the case may be, deposit into the
Letter of Credit Account an amount equal to 105% of the amount by which the
aggregate Letter of Credit Outstandings in excess of the amount of cash held in
the Letter of Credit Account so exceeds the Total Commitment or Borrowing Base,
as the case may be.
(2) Upon the sale or other disposition of any of the properties the
completion of which was financed with the proceeds of Loans as permitted by
Section 3.10, the Borrower shall first apply that portion of the Net Proceeds
thereof that is equal to the principal amount of Loans so utilized for such
completion to the prepayment of the Loans.
(3) Upon the Termination Date, the Total Commitment shall be
terminated in full and the Borrower shall pay the Loans in full and, except as
the Agent may otherwise agree in writing, if any Letter of Credit remains
outstanding, deposit into the Letter of Credit Account an amount equal to 105%
of the amount by which the sum of the aggregate Letter of Credit Outstandings
exceeds the amount of cash held in the Letter of Credit Account, such cash to be
remitted to the Borrower upon the expiration, cancellation, satisfaction or
other termination of such reimbursement obligations, or otherwise comply with
Section 2.03(b).
SECTION 3.12 Optional Prepayment of Loans. The Borrower shall have the
----------------------------
right at any time and from time to time to prepay any Loans, in whole or in
part, on the same Business Day if written, telex or facsimile notice is received
by the Agent prior to 1:00 p.m., New York City time, and thereafter upon at
least one Business Day's prior written, telex or facsimile notice to the Agent;
provided, however, that each such partial prepayment shall be in multiples of
-------- -------
$1,000,000. Each notice of prepayment shall specify the prepayment date and the
principal amount of the Loans to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Loan in the amount and on the date stated
therein. The Agent shall, promptly after receiving notice from the Borrower
hereunder, notify each Bank of the principal amount of the Loans held by such
Bank which are to be prepaid, the prepayment date and the manner of application
of the prepayment.
SECTION 3.13 Reserve Requirements; Change in Circumstances.
---------------------------------------------
26
(1) If any Bank shall have determined that the adoption or
effectiveness after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any lending office of such
Bank) or any Bank's holding company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital or on the capital of such Bank's holding
company, if any, as a consequence of this Agreement, the Loans made by such Bank
pursuant hereto, such Bank's Commitment hereunder or the issuance of, or
participation in, any Letter of Credit by such Bank to a level below that which
such Bank or such Bank's holding company could have achieved but for such
adoption, change or compliance (taking into account Bank's policies and the
policies of such Bank's holding company with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank or such Bank's holding company for any such reduction suffered.
(2) A certificate of each Bank setting forth such amount or amounts
as shall be necessary to compensate such Bank or its holding company as
specified in paragraph (a) above, shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall pay each Bank the amount
shown as due on any such certificate delivered to it within 10 days after its
receipt of the same. Any Bank receiving any such payment shall promptly make a
refund thereof to the Borrower if the law, regulation, guideline or change in
circumstances giving rise to such payment is subsequently deemed or held to be
invalid or inapplicable.
(3) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to such period or any
other period. The protection of this Section shall be available to each Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
SECTION 3.14 Pro Rata Treatment, etc. All payments and repayments of
-----------------------
principal and interest in respect of the Loans (except as provided in Sections
2.13) shall be made pro rata among the Banks in accordance with the then
outstanding principal amount of the Loans and/or participations in Letter of
Credit Outstandings and all outstanding undrawn Letters of Credit (and the
unreimbursed amount of drawn Letters of Credit) hereunder and all payments of
Commitment Fees and Letter of Credit Fees (other than those payable to a
Fronting Bank) shall be made pro rata among the Banks in accordance with their
Commitments. All payments by the Borrower hereunder shall be (i) net of any tax
applicable to the Borrower or Guarantor and (ii) made in Dollars in immediately
available funds at the office of the Agent by 12:00 noon, New York City time, on
the date on which such payment shall be due. Interest in respect of any Loan
hereunder shall accrue from and including the date of such Loan to but excluding
the date on which such Loan is paid in full.
27
SECTION 3.15 Taxes.
-----
(1) Any and all payments by the Borrower or any Guarantor hereunder
shall be made free and clear of and without deduction for any and all current or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) taxes imposed on or measured by
---------
the net income or overall gross receipts of the Agent or any Bank (or any
transferee or assignee thereof, including a participation holder (any such
entity being called a "Transferee")) and franchise taxes imposed on the Agent or
----------
any Bank (or Transferee) by the United States or any jurisdiction under the laws
of which the Agent or any such Bank (or Transferee) is organized or in which the
applicable lending office of any such Bank (or Transferee) is located or any
political subdivision thereof or by any other jurisdiction or by any political
subdivision or taxing authority therein other than a jurisdiction in which the
Agent or such Bank (or Transferee) would not be subject to tax but for the
execution and performance of this Agreement and (ii) taxes, levies, imposts,
deductions, charges or withholdings ("Amounts") with respect to payments
-------
hereunder to a Bank (or Transferee) in accordance with laws in effect on the
later of the date of this Agreement and the date such Bank (or Transferee)
becomes a Bank (or Transferee, as the case may be), but not excluding, with
respect to such Bank (or Transferee), any increase in such Amounts solely as a
result of any change in such laws occurring after such later date or any Amounts
that would not have been imposed but for actions (other than actions
contemplated by this Agreement) taken by the Borrower after such later date (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower or any
-----
Guarantor shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Banks (or any Transferee) or the Agent, (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) such Bank (or Transferee) or the Agent (as the case may be)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxing authority or
other Governmental Authority in accordance with applicable law.
(2) In addition, the Borrower agrees to pay any current or future
stamp or documentary taxes or any other excise or property taxes, charges,
assessments or similar levies that arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
-----------
(3) The Borrower will indemnify each Bank (or Transferee) and the
Agent for the full amount of Taxes and Other Taxes paid by such Bank (or
Transferee) or the Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Bank (or
Transferee) or the Agent, as the case may be, makes written demand therefor. If
a Bank (or Transferee) or the Agent shall become aware that it is entitled to
receive a refund in respect of Taxes or Other Taxes as to which it has been
indemnified by the Borrower pursuant to this Section, it shall promptly notify
the Borrower of the availability of such
28
refund and shall, within 30 days after receipt of a request by the Borrower,
apply for such refund at the Borrower's expense. If any Bank (or Transferee) or
the Agent receives a refund in respect of any Taxes or Other Taxes as to which
it has been indemnified by the Borrower pursuant to this Section, it shall
promptly notify the Borrower of such refund and shall, within 30 days after
receipt of a request by the Borrower (or promptly upon receipt, if the Borrower
has requested application for such refund pursuant hereto), repay such refund to
the Borrower (to the extent of amounts that have been paid by the Borrower under
this Section with respect to such refund plus interest that is received by the
Bank (or Transferee) or the Agent as part of the refund), net of all out-of-
pocket expenses of such Bank (or Transferee) or the Agent and without additional
interest thereon; provided that the Borrower, upon the request of such Bank (or
--------
Transferee) or the Agent, agrees to return such refund (plus penalties, interest
or other charges) to such Bank (or Transferee) or the Agent in the event such
Bank (or Transferee) or the Agent is required to repay such refund. Nothing
contained in this subsection (c) shall require any Bank (or Transferee) or the
Agent to make available any of its tax returns (or any other information
relating to its taxes that it deems to be confidential).
(4) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Bank (or
Transferee) or the Agent, the Borrower will furnish to the Agent, at its address
referred to on the signature pages hereof, the original or a certified copy of a
receipt evidencing payment thereof.
(5) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(6) Each Bank (or Transferee) that is organized under the laws of a
jurisdiction outside the United States shall, if legally able to do so, prior to
the immediately following due date of any payment by the Borrower hereunder,
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
(A) Internal Revenue Service Form W-8 or W-9 and (B) Internal Revenue Service
Form 1001 or Form 4224 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any
subsequent version thereof or successors thereto, properly completed and duly
executed by such Bank (or Transferee) establishing that such payment is (i) not
subject to United States federal withholding tax under the Code because such
payment is effectively connected with the conduct by such Bank (or Transferee)
of a trade or business in the United States or (ii) totally exempt from United
States federal withholding tax or subject to a reduced rate of such tax under a
provision of an applicable tax treaty. Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating that such
payments hereunder or are not subject to United States federal withholding tax
or are subject to such tax at a rate reduced by an applicable tax treaty, the
Borrower or the Agent shall withhold taxes from such payments at the applicable
statutory rate.
(7) The Borrower shall not be required to pay any additional amounts
to any Bank (or Transferee) in respect of United States federal withholding tax
pursuant to subsection (a)
29
above if the obligation to pay such additional amounts would not have arisen but
for a failure by such Bank (or Transferee) to comply with the provisions of
subsection (f) above.
(8) Any Bank (or Transferee) claiming any additional amounts payable
pursuant to this Section 2.15 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and would not,
in the sole reasonable determination of such Bank (or Transferee), be otherwise
materially disadvantageous to such Bank (or Transferee).
SECTION 3.16 Certain Fees. The Borrower shall pay to the Agent, for the
------------
respective accounts of the Agent and the Banks, the fees set forth in that
certain letter dated December 22, 1999 among the Agent, Chase Securities Inc.
and the Borrower at the times set forth therein.
SECTION 3.17 Commitment Fee. The Borrower shall pay to the Banks a
--------------
commitment fee (the "Commitment Fee") for the period commencing on the date the
--------------
Commitment Letter is executed to the Termination Date or the earlier date of
termination of the Commitment, computed (on the basis of the actual number of
days elapsed over a year of 360 days) at the rate of one percent (1%) per annum
on the average daily Unused Total Commitment. Such Commitment Fee, to the extent
then accrued, shall be payable (x) monthly, in arrears, on the last calendar day
of each month, (y) on the Termination Date and (z) as provided in Section 2.10
hereof, upon any reduction or termination in whole or in part of the Total
Commitment.
SECTION 3.18 Letter of Credit Fees. The Borrower shall pay with respect to
---------------------
each Letter of Credit (i) to the Agent on behalf of the Banks a fee calculated
(on the basis of the actual number of days elapsed over a year of 360 days) at
the rate of three percent (3%) per annum on the daily average Letter of Credit
Outstandings and (ii) to the Fronting Bank such Fronting Bank's customary fees
for issuance, amendments and processing referred to in Section 2.03. In
addition, the Borrower agrees to pay each Fronting Bank for its account a
fronting fee in respect of each Letter of Credit issued by such Fronting Bank,
for the period from and including the date of issuance of such Letter of Credit
to and including the date of expiry or draw of such Letter of Credit, computed
at a rate, and payable at times, to be determined by such Fronting Bank, the
Borrower and the Agent. Accrued fees described in clause (i) of the first
sentence of this paragraph in respect of each Letter of Credit shall be due and
payable monthly in arrears on the last calendar day of each month and on the
Termination Date, or such earlier date as the Total Commitment is terminated.
Accrued fees described in clause (ii) of the first sentence of this paragraph in
respect of each Letter of Credit shall be payable at times to be determined by
the Fronting Bank, the Borrower and the Agent.
SECTION 3.19 Nature of Fees. All Fees shall be paid on the dates due, in
--------------
immediately available funds, to the Agent for the respective accounts of the
Agent and the Banks, as provided herein and in the letter described in Section
2.16. Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 3.20 Priority and Liens.
------------------
30
(1) The Borrower and each of the Guarantors hereby covenants,
represents and warrants that, upon entry of the First Day Order, the
Obligations of the Borrower and the Guarantors hereunder and under the Loan
Documents and in respect of Indebtedness permitted by Section 6.03 (vi): (i)
pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times
constitute allowed administrative expense claims in the Cases having priority
over all administrative expenses of the kind specified in Sections 503(b) or
507(b) of the Bankruptcy Code; (ii) pursuant to Section 364(c)(2) of the
Bankruptcy Code, shall at all times be secured by perfected first priority Liens
on all unencumbered pre-petition and post-petition property of the Borrower and
the Guarantors (including, without limitation, all Accounts arising after the
Filing Date, except as otherwise provided in subparagraph (iii) below or in the
Orders, with any such Account on which the Agent and the Banks do not have a
first priority perfected Lien being excluded from the Borrowing Base, but
excluding bankruptcy causes of action, it being understood that, notwithstanding
such exclusion, the proceeds of such causes of action shall be available for the
repayment of the Obligations) and on all cash maintained in the Letter of Credit
Account and any direct investments of the funds contained therein; (iii)
pursuant to Section 364(c)(3) of the Bankruptcy Code, shall be secured by
perfected Liens upon all pre-petition and post-petition property of the Borrower
and the Guarantors (including, without limitation, Accounts in existence as of
the Filing Date that are subject to valid and perfected Liens in favor of the
Real Estate Financiers and the proceeds thereof, but not including property that
is subject to existing Liens that presently secure the obligations of the
Borrower and the Guarantors under the Existing Agreements as to which the Liens
in favor of the Agent and the Banks will be as described in clause (iv) of this
sentence) that is subject to valid and perfected Liens in existence on the
Filing Date or to Permitted Liens, junior to such valid and perfected Liens; and
(iv) pursuant to Section 364(d)(1) of the Bankruptcy Code, shall be secured by
perfected first priority, senior priming Liens on all pre-petition and post-
petition property of the Borrower and the Guarantors that is subject to (A) the
existing Liens that secure the obligations of the Borrower and the Guarantors
under and in connection with the Existing Agreements (subject to any Liens in
existence on the Filing Date to which the Liens being primed hereby are subject
or become subject) but excluding from such priming Liens (but not from the Liens
described in clause (iii) of this sentence) the Liens of the Synthetic Agent to
the extent of the Tranche B Loans and of FBTC Leasing Corp. to the extent of the
Lessor Contributions and related obligations (under and as each such term is
described in the Amended and Restated Credit Agreement that is referred to in
the definition of the term "Synthetic Guarantee" herein) and (B) any Liens
granted after the Filing Date to provide adequate protection in respect of the
Existing Agreements; subject only to (x) in the event of the occurrence and
during the continuance of an Event of Default or an event that would constitute
an Event of Default with the giving of notice or lapse of time or both, the
payment of (1) accrued and unpaid professional fees and disbursements
theretofore incurred or incurred after the cure or waiver of such Event of
Default or event, and (2) professional fees and disbursements incurred during
the time of such continuance in an aggregate amount not in excess of $2,500,000,
in each case by the Borrower, the Guarantors and any statutory committee
appointed in the Cases and allowed by an order of the Bankruptcy Court and (y)
the payment of unpaid fees pursuant to 28 U.S.C. (S) 1930 and to the Clerk of
the Bankruptcy Court (collectively, the "Carve-Out"), provided that following
--------- --------
the Termination Date amounts in the Letter of Credit Account shall not
be subject to the Carve-Out, and provided, further, that, except as otherwise
-------- -------
provided in the Orders, no portion of the Carve-Out shall be utilized for the
payment of professional fees and disbursements incurred in connection with
31
any challenge to the amount, extent, priority, validity, perfection or
enforcement of the indebtedness of the Borrower and the Guarantors owing to the
Existing Lenders or to the collateral securing such indebtedness. The Banks
agree that so long as no Event of Default or event which with the giving of
notice or lapse of time or both would constitute an Event of Default shall have
occurred, the Borrower and the Guarantors shall be permitted to pay compensation
and reimbursement of expenses allowed and payable under 11 U.S.C. (S) 330 and 11
U.S.C. (S) 331, as the same may be due and payable, and the same shall not
reduce the Carve-Out.
