SECURED SUPER-PRIORITY DEBTOR IN POSSESSION REVOLVING CREDIT AGREEMENT,
dated as of February 3, 2000, among INTEGRATED HEALTH SERVICES, INC. (the
"Borrower"), a Delaware corporation, as debtor and debtor in possession under
chapter 11 of the Bankruptcy Code (as defined below), the Subsidiaries (as
defined below) of the Borrower identified on Schedule II hereto, as debtors and
debtors in possession under chapter 11 of the Bankruptcy Code (the "FILING
SUBSIDIARIES"), the Lenders (as defined below), and CITICORP USA, INC. ("CUSA"),
as collateral monitoring agent and administrative agent for the Lenders (in such
capacity, the "AGENT").
W I T N E S S E T H:
WHEREAS, on February 2, 2000 (the "PETITION DATE") the Borrower and the
Filing Subsidiaries each filed a voluntary petition for relief (collectively,
the "CASES") under chapter 11 of the Bankruptcy Code with the United States
Bankruptcy Court for the District of Delaware (the "BANKRUPTCY COURT"); and
WHEREAS, the Borrower and the Filing Subsidiaries are continuing to
operate their respective businesses and manage their respective properties as
debtors in possession under sections 1107 and 1108 of the Bankruptcy Code; and
WHEREAS, the Borrower has requested that the Agent and the Lenders
provide a secured, super-priority revolving credit facility of up to
$300,000,000 in order to fund the continued operation of the Borrower's and the
Filing Subsidiaries' businesses as debtors and debtors in possession under the
Bankruptcy Code; and
WHEREAS, the Agent and the Lenders are willing to make such
postpetition loans and other extensions of credit to the Borrower upon the terms
and conditions set forth herein; and
WHEREAS, each of the Filing Subsidiaries has agreed to guaranty the
obligations of the Borrower hereunder and each of the Borrower and the Filing
Subsidiaries has agreed to secure its obligations to the Agent and the Lenders
hereunder with, inter alia, security interests in, and liens on, all of its
property and assets, whether real or personal, tangible or intangible, now
existing or hereafter arising, all as more fully provided herein.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and subject to the satisfaction of the conditions set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement:
"ACCOMMODATION OBLIGATION" means, as applied to any Person, any direct
or indirect guaranty, endorsement or other liability of that Person with respect
to any Debt, lease, dividend, letter of credit or other obligation (the "PRIMARY
OBLIGATION") of another Person (the "PRIMARY OBLIGOR"), including any obligation
of that Person, whether or not contingent, (i) to purchase, repurchase or
otherwise acquire any such primary obligation or any property constituting
direct or indirect security therefor, or (ii) to advance or provide funds (A)
for the payment or discharge of any such primary obligation, or (B) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof. The amount of
any Accommodation Obligation shall be deemed to be an amount equal to the
maximum stated or determinable amount of the primary obligation in respect of
which such Accommodation Obligation is made or, if not stated or if
indeterminable, the maximum reasonably estimated potential liability in respect
thereof.
"ACCOUNT" means, with respect to any Loan Party, any and all
"accounts," as such term is defined in Section 9-106 of the UCC, now owned or
hereafter acquired by such Loan Party.
"ACCOUNT DEBTOR" is defined in Section 9-105(1)(a) of the UCC.
"ADJUSTED EBITDA" means, with respect to any Person for any period, the
sum of (i) Cash Flow from Operations of such Person for such period; (ii) all
charges for taxes counted in determining the consolidated net income of such
Person for such period; and (iii) Restructuring Charges for such period.
"ADVANCE" means a Revolving Credit Advance or a Swing Line Advance.
"AFFILIATE" of a specified Person means any other Person that directly
or indirectly through one or more intermediaries controls, is controlled by or
is under common control with the Person specified. For this purpose, "control,"
"controlled by" and "under common control with" with respect to any Person mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"AGENT" is defined in the preamble to this Agreement and includes and
any successor Agent appointed pursuant to Section 10.06.
"AGREEMENT" means this Secured Super-Priority Debtor In Possession
Revolving Credit Agreement.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"ARRANGER" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., in its capacity as sole
book runner and lead arranger for the Facility.
"ASSET SALE" means the sale, transfer or other disposition of any
asset, business or property of the Borrower or any of its Subsidiaries, or the
issuance or sale of any capital stock of or other equity, ownership or profit
interest in any Subsidiary of the Borrower (except a dividend on any such stock
or interest declared and payable solely in additional shares of such stock or
interest), to any Person other than the Borrower or a Filing Subsidiary.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, in substantially the form of Exhibit
E-2, and accepted by the Agent, or such other form of assignment and acceptance
agreement acceptable from time to time to the Agent.
"AUTHORIZED OFFICER" means the principal financial officer, the chief
accounting officer, the controller, the treasurer or the executive or senior
vice president-finance of the Borrower.
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"AVAILABILITY RESERVE" means, as of two Business Days after the date of
written notice of any determination thereof to the Borrower by the Agent, such
amounts as the Agent or the Requisite Lenders may from time to time establish
against the Available Credit, in the Agent's or the Requisite Lenders', as
applicable, sole discretion exercised reasonably, in order either (a) to
preserve the value of the Collateral or the Agent's Lien thereon, or (b) to
provide for the payment of unanticipated liabilities (including, without
limitation, liabilities related to cash management services and agreements
related thereto) of the Borrower or its Subsidiaries arising after the Closing
Date.
"AVAILABLE CREDIT" means, at any time, an amount equal to (a) the
Maximum Credit at such time minus (b) the Outstanding Revolving Credit at such
time.
"BANKRUPTCY CODE" means title 11, United States Code, as amended from
time to time, as applicable to the Cases.
"BANKRUPTCY COURT" is defined in the recitals to this Agreement or
shall mean any other court having competent jurisdiction over the Cases.
"BASE RATE" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 0.25% or, if there is no
nearest 0.25%, to the next higher 0.25%) of (i) 0.5% per annum plus
(ii) the rate per annum obtained by dividing (A) the latest three-week
moving average of secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States
money market banks, such three-week moving average being determined
weekly on each Monday (or, if any such day is not a Business Day, on
the next succeeding Business Day) for the three-week period ending on
the previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by Citibank, by (B) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental or
other marginal reserve requirement) for Citibank in respect of
liabilities consisting of or including (among other liabilities)
three-month U.S. dollar nonpersonal time deposits in the United States,
plus (iii) the average during such three-week period of the maximum
annual assessment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring Dollar deposits
in the United States; and
(c) the sum of (i) 0.5% per annum plus (ii) the Federal Funds
Rate.
"BASE RATE ADVANCE" means an Advance which bears interest by reference
to the Base Rate as provided in Section 2.07(a).
"BASE RATE MARGIN" means 2.0% per annum.
"BLOCKED ACCOUNT LETTER" means any "Blocked Account Letter" entered
into among any Loan Party, a Collection Account Bank and the Agent, in
substantially the form of Exhibit C (with such
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changes thereto acceptable to the Borrower and the Agent), which provides, inter
alia, the Agent with the right upon the occurrence of an Event of Default or in
the event that the Available Credit is less than $50,000,000, to require any
Collection Account Bank to wire all amounts received in the applicable
Collection Account to the Citibank Concentration Account on a daily basis.
"BORROWER" is defined in the preamble to this Agreement.
"BORROWING BASE" means (i) the sum of (A) up to 85% of Eligible
Accounts (other than Eligible Medicaid Accounts) (calculated (without
duplication) net of all finance charges, late fees and other fees which are
unearned, sales, excise or similar taxes, and credits or allowances granted at
such time), (B) the lesser of (x) $40,000,000 and (y) up to 85% of Eligible
Medicaid Accounts (calculated (without duplication) net of all finance charges,
late fees and other fees which are unearned, sales, excise or similar taxes, and
credits or allowances granted at such time), (C) the lesser of (x) $25,000,000
and (y) up to 40% of the orderly liquidation value of Eligible Real Property as
set forth in the appraisal delivered pursuant to clause (d) of the definition of
Eligible Real Property, (D) up to 100% of cash and up to 95% of Cash
Equivalents, in each case on deposit or held in the Citibank Collateral Account
(other than deposits held pending application thereof to Eurodollar Rate
Advances in accordance with Sections 2.11(b)(ii) or (iii)) and (E) (x) Adjusted
EBITDA of RoTech and its Subsidiaries for the most recently ended two fiscal
quarter period for which financial statements have been delivered to the Agent
pursuant to Section 6.01(c)(ii) or Section 6.01 (c)(iii), as applicable,
multiplied by two minus (y) the amount of Eligible Accounts attributable to
RoTech in clause (A) above and the amount of Eligible Medicaid Accounts
attributable to RoTech in clause (B) above; provided, however, subject to the
following proviso, that the amount in this clause (E) shall in no event exceed
(1) for the first ninety (90) days after the Closing Date, $150,000,000, (2) for
the next ninety (90) days immediately following the first ninety (90) days after
the Closing Date, $125,000,000 and (3) thereafter, $100,000,000; provided,
further, that the amount in this clause (E) shall in no event exceed
$100,000,000 from and after the effective date, if any, of the Medicare Setoff
Arrangement, minus (ii) any Eligibility Reserves in effect with respect to the
Eligible Accounts included in clause (A) above and any Eligible Medicaid
Accounts included in clause (B) above.
"BORROWING BASE CERTIFICATE" means a certificate to be executed and
delivered from time to time by the Borrower to the Agent in the form of Exhibit
B-5.
"BORROWING DATE" means the Closing Date or any subsequent Business Day
on which a Revolving Credit Advance is requested from the Lenders.
"BREAKAGE COSTS" is defined in Section 2.12.
"BUSINESS DAY" means any day except a Saturday or Sunday or a day when
commercial banks are authorized or required by law to be closed in New York, New
York and, where used in reference to any Eurodollar Rate Advance, means such a
day on which dealings are carried on in the London interbank market.
"BUSINESS PLAN" means a business plan of the Borrower and its
Subsidiaries to be delivered to the Agent on or before July 31, 2000, which
shall contain forecasted expenditures, revenues, net income and cash flow,
prepared by the management of the Borrower, and covering the twelve-month period
immediately following the first twelve months after the Closing Date.
"CALENDAR WEEK" means a period of seven days commencing on any Monday
and ending on the following Sunday.
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"CAPITAL EXPENDITURES" means expenditures for Hard Costs, whether paid
in cash or accrued as liabilities, made by the Borrower or any Subsidiary of the
Borrower.
"CAPITAL LEASE" means, with respect to any Person, any lease of any
property by that Person as lessee which, in accordance with GAAP, is required to
be accounted for as a capital lease on the balance sheet of that Person.
"CARVE-OUT" means claims of the following parties for the following
amounts: (i) the unpaid fees of the U.S. Trustee or the Clerk of the Bankruptcy
Court pursuant to 28 U.S.C. Section 1930(a) and (ii) the aggregate allowed
unpaid fees and expenses payable under sections 330 and 331 of the Bankruptcy
Code to professional persons retained pursuant to an order of the Bankruptcy
Court by the Borrower, the Guarantors or any Committee not to exceed $7,500,000
in the aggregate; provided, however, that the Carve-Out shall not include, apply
to or be available for any fees or expenses incurred by any party, including the
Borrower, the Guarantors or any Committee, in connection with the investigation
(including discovery proceedings), initiation or prosecution of any claims,
causes of action, adversary proceedings or other litigation against the Agent or
the Lenders, including, without limitation, challenging the amount, validity,
perfection, priority or enforceability of or asserting any defense, counterclaim
or offset to, the Obligations or the security interests and Liens of the Secured
Parties in respect thereof; provided, further, however, that so long as no
Potential Default or Event of Default shall occur and be continuing, the Loan
Parties shall be permitted to pay compensation and reimbursement of expenses
allowed and payable under sections 330 and 331 of the Bankruptcy Code, as the
same may be due and payable, and the same shall not reduce the Carve-Out.
"CASES" is defined in the recitals to this Agreement.
"CASH EQUIVALENTS" means (a) securities issued or fully guaranteed or
insured by the United States government or any agency thereof, (b) certificates
of deposit, eurodollar time deposits, overnight bank deposits and bankers'
acceptances of any commercial bank organized under the laws of the United
States, any state thereof, the District of Columbia, any foreign bank, or its
branches or agencies (fully protected against currency fluctuations) which, at
the time of acquisition, are rated at least "A-1" by S&P or "P-1" by ▇▇▇▇▇'▇,
and (c) commercial paper of an issuer rated at least "A-1" by S&P or "P-1" by
▇▇▇▇▇'▇, and (d) shares of any money market fund that (i) has at least 95% of
its assets invested continuously in the types of investments referred to in
clauses (a) through (c) above, (ii) has net assets of not less than $500,000,000
and (iii) is rated at least "A-1" by S&P or "P-1" by ▇▇▇▇▇'▇; provided, however,
that the maturities of all obligations of the type specified in clauses (a)
through (c) above shall not exceed 180 days.
"CASH FLOW FROM OPERATIONS" means, with respect to any Person, and for
any period, the sum, determined as of the last day of such period for such
Person and its subsidiaries on a consolidated basis, of (i) net income after
taxes minus any extraordinary gain and any non-recurring gain on any divestiture
plus any extraordinary loss and any non-recurring loss on any divestiture, (ii)
depreciation, amortization, and other noncash charges deducted in determining
net income and (iii) Interest Expense, all determined in accordance with GAAP;
provided, however, that (A) income attributable to any other Person or business
that is not at least 100% owned, directly or indirectly, by such Person shall be
counted, in determining net income, only to the extent such income is received
in cash by such Person or a Subsidiary of such Person in such period and is not
reinvested in such other Person or business (other than as a loan payable on
demand) within six months thereafter, except that, with respect to the Borrower
only, income from minority Investments existing on the Closing Date and
described in Schedule 6.02(c) of this Agreement shall be counted in accordance
with the Borrower's past practice and (B) no adjustments shall be made to
reflect minority interests in Subsidiaries.
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"CHATTEL PAPER" means, with respect to any Loan Party, any and all
"chattel paper", as such term is defined in Section 9-105(1)(b) of the UCC, now
owned or hereafter acquired by such Loan Party.
"CITIBANK" means Citibank, N.A., a national banking association.
"CITIBANK COLLATERAL ACCOUNT" means a general interest bearing deposit
account established at and maintained by Citibank in the name of and for the
benefit of the Agent on behalf of the Lenders and under the exclusive dominion
and control of the Agent (subject to the provisions of Section 6.01(h)), into
which Collateral in the form of cash shall be deposited.
"CITIBANK CONCENTRATION ACCOUNT" means a general deposit account
established at and maintained by Citibank in the name of and for the benefit of
the Agent on behalf of the Lenders and under the exclusive dominion and control
of the Agent (subject to the provisions of Section 2.11(b)(iii)).
"CLAIM" has the meaning ascribed to such term in section 101(5) of the
Bankruptcy Code.
"CLOSING DATE" means the date on which all of the conditions precedent
set forth in Section 3.01 are satisfied or waived in writing by the Lenders;
provided, that such date shall be no later than March 31, 2000 or such later
date as the Agent and the Borrower shall mutually agree.
"CODE" means the Internal Revenue Code of 1986 and the regulations
thereunder.
"CO-DOCUMENTATION AGENTS" means, collectively, Foothill Capital
Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners, L.P..
"COLLATERAL" is defined in Section 9.01.
"COLLECTION ACCOUNT BANK" means First Union National Bank, Bank of
America, N.A., and SunTrust National Bank.
"COLLECTION ACCOUNTS" means, collectively, each cash collection account
of the Borrower held at Bank of America, First Union National Bank and SunTrust
Bank, which collection accounts shall each be governed by a Blocked Account
Letter.
"COMMITMENT" means, with respect to each Lender, the
commitment of such Lender to make Advances and/or to issue or participate in
Letters of Credit issued on behalf of the Borrower in the aggregate principal
amount outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule I under the caption "Commitment," as amended to reflect each
Assignment and Acceptance executed by such Lender and as such amount may be
reduced or modified pursuant to this Agreement; provided, however, the maximum
principal amount of the Commitments of all the Lenders shall not exceed (x)
$270,000,000 prior to the Entry Date and (y) $300,000,000 from and after the
Entry Date.
"COMMITMENT FEE RATE" means 0.375% per annum.
"COMMITTEE" means the official statutory committee of unsecured
creditors appointed in the Cases pursuant to section 1102 of the Bankruptcy
Code.
"CONTAMINANT" means any material, substance or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant
6
or by other words of similar meaning or regulatory effect, including any
petroleum or petroleum-derived substance or waste, asbestos and polychlorinated
biphenyls.
"CONSTITUENT DOCUMENTS" means, with respect to any Person, (i) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such Person, (ii) the by-laws (or the equivalent governing
documents) of such Person and (iii) any document setting forth the manner of
election and duties of the directors or managing members of such Person (if any)
and the designation, amount and/or relative rights, limitations and preferences
of any class or series of such Person's Stock.
"CONTRACTS" means, with respect to any Loan Party, any and all
"contracts," as such term is defined in Section 1-201(11) of the UCC, now owned
or hereafter acquired by such Loan Party.
"CONTRACTUAL OBLIGATION" means, 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
material property is bound.
"CUSA" is defined in the preamble to this Agreement.
"DEBT," as applied to any Person and in each case determined on a
consolidated basis in conformity with GAAP, means (without duplication) (i) all
indebtedness for borrowed money (whether by loan or the issuance of debt
securities or otherwise); (ii) all obligations issued, undertaken or assumed as
the deferred purchase price of property or services or interest thereon, except
accounts and accrued expenses currently payable; (iii) all reimbursement
obligations with respect to surety bonds, letters of credit, bankers'
acceptances and similar instruments, whether or not contingent; (iv) all
monetary obligations under any Capital Lease; (v) all obligations (contingent or
otherwise) to purchase, retire or redeem any capital stock or any other equity
interest of such Person; (vi) all monetary obligations measured by, or
determined on the basis of, the value of any capital stock of such Person; and
(vii) all obligations, whether or not such obligations constitute Debt as
defined in clauses (i) through (vi) above, secured by (or for which the holder
of the obligation has an existing right, contingent or otherwise, to be secured
by) any Lien upon any property of such Person or any Subsidiary of such Person,
except any such obligation secured by a Lien that is imposed by law and not
voluntarily granted.
"DEPOSITARY BANK" means each bank or financial institution at which any
Loan Party maintains any depositary account and which is listed on Schedule 1.01
hereto.
"DOCUMENT" means, with respect to any Loan Party, any and all
"documents," as such term is defined in Section 9-105(1)(f) of the UCC, now
owned or hereafter acquired by such Loan Party.
"DOLLARS" and "$" mean United States dollars or such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts in the United States of America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance by which it became a
Lender or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Agent.
"EFFECTIVE DATE" means the date upon which a plan of reorganization in
any of the Cases becomes effective.
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"ELIGIBILITY RESERVES" means, effective as of two Business Days after
the date of written notice of any determination thereof to the Borrower by the
Agent, such amounts as the Agent or the Requisite Lenders, in the Agent's or the
Requisite Lenders', as applicable, sole discretion exercised reasonably, may
from time to time establish against the gross amounts of Eligible Accounts to
reflect risks or contingencies arising after the Closing Date which may affect
such Accounts and which have not already been taken into account in the
determination for eligibility or the calculation of the Borrowing Base.
"ELIGIBLE ACCOUNTS" means, in respect of any Loan Party, the gross
outstanding balance of those Accounts of such Loan Party arising out of sales of
goods or the rendition of Medical Services in the ordinary course of business,
made by such Loan Party to a Person which is not an Affiliate of such Loan
Party, which constitute Collateral in which the Agent has a fully perfected
first priority Lien; provided, however, that an Account shall in no event be an
Eligible Account if:
(a) such Account is more than 120 days past the original
invoice date, thereof; or
(b) any warranty contained in this Agreement or any other Loan
Document with respect to such specific Account is not true and correct
with respect to such Account; or
(c) the Account Debtor on such Account has disputed liability
or made any claim with respect to any other Account due from such
Account Debtor to such Loan Party but only to the extent of such
dispute or claim; or
(d) the Account Debtor on such Account has: (i) filed a
petition for bankruptcy or any other relief under the Bankruptcy Code
or any other law relating to bankruptcy, insolvency, reorganization or
relief of debtors; (ii) made an assignment for the benefit of
creditors; (iii) had filed against it any petition or other application
for relief under the Bankruptcy Code or any such other law; (iv) has
failed, suspended business operations, become insolvent, called a
meeting of its creditors for the purpose of obtaining any financial
concession or accommodation; or (v) had or suffered a receiver or a
trustee to be appointed for all or a significant portion of its assets
or affairs; or
(e) the Account Debtor on such Account or any of its
Affiliates is also a supplier to or creditor of such Loan Party unless
such supplier or creditor has executed a no-offset letter satisfactory
to the Agent, in its sole discretion; or
(f) the sale represented by such Account is to an Account
Debtor located outside the United States, unless the sale is on letter
of credit or acceptance terms acceptable to the Agent, in its sole
judgment; or
(g) the sale to such Account Debtor on such Account is on a
▇▇▇▇-on-hold, guaranteed sale, sale-and-return, sale-on-approval or
consignment basis; or
(h) such Account is subject to a Lien in favor of any Person
other than the Agent for the benefit of the Secured Parties; or
(i) with respect to Accounts (other than Medicare Accounts),
such Account is subject to any deduction, offset, counterclaim,
recoupment, return privilege or other conditions (other than volume
sales discounts given in the ordinary course of such Loan Party's
business); or
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(j) the Account Debtor on such Account is located in New
Jersey or Minnesota, unless such Loan Party (A) has received a
certificate of authority to do business and is in good standing in such
state or (B) has filed a Notice of Business Activities Report with the
appropriate office or agency of such state for the current year; or
(k) the Account Debtor on such Account (other than a Medicaid
Account or a Medicare Account) is a Governmental Authority, unless the
applicable Loan Party has assigned its rights to payment of such
Account to the Agent pursuant to the Assignment of Claims Act of 1940,
as amended, in the case of a federal Governmental Authority, and
pursuant to applicable law, if any, in the case of any other
Governmental Authority, and such assignment has been accepted and
acknowledged by the appropriate government officers; or
(l) the Agent, in accordance with its customary criteria,
determines, in its sole discretion exercised reasonably, that such
Account may not be paid or otherwise is ineligible; or
(m) with respect to Accounts (other than Medicare Accounts and
Medicaid Accounts), 50% or more of the outstanding Accounts of any
Account Debtor have become, or have been determined by the Agent, in
its sole discretion exercised reasonably, in accordance with the
provisions hereof, to be, ineligible; or
(n) the sale represented by such Account is denominated in a
currency other than Dollars; or
(o) such Account is not evidenced by an invoice or other
writing in form acceptable to the Agent, in its sole discretion
exercised reasonably; or
(p) such Loan Party, in order to be entitled to collect such
Account, is required to perform any additional service for, or perform
or incur any additional obligation to, the Person to whom or to which
it was made; or
(q) the total Accounts (other than Medicare Accounts and
Medicaid Accounts) of such Account Debtor to the Loan Parties represent
more than 20% of the Eligible Accounts individually or in the aggregate
as to the Loan Parties at such time, but only to the extent of such
excess; or
(r) in the case of Medicaid Accounts, the total Medicaid
Accounts owing by Governmental Authorities of any individual State to
the Loan Parties represent more than 10% of the Eligible Medicaid
Accounts individually or in the aggregate as to the Loan Parties at
such time, but only to the extent of such excess; or
(s) in the case of Medicare Accounts, (i) the applicable
Governmental Authority is not bound by a Medicare Setoff Arrangement or
(ii) the applicable Governmental Authority is bound by a Medicare
Setoff Arrangement, but such Medicare Account remains subject to any
deduction, offset, counterclaim, recoupment, return privilege or other
conditions (other than volume sales discounts given in the ordinary
course of such Loan Party's business), notwithstanding the fact that
such applicable Governmental Authority is bound by such Medicare Setoff
Arrangement; or
(t) such Account is a Private Payor Account.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the
laws of the United States, or any State thereof, and, in the case of any
assignment by a Lender of its Revolving Credit
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Advances and related Commitments hereunder, having total assets in excess of
$5,000,000,000; (ii) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof having total assets in
excess of $3,000,000,000; (iii) a commercial bank organized under the laws of
any other country which is a member of the OECD, or a political subdivision of
any such country having total assets in excess of $5,000,000,000, if such bank
is acting through a branch or agency located in the United States; (iv) the
central bank of any country which is a member of the OECD; (v) a finance
company, insurance company or other financial institution that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business having total assets in excess of $1,000,000,000; (vi) a
fund that is engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business having total assets in excess of
$200,000,000; (vii) any existing Lender and any Affiliates or Related Fund of
such existing Lender; and (viii) any other Person approved by the Agent, the LC
Bank and, except during the continuance of any Event of Default, the Borrower,
which approval in each case shall not be unreasonably withheld or delayed;
provided, however, that no Person who is a non-resident alien or a foreign
entity for United States income tax purposes (except a commercial bank of the
type described in clause (iii) above), may be an Eligible Assignee unless each
Note to be acquired by such Person is reissued in registered form prior to
transfer.
"ELIGIBLE MEDICAID ACCOUNTS" means Medicaid Accounts that are otherwise
Eligible Accounts except for clause (i) of the definition of Eligible Accounts.
"ELIGIBLE REAL PROPERTY" means, in respect of any Loan Party, any
parcel of owned Real Property in the United States of such Loan Party as to
which each of the following conditions has been satisfied at such time:
(a) a first priority Lien on such parcel of Real Property
shall have been granted by such Loan Party in favor of the Agent
pursuant to this Agreement and the Orders and (ii) such Lien shall be
in full force and effect in favor of the Agent at such time;
(b) except as otherwise permitted by the Agent, the Agent and
the title insurance company issuing the policy referred to in clause
(c) of this definition shall have received maps or plats of an as-built
survey of such parcel of Real Property certified to the Agent and such
title insurance company in a manner reasonably satisfactory to them,
dated a date reasonably satisfactory to the Agent and such title
insurance company, by an independent professional licensed land
surveyor reasonably satisfactory to the Agent and such title insurance
company, which maps or plats and the surveys on which they are based
shall be made in form and substance satisfactory to the Agent;
(c) the Agent shall have received in respect of such parcel of
Real Property (i) a mortgagee's title policy (or policies) or marked-up
unconditional binder (or binders) for such insurance (or other evidence
acceptable to the Agent proving ownership thereof) ("MORTGAGEE'S TITLE
INSURANCE POLICY") dated a date reasonably satisfactory to the Agent,
and such policy shall (A) be in an amount not less than the Mortgage
Value (as of the Closing Date) of such parcel of Real Property, (B) be
issued at ordinary rates, (C) insure that the Lien granted pursuant to
this Agreement and the Orders insured thereby creates a valid first
Lien on such parcel of Real Property free and clear of all defects and
encumbrances, except such as may be approved by the Agent and Permitted
Liens, (D) name the Agent for the benefit of the Lenders as the insured
thereunder, (E) be in the form of ALTA Loan Policy - 1992 (or such
local equivalent thereof as is reasonably satisfactory to the Agent),
(F) contain a comprehensive lender's endorsement and (G) be issued by
Chicago Title Insurance Company, First American Title Insurance
Company, Lawyers Title Insurance Corporation or any other title company
reasonably satisfactory to the Agent (including any such title
companies acting as co-insurers or reinsurers), (ii) evidence
10
satisfactory to it that all premiums in respect of each such policy,
all recording fees and stamp, documentary, intangible or mortgage
taxes, if any, in connection with the Mortgage have been paid and (iii)
a copy of all documents referred to, or listed as exceptions to title,
in such title policy (or policies);
(d) the Agent shall have received an appraisal with respect to
such parcel of Real Property that is reasonably satisfactory in form
and substance to the Agent and the Requisite Lenders and performed by
an appraiser that is satisfactory to the Agent;
(e) if requested by the Agent, the Agent shall have received a
Phase I environmental report with respect to such parcel of Real
Property, dated a date not more than one year prior to the Closing
Date, showing no material condition of environmental concern, and in
form reasonably satisfactory to the Agent; and
(f) no casualty shall have occurred affecting the use,
operation or value of such parcel of Real Property if such casualty has
not been restored or repaired by the Loan Party granting a Lien on such
parcel of Real Property;
(g) no condemnation or taking by eminent domain shall have
occurred nor shall any notice of any pending or threatened condemnation
or other proceeding against such parcel of Real Property have been
delivered to the owner or lessee of such parcel of Real Property which
would materially affect the use, operation or value of such;
(h) the Loan Party granting a Lien on such parcel of Real
Property shall (i) make such representations and warranties and
covenants as are reasonably required by the Agent, (ii) in all material
respects comply with all Requirements of Law of any Governmental
Authority applicable to such parcel of Real Property or to the use or
occupancy thereof, and (iii) pay and discharge all taxes of every kind
and nature, all assessments, all water and sewer rents and charges and
all other charges which may become a lien on the Real Property; and
(i) if requested by the Agent, the Agent shall have received a
Mortgage duly executed by such Loan Party covering such parcel of Real
Property.
