exv10w2
Exhibit 10.2
AMENDED AND RESTATED
REVOLVING LOAN AND SECURITY AGREEMENT
dated as of February 28, 2011
by and among
DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee corporation,
as a Borrower
and
those certain additional Borrowers set forth on Schedule 1 hereto,
and
THE PRIVATEBANK AND TRUST COMPANY,
as Administrative Agent for the Lenders
and
The Financial Institutions Parties Hereto as the Lenders
AMENDED AND RESTATED REVOLVING LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED REVOLVING LOAN AND SECURITY AGREEMENT (this “Agreement”),
dated as of February 28, 2011, is by and among DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee
corporation, and those certain other entities set forth on Schedule 1 hereto, which are
signatories hereto (such entities individually and collectively, the “Borrower”), THE
PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation in its individual capacity
(“PrivateBank”), and the other financial institutions parties hereto (together with
PrivateBank, the “Lenders”), and THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking
corporation in its capacity as administrative agent for the Lenders (together with its successors
and assigns, the “Administrative Agent”).
RECITALS
WHEREAS, Advocat Inc., a Delaware corporation (“Parent”), legally and beneficially
owns or controls, either directly, or indirectly through its Subsidiaries, all of the issued and
outstanding Stock of each Borrower;
WHEREAS, the Borrower and PrivateBank are parties to that certain Loan and Security Agreement
dated as of March 17, 2010 (as amended, the “Original Loan Agreement”);
WHEREAS, certain Affiliates of the Borrower are entering into that certain Term Loan and
Security Agreement to be dated of even date herewith by and among such Affiliates, the Lenders and
Administrative Agent (as the same may be amended, supplemented or modified from time to time, the
“Term Loan Agreement”); and
WHEREAS, in connection with the Term Loan Agreement, the parties desire to amend and restate
the Original Loan Agreement (and the Borrowers have agreed to continue to secure all of their
Liabilities under the Original Loan Agreement and the “Financing Agreements” entered into in
connection therewith by continuing their grant of a security interest in and lien upon the
Collateral described herein but in favor of the Administrative Agent for the ratable benefit of the
Lenders and the Administrative Agent), upon the terms and provisions and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and of any loans
or other financial accommodations now or hereafter made to or for the benefit of the Borrower by
the Lenders, and for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto (intending to be legally bound) hereby agree as follows:
1. DEFINITIONS.
1.1 General Terms. When used herein, the following terms shall have the following
meanings:
“Account Debtor” means the Person who is obligated on or under an Account.
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“Accounts” means collectively (a) any right to payment of a monetary obligation,
arising from the delivery of goods or the provision of services, (b) without duplication, any
“account” (as that term is defined in the Code now or hereafter in effect), any accounts receivable
(whether in the form of payments for services rendered or goods sold, rents, license fees or
otherwise), any “health-care-insurance receivables” (as that term is defined in the Code now or
hereafter in effect), any “payment intangibles” (as that term is defined in the Code now or
hereafter in effect) and all other rights to payment and/or reimbursement of every kind and
description, in each case arising from the delivery of goods or the provision of services, (c) all
accounts, general intangibles, Intellectual Property, rights, remedies, guarantees, supporting
obligations, letter of credit rights and security interests in respect of the foregoing, all rights
of enforcement and collection, all books and records evidencing or related to the foregoing, and
all rights under the Financing Agreements in respect of the foregoing, (d) all information and data
compiled or derived by any Borrower or to which any Borrower is entitled in respect of or related
to the foregoing, and (e) all proceeds of any of the foregoing.
“ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve
Fedline system) provided by any Lender for the account of Borrower or its Subsidiaries.
“Adjusted EBITDA” means the sum of (a) EBITDA, and (b) the amounts deducted (or less
amounts added) in computing EBITDA for the period for (i) the non-cash provision (benefit) for
self-insured professional and general liability expenses, (ii) non-cash rent expense, (iii)
non-cash stock based compensation expense, (iv) non-cash debt retirement, and (v) all other
non-cash expenses reasonably approved by the Administrative Agent, less (c) the Cash Cost of
Self-Insured Professional and General Liability.
“Adjusted EBITDAR” means (a) Adjusted EBITDA plus (b) cash rent expense (rent
expense adjusted to remove effects of non-cash rent).
“Administrative Agent” means The PrivateBank and Trust Company, an Illinois banking
corporation, in its capacity as administrative agent for the Lenders hereunder and any successor
thereto in such capacity.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling (including, without limitation, all shareholders, members, directors, partners,
managers, and officers of such Person), controlled by, or under direct or indirect common control
with, such Person. A Person shall be deemed to control another Person if such first Person
possesses, directly or indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through ownership of voting securities, by contract or
otherwise.
“Affiliated Term Borrowers” means Diversicare Afton Oaks, LLC, Diversicare Briarcliff,
LLC, Diversicare Chisolm, LLC and Diversicare Hartford, LLC, each a Delaware limited liability
company.
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“Affiliate Term Loan Financing Agreement” means each “Financing Agreement” as defined
in the Term Loan Agreement, as any of the same may be restated, modified, supplemented or amended
from time to time.
“Affiliate Term Loan Liabilities” means the “Liabilities” as defined in the Term Loan
Agreement.
“Agreement” means this Loan and Security Agreement as the same may be restated,
modified, supplemented or amended from time to time.
“Allocable Amount” shall have the meaning ascribed to such term in Section
12.21(g) hereof.
“Applicable Base Rate Margin” means, with respect to Base Rate Loans, two hundred
(200) basis points.
“Applicable Libor Margin” means, with respect to Libor Loans, an amount equal to four
hundred fifty (450) basis points.
“Assignment Agreement” shall have the meaning ascribed to such term in Section
12.15 hereof.
“Bank Product” means (a) any of the following financial accommodations extended to
Borrower or its Subsidiaries by any Lender: (i) ACH Transactions, (ii) cash and treasury
management, including controlled disbursement, accounts or services, or (iii) any transaction under
or pursuant to any Hedging Agreement, and (b) any other service or facility extended to the
Borrower by any Lender or any Affiliate of such Lender including: (i) credit cards, (ii) credit
card processing services, (iii) debit cards, or (iv) purchase cards; provided that consistent with
Section 8.9 hereof the Deposit Accounts specified therein shall be maintained with
PrivateBank and not any other Lender.
“Bank Product Agreements” means those agreements entered into from time to time by
Borrower or its Subsidiaries with any Lender in connection with the obtaining of any of the Bank
Products.
“Bank Product Obligations” means all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by Borrower or its Subsidiaries to Lenders pursuant to or
evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing or hereafter
arising.
“Base Rate” means the corporate base rate of interest per annum identified from time
to time by the Administrative Agent, as its base or prime rate, which rate shall not necessarily be
the lowest rate of interest which the Administrative Agent charges its customers. Any change in
the Base Rate shall be effective as of the effective date of such change.
“Base Rate Loan” means a Loan that bears interest at an interest rate based on the
Base Rate.
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“Base Rent” means the “Base Rent” as such term is defined in such Omega Master Lease
Agreement.
“Blocked Account Agreement” means the Administrative Agent’s standard blocked account
agreement (or similar agreement) signed by the Borrower relating to the Commercial Blocked Account,
the Government Blocked Account, and payments on all such Accounts, as the same may be modified,
supplemented, restated or amended from time to time, all of the foregoing which must be in form and
substance reasonably acceptable to the Administrative Agent.
“Blocked Persons List” shall have the meaning ascribed to such term in Section
7.29 hereof.
“Borrower Agent” means Diversicare Management Services Co., a Tennessee corporation.
“Borrower Cash Management Program” means the business practice of Parent and Borrowers
whereby cash receipts for Parent and Borrowers are transferred/swept into a central concentration
account and all cash disbursements are funded by transfers from such central concentration account.
“Borrowing Base” means with respect to any Borrower, at any time, without duplication,
an amount equal to up to eighty percent (80%) of the face amount (less discounts, credits and
allowances which have knowingly been taken by or granted to Account Debtors in connection
therewith) of all existing Eligible Accounts that are set forth in the Schedule of Accounts then
most recently delivered by the Borrower to the Administrative Agent.
“Borrowing Date” means a date on which a Libor Loan is made hereunder.
“Borrowing Notice” shall have the meaning ascribed to such term in Section
2.12 hereof.
“Business Day” means (a) with respect to any borrowing, payment or rate selection of
Libor Loans, a day other than Saturday or Sunday on which banks are open for business in Chicago,
Illinois and on which dealings in United States dollars are carried on in the London interbank
market, and (b) for all other purposes, a day other than Saturday or Sunday on which banks are open
for business in Chicago, Illinois.
“Capital Expenditures” means, as to any Person, any and all expenditures of such
Person for fixed or capital assets, including, without limitation, the incurrence of Capitalized
Lease Obligations, all as determined in accordance with GAAP, except that Capital Expenditures
shall not include (i) expenditures for fixed or capital assets to the extent such expenditures are
paid for or reimbursed from the proceeds of insurance, condemnation awards and other settlements in
respect of lost, destroyed, damaged, condemned or stolen assets, (ii) expenditures for assets
purchased substantially concurrently with the trade-in of existing assets to the extent of the
trade-in credit thereof; and (iii) any payment of liabilities or incurrence of incidence comprising
the purchase price for the acquisition, whether by purchase, merger, consolidation or otherwise, by
Borrower of the assets of, or the equity interest in, a Person or a division, line of business or
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other business unit of a Person engaged in a business of the type conducted by Borrower as of
the date hereof or in a business reasonably related thereto.
“Capitalized Lease Obligations” means any amount payable with respect to any lease of
any tangible or intangible property (whether real, personal or mixed), however denoted, which
either (a) is required by GAAP to be reflected as a liability on the face of the balance sheet of
the lessee thereunder, or (b) based on actual circumstances existing and ascertainable, either at
the commencement of the term of such lease or at any subsequent time at which any property becomes
subject thereto, can reasonably be anticipated to impose on such lessee substantially the same
economic risks and burdens, having regard to such lessee’s obligations and the lessor’s rights
thereunder both during and at the termination of such lease, as would be imposed on such lessee by
any lease which is required to be so reflected or by the ownership of the leased property. For
avoidance of doubt, prepaid leases shall not be deemed “Capital Lease Obligations” except to the
extent required under GAAP.
“Capmark” means Capmark Finance Inc., a California corporation.
“Cash Collateral Account” shall have the meaning ascribed to such term in Section
4.3 hereof.
“Cash Cost of Self-Insured Professional and General Liability” means the total cash
expenditures associated with professional and general liability related settlements, legal fees and
administration costs for all facilities owned or leased by the Borrower. For purposes of measuring
the Cash Cost of Self-Insured Professional and General Liability for individual facilities or
groups of facilities, these amounts shall be allocated on the basis of licensed beds of the
facility or group of facilities in relation to the total number of licensed beds for all facilities
owned or leased by the Borrower.
“CERCLA” means the Comprehensive Environmental Release Compensation and Liability Act,
42 U.S.C. § 9601 et seq., as amended.
“Certificates” shall have the meaning ascribed to such term in Section 5.2
hereof.
“CHAMPUS” means the Civilian Health and Medical Program of the Uniformed Service, a
part of TRICARE, a medical benefits program supervised by the U.S. Department of Defense.
“Closing Date” means February 28, 2011.
“Closing Fee” shall have the meaning ascribed to such term in Section 2.16
hereof.
“CMS” means the Centers for Medicare and Medicaid Services of HHS and any Person
succeeding to the functions thereof.
“Collateral” shall have the meaning ascribed to such term in Section 6.1
hereof.
“Commercial Blocked Account” shall have the meaning ascribed to such term in
Section 4.3 hereof.
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“Commercial Leases” means the collective reference to all Leases other than admission
agreements or residency agreements.
“Commitment” means the Revolving Loan Commitment.
“Compliance Certificate” shall have the meaning ascribed to such term in Section
8.1(c) hereof.
“CON” shall have the meaning ascribed to such term in Section 10.2 hereof.
“Credit Party” means each Borrower, the Guarantor, and each other Person that is or
becomes primarily or secondarily liable for the Liabilities, whether as a principal, surety,
guarantor, endorser or otherwise.
“Credit Termination Date” means the earlier of (i) the Stated Maturity Date, (ii) such
other date on which the Commitments shall terminate pursuant to Section 11.2 hereof, or
(iii) such other date as is mutually agreed in writing between the Borrower and the Administrative
Agent.
“Default” means an event, circumstance or condition which through the passage of time
or the service of notice or both would (assuming no action is taken to cure the same) mature into
an Event of Default.
“Default Rate” shall have the meaning ascribed to such term in Section 2.7(a)
hereof.
“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
requested Loans or participations in Letter of Credit Obligations required to be funded by it
hereunder within one Business Day of the date required to be funded by it hereunder unless such
failure has been cured, (b) has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one Business Day of the
date when due, unless the subject of a good faith dispute or unless such failure has been cured, or
(c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.
“Demand Deposit Account” shall have the meaning ascribed to such term in Section
4.3 hereof.
“Deposit Accounts” means any deposit, securities, operating, lockbox, blocked or cash
collateral account (including, without limitation, the Cash Collateral Account, the Demand Deposit
Account, the Commercial Blocked Account and the Government Blocked Account), together with any
funds, instruments or other items credited to any such account from time to time, and all interest
earned thereon.
“Duly Authorized Officer” means the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer and the Assistant Secretary of the Borrower.
“EBITDA” means with respect to the Borrower, for any period of determination, the net
earnings of the Borrower before nonrecurring items (in accordance with GAAP and as
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reasonably agreed to by the Administrative Agent), interest, taxes, depreciation, and
amortization (including amortized transaction expense), all as determined in accordance with GAAP,
consistently applied, and excluding up to $1.8 million of non-capital training expenses associated
with the implementation of an electronic medical system during 2010 and 2011.
“EBITDAR” means with respect to the Borrower, for any period of determination, the sum
of the net earnings of the consolidated Borrower before nonrecurring items (in accordance with GAAP
and as reasonably agreed to by the Administrative Agent), cash interest, taxes, depreciation,
amortization and rent, all as determined in accordance with GAAP, consistently applied, and
excluding up to $1.8 million of non-capital training expenses associated with the implementation of
an electronic medical system during 2010 and 2011.