(2) Subject to the Carve-Out and Permitted Liens, as to all real
property the title to which is held by the Borrower or any of the Guarantors, or
the possession of which is held by the Borrower or any of the Guarantors
pursuant to a leasehold interest, the Borrower and each Guarantor hereby assigns
and conveys as security, grants a security interest in, and (as applicable under
relevant state law) conveys security title to, hypothecates, mortgages, pledges
and sets over unto the Agent on behalf of the Banks (with the priorities
described above) all of the right, title and interest of the Borrower and such
Guarantor in all of such owned real property and in all such leasehold
interests, together in each case with all of the right, title and interest of
the Borrower and such Guarantor in and to all buildings, improvements, and
fixtures related thereto, any lease or sublease thereof, all general intangibles
relating thereto and all proceeds thereof. The Borrower and each Guarantor
acknowledges that, pursuant to the Orders, the Liens in favor of the Agent on
behalf of the Banks in all of such real property and leasehold instruments shall
be perfected without the recordation of any mortgages, deeds of trust, deeds to
secure debt or assignments. The Borrower and each Guarantor further agrees
that, upon the request of the Agent, the Borrower and such Guarantor shall enter
into separate fee and leasehold mortgages, deeds of trust, deeds to secure debt,
collateral assignments or similar instruments in recordable form with respect to
such properties on terms reasonably satisfactory to the Agent.
SECTION 3.21 Right of Set-Off. Subject to the provisions of Section 7.01,
----------------
upon the occurrence and during the continuance of any Event of Default and the
Carve-Out the Agent and each Bank is hereby authorized at any time and from time
to time, to the fullest extent permitted by law and without further order of or
application to the Bankruptcy Court, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Agent and each such Bank to or for
the credit or the account of the Borrower or any Guarantor against any and all
of the obligations of such Borrower or Guarantor now or hereafter existing under
the Loan Documents, irrespective of whether or not such Bank shall have made any
demand under any Loan Document and although such obligations may not have been
accelerated. Each Bank and the Agent agrees promptly to notify the Borrower and
Guarantors after any such set-off and application made by such Bank or by the
Agent, as the case may be, provided that the failure to give such notice shall
--------
not affect the validity of such set-off and application. The rights of each
Bank and the Agent under this Section are in addition to other rights and
remedies which such Bank and the Agent may have upon the occurrence and during
the continuance of any Event of Default.
SECTION 3.22 Security Interest in Letter of Credit Account. Pursuant to
---------------------------------------------
Section 364(c)(2) of the Bankruptcy Code, the Borrower and the Guarantors hereby
assign and pledge to the
32
Agent, for its benefit and for the ratable benefit of the Banks, and hereby
grant to the Agent, for its benefit and for the ratable benefit of the Banks, a
first priority security interest, senior to all other Liens, if any, in all of
the Borrower's and the Guarantors' right, title and interest in and to the
Letter of Credit Account and any direct investment of the funds contained
therein. Cash held in the Letter of Credit Account shall not be available for
use by the Borrower, whether pursuant to Section 363 of the Bankruptcy Code or
otherwise.
SECTION 3.23 Payment of Obligations. Subject to the provisions of Section
----------------------
7.01, upon the maturity (whether by acceleration or otherwise) of any of the
Obligations under this Agreement or any of the other Loan Documents of the
Borrower and the Guarantors, the Banks shall be entitled to immediate payment of
such Obligations without further application to or order of the Bankruptcy
Court.
SECTION 3.24 No Discharge; Survival of Claims. Each of the Borrower and
--------------------------------
the Guarantors agrees that (i) its Obligations hereunder shall not be discharged
by the entry of an order confirming a Plan of Reorganization (and each of the
Borrower and the Guarantors, pursuant to Section 1141(d)(4) of the Bankruptcy
Code, hereby waives any such discharge) and (ii) the Superpriority Claim granted
to the Agent and the Banks pursuant to the Orders and described in Section 2.20
and the Liens granted to the Agent pursuant to the Orders and described in
Sections 2.20 and 2.22 shall not be affected in any manner by the entry of an
order confirming a Plan of Reorganization.
SECTION 3.25 Use of Cash Collateral. Notwithstanding anything to the
----------------------
contrary contained herein, the Borrower shall not be permitted (i) to request a
Borrowing under Section 2.06 or request the issuance of a Letter of Credit under
Section 2.04 unless the Bankruptcy Court shall have entered the First Day Order
or (ii) to request a Borrowing under Section 2.06 unless the Borrower and the
Guarantors shall at that time have the use of all cash collateral subject to the
Orders for the purposes described in Section 3.10.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans and issue and/or
participate in Letters of Credit hereunder, the Borrower and each of the
Guarantors jointly and severally represent and warrant as follows:
SECTION 4.1 Organization and Authority. Each of the Borrower and the
--------------------------
Guarantors (i) is a corporation duly organized and validly existing under the
laws of the State of its incorporation and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which the failure to
so qualify would have a Material Adverse Effect; (ii) subject to the entry by
the Bankruptcy Court of the First Day Order (or the Interim Order or the Final
Order, when applicable) has the requisite corporate power and authority to
effect the transactions contemplated hereby, and by the other Loan Documents to
which it is a party, and (iii) subject to the entry by the Bankruptcy Court of
the First Day Order (or the Interim Order or the Final Order, when applicable)
has all requisite corporate power and authority and the legal right to own,
pledge, mortgage and operate its properties, and to conduct its business as now
or currently proposed to be conducted.
33
SECTION 4.2 Due Execution. Upon the entry by the Bankruptcy Court of the
-------------
First Day Order (or the Interim Order or the Final Order, when applicable), the
execution, delivery and performance by each of the Borrower and the Guarantors
of each of the Loan Documents to which it is a party (i) are within the
respective corporate powers of each of the Borrower and the Guarantors, have
been duly authorized by all necessary corporate action including the consent of
shareholders where required, and do not (A) contravene the charter or by-laws of
any of the Borrower or the Guarantors, (B) violate any law (including, without
limitation, the Securities Exchange Act of 1934) or regulation (including,
without limitation, Regulations T, U or X of the Board of Governors of the
Federal Reserve System), or any order or decree of any court or governmental
instrumentality, the violation of which could reasonably be expected to have a
Material Adverse Effect, (C) conflict with or result in a breach of, or
constitute a default under, any indenture, mortgage or deed of trust entered
into after the Filing Date or any lease, agreement or other instrument entered
into after the Filing Date binding on the Borrower or the Guarantors or any of
their properties, in each case which conflict, breach or default could
reasonably be expected to have a Material Adverse Effect, or (D) result in or
require the creation or imposition of any Lien upon any of the property of any
of the Borrower or the Guarantors other than the Liens granted pursuant to this
Agreement, the other Loan Documents or the Orders; and do not require the
consent, authorization by or approval of or notice to or filing or registration
with any Governmental Authority other than the entry of the Orders. Upon the
entry by the Bankruptcy Court of the First Day Order (or the Interim Order or
the Final Order, when applicable), this Agreement has been duly executed and
delivered by each of the Borrower and the Guarantors. This Agreement is, and
each of the other Loan Documents to which the Borrower and each of the
Guarantors is or will be a party, when delivered hereunder or thereunder, will
be, a legal, valid and binding obligation of the Borrower and each Guarantor, as
the case may be, enforceable against the Borrower and the Guarantors, as the
case may be, in accordance with its terms and the Orders.
SECTION 4.3 Statements Made. The information that has been delivered in
---------------
writing by the Borrower or any of the Guarantors to the Agent or to the
Bankruptcy Court in connection with any Loan Document, and any financial
statement delivered pursuant hereto or thereto (other than to the extent that
any such statements constitute projections), taken as a whole and in light of
the circumstances in which made, as of the date so delivered, contained no
untrue statement of a material fact and did not omit to state a material fact
necessary to make such statements not misleading; and, to the extent that any
such information constitutes projections, such projections were prepared in good
faith on the basis of assumptions, methods, data, tests and information believed
by the Borrower or such Guarantor to be reasonable at the time such projections
were furnished.
SECTION 4.4 Financial Statements. The Borrower has furnished the Banks
--------------------
with copies of (i) the audited consolidated financial statement and schedules of
the Borrower for the fiscal year ended September 30, 1998 and (ii) the unaudited
consolidated financial statement and schedules of the Borrower for the fiscal
quarter ended June 30, 1999. Such financial statements present fairly the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis as of such dates and for such
periods; such balance sheets and the notes thereto disclose all liabilities,
direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the dates thereof required to be disclosed by GAAP and such financial statements
were prepared in
34
a manner consistent with GAAP, subject (in the case of such fiscal quarter
statement) to normal year end adjustments. No material adverse change in the
operations, business, properties, assets, prospects or condition (financial or
otherwise) of the Borrower and its consolidated Subsidiaries, taken as a whole,
has occurred from that set forth in the Borrower's consolidated financial
statements for the fiscal year ended September 30, 1998 or the fiscal quarter
ended June 30, 1999 other than those which have been disclosed to the Banks in
writing and those which customarily occur as a result of events leading up to
and following the commencement of a proceeding under Chapter 11 of the
Bankruptcy Code and the commencement of the Cases (including, without
limitation, those reflected in the financial projections heretofore made
available to the Agent).
SECTION 4.5 Ownership. Except as set forth on Schedule 3.05, (a) each of
---------
the Persons listed on Schedule 3.05 is a wholly-owned, direct or indirect
Subsidiary of the Borrower and (b) the Borrower owns no other Subsidiaries,
whether directly or indirectly, other than MHG and the direct and indirect
subsidiaries of MHG.
SECTION 4.6 Liens. Except for Liens existing on the Filing Date as
-----
reflected on Schedule 3.06 (which Schedules shall be deemed to include any Liens
disclosed by the Lien search reports delivered to the Agent pursuant to Section
4.02(h) hereof, which reports are required to be satisfactory to the Agent and
the Original Required Banks), there are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than Liens permitted
pursuant to Section 6.01. Neither the Borrower nor the Guarantors are parties to
any contract, agreement, lease or instrument the performance of which, either
unconditionally or upon the happening of an event, will result in or require the
creation of a Lien on any assets of the Borrower or any Guarantor or otherwise
result in a violation of this Agreement other than the Liens granted to the
Agent and the Banks as provided for in this Agreement and Permitted Adequate
Protection Liens.
SECTION 4.7 Compliance with Law. Except as set forth in a letter dated
-------------------
the Closing Date heretofore delivered to the Agent and the Banks (which letter
need not duplicate disclosures referred to in Section 3.13) and except for
matters which, singly or in the aggregate could not reasonably expected to have
a Material Adverse Effect:
(1) (i) To the knowledge of the Borrower or the Guarantors, the
operations of the Borrower and the Guarantors comply in all material respects
with all applicable environmental, health and safety statutes and regulations,
including, without limitation, regulations promulgated under the Resource
Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et seq.); (ii) to the
-- ---
Borrower's and each of the Guarantor's knowledge, none of the operations of the
Borrower or the Guarantors is the subject of any federal or state investigation
evaluating whether any remedial action involving a material expenditure by the
Borrower or any Guarantor is needed to respond to a release of any Hazardous
Waste or Hazardous Substance (as such terms are defined in any applicable state
or federal environmental law or regulations) into the environment; and (iii) to
the Borrower's and each of the Guarantor's knowledge, the Borrower and the
Guarantors do not have any material contingent liability in connection with any
release of any Hazardous Waste or Hazardous Substance into the environment.
35
(2) Neither the Borrower nor any Guarantor is, to the best of its
knowledge, in violation of any law, rule or regulation, or in default with
respect to any judgment, writ, injunction or decree of any Governmental
Authority.
SECTION 4.8 Insurance. All policies of insurance of any kind or nature
---------
owned by or issued to the Borrower and the Guarantors, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
employee health and welfare, title, property and liability insurance, are in
full force and effect and are of a nature and provide such coverage (including
self insurance) as is customarily carried by companies of the size and character
of the Borrower and the Guarantors.
SECTION 4.9 The Orders. On the date of the making of the initial Loans or
----------
the issuance of the initial Letters of Credit hereunder, whichever first occurs,
the First Day Order will have been entered and will not have been stayed,
amended, vacated, reversed or rescinded (without the prior written consent of
the Agent). On the date of the making of any Loan or the issuance of any Letter
of Credit, the First Day Order, the Interim Order or the Final Order, as the
case may be, shall have been entered and shall not have been amended, stayed,
vacated or rescinded (without the prior written consent of the Agent). Upon the
maturity (whether by the acceleration or otherwise) of any of the Obligations of
the Borrower and the Guarantors hereunder and under the other Loan Documents,
the Banks shall, subject to the provisions of Section 7.01 and the Carve-Out, be
entitled to immediate payment of such Obligations, and to enforce the remedies
provided for hereunder, without further application to or order by the
Bankruptcy Court.