"ENTRY DATE" means the date of the entry of the Final Order.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial claims, demands, directives, proceedings, orders, decrees and judgments
relating in any way to any Environmental Law or any Environmental Permit.
"ENVIRONMENTAL LAWS" means all federal, state and local laws (including
common law), statutes, rules, regulations, ordinances and codes, and any binding
judicial or administrative interpretation thereof or requirement thereunder,
including any judicial or administrative order, by any Governmental Authority,
relating to the regulation or protection of human health, safety, the
environment and natural resources.
"ENVIRONMENTAL LIABILITIES AND COSTS" means, with respect to any
Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any thereof arising under
11
any Environmental Law, Permit, order or agreement with any Governmental
Authority or other Person, which relate to any environmental, health or safety
condition or a Release or threatened Release, and result from the past, present
or future operations of, or ownership of property by, such Person or any of its
Subsidiaries.
"ENVIRONMENTAL PERMIT" means any license, permit, authorization,
registration or approval issued or required under any Environmental Law.
"EQUIPMENT" means, with respect to any Loan Party, any and all
"equipment," as such term is defined in Section 9-109(2) of the UCC, now owned
or hereafter acquired by such Loan Party.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any entity which is (or at any relevant time
was) a member of a group under "common control" or treated as a single employer
with the Borrower pursuant to Section 414(b), (c) or (m) of the Code.
"ERISA EVENT" means (i) any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, with respect to a Pension Plan; (ii) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA); (iii) a complete or partial
withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan;
(iv) the filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan subject to Title IV of ERISA; (v) a failure to make required
contributions to a Pension Plan or Multiemployer Plan; (vi) the imposition of
any liability under Title VI of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate; (vii) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Pension Plan; (viii) the Borrower or ERISA Affiliate engages in a nonexempt
prohibited transaction or otherwise becomes liable with respect to a nonexempt
prohibited transaction, the consequences of which, in the aggregate, constitute
or could reasonably be expected to result in a Material Adverse Change; or (ix)
a violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Code by the Borrower or any
ERISA Affiliate with respect to any Pension Plan for which the Borrower or any
of its Subsidiaries may be liable, the consequences of which, in the aggregate,
constitute or could reasonably be expected to result in a Material Adverse
Change.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance by which it became
a Lender (or, if no such office is specified, its Domestic Lending Office) or
such other office of such Lender as such Lender may from time to time specify to
the Borrower and the Agent as its Eurodollar Lending Office.
"EURODOLLAR RATE" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Revolving Credit Advance, an interest
rate per annum equal to the displayed rate at 11:00 AM (London time) two
Business Days before the first day of such Interest Period on Telerate page 3750
(or such other page as may replace such page on the Telerate Service for the
purpose of displaying interest rates in the London interbank markets) for
deposits in Dollars in an amount
12
substantially equal to such Revolving Credit Advance and for a period equal to
such Interest Period, to the extent that such interest rate is unavailable on
the Telerate Service, the Eurodollar Rate for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Revolving Credit Advance
shall be an interest rate per annum equal to the rate per annum at which
deposits in Dollars are offered by the principal office of Citibank in London to
prime banks in the interbank market for Dollar deposits at 11:00 a.m. (London
time) two Business Days before the first day of such Interest Period in an
amount substantially equal to Citibank's Eurodollar Rate Advance comprising part
of such Revolving Credit Advance (or, if Citibank is not a Lender, 10% of such
Revolving Credit Advance) and for a period equal to such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance which bears interest by
reference to the Eurodollar Rate as provided in Section 2.07(b).
"EURODOLLAR RATE MARGIN" means 3.0% per annum.
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Lender for any day in the
Interest Period for any Eurodollar Rate Advance means the reserve percentage
applicable for such day under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency liabilities having a term equal
to such Interest Period.
"EVENTS OF DEFAULT" has the meaning provided in Section 7.01.
"FACILITY" means, collectively, the Interim Facility and the Permanent
Facility.
"FACILITY AMOUNT" means, (a) on any date of determination prior to the
Entry Date, (i) the lesser of (A) the aggregate amount of the Commitments in
effect at such time and (B) $100,000,000 minus (ii) all Facility Reductions
which are then effective and (b) on any date of determination from and after the
Entry Date, (i) the aggregate amount of the Commitments in effect at such time
minus (ii) all Facility Reductions which are then effective.
"FACILITY REDUCTION" means each temporary or permanent reduction of the
Facility, whether voluntarily made or scheduled to be made pursuant to Section
2.05 or required to be made pursuant to Section 2.06, Section 7.01 or any other
provision of this Agreement or otherwise becoming effective in accordance with
this Agreement.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding 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 such day on such
transactions received by Citibank from three Federal funds brokers of recognized
standing selected by it.
"FEE LETTERS" is defined in Section 2.04(e).
"FILING SUBSIDIARY" is defined in the preamble to this Agreement.
"FINAL ORDER" means an order of the Bankruptcy Court pursuant to
section 364 of the Bankruptcy Code, approving this Agreement, the other Loan
Documents and authorizing the incurrence
13
by the Loan Parties of permanent post-petition secured and super-priority Debt
in accordance with this Agreement, and as to which no stay has been entered and
which has not been reversed, modified, vacated or overturned, and which is in
form and substance satisfactory to the Agent and the Requisite Lenders.
"FIRST DAY ORDERS" means all orders entered by the Bankruptcy Court on
the Petition Date or within five Business Days of the Petition Date or based on
motions filed on the Petition Date.
"FISCAL YEAR" means the twelve-month period ending on December 31.
"FUNDED LC EXPOSURE" means the aggregate principal amount, as of any
date of determination, of all payments that were made by the LC Bank under any
Letter of Credit but have not been reimbursed to the LC Bank by the Borrower
pursuant to Section 2.02(c) or converted into Advances pursuant to Section
2.02(e).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession, which are applicable to the facts and
circumstances on the date of determination.
"GENERAL INTANGIBLE" means, with respect to any Loan Party, any and all
"general intangibles," as such term is defined in Section 9-106 of the UCC, now
owned or hereafter acquired by such Loan Party.
"GOVERNMENTAL AUTHORITY" means any nation, state, sovereign or
government, any political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTOR" means each Filing Subsidiary.
"GUARANTY" means the guaranty of the Obligations of the Borrower made
by the Guarantors pursuant to Article VIII of this Agreement.
"HARD COSTS" means the direct costs of building, improving or
maintaining any Health Care Facility or other property used by the Borrower or
any of its Subsidiaries (including the cost of land, construction, bricks,
mortar, painting and related building maintenance, carpeting, roof repair and
replacement, parking lot replacement and maintenance, landscaping, HVAC
equipment and sprinkler systems and other items generally considered hard costs
under construction industry practice but not including the purchase price of an
existing Health Care Facility or any allocated overhead and administrative
expenses and other items generally considered soft costs under construction
industry practice) and the purchase price of any fixed, movable or mobile
equipment located on or used in connection with any such Health Care Facility or
otherwise used in conducting business if such equipment is or is required to be
reflected as property, plant and equipment on the consolidated balance sheet of
the Borrower and its Subsidiaries.
"HEALTH CARE COMPANY" means a Person that is principally engaged,
directly or indirectly through its Subsidiaries, in the business of owning,
operating or managing Health Care Facilities or healthcare operations or
providing healthcare services.
14
"HEALTH CARE FACILITY" means a facility which provides any healthcare
services at such facility, whether licensed as a skilled nursing facility,
intermediate care facility, personal care facility or a hospital.
"HEALTH CARE PERMIT" means every accreditation, authorization,
certificate of need, license or permit that is required pursuant to applicable
federal or state law to own, lease, operate or manage a Health Care Facility or
conduct the business of a Health Care Company.
"HEDGING CONTRACT" means any interest rate swap agreement, currency
swap agreement, commodities swap agreement, equity option or put arrangement,
cap, floor or collar agreement, insurance relating to the respective risk
protection or other similar agreement or arrangement designed to provide such
risk protection entered into by the Borrower and the Agent or any Lender.
"INDEMNIFIED LIABILITIES" is defined in Section 11.06(a).
"INDEMNIFIED PERSON" is defined in Section 11.06(a).
"INITIAL PROJECTIONS" means the Projections dated November 29, 1999
delivered to the Agent prior to January 13, 2000.
"INSTRUMENT" means, with respect to any Loan Party, any and all
"instruments," as such term is defined in Section 9-105(1)(i) of the UCC, now
owned or hereafter acquired by such Loan Party other than instruments that
constitute, or are a part of a group of writings that constitute, Chattel Paper.
"INSURER" means a Person that insures a Patient against certain of the
costs incurred in the receipt by such Patient of Medical Services, or that has
an agreement with any Loan Party to compensate such Loan Party for providing
services to a Patient.
"INTEREST EXPENSE" means, with respect to any Person, for any period
for such Person and its subsidiaries on a consolidated basis, interest expense
net of interest income, determined in conformity with GAAP.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
part of the same Revolving Credit Advance the period commencing on the date of
such Advance or the date of the conversion of any Advance into such an Advance
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the last day
of the period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be 1, 2, 3 or 6 months, as the
Borrower may select by notice received by the Agent not later than 11:00 a.m.
(New York City time) three Business Days prior to the first day of such Interest
Period; provided, however, that:
(a) the Borrower may not select any Interest Period in respect
of any Revolving Credit Advance which ends after the Maturity Date;
(b) the Borrower may not select any Interest Period which ends
after any date on which any payment on the respective Advances
(including any payment of Revolving Credit Advances which may result
from a Facility Reduction) is due unless, after giving effect to such
selection, the aggregate unpaid principal amount of Revolving Credit
Advances, having Interest Periods which end on or prior to such date is
at least equal to the principal amount of Advances due and payable on
and prior to such date;
15
(c) Interest Periods commencing on the same date for Advances
comprising part of the same Revolving Credit Advance shall be of the
same duration;
(d) whenever the last day of any Interest Period would
otherwise occur on a day that is not a Business Day, the last day of
such Interest Period shall be extended to the next succeeding Business
Day, except that if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the last
day of such Interest Period shall be the next preceding Business Day;
and
(e) the Borrower may not have more than six (6) Interest
Periods in effect at any one time.
"INTERIM FACILITY" means that portion of the Facility made available to
the Borrower prior to the entry of the Final Order, as approved by the Interim
Order.
"INTERIM ORDER" means that certain order issued by the Bankruptcy Court
in substantially the form of Exhibit E-3 and otherwise in form and substance
satisfactory to the Agent.
"INVENTORY" means, with respect to any Loan Party, any and all
"inventory," as such term is defined in Section 9-109(4) of the UCC, now owned
or hereafter acquired by such Loan Party, and wherever located.
"INVESTMENT" means (i) the acquisition of any interest in any property,
assets or business from any Person, whether by sale, lease or otherwise, (ii)
the funding of any loan, extension of credit, accommodation or capital
contribution to or for the benefit of any Person, and (iii) the acquisition of
any debt or equity securities of or claim against or interest in any Person,
whether upon original issuance, by purchase or otherwise.
"INVESTMENT PROPERTY" means, with respect to any Loan Party, any and
all "investment property" as such term is defined in Section 9-115(l)(f) of the
UCC, now owned or hereafter acquired by such Loan Party and wherever located.
"LC APPLICATION" means an application for a Letter of Credit in
substantially the form of Exhibit B-3, setting forth the information described
therein and such other information as the LC Bank may reasonably request, and
signed by an Authorized Officer.
"LC BANK" means Citibank.
"LC EXPOSURE" means the sum, as of any date of determination, of the
Unfunded LC Exposure and the Funded LC Exposure.
"LC FEE RATE" means, for any day, the then Eurodollar Rate Margin minus
0.25% per annum.
"LC SUBCOMMITMENT" means the lesser, as of any date of determination,
of (i) $50,000,000 and (ii) the Facility Amount.
"LEASE EXPENSE" means, with respect to any Person, for any period for
such Person and its subsidiaries on a consolidated basis, lease and rental
expense accrued during such period under all leases and rental agreements, other
than Capital Leases and leases of personal property, of Health Care Facilities,
determined in conformity with GAAP.
16
"LENDER" means each financial institution or other entity that (a) is
listed on the signature pages hereof as a "Lender" or (b) from time to time
becomes a party hereto by execution of an Assignment and Acceptance.
"LETTER OF CREDIT" means a letter of credit that (i) is available for
funding in Dollars until an expiry date no later than the thirtieth (30th) day
preceding the Termination Date, (ii) is issued by the LC Bank at the request and
for the account of the Borrower or of any other Loan Party; provided that such
other Loan Party shall be a co-applicant, along with the Borrower, on such
letter of credit, (iii) is governed by the Uniform Customs and Practices for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication 500, except as otherwise agreed by the LC Bank, (iv) has a term of
one year or less, and (v) is in form reasonably satisfactory to the LC Bank.
"LIEN" means any mortgage, deed of trust, lien, pledge, charge,
security interest, hypothecation, assignment, deposit arrangement or encumbrance
of any kind in respect of any asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a vendor
or lessor under any conditional sale agreement, capital or finance lease or
other title retention agreement relating to such asset.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Blocked Account
Letters, the Letters of Credit, each LC Application, the Fee Letters and all
other guaranties and other agreements, instruments and written indicia of the
Obligations delivered to the Agent or any Lender by or on behalf of the Borrower
or any other Loan Party pursuant to or in connection with the transactions
contemplated hereby and thereby.
"LOAN PARTIES" means the Borrower and each Guarantor.
"MATERIAL ADVERSE CHANGE" means any materially adverse change in (i)
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and the other Loan Parties, taken as a
whole, (ii) the ability of the Loan Parties to perform their respective
obligations under the Loan Documents or (iii) the ability of the Agent and the
Lenders to enforce the Loan Documents.
"MATERIAL ENVIRONMENTAL CLAIM" means any Environmental Claim,
regardless of merit, which does or can reasonably be expected to (i) result in
the Borrower or any of its Subsidiaries expending in the aggregate an amount in
excess of $2,500,000 to defend against, settle or satisfy, or (ii) prevent or
enjoin the Borrower or any of its Subsidiaries from operating a Health Care
Facility on any property on which it conducts operations.
"MATERIAL LEASE" means any lease agreement in which the aggregate
annual rental payments due thereunder exceed $2,500,000.
"MATURITY DATE" means the second anniversary of the Closing Date.
"MAXIMUM CREDIT" means at any time, (i) the lesser of (A) the Facility
Amount in effect at such time and (B) the Borrowing Base at such time minus (ii)
any Availability Reserve in effect at such time.
"MEDICAID ACCOUNTS" means all Accounts for which the Account Debtor is
(A) any State acting pursuant to a health plan adopted pursuant to Title XIX of
the Social Security Act or (B) any agent, carrier, administrator or intermediary
for such State in connection with any such plan.
17
"MEDICAL SERVICES" means medical and health care services provided to a
Patient, including, but not limited to, medical and health care services
provided to a Patient and performed by or on behalf of any Loan Party which are
covered by a policy of insurance issued by an Insurer, and includes physician
services, nurse and therapist services, dental services, hospital services,
skilled nursing facility services, comprehensive outpatient rehabilitation
services, home health care services, residential and out-patient behavioral
healthcare services, and medicine or health care equipment provided by or on
behalf of any Loan Party to a Patient for a valid and proper medical or health
purpose.
"MEDICARE ACCOUNTS" means all Accounts for which the Account Debtor is
(A) the United States acting under the Medicare program established pursuant to
the Social Security Act or (B) any agent, carrier, administrator or intermediary
for the United States in connection with any such program.
"MEDICARE SETOFF ARRANGEMENT" means (i) an agreement between the
Borrower and the applicable federal Governmental Authorities that are Account
Debtors on all Medicare Accounts, which agreement shall have been approved by an
order of the Bankruptcy Court or (ii) a final, Non-Stayed Order binding on such
federal Governmental Authorities, in each case covering issues of setoff and
recoupment with respect to Medicare Accounts and in each case on terms and
conditions acceptable to the Agent and the Requisite Lenders.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., and its successors.
"MORTGAGE" means a mortgage, deed of trust or other real estate
security document encumbering Real Property of any Loan Party made or required
herein to be made by such Loan Party.
"MORTGAGE VALUE" means, with respect to any parcel of Eligible Real
Property, the lesser of (a) the maximum stated amount secured by the Lien on
such parcel of Eligible Real Property granted in favor of the Agent pursuant to
the relevant Mortgage and (b) the value of such parcel of Eligible Real Property
set forth in the appraisal delivered with respect thereto.
"MORTGAGEE'S TITLE INSURANCE POLICY" has the meaning specified in the
definition of Eligible Real Property.
"MULTIEMPLOYER PLAN" means any "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, as to which the Borrower or any of its ERISA
Affiliates has any obligation or liability (contingent or otherwise).
"1934 ACT" means the Securities Exchange Act of 1934 and the
regulations thereunder.
"NET CASH PROCEEDS" means (a) proceeds received by any Loan Party after
the Closing Date in cash or Cash Equivalents from any Asset Sale, other than
Asset Sales permitted under clauses (i) and (ii) of Section 6.02(b), net of (x)
the reasonable cash costs of sale, assignment or other disposition, (y) taxes
paid or payable as a result thereof and (z) any amount required by the
Bankruptcy Court to be paid or prepaid on Debt secured by a perfected and
unavoidable lien on the assets subject to such Asset Sale; provided, however,
that the evidence of each of (x), (y) and (z) are provided to the Agent in form
and substance satisfactory to it; (b) all money and other Cash Equivalents
obtained as a result of any claims against third parties or any legal action or
proceeding with respect to any of the Collateral; and (c) proceeds of fire or
other insurance on account of the loss of or damage to any such assets or
property, and payments of compensation for any such assets or property taken by
condemnation or eminent domain.
18
"NON-STAYED ORDER" means an order of the Bankruptcy Court which is in
full force and effect, as to which no stay has been entered and which has not
been reversed, modified, vacated or overturned.
"NOTES" means the revolving notes of the Borrower which may be required
to be delivered pursuant to Section 6.01(m) and all promissory notes and other
evidence of indebtedness at any time delivered by the Borrower in exchange or
substitution therefor or in replacement thereof or as additional evidence of the
Borrower's indebtedness for the Advances.
"NOTICE OF BORROWING" means a notice in substantially the form of
Exhibit ▇-▇.
"NOTICE OF CONTINUANCE/CONVERSION" means a notice in substantially the
form of Exhibit B-2.
"NOTICE OF SWING LINE ADVANCE" means a notice in substantially the form
of Exhibit B-4.
"OBLIGATIONS" means all present and future Debts, obligations and
liabilities of every type and description of the Borrower or any other Loan
Party at any time arising under or in connection with this Agreement, any other
Loan Document, cash management services or any agreement related thereto, or any
Hedging Contract, due or to become due to the Agent, any Lender, any Person
required to be indemnified under any Loan Document or any other Person and shall
include (i) all liability for principal of and interest on any Advances, (ii)
all liability for principal of and interest on any reimbursement owed to the LC
Bank for a payment made by it under a Letter of Credit, and (iii) all liability
under the Loan Documents, such cash management agreements and Hedging Agreements
for any additional interest, fees, taxes, compensation, costs, losses, expense
reimbursements and indemnification.
"OECD" means the Organization for Economic Cooperation and Development.
"ORDERS" means the Interim Order or the Final Order, as applicable.
"OTHER AGENTS" means, collectively, the Syndication Agent and the
Co-Documentation Agents.
"OTHER TAXES" is defined in Section 2.16(b).
"OUTSTANDING REVOLVING CREDIT" means the sum, as of any date of
determination, of (i) the aggregate outstanding principal amount of the Advances
and (ii) the LC Exposure.
"PATIENT" means any Person receiving Medical Services from any Loan
Party and all Persons legally liable to pay any Loan Party for such Medical
Services other than Insurers.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its functions under ERISA.
"PENSION PLAN" means any pension plan (other than a Multiemployer Plan)
as to which the Borrower or any of its ERISA Affiliates has any obligation or
liability (contingent or otherwise) and which is subject to Title IV of ERISA or
Section 412 of the Code.
"PERMANENT FACILITY" means the Facility made available to the Borrower
from and after the entry of the Final Order.
19
"PERMIT" means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"PERMITTED LIENS" means Liens permitted under Section 6.02(a).
"PERMITTED PREPETITION CLAIM PAYMENT" means a payment (as adequate
protection or otherwise) on account of any Claim arising or deemed to have
arisen prior to the commencement of the Cases, which is made (i) pursuant to
authority granted by a Non-Stayed Order of the Bankruptcy Court and (ii) when
aggregated with all such payments does not exceed $200,000,000; provided, that
no such payment shall be made after the occurrence and during the continuance of
a Potential Default or an Event of Default.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"PETITION DATE" is defined in the recitals to this Agreement.
"POTENTIAL DEFAULT" means any event or condition described in Section
7.01 which, with any notice or passage of time (or both) expressly described in
Section 7.01, would constitute an Event of Default.
"PRIVATE PAYOR ACCOUNT" means an Account or any portion of an Account
that is payable by an individual beneficiary, recipient or subscriber
individually and not directly to a Loan Party by Medicaid, Medicare or an
Insurer.
"PROCEEDS" means any and all "proceeds," as such term is defined in
Section 9-306 of the UCC.
"PROJECTIONS" means the Borrower's projections to be delivered in a
form consistent with the Initial Projections.
"PRO RATA SHARE" means, in respect of any Lender, the percentage
obtained by dividing (a) the Commitment of such Lender by (b) the aggregate
Commitments of all Lenders (or, at any time after the Termination Date, the
percentage obtained by dividing the aggregate outstanding principal balance of
the Outstanding Revolving Credit owing to such Lender by the aggregate
outstanding principal balance of the Outstanding Revolving Credit owing to all
Lenders).
"QUARTER" means, with respect to any Person, a fiscal quarter of such
Person.
"REAL PROPERTY" means all of those plots, pieces or parcels of land now
owned, leased or hereafter acquired or leased by any Loan Party (the "LAND"),
together with the right, title and interest of such Loan Party, if any, in and
to the streets, the land lying in the bed of any streets, roads or avenues,
opened or proposed, in front of, the air space and development rights pertaining
to the Land and the right to use such air space and development rights, all
rights of way, privileges, liberties, tenements, hereditaments and appurtenances
belonging or in any way appertaining thereto, all fixtures, all easements now or
hereafter benefiting the Land and all royalties and rights appertaining to the
use and enjoyment of the Land, including all alley, vault, drainage, mineral,
water, oil and gas rights, together with all of the buildings and other
improvements now or hereafter erected on the Land, and any fixtures appurtenant
thereto.
20
"REGISTER" is defined in Section 11.07(c).
"RELATED FUND" means, with respect to any Lender that is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"RELEASE" means, with respect to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration, in each case, of any Contaminant into the indoor or
outdoor environment or into or out of any property owned by such Person,
including the movement of Contaminants through or in the air, soil, surface
water, ground water or property.
"REMEDIAL ACTION" means all actions required to (a) clean up, remove,
treat or in any other way address any Contaminant in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release so that a Contaminant does not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care.
"REQUIREMENT OF LAW" means as to any Person, the certificate or
articles of incorporation and bylaws or other organizational or governing
documents of such Person, and any law, statute, ordinance, code, decree, order,
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
(including, without limitation, laws, ordinances and regulations pertaining to
the zoning, occupancy and subdivision of real property).
"REQUISITE LENDERS" means Lenders at the time in the aggregate holding
at least 51% of (i) the aggregate Commitments of all the Lenders and/or (ii) the
aggregate outstanding principal amount of the sum of (x) the Advances by all
Lenders and (y) LC Exposure of all Lenders.
"RESTRUCTURING" means (i) the recapitalization and financial
restructuring of the Borrower and its Subsidiaries, including as accomplished in
the Cases, and (ii) the Borrower's facility rationalization process, including
as contemplated in the Initial Projections.
"RESTRUCTURING CHARGES" means all of the following, to the extent
deducted in determining the net income of a Person: fees, charges, expenses,
write-offs and write-downs relating to the Restructuring, incurred prior to or
after the Petition Date, including, without limitation, (i) fees, costs and
expenses, including without limitation, financing costs and fees, attorneys' and
accountants' fees, retention, incentive and downsizing costs, appraisals and
other fees and expenses, incurred in connection with the Restructuring by the
Borrower, any Filing Subsidiary or any other interested person which is payable
by the Borrower or any Filing Subsidiary, (ii) fees paid to Warburg Dillon Read
LLC, KPMG LLP or any other consultants or investment advisors hired or engaged
by or for the benefit of any Borrower or any Filing Subsidiary or any interested
person which are payable by any Borrower or any Filing Subsidiary and (iii)
costs and expenses relating to closed or terminated facilities, or facilities at
which operations have been materially reduced, including , without limitation,
continuing occupancy costs and other related expenses, any payments made to
landlords of closed, terminated or operationally reduced facilities or rejected
leases, in cancellation, reduction or modification of lease obligations,
severance payments to employees and independent contractors and other
miscellaneous expenses related to closed, terminated or operationally reduced
facilities, in each case, including any reserves therefor; provided that the
amount of cash charges with respect to the items described in clauses (i)
through (ii) above shall not exceed an aggregate amount of (A) during the first
twelve months following the Closing
21
Date, $30,000,000 and (B) during the twelve month period immediately following
the first twelve months after the Closing Date, $25,000,000.
"REVOLVING CREDIT ADVANCE" is defined in Section 2.01(a).
"ROTECH" means RoTech Medical Corporation, a Florida corporation.
"S&P" means Standard & Poor's Ratings Services, A Division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors.
"SECURED PARTIES" means the Agent, the Lenders, the Swing Line Bank,
the LC Bank, each of their respective successors and assigns, and the
beneficiaries of each indemnification obligation undertaken by the Loan Parties
and the Agent.
"SOCIAL SECURITY ACT" means the Social Security Act as codified at 42
U.S.C. Section 1395 et. seq.
"STATE" means the District of Columbia or any state of the United
States of America.
"STOCK" means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity,
whether voting or non-voting.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled
directly or indirectly by such Person or one or more Subsidiaries of such Person
or a combination thereof.
"SWING LINE ADVANCE" means an Advance made by (a) the Swing Line Bank
pursuant to Section 2.01(a)(ii) or (b) any Lender pursuant to Section 2.01(h).
"SWING LINE BANK" means CUSA.
"SWING LINE FACILITY" has the meaning specified in Section 2.01(a)(ii).
"SYMPHONY" means Symphony Health Services, Inc., a Delaware
corporation.
"SYNDICATION AGENT" means First Union National Bank.
"TAXES" is defined in Section 2.16(a).
"TERMINATION DATE" means the earliest of (a) the Maturity Date, (b) the
date of termination of the Commitments pursuant to Section 2.06(a), (c) the date
on which the Obligations become due and payable pursuant to Section 7.01 and (d)
the Effective Date.
"'34 ACT COMPANY" means a Person that is a reporting company under the
1934 Act.
"UCC" means, at any time, the Uniform Commercial Code in effect in the
State of New York at such time.
22
"UNFUNDED LC EXPOSURE" means the maximum amount which the LC Bank may
be required, under all Letters of Credit outstanding as of any date of
determination, to pay on such date or at any future time.
"UNFUNDED PENSION LIABILITY" means, with respect to any Pension Plan,
the excess of such Pension Plan's accrued benefits, as defined in Section 3(23)
of ERISA, over the current value of such Pension Plan's assets, as defined in
Section 3(26) of ERISA (but excluding from the definition of "current value" of
"assets" of such Pension Plan, accrued but unpaid contributions).
"UNITED STATES" and "U.S." mean the United States of America.
"U.S. TRUSTEE" means the United States Trustee for the District of
Delaware.
"WITHDRAWAL LIABILITIES" means the aggregate amount of the liabilities,
if any, pursuant to Section 4201 of ERISA if the Borrower and each ERISA
Affiliate made a complete withdrawal from all Multiemployer Plans and any
increase in contributions pursuant to Section 4243 of ERISA.
"YEAR 2000 COMPLIANT" means the ability of hardware, firmware or
software systems associated with information processing and delivery, operations
or services, operated by, provided to or otherwise necessary to the business or
operations of the Borrower or the Filing Subsidiaries to recognize and properly
perform date-sensitive functions involving certain dates prior to, and at any
date after, December 31, 1999.