“Eligible Accounts” means an Account owing to the Borrower which meets each of the
following requirements, as determined by the Administrative Agent in its sole and absolute
discretion:
(a) Accounts which do not remain unpaid more than ninety (90) calendar days from the
invoice date;
(b) is to be paid pursuant to either a Medicaid Provider Agreement or a Medicare Provider
Agreement, or is a liability of an Account Debtor which is (i) a commercial insurance company (or
managed care company) acceptable to the Administrative Agent in its reasonable determination,
organized under the laws of any jurisdiction in the United States and having its principal office
in the United States, or (ii) any other institutional Account Debtor acceptable to the
Administrative Agent, including health maintenance organizations, unions, or any other type of
Account Debtor, not included in the categories of Account Debtors listed in the foregoing clause
(i), organized under the laws of any jurisdiction in the United States, having its principal office
in the United States, in either case, in which such obligor agrees to pay the Borrower for the
applicable services rendered or performed or, if applicable, goods sold;
(c) the Account Debtor of which has received notice to forward payment to either the
Commercial Blocked Account and/or the Government Blocked Account, as applicable;
(d) those Accounts of Borrower as to which the Administrative Agent has a first priority
perfected Lien and that comply with all of the representations and warranties made to the
Administrative Agent under this Agreement and the Financing Agreements;
(e) to the extent such Account does not include any contingent payments;
(f) to the extent such Account does not include late charges or finance charges, and is
net of any contractual discount and/or Medicare/Medicaid fee schedule adjustments; and
(g) which complies with such other terms and conditions as may be specified from time to
time by the Administrative Agent in its reasonable discretion;
provided, however, the following Accounts of the Borrower are not Eligible
Accounts:
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(i) Accounts to be paid pursuant to a Medicare Provider Agreement or Private
Insurance/Managed Care Accounts, or any other otherwise Eligible Account, which, in either case,
remain unpaid more than ninety (90) calendar days from the billing date; (ii) all Private Pay
Accounts; (iii) Accounts with respect to which the Account Debtor is a director, officer, employee,
equityholder, or Affiliate of the Borrower; (iv) Accounts with respect to which the Account Debtor
is the United States of America or any department, agency or instrumentality thereof, unless such
Account Debtor deposits all payments arising under the Government Accounts to the Government
Blocked Account in accordance with the terms of the Blocked Account Agreement; (v) Accounts with
respect to which the Account Debtor is not subject to service of process within the continental
United States of America; (vi) Accounts known by Borrower (whether actual or constructive
knowledge) to be in dispute (but only to the extent of such disputed amount) or with respect to
which the Account Debtor has asserted, or the Borrower or the Administrative Agent has reason to
believe the Account Debtor is entitled to assert, a counterclaim or right of setoff (but only to
the extent of such counterclaim or setoff amount); (vii) Accounts with respect to which the
prospect of payment or performance by the Account Debtor is or will be impaired, as determined by
the Administrative Agent in the exercise of its reasonable discretion; (viii) Accounts that are not
valid, legally enforceable obligations of the Account Debtor thereunder; (ix) Accounts with respect
to which the Account Debtor is the subject of bankruptcy or a similar insolvency proceeding or has
made an assignment for the benefit of creditors or whose assets have been conveyed to a receiver or
trustee; (x) Accounts with respect to which the Account Debtor’s obligation to pay the Account is
conditional upon the Account Debtor’s approval; (xi) Accounts which arise out of services or, if
applicable, sales not made in the ordinary course of the Borrower’s business; (xii) Accounts with
respect to which any document or agreement executed or delivered in connection therewith, or any
procedure used in connection with any such document or agreement, fails in any material respect to
comply with the requirements of applicable law, or with respect to which any representation or
warranty contained in this Agreement is untrue or misleading in any material respect; (xiii)
Accounts with respect to which Borrower is or may become liable to the Account Debtor for services
rendered, or if applicable, goods sold, by the Account Debtor to Borrower, to the extent of
Borrower’s existing or potential liability to such Account Debtor; and (xiv) Medicaid pending
Accounts;
provided, further, an Account which is at any time an Eligible Account, but
which subsequently fails to meet any of the foregoing requirements for eligibility, shall forthwith
cease to be an Eligible Account, and further, with respect to any Account, if the Administrative
Agent at any time hereafter determines in its reasonable discretion that the prospect of payment or
performance by the Account Debtor with respect thereto is materially impaired for any reason
whatsoever, such Account shall cease to be an Eligible Account after notice of such determination
is given to the Borrower; provided, further, forty-five percent (45%) of all credit
amounts in any of the foregoing that are not deemed to be Eligible Account categories and criteria
shall be deducted from the “current” Accounts as reasonably determined by the Administrative Agent
in its reasonable credit judgment.
“Environmental Laws” means all federal, state, local, and foreign statutes,
regulations, ordinances, and similar provisions having the force or effect of law, all judicial and
administrative orders and determinations, and all common law concerning public health and safety,
worker health and safety, pollution, or protection of the environment, including all those relating
to the presence, use, production, generation, handling, transportation, treatment, storage,
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disposal, distribution, labeling, testing, processing, discharge, release, threatened release,
control, or cleanup of any hazardous materials, substances, or wastes, chemical substances, or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise, or radiation, including, without limitation, the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., as amended; CERCLA; the Toxic
Substance Act, 15 U.S.C. § 2601 et seq., as amended; the Clean Water Act, 33 U.S.C. § 466 et seq.,
as amended; the Clean Air Act, 42 U.S.C. § 7401 et seq., as amended; state and federal superlien
and environmental cleanup programs; and U. S. Department of Transportation regulations.
“Environmental Notice” means any summons, citation, directive, information request,
notice of potential responsibility, notice of violation or deficiency, order, claim, complaint,
investigation, proceeding, judgment, letters or other communication, written or oral to the
Borrower or any officer thereof, actual or threatened, from the United States Environmental
Protection Agency or other federal, state or local agency or authority, or any other entity or
individual, public or private, concerning any intentional or unintentional act or omission which
involves Management of Hazardous Substances on or off the property of the Borrower which could
result in the Borrower incurring a material liability or which could have a Material Adverse
Effect, or the imposition of any Lien on property, or any alleged violation of or responsibility
under Environmental Laws which could result in the Borrower incurring a material liability or which
could have a Material Adverse Effect, and, after due inquiry and investigation, any knowledge of
any facts which could give rise to any of the foregoing.
“Equipment” means “equipment” as defined in the Code, including, without limitation,
any and all of the Borrower’s machinery, equipment, vehicles, fixtures, furniture, computers,
appliances, tools, and other tangible personal property (other than Inventory), whether located on
the Borrower’s premises or located elsewhere, together with any and all accessions, parts and
appurtenances thereto, whether presently owned or hereafter acquired by the Borrower.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
together with the regulations thereunder.
“ERISA Affiliate” means any corporation, trade or business, which together with the
Borrower would be treated as a single employer under Section 4001 of ERISA.
“Event of Default” shall have the meaning ascribed to such term in Section
11.1 hereof.
“Facility” or “Facilities” shall mean any one or more of the skilled nursing
homes, assisted living facilities, retirement homes, rehabilitation centers, or senior adult care
homes or facilities located on the Property and owned or operated by the Borrower in connection
with their business. Set forth on Schedule 1.1(a) is a list of all Facilities in existence
on the Closing Date owned or operated by the Borrower.
“Fee Letter” means “Fee Letter” means that certain letter agreement dated February 28,
2011 by and between PrivateBank and Borrower Agent, pursuant to which, among other things, the
arrangement relating to compensation for certain services rendered by the Administrative
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Agent is set forth (together with any similar letter from Administrative Agent to the Lenders
regarding their respective share of any particular fee payable by Borrower).
“Financing Agreements” means any and all agreements, instruments, certificates and
documents, including, without limitation, security agreements, loan agreements, notes, guarantees,
keep well agreements, landlord waivers, mortgages, deeds of trust, subordination agreements,
intercreditor agreements, pledges, powers of attorney, consents, assignments, collateral
assignments, interest rate protection agreements, reimbursement agreements, contracts, notices,
leases, collateral assignments of key man life insurance policies, financing statements and all
other written matter (including, without limitation, this Agreement, the Revolving Credit Notes,
any Subordination Agreement, the Intercreditor Agreement, the Guaranty, the Pledge Agreements, the
Blocked Account Agreement, the Certificates, the Fee Letter, the Master Letter of Credit Agreement,
any Letter of Credit Documents, any Hedging Agreement and any other Bank Product Agreement), in
each case evidencing, securing or relating to the Loans and the Liabilities, whether heretofore,
now, or hereafter executed by or on behalf of the Borrower, any Affiliate, or any other Person, and
delivered to or in favor of the Administrative Agent, the Issuing Lender or any Lender, together
with all agreements and documents referred to therein or contemplated thereby, as each may be
amended, modified or supplemented from time to time.
“Fiscal Quarter” means the three (3) month period ending on March 31, June 30,
September 30 and December 31 of each calendar year.
“Fiscal Year” means the twelve (12) month period commencing on January 1 and ending on
December 31 of each calendar year.
“Fixed Charge Coverage Ratio” means, on any date of determination, the ratio of (a)
Adjusted EBITDAR for the period of 12 consecutive months then ended, to (b) Fixed Charges, all as
determined for the Parent and the Borrower on a consolidated basis, all as determined in accordance
with GAAP, consistently applied.
“Fixed Charges” means, for any period of determination, the sum of, without
duplication: (a) regularly scheduled payments of principal with respect to all Indebtedness for
borrowed money; plus (b) cash interest expense of Borrower for its Indebtedness that has been paid
during such period (including, without limitation, interest attributable to issued and outstanding
Letters of Credit); plus (c) Net Capital Expenditures; plus (d) cash rent expense that has been
paid during such period; plus (e) dividends on common stock; plus (f) the Required Dividends and
Redemption Amounts (except for amounts paid to redeem the Series C Preferred Stock pursuant to the
Restructuring Stock Issuance and Subscription Agreement, which amounts shall be excluded from the
calculation of Fixed Charges), all of the foregoing as determined in accordance with GAAP,
consistently applied.
“GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board (or any
successor authority) that are applicable to the circumstances as of the date of determination.
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“General Intangibles” means “general intangibles” as defined in the Code, including,
without limitation, any and all general intangibles, choses in action, causes of action, rights to
the payment of money (other than Accounts), and all other intangible personal property of the
Borrower of every kind and nature wherever located and whether currently owned or hereafter
acquired by the Borrower (other than Accounts), including, without limitation, corporate or other
business records, inventions, designs, patents, patent applications, service marks, service mark
applications, trademark applications, brand names, trade names, trademarks and all goodwill
symbolized thereby and relating thereto, trade styles, trade secrets, registrations, domain names,
websites, computer software, advertising materials, distributions on certificated and
uncertificated securities, investment property, securities entitlements, goodwill, operational
manuals, product formulas for industrial processes, blueprints, drawings, copyrights, copyright
applications, rights and benefits under contracts, licenses, license agreements, permits,
approvals, authorizations which are associated with the operation of the Borrower’s business and
granted by any Person, franchises, customer lists, deposit accounts, tax refunds, tax refund
claims, and any letters of credit, guarantee claims, security interests or other security held by
or granted to the Borrower to secure payment by an Account Debtor of any of Borrower’s Accounts,
and, to the maximum extent permitted by applicable Law, any recoveries or amounts received in
connection with any litigation or settlement of any litigation.
“Governing Documents” shall have the meaning ascribed to such term in Section
9.14 hereof.
“Government Accounts” means Accounts on which any federal or state governmental unit
or any intermediary for any federal or state governmental unit is the Account Debtor.
“Governmental Approvals” means, collectively, all consents, licenses, and permits and
all other authorizations or approvals required from any Governmental Authority to operate the
Locations.
“Governmental Authority” means and includes any federal, state, District of Columbia,
county, municipal, or other government and any political subdivision, department, commission,
board, bureau, agency or instrumentality thereof, whether domestic or foreign.
“Government Blocked Account” shall have the meaning ascribed to such term in
Section 4.3 hereof.
“Guarantor” means Parent in its capacity as the guarantor pursuant to the Guaranty.
“Guaranty” means that certain Amended and Restated Guaranty of even date herewith by
Guarantor in favor of the Administrative Agent, in form and substance reasonable satisfactory to
the Administrative Agent, as the same may be amended, restated, reaffirmed, modified or
supplemented from time to time.
“Hazardous Substances” means hazardous substances, materials, wastes, and waste
constituents and reaction by-products, pesticides, oil and other petroleum products, and toxic
substances, including, without limitation, asbestos and PCBs, as those terms are defined pursuant
to Environmental Laws.
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“Healthcare Laws” means all applicable Laws relating to the possession, control,
warehousing, marketing, sale and distribution of pharmaceuticals, the operation of medical or
senior housing facilities (such as, but not limited to, nursing homes, skilled nursing facilities,
rehabilitation hospitals, intermediate care facilities, assisted living and adult care facilities),
patient healthcare, patient healthcare information, patient abuse, the quality and adequacy of
medical care, rate setting, equipment, personnel, operating policies, fee splitting, including,
without limitation, (a) all federal and state fraud and abuse laws, including, but not limited to
the federal Anti-Kickback Statute (42 U.S.C. §1320a-7b(6)), the Stark Law (42 U.S.C. §1395nn), the
civil False Claims Act (31 U.S.C. §3729 et seq.); (b) TRICARE; (c) CHAMPUS, (d) Medicare; (e)
Medicaid; (f) HIPAA; (g) quality, safety and accreditation standards and requirements of all
applicable state laws or regulatory bodies; (h) all laws, policies, procedures, permits,
requirements, certifications, and regulations pursuant to which licenses, approvals and
accreditation certificates are issued in order to operate medical, senior housing facilities,
assisted living facilities, or skilled nursing facilities; and (i) any and all other applicable
health care laws, regulations, manual provisions, policies and administrative guidance, each of (a)
through (i) as may be amended from time to time.
“Hedging Agreement” means any interest rate, currency or commodity swap agreement, cap
agreement or collar agreement, and any other agreement or arrangement designed to protect a Person
against fluctuations in interest rates, currency exchange rates or commodity prices, in each case
in form and substance satisfactory to the Administrative Agent, as the same may be amended or
modified from time to time.
“HHS” means the United States Department of Health and Human Services and any Person
succeeding to the functions thereof.
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as the
same may be amended, modified or supplemented from time to time, and any successor statute thereto,
and any and all rules or regulations promulgated from time to time thereunder.
“HUD Financing” shall have the meaning given to it in the Term Loan Agreement.
“Indebtedness” with respect to any Person means, as of the date of determination
thereof, (a) all of such Person’s indebtedness for borrowed money, (b) all indebtedness of such
Person or any other Person secured by any Lien with respect to any property or asset owned or held
by such Person, regardless whether the indebtedness secured thereby shall have been assumed by such
Person or such Person has become liable for the payment thereof, (c) all Capitalized Lease
Obligations of such Person and obligations or liabilities created or arising under conditional sale
or other title retention agreement with respect to property used and/or acquired by Borrower even
though the rights and remedies of the lessor, seller and/or lender thereunder are limited to
repossession of such property, (d) all unfunded pension fund obligations and liabilities, (e) all
obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (f) all
obligations in respect of letters of credit, whether or not drawn, and bankers’ acceptances issued
for the account of such Person, (g) deferred and/or accrued taxes and all unfunded pension fund
obligations and liabilities, (h) all guarantees by such Person, or any undertaking by such Person
to be liable for, the debts or obligations of any other Person, described in clauses (a) through
(h), and (i) all Bank Product Obligations of such Person.
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“Indemnified Parties” shall have the meaning ascribed to such term in Section
12.16 hereof.
“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 the Borrower to
compensate the Borrower for providing goods or services to a Patient.
“Intellectual Property” means all of the following in any jurisdiction throughout the
world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names, and rights in telephone numbers, together with all
translations, adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and production processes
and techniques, technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals), (f) all computer
software (including source code, executable code, data, databases, and related documentation), (g)
all material advertising and promotional materials, (h) all other proprietary rights, and (i) all
copies and tangible embodiments thereof (in whatever form or medium).
“Intercreditor Agreement” means that certain Subordination and Intercreditor Agreement
dated as of the Original Closing Date, as amended by that certain First Amendment to Subordination
and Intercreditor Agreement dated of even date herewith, by and among the Borrower, Administrative
Agent and Sterling Acquisition Corp., a Kentucky corporation, in its capacity as a lessor under the
applicable Omega Senior Leases.
“Inventory” means “inventory” as defined in the Code, including, without limitation,
any and all inventory and goods of the Borrower, wheresoever located, whether now owned or
hereafter acquired by the Borrower, which are held for sale or lease, furnished under any contract
of service or held as raw materials, work-in-process or supplies, and all materials used or
consumed in the Borrower’s business, and shall include such property the sale or other disposition
of which has given rise to Accounts and which has been returned to or repossessed or stopped in
transit by the Borrower.