SECTION 4.10 Use of Proceeds. The proceeds of the Loans shall be used for
---------------
working capital and other general corporate purposes of the Borrower and the
Guarantors consistent with the Budget (including periodic updates thereof),
which shall include the completion, for not more than $8,800,000, of certain
properties that, on the Filing Date, shall have been partially constructed with
the proceeds of certain of the loans involving, among others, FBTC Leasing Corp.
relating to the Synthetic Guarantee.
SECTION 4.11 Litigation. Other than as set forth in a letter dated the
----------
Closing Date heretofore delivered to the Agent and the Banks or as disclosed
pursuant to Section 5.05(b), there are no unstayed actions, suits or proceedings
pending or, to the knowledge of the Borrower or the Guarantors, threatened
against or affecting the Borrower or the Guarantors or any of their respective
properties, before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which if determined
adversely to the Borrower or the Guarantors would have a Material Adverse
Effect.
SECTION 4.12 Year 2000 Matters. Any reprogramming required to permit the
-----------------
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Borrower
36
or any of its Subsidiaries interface), and the testing of all such systems and
other equipment as so reprogrammed, has been completed in all material respects.
The costs to the Borrower and its Subsidiaries that have not been incurred as of
the date hereof for such reprogramming and testing for the other reasonably
foreseeable consequences to them of any improper functioning of other computer
systems and equipment containing embedded microchips due to the occurrence of
the year 2000 could not reasonably be expected to result in a Default or Event
of Default or to have a Material Adverse Effect. Except for any reprogramming
referred to above, the computer systems of the Borrower and its Subsidiaries are
and, with the ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient for the conduct of their business as
currently conducted.
SECTION 4.13 Health Care Permits. Other than as set forth in a letter
-------------------
dated the Closing Date heretofore delivered to the Agent of the Banks:
(1) Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (i) each of the Borrower and the Guarantors now
has, and has no reason to believe it will not be able to maintain in effect, all
Health Care Permits necessary for the lawful conduct of its business or
operations wherever now conducted and as planned to be conducted, without
limitation, the ownership and operation of its Health Care Facilities pursuant
to all Requirements of Law, (ii) all such Health Care Permits are in full force
and effect and have not been amended or otherwise modified, rescinded, revoked
or assigned, (iii) the Borrower and each of the Guarantors is substantially
complying with the requirements of each such Health Care Permit, and no event
has occurred, and no condition exists, which, with the giving of notice, the
passage of time, or both, would constitute a violation thereof, (iv) neither the
Borrower nor any of the Guarantors has received any written notice of any
violation of any Requirement of Law, (v) to the knowledge of the Borrower, no
condition exists or event has occurred which in itself or with the giving of
notice or the lapse of time, or both, would result in the suspension,
revocation, impairment, forfeiture or non-renewal of any such Health Care
Permit, (vi) there is no claim filed with any Governmental Authority of which
the Borrower or any of the Guarantors has been notified in writing challenging
the validity of any such Health Care Permit and (vii) the continuation, validity
and effectiveness of all such Health Care Permits will not be adversely affected
by the execution and performance of this Agreement or any of the other Loan
Documents.
(2) All Health Care Facilities owned, leased, managed or operated by
the Borrower or any of the Guarantors are entitled to participate in, and
receive payment under, the appropriate Medicare, Medicaid and related
reimbursement programs, and any similar state or local government-sponsored
program, to the extent that the Borrower or any of the Guarantors has decided to
participate in any such program, and to receive reimbursement from private and
commercial payers and health maintenance organizations to the extent applicable
thereto. There are no proceedings pending or, to the knowledge of the Borrower,
any proceedings threatened or investigations pending or threatened, by any
Governmental Authority with respect to the Borrower's or any of its
Subsidiaries' participation in the Medicare, Medicaid or related reimbursement
programs and which could reasonably be expected to have a Material Adverse
Effect.
37
SECTION 5. CONDITIONS OF LENDING
SECTION 5.1 Conditions Precedent to Initial Loans and Initial Letters of
------------------------------------------------------------
Credit. The obligation of the Banks to make the initial Loans or the Fronting
------
Bank to issue the initial Letter of Credit, whichever may occur first, is
subject to the following conditions precedent:
(1) Supporting Documents. The Agent shall have received for each of
--------------------
the Borrower and the Guarantors:
(1) a copy of such entity's certificate of incorporation, as
amended, certified as of a recent date by the Secretary of State of
the state of its incorporation;
(2) a certificate of such Secretary of State, dated as of a
recent date, as to the good standing of and payment of taxes by that
entity and as to the charter documents on file in the office of such
Secretary of State; and
(3) a certificate of the Secretary or an Assistant Secretary of
that entity dated the date of the initial Loans or the initial Letter
of Credit hereunder, whichever first occurs, and certifying (A) that
attached thereto is a true and complete copy of the by-laws of that
entity as in effect on the date of such certification, (B) that
attached thereto is a true and complete copy of resolutions adopted by
the Board of Directors of that entity authorizing the Borrowings and
Letter of Credit extensions hereunder, the execution, delivery and
performance in accordance with their respective terms of this
Agreement, the Loan Documents and any other documents required or
contemplated hereunder or thereunder and the granting of the security
interest in the Letter of Credit Account and other Liens contemplated
hereby, (C) that the certificate of incorporation of that entity has
not been amended since the date of the last amendment thereto
indicated on the certificate of the Secretary of State furnished
pursuant to clause (i) above and (D) as to the incumbency and specimen
signature of each officer of that entity executing this Agreement and
the Loan Documents or any other document delivered by it in connection
herewith or therewith (such certificate to contain a certification by
another officer of that entity as to the incumbency and signature of
the officer signing the certificate referred to in this clause (iii)).
(2) First Day Order.
---------------
(1) At the time of the making of the initial Loans or at the
time of the issuance of the initial Letters of Credit, whichever first
occurs, the Agent and the Banks shall have received a certified copy
of an order of the Bankruptcy Court in substantially the form of
Exhibit A-1 (the "First Day Order") approving the Loan Documents and
---------------
granting the Superpriority Claim status and senior priming and other
Liens described in Section 2.20 which First Day Order: (i) shall have
been entered, with the consent or non-objection of a preponderance, as
determined by the Agent in its sole judgment, of the Existing Lenders,
upon an application or motion of the Borrower reasonably satisfactory
in form and substance to the Agent, on such prior
38
notice to such parties (including the Existing Lenders) as may in each
case be reasonably satisfactory to the Agent; (ii) shall authorize
extensions of credit in an amount not in excess of $25,000,000; (iii)
shall approve the payment by the Borrower of all of the Fees set forth
in Section 2.16; (iv) shall be in full force and effect; and (v) shall
not have been stayed, reversed, modified or amended in any respect
without the prior written consent of the Agent (on behalf of the
Original Required Banks), and, if the First Day Order is the subject
of a pending appeal in any respect, neither the making of such Loans
nor the issuance of such Letter of Credit nor the performance by the
Borrower or any of the Guarantors of any of their respective
obligations hereunder or under the Loan Documents or under any other
instrument or agreement referred to herein shall be the subject of a
presently effective stay pending appeal.
(2) In addition, the First Day Order shall authorize the use by
the Borrower and the Guarantors of any cash collateral in which any
Existing Lender under the Existing Agreements may have an interest and
shall provide, as adequate protection for the use of such cash
collateral and the priming of the Liens granted pursuant to the
Existing Agreements contemplated hereby and subject to the Carve-Out,
for (A) a superpriority claim as contemplated by Section 507(b) of the
Bankruptcy Code immediately junior to the claims under Section
364(c)(1) of the Bankruptcy Code held by the Agent and the Banks, (B)
a replacement Lien on substantially all of the assets of the Borrower
and the Guarantors having a priority immediately junior to, and
subject to the same limitations as are applicable to, the priming and
other Liens granted in favor of the Agent and the Banks hereunder and
under the other Loan Documents (and, in the case of Accounts arising
on or after the Filing Date out of the use of the properties that are
subject as of the Filing Date to valid and perfected Liens in favor of
the Real Estate Financiers, also junior to adequate protection Liens
on such Accounts that may be granted in favor of the Real Estate
Financiers), (C) the payment on a current basis of the reasonable fees
and disbursements of respective professionals (including, but not
limited to, the reasonable fees and disbursements of counsel and
internal and third-party consultants, including financial consultants,
and auditors) for the Pre-Petition Agent (including the payment on the
Closing Date or as soon thereafter as is practicable of any unpaid
pre-petition fees and expenses), the payment of counsel fees and
disbursements of members of the Steering Committee acting under the
Existing Credit Agreement and the continuation of the payment to the
Pre-Petition Agent on a current basis of the administration fees that
are provided for under the Existing Credit Agreement and (D) the
payment to the Existing Lenders, so long as no Event of Default or
event, which upon notice or lapse of time or both, would constitute an
Event of Default shall have occurred and be continuing, of (x) any
cash proceeds received by the Borrower pursuant to any settlement of
the "prudent buyer" dispute with the Health Care Financing
Administration and (y) 75% of the Net Proceeds of asset sales or
dispositions permitted hereunder, the proceeds of which are not
required to be applied to the Loans pursuant to Section 2.11(b).
39
(3) Insofar as the Department of Health and Human Services
("HHS") and the Healthcare Finance Administration ("HCFA") are
--- ----
concerned, the condition in this Section shall be deemed to have been
satisfied if either (x) the First Day Order shall contain a paragraph
limiting the recoupment rights of HHS and HCFA as set forth in Exhibit
A-1 or (y) HHS and the Borrower shall have entered into a stipulation
with respect to Accounts that are included in the Borrowing Base on
terms substantially similar to the terms of the stipulation entered
into on November 4, 1999 between HHS and Sun Healthcare Group, Inc.,
et al., and otherwise satisfactory to the Agent and the Banks.
-----
(3) Security and Pledge Agreement. The Borrower and each of the
-----------------------------
Guarantors shall have duly executed and delivered to the Agent a Security and
Pledge Agreement in substantially the form of Exhibit B (the "Security and
------------
Pledge Agreement").
----------------
(4) First Day Orders. All of the "first day orders" entered by the
----------------
Bankruptcy Court at the time of the commencement of the Cases shall be
reasonably satisfactory in form and substance to the Agent and the Original
Required Banks.
(5) Opinion of Counsel. Unless the Agent shall have agreed that the
------------------
condition set forth in this Section may be satisfied at the time of the entry of
the Interim Order, the Agent and the Banks shall have received the favorable
written opinion of counsel to the Borrower and the Guarantors reasonably
acceptable to the Agent and the Original Required Banks, dated the date of the
initial Loans or the issuance of the initial Letter of Credit, whichever first
occurs, substantially in the form of Exhibit C.
(6) Payment of Fees. The Borrower shall have paid to the Agent the
---------------
then unpaid balance of all accrued and unpaid Fees then due and payable under
and pursuant to this Agreement and the letter referred to in Section 2.16.
(7) Corporate and Judicial Proceedings. All corporate and judicial
----------------------------------
proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Guarantors, the Agent and the Banks
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Agent and the Original Required Banks, and the Agent shall have
received all information and copies of all documents and papers, including
records of corporate and judicial proceedings, which the Agent may have
reasonably requested in connection therewith, such documents and papers where
appropriate to be certified by proper corporate, governmental or judicial
authorities.
(8) Information. The Agent shall have received such information
-----------
(financial or otherwise) as may be reasonably requested by the Agent and shall
have discussed the Borrower's business plan heretofore delivered to the Agent
with the Borrower's management and shall be reasonably satisfied with the nature
and substance of such discussions.
(9) Budget. The Agent shall have received from the Borrower a budget
------
detailing the Borrower's anticipated cash receipts and disbursements for the
period through the Maturity Date
40
and setting forth the anticipated uses of the Commitment that is reasonably
satisfactory in form and substance to the Agent and the Original Required Banks
(the "Budget").
------
(j) Compliance with Laws. The Borrower and the Guarantors shall have
--------------------
granted the Agent access to and the right to inspect all reports, audits and
other internal information of the Borrower and the Guarantors relating to
environmental matters, and any third party verification of certain matters
relating to compliance with environmental laws and regulations reasonably
requested by the Agent, and the Agent shall be reasonably satisfied that the
Borrower and the Guarantors are in compliance in all material respects with all
applicable environmental laws and regulations and be reasonably satisfied that
the costs of maintaining such compliance will not have a Material Adverse
Effect.
(k) Closing Documents. The Agent shall have received all documents
-----------------
required by this Agreement reasonably satisfactory in form and substance to the
Agent.
SECTION 5.2 Conditions Precedent to Each Loan and Each Letter of Credit.
-----------------------------------------------------------
The obligation of the Banks to make each Loan and of the Fronting Bank to issue
each Letter of Credit, including the initial Loan and the initial Letter of
Credit, is subject to the following conditions precedent:
(1) Notice. The Agent shall have received a notice with respect to
------
such borrowing or issuance, as the case may be, as required by Section 2.
(2) Representations and Warranties. All representations and
------------------------------
warranties contained in this Agreement and the other Loan Documents shall be
true and correct in all material respects on and as of the date of each
Borrowing or the issuance of each Letter of Credit hereunder with the same
effect as if made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date.
(3) No Default. On the date of each Borrowing hereunder or the
----------
issuance of each Letter of Credit, no Event of Default or event which upon
notice or lapse of time or both would constitute an Event of Default shall have
occurred and be continuing.