SECTION 1.02. Accounting Terms. All accounting terms not expressly
defined herein shall be construed, except where the context otherwise requires,
and all financial computations required under this Agreement shall be made in
accordance with GAAP applied on a consistent basis. If GAAP changes during the
term of this Agreement so as to affect the calculation of any term defined
herein or any measure of financial performance or financial condition employed
or referred to herein, the Borrower and the Lenders agree to negotiate in good
faith toward an amendment of this Agreement which shall approximate, to the
extent possible, the economic effect of the original provisions hereof after
taking into account such change in GAAP, but until the parties are able to agree
upon such amendment (i) the Borrower shall be deemed in compliance with the
provisions hereof only if and to the extent it would have been in compliance if
such change in GAAP had not occurred and (ii) the Borrower shall deliver to the
Agent, with each financial report delivered by the Borrower hereunder,
information sufficient to confirm such compliance as if such change in GAAP had
not occurred.
SECTION 1.03. Other Definitional Provisionss.
(a) Unless otherwise specified herein or therein, all terms defined in
this Agreement shall have the defined meanings when used in any other Loan
Document or in any certificate or other document made or delivered pursuant
hereto.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section, Schedule and Exhibit
references are to this Agreement unless otherwise specified. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms. The term "including" is not limiting and means "including
without limitation."
(c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but excluding"; and the word "through" means "to and
including."
23
(d) References to agreements and other documents shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(e) References to statutes or regulations shall be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(f) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. Revolving Facility and Swing Line Facility.
(a) Advances.
(i) Revolving Credit Advances. On the terms and subject to the
conditions contained in this Agreement, each Lender severally agrees to
make revolving loans (each a "REVOLVING CREDIT ADVANCE") to the
Borrower from time to time on any Borrowing Date during the period from
the Closing Date until the Termination Date in an aggregate amount not
to exceed at any time outstanding for all such loans by such Lender
such Lender's Commitment; provided, however, that at no time shall any
Lender be obligated to make a Revolving Credit Advance to the Borrower
(i) in excess of such Lender's Pro Rata Share of the Available Credit
of the Borrower at such time and (ii) to the extent that the aggregate
Outstanding Revolving Credit, after giving effect to such Revolving
Credit Advance, would exceed the Maximum Credit at such time.
(ii) Swingline Advances. The Borrower may request the Swing
Line Bank to make, and the Swing Line Bank may, if in its sole
discretion it elects to do so, make, on the terms and conditions
hereinafter set forth, Swing Line Advances to the Borrower from time to
time on any Business Day during the period from the Closing Date until
the Termination Date in an aggregate amount not to exceed at any time
outstanding the lesser of (A) $20,000,000 and (B) the Swing Line Bank's
Pro Rata Share of the Available Credit at such time; provided, however,
that no Swing Line Advance may be made to the extent that the aggregate
Outstanding Revolving Credit, after giving effect to such Swing Line
Advance, would exceed the Maximum Credit at such time. No Swing Line
Advance shall be used for the purpose of funding the payment of
principal of any other Swing Line Advance. Each Swing Line Advance
shall be in an amount of $500,000 or an integral multiple thereof and
shall be made as a Base Rate Advance. Within the limits of the Swing
Line Facility and within the limits referred to in this clause (ii), so
long as the Swing Line Bank, in its sole discretion, elects to make
Swing Line Advances, the Borrower may borrow under this Section
2.01(a)(ii), prepay pursuant to Section 2.11 and reborrow under this
Section 2.01(a)(ii).
(b) Amount of Revolving Credit Advances. Each Revolving Credit Advance
shall be in an aggregate amount not less than $2,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of either Base Rate Advances
or Eurodollar Rate Advances. The Borrower may reborrow under Section 2.01(a)(i)
any Advances comprising part of the same Revolving Credit Advance that it has
voluntarily prepaid pursuant to Section 2.11.
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(c) Notice of Borrowing. To request a Revolving Credit Advance, the
Borrower shall deliver a Notice of Borrowing to the Agent not later than 11:00
a.m. New York City time (i) three Business Days prior to the requested Borrowing
Date, in the case of Eurodollar Rate Advances, and (ii) one Business Day prior
to the requested Borrowing Date, in the case of Base Rate Advances. The Agent
shall give each Lender prompt notice thereof by telecopier. The Notice of
Borrowing shall specify (A) the requested Borrowing Date, (B) the amount of the
Revolving Credit Advance and whether it will consist of Base Rate Advances or
Eurodollar Rate Advances, (C) the Available Credit at such time, and (D) in the
case of a Revolving Credit Advance comprised of Eurodollar Rate Advances, the
initial Interest Period for such Eurodollar Rate Advances.
(d) Telephonic Notice of Borrowing. The Borrower may give the Agent
telephonic notice of any proposed Revolving Credit Advance by the time required
under Section 2.01(c) and in such event shall promptly (but in no event later
than the Borrowing Date for the requested Revolving Credit Advance) deliver a
confirmatory Notice of Borrowing to the Agent. The Agent shall give each Lender
prompt notice thereof by telecopier. If the telephonic request differs in any
respect from the written Notice of Borrowing subsequently delivered, the
telephonic request shall govern as to the terms of all Advances made in
accordance with such telephonic request. The Agent's determination of the
contents of any telephonic request shall, absent manifest error, be conclusive
and binding on all parties hereto.
(e) Funding of Advances. Upon fulfillment of the applicable conditions
set forth in Article III, each Lender shall, before 12:00 noon New York City
time on the Borrowing Date, make available for the account of its Applicable
Lending Office to the Agent at its address referred to in Section 11.02, in same
day funds, such Lender's Pro Rata Share of a Revolving Credit Advance. After the
Agent in each case receives such funds, the Agent will, not later than 5:00 p.m.
New York City time on the Borrowing Date, make such funds available to the
Borrower at the Agent's aforesaid address.
(f) Assumption of Funding. Unless the Agent receives notice from a
Lender prior to any Borrowing Date that such Lender will not make available to
the Agent such Lender's Pro Rata Share of the Revolving Credit Advance to be
made on such Borrowing Date, the Agent may assume that such Lender has made its
respective share available to the Agent on such Borrowing Date in accordance
with Section 2.01(e) and the Agent may, in reliance upon such assumption, make
available to the Borrower on such Borrowing Date a corresponding amount. If and
to the extent that such Lender fails to make its respective share available to
the Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (i) in the case of the Borrower,
the interest rate applicable at the time to such Revolving Credit Advance and
(ii) in the case of such Lender, the Federal Funds Rate until the third Business
Day after demand by the Agent to such Lender for such repayment and thereafter
at the rate applicable at the time to such Revolving Credit Advance. If such
Lender shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Advance as part of such Revolving Credit Advance
for purposes of this Agreement and the Borrower shall thereupon be excused from
making the repayment described in the preceding sentence.
(g) Failure of Lender to Fund. All obligations of the Lenders hereunder
shall be several, but not joint. The failure of any Lender to make the Advance
to be made by it as part of any Revolving Credit Advance shall not relieve any
other Lender of its obligation, if any, hereunder to make its Advance as part of
such Revolving Credit Advance, but no Lender shall be responsible for the
failure of any other Lender to make an Advance on any Borrowing Date.
(h) Swing Line Advances. Each Swing Line Advance shall be made on
notice, given not later than 11:00 A.M. (New York City time) on the date of the
proposed Swing Line Advance, by the
25
Borrower to the Swing Line Bank and the Agent. Each such notice of a Swing Line
Advance (a "NOTICE OF SWING LINE ADVANCE") shall be by telephone or telecopier,
confirmed (in the case of telephonic notice) immediately in writing, specifying
therein the requested (i) date of such Swing Line Advance, (ii) amount of such
Swing Line Advance, (iii) maturity of such Swing Line Advance (which maturity
shall be no later than the seventh day after the requested date of such Swing
Line Advance) and (iv) the Available Credit at such time. If, in its sole
discretion, it elects to make the requested Swing Line Advance, the Swing Line
Bank will make the amount thereof available to the Agent at the Agent's address
referred to in Section 11.02, in same day funds. After the Agent's receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Agent will make such funds available to the Borrower at the
Agent's aforesaid address. Upon written demand by the Swing Line Bank with a
copy of such demand to the Agent, each other Lender shall purchase from the
Swing Line Bank, and the Swing Line Bank shall sell and assign to each such
other Lender, such other Lender's Pro Rata Share of such outstanding Swing Line
Advance as of the date of such demand, by making available for the account of
its Applicable Lending Office to the Agent for the account of the Swing Line
Bank, by deposit to the Agent's address referred to in Section 11.02, in same
day funds, an amount equal to the portion of the outstanding principal amount of
such Swing Line Advance to be purchased by such Lender. The Borrower hereby
agrees to each such sale and assignment. Each Lender agrees to purchase its Pro
Rata Share of outstanding Swing Line Advance on (i) the Business Day on which
demand therefor is made by the Swing Line Bank, provided that notice of such
demand is given not later than 11:00 A.M. (New York City time) on such Business
Day or (ii) the first Business Day next succeeding such demand if notice of such
demand is given after such time. Upon any such assignment by the Swing Line Bank
to any other Lender of a portion of a Swing Line Advance, the Swing Line Bank
represents and warrants to such other Lender that the Swing Line Bank is the
legal and beneficial owner of such interest being assigned by it, but makes no
other representation or warranty and assumes no responsibility with respect to
such Swing Line Advance, the Loan Documents or any Loan Party. If and to the
extent that any Lender shall not have so made the amount of such Swing Line
Advance available to the Agent, such Lender agrees to pay to the Agent forthwith
on demand such amount together with interest thereon, for each day from the date
of demand by the Swing Line Bank until the date such amount is paid to the
Agent, at the Federal Funds Rate. If such Lender shall pay to the Agent such
amount for the account of the Swing Line Bank on any Business Day, such amount
so paid in respect of principal shall constitute a Swing Line Advance made by
such Lender on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Swing Line Advance made by the Swing Line
Bank shall be reduced by such amount on such Business Day.
SECTION 2.02. Letter of Credit Subfacility.
(a) Issuance of Letters of Credit. Subject to the terms and conditions
set forth herein, the LC Bank agrees to issue one or more Letters of Credit, at
the request and for the account of the Borrower, on any Business Day on or after
the Closing Date and prior to the Termination Date, so long as (i) after giving
effect to the issuance of any Letter of Credit so requested, (A) the Outstanding
Revolving Credit at such time does not exceed the Maximum Credit at such time
and (B) the LC Exposure does not exceed the LC Subcommitment in effect at such
time, and (ii) the LC Bank has not received written notice from the Agent or
Requisite Lenders that an Event of Default or Potential Default is continuing.
(b) LC Application. The Borrower may request issuance of a Letter of
Credit by delivering an LC Application to the Agent not later than two Business
Days prior to the date the Letter of Credit is to be issued. The Agent shall
promptly deliver a copy of the LC Application to the LC Bank and each Lender.
(c) Reimbursement. Any payment made by the LC Bank of a draft drawn
under any Letter of Credit shall constitute for all purposes of this Agreement
the making by the LC Bank of a
26
Revolving Credit Advance in the amount of such draft, which Advance shall (i)
constitute a Base Rate Advance until converted, at the Borrower's election, into
a Eurodollar Rate Advance pursuant to Section 2.10, and (ii) satisfy the
Borrower's obligation to reimburse the LC Bank under this Section 2.02. With
respect to each Advance made pursuant to this Section 2.02(c), the Borrower
shall be deemed to have certified the statements contained in Section 3.02(e) as
of the date the payment constituting such Advance was made by the LC Bank;
provided, however, that in the event any such statement was not true and correct
as of such date, such Advance shall be repayable on demand; provided, further,
that upon any such repayment on demand, the failure of any such statement to be
true and correct as of such date shall not constitute an Event of Default under
Section 7.01, unless the failure of any such statement to be true and correct as
of such date would have constituted an Event of Default under Section 7.01 even
if such repaid Advance had never been made.
(d) Reimbursement Obligation Absolute. The conversion of a
reimbursement obligation to an Advance as provided in Section 2.02(c) and the
obligation of the Borrower to reimburse the LC Bank for each payment made by the
LC Bank under any Letter of Credit, and to pay interest thereon as provided
herein, shall be absolute, unconditional and irrevocable and shall be performed
strictly in accordance with the terms of this Agreement under and without regard
to any circumstances, including (i) any lack of validity or enforceability of
any of the Loan Documents; (ii) any amendment or waiver of or any consent to
departure from all or any terms of any of the Loan Documents; (iii) the
existence of any claim, setoff, defense or other right which any Loan Party may
have at any time against any beneficiary or any transferee of any Letter of
Credit (or any Persons for whom any such beneficiary or transferee may be
acting), the LC Bank, the Agent, any Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; (iv) any breach of contract or dispute among or between
any Loan Party, the Agent, the LC Bank, any Lender, or any other Person; (v) any
demand, statement, certificate, draft 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;
(vi) payment by the LC Bank (acting in good faith) under any Letter of Credit
against presentation of any demand, statement, certificate, draft or other
document which does not strictly comply with the terms of any Letter of Credit;
(vii) any non-application or misapplication by any beneficiary or transferee of
the proceeds of any amount paid under any Letter of Credit or any other act or
omission of such beneficiary or such transferee in connection with any Letter of
Credit; (viii) any extension of time for or delay, renewal or compromise of or
other indulgence or modification granted or agreed to by the LC Bank, the Agent,
or any Lender, with or without notice to or approval by any Loan Party; (ix) any
failure to preserve or protect any Collateral, any failure to perfect or
preserve the perfection of any Lien thereon, or the release of any Collateral;
or (x) any other circumstance or event whatsoever relating to any Loan Party or
such Letter of Credit or the reimbursement due therefor, whether or not similar
to any of the foregoing.
(e) Lender Participation. Each Lender severally agrees to participate
with the LC Bank in the extension of credit arising from the issuance of any
Letter of Credit in conformity with Section 2.02(a), in an amount equal to such
Lender's Pro Rata Share of the amount available for payment under such Letter of
Credit. Upon written demand by the LC Bank, with a copy of such demand to the
Agent, each Lender shall promptly fund its participation by paying to the LC
Bank Dollars in an amount equal to such Lender's Pro Rata Share of the payment
made by the LC Bank under any Letter of Credit, together with all interest
accrued and unpaid thereon for the period from the day on which the payment to
be reimbursed was demanded by the LC Bank until the Business Day on which such
funding from such Lender is received by the LC Bank at the rate per annum equal
to the Federal Funds Rate until the second Business Day following such demand,
and thereafter the rate per annum then applicable to Base Rate Advances. Upon
funding its participation in accordance with this Section 2.02(e), each Lender
shall be deemed to have made an Advance pursuant to Section 2.01(a)(i) as of the
date the relevant Letter of Credit was drawn, and the Advance deemed, pursuant
to Section 2.02(c), to have been made by the LC
27
Bank upon any such payment shall be reduced, in an amount equal to such Lender's
participation. Each Lender's obligation to make such payment to the LC Bank
shall be absolute, unconditional and irrevocable and shall not be affected by
any circumstance whatsoever, including the occurrence or continuance of any
Potential Default or Event of Default, the failure to meet any condition that
otherwise must be met for the funding of any Advance, or the failure of any
other Lender to make any payment under this Section 2.02(e), and each Lender
further agrees that such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. If after receipt of such funding from any
Lender the LC Bank receives payment from the Borrower or any other source on
account of the reimbursement obligation that was so funded, or the interest
accrued thereon, the LC Bank shall promptly remit such payment to the Agent for
prompt distribution to the Lenders to the extent of their participation therein.
(f) Commercial Practices. Each Loan Party assumes all risks of the acts
or omissions of any beneficiary or transferee of any Letter of Credit with
respect to the use of any Letter of Credit. Each Loan Party agrees that the LC
Bank, the Agent, the Lenders and their respective directors, officers or
employees shall not be liable or responsible for (i) the use which may be made
of any Letter of Credit or for any acts or omissions of any beneficiary or
transferee in connection therewith; (ii) any reference which may be made to this
Agreement or to any Letter of Credit in any agreements, instruments or other
documents; (iii) the validity, sufficiency or genuineness of any document other
than a Letter of Credit, or of any endorsement thereon, even if such document or
endorsement should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged or any statement therein prove to be untrue
or inaccurate in any respect whatsoever; (iv) payment by the LC Bank (acting in
good faith) against presentation of documents which do not strictly comply with
the terms of any Letter of Credit; or (v) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except only that
the LC Bank shall be liable to the Borrower for acts or events described in
clauses (i) through (v) above, to the extent, but only to the extent, of any
direct (as opposed to indirect, special or consequential) damages suffered by
the Borrower which the Borrower proves were caused by (A) the LC Bank's willful
misconduct or gross negligence in determining whether a draft or demand
presented under any Letter of Credit strictly complies with the terms and
conditions therefor stated in such Letter of Credit or (B) the LC Bank's willful
failure to pay any draft or demand presented under any Letter of Credit that
strictly complies with the terms and conditions thereof. The LC Bank may accept
any document that appears on its face to be in order, without responsibility for
further investigation. The determination whether a draft or demand is properly
presented under any Letter of Credit prior to its expiration or whether a draft
or demand presented under any Letter of Credit is in proper and sufficient form
may be made by the LC Bank in its sole discretion, and such determination shall
be conclusive and binding upon the Borrower to the extent permitted by law. Each
Loan Party hereby waives any right to object to any payment made under any
Letter of Credit on presentation of any draft or demand that is in the form
provided in the Letter of Credit but varies with respect to punctuation,
capitalization, spelling or similar matters of form.
SECTION 2.03. Evidence of Debt.
(a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Advance owing to such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(b) The Register maintained by the Agent pursuant to Section 11.07(c)
shall include accounts for each Lender, in which accounts (taken together) shall
be recorded (i) the rate and amount of each Advance made hereunder, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii)
the amount of any principal or interest due and payable or to become due and
payable
28
from the Borrower to each Lender hereunder and (iv) the amount of any sum
received by the Agent from the Borrower hereunder and each Lender's share
thereof.
(c) The entries made as provided in this Section 2.03 shall be
conclusive and binding for all purposes, absent manifest error.
SECTION 2.04. Fees.
(a) Unused Commitment Fees. The Borrower agrees to pay to each Lender a
commitment fee on the daily average amount by which the Commitment of such
Lender exceeds such Lender's Pro Rata Share of the Outstanding Revolving Credit
from the date hereof until the Termination Date at the Commitment Fee Rate,
payable in arrears (i) monthly on the first day of each month, commencing on the
first such day following the date of this Agreement and (ii) on the Termination
Date.
(b) Facing Fees. On the first day of each month commencing on the
Closing Date and continuing thereafter until the date the Facility Amount and
Unfunded LC Exposure have both been reduced to zero (for the period from the
first day in the respective month through the last day of such month or such
date the Facility Amount and Unfunded LC Exposure have both been reduced to
zero, as the case may be), including on the Termination Date (for the period
from the first day in the immediately preceding month to the Termination Date),
the Borrower shall pay to the Agent for the account of the LC Bank a facing fee
computed by applying 0.25% per annum to the Unfunded LC Exposure from day to day
in the prior month or partial month, as the case may be.
(c) Letter of Credit Fee. On the first day of each month commencing on
the first such day following the Closing Date and continuing thereafter until
the date the Facility Amount and Unfunded LC Exposure have both been reduced to
zero (for the period from the first day in the respective month through the last
day of such month or such date the Facility Amount and Unfunded LC Exposure have
both been reduced to zero, as the case may be), including on the Termination
Date (for the period from the first day in the immediately preceding month to
the Termination Date), the Borrower shall pay to the Agent for the account of
the Lenders, a letter of credit fee computed by applying the LC Fee Rate to the
Unfunded LC Exposure from day to day in the prior month or partial month, as the
case may be. If an Event of Default shall occur and be continuing, the Borrower
shall pay to the Agent a letter of credit fee at a rate equal to the sum of (A)
2.0% per annum and (B) the rate otherwise payable pursuant to this clause (c).
(d) Letter of Credit Administration. The Borrower shall pay the LC
Bank's usual and customary charges for opening, amending, presenting or honoring
any Letter of Credit and for any wire transfers and other administration charges
applicable to each Letter of Credit.
(e) Fees. The Borrower shall pay the Agent and the Arranger when due
all fees payable under the fee letter dated January 13, 2000 and the fee letter
dated the Closing Date (collectively, the "Fee Letters") from Citibank and the
Arranger to the Borrower.
SECTION 2.05. Voluntary and Mandatory Facility Reductions.
(a) Voluntary. The Borrower may, upon at least five Business Days'
prior notice to the Agent, terminate in whole or reduce in part ratably the
unused portions of the respective Commitments of the Lenders; provided, however,
that each partial reduction shall be in the aggregate amount of not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof
29
(b) RoTech Asset Sale. In the event of an Asset Sale of any of the
Stock of RoTech or all or substantially of the assets of RoTech (which Asset
Sale is subject to the approval of the Requisite Lenders), the Facility shall be
permanently reduced by an amount equal to $50,000,000 on the date of the
consummation of such Asset Sale; provided, however, that if an Event of Default
has occurred and is continuing on such date, the Facility shall be permanently
reduced by $100,000,000 (it being understood and agreed that the Lenders shall
have no obligation to make Advances or issue Letters of Credit unless and until
such Event of Default has been waived pursuant to Section 11.01 or is otherwise
cured).
SECTION 2.06. Principal Payments and Swing Line Payments. The Borrower
shall repay the Advances and reduce the Facility Amount as follows:
(a) Final Maturity. On the Termination Date, all outstanding Advances
shall be due and payable and the Facility Amount and LC Subcommitment shall be
automatically and permanently reduced to zero.
(b) Excess Credit Exposure. If at any time, by reason of any voluntary
or mandatory Facility Reduction or for any other reason, the Outstanding
Revolving Credit exceeds the Maximum Credit, the Borrower shall immediately,
without notice or demand, repay Advances or, if no Advances are outstanding,
deposit Dollars to the Citibank Collateral Account, in the manner described in
Section 7.02.
(c) Excess LC Exposure. If at any time, by reason of any voluntary or
mandatory Facility Reduction or for any other reason, the LC Exposure exceeds
the then LC Subcommitment, the Borrower shall immediately deposit Dollars in an
amount equal to such excess to the Citibank Collateral Account in the manner
described in Section 7.02.
(d) Swing Line Payments. The Borrower shall repay to the Agent for the
account of the Swing Line Bank the outstanding principal amount of each Swing
Line Advance, together with all interest accrued thereon, on the earlier of (i)
the maturity date specified in the applicable Notice of Swing Line Advance
(which maturity shall be no later than the seventh day after the requested date
of such Swing Line Advance) and (ii) the Termination Date.
SECTION 2.07. Interest. The Borrower agrees to pay interest on the
unpaid principal amount of each Revolving Credit Advance made by each Lender
comprising part of the same Revolving Credit Advance (or, in the case of an
Advance made pursuant to Section 2.02(c), by the LC Bank), and each Swing Line
Advance from the date of such Advance until such principal amount shall be
repaid in full, at the following rates per annum:
(a) Base Rate Advances. Whenever such Advance is a Base Rate Advance, a
rate per annum equal on each day to the sum of the Base Rate as in effect on
such day plus the Base Rate Margin determined for such day, with all such
interest accrued in any one month payable monthly on the first day of the next
following month and, in the case of the Revolving Credit Advances, when the
Facility Amount has been reduced to zero and all Advances comprising Revolving
Credit Advances are repaid in full. Interest shall be paid in cash for any Swing
Line Advance at a rate per annum equal on each day to the sum of the Base Rate
as in effect on such day plus the Base Rate Margin with all such interest
payable on the date of payment when such Swing Line Advance is due.
(b) Eurodollar Rate Advances. Whenever such Advance is a Eurodollar
Rate Advance, a rate per annum equal on each day during the Interest Period for
such Eurodollar Rate Advance to the sum of the Eurodollar Rate for such Interest
Period plus the Eurodollar Rate Margin determined for such day with all interest
so accrued payable on the last day of such Interest Period and, if such Interest
30
Period has a duration of more than three months, on the day which occurs three
months after the first day of such Interest Period.
(c) Default Interest. For any period of time during which an Event of
Default has occurred and is continuing, (i) the principal amount of all Advances
then outstanding shall bear interest payable upon demand at a rate per annum
equal to the sum of (A) 2.0% per annum and (B) the rate otherwise payable
pursuant to subsection (a) or (b) above, but not to exceed the maximum rate
permitted by applicable law and (ii) the amount of any interest, fee or other
amount payable hereunder which is not paid when due, shall bear interest from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2.0% per annum above the Base Rate as
in effect from time to time plus the Base Rate Margin.
SECTION 2.08. Additional Interest on Eurodollar Rate Advances. The
Borrower shall pay each Lender additional interest on the unpaid principal
amount of each Advance of such Lender for each day that such Advance is
outstanding as a Eurodollar Rate Advance, at a rate per annum equal to the
remainder obtained by subtracting (a) the Eurodollar Rate for such Interest
Period for such Eurodollar Rate Advance from (b) the rate determined by dividing
such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of such Lender for such day. Such additional interest shall
be determined by such Lender, notified to the Borrower through the Agent and
payable when and as interest is payable on such Eurodollar Rate Advance or, if
later, five Business Days after the Borrower receives notice thereof. If the
Borrower so requests, such Lender shall provide the Borrower through the Agent a
certificate setting forth the calculation and supporting information for such
additional interest, which shall be conclusive and binding for all purposes,
absent manifest error.
SECTION 2.09. Interest Rate Determination and Protection.
(a) Determination of Eurodollar Rate. The Eurodollar Rate for each
Interest Period for Eurodollar Rate Advances comprising part of the same
Revolving Credit Advance shall be determined by the Agent.
(b) Notice of Eurodollar Rate. The Agent shall give prompt notice to
the Borrower and the respective Lenders of the applicable Eurodollar Rate for
any Interest Period when determined by the Agent.
(c) Failure to Provide Information. If the Agent is unable to obtain
timely information for determining the Eurodollar Rate for any Eurodollar Rate
Advances, the Agent shall forthwith notify the Borrower and the respective
Lenders that the interest rate cannot be determined for such Eurodollar Rate
Advances and the obligation of such Lenders to make or continue, or to convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and such Lenders that the circumstances causing such
suspension no longer exist.
(d) Suspension of Eurodollar Rate Advances. In the event that: (i) the
Agent determines that adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the Eurodollar Rate then being
determined is to be fixed; or (ii) the Requisite Lenders notify the Agent that
the Eurodollar Rate for any Interest Period will not adequately reflect the cost
to the Lenders of making or maintaining such Loans for such Interest Period, the
Agent shall forthwith so notify the Borrower and the Lenders, whereupon each
Eurodollar Rate Advance will automatically, on the last day of the current
Interest Period for such Advance, convert into a Base Rate Loan and the
obligations of the Lenders to make Eurodollar Rate Advances or to convert Base
Rate Advances into Eurodollar Rate
31
Advances shall be suspended until the Agent shall notify the Borrower that the
Requisite Lenders have determined that the circumstances causing such suspension
no longer exist.
(e) Failure to Specify Duration. If the Borrower fails, prior to the
date the Eurodollar Rate for any Interest Period is determined by the Agent to
specify the duration of any Interest Period for any Eurodollar Rate Advances,
such Interest Period shall be one month.
(f) Agent's Determination Conclusive. Each determination by the Agent
of an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
SECTION 2.10. Voluntary Conversion of Advances.
(a) Notice of Continuance/Conversion. Subject to the provisions of
Sections 2.09 and 2.14, the Borrower may on any Business Day, by giving the
Agent a Notice of Continuance/Conversion not later than 11:00 a.m. (New York
City time) on the third preceding Business Day, (i) convert Base Rate Advances
comprising the same Revolving Credit Advance into Eurodollar Rate Advances, (ii)
convert Eurodollar Rate Advances comprising the same Revolving Credit Advance
into Base Rate Advances or (iii) continue Eurodollar Rate Advances as Eurodollar
Rate Advances, but (A) the Borrower may convert a Eurodollar Rate Advance into a
Base Rate Advance only on the last day of an Interest Period for such Eurodollar
Rate Advance, (B) the Borrower may continue a Eurodollar Rate Advance as a
Eurodollar Rate Advance only as of the last day of an Interest Period for such
Eurodollar Rate Advance, and (C) no Advance may be converted into or continued
as a Eurodollar Rate Advance at any time when an Event of Default or Potential
Default has occurred and is continuing.
(b) Telephonic Notice. In lieu of delivering a Notice of
Continuance/Conversion, the Borrower may give the Agent telephonic notice of any
proposed conversion or continuance by the time required under Section 2.10(a)
and in such event shall promptly (but in no event later than the date of the
requested conversion or continuance) deliver a confirmatory Notice of
Continuance/Conversion to the Agent. If the telephonic request differs in any
respect from the written Notice of Continuance/Conversion subsequently
furnished, the telephonic request shall govern as to the terms of such notice.
The Agent's determination of the contents of any telephonic request shall,
absent manifest error, be conclusive and binding on all parties hereto.