“Issuing Lender” means the Administrative Agent or any other Lender in its respective
capacity as an issuer of Letters of Credit, on behalf of the Lenders, hereunder, and its successors
and assigns in such capacity, and “Issuing Lenders” shall mean all such Lenders, in their capacity
as issuers of Letters of Credit, collectively; provided, however, until
Administrative Agent determines otherwise in writing, the sole Issuing Lender hereunder shall be
PrivateBank.
“Joint Liability Payment” shall have the meaning ascribed to such term in Section
12.21(g) hereof.
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“Laws” means, collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or presidential authority in
the applicable jurisdiction and Healthcare Laws and Environmental Laws, now or hereafter in effect,
and in each case as amended or supplemented from time to time.
“L/C Disbursement” means a payment made by the Issuing Lender pursuant to a Letter of
Credit.
“L/C Fee” has the meaning ascribed to such term in Section 2.18 hereof.
“Leased Real Property” means all leasehold or subleasehold estates and other rights to
use or occupy any land, buildings, structures, improvements, fixtures, or other interest in real
property held by the Parent or Borrower.
“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral), including all amendments, extensions, renewals, guaranties, and other agreements
with respect thereto, pursuant to which the Borrower or Parent holds any Leased Real Property
(including, without limitation, the Commercial Leases and Operating Leases).
“Lender Parties” shall have the meaning ascribed to such term in Section 12.24
hereof.
“Letter of Credit” means any commercial or standby letter of credit which is issued by
an Issuing Lender at the request of and for the account of Borrower in accordance with the terms of
this Agreement, including any “Letter of Credit” as such term is defined in the Master Letter of
Credit Agreement.
“Letter of Credit Documents” means, with respect to any Letter of Credit, collectively
and individually, any application therefor and any other agreements, instruments or other documents
(whether general in application or applicable only to such Letter of Credit) governing or providing
for the (a) the rights and obligations of the parties concerned or at the risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations, each as the same may
be modified and supplemented and in effect from time to time.
“Letter of Credit Obligations” means, at any time and without duplication, the sum of
(a) the aggregate undrawn face amount of all Letters of Credit outstanding at such time
plus (b) the aggregate amount of all drawings under Letters of Credit for which the Issuing
Lender has not at such time been reimbursed (either by the Borrower or by a Revolving Loan made by
the Lenders).
“Liabilities” means any and all of each of the Borrower’s liabilities, obligations and
Indebtedness to the Lenders, the Issuing Lender and the Administrative Agent of any and every kind
and nature, whether heretofore, now or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred, acquired, or owing, whether primary, secondary, direct, indirect,
contingent, absolute, fixed or otherwise (including, without limitation, payments of or for
principal, interest, default interest, reimbursement obligations, fees, costs, expenses, and/or
indemnification, and obligations of performance, and the Closing Fee, the Unused Line Fee, the L/C
Fee and all Bank Product Obligations, and any interest that accrues after commencement of any
insolvency or bankruptcy proceeding regardless of whether allowed or allowable in whole or
- 14 -
in part as a claim in any such insolvency or bankruptcy proceeding) and whether arising or
existing under written agreement, oral agreement, or by operation of law, including, without
limitation, all of each Borrower’s Indebtedness, liabilities and obligations to the Lenders,
Issuing Lender and the Administrative Agent under this Agreement (whether relating to any of the
Loans or otherwise and including, without limitation, all of each Borrower’s Bank Product
Obligations) or the Financing Agreements to which Borrower is a party, and any refinancings,
substitutions, extensions, renewals, replacements and modifications for or of any or all of the
foregoing.
“Libor Base Rate” means a rate of interest equal to (a) the per annum rate of interest
at which United States dollar deposits in an amount comparable to the amount of the relevant Libor
Loan and for a period equal to the Libor Interest Period are offered in the London Interbank
Eurodollar market at 11:00 A.M. (London time) two (2) Business Days prior to the commencement of
such Libor Interest Period (or three (3) Business Days prior to the commencement of such Libor
Interest Period if banks in London, England were not open and dealing in offshore United States
dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets
system (or other authoritative source selected by the Administrative Agent in its sole discretion)
or, if the Bloomberg Financial Markets system or another authoritative source is not available, as
the Libor Base Rate is otherwise determined by the Administrative Agent in its sole and absolute
discretion, divided by (b) a number determined by subtracting from 1.00 the then stated maximum
reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D), such rate to remain fixed for such Libor Interest
Period. The Administrative Agent’s determination of the Libor Base Rate shall be conclusive,
absent manifest error.
“Libor Interest Period” means, with respect to any Libor Loan, successive one (1)
month periods, provided, however, that: (a) each Libor Interest Period occurring
after the initial Libor Interest Period of any Libor Loan shall commence on the day on which the
preceding Libor Interest Period for such Libor Loan expires, with interest for such day to be
calculated at the Libor Rate in effect for the new Libor Interest Period; (b) whenever the last day
of any Libor Interest Period would otherwise occur on a day other than a Business Day, the last day
of such Libor Interest Period shall be extended to occur on the next succeeding Business Day; (c)
whenever the first day of any Libor Interest Period occurs on a date for which there is no
numerically corresponding date in the month in which such Libor Interest Period terminates, such
Libor Interest Period shall end on the last day of such month, unless such day is not a Business
Day, in which case the Libor Interest Period shall terminate on the first Business Day of the
following month, provided, further, that so long as the Libor Rollover remains in
effect, all subsequent Libor Interest Periods shall terminate on the date of the month numerically
corresponding to the date on which the initial Libor Interest Period commenced; and (D) if at any
time the Libor Interest Period for a Libor Loan expires less than one month before the Stated
Maturity Date, such Libor Loan shall automatically renew at the then current Libor Rate for a Libor
Interest Period terminating on the Stated Maturity Date.
“Libor Loan” means a Loan which bears interest at a Libor Rate.
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“Libor Rate” means, with respect to a Libor Loan for the relevant Libor Interest
Period, the sum of the Libor Base Rate applicable to that Libor Interest Period, plus the
Applicable Libor Margin.
“Libor Rollover” means that each Libor Loan shall automatically renew for the Libor
Interest Period specified in the Borrowing Notice at the then current Libor Rate, except that a
Libor Interest Period for a Libor Loan shall not automatically renew with respect to any principal
amount which is scheduled to be repaid before the last day of the applicable Libor Interest Period,
and any such amounts shall bear interest at the Base Rate, until repaid.
“Licenses” shall have the meaning ascribed to such term in Section 10.2 hereof
“Lien” means any lien, security interest, mortgage, pledge, hypothecation, collateral
assignment, or other charge, encumbrance or preferential arrangement, including, without
limitation, the retained security title of a conditional vendor or lessor.
“Loan Account” shall have the meaning ascribed to such term in Section 2.5
hereof.
“Loans” means, individually, a Revolving Loan, and collectively, the Revolving Loans,
and, if applicable, any and all other advances made by the Lenders (or, if applicable, the
Administrative Agent or Issuing Lender) to the Borrower pursuant to the terms of this Agreement or
any other Financing Agreement.
“Location” or “Locations” mean one or more of the healthcare or other
facilities owned by the Borrower on the Property as identified on Schedule 1.1(a) hereto.
“Manage” or “Management” means to generate, handle, manufacture, process,
treat, store, use, re-use, refine, recycle, reclaim, blend or burn for energy recovery, incinerate,
accumulate speculatively, transport, transfer, dispose of, release, threaten to release or abandon
Hazardous Substances.
“Management Agreements” means, collectively, those certain Management Agreements (i)
between Diversicare Management Services Co., as Manager, and each Borrower that is the owner or
operator of a Facility, for the operation and management of the Facilities, and (ii) Manager and
Diversicare Therapy Services, LLC, for bookkeeping, accounting, payroll, billing and management of
its contract therapy services.
“Master Letter of Credit Agreement” shall have the meaning ascribed to such term in
Section 2.1B hereto.
“Material Adverse Change” or “Material Adverse Effect” means, with respect to
any event, act, condition or occurrence of whatever nature (including any adverse determination in
any litigation, arbitration, or governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts, condition or conditions, occurrence or
occurrences, whether or not related, any of the following: (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, business or properties of the
Credit Parties, taken as a whole, (b) a material adverse change in, or a material adverse effect
upon, the rights and remedies of the Administrative Agent or the Lenders under any Financing
- 16 -
Agreement or the ability of the Credit Parties, taken as a whole, to perform their payment or
other obligations under any Financing Agreement to which they are parties, (c) a material adverse
change in, or a material adverse effect upon, the legality, validity or enforceability of any
Financing Agreement, (d) a material adverse change in, or a material adverse effect upon, the
existence, perfection or priority of any security interest granted in any Financing Agreement or
the value of any material Collateral not resulting from any action or inaction by the
Administrative Agent, (e) the termination of Borrower’s continued participation in a Medicare or
Medicaid reimbursement program, which individually or in the aggregate, could reasonably be
expected to result in a material adverse change or a material adverse effect described in the
immediately preceding clauses (a) through (d) above, or (f) any other liability of the Credit
Parties, or any one or more of them, in excess of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) in the aggregate as a result the final adjudication of one or more violations of any
Healthcare Law which remains unpaid for a period of thirty (30) days, unless such liability is
being contested or appealed by appropriate proceedings and Borrower has established appropriate
reserves adequate for payment in the event such appeal or contest is ultimately unsuccessful,
provided further that in the event such contest or appeal is ultimately unsuccessful, the Borrower
shall pay the assessment no later than the deadline set forth by the applicable agency.
“Maximum Revolving Facility” means an amount equal to Fifteen Million and No/100
Dollars ($15,000,000.00).
“Medicaid Certification” means, with respect to Borrower, certification by the
Medicaid program in each state in which the Borrower conducts business which is under or affected
by the Medicaid Regulations that the Borrower complies with all of the applicable requirements for
participation set forth in the Medicaid Regulations.
“Medicaid Provider Agreement” means an agreement entered into with the Medicaid
program in each state in which the Borrower conducts business which is under or affected by the
Medicaid Regulations under which such state Medicaid program agrees to pay for covered services
provided by the Borrower to Medicaid beneficiaries in accordance with the terms of such agreement
and the Medicaid Regulations.
“Medicaid Regulations” or “Medicaid” mean collectively all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere) affecting the health
insurance program established by Title XIX of the Social Security Act (42 U.S.C. §§ 1396, et seq.),
together with all applicable provisions of all rules, regulations, manuals, final orders and
administrative, reimbursement and other applicable guidelines of all governmental authorities,
including HHS, CMS or the Office of the Inspector General of HHS, or any Person succeeding to the
functions of any of the foregoing (whether or not having the force of law).
“Medical Services” means medical and health care services provided to a Patient by any
Borrower, including, but not limited to, medically necessary health care services provided to a
Patient and performed by a Borrower which are covered by a policy of insurance issued by an
Insurer, and including, but not limited to, physician services, nurse and therapist services,
dental services, skilled nursing facility services, rehabilitation services, home health care
services, behavioral health services, hospice services, medical equipment and pharmaceuticals.
- 17 -
“Medicare Certification” means certification of CMS or a state agency or entity under
contract with CMS that the Borrower complies with all of the applicable requirements for
participation set forth in the Medicare Regulations.
“Medicare Provider Agreement” means an agreement entered into with CMS or a state
agency under contract with CMS under which CMS agrees to pay for covered services provided by the
Borrower to Medicare beneficiaries in accordance with the terms of such agreement and the Medicare
Regulations.
“Medicare Regulations” or “Medicare” mean collectively all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere) affecting the health
insurance program for the aged and disabled established by Title XVIII of the Social Security Act
(42 U.S.C. § 1395, et seq.), together with all applicable provisions of all rules, regulations,
manuals, final orders and administrative, reimbursement and other applicable guidelines of all
governmental authorities, including HHS, CMS or the Office of the Inspector General of HHS, or any
Person succeeding to the functions of any of the foregoing (whether or not having the force of
law).
“Multiemployer Plan” shall have the meaning ascribed to such term in Section
7.19 hereof.
“Net Capital Expenditures” means Capital Expenditures minus the sum of (a) any
financing used in connection with such expenditures (including, without limitation, any financing
of capital improvements provided by a landlord and recovered through rental payments) and (b)
amounts actually incurred in connection with those certain Capital Expenditures currently
contemplated in connection with the Facilities as identified (in both dollar amount and specific
projects) on Schedule 1.1(d) attached hereto to be made between the Original Closing Date
and the date that is the three year anniversary of the Original Closing Date up to an aggregate
amount not to exceed $3,600,000 with respect to amounts incurred pursuant to this clause (b), (c)
$1,800,000.00 of Capital Expenditures for the purchase of certain Electronic Medical Records for
2011, and (d) an additional $1,000,000.00 per year of Capital Expenditures from the Closing Date
through Stated Maturity Date for renovation capital expenditures associated with the Guarantor’s
strategic growth plan.
“Non-U.S. Participant” shall have the meaning ascribed to such term in Section
3.3 hereof.
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Asset Control, the Department of the Treasury
pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of
terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of or
by the Office of Foreign Asset Control, the Department of the Treasury or pursuant to any other
applicable Executive Orders.
“Omega” means Omega Healthcare Investors, Inc., a Maryland corporation.
“Omega Debt Documents” means, collectively, the Omega Master Lease Agreement, the
Omega Senior Leases and the security agreements, pledges, documents, instruments and
- 18 -
agreements executed in connection therewith, in each case as the same may be amended or
modified in conformity with Section 9.16 of this Agreement.
“Omega Letter of Credit” means that certain letter of credit issued by the
Administrative Agent to Omega or its designee, and any amendment, renewal or replacement thereof,
on terms and conditions satisfactory to the Administrative Agent in its sole and absolute
discretion.
“Omega Master Lease Agreement” means that certain Consolidated, Amended and Restated
Master Lease dated as of November 8, 2000, by and between Diversicare Leasing Corp., a Tennessee
corporation (“DLC”) and Sterling Acquisition Corp., a Kentucky corporation, as amended by
that certain (a) First Amendment to Consolidated, Amended and Restated Master Lease dated as of
September 30, 2001, by and between DLC and Omega, (b) Second Amendment to Consolidated, Amended and
Restated Master Lease dated as of June 15, 2005, by and between DLC and Omega, (c) Third Amendment
to Consolidated, Amended and Restated Master Lease dated as of October 20, 2006, by and between DLC
and Omega, but effective as of October 1, 2006, (d) Fourth Amendment to Consolidated, Amended and
Restated Master Lease dated as of April 1, 2007, by and between DLC and Omega, (e) that certain
Fifth Amendment to Consolidated, Amended and Restated Master Lease dated as of August 10, 2007, by
and between DLC and Omega, (f) that certain Sixth Amendment to Consolidated, Amended and Restated
Master Lease dated as of March 14, 2008, by and between DLC and Omega, (g) that certain Seventh
Amendment to Consolidated Amended and Restated Master Lease dated as of October 24, 2008, (h) that
certain Eighth Amendment to Consolidated Amended and Restated Master Lease dated as of March 31,
2009, (i) that certain Ninth Amendment to Consolidated Amended and Restated Master Lease dated as
of May 5, 2009, and (j) that certain Tenth Amendment to Consolidated Amended and Restated Master
Lease dated as of September 8, 2009.
“Omega Security Interests” means the security interests of Omega and the Omega Senior
Lessor in certain assets of the Borrower, the rights pertaining to and priorities of which are as
specified in the Intercreditor Agreement.
“Omega Senior Leases” means the Commercial Leases described on Schedule 1.1(e)
attached hereto.