(4) Orders. The First Day Order shall be in full force and effect
------
and shall not have been stayed, reversed, modified or amended in any respect
without the prior written consent of the Agent (on behalf of the Original
Required Banks), provided, that (i) at the time of the making of any Loan or the
--------
issuance of any Letter of Credit the aggregate amount of either of which, when
added to the sum of the principal amount of all Loans then outstanding and the
Letter of Credit Outstandings, would exceed the amount authorized by the First
Day Order (collectively, the "Additional Interim Credit"), the Agent and each of
-------------------------
the Banks shall have received a certified copy of an order of the Bankruptcy
Court in substantially the form of Exhibit A-2 (the "Interim Order"), which, in
-------------
any event, shall have been entered by the Bankruptcy Court no later than 10 days
after the entry of the First Day Order and shall authorize extensions of credit
in an amount not in excess of $50,000,000, taken together with the extensions of
credit that were authorized by the First Day Order, and at the time of the
extension of any Additional Interim Credit the Interim Order shall be
41
in full force and effect, and shall not have been stayed, reversed, modified or
amended in any respect without the prior written consent of the Agent (on behalf
of the Original Required Banks); and if either the First Day Order or the
Interim Order is the subject of a pending appeal in any respect, neither the
making of the Loans nor the issuance of any Letter of Credit nor the performance
by the Borrower or any Guarantor of any of their respective obligations under
any of the Loan Documents shall be the subject of a presently effective stay
pending appeal and (ii) at the time of the making of any Loan or the issuance of
any Letter of Credit the aggregate amount of either of which, when added to the
sum of the principal amount of all Loans then outstanding and the Letter of
Credit Outstandings, would exceed the amount authorized by the Interim Order
(collectively, the "Further Additional Credit"), the Agent and each of the Banks
-------------------------
shall have received a certified copy of an order of the Bankruptcy Court in
substantially the form of Exhibit A-3 (the "Final Order"), which, in any event,
-----------
shall have been entered by the Bankruptcy Court no later than 30 days after the
entry of the First Day Order, and at the time of the extension of any Further
Additional Credit the Final Order shall be in full force and effect, and shall
not have been stayed, reversed, modified or amended in any respect without the
prior written consent of the Agent (on behalf of the Original Required Banks);
and if any of the First Day Order, the Interim Order or the Final Order is the
subject of a pending appeal in any respect, neither the making of the Loans nor
the issuance of any Letter of Credit nor the performance by the Borrower or any
Guarantor of any of their respective obligations under any of the Loan Documents
shall be the subject of a presently effective stay pending appeal.
(5) Synthetic Leases. At the time of the extension of any Additional
----------------
Interim Credit, the Bankruptcy Court shall have "so ordered" a stipulation
executed by, among others, the Borrower and FBTC Leasing Corp., in form and
substance satisfactory to the Agent and the Original Required Banks, regarding
the treatment of the "synthetic lease" transactions with FBTC Leasing Corp.
(6) Payment of Fees. The Borrower shall have paid to the Agent the
---------------
then unpaid balance of all accrued and unpaid Fees then due and payable under
and pursuant to this Agreement and the letter referred to in Section 2.16.
(7) Borrowing Base Certificate. The Agent shall have received the
--------------------------
timely delivery of the most recent Borrowing Base Certificate required pursuant
to Section 5.06.
(8) UCC Searches. At the time of the making of the first Loan or
------------
the issuance of the first Letter of Credit following the entry of the Final
Order, the Agent shall have received UCC searches conducted in the jurisdictions
in which the Borrower and the Guarantors conduct business (dated as of a date
reasonably satisfactory to the Agent), reflecting the absence of Liens and
encumbrances on the assets of the Borrower and the Guarantors other than Liens
granted (or otherwise permitted) under the Existing Agreements or Permitted
Liens and such other Liens as may be satisfactory to the Agent and the Original
Required Banks.
(9) Usage. The use of such extension of credit shall be consistent
-----
with the Budget, as updated from time to time.
42
(10) Overhead. No later than the date of the entry of the Interim
--------
Order, the Bankruptcy Court shall have entered orders (in the cases of each of
the Borrower and MHG), which orders may be included in the Orders and any
corresponding orders in the MHG bankruptcy cases, in form and substance
satisfactory to the Agent and the Original Required Banks, regarding the payment
by MHG and its Subsidiaries that are debtors in cases under Chapter 11 of the
Bankruptcy Code of a weekly overhead fee to the Borrower in an amount
satisfactory to the Agent and the Original Required Banks that shall in no event
be less than 5% of MHG's and such debtor Subsidiaries' net revenues for prior
periods, excluding any management fees received from third parties and paid
directly to the Borrower during such periods, and at the time of each extension
of credit thereafter such orders shall be in full force and effect.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time.
SECTION 6. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)), or any amount shall remain outstanding or
unpaid under this Agreement, the Borrower and each of the Guarantors agree that,
unless the Required Banks shall otherwise consent in writing, the Borrower and
each of the Guarantors will:
SECTION 6.1 Financial Statements, Reports, etc. In the case of the
----------------------------------
Borrower and the Guarantors, deliver to the Agent and each of the Banks:
(1) On or before January 25, 2000, the Borrower's consolidated
balance sheet and related consolidated statements of income, consolidated cash
flows, and consolidated statement of changes in shareholders' equity, showing
the consolidated financial condition and the consolidated results of operations
of the Borrower and its Subsidiaries (excluding MHG and its Subsidiaries) as of
and for the fiscal year ended September 30, 1999, such financial statements to
be audited by Ernst & Young LLP or other independent public accountants of
recognized national standing reasonably acceptable to the Original Required
Banks and accompanied by an opinion of such accountants which (1) shall not be
qualified in any material respect other than with respect to the Cases, (2) may
contain an explanatory paragraph expressing doubt about the Borrower's ability
to continue as a going concern, and (3) shall refer to the notes to the
financial statements (which notes may state that the financial statements are
not prepared in accordance with GAAP since GAAP would require that the accounts
of MHG and its Subsidiaries be included in the Borrower's consolidated financial
statements). Such consolidated financial statements shall include in the notes
to the financial statements disclosure of segment information as required by
Financial Accounting Standards Board Statement No. 131 "Disclosures and Segments
of an Enterprise and Related Information" except that MHG and its Subsidiaries
may be excluded. Such consolidated financial statements shall be accompanied by
a certification by a Financial Officer of the Borrower certifying that such
43
consolidated financial statements fairly present the financial condition and
results of operations of the Borrower and its Subsidiaries (excluding MHG and
its Subsidiaries) on a consolidated basis in accordance with GAAP and that the
segment disclosure (excluding MHG and its Subsidiaries) included in the notes to
the consolidated financial statements have been prepared in accordance with GAAP
(but for the exclusion of MHG and its Subsidiaries);
(2) as soon as available, but no more than (i) 45 days after the end
of each of November 1999, December 1999, January 2000 and February 2000 and
(ii) 30 days after the end of each month thereafter, the unaudited consolidated
and consolidating balance sheets, and related statements of income and cash
flows of the Borrower and the Guarantors on a consolidated and consolidating
basis and as of the close of such fiscal month and the then elapsed portion of
the fiscal year together with (x) an update for the successive 13-week period of
the Borrower's 13-week cash flow forecast previously delivered to the Agent and
(y) a report of the EBITDA performance during the immediately preceding month of
the real estate portfolios financed by the Real Estate Financiers;
(3) concurrently with any delivery of financial statements under (a)
or (b) above as applicable, (i) a certificate of a Financial Officer certifying
such statements (A) certifying to the best of such Financial Officer's knowledge
that no Event of Default or event which upon notice or lapse of time or both
would constitute an Event of Default has occurred, or, if such an Event of
Default or event has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and (B)
setting forth computations in reasonable detail satisfactory to the Agent
demonstrating compliance with the provisions of Sections 6.03, 6.04, 6.05 and
6.14 and (ii) a certificate (which certificate may be limited to accounting
matters and disclaim responsibility for legal interpretations) of such
accountants accompanying the audited consolidated financial statements delivered
under (a) above certifying that, in the course of the regular audit of the
business of the Borrower and its Subsidiaries, such accountants have obtained no
knowledge that an Event of Default has occurred and is continuing, or if, in the
opinion of such accountants, an Event of Default has occurred and is continuing,
specifying the nature thereof and all relevant facts with respect thereto;
(4) as soon as possible, and in any event within 45 days of the
Closing Date, a consolidated pro forma balance sheet of the Borrower's and the
--- -----
Guarantors' financial condition as of the Filing Date;
(5) within 30 days from the end of each fiscal quarter of the
Borrower, an update of the Budget for the succeeding six-month period
satisfactory in form and substance to the Agent and the Original Required Banks
together with an analysis of budgeted to actual performance for the immediately
preceding month (or a certificate from a Financial Officer of the Borrower that
the Budget need not be updated);
(6) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by it
with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all the functions of said commission, or with any
national securities exchange, as the case may be;
44
(7) as soon as available and in any event (A) within 30 days after
the Borrower or any of its ERISA Affiliates knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination Event
with respect to any Single Employer Plan of the Borrower or such ERISA Affiliate
has occurred and (B) within 10 days after the Borrower or any of its ERISA
Affiliates knows or has reason to know that any other Termination Event with
respect to any such Plan has occurred, a statement of a Financial Officer of the
Borrower describing such Termination Event and the action, if any, which the
Borrower or such ERISA Affiliate proposes to take with respect thereto;
(8) promptly and in any event within 10 days after receipt thereof by
the Borrower or any of its ERISA Affiliates from the PBGC copies of each notice
received by the Borrower or any such ERISA Affiliate of the PBGC's intention to
terminate any Single Employer Plan of the Borrower or such ERISA Affiliate or to
have a trustee appointed to administer any such Plan;
(9) if requested by the Agent, promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan of the Borrower or any of its ERISA
Affiliates;
(10) within 10 days after notice is given or required to be given to
the PBGC under Section 302(f)(4)(A) of ERISA of the failure of the Borrower or
any of its ERISA Affiliates to make timely payments to a Plan, a copy of any
such notice filed and a statement of a Financial Officer of the Borrower setting
forth (A) sufficient information necessary to determine the amount of the lien
under Section 302(f)(3), (B) the reason for the failure to make the required
payments and (C) the action, if any, which the Borrower or any of its ERISA
Affiliates proposed to take with respect thereto;
(11) promptly and in any event within 10 days after receipt thereof by
the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by the Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the amount of
liability incurred, or which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or (C)
above;
(12) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any
Guarantor, or compliance with the terms of any material loan or financing
agreements as the Agent, at the request of any Bank, may reasonably request; and
(13) furnish to the Agent and its counsel promptly after the same is
available, copies of all pleadings, motions, applications, judicial information,
financial information and other documents filed by or on behalf of the Borrower
or any of the Guarantors with the Bankruptcy Court
45
in the Cases, or distributed by or on behalf of the Borrower or any of the
Guarantors to any official committee appointed in the Cases.
SECTION 6.2 Corporate Existence. Preserve and maintain in full force and
-------------------
effect all governmental rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of its business
except (i)(A) if in the reasonable business judgment of the Borrower or such
Guarantor, as the case may be, it is in its best economic interest not to
preserve and maintain such rights, privileges, qualifications, permits, licenses
and franchises, and (B) such failure to preserve the same could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (ii) as
otherwise permitted in connection with sales of assets permitted by Section
6.11.
SECTION 6.3 Insurance. (a) Keep its insurable properties insured at all
---------
times, against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies of the same or similar size in
the same or similar businesses; and maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrower or any Guarantor, as the case may
be, in such amounts and with such deductibles as are customary with companies of
the same or similar size in the same or similar businesses and in the same
geographic area; and (b) maintain such other insurance or self insurance as may
be required by law.
SECTION 6.4 Obligations and Taxes. With respect to the Borrower and each
---------------------
Guarantor, pay all its material obligations arising after the Filing Date
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property arising after the
Filing Date, before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise arising after the
Filing Date which, if unpaid, would become a Lien or charge upon such properties
or any part thereof; provided, however, that the Borrower and each Guarantor
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings (if
the Borrower and the Guarantors shall have set aside on their books adequate
reserves therefor).
SECTION 6.5 Notice of Event of Default, Investigations, Violations, etc.
-----------------------------------------------------------
Promptly give to the Agent notice in writing of:
(1) any Event of Default or the occurrence of any event or
circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default;
(2) any litigation, investigations or proceeding which may exist at
any time between the Borrower or any of the Guarantors and any Governmental
Authority, which in either case could reasonably be expected to have a Material
Adverse Effect; and
46
(3) the following events, as soon as possible and in any event within
five Business Days (i) after obtaining knowledge thereof, the occurrence of any
event that would (with the giving of notice, the passage of time, or both) be a
violation of any Health Care Permit necessary for the lawful conduct of the
business or operations of the Borrower or any of the Guarantors (other than
those Health Care Permits the violation of which could not reasonably be
expected to have a Material Adverse Effect), including, without limitation, the
ownership and operation of its Health Care Facilities, (ii) after receipt
thereof, any notice of any violation of any Requirements of Law which would
(with the giving of notice, the passage of time, or both) cause any of the
Health Care Permits referred to in clause (i) to be modified, rescinded or
revoked and which the Borrower does not reasonably expect to be able to cure
within a reasonable period of time, (iii) after receipt thereof, any notice,
summons, citation, or other proceeding seeking to adversely modify in any
material respect, revoke, or suspend any Medicare provider agreement, Medicaid
provider agreement, Medicare certification or Medicaid certification applicable
to any of the Health Care Facilities of the Borrower or any of the Guarantors in
any manner which could reasonably be expected to have a Material Adverse Effect,
or (iv) after obtaining knowledge thereof, any revocation or involuntary
termination of any Medicare provider agreement, Medicaid provider agreement,
Medicare certification or Medicaid certification applicable to any of the Health
Care Facilities of the Borrower or any of the Guarantors that could reasonably
be expected to have a Material Adverse Effect.
SECTION 6.6 Borrowing Base Certificate. Promptly deliver to the Agent, but
--------------------------
in no event later than (i) the Closing Date for the month ended October 31,
1999, (ii) 60 days after the month ended November 30, 1999, (iii) 45 days after
each of the months ended December 31, 1999 and January 31, 2000, and (iv) 30
days after the end of each calendar month thereafter (and, if requested by the
Agent at any other time when the Agent reasonably believes that the
then-existing Borrowing Base is materially inaccurate, as soon as reasonably
available but no later than 10 days after the request), a completed Borrowing
Base Certificate in substantially the form of Exhibit E hereto (the "Borrowing
---------
Base Certificate") calculating and certifying the Borrowing Base as of the last
----------------
day of such calendar month (or as of such other requested date, as the case may
be), with supporting documentation (including, without limitation, the
documentation described in Schedule 1 to Exhibit E), in each case signed on
behalf of the Borrower by a Financial Officer thereof and certified as being
complete and correct based on the Borrower's and applicable Division's
accounting records.