(c) Requirements. Each Notice of Continuance/Conversion or telephonic
request shall specify (i) the date of the continuance or conversion, (ii) the
Advances to be converted or continued and (iii) when Advances are converted into
or continued as Eurodollar Rate Advances, the duration of the Interest Period
for such Advances.
(d) Base Rate Advances. Unless a Eurodollar Rate has been determined
for a particular Advance and applies to such Advance on a particular day in
accordance with the provisions hereof, such Advance shall be a Base Rate Advance
and shall accrue interest at the rate then applicable to Base Rate Advances.
SECTION 2.11. Prepayments.
(a) Voluntary Prepayments . The Borrower from time to time may prepay,
without premium or penalty, the outstanding principal amounts of Advances, in
whole or ratably in part, so long as (i) the Borrower gives one Business Day's
prior written notice to the Agent stating the proposed date and aggregate
principal amount of the prepayment, (ii) each partial prepayment is made in an
aggregate principal amount of $2,000,000 or an integral multiple of $1,000,000
in excess thereof, (iii) if any Eurodollar Rate Advance is paid prior to the
last day of the Interest Period for such Advances, all unpaid
32
interest accrued to the date of prepayment on the principal amount prepaid and
all Breakage Costs incurred as a result of the prepayment are also paid, and
(iv) all unpaid interest accrued to the date of prepayment is paid concurrently
with any prepayment in full. In addition, the Borrower from time to time may
prepay, without premium or penalty, the outstanding principal amount of any
Swing Line Advance in whole, together with all unpaid interest thereon to the
date of prepayment. Notice of any prepayment under this Section 2.11(a), once
given, shall be irrevocable, and the amount of the prepayment specified in the
notice shall accordingly be due and payable on the prepayment date specified
therein.
(b) Mandatory Prepayments.
(i) Upon receipt by any Loan Party of Net Cash Proceeds, the
Borrower shall immediately prepay the Advances (or deposit cash in the
Citibank Collateral Account in respect of Letters of Credit in the
manner described in Section 7.02) in an amount equal to 100% of such
Net Cash Proceeds; provided, however, in the event such Net Cash
Proceeds are less than $10,000,000 in any transaction or series of
related transactions, such proceeds are not required to be applied to
the Advances (or deposited in the Citibank Collateral Account) to the
extent such proceeds are deposited in a Collection Account. Any such
mandatory prepayment shall be applied in accordance with Section
2.11(b)(ii) below.
(ii) Any prepayments made by the Borrower required to be
applied in accordance with Section 2.11(b)(i) shall be applied as
follows: first, to repay the outstanding principal balance of the Swing
Line Advances until such Swing Line Advances shall have been repaid in
full; second, to repay the outstanding principal balance of Revolving
Credit Advances which are Base Rate Advances until such Advances shall
have been paid in full; third, to repay the outstanding principal
balance of Revolving Credit Advances which are Eurodollar Rate Advances
until such Advances shall have been paid in full; provided, however,
that as long as no Potential Default or Event of Default shall occur
and be continuing, such prepayments shall, at the request of the
Borrower, be held in the Citibank Collateral Account pending
application to any Eurodollar Rate Advance on the last day of the
Interest Period with respect thereto; and then, to the Citibank
Collateral Account to provide cash collateral for the then LC Exposure
in the manner set forth in Section 7.02.
(iii) Each Borrower agrees that all available funds in the
Citibank Concentration Account shall be applied on a daily basis first
to repay the outstanding principal amount of the Swing Line Advances
until such Swing Line Advances shall have been repaid in full, second
to repay the outstanding principal balance of Revolving Credit Advances
which are Base Rate Advances until such Advances shall have been repaid
in full, third to repay the outstanding principal balance of Revolving
Credit Advances which are Eurodollar Rate Advances until such Advances
shall have been paid in full; provided, however, that as long as no
Potential Default or Event of Default shall occur and be continuing,
the amount of such Eurodollar Rate Advances shall, at the request of
the Borrower, be transferred to the Citibank Collateral Account pending
application to any Eurodollar Rate Advance on the last day of the
Interest Period with respect thereto; and fourth to any other
Obligations then due and payable. If there are no Advances outstanding
and no other Obligations are then due and payable (and no additional
funds are required to be on deposit in the Citibank Collateral Account
pursuant to Section 2.06(b) or (c) or Section 7.02), the Borrower may
direct the Agent to (and the Agent shall) disburse the excess amount of
such funds on deposit in the Citibank Concentration Account as
requested by the Borrower in writing. Any excess amount on deposit in
the Citibank Concentration Account after giving effect to the
applications required in this Section 2.11(b)(iii) may, at the request
of the Borrower, or shall, upon the occurrence and during the
continuance of any Event of Default and
33
notice to the Borrower by the Agent or the Requisite Lenders, be
transferred to, and held on deposit in, the Citibank Collateral
Account.
SECTION 2.12. Funding Losses. If (i) any Eurodollar Rate Advance is
repaid or converted to a Base Rate Advance on any day other than the last day of
an Interest Period for such Eurodollar Rate Advance (whether as a result of any
optional prepayment, mandatory prepayment, payment upon acceleration, mandatory
conversion or otherwise), (ii) after giving the respective notice thereof, the
Borrower fails to borrow any Eurodollar Rate Advance in accordance with a Notice
of Borrowing or a telephonic request delivered to the Agent (whether as a result
of the failure to satisfy any applicable conditions or otherwise), (iii) any
Base Rate Advance is not converted into a Eurodollar Rate Advance or any
Eurodollar Rate Advance is not continued as a Eurodollar Rate Advance in
accordance with a Notice of Continuance/Conversion or telephonic request
delivered to the Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise), or (iv) the Borrower fails to make any
prepayment in accordance with any notice of prepayment delivered to the Agent,
the Borrower shall, upon demand by any Lender, reimburse such Lender for all
costs and losses incurred by such Lender as a result of such repayment,
prepayment or failure ("BREAKAGE COSTS"), including costs and losses incurred by
a Lender as a result of funding arrangements or contracts entered into by such
Lender to fund Eurodollar Rate Advances. Breakage Costs shall be payable only if
demanded within 90 days after the end of the applicable Interest Period and
shall be due 30 days after demand. Demand shall be made by delivery to the
Borrower and the Agent of a certificate of the Lender making the demand, setting
forth in reasonable detail the calculation of the Breakage Costs for which
demand is made. Such certificate shall, in the absence of manifest error, be
conclusive and binding on the Borrower.
SECTION 2.13. Increased Costs.
(a) Increase in Cost. If, due to either (i) the introduction of or any
change (other than any change by way of imposition or increase of reserve
requirements, in the case of Eurodollar Rate Advances, included in the
Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender or any participant under
Section 11.07(e) of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time pay to the
Agent for the account of such Lender or participant additional amounts
sufficient to compensate such Lender or participant for such increased cost.
Such costs shall be payable only if demanded within six months after they were
incurred and shall be due 30 days after demand. Demand shall be made by delivery
to the Borrower and the Agent of a certificate of the Lender or participant
making the demand, setting forth in reasonable detail the calculation of the
costs for which demand is made. Such certificate shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
(b) Increase in Capital Requirements. If any Lender determines that
compliance with any law or regulation or any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender and that
the amount of such capital is increased by or based upon the existence of such
Lender's commitment to lend or funding hereunder and other commitments or
funding of this type, then, upon demand by such Lender, the Borrower shall,
within 30 days after demand from time to time by such Lender, pay to the Agent
for the account of such Lender additional amounts sufficient to compensate such
Lender or such corporation in the light of such circumstances, to the extent
that such Lender determines such increase in capital to be allocable to the
existence of such Lender's commitment to lend or funding hereunder. Demand for
such payment may be made at any time but must be made in writing, with a copy to
the Agent. No such compensation may be demanded as to increased capital
maintained by a Lender more than 12 months
34
before compensation was first demanded by such Lender under this Section
2.13(b). Demand for such compensation shall be made by delivery to the Borrower
and the Agent of a certificate of the Lender making the demand, setting forth
the amount demanded. Such certificate shall, in the absence of manifest error,
be conclusive and binding on the Borrower.
(c) Replacement Lenders and Participants. If, and on each occasion
that, (i) a Lender or a participant under Section 11.07(e) makes a demand for
compensation pursuant to Section 2.13(a) or Section 2.13(b) with respect to
Eurodollar Rate Advances or (ii) a Lender is excused from funding Eurodollar
Rate Advances pursuant to Section 2.14 or (iii) Taxes are required, pursuant to
Section 2.16(a), to be deducted from or with respect to any amount payable to
any Lender or the Agent, the Borrower may in whole permanently replace such
Lender or participant, as the case may be, with an Eligible Assignee willing to
become a Lender hereunder, on the following terms:
(A) The Borrower shall give the Agent and the Lender or
participant being replaced at least five Business Days' prior written
notice of the replacement. The notice must be given within 180 days
after the date of the event specified in clause (i), (ii) or (iii)
above, as the case may be, pursuant to which such replacement is made,
and must state the day (which must be a Business Day not more than 10
days after the notice is given) on which the replacement will be
effective.
(B) On the effective date of the replacement, (a) the
replacement Lender shall purchase the Advances owed to such replaced
Lender or participant for a purchase price equal to the principal
amount thereof and all interest accrued thereon as of such effective
date, payable in cash on such effective date, (b) an Assignment and
Acceptance in compliance with (this Agreement covering such Advances
shall be delivered to the replacement Lender by the Lender being
replaced or by the participant being replaced and the Lender from which
it holds its participation, and (c) the Borrower shall pay to the Agent
for the account of the replaced Lender or participant all Breakage
Costs resulting from the replacement and all additional interest, fees,
compensation, costs, losses, taxes, expense reimbursements, indemnities
and other Obligations due to the Lender or participant being replaced.
(C) The Borrower will remain liable to each replaced Lender or
participant for all Obligations that survive the repayment of the
Advances.
(D) The Borrower shall have received the written consent of
the Agent (which consent shall not be unreasonably withheld).
SECTION 2.14. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other Governmental Authority asserts that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, then (i) the obligation of such Lender to make or
continue, or to convert Advances into Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and (ii) the Borrower
shall forthwith either (A) prepay in full all Eurodollar Rate Advances of such
Lender then outstanding, together with interest accrued thereon and Breakage
Costs related thereto or (B) convert all Eurodollar Rate Advances of such Lender
then outstanding into Base Rate Advances and pay all interest accrued thereon to
the date of conversion and all Breakage Costs related thereto.
SECTION 2.15. Payments and Computations.
35
(a) Payments.The Borrower shall make each payment hereunder and under
the Notes not later than 11:00 a.m. (New York City time) on the day payment is
due, in Dollars received by the Agent at its address referred to in Section
11.02 in same day funds. Any payment due to a Lender shall be paid to the Agent
for account of such Lender. If the Agent receives a payment for account of a
Lender not later than 11:00 a.m. (New York City time), the Agent will cause like
funds to be distributed to such Lender for account of its Applicable Lending
Office by the close of business on the same day; if the Agent receives a payment
for account of a Lender after 11:00 a.m. (New York City time), the Agent will
cause like funds to be distributed to such Lender for account of its Applicable
Lending Office no later than the close of business on the next succeeding
Business Day.
(b) Charging of Accounts. If and to the extent any payment owed to the
Agent or any Lender is not made within three Business Days after the date it was
due hereunder or under the Note held by such Lender, each Loan Party hereby
authorizes the Agent and such Lender, subject to any notice period provided in
the Orders, to setoff and charge any amount so due against any deposit account
maintained by such Loan Party with the Agent or such Lender, whether or not the
deposit therein is then due.
(c) Computations. All computations of interest, additional interest and
fees accruing at a per annum rate shall be made on the basis of the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest, additional interest or commitment fees are
payable and a year of 360 days.
(d) Payment on Business Day. Whenever any payment hereunder or under
the Notes is due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall be
included in the computation of interest or fees. If, however, such extension
would cause payment of interest on or principal of Eurodollar Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(e) Presumption of Payment. Unless the Agent receives notice from the
Borrower prior to the date on which any payment is due to the Agent for the
benefit of the Lenders hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower does not make
such payment to the Agent in full when due, each Lender shall repay to the Agent
forthwith on demand such amount distributed to such Lender, together with
interest thereon for each day from the date such amount was distributed to such
Lender until the Business Day such Lender repays such amount to the Agent, at
the Federal Funds Rate until the third Business Day after such demand and
thereafter at the rate applicable to Base Rate Advances.
SECTION 2.16. Taxes.
(a) Net Payments. Any and all payments by the Borrower hereunder or
under the Notes shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Agent, taxes imposed on its net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender or
the Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender, taxes imposed on its net income, and franchise
taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities,
collectively, are "TAXES"). If the Borrower is required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note to any
Lender or the Agent,
36
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.16) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received if no such deductions
had been made, (ii) the Borrower shall make such deductions, and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) Payment of Other Taxes. In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, or otherwise
similarly with respect to, this Agreement, the Notes or any other Loan Document
("OTHER TAXES").
(c) Indemnification. The Borrower will indemnify each Lender and the
Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.16)
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses, but excluding any liability arising
from the gross negligence or willful misconduct of such Person) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnity shall be due 30 days
after written demand therefor. Any Person entitled to indemnification by the
Borrower pursuant to this Section 2.16(c) shall give the Borrower written notice
of any matter which such Person has determined has given rise to a right of
indemnification hereunder within 120 days after the earlier of (i) the date on
which such Person makes payment of the Taxes or Other Taxes giving rise to such
right or (ii) the date on which such Person receives written demand for payment
of such Taxes or Other Taxes from the applicable Governmental Authority;
provided, however, that the failure by any Person timely to provide such notice
(A) shall not release the Borrower from any of its obligations under this
Section 2.16(c) except to the extent the Borrower is materially prejudiced by
such failure, or such notice was provided more than 240 days after the latest
date such notice could have been timely given, and (B) shall not relieve the
Borrower from any other obligation or liability that it may have to such Person
otherwise than under this Section 2.16(c).
(d) Evidence of Payments. Within 30 days after the date of any payment
of Taxes hereunder by the Borrower, the Borrower will furnish to the Agent, at
its address referred to in Section 11.02, the original or a certified copy of
any receipt issued to the Borrower evidencing payment thereof.
(e) Withholding Tax Exemption. If any Lender is a "foreign person"
within the meaning of the Code, such Lender shall deliver to the Agent (i) (A)
if such Lender qualifies for an exemption from, or a reduction of, United States
withholding tax under a tax treaty, a properly completed and executed Internal
Revenue Service Form 1001 (or applicable successor form) before the payment of
any interest in the first calendar year and in each succeeding calendar year
during which interest may be paid under this Agreement, (B) if such Lender
qualifies for an exemption from United States withholding tax for interest paid
under this Agreement because it is effectively connected with a United States
trade or business of such Lender, two properly completed and executed copies of
Internal Revenue Service Form 4224 (or applicable successor form) before the
payment of any interest is due in the first taxable year of such Lender, and in
each succeeding taxable year of such Lender, during which interest may be paid
under this Agreement, or (C) if such Lender is not a "bank" as defined in
Section 881(c)(3)(A) of the Code, a properly completed and executed Internal
Revenue Service Form W-8 (or applicable successor form) before the payment of
any interest is due in the first taxable year of such Lender, and in each
succeeding taxable year of such Lender, during which interest may be paid under
this Agreement, certifying that such Lender is a foreign corporation,
partnership, estate or trust, together with a certificate
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of a duly authorized officer representing that such Lender is not a "bank" for
purposes of Section 881(c) of the Code, is not a 10% shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code), and (ii) such other form or forms as may be
required or reasonably requested by the Agent to establish or substantiate
exemption from, or reduction of, United States withholding tax under the Code or
other laws of the United States. Each Lender agrees to notify the Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction. If any form or document referred to in this subsection
(e) requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service Form 1001, 4224 or W-8 (or applicable successor forms) (or the
related certificate described above), that the Lender reasonably considers to be
confidential, the Lender shall give notice thereof to the Borrower and shall not
be obligated to include in such form or document such confidential information.
(f) Withholding Taxes. Where any Lender which is a "foreign person" is
entitled to a reduction in the applicable withholding tax, the Agent may
withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by Section 2.16(e) are not delivered to
the Agent, then the Agent may withhold from any interest payment to any Lender
not providing such forms or other documentation, an amount equivalent to the
applicable withholding tax.
(g) Subsequent Lenders. For purposes of this Section 2.16, the term
"Lender" shall include any assignee pursuant to, and after compliance with the
requirements of, Section 11.07; provided, however, that no Person acquiring any
participation pursuant to Section 11.07(e) shall be deemed a "Lender" for
purposes of this Section 2.16 unless and until the Borrower has been notified of
such participation. If any Lender grants participation in or otherwise transfers
its rights under this Agreement, the participant or transferee shall be bound by
the terms of Sections 2.16(e) and (f) as though it were such Lender.
(h) Refund, Deduction or Credit of Taxes. If any Lender determines, in
its sole good faith discretion, that it has actually and finally realized, by
reason of a refund, deduction or credit of any Taxes paid or reimbursed by the
Borrower pursuant to subsection (a), (b) or (c) above in respect of payments
under the Loan Documents, a current monetary benefit that it would otherwise not
have obtained, and that would result in the total payments under this Section
2.16 exceeding the amount needed to make such Lender whole, such Lender shall
pay to the Borrower, with reasonable promptness following the date on which it
actually realizes such benefit, an amount equal to the lesser of the amount of
such benefit or the amount of such excess, in each case net of all reasonable
out-of-pocket expenses in securing such refund, deduction or credit, provided
that nothing in this subsection shall require any Lender to provide its tax
returns to the Borrower or to manage its tax affairs in any particular manner.
(i) Exclusion of Certain Taxes. Notwithstanding any other provision of
this Agreement, the Borrower shall not be required to pay any amount hereunder
to any Lender or the Agent in respect of any Taxes to the extent that, on the
date hereof or any other date such Lender became a party to (or participant with
respect to) this Agreement or (with respect to payments to an Applicable Lending
Office) the date such Lender designated which Applicable Lending Office with
respect to this Agreement or any Notes, the obligation to withhold or pay such
Taxes existed or would exist upon the payment of an amount by the Borrower under
this Agreement or any Note; provided, however, that this paragraph shall not
apply (A) to any Lender or Applicable Lending Office that became a Lender or
Applicable Lending Office as a result of an assignment, transfer, or designation
made at the request of the Borrower, or (B) to the extent that the amount
otherwise payable by the Borrower pursuant to this Section 2.16 to any Lender
that is an assignee pursuant to (and in compliance with the requirements of)
Section 11.07 does not
38
exceed the amount that would have been payable under this Section 2.16 to the
assigning Lender in the absence of such assignment.
(j) Additional Cooperation. Any Lender claiming any amount pursuant to
this Section 2.16 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonably
requested by the Borrower or to change the jurisdiction of such Lender's
Applicable Lending Office if such a filing or change would avoid the need for or
reduce the amount payable by the Borrower under this Section 2.16 and would not,
in the good-faith determination of such Lender, otherwise be disadvantageous to
such Lender.
SECTION 2.17. Sharing of Payments. If after the occurrence and during
the continuance of any Event of Default any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any Advances owed to it in excess of its Pro Rata
Share of all such payments, such Lender shall forthwith purchase from the other
Lenders such participations in the Advances made by them as shall be necessary
to cause such purchasing Lender to share the excess payment ratably with each of
them. If all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from the other Lenders shall be rescinded
and each such other Lender shall repay to the purchasing Lender the purchase
price to the extent of its allocable share of such recovery together with its
allocable share of any interest required to be paid by the purchasing Lender on
the amount so recovered. The Borrower agrees that any Lender purchasing a
participation from another Lender pursuant to this Section 2.17 may, to the
fullest extent permitted by law, exercise collection rights (including the right
of set-off) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent on the Closing Date. This Agreement
shall become effective and binding upon the parties hereto only if each of the
following conditions precedent is satisfied by no later than March 31, 2000:
(a) Bankruptcy Court Order. The Bankruptcy Court shall have entered the
Interim Order, certified by the Clerk of the Bankruptcy Court as having been
duly entered, and the Interim Order is in full force and effect and shall not
have been vacated, reversed, modified, amended or stayed without the prior
written consent of the Agent and the Requisite Lenders.
(b) Loan Documents. The Agent must have received, with sufficient
copies for each Lender, and all in form and substance satisfactory to the Agent
and each Lender and each of their respective counsels:
(i) the Revolving Credit Notes (to the extent requested) duly
executed by the Borrower;
(ii) this Agreement duly executed by each of the Loan Parties,
the Agent and each of the Lenders;
(iii) interim unaudited quarterly and monthly financial
statements of the Borrower and its Subsidiaries, consistent with the
Borrower's past practices and in a form satisfactory to the
39
Agent, through the Quarter ending September 30, 1999 and each fiscal
month ending thereafter for which financial statements are available;
(iv) the executed legal opinion of ▇▇▇▇, Scholer, Fierman,
▇▇▇▇ & Handler, LLP, counsel to the Loan Parties, in substantially the
form of Exhibit D;
(v) such other legal opinions as the Agent may reasonably
require;
(vi) copies of the articles or certificate of incorporation
and by-laws or other governing documents of the Borrower, RoTech and
Symphony as in effect on the Closing Date, certified as of the Closing
Date by a Secretary or an Assistant Secretary of the Borrower, RoTech
or Symphony, as applicable;
(vii) copies of resolutions of the Board of Directors of the
Borrower, RoTech and Symphony approving the transactions contemplated
hereby and authorizing the execution, delivery and performance thereof
by the Borrower, RoTech and Symphony, as applicable, certified as of
the Closing Date by a Secretary or an Assistant Secretary of the
Borrower, RoTech or Symphony, as applicable;
(viii) a certificate of the Secretary or an Assistant
Secretary of the Borrower, RoTech and Symphony, certifying the names
and true signatures of the officers of the Borrower, RoTech and
Symphony, as applicable, authorized to sign each Loan Document to which
it is a party and to request an extension of credit hereunder;
(ix) a certificate of the Secretary or an Assistant Secretary
of the Borrower, certifying the names and true signatures of the
officers of each other Loan Party authorized to sign each Loan Document
to which it is a party;
(x) a good standing certificate for the Borrower, RoTech and
Symphony, issued as of a recent date by the Secretary of State of the
state in which the Borrower, RoTech and Symphony, as applicable, is
incorporated or formed and each state in which the Borrower, RoTech and
Symphony is qualified to do business;
(xi) the fee letter dated the Closing Date from Citibank and
the Arranger to the Borrower.
(xii) all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to this
Agreement or any other Loan Document;
(xiii) such other certificates, agreements, documents or
instruments as the Agent or the Arranger may reasonably request in
writing.
(c) Governmental Consents. Each Loan Party must have obtained (without
the imposition of any conditions that are not reasonably acceptable to the
Agent) all necessary consents, approvals and authorizations required from any
Governmental Authority in connection with the execution, delivery and
performance of its obligations under the Loan Documents and the transactions
contemplated thereby and such consents or approvals shall be in full force and
effect.
(d) No Injunction. No law or regulation shall prohibit, and no order,
judgment or decree of any Governmental Authority shall enjoin, prohibit or
restrain, and no litigation shall be pending or threatened which, in the
reasonable judgment of the Agent, would enjoin, prohibit, prevent or restrain
40
or impose materially adverse conditions upon (i) the making of the Advances,
(ii) the issuance of any Letter of Credit or (iii) the consummation of the
transactions contemplated by the Loan Documents.
(e) Material Adverse Change. Other than (i) the filing of the Cases and
(ii) the circumstances and conditions set forth in the Initial Projections,
there shall have occurred no Material Adverse Change since September 30, 1999.
(f) Security. The Agent shall have a valid and perfected lien on and
security interest in the Collateral having the priorities set forth herein and
in the Orders.
(g) Payment of Fees. All fees and expenses (including reasonable fees
and expenses of counsel) due to the Agent, the Lenders and the Arranger and all
fees and expenses provided for in the fee letter dated January 13, 2000 and
referred to in Section 2.04(e) must have been paid.
SECTION 3.02. Conditions Precedent to Each Extension of Credit. The
obligation of each Lender to make an Advance on the occasion of any Revolving
Credit Advance, the obligation of the LC Bank to issue any Letter of Credit and
the right of the Borrower to request a Swing Line Advance is subject to the
conditions precedent that on the date the Revolving Credit Advance or Swing Line
Advance is to be made or Letter of Credit is to be issued, including on the
Closing Date:
(a) Notice. The Borrower shall have delivered a fully completed Notice
of Borrowing, Notice of Swing Line Advance or LC Application, as the case may
be, dated on or before such date.
(b) Borrowing Base. After giving effect to the Advances requested to be
made on any such date, the use of proceeds thereof and any Letters of Credit
requested to be issued on any such date, the Outstanding Revolving Credit at
such time shall not exceed the Maximum Credit at such time.
(c) Borrowing Base Certificate. The Agent shall have received a
Borrowing Base Certificate, executed and delivered by an Authorized Officer of
the Borrower, as required by Section 6.01(c)(xii).
(d) Bankruptcy Court Approval.
(i) With respect to the Interim Facility, the Interim Order
authorizing and approving the Interim Facility and the transactions
contemplated thereby and, with respect to the Permanent Facility, the
Final Order, authorizing and approving the Permanent Facility and the
transactions contemplated thereby, shall have been duly entered and are
in full force and effect and shall not have been vacated, reversed,
modified, amended or stayed without the prior written consent of the
Agent and the Requisite Lenders; and
(ii) the First Day Orders and all motions and other documents
filed with and submitted to the Bankruptcy Court in connection with
this Agreement and the transactions contemplated hereby shall be
satisfactory in form and substance to the Agent.
(e) Statements. Each of the following statements shall be true:
(i) the representations and warranties contained in Article IV
are correct on and as of such date, before and after giving effect to
the extension of credit to be made hereunder on such date and the
application of the proceeds therefrom, as though made on and as of such
date;
41
(ii) no event has occurred and is continuing, or would result
from such extension of credit or from the application of the proceeds
therefrom, which constitutes an Event of Default or a Potential
Default;
(iii) other than (A) the filing of the Cases and (B) the
circumstances and conditions set forth in the Initial Projections, no
Material Adverse Change has occurred; and
(iv) the making of such Advance or the issuance of such Letter
of Credit does not violate any Requirements of Law and has not been
enjoined, temporarily, preliminarily or permanently.
The delivery of a Notice of Borrowing, Swing Line Notice of Borrowing or LC
Application and the acceptance by the Borrower of the proceeds of any Advance or
of a Letter of Credit shall constitute a representation and warranty by the
Borrower that, on the date such Advance is made or Letter of Credit is issued,
the foregoing statements are true.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Loan Parties. The
Borrower represents and warrants as to itself and as to each other Loan Party,
and each other Loan Party represents and warrants as to such Loan Party, as
follows:
(a) Organization. Each Loan Party is a corporation or partnership duly
organized, validly existing and in good standing (except where the failure of
one or more Loan Parties, other than the Borrower, RoTech or Symphony, to be in
good standing after the Closing Date could not reasonably be expected to result
in a Material Adverse Change) under the laws of the jurisdiction in which it is
organized and is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary.
(b) Power and Authority. Each Loan Party (i) has all the requisite
corporate or partnership power and authority to carry on its business as now
being conducted and as proposed to be conducted by it, (ii) has the legal right
to own, pledge, mortgage and operate its properties and to lease the property it
operates under lease and (iii) subject to the entry of the Orders, has all
requisite power and authority to execute, deliver and perform each Loan Document
to which it is a party and to take all action necessary to consummate the
transactions contemplated under each Loan Document to which it is a party).
(c) Due Authorization. The execution, delivery and performance by each
Loan Party of each Loan Document to which it is or will be a party have been
duly authorized by all necessary action of its board of directors (or, in case
of a partnership, of its governing authority).
(d) Subsidiaries and Ownership of Capital Stock and Ownership
Interests. Set forth in Part I of Schedule 4.01(d) hereto is a complete list, as
of the Closing Date, of all direct and indirect Subsidiaries of the Borrower.
Each Filing Subsidiary is a wholly-owned Subsidiary of the Borrower. Except as
set forth in such schedules, no capital stock of or other equity, ownership or
profit interest in any such Subsidiary is subject to issuance or sale under any
warrant, option or purchase right, conversion or exchange right, call,
commitment or claim of any right, title or interest therein or thereto. The
outstanding capital stock of each such Subsidiary is duly authorized, validly
issued, fully paid and
42
nonassessable and is not "margin stock," as that term is defined in Regulations
T, U and X of the Board of Governors of the Federal Reserve System.
(e) Health Care Facilities. Set forth in Schedule 4.01(e) hereto is a
complete list, as of the Closing Date, of each Health Care Facility owned,
leased, managed or operated by the Borrower or any Subsidiary of the Borrower
which is a skilled nursing facility, hospital, assisted living facility or
retirement facility, and Schedule 4.01(e) hereto, as it may be so amended,
specifically sets forth, with respect to each such Health Care Facility, whether
such Health Care Facility is a leased facility or an owned facility.