“Omega Senior Lessor” means Sterling Acquisition Corp., a Kentucky corporation.
“Operating Lease” means the collective reference to all Commercial Leases between the
Borrower and the Operators, respectively, pursuant to which the Operators lease and operate each
Location.
“Operators” or “Operator” means the respective operators of the Locations, all
of which are licensed under all applicable Healthcare Laws.
“Original Closing Date” means March 17, 2010.
“Parent” shall have the meaning ascribed to such term in the Recitals hereof.
“Participant” shall have the meaning ascribed to such term in Section 12.15(d)
hereof.
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“Patient” means any Person receiving Medical Services from the Operators and all
Persons legally liable to pay the Operators for such Medical Services other than Insurers or
Governmental Authorities.
“Patriot Act” shall have the meaning ascribed to such term in Section 8.16
hereof.
“PBGC” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Permitted Liens” shall have the meaning ascribed to such term in Section 9.1
hereof.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust,
limited liability company, unincorporated organization, association, corporation, institution,
entity, party, or government (whether national, federal, state, provincial, county, city, municipal
or otherwise, including, without limitation, any instrumentality, division, agency, body or
department thereof).
“Plan” shall have the meaning ascribed to such term in Section 7.19 hereof.
“Pledge Agreements” means, collectively, that certain (a) Amended and Restated Pledge
Agreement of even date herewith made by Parent in favor of the Administrative Agent, (b) Amended
and Restated Pledge Agreement of even date herewith made by Diversicare Management Services Co., a
Tennessee corporation, in favor of the Administrative Agent, (c) Amended and Restated Pledge
Agreement of even date herewith made by Advocat Finance, Inc., a Delaware corporation, in favor of
the Administrative Agent, (d) Amended and Restated Pledge Agreement of even date herewith made by
Diversicare Leasing Corp., a Tennessee corporation, in favor of the Administrative Agent, (e)
Amended and Restated Pledge Agreement of even date herewith made by Diversicare Assisted Living
Services, Inc., a Tennessee corporation, in favor of the Administrative Agent, (f) Amended and
Restated Pledge Agreement of even date herewith made by Diversicare Assisted Living Services NC,
LLC, a Tennessee limited liability company, in favor of the Administrative Agent, and (g) Pledge
Agreement of even date herewith made by Senior Care Florida Leasing, LLC, a Delaware limited
liability company, in favor of the Administrative Agent, each of the foregoing in form and
substance reasonable satisfactory to the Administrative Agent, as the same may be modified,
supplemented or amended from time to time in accordance with the terms thereof.
“Pledgor” means the “Pledgor” as such term is respectively defined in each Pledge
Agreement.
“Preferred Stock” means the 5,000 shares of Series C Preferred Stock of Parent issued
to Omega pursuant to that certain Restructuring Stock Issuance and Subscription Agreement dated
October 20, 2006.
“Preferred Stock Certificate of Designation” means that certain Certificate of
Designation of the Preferred Stock dated October 20, 2006, as in effect as of the date hereof.
“Private Insurance/Managed Care Account” means Accounts owing from insurance companies
or managed care companies to a Person for services provided or rendered by the Borrower to a Person
where the Person has assigned the right to the Account to the Borrower.
- 20 -
“Private Insurance/Managed Care Contracts” means contracts and agreements between the
Borrower (or an Affiliate thereof) and insurance companies and/or managed care companies pursuant
to which the Borrower has the right to make a claim for and receive payment for services rendered
or furnished to a Person that is an intended beneficiary of such contract or agreement.
“Private Pay Accounts” means Accounts owing directly from an individual for services
provided or rendered by the Borrower to such individual.
“Pro Rata Share” means (a) with respect to a Lender’s obligation to make any Loan
hereunder and right to receive payments of principal, interest and fees with respect to such Loans,
the Revolving Loan Commitment Percentage of such Lender, and (b) for all other purposes with
respect to any Lender, the percentage obtained by dividing (i) such Lender’s then outstanding
principal amount of Loans and unused Revolving Loan Commitments, by (ii) the then aggregate
outstanding principal amount of Loans and unused Revolving Loan Commitments of all Lenders.
“Prohibited Transaction” shall have the meaning ascribed to such term in ERISA.
“Property” means any and all real property owned, leased, sub-leased or used at any
time by Borrower.
“Rate Option” means the Libor Rate or the Base Rate.
“Real Property Asset” means a parcel of real property, together with all improvements
(if any) thereon, including any Facility, owned in fee simple by a Borrower.
“Register” shall have the meaning ascribed to such term in Section 12.15(d)
hereof.
“Release” means any actual or threatened spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous
Substances into the environment, as “environment” is defined in CERCLA.
“Released Parties” shall have the meaning ascribed to such term in Section
12.24 hereof.
“Releasing Parties” shall have the meaning ascribed to such term in Section
12.24 hereof.
“Required Dividends and Redemption Amounts” means (i) any amounts actually paid as
dividends on, or for the redemption (upon the option of the holder or, with Administrative Agent’s
prior consent, the option of Parent) of, the 5,000 shares of Series C Preferred Stock of Parent
issued to Omega pursuant to the Restructuring Stock Issuance and Subscription Agreement and the
Preferred Stock Certificate of Designation and (ii) the amounts actually included in Base Rent paid
under the Omega Master Lease Agreement representing payments for the replacement of preferred stock
previously owned by Omega with said Series C Preferred Stock pursuant to said Restructuring Stock
Issuance and Subscription Agreement, which amounts are not included in rent expense in the income
statement of the Credit Parties.
- 21 -
“Required Lenders” means, as of any date of determination, (a) if there are three (3)
or fewer Lenders, Lenders holding one hundred percent (100%) of the sum of the outstanding
principal balance of the Revolving Loans (and the Revolving Loan Commitment), or (b) if there are
more than three (3) Lenders, Lenders holding sixty-six and two-thirds percent (66-2/3%) or more of
the sum of the outstanding principal balance of the Revolving Loans (and the Revolving Loan
Commitment), provided, that the commitments of, and the portion of the Liabilities held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required
Lenders.
“Respond” or “Response” means any action taken pursuant to Environmental Laws
to correct, remove, remediate, cleanup, prevent, mitigate, monitor, evaluate, investigate or assess
the Release of a Hazardous Substance.
“Restricted Agreements” means, collectively, each Management Agreement, Omega Debt
Document, Commercial Lease, agreement, document or instrument entered into in connection with
(directly or indirectly) the Cash Management Program, the Restructuring Stock Issuance and
Subscription Agreement, the Preferred Stock Certificate of Designation, any other agreement,
document or instrument between or among the Credit Parties and any agreement, document or
instrument pertaining to (directly or indirectly) any of the foregoing.
“Restrictions” shall have the meaning ascribed to such term in Section 10.3
hereof.
“Restructuring Stock Issuance and Subscription Agreement” means that certain
Restructuring Stock Issuance and Subscription Agreement dated October 20, 2006, by and between
Parent and Omega, as in effect as of the date hereof.
“Revolving Credit Note(s)” shall have the meaning ascribed to such term in Section
2.1 hereof.
“Revolving Loan Commitment” shall have the meaning ascribed to such term in
Section 2.1 hereof.
“Revolving Loan Commitment Percentage” means, as to any Lender, the percentage set
forth opposite such Lender’s name on Annex A hereto under the column “Revolving Loan
Commitment Percentage”, or, if different, in the most recent Assignment Agreement to which such
Lender is a party.
“Revolving Loans” shall have the meaning ascribed to such term in Section 2.1
hereof.
“Rose Terrace Lease” means the Borrower’s land acquisition, development, construction
and lease of a new skilled nursing facility in Cabell County, West Virginia.
“Schedule of Accounts” means an aged trial balance and reconciliation to the Borrowing
Base in form and substance reasonably satisfactory to the Administrative Agent (which may at the
Administrative Agent’s discretion include copies of original invoices) listing the Accounts of the
Borrower, certified on behalf of the Borrower by a Duly Authorized Officer, to be delivered on a
monthly basis to the Administrative Agent by the Borrower pursuant to Section 8.1(d)
hereof.
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“Service Fee” shall have the meaning ascribed to such term in Section 8.9
hereof.
“Solvent” means, with respect to any Person on a particular date, that on such date
(a) the fair value of the property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person; (b) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay
as such debts and liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which such Person’s
property would constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured liability, but shall not
include incurred but not reported professional liability claims.
“Stated Maturity Date” means February 28, 2016.
“Stock” shall mean all certificated and uncertificated shares, options, warrants,
general or limited partnership interests, membership interests or units, limited liability company
interests, participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether voting or
nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
“Subordinated Debt” means any and all Indebtedness owing by the Borrower to a third
party that has been subordinated to the Liabilities in writing on terms and conditions satisfactory
to the Administrative Agent in its sole and absolute discretion.
“Subordination Agreement” means, collectively, those certain subordination agreements
that have been and may in the future be entered into from time to time by holders of Subordinated
Debt and the Administrative Agent, each in form and substance satisfactory to the Administrative
Agent in its sole and absolute discretion, each as the same may be modified, supplemented, amended
or restated from time to time.
“Subsidiary” means, with respect to any Person, (i) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding Stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of whether, at the
time, Stock of any other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of fifty percent (50%)
or more of such Stock whether by proxy, agreement, operation of law or otherwise, and (ii) any
partnership or limited liability company in which such Person or one or more Subsidiaries of such
Person has an equity interest (whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or of which any such Person is
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a general partner, managing member or manager or may exercise the powers of a general partner,
managing member or manager.
“Tax Code” shall have the meaning ascribed to such term in Section 7.19
hereof.
“Taxes” shall have the meaning ascribed to such term in Section 3.3 hereof.
“Tenant” means any tenant, resident or occupant under any Lease.
“Term Loan” means that certain term loan to be made on the date hereof by the Lenders
to the Affiliated Term Borrowers pursuant to the Term Loan Agreement.
“Term Loan Agreement” means that certain Term Loan and Security Agreement dated of
even date herewith by and among the Affiliated Term Borrowers, the Lenders and the Administrative
Agent, as the same may be restated, modified, supplemented or amended from time to time.
“TRICARE” means the medical program for active duty members, qualified family members,
CHAMPUS eligible retirees and their family members and survivors, of all uniformed services.
“Uniform Commercial Code” or “UCC” or “Code” means the Uniform
Commercial Code as the same may, from to time, be in effect in the State of Illinois; provided,
however, that if, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or remedies with respect to, Administrative Agent’s Lien on the
Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of Illinois, the term “Uniform Commercial Code” or “UCC” or “Code” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this
Agreement or the other Financing Agreements relating to such attachment, perfection, priority or
remedies and for purposes of definitions related to such provisions; provided
further that, to the extent that the Uniform Commercial Code of a particular jurisdiction
is used to define a term herein or in any Financing Agreement and such term is defined differently
in different Articles or Divisions of such Uniform Commercial Code, then the definition of such
term contained in Article or Division 9 of such Uniform Commercial Code shall control.
“Unused Line Fee” means a fee in an amount equal to fifty basis points (0.50%) per
annum times the amount by which the Maximum Revolving Facility exceeds the average daily balance of
the Revolving Loans (which, for clarification, includes the amounts outstanding under any Letters
of Credit), payable to the Administrative Agent for the Lenders for their Pro Rata Share.
“Withholding Certificate” shall have the meaning ascribed to such term in Section
3.3 hereof.
1.2 Interpretation.
(1) All accounting terms used in this Agreement or the other Financing Agreements shall
have, unless otherwise specifically provided herein or therein, the
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meaning customarily given such
term in accordance with GAAP, and all financial computations thereunder shall be computed, unless
otherwise specifically provided therein, in accordance with GAAP consistently applied; provided,
however, that all financial covenants and calculations in the Financing Agreements shall be made in
accordance with GAAP as in effect on the Closing Date unless Borrower and Administrative Agent
shall otherwise specifically agree in writing. That certain items or computations are explicitly
modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the
foregoing. Unless otherwise specified, references in this Agreement or any of the attachments
hereto or appendices hereof to a Section, subsection or clause refer to such Section, subsection or
clause as contained in this Agreement. The words “herein,” “hereof” and “hereunder” and other
words of similar import refer to this Agreement as a whole, including all annexes, exhibits and
schedules attached hereto, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause contained in this Agreement
or any such annex, exhibit or schedule.
(2) Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine and neuter genders. The words
“including”, “includes” and “include” shall be deemed to be followed by the words “without
limitation”; the word “or” is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the Financing Agreements)
or, in the case of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include any amendments of the
same and any successor statutes and regulations. Whenever any provision in any Financing Agreement
refers to the knowledge (or an analogous phrase) of Borrower, except as otherwise expressly
provided for herein, such words are intended to signify that a Duly Authorized Officer of Borrower
has actual knowledge or awareness of a particular fact or circumstance or that a prudent individual
in the position of such Duly Authorized Officer of Borrower, would reasonably be expected to have
known or been aware of such fact or circumstance in the course of performing his or her duties.
2. COMMITMENT; INTEREST; FEES.
2.1 Revolving Loans. On the terms and subject to the conditions set forth in this
Agreement, and provided there does not then exist a Default or an Event of Default, each Lender,
severally and for itself alone, agrees to make such Lender’s Pro Rata Share of revolving loans
(such loans are collectively called “Revolving Loans” and individually called a
“Revolving Loan”) to the Borrower from time to time on and after the Closing Date and prior
to the Credit Termination Date, so long as the aggregate amount of such advances outstanding at any
time to the Borrower do not exceed the lesser of: (i) the Maximum Revolving Facility at such time
minus any reserves established by the Administrative Agent pursuant to Section 2.1(b)
hereof and (ii) the Borrowing Base at such time minus any reserves established by the
Administrative Agent pursuant to
Section 2.1(b) hereof, in each case, if at any time applicable, minus all Letter of
Credit Obligations. The Borrower shall have the right to repay and reborrow any of the Revolving
Loans without premium or penalty (subject to Section 3.4 hereof); provided,
however, that it shall be a condition precedent to any reborrowing that as of the date of
any reborrowing (any such date herein called a “Reborrowing Date”) all of the conditions to
borrowing set forth in Section 5.1 of this Agreement shall be satisfied and all
representations and warranties made
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herein shall be true and correct in all material respects as of
such Reborrowing Date. The Lenders’ commitment hereunder to make Revolving Loans is hereinafter
called the “Revolving Loan Commitment.” The payment obligations of the Borrower to the
Lenders hereunder are and shall be joint and several as provided in Section 12.21 hereof.
The failure of any Lender to make a requested Revolving Loan on any date shall not relieve any
other Lender of its obligation to make a Revolving Loan on such date, but no Lender shall be
responsible for the failure of any other Lender to make any Revolving Loan to be made by such other
Lender. Each Lender’s obligation to fund any Revolving Loan shall be limited to such Lender’s
Revolving Loan Commitment Percentage of the Revolving Loan Commitment.
(1) Each advance to the Borrower under this Section 2.1 shall be in integral multiples of
Ten Thousand Dollars ($10,000) and shall, on the day of such advance, be deposited, in immediately
available funds, in the Borrower’s demand deposit account with the Administrative Agent, or in such
other account as the Borrower Agent may, from time to time, designate in writing with the
Administrative Agent’s approval.
(2) The Borrower acknowledges and agrees that the Administrative Agent may from time to
time (i) upon five (5) calendar days notice, increase or decrease the advance rates with respect to
Eligible Accounts in the Administrative Agent’s reasonable discretion (provided, prior to a
Default, the Administrative Agent will not reduce any such advance rate by more than ten percent
(10%), but after the occurrence and during the period of any Default, the Administrative Agent may
reduce any such advance rate in any amount in its reasonable discretion), and/or (ii) establish
reserves against the Borrowing Base, the Eligible Accounts in the Administrative Agent’s reasonable
discretion.