SECTION 6.7 Maintenance of Concentration Accounts. Continue to maintain
-------------------------------------
with the Agent an account or accounts to be used by the Borrower and the
Guarantors as their principal concentration accounts for day-to-day operations
conducted by the Borrower and the Guarantors.
SECTION 6.8 Books and Records, Inspection and Collateral Review Rights.
----------------------------------------------------------
(1) The Borrower will, and will cause each of the Guarantors to, keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP in all material respects and all material Requirements of
Law are made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of the Guarantors to, permit
any representatives designated by the Agent, upon reasonable prior notice, to
visit and inspect its financial records and properties, to examine and make
extracts from its books and records, and
47
to discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
(2) The Borrower will, and will cause each of the Guarantors to,
permit any representatives designated by the Agent (including any consultants,
accountants, lawyers and appraisers retained by the Agent) to conduct
evaluations and appraisals of the Borrower's computation of the Borrowing Base
and the assets included in the Borrowing Base, all at such reasonable times and
as often as reasonably requested. The Borrower shall pay the reasonable fees
(including reasonable and customary internally allocated fees of employees of
the Agent as to which invoices have been furnished) and expenses of any such
representatives retained by the Agent as to which invoices have been furnished
to conduct any such evaluation or appraisal, including the reasonable fees and
expenses associated with collateral monitoring services performed by the
Collateral Agent Services Group of the Agent. To the extent required by the
Agent as a result of any such evaluation, appraisal or monitoring, the Borrower
also agrees to modify or adjust the computation of the Borrowing Base (which may
include maintaining additional reserves, modifying the advance rates or
modifying the eligibility criteria for the components of the Borrowing Base).
(3) In the event that historical accounting practices, systems or
reserves relating to the components of the Borrowing Base are modified in a
manner that is adverse to the Banks in any material respect, the Borrower will
agree to maintain such additional reserves (for purposes of computing the
Borrowing Base) in respect to the components of the Borrowing Base and make such
other adjustments to its parameters for including the components of the
Borrowing Base as the Agent shall reasonably require based upon such
modifications.
SECTION 6.10 Conduct of Business and Maintenance of Existence, etc. (a) (i)
------------------------------------------------------
Continue to engage in the business of owning, operating, managing and/or
financing Health Care Facilities and providing other services or amenities
customarily provided by, or other activities customarily undertaken by, Persons
owning, operating, managing and/or financing Health Care Facilities, (ii)
preserve, renew and keep in full force and effect its corporate existence
(except as otherwise permitted by Section 6.11) and (iii) take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business, except, in each case, as otherwise
permitted by Section 6.11 and except, in the case of clause (iii) above, to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (b) comply with all Contractual Obligations and Requirements
of Law except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 6.10 Health Care Permits and Approvals. Take all action reasonably
---------------------------------
necessary to (a) maintain in full force and effect all Health Care Permits
reasonably necessary for the lawful conduct of its business or operations where
now conducted and as planned to be conducted, including the ownership and
operation of its Health Care Facilities, pursuant to all Requirements of Law and
(b) to ensure that all Health Care Facilities owned, leased, managed or operated
by the Borrower or any of the Guarantors are entitled to participate in, and
receive payment under, the appropriate Medicare, Medicaid and related
reimbursement programs, and any similar state or local government-sponsored
program, to the extent the Borrower or any of the Guarantors
48
has decided to participate in any such program, and to receive reimbursement
from private and commercial payers and health maintenance organizations to the
extent applicable thereto, except, in each case, where a failure to do so could
not reasonably be expected to have a Material Adverse Effect or would not be
inconsistent with the Borrower's three-year business plan heretofore delivered
to the Agent and the Banks.
SECTION 6.11 Financial Advisor. Not later than 30 days following the Filing
-----------------
Date, retain, pursuant to an order entered by the Bankruptcy Court, and
thereafter continue the retention at all times of, a financial advisor
acceptable to the Agent (it being understood that ▇▇▇▇▇▇ Del Genio ▇▇▇▇▇ & Co.,
LLC is acceptable to the Agent and the Original Required Banks), to assist the
Borrower with its operational and financial restructuring, to monitor the
Borrower's cash flows and financial position (and to report same to the Agent)
and to make such financial advisor available to the Agent to discuss the
Borrower's operations, financial performance and cash flow reports upon the
Agent's reasonable request.
SECTION 7. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)) or any amount shall remain outstanding or
unpaid under this Agreement, unless the Required Banks shall otherwise consent
in writing, the Borrower and each of the Guarantors will not (and will not apply
to the Bankruptcy Court for authority to):
SECTION 7.1 Liens. Incur, create, assume or suffer to exist any Lien on any
-----
asset of the Borrower or the Guarantors, now owned or hereafter acquired by the
Borrower or any of such Guarantors, other than (i) Liens which were existing on
the Filing Date as reflected on Schedule 3.06 hereto and Liens granted pursuant
to the Existing Agreement; (ii) Liens in favor of the Existing Lenders as
adequate protection granted pursuant to the Orders, which Liens are junior to
the Liens contemplated hereby in favor of the Agent and the Banks, provided that
--------
the First Day Order, the Interim Order and the Final Order provide that the
holder of such junior Liens shall not be permitted to take any action to
foreclose with respect to such junior Liens so long as any amounts shall remain
outstanding hereunder or any Commitment shall be in effect; (iii) Permitted
Liens; (iv) Liens in favor of the Agent and the Banks; and (v) Liens securing
purchase money Indebtedness or Capitalized Leases permitted by Section
6.03(iii).
SECTION 7.2 Merger, etc. Consolidate or merge with or into another Person.
-----------
SECTIOn 7.3 Indebtedness. Contract, create, incur, assume or suffer to
------------
exist any Indebtedness, except for (i) Indebtedness under this Agreement; (ii)
Indebtedness incurred prior to the Filing Date (including existing Capitalized
Leases); (iii) Indebtedness incurred subsequent to the Filing Date secured by
purchase money Liens or Capitalized Leases in an aggregate amount not to exceed
$7,500,000 to the extent permitted by Section 6.04; (iv) Indebtedness arising
from Investments among the Borrower and the Guarantors that are permitted
hereunder; (v) Indebtedness
49
which is secured by a Lien permitted by Section 6.01; and (vi) Indebtedness owed
to Chase or any of its banking Affiliates in respect of any overdrafts and
related liabilities arising from treasury, depository and cash management
services or in connection with any automated clearing house transfers of funds.
SECTION 7.4 Capital Expenditures. (a) Make Capital Expenditures during each
--------------------
month listed below in excess of the amount opposite such month, provided that if
--------
the amount of the actual Capital Expenditures that are made during any month is
less than the amount thereof that is permitted to be made during such month, the
unused portion thereof may be carried forward to and made during the immediately
following three months:
Month Ending Capital Expenditures
------------ --------------------
January 31, 2000 $8,000,000
February 29, 2000 $3,000,000
March 31, 2000 $1,400,000
April 30, 2000 $1,400,000
May 31, 2000 $1,400,000
June 30, 2000 $1,400,000
July 31, 2000 $1,400,000
August 31, 2000 $1,400,000
September 30, 2000 $1,400,000
October 31, 2000 $1,400,000
November 30, 2000 $1,400,000
December 31, 2000 $1,400,000
(b) Make Capital Expenditures other than for normal routine
maintenance or required to maintain applicable Health Care Permits in the case
of any Health Care Facility that is leased from, or subject to a Lien in favor
of, a Real Estate Financier.
SECTION 7.5 EBITDA. Permit EBITDA during each month listed below to be
------
less than the amount specified opposite such month:
Month Ending EBITDA
------------ ------
January 31, 2000 ($600,000)
February 29, 2000 $1,650,000
March 31, 2000 $3,500,000
April 30, 2000 $3,400,000
May 31, 2000 $3,000,000
June 30, 2000 $1,800,000
July 31, 2000 $3,700,000
August 31, 2000 $2,600,000
September 30, 2000 $ 600,000
50
October 31, 2000 $4,300,000
November 30, 2000 $2,300,000
December 31, 2000 $2,500,000
SECTION 7.6 Guarantees and Other Liabilities. Purchase or repurchase (or
--------------------------------
agree, contingently or otherwise, so to do) the Indebtedness of, or assume,
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance of any obligation or capability of so
doing, or otherwise), endorse or otherwise become liable, directly or
indirectly, in connection with the obligations, stock or dividends of any
Person, except (i) for any guaranty of Indebtedness or other obligations of any
Borrower or Guarantor if the Guarantor could have incurred such Indebtedness or
obligations under this Agreement and (ii) by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business.
SECTION 7.7 Chapter 11 Claims. Incur, create, assume, suffer to exist or
-----------------
permit any other Super-Priority Claim which is pari passu with or senior to the
---- -----
claims of the Agent and the Banks against the Borrower and the Guarantors
hereunder, except for the Carve-Out.
SECTION 7.8 Dividends; Capital Stock. Declare or pay, directly or
------------------------
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes, provided that
--------
any Guarantor may pay dividends or make distributions or other payments to its
direct parent or to the Borrower.
SECTION 7.9 Transactions with Affiliates. Except as set forth on
----------------------------
Schedule 6.09, sell or transfer any property or assets to, or otherwise engage
in any other material transactions with, any of its Affiliates (other than the
Borrower and the Guarantors), other than in the ordinary course of business at
prices and on terms and conditions not less favorable to the Borrower or such
Guarantor than could be obtained on an arm's-length basis from unrelated third
parties, and other than the overhead payment arrangements described in Section
4.02(j).
SECTION 7.10 Investments, Loans and Advances. Purchase, hold or acquire
-------------------------------
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person (including, without limitations, to MHG or any
of its Subsidiaries or any Subsidiary of the Borrower that is not a Guarantor or
that has not commenced a Case) (all of the foregoing, "Investments"), except for
-----------
(i) ownership by the Borrower or the Guarantors of the capital stock of each of
the Subsidiaries listed on Schedule 3.05, (ii) Permitted Investments and (iii)
advances and loans among the Borrower and the Guarantors in the ordinary course
of business.
SECTION 7.11 Disposition of Assets. Sell or otherwise dispose of any
---------------------
assets (including, without limitation, the capital stock of any Subsidiary)
except for (i) sales of inventory, fixtures and equipment in the ordinary course
of business, (ii) sales of surplus equipment no longer used or useful in its
business, (iii) sales of assets described in a letter dated the Closing Date,
51
heretofore delivered to the Agent and the Banks upon terms reasonably acceptable
to the Agent and the Required Banks and (iv) sales or other dispositions of
other assets having a fair market value not exceeding $500,000 in the aggregate.
SECTION 7.12 Nature of Business. Modify or alter in any material manner
------------------
the nature and type of its business as conducted at or prior to the Filing Date
or the manner in which such business is conducted (except as required by the
Bankruptcy Code), it being understood that asset sales permitted by Section 6.11
shall not constitute such a material modification or alteration.
SECTION 7.13 Health Care Permits and Approvals. Engage in any activity that
---------------------------------
(a) constitutes or, with the giving of notice, the passage of time, or both,
would result in a material violation of, any Health Care Permit necessary for
the lawful conduct of its business or operations or (b) constitutes or, with the
giving of notice, the passage of time, or both, would result in the loss by any
Health Care Facility owned or leased by the Borrower or any of the Guarantors of
the right to participate in, and receive payment under, the appropriate
Medicare, Medicaid and related reimbursement programs, and any similar state or
local government-sponsored program, to the extent that the Borrower or such
Guarantor has decided to participate in any such program, and to receive
reimbursement from private and commercial payers and health maintenance
organizations to the extent applicable thereto, in each case, except where the
loss of such Health Care Permit or rights to participate in or receive payments
under such programs could not reasonably be expected to have a Material Adverse
Effect or would not be inconsistent with the Borrower's three-year business plan
heretofore delivered to the Agent and the Banks.
SECTION 7.14 Census. Allow the patient census of the Borrower's and the
------
Guarantors' Health Care Facilities when taken as a whole, during each month
listed below, to fall below the percentage of the number of licensed available
beds in such Health Care Facilities, taken as a whole (computed in a manner
consistent with reporting practices existing on the Filing Date) set forth
opposite such month:
Month Ending Percentage
------------ ----------
January 31, 2000 83.0%
February 29, 2000 83.0%
March 31, 2000 83.8%
April 30, 2000 84.0%
May 31, 2000 84.0%
June 30, 2000 84.0%
July 31, 2000 84.0%
August 31, 2000 83.5%
September 30, 2000 84.5%
October 31, 2000 84.5%
November 30, 2000 84.5%
December 31, 2000 84.5%
52
SECTION 7.15 Assumption of Provider Agreements. Assume, without the
---------------------------------
prior written consent of the Agent, any provider agreement between the Borrower,
any Guarantor and any Governmental Authority.
SECTION 7.16 Overhead. Permit any modification, amendment or alteration
--------
in any material respect of the orders (or of the applicable paragraphs of the
Orders and any corresponding orders in the MHG bankruptcy cases) referred to in
Section 4.02(j) or render any management services to MHG or any of its
Subsidiaries so long as any failure by MHG or its Subsidiaries to pay the fees
that are provided for thereunder, or to perform any of its other obligations
thereunder, shall have occurred and be continuing for more than 7 days.