(f) Governmental Approval. No authorization or approval or other action
by, and no notice to or filing with, any Governmental Authority is required for
the due execution, delivery and performance by each of the Loan Parties of any
Loan Document to which it is or will be a party, except for those listed on
Schedule 4.01(f) hereto, each of which has been duly obtained or made and is in
full force and effect.
(g) Binding and Enforceable. Subject to the entry of the Orders, this
Agreement is, and each other Loan Document to which any Loan Party is or will be
a party is the legal, valid and binding obligation of the Loan Parties
enforceable against the Loan Parties in accordance with their respective terms.
(h) Government Regulation. No Loan Party is an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Loan Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Debt or to perform its
obligations hereunder. The making of the Advances by the Lenders to the
Borrower, the issuance of the Letters of Credit on behalf of the Borrower and
the application of the proceeds and repayment thereof will not violate any
provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
(i) Financial Information. The consolidated balance sheet of the
Borrower and its Subsidiaries as at September 30, 1999 and their related income
and cash flow statements for the period then ended, each other financial
statement of the Borrower and its Subsidiaries delivered to the Lenders on or
prior to the Closing Date, and each financial statement delivered to the Lenders
pursuant to Section 6.01(c), as and when delivered to the Lenders fairly
presents the consolidated financial condition of the Borrower and its
Subsidiaries as at the date thereof and the consolidated results of their
operations for the period then ended, all in accordance with GAAP consistently
applied.
(j) Material Adverse Change. Other than (i) the filing of the Cases and
(ii) the circumstances and conditions set forth in the Initial Projections,
there has been no Material Adverse Change since September 30, 1999.
(k) Compliance. Except as permitted pursuant to Section 6.02(n) and
Section 6.02(p), each Loan Party is in compliance in all material respects with
all material Requirements of Law.
(l) Litigation. Other than the Cases, there is no pending or overtly
threatened action or proceeding affecting any Loan Party before any court,
governmental agency or arbitrator, which would, if adversely determined, result
in a Material Adverse Change or which relates to or could reasonably be expected
to affect the legality, validity or enforceability of any Loan Document.
43
(m) No Conflict. Subject to the entry of the Orders, the execution,
delivery and performance by each Loan Party of each of the Loan Documents to
which it is a party do not and will not (i) conflict with, result in a breach
of, or constitute (with or without notice or the lapse of time or both) a
default under, any Contractual Obligation of any Loan Party or enforceable
against it or any of its property or assets, except under immaterial agreements
for supplies or services which are readily replaceable without any adverse
effect on such Loan Party or its business, (ii) conflict with or contravene any
Requirement of Law, (iii) contravene its Constituent Documents or (iv) require
any approval of its stockholders (if applicable).
(n) No Default. No event has occurred and is continuing which
constitutes an Event of Default or a Potential Default.
(o) Payment of Taxes. Each Loan Party has filed all federal income tax
returns and all other material tax returns required to be filed by it and has
paid all material taxes and assessments payable by it which have become due
except to the extent being contested.
(p) Margin Regulations. No proceeds of any Advance or Letter of Credit
will be used for any purpose that requires any Lender to deliver or obtain any
certification under, or to comply with any margin requirement or other provision
of, Regulations T, U or X of the Board of Governors of the Federal Reserve
System.
(q) Conduct of Business. The Borrower is a holding company engaged
primarily in the business of (i) holding stock of and claims against its
Subsidiaries; (ii) managing and developing corporate opportunities related to
the business of its Subsidiaries; (iii) administering and coordinating the
overall operating business of its Subsidiaries and other investments permitted
hereunder; (iv) obtaining of financing for the business of its Subsidiaries; and
(v) holding interests in and title to assets and property necessary or
appropriate to conduct such business in the ordinary course. Each Subsidiary of
the Borrower is either (i) inactive or (ii) engaged in the business of a Health
Care Company, including making Investments in Subsidiaries or Persons that are
Health Care Companies.
(r) Health Care Permits.
(i) Except as permitted pursuant to Section 6.01(k) and
Section 6.02(n), (A) each Loan Party now has, and except solely as a
result of the filing of the Cases, 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, including the ownership and operation
of its Health Care Facilities, pursuant to all applicable laws and all
requirements of Governmental Authorities having jurisdiction over such
Loan Party or over any part of its operations; (B) all such Health Care
Permits are in full force and effect and have not been amended or
otherwise modified (except for modifications which do not constitute
and cannot reasonably be expected to result in a Material Adverse
Change), rescinded, revoked or assigned; (C) no Loan Party is in
default in any material respect under, or in violation in any material
respect of, any such Health Care Permit (and to the best knowledge of
the Borrower, no event has occurred, and no condition exists, which,
with the giving of notice or passage of time or both, would constitute
a default thereunder or violation thereof) that has caused or could
reasonably be expected to cause the loss of any such Health Care
Permit; (D) neither the Borrower nor any other Loan Party has received
any notice of any violation of applicable laws which has caused or
could reasonably be expected to cause any such Health Care Permit to be
modified, rescinded or revoked (except for modifications, rescissions
or revocations not amounting to a Material Adverse Change); (E) to the
best knowledge of the Borrower, no condition exists or event has
occurred which could reasonably be expected to result in the
44
suspension, revocation, impairment, forfeiture or non-renewal of any
such Health Care Permit; and (F) the continuation, validity and
effectiveness of all such Health Care Permits will not in any way be
adversely affected by the transactions contemplated by this Agreement,
except that the exercise by the Agent of its rights and remedies in
respect of the Collateral may be subject to the licensing power of
health care regulatory authorities.
(ii) Except as permitted pursuant to Section 6.01(k) and
Section 6.02(n), all Health Care Facilities owned, leased, managed or
operated by any Loan Party are entitled to participate in, and receive
payment under, the appropriate Medicare, Medicaid and related
reimbursement programs and in any similar state or local
government-sponsored program, to the extent that such Loan Party has
decided to participate in any such state or local program, and to
receive reimbursement from private and commercial payers and health
maintenance organizations to the extent applicable thereto.
(s) Environmental Matters. Except as set forth in Schedule 4.01(s)
hereto, as it may from time to time be amended by the Borrower, (i) no Material
Environmental Claim is pending or, to the knowledge of the Borrower, overtly
threatened against the Borrower or any of its Subsidiaries, or any property or
assets currently owned or leased thereby, and (ii) to the knowledge of the
Borrower, no Material Environmental Claim is pending or overtly threatened
against any property or assets previously owned, leased or otherwise used by the
Borrower or any of its Subsidiaries. Except in respect of matters that, in the
aggregate, are not and cannot reasonably be expected to result in a Material
Environmental Claim or a Material Adverse Change, (i) the operations of the
Borrower and its Subsidiaries comply and have complied with all applicable
Environmental Laws, (ii) no facts, circumstances or conditions exist that could
reasonably be expected to result in the assertion of a Material Environmental
Claim against the Borrower or its Subsidiaries or to prevent continued
compliance by the Borrower and its Subsidiaries with Environmental Laws, and
(iii) to the knowledge of the Borrower, no material capital expenditures not
disclosed on Schedule 4.01(s) are anticipated or necessary to achieve or
maintain compliance with existing or promulgated, but not yet effective,
Environmental Laws.
(t) ERISA Compliance.
(i) Except as set forth on Schedule 4.01(t), each Pension Plan
is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other applicable Federal or state
law.
(ii) Each Pension Plan which is intended to be tax-qualified
under Section 401(a) of the Code has been determined by the IRS to
qualify under Section 401 of the Code, and the trusts created
thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and to the best knowledge of the
Borrower nothing has occurred which would cause the loss of such
qualification or tax-exempt status.
(iii) Except as set forth in Schedule 4.01(t) hereto, (A) none
of the Pension Plans has any material Unfunded Pension Liability as to
which the Borrower or any ERISA Affiliate is or may be liable; (B)
neither the Borrower nor any ERISA Affiliate has nor reasonably expects
to incur any material liability (and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in such
material liability) under Section 4201 or 4243 of ERISA with respect to
any Multiemployer Plan; and (C) other than the Cases, no ERISA Event
has occurred or, to the best knowledge of the Borrower, is reasonably
expected to occur.
(iv) Neither the Borrower nor any ERISA Affiliate has engaged,
directly or indirectly, in a prohibited transaction (as defined in
Section 4975 of the Code or Section 406 of
45
ERISA) for which no statutory or administrative exemption is applicable
in connection with any Plan the consequences of which, in the
aggregate, constitute or can reasonably be expected to result in a
Material Adverse Change.
(u) Title to Assets. Each Loan Party has title, as of the date of each
of its financial statements delivered hereunder, to all of its material assets
reflected therein, except assets leased to it under a Capital Lease, free and
clear of all Liens except Permitted Liens.
(v) Loan Documents. On and after the Closing Date, the provisions of
the Loan Documents and the Orders are effective to create in favor of the Agent,
for the benefit of the Secured Parties, legal, valid and perfected Liens on and
security interests (having the priority provided for herein) in all right, title
and interest in the Collateral, enforceable against each Loan Party that owns an
interest in such Collateral.
(w) Security. Pursuant to subsections 364(c)(2) and (3) of the
Bankruptcy Code and the Orders, all amounts owing by the Borrower under the
Facility and by the Guarantors in respect thereof (including, without
limitation, any exposure of a Lender or any of its affiliates in respect of cash
management or hedging transactions incurred on behalf of the Borrower or any
Guarantor) will be secured by a first priority perfected Lien on the Collateral,
subject only to (i) valid, perfected, nonavoidable and enforceable Liens
existing as of the Petition Date and (ii) the Carve-Out.
(x) Priority. Pursuant to section 364(c) of the Bankruptcy Code and the
Orders, all Obligations and all Obligations of the Guarantors in respect thereof
(including, without limitation, any exposure of a Lender in respect of cash
management or hedging transactions incurred on behalf of the Borrower or any
Guarantor) at all times will constitute allowed super-priority administrative
expense claims in each of the Cases having priority over all administrative
expenses of the kind specified in sections 503(b) or 507(b) of the Bankruptcy
Code, subject only to the Carve-Out.
(y) Orders. The Orders and the transactions contemplated hereby and
thereby, are in full force and effect and have not been vacated, reversed,
modified, amended or stayed without the prior written consent of the Agent.
(z) Accounts Receivable Each Account is genuine and in all respects
what it purports to be, and is not evidenced by a judgment. Each Account arises
from an actual and bona fide sale and delivery of goods or rendition of Medical
Services to customers, made by a Loan Party in the ordinary course of its
business, in accordance with the terms and conditions of all purchase orders,
contracts, certifications, participations, certificates of need or other
documents relating thereto and forming a part of the contract between the
relevant Loan Party and Account Debtor. Each Account covers the sale or the
rendition of services that gave rise to the Account and each invoice relating to
the Account and such services has been forwarded to the relevant Account Debtor
for payment in accordance with applicable laws and in compliance and conformity
with any and all requisite procedures, requirements and regulations governing
payment by such Account Debtor with respect to such Account, and all Medicare
Accounts and Medicaid Accounts are properly payable directly to a Loan Party in
the amount stated as the balance of such Account. The invoices evidencing the
Accounts are in the name of the Loan Party to which such Account is owed and are
available to the Agent. The customers of the Loan Parties have accepted the
goods or Medical Services the sale or rendition of which gave rise to the
Accounts, owe and are obligated to pay the full amounts stated in the related
invoices according to their terms. There are no facts, events or occurrences
which in any way impair the validity or enforceability of any Accounts or tend
to reduce the amount payable thereunder from the face amount of the claim or
invoice and statements related thereto. None of the Loan Parties has knowledge
of information that would lead it to believe that any of the following
statements is incorrect: (1) the Account Debtor under each Account had
46
the capacity to contract at the time any contract or other document giving rise
to such Account was executed; and (2) there are no proceedings or actions known
to the Borrower which are threatened or pending against any Account Debtor which
might result in any material adverse change in such Account Debtor's financial
condition or the collectibility of any Account owing by such Account Debtor.
(aa) Year 2000 Compliance. The Loan Parties are Year 2000 Compliant in
all material respects.
(bb) Full Disclosure. The information prepared or furnished by or on
behalf of the Borrower or any Loan Party in connection with this Agreement or
the consummation of the transactions contemplated hereby taken as a whole does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein or herein not
misleading. All facts known to the Borrower which are material to any
understanding of the financial condition, business, properties or prospects of
the Borrower and its Subsidiaries taken as one enterprise have been disclosed to
the Lenders.
(cc) ▇▇▇▇▇.▇▇ of the date hereof, there are no existing Liens on any
assets of the Loan Parties other than Permitted Liens and there are no existing
Liens on any material portion of the Accounts of any Loan Party.
(dd) Debt. As of the date hereof, there is no Debt of the Borrower or
any of its Subsidiaries other than Debt permitted by Section 6.02(d).
(ee) Depositary Banks. Schedule 1.01 sets forth a complete list as of
the Closing Date of each bank or financial institution at which any Loan Party
maintains any depositary account.
ARTICLE V
FINANCIAL COVENANTS OF THE BORROWER
SECTION 5.01. Financial Covenants. So long as any Obligation remains
unpaid, any Letter of Credit remains outstanding or any Lender is obligated to
extend credit hereunder, unless the Requisite Lenders otherwise consent in
writing the Borrower will:
(a) Minimum Adjusted EBITDA. Have during any period set forth below
Adjusted EBITDA for such period in an amount not less than the amount set forth
opposite such period:
For the period beginning
on January 1, 2000 Minimum Cumulative
and ending on: Adjusted EBITDA
March 31, 2000 $45,000,000
June 30, 2000 $90,000,000
September 30, 2000 $145,000,000
December 31, 2000 $200,000,000
For the period beginning
on January 1, 2001 Minimum Cumulative
and ending on: Adjusted EBITDA
March 31, 2001 $52,500,000
47
June 30, 2001 $105,000,000
September 30, 2001 $157,500,000
December 31, 2001 $210,000,000
(b) Maximum Capital Expenditures. The Borrower will not permit Capital
Expenditures to be made or incurred during any period set forth below in excess
of the amount set forth opposite such period:
For the period beginning
on January 1, 2000 Maximum Cumulative
and ending on: Capital Expenditures
March 31, 2000 $37,500,000
June 30, 2000 $75,000,000
September 30, 2000 $112,500,000
December 31, 2000 $150,000,000
For the period beginning
on January 1, 2001 Maximum Cumulative
and ending on: Capital Expenditures
March 31, 2001 $37,500,000
June 30, 2001 $75,000,000
September 30, 2001 $112,500,000
December 31, 2001 $150,000,000
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01. Affirmative Covenants. So long as any Obligation remains
unpaid, any Letter of Credit remains outstanding or any Lender is obligated to
extend credit hereunder, unless the Requisite Lenders otherwise consent in
writing, the Loan Parties will, and will cause their respective Subsidiaries to:
(a) Compliance with Laws. Comply in all material respects with all
Requirements of Law.
(b) Inspection of Property and Books and Records. (i) Maintain proper
books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving its assets and business, and (ii) permit
representatives of the Agent or any Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its officers, employees and independent public accountants, all at
the expense of the Borrower, in the case of visits or inspections by the Agent
and, if an Event of Default is then continuing, by any Lender, and at such
reasonable times during normal business hours and as often as may be reasonably
requested, upon reasonable advance notice to the Borrower, except that when an
Event of Default exists the Agent or any Lender may take any such action at any
time during business hours and on same-day notice.
48
(c) Reporting Requirements. Furnish to the Lenders, all in form and
substance satisfactory to the Agent:
(i) within 40 days after the end of each fiscal month in each
Fiscal Year (other than the third month in each Quarter), financial
information regarding the Borrower and its Subsidiaries consisting of
consolidated unaudited balance sheets as of the close of such month and
the related statements of income and cash flow for such month and that
portion of the current Fiscal Year ending as of the close of such month
(including separate balance sheets and income statements by business
line), setting forth in comparative form the figures contained in the
Initial Projections and the Business Plan, as applicable, for the
current Fiscal Year, in each case certified by an Authorized Officer of
the Borrower as fairly presenting the consolidated financial position
of the Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
accordance with GAAP (subject to the absence of footnote disclosure and
normal year-end audit adjustments).
(ii) within 55 days after the end of each of the first three
Quarters of each Fiscal Year, financial information regarding the
Borrower and its Subsidiaries consisting of consolidated unaudited
balance sheets as of the close of such Quarter and the related
statements of income and cash flow for such Quarter and that portion of
the Fiscal Year ending as of the close of such Quarter (including
separate balance sheets and income statements by business line),
setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Initial
Projections and the Business Plan, as applicable, for the current
Fiscal Year, in each case certified by an Authorized Officer of the
Borrower as fairly presenting the consolidated financial position of
the Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
accordance with GAAP (subject to the absence of footnote disclosure and
normal year-end audit adjustments).
(iii) within 100 days after the end of each Fiscal Year,
financial information regarding the Borrower and its Subsidiaries
consisting of consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such year and related statements of
income and cash flows of the Borrower and its Subsidiaries for such
Fiscal Year, all prepared in conformity with GAAP and certified, in the
case of such consolidated financial statements, without qualification
as to the scope of the audit by KPMG LLP or other independent public
accountants acceptable to the Administrative Agent, together with the
report of such accounting firm stating that (A) such financial
statements fairly present the consolidated financial position of the
Borrower and its Subsidiaries as at the dates indicated and the results
of their operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except for changes with which such independent certified public
accountants shall concur and which shall have been disclosed in the
notes to the financial statements), and (B) the examination by such
accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing standards,
and accompanied by a certificate stating that in the course of the
regular audit of the business of the Borrower and its Subsidiaries such
accounting firm has obtained no knowledge that an Event of Default in
respect of the financial covenants contained in Article V has occurred
and is continuing, or, if in the opinion of such accounting firm, a
Potential Default or Event of Default has occurred and is continuing in
respect of such financial covenants, a statement as to the nature
thereof.
(iv) together with each delivery of any financial statement
pursuant to clauses (ii) and (iii) of this Section 6.01(c), a
certificate of an Authorized Officer of the Borrower in substantially
the form of Exhibit E-1 (A) demonstrating compliance with each of the
financial covenants contained in Article V and (B) stating that no
Potential Default or Event of Default has occurred
49
and is continuing or, if a Potential Default or an Event of Default has
occurred and is continuing, stating the nature thereof and the action
which the Borrower proposes to take with respect thereto.
(v) no later than July 31, 2000, the Business Plan (including
updated Projections for the balance of the Facility);
(vi) promptly after the filing thereof, copies of all reports
on Form 10-K, 10-Q or 8-K and all other documents filed with the
Securities and Exchange Commission or any national securities exchange;
(vii) notice when, but in no event later than ten days after,
it becomes aware of any pending or threatened Material Environmental
Claim or the presence of any Hazardous Material in, on or under any of
its property that is likely to prohibit or restrict materially the
occupancy, transferability or use of such property under any
Environmental Laws or result in a Material Environmental Claim;
(viii) notice upon, but in no event later than ten days after,
the occurrence of any ERISA Event affecting the Borrower or any ERISA
Affiliate, together with (A) a copy of any notice with respect to such
ERISA Event that may be required to be filed with the PBGC and (B) any
notice delivered by the PBGC to the Borrower or any ERISA Affiliate
with respect to such ERISA Event;
(ix) As soon as practicable, and in any event within five
Business Days after any executive officer of any Loan Party has actual
knowledge of the existence of any Potential Default, Event of Default
or other event which has resulted in a Material Adverse Change or which
has any reasonable likelihood of causing or resulting in a Material
Adverse Change, the Borrower shall give the Agent notice specifying the
nature of such Default or Event of Default or other event, including
the anticipated effect thereof, which notice, if given by telephone,
shall be promptly confirmed in writing on the next Business Day;
(x) as soon as possible, and in any event within five Business
Days (A) after becoming aware thereof, notice of the occurrence of any
event that is or would (with the passage of time, notice or both) be a
default under or a violation of any Health Care Permit necessary for
the lawful conduct of the business or operations of any Loan Party,
including the ownership and operation of its Health Care Facilities;
(B) after receipt thereof, any notice of any violation of applicable
laws that causes or could reasonably be expected to cause any such
Health Care Permit to be materially modified, rescinded or revoked; and
(C) after becoming aware thereof, notice of the occurrence of any event
that constitutes or can reasonably be expected to result in a Material
Adverse Change;
(xi) as soon as possible, but in no event later than ten days
after becoming aware thereof, notice of any contingent liabilities of
the Borrower or any of its Subsidiaries that could reasonably be
expected to result in a Material Adverse Change;
(xii) within five days after the end of each fiscal month of
the Borrower, the Borrowing Base Certificate, together with all
appropriate supporting data pursuant to such Borrowing Base
Certificate; provided, that if the Available Credit shall be less than
$100,000,000, such Borrowing Base Certificate shall be delivered within
two days after the end of each Calendar Week of the Borrower;
50
(xiii) within five days after the end of each fiscal month of
the Borrower, average RUG rate and other payor rates for such fiscal
month;
(xiv) within three days after the end of each Calendar Week of
the Borrower, (A) rolling 13-week cash flow forecast, (B) facility
census by payor for such week; provided, that the delivery of such
census required pursuant to this clause (B) shall commence thirty days
after the Closing Date, (C) PIP collections in total for such week, (D)
Medicaid collections wired to the Borrower's corporate office during
such week, (E) daily collections compared to the Initial Projections
and the Business Plan, as applicable, for such week and (F)
consolidated facility occupancy rate for such week;
(xv) promptly after the commencement thereof, written notice
of the commencement of all actions, suits and proceedings before any
domestic or foreign Governmental Authority or arbitrator, affecting the
Borrower or any of its Subsidiaries, which in the reasonable judgment
of the Borrower, expose the Borrower or any such Subsidiary to
liability in an amount aggregating $1,000,000 or more or which, if
adversely determined, could reasonably be expected to result in having
a Material Adverse Change.
(xvi) promptly after the sending or filing thereof, copies of
all material notices, certificates or reports delivered pursuant to the
Existing Agreement;
(xvii) as soon as available, all schedules of assets and
liabilities, all statements of financial affairs, all operating
reports, all claims registers and all other pleadings, in each case
filed in the Cases by or on behalf of any Loan Party; and
(xviii) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as the Agent (on behalf of itself or any Lender) from time
to time may reasonably request.
(d) Preservation of Corporate Existence, Etc. Subject to Section
6.02(k), (i) preserve and maintain in full force and effect its corporate or
partnership existence and good standing under the laws of its State or
jurisdiction of incorporation or organization and all rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable in the
normal conduct of its business (provided, that the failure at any one time to
maintain Health Care Permits with respect to any seven Health Care Facilities
owned or leased by any one or more Filing Subsidiaries shall not constitute a
failure to comply with this Section 6.02(d)(i)), (ii) conduct its business
consistent with past practice, (iii) use its reasonable efforts, in the ordinary
course and consistent with past practice, to preserve its business organization
and preserve the goodwill and business of the customers, suppliers and others
doing business with it, and (iv) preserve or renew all of its registered
trademarks, trade names, patents, permits, material licenses, service marks and
other intellectual property, the non-preservation of which constitutes or could
reasonably be expected to result in a Material Adverse Change.
(e) Maintenance of Property. Except as otherwise required by the
Bankruptcy Code, maintain and preserve all its property which is necessary for
use in its business in good working order and condition, except ordinary wear
and tear and except as permitted under Section 6.02(b), and use the standard of
care typical in the industry in the operation of the Health Care Facilities.
(f) Bankruptcy Court. Use its best efforts to obtain the approval of
the Bankruptcy Court of this Agreement and the other Loan Documents and deliver
to the Agent and the Agent's counsel all material pleadings, motions and other
documents filed on behalf of the Loan Parties with the Bankruptcy Court.
51
(g) Insurance. Maintain insurance with financially sound and reputable
insurers with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons, including workers' compensation
insurance, public liability and property and casualty insurance, except that the
Borrower shall be permitted to maintain self insurance with respect to health
care benefits provided to employees and with respect to workers' compensation
insurance so long as the Borrower also maintains, with financially sound and
reputable insurers, stop loss insurance of the type and in amounts customarily
maintained by Persons engaged in the same or similar business as are customarily
carried under similar circumstances by such other Persons. Upon request of the
Agent, the Borrower shall furnish the Agent, with copies for each Lender, at
reasonable intervals (but not more than once per calendar year), a certificate
of an Authorized Officer (and, if requested by the Agent, any insurance broker
of the Borrower) setting forth the nature and extent of all insurance maintained
by the Borrower and its Subsidiaries in accordance with this Section 6.01(g)
(and which, in the case of a certificate of a broker, was placed through such
broker).
(h) Cash Management
(i) The Loan Parties shall maintain a cash management system
acceptable to the Agent including one or more lockboxes, which cash
management system shall provide for all funds received by any Loan
Party to be deposited in a Collection Account covered by a Blocked
Account Letter, the Citibank Concentration Account or into a bank
account the deposits in which are swept into a Collection Account or
the Citibank Concentration Account a periodic basis (no less frequently
than bi-weekly).
(ii) Within 45 days of the Closing Date (or by such later date
as the Borrower may request in writing and the Agent may agree), the
Borrower shall deliver to the Agent the Blocked Account Letters, duly
executed by all of the applicable Collection Account Banks, the
Borrower and the appropriate Loan Party;
(iii) Notwithstanding anything to the contrary contained in
this Section 6.01(h), to the extent that at the close of any Business
Day (x) cash and Cash Equivalents of any Loan Party held in any
Collection Account or other cash deposit account exceeds $10,000,000,
or (y) cash and Cash Equivalents of all Loan Parties held in all
Collection Accounts and cash deposit accounts exceeds $50,000,000 in
the aggregate, such excess , in the case of clause (x) or (y) shall be
transferred to the Citibank Concentration Account on the following
Business Day. All funds on deposit in the Citibank Concentration
Account shall be applied in the manner specified in Section
2.11(b)(iii).
(iv) If at any time prior to the Termination Date no Event of
Default or Potential Default has occurred and is continuing and the
amount on deposit in the Citibank Collateral Account exceeds the amount
of cash collateral required to be deposited in respect of the then LC
Exposure pursuant to Section 2.06(b) or (c) or otherwise pursuant to
Section 2.11(b)(ii) or (iii), the Agent shall, if so directed in
writing by the Borrower, cause such deposit to be released to the
Borrower to the extent, but only to the extent, such deposit exceeds
the sum of (A) 105% of the then LC Exposure required to be cash
collateralized pursuant to Section 2.06(b) or (c) and (B) the amount of
cash collateral required to be deposited in the Citibank Collateral
Account pursuant to Section 2.11(b)(ii) or (iii).
(v) As long as no Event of Default has occurred and is
continuing, the Agent shall, upon the request of the Borrower, use all
funds on deposit in the Citibank Collateral Account to make Investments
in Cash Equivalents selected by the Borrower.
52
(i) Environmental Laws. Except as otherwise required by the Bankruptcy
Code or by a Final Order of the Bankruptcy Court, conduct its operations and
keep and maintain its property in compliance in all material respects with all
applicable Environmental Laws and Environmental Permits; and prepare at the
Borrower's sole cost and expense and deliver to the Agent and the Lenders such
updates as the Agent or the Requisite Lenders may reasonably request relating to
any Material Environmental Claim.
(j) Use of Proceeds. Use the proceeds of the Advances solely (i) to
fund post-petition operating expenses of the Loan Parties incurred in the
ordinary course of business, (ii) to pay certain other costs and expenses of
administration of the Cases to be specified in writing to the Agent (including
by notice of application for Orders), (iii) for working capital, capital
expenditures and other general corporate purposes of the Loan Parties not in
contravention of any Requirement of Law or the Loan Documents and (iv) as long
as no Potential Default or Event of Default has occurred and is continuing, to
pay certain Permitted Prepetition Claim Payments. The Borrower shall use the
entire amount of the proceeds of each Advance in accordance with this Section
6.01(j); provided, however, that nothing herein shall in any way prejudice or
prevent the Agent or the Lenders from objecting, for any reason, to any
requests, motions or applications made in the Bankruptcy Court, including any
applications for interim or final allowances of compensation for services
rendered or reimbursement of expenses incurred under section 105(a), 330 or 331
of the Bankruptcy Code, by any party in interest, and provided, further, that
the Borrower shall not use the proceeds from any Advances for any purpose that
is prohibited under the Bankruptcy Code.