(3) The Revolving Loans shall be evidenced by a separate promissory note or amended and
restated promissory note (hereinafter, as the same may be amended, restated, modified or
supplemented from time to time, and together with any renewals or extensions thereof or exchanges
or substitutions therefor, called the “Revolving Credit Note(s)”), duly executed and delivered by
the Borrower, substantially in the form set forth in Exhibit A attached hereto, with appropriate
insertions, dated the Closing Date, jointly and severally payable to the order of each Lender,
respectively, in the principal amount equal to such Lender’s Pro Rata Share of the Maximum
Revolving Facility. THE PROVISIONS OF THE REVOLVING CREDIT NOTES NOTWITHSTANDING, THE REVOLVING
LOANS THEN OUTSTANDING SHALL BECOME IMMEDIATELY DUE AND PAYABLE ON A JOINT AND SEVERAL BASIS UPON
THE EARLIEST TO OCCUR OF (X) STATED MATURITY DATE; (Y) THE ACCELERATION OF THE LIABILITIES PURSUANT
TO SECTION 11.2 HEREOF; AND (Z) TERMINATION OF THIS AGREEMENT (WHETHER BY PREPAYMENT OR OTHERWISE)
IN ACCORDANCE WITH ITS TERMS.
(4) Accrued interest on the Revolving Loans shall be due and payable and shall be made by
the Borrower to the Administrative Agent in accordance with Section 2.7 hereof. Monthly interest
payments on the Revolving Loans shall be computed using the interest rate then in effect and based
on the outstanding principal balance of the Revolving Loans. Upon maturity, the outstanding
principal balance of the Revolving Loans shall be immediately due and payable, together with any
remaining accrued interest thereon.
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2.1(B) Letters of Credit.
Subject to the terms and conditions of this Agreement (and any other reasonable documentation
or Letter of Credit Documents required by the applicable Issuing Lender for the benefit of the
Lenders from Borrower in connection with the issuance of any Letter of Credit) and upon (i) the
execution by Borrower Agent, the Borrower and the Issuing Lender of a Master Letter of Credit
Agreement in form and substance acceptable to the Issuing Lender (together with all amendments,
modifications and restatements thereof, the “Master Letter of Credit Agreement”), and (ii)
the execution and delivery by the Borrower, and the acceptance by the Issuing Lender, in its sole
and absolute discretion, of a Letter of Credit Application, and provided there does not then exist
a Default or an Event of Default, the Issuing Lender (on behalf of the Lenders, on a Pro Rata Share
basis) agrees to issue for the account of the Borrower such Letters of Credit in the standard form
of the Issuing Lender and otherwise in form and substance acceptable to the Issuing Lender, from
time to time during the term of this Agreement, provided that the Letter of Credit Obligations may
not at any time exceed, in the aggregate at any time, the lesser of (A) the Borrowing Base (minus
(x) any reserves established by the Administrative Agent pursuant to Section 2.1(c)
hereof), and (y) the outstanding aggregate principal amount of the Revolving Loans (which, for
clarification, includes all then existing Letter of Credit Obligations), or (B) Ten Million and
No/100 Dollars ($10,000,000.00); provided, further, the expiration date on any
Letter of Credit will not be more than one (1) year from the date of issuance for such Letter of
Credit and not later than the date that is five (5) Business Days prior to the Credit Termination
Date. The Borrower shall jointly and severally reimburse Issuing Lender, Administrative Agent and
each Lender immediately upon demand, for any payments required to be made by Issuing Lender, such
Lender or Administrative Agent to any Person with respect to any Letter of Credit (including
pursuant to Section 2.18 hereof); provided, however, Administrative Agent
acknowledges that no such fees or charges regarding any Letter of Credit are due or owing on the
Closing Date as a result of Borrower entering into this Agreement. The amount of any payments made
by the Issuing Lender with respect to draws made by a beneficiary under (or such costs, fees and
expenses in connection with) a Letter of Credit for which the Borrower has failed to reimburse the
Issuing Lender upon the earlier of (1) the Issuing Lender’s demand for repayment, or (2) five (5)
days from the date of such payment to such beneficiary by the Issuing Lender, shall be deemed to
have been converted to a Revolving Loan as of the date such payment was made by the Issuing Lender
to such beneficiary. Upon the occurrence of an Event of a Default and at the option of the Issuing
Lender, all Letter of Credit Obligations shall be converted to Revolving Loans consisting of Base
Rate Loans, all without demand, presentment, protest or notice of any kind, all of which are hereby
waived by the Borrower. To the extent the provisions of the Master Letter of Credit Agreement
differ from, or are inconsistent with, the terms of this Agreement, the provisions of this
Agreement shall govern. For clarification, it is acknowledged that upon an issuance of a Letter of
Credit, a Revolving
Loan in such amount shall be deemed to have been made and shall concurrently reduce
availability for additional borrowing by such amount.
The Issuing Lender will, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment by the beneficiary under any Letter of Credit issued
by the Issuing Lender to ascertain that the same appear on their face to be in conformity with the
terms and conditions of such Letter of Credit. If, after examination, the Issuing Lender has
determined that a demand for payment under such Letter of Credit does not
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conform to the terms and
conditions of such Letter of Credit, then the Issuing Lender will, as soon as reasonably
practicable, give notice to the beneficiary to the effect that negotiation was not in accordance
with the terms and conditions of such Letter of Credit, stating the reasons therefor and that the
relevant document is being held at the disposal of such beneficiary or is being returned to such
beneficiary, as the Issuing Lender may elect. The beneficiary may attempt to correct any such
nonconforming demand for payment under such Letter of Credit if, and to the extent that, such
beneficiary is entitled (without regard to the provisions of this sentence) and able to do so. If
the Issuing Lender determines that a demand for payment under such Letter of Credit conforms to the
terms and conditions of such Letter of Credit, then the Issuing Lender will make payment to the
beneficiary in accordance with the terms of such Letter of Credit. The Issuing Lender has the
right to require the beneficiary to surrender such Letter of Credit to Issuing Lender on the stated
expiration date of such Letter of Credit.
As between the Borrower and the Issuing Lender, the Borrower assumes all risks of the acts and
omissions of, or misuse of Letters of Credit by, the respective beneficiaries of the Letters of
Credit. In furtherance and not in limitation of the foregoing, subject to the provisions of the
Letter of Credit applications, the Issuing Lender will not be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party
in connection with the application for or issuance of the Letters of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
provided, however, that the Issuing Lender will examine such documents to insure conformity thereof
with any demand for payment; (ii) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective
for any reason; (iii) for failure of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, facsimile or otherwise, except to the extent arising out of the Issuing Lender’s willful
misconduct; (v) for any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof, except to the extent
arising out of the Issuing Lender’s gross negligence or willful misconduct; (vi) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or (vii) for any consequences arising from causes beyond the control of the
Issuing Lender, including, without limitation, any acts by governmental authorities. In
furtherance of the foregoing, and without limiting the generality thereof, the Borrower agrees to
and shall indemnify and hold harmless the Issuing Lender and the Administrative Agent (and each of
their respective directors, stockholders, officers, employees, agents, and affiliates) from and
against each and every claim, loss, cost, expense and liability which might arise against the
Issuing Lender (or any such other Person) arising out of or in connection with any Letter of
Credit or otherwise by reason of any transfer, sale, delivery, surrender or endorsement of any
bill of lading, warehouse receipt or other document held by the Issuing Lender or for its account,
except solely to the extent arising out of the Issuing Lender’s gross negligence or willful
misconduct. None of the above affects, impairs or prevents the vesting of any of the Issuing
Lender’s or Administrative Agent’s rights or powers under this Agreement or the Borrower’s
obligation to make reimbursement.
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By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the
amount thereof) by the Issuing Lender, and without any further action on the part of the Issuing
Lender or the other Lenders, the Issuing Lender hereby grants to each other Lender, and each Lender
hereby acquires from the Issuing Lender, a participation in such Letter of Credit equal to such
Lender’s Pro Rate Share (deemed as if being a Revolving Loan) of the aggregate amount available to
be drawn under such Letter of Credit. Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever, including any amendment,
renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or
Event of Default or reduction or termination of the Revolving Loan Commitments, and that each such
payment shall be made without any offset, counterclaim, defense, abatement, withholding or
reduction whatsoever.
In consideration and in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Lender,
such Lender’s Pro Rate Share of each L/C Disbursement made by the Issuing Lender promptly upon the
request of such Issuing Lender (made through the Administrative Agent) at any time from the time of
such L/C Disbursement until such L/C Disbursement is reimbursed by Borrower or at any time after
any reimbursement payment is required to be refunded to Borrower for any reason. Each such payment
shall be made in the same manner as provided herein with respect to Revolving Loans made by such
Lender, and the Administrative Agent shall promptly pay to the Issuing Lender the amounts so
received by it from the Lenders. Promptly following receipt by the Administrative Agent of any
payment from Borrowers pursuant to this Subsection, the Administrative Agent shall distribute such
payment to the Issuing Lender or, to the extent that the other Lenders have made payments pursuant
to this paragraph to reimburse the Issuing Lender, then to such Lenders and such Issuing Lender as
their interests may appear. Any payment made by a Lender pursuant to this Subsection to reimburse
the Issuing Lender for any L/C Disbursement shall not constitute a Loan and shall not relieve any
Borrower of its obligation to reimburse such L/C Disbursement.
If the Issuing Lender shall make any L/C Disbursement in respect of a Letter of Credit,
Borrower shall reimburse the Issuing Lender in respect of such L/C Disbursement by paying to the
Administrative Agent an amount equal to such L/C Disbursement not later than 1:00 p.m., Chicago
time, on (A) the Business Day that Borrower Agent or Parent receives notice of such L/C
Disbursement, if such notice is received prior to 12:00 noon, Chicago time, or (B) the Business Day
immediately following the day that Borrower Agent or Parent receives such notice, if such notice is
not received prior to such time. If Borrower fails for any reason to make such payment when due,
the Administrative Agent shall notify each Lender of the applicable L/C Disbursement, the payment
then due from Borrower in respect thereof and such Lender’s Pro Rate Share thereof, and upon the
written request (which may be by e-mail) of the Issuing Lender,
each other Lender shall pay to the Administrative Agent, for the account of the Issuing
Lender, such Lender’s Pro Rate Share thereof in accordance herewith.
The obligations of Borrower with respect to any Letter of Credit issued pursuant to this
Agreement are absolute, unconditional and irrevocable and shall be payable and performed strictly
in accordance with the terms of this Agreement and the Letter of Credit under all circumstances
whatsoever, including, without limitation, (i) any lack of validity or enforceability
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of any Letter
of Credit, any other Letter of Credit Document or any Financing Agreement, or any term or provision
therein, (ii) any draft or other document presented under a 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, or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under such Letter of Credit, (iii) payment by the Issuing
Lender under a Letter of Credit against presentation of a draft or other document that does not
comply strictly with the terms of such Letter of Credit, or any payment by the Issuing Lender under
any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other representative of or successor
to any beneficiary or any transferee of such Letter of Credit, including any arising in connection
with any bankruptcy, reorganization or other insolvency law, (iv) the existence of any claim,
counterclaim, setoff, defense or other right that Borrower may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the Issuing Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or
any agreement or instrument relating thereto, or any unrelated transaction, (v) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of or defense to Borrowers’
obligations hereunder, (vi) any amendment or waiver of or consent to any departure from any or all
of the Financing Agreements, (vii) any improper use which may be made of any Letter of Credit or
any improper acts or omissions of any beneficiary or transferee of any Letter of Credit in
connection therewith, (viii) the existence of any claim, set-off, defense or any right which any
Borrower may have at any time against any beneficiary or any transferee of any Letter of Credit (or
Persons for whom any such beneficiary or any such transferee may be acting), any Lender or any
other Person, whether in connection with any Letter of Credit, any transaction contemplated by any
Letter of Credit, this Agreement, or any other Financing Agreement, or any unrelated transaction,
(ix) the insolvency of any Person issuing any documents in connection with any Letter of Credit,
(x) any breach of any agreement between any Borrower and any beneficiary or transferee of any
Letter of Credit, (xi) any irregularity in the transaction with respect to which any Letter of
Credit is issued, including any fraud by the beneficiary or any transferee of such Letter of
Credit, (xii) any errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, wireless or otherwise, whether or not they are in code, (xiii)
any act, error, neglect or default, omission, insolvency or failure of business of any of the
correspondents of the Issuing Lender, and (xiv) any other circumstances arising from causes beyond
the control of the Issuing Lender; except, in each case above, as result from the gross negligence
or willful misconduct of Issuing Lender.
No Issuing Lender shall be under any obligation to issue any Letter of Credit if: (i) the
issuance of such Letter of Credit would violate one or more policies of the Issuing Lender
applicable to letters of credit generally; (ii) except as otherwise agreed by the Administrative
Agent and the Issuing Lender, such Letter of Credit is in an initial stated amount less than
$100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby
Letter of Credit; (iii) except as otherwise agreed by the Administrative Agent and the Issuing
Lender, such Letter of Credit is to be denominated in a currency other than United States Dollars;
(iv) such Letter of Credit contains any provisions for automatic reinstatement of the stated amount
after any drawing thereunder; or (v) any Lender is at such time a Defaulting Lender hereunder,
unless the Issuing Lender has entered into satisfactory arrangements with the
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Borrower or such
Defaulting Lender to eliminate the Issuing Lender’s risk with respect to such Defaulting Lender.
2.2 [Intentionally Omitted.].
2.3 Reduction of Revolving Loan Commitment by the Borrower. The Borrower may from time to
time, on at least five (5) Business Days’ prior written notice received by the Administrative
Agent, permanently reduce the amount of the Revolving Loan Commitment but only upon first repaying
the amount, if any, by which the aggregate unpaid principal amount of the Revolving Credit Note
exceeds the then reduced amount of the Revolving Loan Commitment.
2.4 Principal Balance of Liabilities Not to Exceed the Maximum Revolving Facility. The
sum of the aggregate outstanding principal balance of the Loans to the Borrower made under this
Agreement shall not, at any time, exceed the Maximum Revolving Facility. The Borrower agrees that
if at any time any such excess shall arise, the Borrower shall immediately pay on a joint and
several basis to the Administrative Agent for distribution to the applicable Issuing Lender and
Lenders such amount as may be necessary to eliminate such excess.
2.5 The Borrower’s Loan Account. The Administrative Agent, on behalf of each Lender,
shall maintain a loan account (the “Loan Account”) on its books for the Borrower in which
shall be recorded (a) all Loans made by the Lenders (including Administrative Agent) to the
Borrower pursuant to this Agreement, (b) all payments made by the Borrower on all such Loans, and
(c) all other appropriate debits and credits as provided in this Agreement, including, without
limitation, all fees, charges, expenses and interest. All entries in the Loan Account shall be
made in accordance with the Administrative Agent’s customary accounting practices as in effect from
time to time. The Borrower promises to pay the amount reflected as owing by Borrower under its
Loan Account and all of its other obligations hereunder as such amounts become due or are declared
due pursuant to the terms of this Agreement. Notwithstanding the foregoing, the failure so to
record any such amount or any error in so recording any such amount shall not limit or otherwise
affect the Borrower’s obligations under this Agreement or under the Revolving Credit Note to repay
the outstanding principal amount of any of the Loans together with all interest accruing thereon.