SECTION 8. EVENTS OF DEFAULT
SECTION 8.1 Events of Default. In the case of the happening of any of
-----------------
the following events and the continuance thereof beyond the applicable period of
grace if any (each, an "Event of Default"):
----------------
(1) any material representation or warranty made by the Borrower or
any Guarantor in this Agreement or in any Loan Document or in connection with
this Agreement or the credit extensions hereunder or any material statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower or any Guarantors to the Banks under or in
connection with this Agreement, shall prove to have been false or misleading in
any material respect when made or delivered; or
(2) default shall be made in the payment of any (i) Fees or interest
on the Loans or reimbursable costs and expenses when due, and such default shall
continue unremedied for more than two (2) Business Days or (ii) principal of the
Loans or other amounts payable by the Borrower hereunder (including, without
limitation, reimbursement obligations or cash collateralization in respect of
Letters of Credit but excluding those provided for in clause (i) above), when
and as the same shall become due and payable, whether at the due date thereof
(including the Prepayment Date) or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise; or
(3) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any covenant, condition or agreement contained in
Section 6 hereof; or
(4) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement or any of the
other Loan Documents and such default shall continue unremedied for more than
fifteen (15) days (or, in the case of a default under Sections 5.05, 5.09 or
5.10, for more than ten (10) days after a Responsible Officer has knowledge of
such default); or
(5) any of the Cases shall be dismissed or converted to a case under
Chapter 7 of the Bankruptcy Code; a trustee under Chapter 7 or Chapter 11 of the
Bankruptcy Code, a responsible officer or an examiner with enlarged powers
relating to the operation of the business (powers beyond those set forth in
Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
53
Bankruptcy Code shall be appointed in any of the Cases and the order appointing
such trustee, responsible officer or examiner shall not be reversed or vacated
within 30 days after the entry thereof; or an application shall be filed by the
Borrower or any Guarantor for the approval of any other Super-Priority Claim
(other than the Carve-Out) in any of the Cases which is pari passu with or
---- -----
senior to the claims of the Agent and the Banks against the Borrower or any
Guarantor hereunder, or there shall arise or be granted any such pari passu or
---- -----
senior Super-Priority Claim; or
(6) the Bankruptcy Court shall enter an order or orders granting
relief from the automatic stay applicable under Section 362 of the Bankruptcy
Code to the holder or holders of any security interest to permit foreclosure (or
the granting of a deed in lieu of foreclosure or the like) on any assets of the
Borrower or any of the Guarantors which have a value in excess of $500,000 in
the aggregate; or
(7) a Change of Control shall occur; or
(8) the Borrower shall fail to deliver a certified Borrowing Base
Certificate when due and such default shall continue unremedied for more than
three (3) Business Days; or
(9) any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on the Borrower or any of the Guarantors,
or the Borrower or any of the Guarantors shall so assert in any pleading filed
in any court; or
(10) an order of the Bankruptcy Court shall be entered reversing,
amending, supplementing, staying for a period in excess of 10 days, vacating or
otherwise modifying either of the Orders or terminating the use of cash
collateral by the Borrower or the Guarantors pursuant to the Orders; or
(11) any judgment or order as to a post-petition liability or debt for
the payment of money in excess of $500,000 not covered by insurance shall be
rendered against the Borrower or any of the Guarantors and the enforcement
thereof shall not have been stayed; or
(12) any non-monetary judgment or order with respect to a post-
petition event shall be rendered against the Borrower or any of the Guarantors
which does or would reasonably be expected to (i) cause a material adverse
change in the financial condition, business, prospects, operations or assets of
the Borrower and the Guarantors taken as a whole on a consolidated basis, (ii)
have a material adverse effect on the ability of the Borrower or any of the
Guarantors to perform their respective obligations under any Loan Document, or
(iii) have a material adverse effect on the rights and remedies of the Agent or
any Bank under any Loan Document, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(13) except as permitted by the Orders, the Borrower or the Guarantors
shall make any Pre-Petition Payment other than Pre-Petition Payments authorized
by the Bankruptcy Court (x) not in excess of $20,000,000 in respect of certain
critical vendors and valid reclamation claims, (y) in respect of accrued payroll
and related expenses and employee benefits as of the Filing Date, and
54
(z) payments in accordance with other "first day" orders approved by the Agent
and the Original Required Banks; or
(14) any Termination Event described in clauses (iii) or (iv) of the
definition of such term shall have occurred and shall continue unremedied for
more than 10 days and the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of the Plan in respect of which such
Termination Event shall have occurred and be continuing and the Insufficiency of
any and all other Plans with respect to which such a Termination Event
(described in such clauses (iii) or (iv)) shall have occurred and then exist is
equal to or greater than $5,000,000; or
(15) (i) the Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate
does not have reasonable grounds to contest such Withdrawal Liability and is not
in fact contesting such Withdrawal Liability in a timely and appropriate manner,
and (iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $5,000,000 allocable to post-petition obligations or
requires payments exceeding $500,000 per annum; or
(16) the Borrower or any ERISA Affiliate thereof shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the date hereof by an amount exceeding $5,000,000; or
(17) the Borrower or any ERISA Affiliate shall have committed a
failure described in Section 302(f)(1) of ERISA (other than the failure to make
any contribution accrued and unpaid as of the Filing Date) and the amount
determined under Section 302(f)(3) of ERISA is equal to or greater than
$5,000,000; or
(18) it shall be determined (whether by the Bankruptcy Court or by any
other judicial or administrative forum) that the Borrower or any Guarantor is
liable for the payment of claims arising out of any failure to comply (or to
have complied) with applicable environmental laws or regulations the payment of
which will have a material adverse effect on the financial condition, business,
properties, operations or assets of the Borrower or the Guarantors, taken as a
whole, and the enforcement thereof shall not have been stayed; or
(19) any Medicaid or Medicare Account Debtor or any other Governmental
Authority makes any reduction from or otherwise withholds, through setoff,
recoupment or otherwise, any amounts due to such Account Debtor from any Account
or Accounts arising from healthcare services provided in the then current
cost/rate period, other than (i) any "qualified overpayments" as defined in the
stipulation (related to Medicare overpayments) with HHS referred
55
to in Section 4.01(b)(iii), and (ii) other reductions or withholdings through
setoff, recoupment or otherwise, in an aggregate amount that is not in excess of
$1,000,000 (excluding for purposes of this clause (ii), however, reductions,
setoffs or recoupments that arise in the normal course of business and that are
recorded as liabilities or are adequately provided for by retro settlement
reserves on the books of the Borrower and the Guarantors, in each case in
accordance with GAAP, and that represent reductions, setoffs or recoupments in
connection with (x) North Carolina, Colorado or Nebraska Medicaid, (y) nursing
facility Medicare bad debts for deductibles and coinsurance and (z) long-term
acute care hospitals);
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Banks, shall, by notice
to the Borrower (with a copy to counsel for the Official Creditors' Committee
appointed in the Cases, to counsel for the Pre-Petition Agent and to the United
States Trustee for the District of Delaware), take one or more of the following
actions, at the same or different times (provided, that with respect to clause
--------
(iv) below and the enforcement of Liens or other remedies with respect to the
Collateral under clause (v) below, the Agent shall provide the Borrower (with a
copy to counsel for the Official Creditors' Committee in the Cases, to counsel
for the Pre-Petition Agent and to the United States Trustee for the District of
Delaware) with five (5) Business Days' written notice prior to taking the action
contemplated thereby and provided, further, that upon receipt of notice referred
--------- -------
to in the immediately preceding clause with respect to the accounts referred to
in clause (iv) below, the Borrower may continue to make ordinary course
disbursements from such accounts (other than the Letter of Credit Account) but
may not withdraw or disburse any other amounts from such accounts): (i)
terminate forthwith the Total Commitment; (ii) declare the Loans then
outstanding to be forthwith due and payable, whereupon the principal of the
Loans together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower and the Guarantors, anything contained herein or in any
other Loan Document to the contrary notwithstanding; (iii) require the Borrower
and the Guarantors upon demand to forthwith deposit in the Letter of Credit
Account cash in an amount which, together with any amounts then held in the
Letter of Credit Account, is equal to the sum of 105% of the then outstanding
Letters of Credit (and to the extent the Borrower and the Guarantors shall fail
to furnish such funds as demanded by the Agent, the Agent shall be authorized to
debit the accounts of the Borrower and the Guarantors maintained with the Agent
in such amount five (5) Business Days after the giving of the notice referred to
above); (iv) set-off amounts in the Letter of Credit Account or any other
accounts maintained with the Agent and apply such amounts to the obligations of
the Borrower and the Guarantors hereunder and in the other Loan Documents; and
(v) exercise any and all remedies under the Loan Documents and under applicable
law available to the Agent and the Banks.
56
SECTION 9. THE AGENT
SECTION 9.1 Administration by Agent. The general administration of the
-----------------------
Loan Documents shall be by the Agent. Each Bank hereby irrevocably authorizes
the Agent, at its discretion, to take or refrain from taking such actions as
agent on its behalf and to exercise or refrain from exercising such powers under
the Loan Documents as are delegated by the terms hereof or thereof, as
appropriate, together with all powers reasonably incidental thereto (including
the release of Collateral in connection with any transaction that is expressly
permitted by the Loan Documents). The Agent shall have no duties or
responsibilities except as set forth in this Agreement and the remaining Loan
Documents.
SECTION 9.2 Advances and Payments
---------------------
(1) On the date of each Loan, the Agent shall be authorized (but not
obligated) to advance, for the account of each of the Banks, the amount of the
Loan to be made by it in accordance with its Commitment hereunder. Should the
Agent do so, each of the Banks agrees forthwith to reimburse the Agent in
immediately available funds for the amount so advanced on its behalf by the
Agent, together with interest at the Federal Funds Effective Rate if not so
reimbursed on the date due from and including such date but not including the
date of reimbursement.
(2) Any amounts received by the Agent in connection with this
Agreement (other than amounts to which the Agent is entitled pursuant to
Sections 2.16, 8.06, 10.05 and 10.06), the application of which is not otherwise
provided for in this Agreement shall be applied, first, in accordance with each
-----
Bank's Commitment Percentage to pay accrued but unpaid Commitment Fees or Letter
of Credit Fees, and second, in accordance with each Bank's Commitment Percentage
------
to pay accrued but unpaid interest and the principal balance outstanding and all
unreimbursed Letter of Credit drawings. All amounts to be paid to a Bank by the
Agent shall be credited to that Bank, after collection by the Agent, in
immediately available funds either by wire transfer or deposit in that Bank's
correspondent account with the Agent, as such Bank and the Agent shall from time
to time agree.
SECTION 9.3 Sharing of Setoffs. Each Bank agrees that if it shall,
------------------
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, including, but not limited to, a secured claim under Section 506
of the Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim and received by such Bank under any applicable
bankruptcy, insolvency or other similar law, or otherwise, obtain payment in
respect of its Loans as a result of which the unpaid portion of its Loans is
proportionately less than the unpaid portion of the Loans of any other Bank (a)
it shall promptly purchase at par (and shall be deemed to have thereupon
purchased) from such other Bank a participation in the Loans of such other Bank,
so that the aggregate unpaid principal amount of each Bank's Loans and its
participation in Loans of the other Banks shall be in the same proportion to the
aggregate unpaid principal amount of all Loans then outstanding as the principal
amount of its Loans prior to the obtaining of such payment was to the principal
amount of all Loans outstanding prior to the obtaining of such payment and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that the Banks share such payment pro-rata, provided that if any such
non-pro-rata payment is thereafter recovered or otherwise set aside such
purchase of participations shall be rescinded (without interest). The Borrower
expressly consents to the foregoing arrangements and agrees that any Bank
holding (or deemed to
57
be holding) a participation in a Loan may exercise any and all rights of
banker's lien, setoff (in each case, subject to the same notice requirements as
pertain to clause (iv) of the remedial provisions of Section 7.01) or
counterclaim with respect to any and all moneys owing by the Borrower to such
Bank as fully as if such Bank held a Note and was the original obligee thereon,
in the amount of such participation.
SECTION 9.4 Agreement of Required Banks. Upon any occasion requiring or
---------------------------
permitting an approval, consent, waiver, election or other action on the part of
the Required Banks, action shall be taken by the Agent for and on behalf or for
the benefit of all Banks upon the direction of the Required Banks, and any such
action shall be binding on all Banks. No amendment, modification, consent, or
waiver shall be effective except in accordance with the provisions of Section
10.10.
SECTION 9.5 Liability of Agent.
------------------
(1) The Agent when acting on behalf of the Banks, may execute any
of its respective duties under this Agreement by or through any of its
respective officers, agents, and employees, and neither the Agent nor its
directors, officers, agents, employees or Affiliates shall be liable to the
Banks or any of them for any action taken or omitted to be taken in good faith,
or be responsible to the Banks or to any of them for the consequences of any
oversight or error of judgment, or for any loss, unless the same shall happen
through its gross negligence or willful misconduct. The Agent and its respective
directors, officers, agents, employees and Affiliates shall in no event be
liable to the Banks or to any of them for any action taken or omitted to be
taken by them pursuant to instructions received by them from the Required Banks
or in reliance upon the advice of counsel selected by it. Without limiting the
foregoing, neither the Agent, nor any of its respective directors, officers,
employees, agents or Affiliates shall be responsible to any Bank for the due
execution, validity, genuineness, effectiveness, sufficiency, or enforceability
of, or for any statement, warranty, or representation in, this Agreement, any
Loan Document or any related agreement, document or order, or shall be required
to ascertain or to make any inquiry concerning the performance or observance by
the Borrower of any of the terms, conditions, covenants, or agreements of this
Agreement or any of the Loan Documents.
(2) Neither the Agent nor any of its respective directors,
officers, employees, agents or Affiliates shall have any responsibility to the
Borrower or the Guarantors on account of the failure or delay in performance or
breach by any Bank or by the Borrower or the Guarantors of any of their
respective obligations under this Agreement or any of the Loan Documents or in
connection herewith or therewith.
(3) The Agent, in its capacity as Agent hereunder, shall be
entitled to rely on any communication, instrument, or document reasonably
believed by such person to be genuine or correct and to have been signed or sent
by a person or persons believed by such person to be the proper person or
persons, and such person shall be entitled to rely on advice of legal counsel,
independent public accountants, and other professional advisers and experts
selected by such person.