(k) Health Care Permits and Approvals. Take all action necessary (i) to
maintain in full force and effect all Health Care Permits necessary for the
lawful conduct of its business or operations wherever now conducted and as
planned to be conducted, including the ownership and operation of its Health
Care Facilities, pursuant to all applicable laws and all requirements of
Governmental Authorities having jurisdiction over it or any part of its
operations; and (ii) ensure that all Health Care Facilities owned or leased by
it 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 it has decided to
participate in any such state or local program, and to receive reimbursement
from private and commercial payers and health maintenance organizations to the
extent applicable thereto; provided, that the failure at any one time to
maintain Health Care Permits with respect to any seven Health Care Facilities
owned or leased by any one or more Filing Subsidiaries shall not constitute a
failure to comply with this Section 6.01(k).
(l) Further Assurances.
(i) Promptly and in no event later than five Business Days
after becoming aware thereof, notify the Lenders if any written
information, exhibits and reports furnished to the Lenders contain any
untrue statement of a material fact or omit to state any material fact
or any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and correct any
defect or error that may be discovered therein or in the execution,
acknowledgement or recordation of any Loan Document.
(ii) Promptly upon request by the Agent or the Requisite
Lenders, execute, deliver, acknowledge, file, re-file, register and
re-register any and all such further acts, security agreements,
assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances, Federal Reserve Forms U-1 or G-3
or similar forms and other instruments as the Agent or the Requisite
Lenders may reasonably require from time to time in order (A) to carry
out more effectively the purposes of this Agreement or any other Loan
Document, (B) to subject to the Liens created by any of the
53
Loan Documents and the Orders any of the properties, rights or
interests described in or intended to be covered by any Loan Document,
(C) to establish and maintain the validity, effectiveness, perfection
and priority of any Loan Document or any Liens intended to be created
thereby, or (D) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Agent and the Lenders the rights
granted or now or hereafter intended to be granted to the Lenders under
any Loan Document or under any other instrument executed in connection
therewith.
(m) Delivery of Promissory Note. If requested by any Lender, execute
and deliver a promissory note, in substantially the form of Exhibit A, payable
to the order of such Lender in a principal amount equal to such Lender's
Commitment, duly executed by the Borrower.
(n) Licensure; Medicaid/Medicare Cost Reports. If required by
applicable law or any Governmental Authority, properly file all
Medicaid/Medicare cost reports; and maintain all certificates of need, provider
numbers and licenses that are necessary to conduct such Loan Party's business as
currently conducted, and take any steps required to comply with any such new or
additional requirements that may be imposed on providers of medical products and
Medical Services.
SECTION 6.02. Negative Covenants. So long as any Obligation remains
unpaid, any Letter of Credit remains outstanding or any Lender is obligated to
extend credit hereunder, without the written consent of the Requisite Lenders,
neither the Borrower nor any other Loan Party will, and the Borrower will not
cause or permit any of its Subsidiaries to:
(a) Liens. Directly or indirectly make, create, incur, permit, assume
or suffer to exist any Lien upon or with respect to any part of its properties
or assets, whether now owned or hereafter acquired, or become or remain bound by
any agreement to do so or assign any right to receive income, except:
(i) any Lien existing on the Closing Date and described in
Schedule 6.02(d) hereto;
(ii) any Lien created under any Loan Document;
(iii) any Lien for the payment of taxes, fees, assessments or
other governmental charges which are not delinquent and remain payable
without penalty 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 to the extent
required by GAAP;
(iv) any carriers', warehousemen's, mechanics', landlords', or
materialmen's, or other similar Lien imposed by law arising in the
ordinary course of business which is not delinquent or remains payable
without penalty or which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained to the extent
required by GAAP;
(v) any Lien (other than a Lien imposed by ERISA) on deposits
required by law pursuant to worker's compensation, unemployment
insurance and other social security benefits;
(vi) any easement, right-of-way, restriction and other similar
encumbrance with respect to Real Property incurred in the ordinary
course of business which does not materially detract from the value of
such Real Property or interfere with the ordinary conduct of the
business conducted and proposed to be conducted at such Real Property;
and
54
(vii) purchase money Liens granted by the Borrower or any
Subsidiary of the Borrower (including the interest of a lessor under a
Capital Lease and Liens to which any property is subject at the time of
the Borrower's or such Subsidiary's acquisition thereof) securing Debt
permitted under Section 6.01(d)(iii)and limited in each case to the
property purchased with the proceeds of such purchase money
Indebtedness or subject to such Capital Lease.
(b) Disposition of Assets. Engage in any Asset Sale or otherwise
directly or indirectly sell, assign, lease, convey, transfer or otherwise
dispose of all or any portion of its assets, business or property (including,
without limitation, in connection with a sale and leaseback transaction or the
sale or factoring at maturity or collection of any accounts) or any interest
therein, or agree to do any of the foregoing, except:
(i) the disposition of inventory or used, worn-out or surplus
property or equipment in the ordinary course of business;
(ii) the sale of equipment in the ordinary course of business
for credit against the purchase price of similar replacement equipment
or if the proceeds of the sale are reasonably promptly applied to the
purchase price of similar replacement equipment; and
(iii) any other Asset Sale (other than any Asset Sale of any
of the Stock of RoTech or all or substantially all of the assets, of
RoTech) made for fair market value; so long as (A) the sum of the
aggregate consideration received pursuant to such Asset Sale plus the
aggregate consideration received pursuant to all such other Asset Sales
in any Fiscal Year is less than $10,000,000, (B) the consideration
received in such Asset Sale is solely in cash, and (C) at the time of
or after giving effect to such Asset Sale, no Event of Default or
Potential Default exists;
provided, however, that the foregoing limitations are not intended to prevent
the Borrower from rejecting unexpired leases or executory contracts pursuant to
section 365 of the Bankruptcy Code in connection with the Cases.
(c) Investments. Directly or indirectly make, acquire, carry or
maintain any Investment, or become or remain bound by any agreement to make,
acquire, carry or maintain any Investment, except:
(i) Investments in cash and Cash Equivalents;
(ii) Investments in accounts or notes receivable or other
claims arising from the sale or lease of goods or services in the
ordinary course of business;
(iii) Investments held on the Closing Date and described in
Schedule 6.02(c) hereto; and
(iv) Investments by (A) the Borrower in any Guarantor, or by
any Guarantor in the Borrower or any other Guarantor, (B) a Subsidiary
that is not a Guarantor in the Borrower or any other Subsidiary, (C)
the Borrower or any Guarantor in a Subsidiary that is not a Guarantor;
provided, however, that the aggregate outstanding amount of such
Investments pursuant to this clause (iv)(C) shall not exceed
$20,000,000 at any time; provided further, however, that no such
Investments shall be made in Monarch Properties LP, Lyric Health Care
LLC or any of their respective Subsidiaries.
55
(d) Limitation on Debt. Directly or indirectly create, incur, assume,
guarantee or suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to, any Debt, except:
(i) the Obligations;
(ii) Debt existing on the Closing Date and described in
Schedule 6.02(d);
(iii) obligations in respect of Capital Leases and purchase
money Debt incurred by the Borrower or its Subsidiaries to finance the
acquisition of fixed assets in the ordinary course of business in an
aggregate outstanding principal amount not to exceed $25,000,000 at any
time; provided, however, that the Capital Expenditure related thereto
is otherwise permitted by Section 5.01(b); and
(iv) Debt arising from intercompany loans (A) from the
Borrower to any Guarantor or from any Guarantor to the Borrower or any
other Guarantor and (B) from the Borrower or any Guarantor to any
Subsidiary of the Borrower that is not a Guarantor; provided, however,
that the Investment in the intercompany loan to such Subsidiary is
permitted under Section 6.02(c)(iv).
(e) Transactions with Affiliates. Enter or agree to enter into any
transaction with any Affiliate of the Borrower or of any Subsidiary of the
Borrower except (i) under the Loan Documents, (ii) in the ordinary course of
business and pursuant to the reasonable requirements of the business of the
Borrower or such Subsidiary and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arm's-length transaction with a Person not an Affiliate
of the Borrower or such Subsidiary; provided, that if such Affiliate is not a
Subsidiary of the Borrower, the Borrower or such Loan Party shall give written
notice of any such transaction to the Agent and the Lenders and such transaction
shall be subject to the approval of the Requisite Lenders or (iii) salaries and
other employee compensation to officers or directors of the Borrower or any of
its Subsidiaries commensurate with current compensation levels or as part of an
employee retention or incentive program approved by the Bankruptcy Court.
(f) Accommodation Obligations. Create, incur, assume or suffer to exist
any Accommodation Obligations except:
(i) endorsements of checks for collection or deposit in the
ordinary course of business;
(ii) Accommodation Obligations of the Borrower and its
Subsidiaries existing as of the Closing Date and described in Schedule
6.02(f) hereto; and
(iii) the Obligations.
(g) Leases of Health Care Facilities. Enter into or become obligated as
lessee under any lease of a Health Care Facility, whether or not it is a Capital
Lease, unless (i) the lease is free from provisions pursuant to which the lease
is violated or put into default by reason of any breach, default or event of
default under any indenture or agreement governing any Debt of, or other lease
binding on, the Borrower or any of its other Subsidiaries, except another lease
entered into by the same lessor or by one of its Affiliates, (ii) the lease
permits the Borrower and such Subsidiary to comply with this Section 6.01(g) and
does not include any provision that is or would be violated or put in default by
reason of such compliance or by reason of the enforcement of the claims and
Liens of the Agent and Lenders arising from such compliance, and (iii) the lease
is free from provisions pursuant to which the lease is or
56
would be violated or put into default, or any prepayment would be required, by
reason of any change in control of the Borrower or such Subsidiary except, if
required by the lessor despite best efforts by the Borrower to the contrary, a
right to consent to a change of ownership of such Subsidiary if such consent may
not unreasonably be withheld.
(h) Subsidiaries. Directly or indirectly, by operation of law or
otherwise, form or acquire any Subsidiary.
(i) Restricted Payments. Directly or indirectly (A) declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its capital
stock or any other equity, ownership or profit interests; (B) purchase, redeem
or otherwise acquire for value any shares of any class of capital stock of, or
other equity, ownership or profit interests in, the Borrower or any of its
Subsidiaries or any warrants, rights or options to acquire any such shares or
interests, now or hereafter outstanding; (C) enter into any agreement
restricting the ability of any Subsidiary of the Borrower to declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities to its stockholders; (D) except in respect of
Permitted Prepetition Claim Payments, agree to or permit any amendment or
modification of, or change in, any of the terms of prepetition Debt; or (E)
except in respect of Permitted Prepetition Claim Payments, pay, prepay, redeem,
or purchase or otherwise acquire any prepetition Debt, or make any deposit to
provide for the payment of any prepetition Debt, or exchange any prepetition
Debt, or otherwise make any payment (as adequate protection or otherwise) on
account of any Claim arising or deemed to have arisen prior to the Petition
Date, or give any notice in respect thereof.
(j) Capital Structure/Modification of Constituent Documents. Change its
capital structure (including the terms of its outstanding Stock) or otherwise
amend its Constituent Documents, except for changes and amendments which do not
materially affect the rights and privileges of any Loan Party, or the interests
of the Agent and the Lenders under the Loan Documents or in the Collateral.
(k) Mergers, Etc. Merge or consolidate with or into or enter into any
agreement to merge or consolidate with or into any Person except that a
wholly-owned Subsidiary of the Borrower may engage in a merger or consolidation
with any one or more other wholly-owned Subsidiaries of the Borrower if the
surviving corporation is a wholly-owned Subsidiary of the Borrower and is a
Guarantor.
(l) Conduct of Business. Engage in any business other than the
businesses of the Loan Parties described in Section 4.01(q) and any business or
activity substantially similar thereto.
(m) Compliance with ERISA. Directly or indirectly (or permit any ERISA
Affiliate directly or indirectly to) (i) terminate any Plan subject to Title IV
of ERISA so as to result in liability to the Borrower or any ERISA Affiliate in
excess of $2,000,000; (ii) permit any ERISA Event to exist; (iii) make a
complete or partial withdrawal (within the meaning of ERISA Section 4201) from
any Multiemployer Plan so as to result in liability to the Borrower or any ERISA
Affiliate in excess of $2,000,000; or (iv) permit the total Unfunded Pension
Liabilities (using the actuarial assumptions utilized by the PBGC) for all
Pension Plans (other than Pension Plans which have no Unfunded Pension
Liabilities) to exceed $2,000,000.
(n) Health Care Permits and Approvals. Engage in any activity that (i)
is or could reasonably be expected to result in a material default under or
violation of any Health Care Permit necessary for the lawful conduct of its
business or operations or (ii) causes or could reasonably be expected to cause
the loss by any Health Care Company or Health Care Facility owned, leased,
managed or operated by it 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
57
program to the extent that it has decided to participate in any such state or
local program, or to receive reimbursement from private and commercial payers
and health maintenance organizations to the extent applicable thereto; provided,
that the failure at any one time to maintain Health Care Permits with respect to
any seven Health Care Facilities owned or leased by any Filing Subsidiary shall
not constitute a failure to comply with this Section 6.02(n).
(o) Payment Restrictions Affecting Subsidiaries. Cause, permit or
suffer any Subsidiary to become or remain subject to any Contractual Obligation
that in any manner limits or restricts its right to pay dividends or make
distributions, whether in cash or in property, to its stockholders or to make
loans or sell assets to the Borrower or any of its Subsidiaries or to enter into
any other lawful transaction with the Borrower or any of its Subsidiaries,
except limitations and restrictions set forth in this Agreement or the other
Loan Documents.
(p) The Orders. Make or permit to be made any change, amendment or
modification, or any application or motion for any change, amendment or
modification, to either Order without the prior written consent of the Requisite
Lenders.
(q) Application to Bankruptcy Court. Apply to the Bankruptcy Court for
the authority to take any action that is prohibited by or inconsistent with the
terms of this Agreement or any of the other Loan Documents or refrain from
taking any action that is required to be taken by the terms of this Agreement or
any of the other Loan Documents.
(r) Ownership. Make or permit to be made any change in the ownership or
control of any Guarantor.
(s) Accounting Changes; Fiscal Year. Change its (i) accounting
treatment and reporting practices or tax reporting treatment, except as required
by GAAP or any Requirement of Law and disclosed to the Lenders and the Agent or
(ii) Fiscal Year.
(t) Cancellation of Indebtedness Owed to It. Cancel any Claim or Debt
owed to it except (i) in the ordinary course of business consistent with past
practice or (ii) as otherwise approved by the Bankruptcy Court.
(u) No Speculative Transactions. Engage in any speculative transaction
or in any transaction involving Hedging Contracts, except for the sole purpose
of hedging in the normal course of the Loan Parties' businesses and consistent
with industry practices.
(v) Chapter 11 Claims. Incur, create, assume, suffer to exist or permit
any administrative expense, unsecured claim, or other super-priority claim or
lien which is pari passu with or senior to the claims of the Secured Parties
against the Loan Parties hereunder, or apply to the Bankruptcy Court for
authority to do so, except for the Carve-Out.
(w) Cash Management. Make any change in the system or method by which
all funds held in the lockboxes and cash collection accounts of the Loan Parties
are transferred on a timely basis from such lockboxes and cash collection
accounts into the Collection Accounts or the Citibank Concentration Account,
without the prior written consent of the Agent, or otherwise provide for any
such funds to be transferred to any other deposit or collection account other
than the Collection Accounts, the Citibank Collateral Account or the Citibank
Concentration Account.
(x) Environmental Allow a Release of any Contaminant in violation of
any Environmental Law; provided, however, that any Loan Party shall not be
deemed in violation of this Section 6.02(x) if, as the consequence of all such
Releases, such Loan Party would not incur Environmental Liabilities and Costs in
excess of $5,000,000 in the aggregate.
58
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) Non-Payment of Principal or Interest. The Borrower fails to pay
when due (i) any principal of any Advance, (ii) any Funded LC Exposure, (iii)
any interest payable under Section 2.07 or (iv) any additional interest payable
under Section 2.08; or
(b) Non-Payment of Fees. The Borrower fails to pay when due , any fee
payable under Section 2.04 or any other Obligation owing hereunder or under any
Loan Document and such failure continues for three Business Days; or
(c) Representations and Warranties. Any representation or warranty made
by any Loan Party under or in connection with any Loan Document proves to have
been incorrect in any material respect when made or deemed made; or
(d) Covenants. The Borrower or any other Loan Party fails to perform or
observe any term, covenant or agreement set forth in ▇▇▇▇▇▇▇ ▇.▇▇, ▇▇▇▇▇▇▇
▇.▇▇(▇), (▇), (▇), (▇) or (j) or Section 6.02; or
(e) Other Covenants. The Borrower or any other Loan Party fails to
perform or observe any term, covenant or agreement contained in this Agreement
or any other Loan Document (other than those specifically referred to in
subsections (a), (b), (c) and (d) of this Section 7.01) and such failure
continues for 30 days; or
(f) Leases. (i) Any Loan Party (A) fails to make any payment within the
period required under any Material Lease, and such failure continues for longer
than the period of grace, if any, specified for such failure in such Material
Lease, or (B) fails to perform or observe any other term, covenant or agreement
that (a) is contained in any Material Lease and (b) requires the payment of
money or can be performed or observed by the payment of money, and such failure
continues for longer than the period of grace, if any, specified for such
failure in such Material Lease; or (ii) any Material Lease is terminated as a
result of any failure by any Loan Party to perform or observe any term, covenant
or agreement contained therein; or
(g) Judgments. Any judgment or order for the payment of money is
rendered against any of the Loan Parties or any of their Subsidiaries in an
amount in excess of $500,000 for any single judgment or order or in excess of
$1,000,000 for all such judgments or orders and either (i) enforcement
proceedings are commenced by any creditor upon such judgment or order and are
not stayed, or (ii) there is 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, is not in effect; or
(h) Loan Documents. (x) The Loan Documents and the Orders shall, for
any reason, cease to create a valid Lien on any of the Collateral purported to
be covered thereby or such Lien shall cease to be a perfected Lien having the
priority provided herein pursuant to section 364 of
59
the Bankruptcy Code against each Loan Party, or any Loan Party shall so allege
in any pleading filed in any court or
(y) Any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on each Loan Party party thereto
or any Loan Party shall so state in writing; or
(i) Material Adverse Change. Any Material Adverse Change shall occur;
or
(j) ERISA. (i) The Borrower or any ERISA Affiliate shall fail to
satisfy its contribution requirements under Section 412(c)(11) of the Code,
whether or not it has sought a waiver under Section 4 12(d) of the Code; or (ii)
in the case of an ERISA Event (other than the Cases) involving the withdrawal
from a Pension Plan of a "substantial employer" (as defined in Section
4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that Pension Plan's Unfunded Pension Liabilities is more
than $2,000,000; or (iii) in the case of an ERISA Event (other than the Cases)
involving the complete or partial withdrawal from a Multiemployer Plan, the
withdrawing employer incurs a withdrawal liability in an aggregate amount
exceeding $2,000,000; or (iv) a Pension Plan that is intended to be qualified
under Section 401(a) of the Code loses its qualification, and with respect to
such loss of qualification, the Borrower or any ERISA Affiliate can reasonably
be expected to be required to pay (for additional taxes, payments to or on
behalf of Pension Plan participants, or otherwise) an aggregate amount exceeding
$2,000,000; or (v) any combination of events listed in clauses (ii) through (iv)
occurs that involves a net increase in aggregate Unfunded Pension Liabilities
and unfunded liabilities in excess of $5,000,000; or
(k) Trustee. A trustee shall be appointed in any of the Cases; or
(l) Environmental Liabilities. Environmental Liabilities shall exceed
$5,000,000; or
(m) Cases. Any of the Cases shall be dismissed, suspended or converted
to a case under chapter 7 of the Bankruptcy Code, or any Loan Party shall file
any pleading requesting any such relief;or an application shall be filed by any
Loan Party for the approval of, or there shall arise, (i) any other Claim having
priority senior to or pari passu with the claims of the Agent and the Lenders
under the Loan Documents or any other claim having priority over any or all
administrative expenses of the kind specified in sections 503(b) or 507(b) of
the Bankruptcy Code (other than the Carve-Out) or (ii) any Lien on the
Collateral having a priority senior to or pari passu with the liens and security
interests granted herein, except as expressly provided herein; or
(n) Prepetition Claims. Any Loan Party shall file a motion seeking, or
the Bankruptcy Court shall enter, an order (i) approving payment of any
prepetition Claim other than a Permitted Prepetition Claim Payment, (ii)
approving a First Day Order not approved by the Agent, (iii) granting relief
from the automatic stay applicable under section 362 of the Bankruptcy Code to
any holder of any security interest to permit foreclosure on any assets (other
than certain assets identified by the Borrower and agreed to by the Agent)
having a book value in excess of $1,000,000 in the aggregate, or (iv) except to
the extent the same would not constitute a default under any of the previous
clauses, approving any settlement or other stipulation with any creditor of any
Loan Party, other than the Agent and the Lenders, or otherwise providing for
payments as adequate protection or otherwise to such creditor individually or in
the aggregate in excess of $100,000 for any and all such creditors; or
(o) Court Orders. (i) The Interim Order shall cease to be in full force
and effect and the Final Order shall not have been entered prior to such
cessation, or (ii) the Final Order shall not have been entered by the Bankruptcy
Court on or before the 45th day following the Closing Date or (iii) from and
after the date of entry thereof, the Final Order shall cease to be in full force
and effect, or (iv) any
60
Loan Party shall fail to comply with the terms of the Interim Order or the Final
Order in any material respect, or (v) the Interim Order or the Final Order shall
be amended, supplemented, stayed, reversed, vacated or otherwise modified (or
any of the Loan Parties shall apply for authority to do so) without the written
consent of the Requisite Lenders; or
(p) Examiner. The Bankruptcy Court shall enter an order appointing a
responsible officer or an examiner with powers beyond the duty to investigate
and report, as set forth in section 1106(a)(3) and (4) of the Bankruptcy Code,
in any of the Cases; or
(q) Forfeiture; Seizure. The Agent or any Lender receives any
indication or evidence that any Loan Party may have directly or indirectly been
engaged in any type of activity that the Agent, in its reasonable discretion,
determines might result in the forfeiture of any material property of any Loan
Party to any Governmental Authority, or any Governmental Authority takes any
action to seize or require the turnover of any Health Care Facility of any Loan
Party;
then, and in any such event, without further order of, application to, or action
by, the Bankruptcy Court: (i) with the consent of the Requisite Lenders, the
Agent may, or upon the request of the Requisite Lenders, the Agent shall, by
notice to the Borrower declare the Commitments to be terminated forthwith,
whereupon such Commitments shall immediately terminate; and (ii) with the
consent of the Requisite Lenders, the Agent may, or upon the request of the
Lenders, the Agent shall, by notice to the Borrower, declare the Advances
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all LC Exposure, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by the
Loan Parties. In addition, subject solely to any requirement of the giving of
notice by the terms of the Interim Order or the Final Order, the automatic stay
provided in section 362 of the Bankruptcy Code shall be deemed automaticallly
vacated without further action or order of the Bankruptcy Court and the Agent
and the Lenders shall be entitled to exercise all of their respective rights and
remedies under the Loan Documents, including, without limitation, all rights and
remedies with respect to the Collateral and the Guarantors.
SECTION 7.02. Actions in Respect of Letters of Credit. Upon the
Termination Date or as required by Section 2.06 (b) or (c) or Section
2.11(b)(ii) or (iii), the Borrower shall pay to the Agent in immediately
available funds, for deposit in the Citibank Collateral Account, an amount so
that the balance in the Citibank Collateral Account shall equal 105% of the sum
of all outstanding LC Exposure. The Agent may, from time to time after funds are
deposited in the Citibank Collateral Account, apply funds then held in the
Citibank Collateral Account to the payment of any amounts as shall have become
or shall become due and payable by the Borrower to the Lenders in respect of the
LC Exposure or other Obligations that become due and payable. The Agent shall
promptly give written notice of any such application; provided, however, that
the failure to give such written notice shall not invalidate any such
application. Except as permitted under Section 6.01(h)(iv), neither the
Borrower, any other Loan Party, nor any Person claiming on behalf of or through
the Borrower shall have any right to withdraw any of the funds held in the
Citibank Collateral Account at any time prior to the termination of all
outstanding Letters of Credit and the payment in full of all then outstanding
and payable monetary Obligations.
SECTION 7.03. Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers or privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement.
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ARTICLE VIII
GUARANTY
SECTION 8.01. The Guaranty. In order to induce the Lenders to enter
into this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by each Guarantor from the proceeds of the
Advances and the issuance of the Letters of Credit, each Guarantor hereby agrees
with the Agent and Lenders as follows: each Guarantor hereby unconditionally and
irrevocably, jointly and severally, guarantees as primary obligor and not merely
as surety the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all of the Obligations of the Borrower to
the Lenders. If any or all of the Obligations of the Borrower to the Lenders
become due and payable hereunder, each Guarantor, jointly and severally,
unconditionally promises to pay such Obligations to the Lenders, or order, on
demand, together with any and all reasonable expenses which may be incurred by
the Agent or the Lenders in collecting any of the Obligations.
SECTION 8.02. Nature of Liability. The liability of each Guarantor
hereunder is exclusive and independent of any security for or other guaranty of
the Obligations of the Borrower whether executed by such Guarantor, any other
Guarantor, any other guarantor or by any other party, and the liability of each
Guarantor hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Obligations of the Borrower, or (c) any payment on
or in reduction of any such other guaranty or undertaking, or (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Agent or the Lenders on the
indebtedness which the Agent or such Lenders repay to the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
SECTION 8.03. Independent Obligation. The obligations of each Guarantor
hereunder are independent of the obligations of any other Guarantor, any other
guarantor or the Borrower, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any other guarantor or the Borrower and whether or not any
other Guarantor, any other guarantor or the Borrower be joined in any such
action or actions. Each Guarantor waives, to the fullest extent permitted by
law, the benefit of any statute of limitations affecting its liability hereunder
or the enforcement thereof. Any payment by the Borrower or other circumstance
which operates to toll any statute of limitations as to the Borrower shall
operate to toll the statute of limitations as to the Guarantor.
SECTION 8.04. Authorization. Each Guarantor authorizes the Agent and
the Lenders without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of the
Obligations (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Guaranty herein made shall apply to the
Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Obligations and sell,
exchange, release, surrender, realize upon or otherwise deal with in any manner
and in any order any property by
62
whomsoever at any time pledged or mortgaged to secure, or howsoever securing,
the Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the Borrower
or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Obligations, any security therefor
or any liability (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, or subordinate the payment of all or
any part thereof to the payment of any liability (whether due or not) of the
Borrower to its creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Lenders regardless of what
liability or liabilities of such Guarantor or the Borrower remain unpaid; and/or
(g) consent to or waive any breach of, or any act, omission or default
under, this Agreement or any of the instruments or agreements referred to
herein, or otherwise amend, modify or supplement this Agreement or any of such
other instruments or agreements.
SECTION 8.05. Reliance. It is not necessary for the Agent or the
Lenders to inquire into the capacity or powers of the Borrower or its
Subsidiaries or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
SECTION 8.06. Subordination. Any of the Debt of the Borrower now or
hereafter owing to any Guarantor is hereby subordinated to the Obligations of
the Borrower; provided that payment may be made by the Borrower on any such Debt
owing to such Guarantor so long as the same is not prohibited by this Agreement
and provided, further, that if the Agent so requests at a time when an Event of
Default exists, all such Debt of the Borrower to such Guarantor shall be
collected, enforced and received by such Guarantor as trustee for the Lenders
and be paid over to the Agent on behalf of the Lenders on account of the
Obligations of the Borrower to Lenders, but without affecting or impairing in
any manner the liability of such Guarantor under the other provisions of this
Guaranty. Prior to the transfer by any Guarantor of any note or negotiable
instrument evidencing any of the Debt of the Borrower to such Guarantor, such
Guarantor shall ▇▇▇▇ such note or negotiable instrument with a legend that the
same is subject to this subordination.
SECTION 8.07. Waiver. (a) Each Guarantor waives any right (except as
shall be required by applicable statute and cannot be waived) to require the
Agent or the Lenders to (i) proceed against the Borrower, any other Guarantor,
any other guarantor or any other party, (ii) proceed against or exhaust any
security held from the Borrower, any other Guarantor, any other guarantor or any
other party or (iii) pursue any other remedy in the Agent's or the Lenders'
power whatsoever. Each Guarantor waives (except as shall be required by
applicable statute and cannot be waived) any defense based on or arising out of
any defense of the Borrower, any other Guarantor, any other guarantor or any
other party other than payment in full of the Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor or any other party, or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Borrower other than payment in
full of the Obligations. Subject to the giving
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of three Business Days prior written notice in accordance with the Orders, the
Agent and the Lenders may, at their election, foreclose on any security held by
the Agent or the Lenders by one or more judicial or nonjudicial sales, whether
or not every aspect of any such sale is commercially reasonable (to the extent
such sale is permitted by applicable law), or exercise any other right or remedy
the Agent and the Lenders may have against the Borrower or any other party, or
any security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have been paid. Each
Guarantor waives any defense arising out of any such election by the Agent and
the Lenders, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of such Guarantor
against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Obligations. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Obligations and
the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that the Agent and the Lenders shall have no duty
to advise such Guarantor of information known to them regarding such
circumstances or risks.