2.6 Statements. All Loans to the Borrower, and all other debits and credits provided for
in this Agreement, shall be evidenced by entries made by the Administrative Agent in its internal
data control systems showing the date, amount and reason for each such debit or credit. Until such
time as the Administrative Agent shall have rendered to the Borrower Agent written statements of
account as provided herein, the balance in the Loan Account, as set forth on the Administrative
Agent’s most recent computer printout, shall be rebuttably presumptive evidence of the amounts due
and owing the Lenders by the Borrower. From time to time the Administrative Agent shall render to
the Borrower Agent a statement setting forth the balance of the Loan Account, including principal,
interest, expenses and fees. Each such statement shall be subject to subsequent adjustment by the
Administrative Agent but shall, absent manifest errors or omissions, be presumed correct and
binding upon the Borrower.
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2.7 Interest. (a) The Borrower agrees to jointly and severally pay to the Administrative
Agent on behalf of the Lenders interest on the daily outstanding principal balance of (i) the Base
Rate Loans at the Base Rate from time to time in effect, plus the Applicable Base Rate Margin, and
(ii) the Libor Loans at the Libor Rate; provided, however, that immediately
following the occurrence and during the continuance of an Event of Default, and notwithstanding any
other provisions of this Agreement to the contrary, the Borrower agrees to pay to the
Administrative Agent on behalf of the Lenders interest on the outstanding principal balance of the
Loans at the per annum rate of three percent (3%) plus the rate otherwise payable hereunder with
respect to such Loans (the “Default Rate”).
(b) Accrued interest on each Base Rate Loan shall be payable on the first calendar day of
each month and at maturity, commencing with the first day of the calendar month after the initial
disbursement of such loan. Accrued interest on each Libor Loan shall be payable on the last day of
the Libor Interest Period relating to such Libor Loan and at maturity, commencing with the first
such last day of the initial Libor Interest Period. Monthly interest payments on the Loans shall
be computed using the interest rate then in effect and based on the outstanding principal balance
of the Loans. Upon maturity, the outstanding principal balance of all Loans shall be immediately
due and payable, together with any remaining accrued interest thereon. Interest shall be computed
on the basis of a year of three hundred sixty (360) days for the actual number of days elapsed
(which results in more interest being paid than if computed on the basis of a 365-day year). If
any payment of principal of, or interest on, the Revolving Credit Note falls due on a day that is
not a Business Day, then such due date shall be extended to the next following Business Day, and
additional interest shall accrue and be payable for the period of such extension.
2.8 Method for Making Payments. All payments that the Borrower is required to make to the
Administrative Agent on behalf of the Lenders under this Agreement or under any of the other
Financing Agreements shall be made in immediately available funds not later than 1:00 p.m. (Chicago
time) on the date of payment at the Administrative Agent’s office at 120 South LaSalle Street,
Chicago, Illinois
60603, or at such other place as the Administrative Agent directs in writing from time to
time, or, in the Administrative Agent’s sole and absolute discretion after the occurrence and
during the continuance of any Default, by appropriate debits to the Loan Account. Borrower hereby
irrevocably authorizes and instructs the Administrative Agent after the occurrence and during the
continuance of any Default to direct debit any of Borrower’s operating accounts with Administrative
Agent or any Lender for all principal, interest, fees and expenses due hereunder with respect to
the Loans and the other Liabilities. Payments made after 1:00 p.m. (Chicago time) shall be deemed
to have been made on the next succeeding Business Day. Administrative Agent shall promptly remit
to each Lender its Pro Rata Share of all such payments received in collected funds by
Administrative Agent for the account of such Lender; provided, however, all
payments due by Borrower under Section 3, as applicable, shall be made by Borrower directly
to Lender entitled thereto without setoff, counterclaim or other defense.
2.9 Term of this Agreement. The Borrower shall have the right to terminate this Agreement
following prepayment of all of the Liabilities as provided under Section 2.10 hereof;
provided, however, that (a) all of the Administrative Agent’s and each Lender’s
rights and remedies under this Agreement, and (b) the Liens created under Section 6.1
hereof and under
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any of the other Financing Agreements, shall survive such termination until all of
the Liabilities under this Agreement and the other Financing Agreements have been indefeasibly paid
in full in cash. In addition, the Liabilities may be accelerated as set forth in Section
11.2 hereof. Upon the effective date of termination, all of the Liabilities shall become
immediately due and payable on a joint and several basis without notice or demand. Notwithstanding
any termination, until all of the Liabilities hereunder shall have been indefeasibly paid and
satisfied in full in cash, the Administrative Agent shall be entitled to retain its Liens (for the
ratable benefit of the Lenders and the Administrative Agent) in and to all existing and future
Collateral and the Borrower shall continue to remit collections of Accounts of the Borrower and
proceeds as provided herein.
2.10 Optional Prepayment of Loans. Borrower may, at its option, permanently prepay,
without penalty or premium (other than as specified in Section 3.4 hereof), at any time
during the term of this Agreement all or any portion of any of the Revolving Loans.
2.11 Limitation on Charges. It being the intent of the parties that the rate of interest
and all other charges to the Borrower be lawful, if for any reason the payment of a portion of the
interest or other charges otherwise required to be paid under this Agreement would exceed the limit
which the Lenders may lawfully charge the Borrower, then the obligation to pay interest or other
charges shall automatically be reduced to such limit and, if any amounts in excess of such limit
shall have been paid, then such amounts shall at the sole option of the Administrative Agent (or
otherwise at the direction of the Required Lenders) either be refunded to the Borrowers or credited
to the principal amount of the Liabilities (or any combination of the foregoing) so that under no
circumstances shall the interest or other charges required to be paid by the Borrowers hereunder
exceed the maximum rate allowed by applicable Laws, and Borrowers shall not have any action
against any Lender or the Administrative Agent for any damages arising out of the payment or
collection of any such excess interest.
2.12 Method of Selecting Rate Options; Additional Provisions Regarding Libor Loans. The
Borrower may select a Libor Rate with respect to a Revolving Loan as provided in this Section
2.12; provided, however, that with respect to each and all Libor Loans made
hereunder (i) the initial advance shall be in an amount not less than Five Hundred Thousand Dollars
($500,000) and in integral multiples of One Hundred Thousand Dollars ($100,000) thereafter; and
(ii) there shall not exist at any one time outstanding more than five (5) separate traunches of
Libor Loans. Revolving Loans shall bear interest at the Base Rate unless the Borrower provides a
Borrowing Notice to the Administrative Agent in the form of Exhibit B, signed by a Duly
Authorized Officer of the Borrower, irrevocably electing that all or a portion of the Revolving
Loans are to bear interest at a Libor Rate (the “Borrowing Notice”). The Borrowing Notice
shall be delivered to the Administrative Agent not later than two (2) Business Days before the
Borrowing Date for each Libor Loan, specifying:
(1) The Borrowing Date, which shall be a Business Day, of such Loan;
(2) The type and aggregate amount of such Loan;
(3) The Rate Option selected for such Loan; and
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(4) The Libor Interest Period applicable thereto.
Each Libor Loan shall bear interest from and including the first day of the Libor Interest
Period applicable thereto to (but not including) the last day of such Libor Interest Period at the
interest rate determined as applicable to such Libor Loan. If at the end of an Libor Interest
Period for an outstanding Libor Loan, the Borrower has failed to select a new Rate Option or to pay
such Libor Loan, then such Loan, if a Revolving Loan, shall be automatically converted to a Base
Rate Loan on and after the last day of such Libor Interest Period until paid or until the effective
date of a new Rate Option with respect thereto selected by the Borrower. An outstanding Revolving
Loan that is a Base Rate Loan may be converted to a Libor Loan at any time subject to the notice
provisions applicable to the type of Loan selected. The Borrower may not select a Libor Rate for a
Revolving Loan if there exists a Default or Event of Default. The Borrower shall select Libor
Interest Periods with respect to Libor Loans so that such Libor Interest Period does not expire
after the end of the Credit Termination Date.
2.13 Setoff. (a) Other than with respect to Government Accounts, Borrower agrees that the
Administrative Agent and each Lender has all rights of setoff and banker’s liens provided by
applicable law. The Borrower agrees that, if at any time (i) any amount owing by it under this
Agreement or any Financing Agreement is then due and payable to the Administrative Agent or
Lenders, or (ii) or an Event of Default shall have occurred and be continuing, then the
Administrative Agent or Lenders, in their sole discretion, may set off against and apply to the
payment of any and all Liabilities, any and all balances, credits, deposits, accounts or
moneys of the Borrower then or thereafter with the Administrative Agent or such Lender.
(b) Without limitation of Section 2.13(a) hereof, the Borrower agrees that, upon
and after the occurrence of any Event of Default, the Administrative Agent and each Lender is
hereby authorized, at any time and from time to time, without prior notice to the Borrower
(provided, however, prior to an Event of Default the Administrative Agent and such Lender shall use
reasonable efforts to provide notice of any such action within a reasonable time thereafter but the
Administrative Agent and such Lender shall not be liable for any failure to provide such notice),
(i) to set off against and to appropriate and apply to the payment of any and all Liabilities any
and all amounts which the Administrative Agent or Lender is obligated to pay over to the Borrower
(whether matured or unmatured, and, in the case of deposits, whether general or special, time or
demand and however evidenced), and (ii) pending any such action, to the extent necessary, to
deposit such amounts with the Administrative Agent as Collateral to secure such Liabilities and to
dishonor any and all checks and other items drawn against any deposits so held as the
Administrative Agent in its sole discretion may elect.
(c) The rights of the Administrative Agent and Lenders under this Section 2.13 are
in addition to all other rights and remedies which the Administrative Agent and Lenders may
otherwise have in equity or at law.
(d) If any Lender shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of offset or otherwise), on account of (a) principal of or interest on
any Revolving Loan, but excluding (i) any payment pursuant to Section 3.8 or Section
12.15 and (ii) payments of interest on any Base Rate Loan that but for Sections 3.2,
3.6 and 3.7 would be a Libor Loan, or (b) other recoveries obtained by all Lenders on account
of principal of
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and interest on the Loans (or such participation) then held by them, then such
Lender shall purchase from the other Lenders such participations in the Loans held by them as shall
be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably
with each of them; provided that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery.
2.14 Termination of Commitment. On the date on which the Commitment terminates pursuant to
Section 11.2 hereof, all Loans and other Liabilities shall become immediately due and
payable, without presentment, demand or notice of any kind.
2.15 Unused Line Fee.. Borrower hereby agrees to pay to the Administrative Agent for the
Lenders on a Pro Rata Share basis the Unused Line Fee, which shall be payable in arrears, on the
first day of each month commencing on April 1, 2011, and on the Stated Maturity Date, which fee
shall be nonrefundable and deemed fully earned on the date of payment thereof.
2.16 Closing Fee. On the Closing Date, the Borrower shall pay to the Administrative Agent a one-time closing
fee pursuant to the Fee Letter in immediately available funds, which fee shall be nonrefundable and
deemed fully earned as of such date (“Closing Fee”).
2.17 Late Charge. If any installment of principal or interest due hereunder shall become
overdue for five (5) days after the date when due, the Borrower shall pay to the Administrative
Agent (for the ratable benefit of the Lenders) on demand a “late charge” of five cents ($.05) for
each dollar so overdue in order to defray part of the increased cost of collection occasioned by
any such late payment, as liquidated damages and not as a penalty.
2.18 L/C Fees. For each Letter of Credit, the Borrower will pay to the Administrative
Agent for the Lenders a fee (“L/C Fee”) equal to three percent (3.00%) per annum of the
undrawn face amount of each Letter of Credit, provided, that the L/C Fee will not be less
than the Administrative Agent’s standard minimum amount for such fees in effect at such time. The
L/C Fee is and shall be payable quarterly in advance, on the first day of each Fiscal Quarter
during which each such Letter of Credit remains outstanding, and such fee shall be nonrefundable
and deemed fully earned as of such payment date. The L/C Fee will be computed on the basis of a
360 day year for the actual number of days elapsed (which results in a larger fee being paid than
if computed on the basis of a 365-day year). In addition, the Borrower will pay to the Issuing
Lender all customary charges and out-of-pocket and additional expenses in connection with the
issuance and administration (and, if applicable, amendment) of any Letters of Credit issued under
this Agreement.
3. CHANGE IN CIRCUMSTANCES.
3.1 Yield Protection. If, after the date of this Agreement (for purposes of this
Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all guidelines and
regulations adopted in connection therewith are deemed to have been adopted after the date hereof),
the adoption of any law or any governmental or quasi-governmental rule, regulation,
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policy,
guideline or directive (whether or not having the force of law), or any change therein, or any
change in the interpretation or administration thereof, or the compliance of any Lender therewith,
or Regulation D of the Board of Governors of the Federal Reserve System,
(1) subjects any Lender to any tax, duty, charge or withholding on or from payments due
from the Borrower (excluding taxation of the overall net income or receipts of such Lender or any
branch profits taxes), or changes the basis of taxation of payments to such Lender in respect of
its Loans or other amounts due it hereunder, or
(2) imposes, modifies, or increases or deems applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (other than reserves and assessments taken into account in
determining the interest rate applicable to Libor Loans), or
(3) imposes any other condition the result of which is to increase the cost to any Lender
of making, funding or maintaining advances or reduces any amount receivable by such Lender in
connection with advances, or requires any Lender to make any payment calculated by reference to the
amount of advances held or interest received by it, by an amount deemed material by such Lender,
or
(4) affects the amount of capital required or expected to be maintained by any Lender or
any corporation controlling such Lender and such Lender determines the amount of capital required
is increased by or based upon the existence of this Agreement or its obligation to make Loans
hereunder or of commitments of this type,
then, within three (3) Business Days of demand by such Lender, the Borrower agrees to pay such
Lender that portion of such increased expense incurred (including, in the case of clause (d), any
reduction in the rate of return on capital to an amount below that which it could have achieved but
for such law, rule, regulation, policy, guideline or directive and after taking into account such
Lender’s policies as to capital adequacy) or reduction in an amount received which such Lender
determines is attributable to making, funding and maintaining the Loans.
3.2 Availability of Rate Options. If Administrative Agent determines (or Required Lenders
advise Administrative Agent in writing) that maintenance of any Libor Loans would violate any
applicable law, rule, regulation or directive of any government or any division, agency, body or
department thereof, whether or not having the force of law, the Lenders shall suspend the
availability of the Libor Rate option and the Administrative Agent shall require any Libor Loans
outstanding to be promptly converted to a Base Rate Loan subject to the Borrower’s compliance with
Section 3.4 hereof; or if Administrative Agent determines (or Required Lenders advise
Administrative Agent in writing) that (i) deposits of a type or maturity appropriate to match fund
Libor Loans are not available, the Lenders shall suspend the availability of the Libor Rate after
the date of any such determination, or (ii) the Libor Rate does not accurately reflect the cost of
making a Libor Loan, then, if for any reason whatsoever the provisions of Section 3.1
hereof are inapplicable, the Lenders shall, at their option, suspend the availability of the Libor
Rate after the date of any such determination or permit (solely in the case of clause (ii))
the Borrower to pay the Lenders for any increased cost the Lenders may incur.
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3.3 Taxes. All payments by the Borrower under this Agreement shall be made free and clear
of, and without deduction for, any present or future income, excise, stamp or other taxes, fees,
levies, duties, withholdings or other charges of any nature whatsoever, now or hereafter imposed by
any taxing authority, other than franchise taxes and taxes imposed on or measured by any Lender’s
net income or receipts or branch profits taxes (such non-excluded items being
called “Taxes”). If any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrower shall:
(1) pay directly to the relevant authority the full amount required to be so withheld or
deducted;
(2) promptly forward to the Administrative Agent an official receipt or other
documentation satisfactory to the Administrative Agent evidencing such payment to such authority;
and
(3) pay to the Lenders such additional amount or amounts as is necessary to ensure that
the net amount actually received by the Lenders will equal the full amount the Lenders would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any Lender with respect to any payment
received by such Lender hereunder, such Lender may pay such Taxes and the Borrower agrees to
promptly pay such additional amounts (including, without limitation, any penalties, interest or
expenses) as is necessary in order that the net amount received by the Lenders after the payment of
such Taxes (including, without limitation, any Taxes on such additional amount) shall equal the
amount the Lenders would have received had not such Taxes been asserted.