SECTION 9.6 Reimbursement and Indemnification. Each Bank agrees (i) to
---------------------------------
reimburse (x) the Agent for such Bank's Commitment Percentage of any expenses
and fees incurred for the benefit of the Banks under this Agreement and any of
the Loan Documents, including, without limitation, counsel fees and compensation
of agents and employees paid for services rendered on
58
behalf of the Banks, and any other expense incurred in connection with the
operations or enforcement thereof not reimbursed by the Borrower or the
Guarantors and (y) the Agent for such Bank's Commitment Percentage of any
expenses of the Agent incurred for the benefit of the Banks that the Borrower
has agreed to reimburse pursuant to Section 10.05 and has failed to so reimburse
and (ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees, agents or Affiliates, on demand, in the amount of its
proportionate share, from and against any and 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 it or any of them in any way relating to or arising out
of this Agreement or any of the Loan Documents or any action taken or omitted by
it or any of them under this Agreement or any of the Loan Documents to the
extent not reimbursed by the Borrower or the Guarantors (except such as shall
result from their respective gross negligence or willful misconduct).
SECTION 9.7 Rights of Agent. It is understood and agreed that Chase shall
---------------
have the same rights and powers hereunder (including the right to give such
instructions) as the other Banks and may exercise such rights and powers, as
well as its rights and powers under other agreements and instruments to which it
is or may be party, and engage in other transactions with the Borrower or any
Guarantor, as though it were not the Agent of the Banks under this Agreement.
SECTION 9.8 Independent Banks. Each Bank acknowledges that it has decided
-----------------
to enter into this Agreement and to make the Loans hereunder based on its own
analysis of the transactions contemplated hereby and of the creditworthiness of
the Borrower and the Guarantors and agrees that the Agent shall bear no
responsibility therefor.
SECTION 9.9 Notice of Transfer. The Agent may deem and treat a Bank party
------------------
to this Agreement as the owner of such Bank's portion of the Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Bank shall have been received by the Agent.
SECTION 9.10 Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Banks and the Borrower. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent, which
shall be reasonably satisfactory to the Borrower. If no successor Agent shall
have been so appointed by the Required Banks and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation, the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of a least $100,000,000, which shall be reasonably satisfactory to the
Borrower. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
SECTION 10. GUARANTY
SECTION 10.1 Guaranty
--------
59
(1) Each of the Guarantors unconditionally and irrevocably guarantees
the due and punctual payment and performance by the Borrower of the Obligations.
Each of the Guarantors further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
it will remain bound upon this guaranty notwithstanding any extension or renewal
of any of the Obligations. The Obligations of the Guarantors shall be joint and
several.
(2) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor, and also waives notice
of protest for nonpayment. The Obligations of the Guarantors hereunder shall not
be affected by (i) the failure of the Agent or a Bank to assert any claim or
demand or to enforce any right or remedy against the Borrower or any other
Guarantor under the provisions of this Agreement or any other Loan Document or
otherwise; (ii) any extension or renewal of any provision hereof or thereof;
(iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Agent for the Obligations or any of them; (v) the failure of the Agent or a Bank
to exercise any right or remedy against any other Guarantor; or (vi) the release
or substitution of any Guarantor or any other Guarantor.
(3) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the Agent
or a Bank to any security held for payment of the Obligations or to any balance
of any deposit, account or credit on the books of the Agent or a Bank in favor
of the Borrower or any other Guarantor, or to any other Person.
(4) Each of the Guarantors hereby waives any defense that it might
have based on a failure to remain informed of the financial condition of the
Borrower and of any other Guarantor and any circumstances affecting the ability
of the Borrower to perform under this Agreement.
(5) Each Guarantor's guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations or any
other instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither of the Agent, nor any of the Banks makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(6) Subject to the provisions of Section 7.01, upon the Obligations
becoming due and payable (by acceleration or otherwise), the Banks shall be
entitled to immediate payment of such Obligations by the Guarantors upon written
demand by the Agent, without further application to or order of the Bankruptcy
Court.
SECTION 10.2 No Impairment of Guaranty. The obligations of the Guarantors
-------------------------
hereundershall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations. Without
limiting the
60
generality of the foregoing, the obligations of the Guarantors hereunder
shall not be discharged or impaired or otherwise affected by the failure of the
Agent or a Bank to assert any claim or demand or to enforce any remedy under
this Agreement or any other agreement, by any waiver or modification of any
provision thereof, by any default, failure or delay, willful or otherwise, in
the performance of the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of the Guarantors or would otherwise operate as a discharge
of the Guarantors as a matter of law, unless and until the Obligations are paid
in full.
SECTION 10.3 Subrogation. Upon payment by any Guarantor of any sums to
-----------
the Agent or a Bank hereunder, all rights of such Guarantor against the Borrower
arising as a result thereof by way of right of subrogation or otherwise, shall
in all respects be subordinate and junior in right of payment to the prior final
and indefeasible payment in full of all the Obligations. If any amount shall be
paid to such Guarantor for the account of the Borrower, such amount shall be
held in trust for the benefit of the Agent and the Banks and shall forthwith be
paid to the Agent and the Banks to be credited and applied to the Obligations,
whether matured or unmatured.
SECTION 11. MISCELLANEOUS
SECTION 11.1 Notices. Notices and other communications provided for
-------
herein shall be in writing (including telegraphic, telex, facsimile or cable
communication) and shall be mailed, telegraphed, telexed, transmitted, cabled or
delivered to the Borrower, or any Guarantor in care of the Borrower, at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Senior Vice
President and Treasurer, with copies to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C., ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq. and K. ▇▇▇▇ ▇▇▇▇▇▇▇, Esq., and to Powell, Goldstein, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, LLP, Sixteenth Floor, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., and to a Bank or the Agent to it at its
address set forth on Annex A, or such other address as such party may from time
to time designate by giving written notice to the other parties hereunder. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the fifth
Business Day after the date when sent by registered or certified mail, postage
prepaid, return receipt requested, if by mail; or when delivered to the
telegraph company, charges prepaid, if by telegram; or when receipt is
acknowledged, if by any telegraphic communications or facsimile equipment of the
sender; or on the first Business Day after delivery to an overnight courier
(charges prepaid); or when received, if by hand delivery; in each case addressed
to such party as provided in this Section 10.01 or in accordance with the latest
unrevoked written direction from such party; provided, however, that in the case
of notices to the Agent notices pursuant to the preceding sentence with respect
to change of address and pursuant to Section 2 shall be effective only when
received by the Agent.
SECTION 11.2 Survival of Agreement, Representations and Warranties, etc.
----------------------------------------------------------
All warranties, representations and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Banks and shall survive the making of the Loans herein
contemplated regardless of any investigation made by any Bank or on its behalf
and shall continue in full force and effect so long as any amount due or to
become due hereunder is outstanding and unpaid and so long as the Commitments
have not been terminated. All statements
61
in any such certificate or other instrument shall constitute representations and
warranties by the Borrower and the Guarantors hereunder with respect to the
Borrower.
SECTION 11.3 Successors and Assigns.
----------------------
(1) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Agent and the Banks and their respective successors and
assigns. Neither the Borrower nor any of the Guarantors may assign or transfer
any of their rights or obligations hereunder without the prior written consent
of all of the Banks. Each Bank may sell participations to any Person in all or
part of any Loan, or all or part of its Commitment, in which event, without
limiting the foregoing, the provisions of Section 2.13 shall inure to the
benefit of each purchaser of a participation (provided that such participant
shall look solely to the seller of such participation for such benefits and the
Borrower's and the Guarantors' liability, if any, under Sections 2.13 and 2.15
shall not be increased as a result of the sale of any such participation) and
the pro rata treatment of payments, as described in Section 2.14, shall be
--- ----
determined as if such Bank had not sold such participation. In the event any
Bank shall sell any participation, such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower and each of the
Guarantors relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this Agreement
(provided that such Bank may grant its participant the right to consent to such
Bank's execution of amendments, modifications or waivers which (i) reduce any
Fees payable hereunder to the Banks, (ii) reduce the amount of any scheduled
principal payment on any Loan or reduce the principal amount of any Loan or the
rate of interest payable hereunder or (iii) extend the maturity of the
Borrower's obligations hereunder). The sale of any such participation shall not
alter the rights and obligations of the Bank selling such participation
hereunder with respect to the Borrower.
(2) Each Bank may assign to one or more Banks or Eligible Assignees
all or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the same
portion of the related Loans at the time owing to it), provided, however, that
-------- -------
(i) other than in the case of an assignment to a Person at least 50% owned by
the assignor Bank, or by a common parent of both, or to another Bank, the Agent
and the Fronting Bank must give their respective prior written consent to such
assignment, which consent will not be unreasonably withheld, (ii) the aggregate
amount of the Commitment and/or Loans of the assigning Bank subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Agent) shall, unless otherwise agreed to
in writing by the Borrower and the Agent, in no event be less than $1,000,000 or
such lesser amount as is equal to the remaining Commitment and/or Loans of the
assignor thereof and (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance with blanks appropriately
completed, together with a processing and recordation fee of $3,500 (for which
the Borrower shall have no liability). Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be within ten Business
Days after the execution thereof (unless otherwise agreed to in writing by the
Agent), (A) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Bank hereunder and (B) the Bank thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an
62
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto).
(3) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any of the other Loan Documents; (ii) such Bank assignor
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any Guarantor or the performance
or observance by the Borrower or any Guarantor of any of its obligations under
this Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
copies of the financial statements referred to in Section 3.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such Bank
assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
thereto, together with such powers as are reasonably incidental hereof; and (vi)
such assignee agrees that it will perform in accordance with their terms all
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(4) The Agent shall maintain at its office a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Banks and the Commitments of, and principal amount of the
Loans owing to, each Bank from time to time (the "Register"). The entries in
--------
the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Guarantors, the Agent and the Banks shall treat each Person the
name of which is recorded in the Register as a Bank hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(5) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with the fee payable in
respect thereto, the Agent shall, if such Assignment and Acceptance has been
completed with blanks appropriately filled and consented to by the Agent and the
Fronting Bank (to the extent such consent is required hereunder), (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt written notice thereof to the Borrower
(together with a copy thereof). No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(6) Any Bank may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.03, disclose
to the assignee or
63
participant or proposed assignee or participant, any information relating to the
Borrower or any of the Guarantors furnished to such Bank by or on behalf of the
Borrower or any of the Guarantors; provided that prior to any such disclosure,
--------
each such assignee or participant or proposed assignee or participant shall
agree in writing to be bound by the provisions of Section 10.04.
(7) The Borrower hereby agrees, to the extent set forth in the
Commitment Letter, to actively assist and cooperate with the Agent in the
Agent's efforts to sell participations herein (as described in Section 10.03(a))
and assign to one or more Banks or Eligible Assignees a portion of its
interests, rights and obligations under this Agreement (as set forth in Section
10.03(b)).
SECTION 11.4 Confidentiality. Each Bank agrees to keep any information
---------------
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any Bank
--------
from disclosing such information (i) to any other Bank, (ii) upon the order of
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority, (iv) which has been publicly disclosed other
than as a result of a disclosure by the Agent or any Bank which is not permitted
by this Agreement, (v) in connection with any litigation to which the Agent, any
Bank, or their respective Affiliates may be a party to the extent reasonably
required, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder, (vii) to such Bank's legal counsel and independent
auditors, and (viii) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 10.03(f). Each
Bank shall use reasonable efforts to notify the Borrower of any required
disclosure under clause (ii) of this Section.
SECTION 11.5 Expenses. Whether or not the transactions hereby
--------
contemplated shall be consummated, the Borrower and the Guarantors agree to pay
all reasonable out-of-pocket expenses incurred by the Agent (including but not
limited to the reasonable fees and disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
special counsel for the Agent, any other counsel that the Agent shall retain and
any internal or third-party appraisers, consultants and auditors advising the
Agent and Chase Securities Inc.) as to which invoices have been furnished, in
connection with the preparation, execution, delivery and administration of this
Agreement and the other Loan Documents, the making of the Loans and the issuance
of the Letters of Credit, the perfection of the Liens contemplated hereby, the
syndication of the transactions contemplated hereby, the reasonable and
customary costs, fees and expenses of the Agent in connection with its monthly
and other periodic field audits, monitoring of assets (including reasonable and
customary internally allocated fees related to the initial and ongoing Borrowing
Base examinations), the costs of electronic communications services and
publicity expenses, and, during the continuance of an Event of Default, all
reasonable out-of-pocket expenses incurred by the Banks and the Agent in the
enforcement or protection of the rights of any one or more of the Banks or the
Agent in connection with this Agreement or the other Loan Documents, including
but not limited to the reasonable fees and disbursements of any counsel for the
Banks or the Agent. Such payments shall be made on the date of the First Day
Order and thereafter on demand, promptly upon delivery of a statement setting
forth such costs and expenses. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower and the Guarantors agree to
reimburse the Agent and Chase Securities Inc. for the expenses set forth in the
Commitment Letter and the reimbursement provisions thereof
64
are hereby incorporated herein by reference. The obligations of the Borrower and
the Guarantors under this Section shall survive the termination of this
Agreement and/or the payment of the Loans.
SECTION 11.6 Indemnity. The Borrower and each of the Guarantors agree
---------
to indemnify and hold harmless the Agent, Chase Securities Inc. and the Banks
and their directors, officers, employees, agents and Affiliates (each an
"Indemnified Party") from and against any and all expenses, losses, claims,
-----------------
damages and liabilities incurred by such Indemnified Party arising out of claims
made by any Person in any way relating to the transactions contemplated hereby,
but excluding therefrom all expenses, losses, claims, damages, and liabilities
to the extent that they are determined by the final judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnified Party. The obligations of the Borrower and the
Guarantors under this Section shall survive the termination of this Agreement
and/or the payment of the Loans.
SECTION 11.7 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE, WITHOUT TAKING INTO ACCOUNT ANY CONFLICT OF LAWS PRINCIPLES
THEREOF, AND THE BANKRUPTCY CODE.
SECTION 11.8 No Waiver. No failure on the part of the Agent or any of
---------
the Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or any of the other Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 11.9 Extension of Maturity. Should any payment of principal of
---------------------
or interest or any other amount due hereunder become due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 11.10 Amendments, etc.