SECTION 8.08. Limitation on Enforcement. The Lenders agree that this
Guaranty may be enforced only by the action of the Agent, in each case acting
upon the instructions of the Requisite Lenders, and that no Lender shall have
any right individually to seek to enforce or to enforce this Guaranty it being
understood and agreed that such rights and remedies may be exercised by the
Agent for the benefit of the Lenders upon the terms of this Agreement.
ARTICLE IX
SECURITY
SECTION 9.01. Security. (a) To induce the Lenders to make the Revolving
Credit Advances, the LC Bank to issue Letters of Credit, and the Swing Line Bank
to make the Swing Line Advances, each Loan Party hereby grants to the Agent, for
itself and for the ratable benefit of the Secured Parties, as security for the
full and prompt payment when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations of such Loan Party (including, without limitation,
all Obligations of the Guarantors hereunder), a continuing first priority Lien
and security interest (subject only to (i) valid, perfected, enforceable and
nonavoidable Liens of record existing immediately prior to the Petition Date,
(ii) the Carve-Out, and (iii) Liens permitted under Section 6.02(a)(vii)) in
accordance with sections 364(c)(2) and (3) of the Bankruptcy Code in and to all
Collateral of such Loan Party. "Collateral" means all of the property and assets
of each Loan Party and its estate, real and personal, tangible and intangible,
whether now owned or existing or hereafter acquired or arising and regardless of
where located, including, but not limited to:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts and any and all claims of such Loan Party
for damages arising out of or for breach of or a default under any
Contract and the right of such Loan Party to perform or to compel
performance under any Contract and to exercise all remedies thereunder
(iv) all Documents;
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(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Real Property;
(x) all bank accounts, deposit accounts, securities accounts,
commodities accounts and other similar accounts, including, without
limitation, the Collection Accounts, the Citibank Concentration Account
and the Citibank Collateral Account and all cash, deposits, Cash
Equivalents and other instruments from time to time on deposit or held
therein;
(xi) all Investment Property, including, without limitation,
shares of Stock owned by such Loan Party and any and all dividends or
distributions, in respect thereof;
(xii) all other goods, real and personal property of such Loan
Party, whether tangible or intangible or whether now owned or hereafter
acquired by such Loan Party and wherever located;
(xiii) to the extent not otherwise included, all monies and
other property of any kind which is, after the Petition Date, received
by such Loan Party in connection with refunds with respect to taxes,
assessments and governmental charges imposed on such Loan Party or any
of its property or income;
(xiv) to the extent not otherwise included, all causes of
action (other than claims of the Loan Parties under sections 544, 545,
547 and 548 of the Bankruptcy Code) and all monies and other property
of any kind received therefrom, and all monies and other property of
any kind recovered by any Loan Party; and
(xv) to the extent not otherwise included, all Proceeds of
each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of each of the
foregoing including, without limitation, proceeds in the form of
Accounts, Chattel Paper, Contracts, Documents, Equipment, General
Intangibles, Instruments and Investment Property.
(b) In addition, as collateral security for the prompt and complete
payment when due of the Obligations (including, without limitation, all
Obligations of the Guarantors hereunder) and in order to induce Lenders and the
LC Bank as aforesaid, each Loan Party hereby further grants to the Agent, for
itself and for the ratable benefit of the Secured Parties, a first priority lien
on and security interest in all property of such Loan Party held by the Agent or
any other Secured Party or any Affiliate of the Agent or any other Secured
Party, including, without limitation, all property of every description, now or
hereafter in the possession or custody of or in transit to the Agent or such
Secured Party or Affiliate of the Agent or other Secured Party for any purpose,
including safekeeping, collection or pledge, for the account of such Loan Party
or as to which such Loan Party may have any right or power.
(c) The Citibank Collateral Account and the Citibank Concentration
Account shall be under the sole dominion and control of the Agent. No Person or
entity claiming by, through or under the Borrower or any other Loan Party shall
have any control over the use of, or any right to effect a
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withdrawal from, the Citibank Collateral Account or the Citibank Concentration
Account, except as expressly permitted in Section 2.11(b)(iii) or Section 7.02.
SECTION 9.02. Perfection of Security Interests. (a) Each Loan Party
shall, at its expense, perform any and all steps requested by the Agent at any
time to perfect, maintain, protect, and enforce the Lenders' security interest
in the Collateral of such Loan Party, including, without limitation, (i)
executing and filing financing or continuation statements, and amendments
thereof, in form and substance satisfactory to the Agent, (ii) maintaining
complete and accurate stock records, (iii) using its best efforts in delivering
to the Agent negotiable warehouse receipts, if any, and, upon the Agent's
request therefor, non-negotiable warehouse receipts covering any portion of the
Collateral located in warehouses and for which warehouse receipts are issued,
(iv) placing notations on such Loan Party's books of account to disclose the
Agent's security interest therein, (v) delivering to the Agent all documents
necessary or desirable to perfect the Agent's Lien in letters of credit on which
such Loan Party is named as beneficiary and all acceptances issued in connection
therewith, (vi) after the occurrence and during the continuation of an Event of
Default, transferring Inventory maintained in warehouses to other warehouses
designated by the Agent and (vii) taking such other steps as are deemed
necessary or desirable to maintain the Agent's security interest in the
Collateral.
(b) Each Loan Party hereby authorizes the Agent to execute and file
financing statements or continuation statements on such Loan Party's behalf
covering the Collateral. The Agent may file one or more financing statements
disclosing the Agent's security interest under this Agreement without the
signature of such Loan Party appearing thereon. Each Loan Party shall pay the
costs of, or incidental to, any recording or filing of any financing statements
concerning the Collateral. Each Loan Party agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. If any Collateral is at any time in the
possession or control of any warehouseman, bailee or such Loan Party's agents or
processors, such Loan Party shall notify such warehouseman, bailee, agents or
processors of the Agent's security interest, which notification shall specify
that such Person shall, upon the occurrence and during the continuance of an
Event of Default, hold all such Collateral for the Agent's account subject to
the Agent's instructions. From time to time, each Loan Party shall, upon the
Agent's request, execute and deliver written instruments pledging to the Agent
the Collateral described in any such instruments or otherwise, but the failure
of such Loan Party to execute and deliver such confirmatory instruments shall
not affect or limit the Agent's security interest or other rights in and to the
Collateral. Until all Obligations have been fully satisfied and the Commitments
shall have been terminated, the Agent's security interest in the Collateral, and
all Proceeds and products thereof, shall continue in full force and effect.
(c) Notwithstanding subsections (a) and (b) of this Section 9.02, or
any failure on the part of any Loan Party or the Agent to take any of the
actions set forth in such subsections, the Liens and security interests granted
herein shall be deemed valid, enforceable and perfected by entry of the Interim
Order and the Final Order, as applicable. No financing statement, notice of
lien, mortgage, deed of trust or similar instrument in any jurisdiction or
filing office need be filed or any other action taken in order to validate and
perfect the Liens and security interests granted by or pursuant to this
Agreement, the Interim Order or the Final Order.
SECTION 9.03. Rights of Lender; Limitations on Lenders' Obligations.
(a) Subject to each Loan Party's rights and duties under the Bankruptcy Code
(including section 365 of the Bankruptcy Code), it is expressly agreed by each
Loan Party that, anything herein to the contrary notwithstanding, such Loan
Party shall remain liable under its Contracts to observe and perform all the
conditions and obligations to be observed and performed by it thereunder.
Neither the Agent nor any Secured Party shall have any obligation or liability
under any Contract by reason of or arising out of this Agreement, the Loan
Documents, or the granting to the Agent of a security interest therein or the
receipt
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by the Agent or any Lender of any payment relating to any Contract pursuant
hereto, nor shall the Agent be required or obligated in any manner to perform or
fulfill any of the obligations of any Loan Party under or pursuant to any
Contract, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
(b) Subject to Section 9.05 hereof, the Agent authorizes each Loan
Party to collect its Accounts, provided that such collection is performed in
accordance with such Loan Party's customary procedures, and the Agent may, upon
the occurrence and during the continuation of any Event of Default and without
notice, other than any requirement of notice provided in the Orders, limit or
terminate said authority at any time.
(c) Subject to any requirement of notice provided in the Orders, the
Agent may at any time, upon the occurrence and during the continuation of any
Event of Default, after first notifying the Borrower of its intention to do so,
notify Account Debtors, notify the other parties to the Contracts of the
Borrower or any Loan Party, notify obligors of Instruments and Investment
Property of the Borrower or any Loan Party and notify obligors in respect of
Chattel Paper of the Borrower that the right, title and interest of the Borrower
or such Loan Party in and under such Accounts, such Contracts, such Instruments,
such Investment Property and such Chattel Paper have been assigned to the Agent
and that payments shall be made directly to the Agent. Subject to any
requirement of notice provided in the Orders, upon the request of the Agent, the
Borrower or any Loan Party will so notify such Account Debtors, such parties to
Contracts, obligors of such Instruments and Investment Property and obligors in
respect of such Chattel Paper. Subject to any requirement of notice provided in
the Orders, upon the occurrence and during the continuation of an Event of
Default, the Agent may in its own name, or in the name of others, communicate
with such parties to such Accounts, such Contracts, such Instruments, such
Investment Property and such Chattel Paper to verify with such Persons to the
Agent's reasonable satisfaction the existence, amount and terms of any such
Accounts, such Contracts, Instruments, Investment Property or Chattel Paper.
(d) The Agent shall have the right to make test verification of the
Accounts in any manner and through any medium that it considers advisable, and
each Loan Party agrees to furnish all such assistance and information as the
Agent may require in connection therewith. Each Loan Party, at its expense, will
cause certified independent public accountants satisfactory to the Requisite
Lenders to prepare and deliver to the Agent at any time and from time to time,
promptly upon the Agent's request, the following reports: (i) a reconciliation
of all Accounts of such Loan Party, (ii) an aging of all Accounts of such Loan
Party, (iii) trial balances, and (iv) a test verification of such Accounts as
the Agent may request. The Agent shall have the right at any time to conduct
periodic audits of the Accounts of any Loan Party at the expense of the
Borrower.
SECTION 9.04. Covenants of the Loan Parties with Respect to Collateral.
Each Loan Party hereby covenants and agrees with the Agent that from and after
the date of this Agreement and until the Obligations are fully satisfied:
(a) Maintenance of Records. Each Loan Party will keep and maintain, at
its own cost and expense, satisfactory and complete records of the Collateral,
in all material respects, including, without limitation, a record of all
payments received and all credits granted with respect to the Collateral and all
other dealings concerning the Collateral. For the Agent's further security, each
Loan Party agrees that the Agent shall have a property interest in all of such
Loan Party's books and records pertaining to the Collateral and, upon the
occurrence and during the continuation of an Event of Default, such Loan
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Party shall deliver and turn over any such books and records to the Agent or to
its representatives at any time on demand of the Agent.
(b) Indemnification With Respect to Collateral. In any suit, proceeding
or action brought by the Agent relating to any Account, Chattel Paper, Contract,
General Intangible, Investment Property, Instrument or other Collateral for any
sum owing thereunder or to enforce any provision of any Account, Chattel Paper,
Contract, General Intangible, Investment Property, Instrument, or other
Collateral, each Loan Party will save, indemnify and keep the Secured Parties
harmless from and against all expense, loss or damage suffered by the Secured
Parties by reason of any defense, setoff, counterclaim, recoupment or reduction
of liability whatsoever of the obligor thereunder, arising out of a breach by
such Loan Party of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to, or in favor of, such
obligor or its successors from such Loan Party, and all such obligations of such
Loan Party shall be and remain enforceable against and only against such Loan
Party and shall not be enforceable against the Agent.
(c) Limitation on Liens on Collateral. Each Loan Party will not create,
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral except
Permitted Liens and will defend the right, title and interest of the Agent in
and to any of such Loan Party's rights under the Chattel Paper, Leases, Real
Estate, Contracts, Documents, General Intangibles, Instruments, Investment
Property and to the Equipment and Inventory and in and to the Proceeds thereof
against the claims and demands of all Persons whomsoever other than claims or
demands arising out of Permitted Liens.
(c) Limitations on Modifications of Accounts. Each Loan Party will not,
without the Agent's prior written consent, grant any extension of the time of
payment of any of the Accounts, Chattel Paper or Instruments, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any Person liable for the payment thereof, or allow any credit
or discount whatsoever thereon other than any of the foregoing which are done in
the ordinary course of business, consistent with past practices and trade
discounts granted in the ordinary course of business of such Loan Party.
(d) Notices. Each Loan Party will advise the Lenders promptly, in
reasonable detail, (i) of any Lien asserted against any of the Collateral other
than Permitted Liens, and (ii) of the occurrence of any other event which would
result in a Material Adverse Change with respect to the aggregate value of the
Collateral or on the security interests created hereunder.
(e) Maintenance of Equipment. Each Loan Party will keep and maintain
the Equipment in good operating condition sufficient for the continuation of the
business conducted by such Loan Party on a basis consistent with past practices,
ordinary wear and tear excepted.
SECTION 9.05. Performance by Agent of the Loan Parties' Obligations. If
any Loan Party fails to perform or comply with any of its agreements contained
herein and the Agent, as provided for by the terms of this Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Agent incurred in connection with such
performance or compliance, together with interest thereon at the rate then in
effect in respect of the Revolving Credit Advance, shall be payable by such Loan
Party to the Agent on demand and shall constitute Obligations secured by the
Collateral. Performance of such Loan Party's obligations as permitted under this
Section 9.05 shall in no way constitute a violation of the automatic stay
provided by section 362 of the Bankruptcy Code and each Loan Party hereby waives
applicability thereof. Moreover, the Agent shall in no way be responsible for
the payment of any costs incurred in connection with
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preserving or disposing of Collateral pursuant to section 506(c) of the
Bankruptcy Code and the Collateral may not be charged for the incurrence of any
such cost.
SECTION 9.06. Limitation on Agent's Duty in Respect of Collateral.
Neither the Agent nor any Lender shall have any duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
it or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto, except that the Agent shall,
with respect to the Collateral in its possession or under its control, deal with
such Collateral in the same manner as the Agent deals with similar property for
its own account. Upon request of any Loan Party, the Agent shall account for any
moneys received by it in respect of any foreclosure on or disposition of the
Collateral of such Loan Party.
SECTION 9.07. Remedies, Rights Upon Default. (a) If any Event of
Default shall occur and be continuing, the Agent may exercise in addition to all
other rights and remedies granted to it in this Agreement and in any other Loan
Document, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, each Loan Party expressly agrees that
in any such event the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice required by the Interim
Order or Final Order or the notice specified below of time and place of public
or private sale) to or upon such Loan Party or any other Person (all and each of
which demands, advertisements and/or notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of the
Agent's offices or elsewhere at such prices at it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The Agent
shall have the right upon any such public sale or sales to purchase the whole or
any part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption each Loan Party hereby releases. Each Loan Party
further agrees, at the Agent's request, to assemble the Collateral make it
available to the Agent at places which the Agent shall reasonably select,
whether at such Loan Party's premises or elsewhere. The Agent shall apply the
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale (net of all expenses incurred by the Agent in connection therewith,
including, without limitation, attorney's fees and expenses), to the Obligations
in any order deemed appropriate by the Agent, such Loan Party remaining liable
for any deficiency remaining unpaid after such application, and only after so
paying over such net proceeds and after the payment by the Agent of any other
amount required by any provision of law, including Section 9-504(l)(c) of the
UCC, need the Agent account for the surplus, if any, to such Loan Party. To the
maximum extent permitted by applicable law, each Loan Party waives all claims,
damages, and demands against the Agent and the Lenders arising out of the
repossession, retention or sale of the Collateral except such as arise out of
the gross negligence or willful misconduct of the Agent. Each Loan Party agrees
that the Agent need not give more than seven (7) days' notice to the Borrower
(which notification shall be deemed given when mailed or delivered on an
overnight basis, postage prepaid, addressed to the Borrower at its address
referred to in Section 11.02) of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. The Borrower and the other Loan Parties
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to which the
Agent is entitled, the Borrower and the other Loan Parties also being liable for
the fees and expenses of any attorneys employed by the Agent to collect such
deficiency.
(b) Each Loan Party hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.
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SECTION 9.08. The Agent's Appointment as Attorney-in-Fact. (a) Each
Loan Party hereby irrevocably constitutes and appoints the Agent and any officer
or agent thereof, with full power of substitution, as its and its Subsidiaries
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Loan Party and in the name of such Loan Party, or in
its own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which may be
necessary and desirable to accomplish the purposes of this Agreement and the
transactions contemplated hereby, and, without limiting the generality of the
foregoing, hereby give the Agent the power and right, on behalf of such Loan
Party, without notice to or assent by such Loan Party to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any
Collateral and, in the name of such Loan Party, its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other Instruments for the payment of
moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Agent for the purpose of collecting any and
all such moneys due under any Collateral whenever payable and to file
any claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Agent for the purpose
of collecting any and all such moneys due under any Collateral whenever
payable;
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the
terms of this Agreement and to pay all or any part of the premiums
therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due, and to
become due thereunder, directly to the Agent or as the Agent shall
direct; (B) to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time, in respect
of or arising out of any Collateral; (C) to sign and indorse any
invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts and other documents
constituting or relating to the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or equity in any
court of competent jurisdiction to collect the Collateral or any part
thereof and to enforce any other right in respect of any Collateral;
(E) to defend any suit, action or proceeding brought against any Loan
Party with respect to any Collateral of such Loan Party; (F) to settle,
compromise or adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases as
the Agent may deem appropriate; (G) to license or, to the extent
permitted by an applicable license, sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive
basis, any trademarks, throughout the world for such term or terms, on
such conditions, and in such manner, as the Agent shall in its sole
discretion determine; and (H) generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's
option and such Loan Party's expense, at any time, or from time to
time, all acts and things which the Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and the Agent's Lien
therein, in order to effect the intent of this Agreement, all as fully
and effectively as such Loan Party might do.
(b) The Agent agrees that it will forbear from exercising the power of
attorney or any rights granted to the Agent pursuant to this Section 9.08,
except upon the occurrence or during the continuation of an Event of Default.
The Borrower and the other Loan Parties hereby ratify, to the extent permitted
by law, all that said attorneys shall lawfully do or cause to be done by virtue
hereof. Exercise
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by the Agent of the powers granted hereunder is not a violation of the automatic
stay provided by section 362 of the Bankruptcy Code and each Loan Party waives
applicability thereof. The power of attorney granted pursuant to this Section
9.08 is a power coupled with an interest and shall be irrevocable until the
Obligations are indefeasibly paid in full.
(c) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Collateral and shall not impose
any duty upon it to exercise any such powers. The Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers and neither it nor any of its officers, directors, employees or agents
shall be responsible to any Loan Party for any act or failure to act, except for
its own gross negligence or willful misconduct.
(d) Each Loan Party also authorizes the Agent, at any time and from
time to time upon the occurrence and during the continuation of any Event of
Default or as otherwise expressly permitted by this Agreement, (i) to
communicate in its own name or the name of its Subsidiaries with any party to
any Contract with regard to the assignment of the right, title and interest of
such Loan Party in and under the Contracts hereunder and other matters relating
thereto and (ii) to execute any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral.
(e) All Obligations, including all Obligations of the Guarantors
hereunder, shall constitute, in accordance with section 364(c)(1) of the
Bankruptcy Code, claims against each Loan Party in its Case which are
administrative expense claims having priority over any all administrative
expenses of the kind specified in sections 503(b) or 507(b) of the Bankruptcy
Code.
SECTION 9.09. Modifications.
(a) The liens and security interests, lien priority, administrative
priorities and other rights and remedies granted to the Agent for the benefit of
the Lenders pursuant to this Agreement, the Interim Order and/or the Final Order
(specifically, including, but not limited to, the existence, perfection and
priority of the Liens and security interests provided herein and therein and the
administrative priority provided herein and therein) shall not be modified,
altered or impaired in any manner by any other financing or extension of credit
or incurrence of Debt by any of the Loan Parties (pursuant to section 364 of the
Bankruptcy Code or otherwise), or by any dismissal or conversion of any of the
Cases, or by any other act or omission whatsoever. Without limitation,
notwithstanding any such order, financing, extension, incurrence, dismissal,
conversion, act or omission:
(i) except for the Carve-Out having priority over the
Obligations, no costs or expenses of administration which have been or
may be incurred in any of the Cases or any conversion of the same or in
any other proceedings related thereto, and no priority claims, are or
will be prior to or on a parity with any claim of the Agent or the
Lenders against the Loan Parties in respect of any Obligation;
(ii) the liens and security interests granted herein shall
constitute valid and perfected first priority liens and security
interests, (subject only to (A) the Carve-Out, (B) valid, perfected,
enforceable and nonavoidable Liens of record existing immediately prior
to the Petition Date and (C) Liens permitted under Section
6.02(a)(vii)) in accordance with sections 364(c)(2) and (3) of the
Bankruptcy Code, and shall be prior to all other liens and security
interests, now existing or hereafter arising, in favor of any other
creditor or any other Person whatsoever; and
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(iii) the liens and security interests granted hereunder shall
continue valid and perfected without the necessity that financing
statements be filed or that any other action be taken under applicable
nonbankruptcy law.
(b) Notwithstanding any failure on the part of any Loan Party or the
Agent or the Lenders to perfect, maintain, protect or enforce the liens and
security interests in the Collateral granted hereunder, the Interim Order and
the Final Order (when entered) shall automatically, and without further action
by any Person, perfect such liens and security interests against the Collateral.
ARTICLE X
THE AGENT, THE OTHER AGENTS AND THE ARRANGER
SECTION 10.01. Authorization and Action. Each Lender hereby 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 hereof, together with such powers as are reasonably incidental thereto. As
to any matters not expressly provided for by this Agreement (including
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Requisite Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable law. The Agent shall not be liable to any Lender if, in accordance
with the terms of this Agreement, it takes or omits to take any action pursuant
to the instructions of the Requisite Lenders. The Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement. The Agent agrees to perform and discharge the duties
and powers delegated to it under this Agreement and the other Loan Documents in
accordance with the terms hereof and thereof.
SECTION 10.02. Agent Not Liable. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or any of them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent (i) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and including the
agreement of the assignee or transferee to be bound hereby as it would have been
if it had been an original Lender party hereto, in form satisfactory to the
Agent; (ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement; (iv) shall not have any duty
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement on the part of the Borrower or
to inspect the property (including the books and records) of the Borrower; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other Loan Document or any other instrument or document furnished pursuant
to any Loan Document or for the creation, validity, enforceability, sufficiency,
value, perfection or priority of any Lien purported to be granted to the Agent,
whether pursuant to any of the Loan Documents or otherwise; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier)
believed by it in good faith to be genuine and signed or sent by the proper
party or parties.
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SECTION 10.03. Rights as Lender. With respect to its commitment and the
Advances and Notes held by it and all other rights, claims and interests
accorded it as Lender, CUSA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall include CUSA in its
individual capacity. CUSA and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, the Borrower, any of its Subsidiaries and any Person who may
do business with or own securities of the Borrower or any such Subsidiary, all
as if CUSA were not the Agent and without any duty to account therefor to the
Lenders. Any Lender and its respective Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, the Borrower, any of its Subsidiaries and any Person who may
do business with or own securities of the Borrower or any such Subsidiary, all
as if such Lender were not a Lender hereunder and without any duty to account
therefor to the other Lenders.
SECTION 10.04. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.01(i) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it deems
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 10.05. Indemnification. The Lenders agree to indemnify the
Agent and the Other Agents (to the extent not reimbursed by the Borrower)
ratably according to their Pro Rata Shares 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 the Agent in any way relating to or
arising out of this Agreement or the other Loan Documents or any action taken or
omitted by the Agent under this Agreement or the other Loan Documents; provided
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
Without limiting the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its Pro Rata Share of any reasonable out-of-pocket
expenses (including reasonable fees and expenses of counsel) incurred by the
Agent in connection with the preparation, execution, delivery, modification,
amendment, protection or enforcement (whether through negotiations, by legal
proceedings, in bankruptcy or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or the other Loan Documents, to
the extent that the Agent is not reimbursed for such expenses by the Borrower.
SECTION 10.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Requisite Lenders. Upon any such
resignation or removal, the Requisite Lenders shall, subject to the written
consent of the Borrower, which consent shall not be required during the
continuance of an Event of Default and shall not otherwise be unreasonably
withheld or delayed, have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Requisite Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation or the Requisite Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any State and having total assets of at least
$20,000,000,000. 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 or removal hereunder as
Agent, the provisions of this
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Article X 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 10.07. Release of Collateral. The Agent is hereby irrevocably
authorized to release any Lien granted to or held by the Agent upon (i) any and
all Collateral when the Facility Amount has been permanently reduced to zero,
all Letters of Credit issued hereunder have expired or been discharged, all
outstanding Advances and LC Exposure have been repaid, and all other Obligations
that are then due and payable and of which the Agent then has written notice
demanding payment prior to release of Collateral have been paid, (ii) any
Collateral constituting property sold or to be sold or disposed of as part of or
in connection with any disposition permitted under Section 6.02(b) or consented
to by the Requisite Lenders, or (iii) any Collateral consisting of an instrument
evidencing Debt or other debt instrument, if the indebtedness evidenced thereby
has been paid in full. Upon request by the Agent or the Borrower at any time,
each Lender shall confirm in writing the Agent's authority to release
Collateral, or particular types or items of Collateral, as set forth in this
Section 10.07. The Agent shall not be obligated to release any Collateral unless
it receives such written confirmation from the Requisite Lenders.
SECTION 10.08. The Other Agents and the Arranger. Each Lender hereby
appoints First Union National Bank as "Syndication Agent" and Foothill Capital
Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners, L.P. as "Co-Documentation
Agents". Notwithstanding anything to the contrary contained in this Agreement,
the Syndication Agent is a Lender designated as "Syndication Agent" and the
Co-Documentation Agents are each a Lender designated as "Co-Documentation
Agent", in each case for title purposes only and, in such capacity, neither the
Syndication Agent nor the Co-Documentation Agents shall have any obligations or
duties whatsoever under this Agreement or any other Loan Document to any Loan
Party, any Lender or the LC Bank or shall have any rights separate from their
respective rights as Lenders, except as expressly provided in this Agreement.
The Arranger shall have no obligations or duties whatsoever in such capacity
under this Agreement or any other Loan Document and shall incur no liability
hereunder or thereunder in such capacity.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments. No amendment or waiver of any provision of
this Agreement or the Notes, nor consent to any departure by the Borrower or any
other Loan Party therefrom, shall be effective unless it is in writing and
signed by the Requisite Lenders (and any such waiver or consent shall in any
case be effective only in the specific instance and for the specific purpose for
which given), except that
(a) no amendment, waiver or consent shall, unless in writing and signed
by each Lender, do any of the following:
(i) change the obligation of any Lender to extend credit
hereunder or subject any Lender to any additional obligations;
(ii) reduce the principal of or interest on any Advance or any
fees or other amounts payable to any Lender hereunder or under any
other Loan Document;
(iii) postpone any date fixed for any payment (including any
mandatory prepayment) of principal of or interest on any Advances or LC
Exposure held by any Lender or any fees or other amounts payable to any
Lender under any Loan Document;
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(iv) waive, reduce or postpone any Facility Reduction required
hereunder;
(v) amend the definition of "Facility Amount," "Pro Rata
Share," or "Requisite Lenders";
(vi) waive any Event of Default that is continuing under
Section 7.01(a) or 7.01(b) in respect of a payment due to any Lender;
(vii) release any substantial portion of the Collateral other
than in accordance with the terms of this Agreement;
(viii) release or limit the liability of any Guarantor under
the Guaranty other than in accordance with the terms of the Guaranty;
(ix) amend Section 2.13, Section 2.17 or Section 7.01(a);
(x) increase the advance rates in the definition of "Borrowing
Base" above the rates set forth in such definition;
(xi) create any Lien or super-priority claim senior to the
Liens and claims of the Lenders under this Agreement or any other Loan
Document; or
(xii) amend this Section 11.01;
(b) no amendment, waiver or consent shall, unless in writing and signed
by the Agent in addition to the Lenders required above to take such action,
affect the rights or duties of the Agent under this Agreement or any Loan
Document;
(c) no amendment, waiver or consent shall, unless in writing and signed
by the LC Bank in addition to the Lenders required above to take such action,
affect the rights or duties of the LC Bank under this Agreement.
SECTION 11.02. Notices. All notices and other communications provided
for hereunder shall be in writing (including telecopier communication) and
mailed, telecopied, or delivered, if to the Borrower, at Integrated Health
Services, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel and Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President, with a copy
to: ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇.▇. ▇▇▇▇▇▇, Esq.; if to any Lender, at its Domestic
Lending Office specified opposite its name on Schedule I hereto; and if to the
Agent, at Citicorp USA, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, - ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, with a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., or, as
to each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications shall,
when mailed or telecopied, be effective when deposited in the mails or
telecopied, respectively, except that notices and communications to the Agent
pursuant to Article II or VII shall not be effective until received by the
Agent.