To the extent permitted by applicable law, each Lender that is not a United States person
within the meaning of Code Section 7701(a)(30) (a “Non-U.S. Participant”) shall deliver to
Borrower and Administrative Agent on or prior to the Closing Date (or in the case of a Lender that
is an Assignee, on the date of such assignment to such Lender) two accurate and complete original
signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable form
prescribed by the IRS) certifying to such Lender’s entitlement to a complete exemption from United
States withholding tax on interest payments to be made hereunder or on any Loan. If a Lender that
is a Non-U.S. Participant is claiming a complete exemption from withholding on interest pursuant to
Code Sections 871(h) or 881(c), such Lender shall deliver (along with two accurate and complete
original signed copies of IRS Form W-8BEN) a certificate in form and substance reasonably
acceptable to Administrative Agent (any such certificate, a “Withholding Certificate”). In
addition, each Lender that is a Non-U.S. Participant agrees that from time to time after the
Closing Date (or in the case of a Lender that is an Assignee, after the date of the assignment to
such Lender), when a lapse in time (or change in circumstances occurs) renders the prior
certificates hereunder obsolete or inaccurate in any material respect, such Lender shall, to the
extent permitted under applicable law, deliver to Borrower and Administrative Agent two new and
accurate and complete original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any
successor or other applicable forms prescribed by the IRS), and if applicable, a new Withholding
Certificate, to confirm or establish
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the entitlement of such Lender or Administrative Agent to an
exemption from United States withholding tax on interest payments to be made hereunder or on any
Loan.
Each Lender that is not a Non-U.S. Participant (other than any such Lender which is taxed as a
corporation for U.S. federal income tax purposes) shall provide two properly
completed and duly executed copies of IRS Form W-9 (or any successor or other applicable form)
to Borrower and Administrative Agent certifying that such Lender is exempt from United States
backup withholding tax. To the extent that a form provided pursuant to this Section is rendered
obsolete or inaccurate in any material respects as result of change in circumstances with respect
to the status of a Lender, such Lender shall, to the extent permitted by applicable law, deliver to
Borrower and Administrative Agent revised forms necessary to confirm or establish the entitlement
to such Lender’s or Administrative Agent’s exemption from United States backup withholding tax.
Borrower shall not be required to pay additional amounts to a Lender, or indemnify any Lender,
under this Section to the extent that such obligations would not have arisen but for the failure of
such Lender to comply with this Section.
Each Lender agrees to and shall indemnify Administrative Agent and hold Administrative Agent
harmless for the full amount of any and all present or future Taxes and related liabilities
(including penalties, interest, additions to tax and expenses, and any Taxes imposed by any
jurisdiction on amounts payable to Administrative Agent under this Section 3.3) which are
imposed on or with respect to principal, interest or fees payable to such Lender hereunder as a
result of the failure by such Lender to deliver, or as a result of the inaccuracy, inadequacy or
deficiency of, any documentation required to be delivered by such Lender to the Administrative
Agent as set forth above. Such indemnification shall be made within thirty (30) days from the date
Administrative Agent makes written demand therefor.
3.4 Funding Indemnification. If any payment of a Libor Loan occurs on a date that is not
the last day of the applicable Libor Interest Period, whether because of acceleration, prepayment
or otherwise, or a Libor Loan is not made on the date specified by the Borrower, the Borrower shall
indemnify the Lender for any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain the
Libor Loan.
3.5 Lender Statements. Each affected Lender shall deliver a written statement to the
Borrower and Administrative Agent as to the amount due, if any, under Sections 3.1,
3.3 or 3.4 hereof. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of demonstrable error. Unless otherwise provided herein,
the amount specified in the written statement shall be payable on demand after receipt by the
Borrower of the written statement.
3.6 Basis for Determining Interest Rate Inadequate or Unfair. If with respect to any
Libor Interest Period: (a) Administrative Agent reasonably determines (or Required Lenders advise
Administrative Agent in writing), which determination shall be binding and conclusive on the
Borrower, that by reason of circumstances affecting the interlender Libor Base market adequate and
reasonable means do not exist for ascertaining the applicable Libor Base Rate; or (b)
Administrative Agent reasonably determines (or Required Lenders advise
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Administrative Agent in
writing) that the Libor Base Rate will not adequately
and fairly reflect the cost to Lenders of maintaining or funding the Loan or any portion
thereof for such Libor Interest Period, or that the making or funding of Libor Loans has become
impracticable as a result of an event occurring after the date of this Agreement which in the
opinion of Administrative Agent (or Required Lenders) adversely affects such Loans, then, in either
case, so long as such circumstances shall continue: (i) Lenders shall not be under any obligation
to make, convert into or continue Libor Loans and (ii) on the last day of the then current Libor
Interest Period for each Libor Loan, each such Loan shall, unless then repaid in full,
automatically convert to a Base Rate Loan. Each affected Lender shall promptly give the Borrower
written notice of any determination made by it under this Section accompanied by a statement
setting forth in reasonable detail the basis of such determination.
3.7 Illegality. If any applicable law or regulation, or any interpretation thereof by any
court or any governmental or other regulatory body charged with the administration thereof, should
make it unlawful for any Lender or its lending office to make, maintain or fund any Libor Loan,
then the obligation of such Lender to make, convert into or continue such Libor Loan shall, upon
the effectiveness of such event, be suspended for the duration of such unlawfulness, and on the
last day of the current Libor Interest Period for such Libor Loan (or, in any event, if
Administrative Agent or Required Lenders so request, on such earlier date as may be required by the
relevant law, regulation or interpretation), the Libor Loans shall, unless then repaid in full,
automatically convert to Base Rate Loans.
3.8 Right of Lenders to Fund through Other Offices. Each Lender may, if it so
elects, fulfill its commitment as to any Libor Loan by causing a foreign branch or Affiliate of
such Lender to make such Loan; provided that such election shall not increase the costs to
Borrower hereunder and that in such event for the purposes of this Agreement such Loan shall be
deemed to have been made by such Lender and the obligation of Borrower to repay such Loan shall
nevertheless be to such Lender and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or Affiliate.
3.9 Discretion of Lenders as to Manner of Funding. Notwithstanding any provision of
this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of
all or any part of its Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each Libor Loan during each Libor Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such Libor Interest Period and
bearing an interest rate equal to the Libor Rate for such Libor Interest Period.
4. ELIGIBILITY REQUIREMENTS; CASH COLLATERAL ACCOUNT; ATTORNEY-IN-FACT.
4.1 Account Warranties; Schedule of Accounts. (a) The amounts shown on the Schedule of Accounts and all invoices and statements delivered
to the Administrative Agent with respect to any Account, are and will be actually and absolutely
owing to the Borrower and are and will not be contingent for any reason. There are no set-offs,
counterclaims or disputes existing or asserted with respect to any Accounts included on any
Schedule of Accounts and the
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Borrower has not made any agreement with any Account Debtor for any
deduction from such Account, except for discounts or allowances allowed by the Borrower in the
ordinary course of business for prompt payment, all of which discounts or allowances are reflected
in the calculation of the invoice related to such Account. There are no reserves against the
collection of Accounts not set forth in the applicable Schedule of Accounts or the financial
statements delivered pursuant to Section 8.1 hereof and there are no facts, events or
occurrences which in any way impair the validity or enforcement of any of the Accounts or tend to
reduce the amount payable thereunder from the amount of the invoice shown on any Schedule of
Accounts, and on all contracts, invoices and statements delivered to the Administrative Agent with
respect thereto.
(b) Verification of Accounts. The Administrative Agent and Lenders shall have the
right, at any time or times hereafter, in the name of the Administrative Agent or a nominee of the
Administrative Agent, to verify the validity, amount or any other matter relating to any Accounts
of the Borrower, by mail, telephone, facsimile or otherwise.
4.2 Account Covenants. The Borrower shall promptly upon its learning thereof: (a) inform
the Administrative Agent in writing of any delay in the Borrower’s performance of any of its
obligations to any Account Debtor or of any assertion of any claims, offsets or counterclaims by
any Account Debtor of the Borrower other than made in the ordinary course of business, either of
which could have a Material Adverse Effect; (b) furnish to and inform the Administrative Agent of
all adverse information relating to the financial condition of any Account Debtor of the Borrower
which could have a Material Adverse Effect; and (c) notify the Administrative Agent in writing if
any of Borrower’s then existing Accounts scheduled to the Administrative Agent with respect to
which the Administrative Agent for the Lenders has made an advance are no longer Eligible Accounts.
4.3 Collection of Accounts and Payments(a) A blocked account (the “Commercial Blocked
Account”) shall have been established in the Borrower’s name with Administrative Agent,
pursuant to which Administrative Agent shall have control over the Commercial Blocked Account in
accordance with the Blocked Account Agreement, pursuant to which the Borrower shall direct all
Account Debtors (other than Account Debtors obligated on Government Accounts) to directly remit and
to which the Borrower shall remit all payments on Accounts of the Borrower (other than Government
Accounts) and in which the Borrower will immediately deposit all payments made for Inventory of the
Borrower, if any, or services provided by the Borrower and all other proceeds of the Collateral in
the identical form in which such payment was made, whether in cash or by check. In addition, on or
prior to the Closing Date, a blocked account (the “Government Blocked Account”) shall have
been established in the Borrower’s name with Administrative Agent, pursuant to which the Borrower
shall have control over the Government
Blocked Account in accordance with the Blocked Account Agreement, pursuant to which the
Borrower shall direct all Account Debtors obligated on Government Accounts to directly remit and to
which the Borrower shall remit all payments on Government Accounts of the Borrower and all other
proceeds of the foregoing Collateral in the identical form in which such payment was made, whether
in cash or by check. All amounts deposited in the Commercial Blocked Account and the Government
Blocked Account will be automatically transferred, on a daily basis, to a demand deposit account
(the “Demand Deposit Account”). The Demand Deposit Account will be established in the
Borrower’s name with the Administrative Agent. Notwithstanding the foregoing, the Borrower hereby
irrevocably authorizes the
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Administrative Agent upon the occurrence of a Default or an Event of
Default to cause all amounts deposited in the Commercial Blocked Account to be automatically
transferred, on a daily basis, to a concentration account at the Administrative Agent’s offices in
Chicago, Illinois (the “Cash Collateral Account”) during the period of such Default or
Event of Default. In addition, upon the occurrence of a Default or an Event of Default the
Borrower shall transfer, on a daily basis, all amounts in the Government Blocked Account to the
Cash Collateral Account during the period of such Default or Event of Default. The Borrower hereby
agrees that all payments made to the Commercial Blocked Account, received in the Cash Collateral
Account, or otherwise received by the Administrative Agent, whether in respect of the Accounts of
the Borrower or as proceeds of other Collateral or otherwise, will be the sole and exclusive
property of the Administrative Agent for the ratable benefit of the Lenders, the Issuing Lender and
Administrative Agent (to the extent of the Liabilities). The Borrower further agrees that all
payments made to the Commercial Blocked Account and the Government Blocked Account and transferred
to the Cash Collateral Account will be applied on account of the Liabilities of the Borrower as
follows: (a) each day’s available balance in respect of checks and other instruments received by
the Administrative Agent in the Cash Collateral Account or otherwise at its offices in Chicago,
Illinois will be credited by the Administrative Agent (conditional upon final collection) to the
Borrower’s Loan Account and shall reduce outstandings on the Revolving Loans two (2) Business Days’
after receipt by the Administrative Agent, and (b) all cash payments received by the Administrative
Agent in the Cash Collateral Account or otherwise at its offices in Chicago, Illinois, including,
without limitation, payments made by wire transfer of immediately available funds received by the
Administrative Agent, will be credited by the Administrative Agent to the Borrower’s Loan Account
on the receipt of immediately available funds by the Administrative Agent. If during the period of
such Default or Event of Default, the Borrower (or any director, officer, employee, affiliate, or
agent thereof) shall receive any payment from any Account Debtor (other than an Account Debtor
obligated on a Government Account), the Borrower hereby agrees that all such payments shall be the
sole and exclusive property of the Administrative Agent (to the extent of the Liabilities), and the
Borrower shall hold such payments in trust as the Administrative Agent’s trustee and immediately
deliver said payments to the Cash Collateral Account established pursuant to this Section and shall
be applied in accordance with this Section. The Borrower agrees to pay to the Administrative Agent
any and all reasonable fees, costs and expenses which the Administrative Agent incurs in connection
with opening and maintaining the Commercial Blocked Account, the Government Blocked Account and the
Cash Collateral Account for the Borrower and depositing for collection by the Administrative Agent
any check or item of payment received and/or delivered to the Administrative Agent on account of
the Borrower’s Liabilities. The Borrower shall cooperate with the Administrative Agent in the
identification and reconciliation on a daily basis of all amounts received in the Commercial
Blocked Account and
the Government Blocked Account. If more than five percent (5%) of the amount of payments on
the Accounts since the date of the most recent Revolving Loan is not identified or reconciled to
the satisfaction of the Administrative Agent within five (5) Business Days of receipt, the
Administrative Agent for the Lenders shall not be obligated to make further Revolving Loans until
such amount is identified or is reconciled to the sole and absolute satisfaction of the
Administrative Agent. The Administrative Agent may utilize its own staff or, if it deems
necessary, engage an outside auditor, in either case at the Borrower’s expense, to make such
examination and report as may be necessary to identify and reconcile such amount.