----------------
(1) No modification, amendment or waiver of any provision of this
Agreement or the other Loan Documents, and no consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Banks, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given; provided, however, that no such modification or amendment shall
-------- -------
without the written consent of the Bank affected thereby (x) increase the
Commitment of a Bank (it being understood that a waiver of an Event of Default
shall not constitute an increase in the Commitment of a Bank), or (y) reduce the
principal amount of any Loan or the rate of interest payable thereon, or extend
any date for the payment of interest hereunder or reduce any Fees payable
hereunder or extend the final maturity of the Borrower's obligations hereunder;
and, provided, further, that no such modification or amendment shall without the
-------- -------
written consent of (A) all of the Banks (i) amend or modify any provision of
this Agreement which provides for the unanimous
65
consent or approval of the Banks, (ii) amend this Section 10.10 or the
definition of Required Banks or (iii) amend or modify the Super-Priority Claim
status of the Banks contemplated by Section 2.20; or (iv) release all or any
substantial portion of the Liens granted to the Agent hereunder (other than in
connection with dispositions permitted hereunder), under the Orders or under any
other Loan Document, or release any Guarantor; or (B) Banks holding Loans
representing at least 66-2/3% of the aggregate principal amount of the Loans
outstanding, or if no Loans are outstanding, Banks having Commitments
representing at least 66-2/3% of the Total Commitment to (i) amend any of the
advance rates set forth in the definition of the term "Borrowing Base", (ii)
increase the maximum principal amounts of extensions of credit permitted prior
to the entry of the Final Order by Sections 4.01(b)(i) or 4.02(d), (iii)
decrease the percentage of net revenues required to be paid to the Borrower by
MHG in calculating the weekly overhead payment as described in Section 4.02(j)
or otherwise modify, waive or amend the condition precedent set forth therein or
(iv) modify, waive or amend the provisions of Section 6.16.. No such amendment
or modification may adversely affect the rights and obligations of the Agent or
any Fronting Bank hereunder or any Bank in the capacity referred to in Section
6.03(v) without its prior written consent. No notice to or demand on the
Borrower or any Guarantor shall entitle the Borrower or any Guarantor to any
other or further notice or demand in the same, similar or other circumstances.
Each assignee under Section 10.03(b) shall be bound by any amendment,
modification, waiver, or consent authorized as provided herein, and any consent
by a Bank shall bind any Person subsequently acquiring an interest on the Loans
held by such Bank. No amendment to this Agreement shall be effective against the
Borrower or any Guarantor unless signed by the Borrower or such Guarantor, as
the case may be.
(2) Notwithstanding anything to the contrary contained in Section
10.10(a), in the event that the Borrower requests that this Agreement be
modified or amended in a manner which would require the unanimous consent of all
of the Banks (or the consent described in clause (B) of the first sentence of
Section 10.10(a)) and such modification or amendment is agreed to by the Super-
majority Banks (as hereinafter defined), then with the consent of the Borrower
and the Super-majority Banks, the Borrower and the Super-majority Banks shall be
permitted to amend the Agreement without the consent of the Bank or Banks which
did not agree to the modification or amendment requested by the Borrower (such
Bank or Banks, collectively the "Minority Banks") to provide for (w) the
--------------
termination of the Commitment of each of the Minority Banks, (x) the addition to
this Agreement of one or more other financial institutions (each of which shall
be an Eligible Assignee), or an increase in the Commitment of one or more of the
Super-majority Banks, so that the Total Commitment after giving effect to such
amendment shall be in the same amount as the Total Commitment immediately before
giving effect to such amendment, (y) if any Loans are outstanding at the time of
such amendment, the making of such additional Loans by such new financial
institutions or Super-majority Bank or Banks, as the case may be, as may be
necessary to repay in full the outstanding Loans of the Minority Banks
immediately before giving effect to such amendment and (z) such other
modifications to this Agreement as may be appropriate. As used herein, the term
"Super-majority Banks" shall mean, at any time, Banks holding Loans representing
at least 66-2/3% of the aggregate principal amount of the Loans outstanding, or
if no Loans are outstanding, Banks having Commitments representing at least 66-
2/3% of the Total Commitment.
SECTION 11.11 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
66
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.12 Headings. Section headings used herein are for convenience
--------
only and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 11.13 Execution in Counterparts. This Agreement may be executed
--------------------------
in any number of counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same instrument.
SECTION 11.14 Prior Agreements. This Agreement represents the entire
----------------
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between the Borrower or a
Guarantor and any Bank or the Agent prior to the execution of this Agreement
which relate to Loans to be made hereunder shall be replaced by the terms of
this Agreement (except as otherwise expressly provided herein with respect to
the Commitment Letter and the fee letter referred to therein, including without
limitation the Borrower's agreement to actively assist the Agent in the
syndication of the transactions contemplated hereby referred to in Section
10.03(g) and including also the provisions of Section 2.16).
SECTION 11.15 Further Assurances. Whenever and so often as reasonably
------------------
requested by the Agent, the Borrower and the Guarantors will promptly execute
and deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be necessary and reasonably required in
order to further and more fully vest in the Agent all rights, interests, powers,
benefits, privileges and advantages conferred or intended to be conferred by
this Agreement and the other Loan Documents.
SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE GUARANTORS,
--------------------
THE AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
[SIGNATURE PAGES FOLLOW]
67
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and the year first written.
BORROWER:
MARINER POST-ACUTE NETWORK, INC.
By: _______________________________
Name:
Title:
GUARANTORS:
AMERICAN MEDICAL INSURANCE BILLING
SERVICES, INC.
AMERICAN PHARMACEUTICAL SERVICES, INC.
AMERICAN REHABILITY SERVICES, INC.
AMERICAN-CAL MEDICAL SERVICES, INC.
AMERRA PROPERTIES, INC.
AMS GREEN TREE, INC.
AMS PROPERTIES, INC.
APS HOLDING COMPANY, INC.
APS PHARMACY MANAGEMENT, INC.
▇▇▇▇▇ CENTER HEALTH &
RETIREMENT/ALLEGHANY, INC.
▇▇▇▇▇ CENTER HEALTH &
RETIREMENT/▇▇▇▇▇▇▇, INC.
▇▇▇▇▇ CENTER HEALTH &
RETIREMENT/TAMPA, INC.
▇▇▇▇▇ CENTER HEALTH &
RETIREMENT/▇▇▇▇▇▇▇, INC.
▇▇▇▇▇ CENTER MANAGEMENT CORPORATION
▇▇▇▇▇ CENTER NURSING CARE/AUSTELL, INC.
▇▇▇▇▇ CENTER NURSING CARE/FINCASTLE,
INC.
▇▇▇▇▇ CENTER NURSING CARE/HICKORY, INC.
▇▇▇▇▇ CENTER NURSING CARE/POWDER
SPRINGS, INC.
▇▇▇▇▇ CENTER OF ASHEBORO, INC.
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
CAMBRIDGE BEDFORD, INC.
CAMBRIDGE EAST, INC.
CAMBRIDGE NORTH, INC.
CAMBRIDGE SOUTH, INC.
CLINTONAIRE NURSING HOME, INC.
CONNERWOOD HEALTHCARE, INC.
CORNERSTONE HEALTH MANAGEMENT COMPANY
CRESTMONT HEALTH CENTER, INC.
DEVCON HOLDING COMPANY
EH ACQUISITION CORP.
EH ACQUISITION CORP. II
EH ACQUISITION CORP. III
EVERGREEN HEALTHCARE LTD., L.P.
EVERGREEN HEALTHCARE, INC.
FRENCHTOWN NURSING HOME, INC.
GC SERVICES, INC.
GCI BELLA VITA, INC.
GCI CAMELLIA CARE CENTER, INC.
GCI ▇▇▇▇▇▇ VILLAGE, INC.
GCI EAST VALLEY MEDICAL &
REHABILITATION CENTER, INC.
GCI FAITH NURSING HOME, INC.
GCI HEALTH CARE CENTERS, INC.
GCI ▇▇▇▇▇▇ ACRES, INC.
GCI PALM COURT, INC.
GCI PRINCE ▇▇▇▇▇▇, INC.
GCI REHAB, INC.
GCI SPRINGDALE VILLAGE, INC.
GCI THERAPIES, INC.
GCI VILLAGE GREEN, INC.
GCI-CAL THERAPIES COMPANY
GCI-WISCONSIN PROPERTIES, INC.
GRANCARE HOME HEALTH SERVICES, INC.
GRANCARE OF MICHIGAN, INC.
GRANCARE OF NORTH CAROLINA, INC.
GRANCARE OF NORTHERN CALIFORNIA, INC.
GRANCARE SOUTH CAROLINA, INC.
GRANCARE, INC.
HAWK'S-PERIMETER, INC.
HERITAGE NURSING HOME, INC.
69
HERITAGE OF LOUISIANA, INC.
HMI CONVALESCENT CARE, INC.
HOSPICE ASSOCIATES OF AMERICA, INC.
HOSTMASTERS, INC.
INTERNATIONAL HEALTH CARE MANAGEMENT,
INC.
INTERNATIONAL X-RAY, INC.
LC MANAGEMENT COMPANY
LCA OPERATIONAL HOLDING COMPANY
LCR, INC.
LIVING CENTERS - EAST, INC.
LIVING CENTERS - PHCM, INC.
LIVING CENTERS - ROCKY MOUNTAIN, INC.
LIVING CENTERS - SOUTHEAST
DEVELOPMENT CORPORATION
LIVING CENTERS - SOUTHEAST, INC.
LIVING CENTERS DEVELOPMENT COMPANY
LIVING CENTERS HOLDING COMPANY
LIVING CENTERS LTCP DEVELOPMENT COMPANY
LIVING CENTERS OF TEXAS, INC.
▇▇▇▇▇▇▇ NURSING CENTER, INC.
MED-THERAPY REHABILITATION SERVICES,
INC.
MIDDLEBELT NURSING HOME, INC.
MIDDLEBELT-HOPE NURSING HOME, INC.
▇▇▇-▇▇▇ CORP.
NATIONAL HERITAGE REALTY, INC.
NIGHTINGALE EAST NURSING CENTER, INC.
OMEGA/INDIANA CARE CORP.
PROFESSIONAL HEALTH CARE MANAGEMENT,
INC.
PROFESSIONAL RX SYSTEMS, INC.
REHABILITY HEALTH SERVICES, INC.
RENAISSANCE MENTAL HEALTH CENTER, INC.
ST. ▇▇▇▇▇▇▇ NURSING HOME, INC.
SUMMIT HOSPITAL HOLDINGS, INC.
SUMMIT HOSPITAL OF EAST GEORGIA, INC.
SUMMIT HOSPITAL OF SOUTHEAST ARIZONA,
INC.
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, INC.
SUMMIT HOSPITAL OF SOUTHWEST LOUISIANA, INC.
SUMMIT HOSPITAL OF WEST GEORGIA, INC.
SUMMIT INSTITUTE FOR PULMONARY MEDICINE
AND REHABILITATION, INC.
SUMMIT INSTITUTE OF AUSTIN, INC.
SUMMIT INSTITUTE OF WEST MONROE, INC.
SUMMIT MEDICAL HOLDINGS, LTD.
SUMMIT MEDICAL MANAGEMENT, INC.
By: _______________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
71
THE CHASE MANHATTAN BANK,
Individually and as Agent
By: _______________________________
Name:
Title:
BANK OF AMERICA, N.A.
By: _______________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By: _______________________________
Name:
Title:
FOOTHILL CAPITAL CORPORATION
By: _______________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
By: _______________________________
Name:
Title:
▇▇▇ ▇▇▇▇▇▇ PRIME RATE INCOME TRUST
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By: _______________________________
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By: _______________________________
Name:
Title:
WACHOVIA BANK, N.A.
By: _______________________________
Name:
Title:
73
ANNEX A
to
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of January , 1999
----------------------------
Commitment Commitment
Banks Amount Percentage
----- ------ ----------
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 26,000,000 26.0000%
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇
Bank of America, N.A. $ 12,500,000 12.5000%
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
General Electric Capital $ 12,500,000 12.5000%
Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Foothill Capital Corporation $ 12,500,000 12.5000%
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
#▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit $ 12,500,000 12.5000%
Partners L.P.
Bank Loan Trading
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ Prime Rate $ 9,500,000 9.5000%
Income Trust
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
The Bank of Nova Scotia $ 9,500,000 9.5000%
74
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇ ▇▇▇▇▇▇
Wachovia Bank, N.A. $ 5,000,000 5.0000%
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇-▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Total $100,000,000 100.0000%
============ ========
75
Exhibit A-1 to the
Revolving Credit and
Guaranty Agreement
FORM OF FIRST DAY ORDER
76
Exhibit A-2 to the
Revolving Credit and
Guaranty Agreement
FORM OF INTERIM ORDER
77
Exhibit A-3 to the
Revolving Credit and
Guaranty Agreement
FORM OF FINAL ORDER
[To be substantially in the form as the Interim Order]
78
Exhibit B to the
Revolving Credit and
Guaranty Agreement
FORM OF SECURITY AND
PLEDGE AGREEMENT
79
Exhibit C to the
Revolving Credit and
Guaranty Agreement
FORM OF OPINION OF COUNSEL
80
Exhibit D to the
Revolving Credit and
Guaranty Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE
81
Exhibit E to the
Revolving Credit and
Guaranty Agreement
FORM OF BORROWING BASE CERTIFICATE
EXISTING AGREEMENTS
[TO BE SATISFACTORY TO THE BANKS]
82
SCHEDULE 1.01
EXISTING AGREEMENTS
[TO BE SATISFACTORY TO THE BANKS]
83
SCHEDULE 3.05
SUBSIDIARIES
[TO BE SATISFACTORY TO THE BANKS]
[Designate Guarantors and Non-Filed Subsidiaries]
84
SCHEDULE 3.06
LIENS
[TO BE SATISFACTORY TO THE BANKS]
85
SCHEDULE 6.09
TRANSACTIONS WITH AFFILIATES
[TO BE SATISFACTORY TO THE BANKS]
i