SECTION 11.03. No Waiver; Remedies. No failure on the part of any
Lender, the LC Bank or the Agent to exercise, and no delay in exercising, any
right under any Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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SECTION 11.04. Costs and Expenses. The Borrower agrees to pay on demand
all reasonable costs and expenses incurred by the Agent and the Arranger in
connection with (a) the preparation, negotiation, execution, delivery,
modification and amendment of the Loan Documents and the other documents to be
delivered under the Loan Documents, including the reasonable fees and
out-of-pocket expenses and disbursements of counsel for the Agent with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under the Loan Documents, (b) the funding of all Advances under
the Facility, including, without limitation, all due diligence, syndication
(including printing, distribution and bank meetings), transportation, computer,
duplication, messenger, audit, appraisal and consultant costs and expenses and
all search, filing and recording fees, incurred or sustained by the Agent or the
Arranger in connection with the Facility, the Loan Documents or the transactions
contemplated thereby, the administration of the Facility and any amendment or
waiver of any provision of any Loan Documents, and (c) any review of pleadings
and documents related to the Cases, attendance at meetings or court hearings
related to the Cases and general monitoring of the Cases and any subsequent
chapter 7 cases of the Loan Parties. The Borrower further agrees to pay on
demand (i) all reasonable costs and expenses, including reasonable fees and
expenses of attorneys (including allocable costs of in-house counsel),
accountants, advisors and other experts, incurred by the Agent or the Lenders in
respect of any Event of Default or while any Event of Default is continuing or
in connection with the protection, resolution or enforcement (whether through
negotiations, by legal proceedings, in bankruptcy or otherwise) of the
Obligations or the Collateral or any right, remedy, power, interest or claim of
the Agent or any Lender under any Loan Document and (ii) all costs and expenses
of the Lenders (including reasonable fees, expenses and disbursements of
counsel) in connection with the enforcement or protection of any of their rights
and remedies under the Loan Documents.
SECTION 11.05. Right of Set-off. Whenever any Event of Default is
continuing, each Lender may at any time or from time to time, with the consent
of the Requisite Lenders but without any prior notice to the Borrower or any
other Person, set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other debt at any time
owing by such Lender to or for the credit or the account of the Borrower,
whether or not then due, and whether or not then fully secured, against any and
all Advances, LC Exposure and other Obligations then owing to such Lender,
whether or not then due. After any such set-off and application is made, the
Lender that made it shall promptly notify the Borrower thereof, but the failure
to do so shall not affect the validity of the set-off and application and shall
not expose such Lender to any liability. The Lenders' right of setoff under this
Section 11.05 is cumulative with and additional to all other rights and remedies
(including other rights of set-oft) of the Lenders.
SECTION 11.06. Indemnity.
(a) General Indemnity. The Borrower shall pay, defend, indemnify, and
hold the Arranger, each Lender, the Agent, the Other Agents, their respective
Affiliates and each of their respective officers, directors, employees, counsel,
agents, advisors, representatives and attorneys-in-fact (each, an "INDEMNIFIED
PERSON") harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses or
disbursements (including reasonable fees, disbursements and expenses of counsel
and allocated costs of internal counsel incurred in defending any such action or
incurred in enforcing this Section 11.06(a)), joint or several, that may be
incurred by or asserted or awarded against any Indemnified Person, of any kind
or nature whatsoever with respect to the execution, delivery, enforcement and
performance of this Agreement and any other Loan Document or the transactions
contemplated herein, and with respect to any investigation, litigation or
proceeding or the preparation of any defense related to this Agreement or the
Advances or the Letters of Credit or the use of the proceeds thereof, whether or
not any Indemnified Person is a party thereto (all the foregoing, collectively,
the "INDEMNIFIED LIABILITIES") and whether or not such investigation, litigation
or proceeding is brought by the Borrower, any Guarantor, any of their respective
shareholders or creditors,
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an Indemnified Person, or any other person, except that no Indemnified Person
shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to the Borrower, any Guarantor or any of their respective
shareholders or creditors for or in connection with the transactions
contemplated hereby, except to the extent that such liability is found in a
final non-appealable judgment by a count of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. In no event shall any Indemnified Person be liable on any theory of
liability for any special, indirect, consequential or punitive damages.
(b) Environmental Indemnity. The Borrower shall pay, defend, indemnify,
and hold harmless each Indemnified Person from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements (including reasonable fees and
expenses of counsel and the allocated cost of internal counsel), which may be
incurred by or asserted against any Indemnified Person in connection with or
arising out of any pending or threatened investigation or Environmental Claim
arising out of or related to any acts or omissions or any property of the
Borrower or any of its Subsidiaries. In no event shall any site visit,
observation, or testing by the Agent or any Lender be a representation that
Contaminants are or are not present in, on, or under the site, or that there has
been or shall be compliance with any Environmental Law. Neither the Borrower nor
any other party is entitled to rely on any site visit, observation, or testing
by the Agent or any Lender. Neither the Agent nor any Lender owes any duty of
care to protect the Borrower or any other Person against, or to inform the
Borrower or any other Person of, any adverse condition affecting any site or
property.
SECTION 11.07. Assignments and Participations.
(a) Permitted Assignment. Each Lender may assign, subject to the
Agent's approval (such approval not to be unreasonably withheld or delayed), to
one or more banks, financial institutions or other entities acceptable to the
Arranger all or a portion of its rights and obligations under this Agreement,
but (i) each such assignment shall be of a constant, and not a varying,
percentage of all of the assigning Lender's rights and obligations under this
Agreement, unless otherwise consented to by the Agent; (ii) the amount of the
commitment, if any, and outstanding Advances of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall not be less
than $5,000,000 or the total amount of the remaining commitment, if any, and
outstanding Advances of such Lender, except that an assignment to an existing
Lender or an Affiliate of a Lender or a Related Fund may be in an amount less
than $5,000,000, (iii) each such assignment shall be to an Eligible Assignee and
(iv) the parties to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment and a processing and
recordation fee payable to the Agent of $3,500; provided, that unless such
assignee is one of the seven institutions previously identified in writing to
the Borrower by the Arranger or an Event of Default has occurred and is
continuing, such assignee shall be reasonably acceptable to the Borrower (such
acceptance not to be unreasonably withheld or delayed). Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, (A) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (B) the Lender assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and 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 assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(b) Effect of Assignment. By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each
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other and the other parties hereto that (i) other than as provided in such
Assignment and Acceptance, such assigning Lender 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
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or as to the Collateral or the validity, enforceability, perfection or
priority of any Lien upon the Collateral; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under this Agreement or any other instrument
or document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Section 4.01(i) 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 assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) 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 hereof, together with such
powers as are reasonably incidental thereto; (vii) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender; and
(viii) such assignee confirms and agrees that it shall have no greater
indemnification rights pursuant to Section 2.16(c) than its Lender assignor.
(c) Maintenance of Agreements. The Agent, acting for this purpose (but
only for this purpose) as the agent of the Borrower (and in such capacity
neither the Agent nor any of its directors, officers, agents or employees shall
be liable for any action taken or omitted to be taken by it or any of them under
or in connection with this Section 11.07(c), except for its or their own gross
negligence or willful misconduct), shall maintain at its address referred to in
Section 11.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the commitments and Pro Rata Shares of, and principal amount of the
Advances owing to, each Lender from time to time (the "REGISTER"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders shall treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Procedure. Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee Lender representing that it is
an Eligible Assignee, together with any Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit E-2, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such Eligible Assignee in an
aggregate amount equal to the interest in the surrendered Note or Notes assigned
to it pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained an interest in the surrendered Note or Notes, a new Note or Notes
to the order of the assigning Lender in an aggregate amount equal to the
interest so retained. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of Exhibit A.
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(e) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights (other than voting
rights) and obligations under this Agreement, but (i) such Lender's obligations
under this Agreement (including its commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Note or Notes for all purposes of this Agreement,
and (iv) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; provided, that to the extent any matter
requires the consent of 100% of the Lenders, such purchasing bank or other
entity may vote upon such matter.
(f) Additional Information. Any Lender may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 11.07, disclose to the assignee or participant or proposed assignee
or participant or to any Person who evaluates, approves, structures or
administers the loans on behalf of a Lender, any information relating to the
Borrower furnished to such Lender by or on behalf of the Borrower, but only if
such Person, the assignee or participant or proposed assignee or participant is
obligated to preserve the confidentiality of any confidential information
relating to the Borrower received by it from such Lender.
(g) Affiliated Assignments Any Lender may assign any of its rights and
obligations under this Agreement to any of its Affiliates without notice to or
consent of the Borrower or the Agent, and such Lender or any of its Affiliates
may assign any of its rights (including, without limitation, rights to payment
of principal and/or interest under the Notes) under this Agreement to any
Federal Reserve Bank without notice to or consent of the Borrower or the Agent.
(h) Subsequent Lenders. Each of the parties hereto agrees that on the
Entry Date and upon the prior written consent of the Agent, any Eligible
Assignee may become party to this Agreement as a Lender and be subject to all of
the obligations and entitled to all of the rights of a Lender under the Loan
Documents upon such Eligible Assignee's execution and delivery of a counterpart
of this Agreement containing the amount of its Commitment; provided, that in no
event shall the maximum amount of the Commitments of all the Lenders exceed
$300,000,000 after giving effect to the Commitment of each additional Lender
becoming a party to this Agreement pursuant to this Section 11.07(h); provided
further, however, that such Eligible Assignee shall not become a Lender party to
this Agreement unless (x) all fees and expenses provided for in the fee letter
dated the Closing Date and referred to in Section 2.04(e) shall have been paid
and (y) the payment of such fees and expenses shall have been approved, to the
extent required, by the Bankruptcy Court. The Agent shall be authorized to amend
or supplement Schedule I to set forth the Commitment of each Lender becoming a
party to this Agreement pursuant to this Section 11.07(h). Any Lender becoming a
party to this Agreement pursuant to this Section 11.07(h) shall be required on
the Entry Date to purchase a portion of the then outstanding Revolving Credit
Advances such that after giving effect to such purchase, each Lender shall have
its Pro Rata Share (adjusted to give effect to the increased Commitments) of the
Revolving Credit Advances on such date. In addition, on the Entry Date each
Lender's participation in the LC Exposure shall be adjusted to reflect any
adjustment in such Lender's Pro Rata Share.
SECTION 11.08. Binding Effect. This Agreement shall become effective
when it has been executed by the parties hereto and the conditions set forth in
Section 3.01 have been satisfied and thereafter shall be binding upon and inure
to the benefit of the Borrower, the Agent and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of each of the Lenders and the Agent.
79
SECTION 11.09. Governing Law. This Agreement and the other Loan
Documents shall be governed by, and construed in accordance with, the laws of
the State of New York.
SECTION 11.10. Waiver of Jury Trial. THE BORROWER, THE LENDERS AND THE
AGENT WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES, WHETHER BASED ON CONTRACT, TORT, STATUTORY LIABILITY
OR OTHERWISE. THE BORROWER, THE LENDERS AND THE AGENT AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY THE COURT WITHOUT A JURY. THIS WAIVER SHALL
APPLY TO EACH FUTURE AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION OF ANY LOAN
DOCUMENT AND TO EACH FUTURE LOAN DOCUMENT.
SECTION 11.11. Limitation of Liability. No claim may be made by the
Borrower, any Subsidiary of the Borrower, any Lender, the Agent or any other
Person against the Agent or any other Lender or the Affiliates, directors,
officers, employees, attorneys or agents of any of them for any special,
indirect or consequential damages or, to the fullest extent permitted by law,
for any punitive damages in respect of any claim or cause of action (whether
based on contract, tort, statutory liability, or any other ground) based on,
arising out of or related to any Loan Document or the transactions contemplated
hereby or any act, omission or event occurring in connection therewith, and the
Borrower (for itself and on behalf of each of its Subsidiaries), the Agent and
each Lender hereby waive, release and agree never to ▇▇▇ upon any claim for any
such damages, whether such claim now exists or hereafter arises and whether or
not it is now known or suspected to exist in its favor.
SECTION 11.12. Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire Agreement and understanding among the
Borrower, the Lenders and the Agent and supersedes all prior or contemporaneous
agreements and understandings of such persons, verbal or written, relating to
the subject matter hereof and thereof except for the Fee Letters and any prior
arrangements made with respect to the payment by the Borrower of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to
be incurred) by or on behalf of the Agent or any Lender.
SECTION 11.13. Survival. The Borrower's liability for any and all
additional interest, fees, taxes, compensation, costs, losses, expense
reimbursements, indemnification and other similar Obligations arising under any
Loan Document shall survive the expiration or termination of the commitments of
the Lenders to extend credit hereunder, the repayment and retirement of all
Advances and LC Exposure at any time outstanding hereunder and the assignment by
a Lender of all or the remaining portion of its rights and obligations under
this Agreement.
SECTION 11.14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 11.15. Acknowledgements. The Borrower hereby acknowledges that
(i) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents, (ii) neither the Agent nor any
Lender has any fiduciary relationship with or fiduciary duty to the Borrower
arising out of or in connection with this Agreement or any of the Loan
Documents, and the relationship between the Agent and the Lender, on the one
hand, and the Borrower, on the other
80
hand, in connection herewith or therewith is solely that of debtor and creditor
and (iii) no joint venture is created hereby or by the other Loan Documents or
otherwise by virtue of the transaction contemplated hereby among the Lenders or
among the Borrower and the Lenders or among the Borrower and the Agent.
81
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
INTEGRATED HEALTH SERVICES, INC.,
as Borrower
By:
-------------------------------
Name:
Title:
CITICORP USA, INC.,
as Agent, Swing Line Bank and Lender
By:
-------------------------------
Name:
Title:
EACH OF THE GUARANTORS LISTED ON SCHEDULE II
HERETO,
as Guarantors
By:
-------------------------------
Name:
Title:
FOOTHILL CAPITAL CORPORATION,
as Lender
By:
-------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Lender
By:
-------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Lender
By:
-------------------------------
Name:
Title:
BANK OF AMERICA, N.A.,
as Lender
By:
-------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS) INC.,
as Lender
By:
-------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Lender
By:
-------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS, L.P.,
as Lender
By:
-------------------------------
Name:
Title:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS..................................................1
SECTION 1.01. Certain Defined Terms........................................................1
SECTION 1.02. Accounting Terms............................................................23
SECTION 1.03. Other Definitional Provisions...............................................23
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES................................................24
SECTION 2.01. Revolving Facility and Swing Line Facility..................................24
(a) Advances....................................................................24
(b) Amount of Revolving Credit Advances.........................................24
(c) Notice of Borrowing.........................................................25
(d) Telephonic Notice of Borrowing..............................................25
(e) Funding of Advances.........................................................25
(f) Assumption of Funding.......................................................25
(g) Failure of Lender to Fund...................................................25
(h) Swing Line Advances.........................................................25
SECTION 2.02. Letter of Credit Subfacility................................................26
(a) Issuance of Letters of Credit...............................................26
(b) LC Application..............................................................26
(c) Reimbursement...............................................................26
(d) Reimbursement Obligation Absolute...........................................27
(e) Lender Participation........................................................27
(f) Commercial Practices........................................................28
SECTION 2.03. Evidence of Debt............................................................28
SECTION 2.04. Fees........................................................................29
(a) Unused Commitment Fees......................................................29
(b) Facing Fees.................................................................29
(c) Letter of Credit Fee........................................................29
(d) Letter of Credit Administration.............................................29
(e) Fees........................................................................29
SECTION 2.05. Voluntary and Mandatory Facility Reductions.................................29
(a) Voluntary...................................................................29
(b) RoTech Asset Sale...........................................................30
SECTION 2.06. Principal Payments and Swing Line Payments..................................30
(a) Final Maturity..............................................................30
(b) Excess Credit Exposure......................................................30
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(CONTINUED)
Page
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(c) Excess LC Exposure..........................................................30
(d) Swing Line Payments.........................................................30
SECTION 2.07. Interest....................................................................30
(a) Base Rate Advances..........................................................30
(b) Eurodollar Rate Advances....................................................30
(c) Default Interest............................................................31
SECTION 2.08. Additional Interest on Eurodollar Rate Advances.............................31
SECTION 2.09. Interest Rate Determination and Protection..................................31
(a) Determination of Eurodollar Rate............................................31
(b) Notice of Eurodollar Rate...................................................31
(c) Failure to Provide Information..............................................31
(d) Suspension of Eurodollar Rate Advances......................................31
(e) Failure to Specify Duration.................................................32
(f) Agent's Determination Conclusive............................................32
SECTION 2.10. Voluntary Conversion of Advances............................................32
(a) Notice of Continuance/Conversion............................................32
(b) Telephonic Notice...........................................................32
(c) Requirements................................................................32
(d) Base Rate Advances..........................................................32
SECTION 2.11. Prepayments.................................................................32
(a) Voluntary Prepayments.......................................................32
(b) Mandatory Prepayments.......................................................33
SECTION 2.12. Funding Losses..............................................................34
SECTION 2.13. Increased Costs.............................................................34
(a) Increase in Cost............................................................34
(b) Increase in Capital Requirements............................................34
(c) Replacement Lenders and Participants........................................35
SECTION 2.14. Illegality..................................................................35
SECTION 2.15. Payments and Computations...................................................35
(a) Payments....................................................................36
(b) Charging of Accounts........................................................36
(c) Computations................................................................36
ii
TABLE OF CONTENTS
(CONTINUED)
Page
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(d) Payment on Business Day.....................................................36
(e) Presumption of Payment......................................................36
SECTION 2.16. Taxes.......................................................................36
(a) Net Payments................................................................36
(b) Payment of Other Taxes......................................................37
(c) Indemnification.............................................................37
(d) Evidence of Payments........................................................37
(e) Withholding Tax Exemption...................................................37
(f) Withholding Taxes...........................................................38
(g) Subsequent Lenders..........................................................38
(h) Refund, Deduction or Credit of Taxes........................................38
(i) Exclusion of Certain Taxes..................................................38
(j) Additional Cooperation......................................................39
SECTION 2.17. Sharing of Payments.........................................................39
ARTICLE III CONDITIONS OF LENDING............................................................39
SECTION 3.01. Conditions Precedent on the Closing Date....................................39
(a) Bankruptcy Court Order......................................................39
(b) Loan Documents..............................................................39
(c) Governmental Consents.......................................................40
(d) No Injunction...............................................................40
(e) Material Adverse Change.....................................................41
(f) Security....................................................................41
(g) Payment of Fees.............................................................41
SECTION 3.02. Conditions Precedent to Each Extension of Credit............................41
(a) Notice......................................................................41
(b) Borrowing Base..............................................................41
(c) Borrowing Base Certificate..................................................41
(d) Bankruptcy Court Approval...................................................41
(e) Statements..................................................................41
ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................................42
SECTION 4.01. Representations and Warranties of the Loan Parties..........................42
(a) Organization................................................................42
iii
TABLE OF CONTENTS
(CONTINUED)
Page
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(b) Power and Authority.........................................................42
(c) Due Authorization...........................................................42
(d) Subsidiaries and Ownership of Capital Stock and Ownership Interests.........42
(e) Health Care Facilities......................................................42
(f) Governmental Approval.......................................................43
(g) Binding and Enforceable.....................................................43
(h) Government Regulation.......................................................43
(i) Financial Information.......................................................43
(j) Material Adverse Change.....................................................43
(k) Compliance..................................................................43
(l) Litigation..................................................................43
(m) No Conflict.................................................................43
(n) No Default..................................................................44
(o) Payment of Taxes............................................................44
(p) Margin Regulations..........................................................44
(q) Conduct of Business.........................................................44
(r) Health Care Permits.........................................................44
(s) Environmental Matters.......................................................45
(t) ERISA Compliance............................................................45
(u) Title to Assets.............................................................46
(v) Loan Documents..............................................................46
(w) Security....................................................................46
(x) Priority....................................................................46
(y) Orders......................................................................46
(z) Accounts Receivable.........................................................46
(aa) Year 2000 Compliance........................................................47
(bb) Full Disclosure.............................................................47
(cc) Liens.......................................................................47
(dd) Debt........................................................................47
(ee) Depositary Banks............................................................47
ARTICLE V FINANCIAL COVENANTS OF THE BORROWER..............................................47
iv
TABLE OF CONTENTS
(CONTINUED)
Page
----
SECTION 5.01. Financial Covenants.........................................................47
(a) Minimum Adjusted EBITDA.....................................................47
(b) Maximum Capital Expenditures................................................48
ARTICLE VI COVENANTS OF THE BORROWER........................................................48
SECTION 6.01. Affirmative Covenants.......................................................48
(a) Compliance with Laws........................................................48
(b) Inspection of Property and Books and Records................................48
(c) Reporting Requirements......................................................49
(d) Preservation of Corporate Existence, Etc....................................51
(e) Maintenance of Property.....................................................51
(f) Bankruptcy Court............................................................51
(g) Insurance...................................................................52
(h) Cash Management.............................................................52
(i) Environmental Laws..........................................................53
(j) Use of Proceeds.............................................................53
(k) Health Care Permits and Approvals...........................................53
(l) Further Assurances..........................................................53
(m) Delivery of Promissory Note.................................................54
(n) Licensure; Medicaid/Medicare Cost Reports...................................54
SECTION 6.02. Negative Covenants..........................................................54
(a) Liens.......................................................................54
(b) Disposition of Assets.......................................................55
(c) Investments.................................................................55
(d) Limitation on Debt..........................................................56
(e) Transactions with Affiliates................................................56
(f) Accommodation Obligations...................................................56
(g) Leases of Health Care Facilities............................................56
(h) Subsidiaries................................................................57
(i) Restricted Payments.........................................................57
(j) Capital Structure/Modification of Constituent Documents.....................57
(k) Mergers, Etc................................................................57
(l) Conduct of Business.........................................................57
v
TABLE OF CONTENTS
(CONTINUED)
Page
----
(m) Compliance with ERISA.......................................................57
(n) Health Care Permits and Approvals...........................................57
(o) Payment Restrictions Affecting Subsidiaries.................................58
(p) The Orders..................................................................58
(q) Application to Bankruptcy Court.............................................58
(r) Ownership...................................................................58
(s) Accounting Changes; Fiscal Year.............................................58
(t) Cancellation of Indebtedness Owed to It.....................................58
(u) No Speculative Transactions.................................................58
(v) Chapter 11 Claims...........................................................58
(w) Cash Management.............................................................58
(x) Environmental...............................................................58
ARTICLE VII EVENTS OF DEFAULT................................................................59
SECTION 7.01. Events of Default...........................................................59
(a) Non-Payment of Principal or Interest........................................59
(b) Non-Payment of Fees.........................................................59
(c) Representations and Warranties..............................................59
(d) Covenants...................................................................59
(e) Other Covenants.............................................................59
(f) Leases......................................................................59
(g) Judgments...................................................................59
(h) Loan Documents..............................................................59
(i) Material Adverse Change.....................................................60
(j) ERISA.......................................................................60
(k) Trustee.....................................................................60
(l) Environmental Liabilities...................................................60
(m) Cases.......................................................................60
(n) Prepetition Claims..........................................................60
(o) Court Orders................................................................60
(p) Examiner....................................................................61
(q) Forfeiture; Seizure.........................................................61
SECTION 7.02. Actions in Respect of Letters of Credit.....................................61
vi
TABLE OF CONTENTS
(CONTINUED)
Page
----
SECTION 7.03. Rights Not Exclusive........................................................61
ARTICLE VIII GUARANTY.........................................................................62
SECTION 8.01. The Guaranty................................................................62
SECTION 8.02. Nature of Liability.........................................................62
SECTION 8.03. Independent Obligation......................................................62
SECTION 8.04. Authorization...............................................................62
SECTION 8.05. Reliance....................................................................63
SECTION 8.06. Subordination...............................................................63
SECTION 8.07. Waiver......................................................................63
SECTION 8.08. Limitation on Enforcement...................................................64
ARTICLE IX SECURITY.........................................................................64
SECTION 9.01. Security....................................................................64
SECTION 9.02. Perfection of Security Interests............................................66
SECTION 9.03. Rights of Lender; Limitations on Lenders' Obligations.......................66
SECTION 9.04. Covenants of the Loan Parties with Respect to Collateral....................67
SECTION 9.05. Performance by Agent of the Loan Parties' Obligations.......................68
SECTION 9.06. Limitation on Agent's Duty in Respect of Collateral.........................69
SECTION 9.07. Remedies, Rights Upon Default...............................................69
SECTION 9.08. The Agent's Appointment as Attorney-in-Fact.................................70
SECTION 9.09. Modifications...............................................................71
ARTICLE X THE AGENT, THE OTHER AGENTS AND THE ARRANGER.....................................72
SECTION 10.01 Authorization and Action....................................................72
SECTION 10.02 Agent Not Liable............................................................72
SECTION 10.03 Rights as Lender............................................................73
SECTION 10.04 Lender Credit Decision......................................................73
SECTION 10.05 Indemnification.............................................................73
SECTION 10.06 Successor Agent.............................................................73
SECTION 10.07 Release of Collateral.......................................................74
SECTION 10.08 The Other Agents and the Arranger...........................................74
ARTICLE XI MISCELLANEOUS....................................................................74
SECTION 11.01 Amendments..................................................................74
SECTION 11.02 Notices.....................................................................75
vii
TABLE OF CONTENTS
(CONTINUED)
Page
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SECTION 11.03 No Waiver; Remedies.............................................................75
SECTION 11.04 Costs and Expenses..............................................................76
SECTION 11.05 Right of Set-off................................................................76
SECTION 11.06 Indemnity.......................................................................76
(a) General Indemnity...........................................................76
(b) Environmental Indemnity.....................................................77
SECTION 11.07 Assignments and Participations..................................................77
(a) Permitted Assignment........................................................77
(b) Effect of Assignment........................................................77
(c) Maintenance of Agreements...................................................78
(d) Procedure...................................................................78
(e) Participations..............................................................79
(f) Additional Information......................................................79
(g) Affiliated Assignments......................................................79
(h) Subsequent Lenders..........................................................79
SECTION 11.08 Binding Effect..................................................................79
SECTION 11.09 Governing Law...................................................................79
SECTION 11.10 Waiver of Jury Trial............................................................79
SECTION 11.11 Limitation of Liability.........................................................80
SECTION 11.12 Entire Agreement................................................................80
SECTION 11.13 Survival........................................................................80
SECTION 11.14 Execution in Counterparts.......................................................80
SECTION 11.15 Acknowledgements................................................................80
viii
EXHIBITS
Exhibit A Form of Revolving Credit Note
Forms of Loan Administration Documents
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Continuance/Conversion
Exhibit B-3 Form of LC Application
Exhibit B-4 Form of Notice of Swing Line Advance
Exhibit B-5 Form of Borrowing Base Certificate
Forms of Certain Loan Documents
Exhibit C Form of Blocked Account Letter
Forms of Opinion of Counsel
Exhibit D Form of Opinion of Counsel for the Loan Parties
Other Forms
Exhibit E-1 Form of Compliance Certificate
Exhibit E-2 Form of Assignment and Acceptance
Exhibit E-3 Form of Interim Order
SCHEDULES
Schedule I List of Lenders, Commitments and Pro Rata Shares
Schedule II List of Guarantors
Schedule 1.01 List of Depositary Banks
Schedule 4.01(d) List of Subsidiaries
Schedule 4.01(e) List of Health Care Facilities
Schedule 4.01(f) List of Government Approvals
Schedule 4.01(s) List of Environmental Matters
Schedule 4.01(t) List of ERISA Matters
Schedule 6.02(c) List of Loans and Investments
Schedule 6.02(d) List of Liens and Debt
Schedule 6.02(f) List of Accommodation Obligations
SECURED SUPER-PRIORITY
DEBTOR IN POSSESSION
REVOLVING CREDIT AGREEMENT
DATED AS OF FEBRUARY 3, 2000
AMONG
INTEGRATED HEALTH SERVICES, INC.,
A DEBTOR AND DEBTOR IN POSSESSION,
AS BORROWER,
THE SUBSIDIARIES PARTY HERETO AS GUARANTORS,
AS DEBTORS AND DEBTORS IN POSSESSION,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
AND
CITICORP USA, INC.,
AS COLLATERAL MONITORING AGENT AND ADMINISTRATIVE AGENT
* * *
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.,
AS LEAD ARRANGER AND SOLE BOOK RUNNER
FIRST UNION NATIONAL BANK,
AS SYNDICATION AGENT
FOOTHILL CAPITAL CORPORATION
AND
▇▇▇▇▇▇▇ SACHS CREDIT PARTNERS, L.P.,
AS CO-DOCUMENTATION AGENTS