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4.4 Appointment of the Administrative Agent as the Borrower’s Attorney-in-Fact. The
Borrower hereby irrevocably designates, makes, constitutes and appoints the Administrative Agent
(and all Persons designated by the Administrative Agent in writing to the Borrower) as the
Borrower’s true and lawful attorney-in-fact, and authorizes the Administrative Agent, in the
Borrower’s or the Administrative Agent’s name, after an Event of Default has occurred and is
continuing to do the following: (a) at any time, (i) endorse the Borrower’s name upon any items of
payment or proceeds thereof and deposit the same in the Administrative Agent’s account on account
of the Borrower’s Liabilities, (ii) endorse the Borrower’s name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Account of the Borrower or
any goods pertaining thereto to collect the proceeds thereof; (iii) sign the Borrower’s name on any
verification of Accounts of the Borrower and notices thereof to Account Debtors (other than Account
Debtors obligated on Government Accounts to the extent that it would otherwise violate applicable
Law to do so); (iv) take control in any manner of any item of payment on or proceeds of any Account
of the Borrower and apply such item of payment or proceeds to the Liabilities, and (i) demand
payment of any Accounts of the Borrower; (ii) enforce payment of Accounts of the Borrower by legal
proceedings or otherwise; (iii) exercise all of the Borrower’s rights and remedies with respect to
proceedings brought to collect any Account; (iv) sell or assign any Account of the Borrower upon
such terms, for such amount and at such time or times as the Administrative Agent deems advisable,
(v) settle, adjust, compromise, extend or renew any Account of the Borrower; (vi) discharge and
release any Account of the Borrower; (vii) prepare, file and sign the Borrower’s name on any proof
of claim in bankruptcy or other similar document against any Account Debtor (other than Account
Debtors obligated on Government Accounts to the extent that it would otherwise violate applicable
Law to do so); (viii) have access to any lock box or postal box into which the Borrower’s mail is
deposited, and open and process all payments on Accounts addressed to the Borrower and deposited
therein, and (ix) do all other acts and things which are necessary, in the Administrative Agent’s
reasonable discretion, to fulfill the Borrower’s obligations under this Agreement. The Borrower
hereby ratifies and approves all acts under such power of attorney and neither Administrative Agent
nor any other Person acting as Borrower’s attorney hereunder will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law made in good faith except as
result of its gross negligence, willful misconduct or illegal activity. The appointment of
Administrative Agent (and any of the Administrative Agent’s officers, employees or agents
designated by the Administrative Agent) as Borrower’s attorney, and each and every one of
Administrative Agent’s rights and powers, being coupled with an interest, are irrevocable until all
of the Liabilities have been fully repaid and this Agreement shall have expired or been terminated
in accordance with the terms hereunder. Notwithstanding anything to
the contrary contained in this Section 4.4, any reference to “any Account of the
Borrower” contained in this Section shall be deemed to exclude any Government Accounts to the
extent that the failure to do so would violate applicable Law. Without restricting the generality
of the foregoing, after an Event of Default has occurred and is continuing, Borrower hereby
appoints and constitutes the Administrative Agent its lawful attorney-in-fact with full power of
substitution in the Property to use unadvanced funds remaining under the Revolving Credit Note or
which may be reserved, escrowed or set aside for any purposes hereunder at any time, or to advance
funds in excess of the face amount of the Revolving Credit Note, to pay, settle or compromise all
existing bills and claims, which may be liens or security interests, or to avoid such bills and
claims becoming liens against the Collateral; to execute all applications and
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certificates in the
name of Borrower prosecute and defend all actions or proceedings in connection with the Collateral
(including any Leases pertaining to Property); and to do any and every act which the Borrower might
do in its own behalf; it being understood and agreed that this power of attorney shall be a power
coupled with an interest and cannot be revoked.
4.5 Notice to Account Debtors. Following the occurrence of a Default or Event of Default,
the Administrative Agent may, in its sole discretion, at any time or times, without prior notice to
the Borrower, notify any or all Account Debtors of the Borrower (other than Account Debtors
obligated on Government Accounts to the extent that it would otherwise violate applicable Law to do
so) that the Accounts of the Borrower have been assigned to the Administrative Agent, that the
Administrative Agent has a Lien therein, and that all payments upon such Accounts be made directly
to the Cash Collateral Account or otherwise directly to the Administrative Agent. Notwithstanding
anything to the contrary contained in this Section 4.5, any reference to “Accounts of the
Borrower” contained in this Section shall be deemed to exclude any Government Accounts to the
extent that the failure to do so would violate applicable Law.
4.6 Equipment Warranties. The Borrower represents and warrants that (a) the Borrower’s
Equipment is not subject to any Lien whatsoever except for the Permitted Liens; and (b) each item
of Equipment that is material to the operations of Borrower is in working condition and repair,
ordinary wear and tear excepted, and is currently used or usable in Borrower’s business.
4.7 Equipment Records. The Borrower shall at all times hereafter keep correct and
accurate records itemizing and describing the kind, type, age and condition of its Equipment, the
Borrower’s cost therefor and accumulated depreciation thereon, and retirements, sales, or other
dispositions thereof, all of which records shall be available during Borrower’s usual business
hours at the request of the Administrative Agent.
5. CONDITIONS OF LOANS.
5.1 Conditions to all Loans. Notwithstanding any other term or provision contained in this Agreement, the making of any
Loan (and, for clarification, issuance of any Letter of Credit) provided for in this Agreement
shall be conditioned upon the following:
(1) The Borrower’s Request. The Administrative Agent shall have received, (i) with
respect to a request by Borrower for a Base Rate Loan, by no later than 11:00 a.m. (Chicago time)
on the day on which such Loan is requested to be made hereunder, a telephonic request from any
Person who the Administrative Agent reasonably believes is authorized by Borrower to make a
borrowing request on behalf of Borrower, for a Loan in a specific amount, and (ii) with respect to
a request by Borrower for a Libor Loan, by no later than 1:00 p.m. (Chicago time) two (2) Business
Days prior to the day on which a Libor Loan is requested, the Borrowing Notice required under
Section 2.12 hereof. In addition, each request for a Loan shall be accompanied or preceded by all
other documents not previously delivered as required to be delivered
to the Administrative Agent
under Section 5.2 hereof, and a request for any Revolving Loan shall be accompanied or preceded by
a borrowing base certificate from the Borrower, signed by a Duly Authorized Officer, in form and
substance satisfactory to the
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Administrative Agent. The Administrative Agent shall have no
liability to the Borrower or any other Person as a result of acting on any telephonic request that
the Administrative Agent believes in good faith to have been made by any Person authorized by
Borrower to make a borrowing request on behalf of Borrower. Promptly upon receipt of such
borrowing request, Administrative Agent will advise each Lender thereof. Not later than 1:00 p.m.
(Chicago time), on the date of a proposed borrowing of a Loan, each Lender shall provide
Administrative Agent at the office specified by Administrative Agent with immediately available
funds covering such Lender’s Pro Rata Share of such borrowing and, so long as Administrative Agent
has not received written notice that the conditions precedent set forth in Section 5 with respect
to such borrowing have not been satisfied, Administrative Agent shall pay over the funds received
by Administrative Agent to Borrower on the requested borrowing date.
(2) Financial Condition. No Material Adverse Change (or material adverse change, as
determined by the Administrative Agent in its reasonable good faith discretion, in the prospects of
Borrower) shall have occurred at any time or times subsequent to the most recent request for any
Loan under this Agreement.
(3) No Default. Neither a Default nor an Event of Default shall have occurred and be
continuing.
(4) Other Requirements. The Administrative Agent shall have received, in form and
substance reasonably satisfactory to the Administrative Agent, all certificates, orders,
authorities, consents, affidavits, schedules, instruments, agreements, financing statements, and
other documents which are provided for hereunder or under or in connection with any Financing
Agreement, or which the Administrative Agent may at any time reasonably request.
(5) Representations and Warranties. All of the representations and warranties contained
in the Financing Agreements to which the Borrower is a party and in this Agreement (including,
without limitation, those set forth in Section 7 hereof), shall be true and correct in all material
respects (without duplication of materiality) as of the date the request
for the Loan is made, as though made on and as of such date (unless expressly stated to
relate to an earlier date, in which case such representations and warranties shall be true and
correct as of such earlier date).
(6) Letter of Credit Prohibition. As to requested Letters of Credit, no order, judgment
or decree of any governmental authority will, or will purport to, enjoin or restrain any Issuing
Lender from issuing the requested Letter of Credit nor will any law or governmental rule,
regulation, policy, guideline or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over any Issuing Lender prohibit or request that such
Issuing Lender refrain from the issuance of Letters of Credit in particular or impose upon such
Issuing Lender with respect to any Letter of Credit any restrictive or reserve requirement (for
which such Issuing Lender is not otherwise compensated) or any uncovered loss, cost or expense
which was not in effect as of the Closing Date.
5.2 Initial Loans. Any Lender’s obligation to make the initial Revolving Loans and issue
any Letter of Credit hereunder is, in addition to the conditions precedent
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specified in Section
5.1 hereof, subject to the satisfaction of each of the following conditions precedent:
(1) Fees and Expenses. The Borrower shall have paid all fees owed to the Administrative
Agent and Lenders and reimbursed Administrative Agent and the Lenders for all costs, disbursements,
fees and expenses due and payable hereunder on or before the Closing Date, including, without
limitation, all fees and costs identified in Section 12.2(a) hereof.
(2) Documents. The Administrative Agent shall have received all of the following, each
duly executed and delivered and dated the Closing Date, or such earlier date as shall be
satisfactory to the Administrative Agent, each in form and substance reasonably satisfactory to the
Administrative Agent in its sole determination:
(1) Financing Agreements. This Agreement, the Revolving Credit Notes, the Guaranty, each
Pledge Agreement, the Intercreditor Agreement, the Subordination Agreements (if any), the Blocked
Account Agreement, the Master Letter of Credit Agreement and such other Financing Agreements as the
Administrative Agent may require (provided each Lender shall also receive a fully-executed original
of this Agreement and such Lender’s respective Revolving Credit Note).
(2) Resolutions; Incumbency and Signatures. Copies of resolutions of the Board of
Directors of the Borrower, and, if required, the shareholder of the Borrower, authorizing or
ratifying the execution, delivery and performance by the Borrower of this Agreement, the Financing
Agreements to which the Borrower is a party and any other document provided for herein or therein
to be executed by Borrower, certified by a Duly Authorized Officer. A certificate of a Duly
Authorized Officer certifying the names of the officers of the Borrower authorized to make a
borrowing request and sign this Agreement and the Financing Agreements to which the Borrower is a
party, together with a sample of the true signature of each such officer; the Lender may
conclusively rely on each such certificate until
formally advised by a like certificate of any changes therein. A copy of resolutions of the
Board of Directors of Parent authorizing or ratifying the execution, delivery and performance by
Parent of the Guaranty and its Pledge Agreement. A copy of resolutions of the Board of Directors
of each Pledgor authorizing or ratifying the execution, delivery and performance by such Pledgor of
its respective Pledge Agreement.
(3) Consents. Certified copies of all documents evidencing any necessary consents and
governmental approvals, if any, with respect to this Agreement, the Financing Agreements, and any
other documents provided for herein or therein to be executed by Borrower.
(4) Opinion of Counsel. An opinion of Harwell Howard Hyne Gabbert & Manner, the legal
counsel to the Borrower, Pledgors and Parent, in form and substance reasonably satisfactory to
Administrative Agent.
(5) Certain Restricted Agreements Correct and complete copies of the fully executed
Commercial Leases, Management Agreements, the nursing home
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licenses of each Borrower, and any other
Restricted Agreement, together with all applicable amendments thereto; provided, the Administrative
Agent acknowledges that these items were previously furnished to it.
(6) [Intentionally Omitted.]
(7) Governing Documents and Good Standings. Administrative Agent shall have received (i)
copies, certified as correct and complete by the applicable state of organization of each Borrower
and Guarantor, of the certificate of incorporation, certificate of formation or certificate of
limited liability partnership, as applicable, of each Borrower and Guarantor, with any amendments
to any of the foregoing, (ii) copies, certified as correct and complete by an authorized officer,
member or partner of each Borrower and Guarantor, of all other documents necessary for performance
of the obligations of Borrower and Guarantor under this Agreement and the other Financing
Agreements, and (iii) certificates of good standing for each Borrower and Guarantor issued by the
state of organization of each Borrower and Guarantor and by each state in which each Borrower and
Guarantor is doing and currently intends to do business for which qualification is required (such
certificates set forth in (i) through (iii), the “Certificates”); provided, the
Administrative Agent acknowledges that these items were previously furnished to it.
(8) Term Loan Agreement and Affiliate Term Loan Financing Agreements. Fully-executed
copies of the Term Loan Agreement and the Affiliate Term Loan Financing Agreements.
(9) UCC Financing Statements; Termination Statements; UCC Searches. UCC Financing
Statements or UCC Amendment Statements, as requested by the Administrative Agent, naming the
Borrower as debtor and the Administrative Agent as secured party with respect to the Collateral,
together with such UCC termination statements necessary to release all Liens (other than Permitted
Liens) and other rights in favor of any Person in any of the Collateral except the Administrative
Agent (for the ratable benefit of the Lenders and the
Administrative Agent), and other documents as the Administrative Agent deems necessary or
appropriate, shall have been filed in all jurisdictions that the Administrative Agent deems
necessary or advisable. UCC Financing Statements or UCC Amendment Statements, as requested by the
Administrative Agent, naming the respective Pledgor, as applicable, as debtor and the
Administrative Agent as secured party with respect to the Collateral (as defined in the applicable
Pledge Agreement), and other documents relating thereto, if any, as the Administrative Agent deems
necessary or appropriate, shall have been filed in all jurisdictions that the Administrative Agent
deems necessary or advisable. Bring down UCC tax, lien, pending suit and judgment searches for the
Borrower, the Pledgors and the Guarantor (including, for each, any assumed name or trade name) and
each dated a date reasonably near to the Closing Date in all jurisdictions deemed necessary by the
Administrative Agent, the results of which shall be satisfactory to the Administrative Agent in its
sole and absolute determination.
(10) Insurance Certificates. Certificates from the Borrower’s insurance carriers
evidencing that all required insurance coverage is in effect, each designating the Administrative
Agent as an additional insured thereunder; provided, the Administrative Agent acknowledges that
these items were previously furnished to it.
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(11) Pay Off Letter. Pay Off Letter from Capmark, in form and substance reasonably
satisfactory to Administrative Agent.
(12) Capmark Terminations. Written evidence, satisfactory to the Administrative Agent, of
the terminations of the Capmark Intercreditor Agreement and the Capmark Blocked Account Agreement
(each as defined in the Original Loan Agreement), including signed copies of (i) Termination of
Intercreditor and Blocked Account Agreements (Capmark Facilities), and (ii) Termination of
Intercreditor Agreement (Florida Facilities).
(13) Omega Debt Documents. Correct and complete copies of the fully-executed Omega Debt
Documents (including all exhibits, schedules and appendices thereto); provided, the Administrative
Agent acknowledges that these items were previously furnished to it.
(14) Operating Agreement Amendments. Correct and complete copies of duly executed
Amendment to Limited Liability Company Agreements dated February 2011 for each of the Borrowers
(including Senior Care Southern Pines, LLC, Senior Care Cedar Hills, LLC, Senior Care Golfcrest,
LLC, Senior Care Florida Leasing, LLC, and Senior Care Golfview, LLC).
(15) First Amendment to Intercreditor Agreement; etc. Correct and complete copy
of a duly executed First Amendment to Subordination and Intercreditor Agreement dated of even date
herewith, by and among the Borrower, Administrative Agent and Sterling Acquisition Corp., a
Kentucky corporation; and signed copy of that certain Termination of Intercreditor Agreement
(Florida Facilities).
(16) Other. Such other documents, certificates and instruments as the
Administrative Agent may reasonably request.
(3) Field Examinations. At the Administrative Agent’s sole option, the Administrative
Agent shall have completed its field examinations of the Borrower’s books and records, assets, and
operations which examinations will be satisfactory to the Administrative Agent in its sole and
absolute discretion; provided, the Administrative Agent acknowledges that these items were
previously satisfied.
(4) Certificate. The Administrative Agent shall have received a certificate signed on
behalf of the Borrower by a Duly Authorized Officer and dated the Closing Date certifying
satisfaction of the conditions specified in Sections 5.1 and 5.2 hereof.
(5) Closing Fee. The Borrower shall have paid the Administrative Agent the Closing
Fee.
(6) Omega Letter of Credit. The Omega Letter of Credit shall have been issued to Omega on
terms and conditions satisfactory to the Administrative Agent in its sole and absolute discretion;
provided, the Administrative Agent acknowledges that this item was previously satisfied.
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(7) Bank Meetings. Borrower’s senior management shall have made themselves and
Borrower’s facilities reasonably available (through scheduled bank meetings, company visits, or
other venues) to Administrative Agent and Lenders and their representatives.
(8) Term Loan Agreement. Satisfaction of each of the conditions precedent contained in
the Term Loan Agreement, as determined by the Administrative Agent.
6. COLLATERAL.
6.1 Security Interest. Subject only to the Omega Security Interests (the priorities with
respect to each of which shall be as set forth in the Intercreditor Agreement), as security for the
prompt and complete payment and performance of all of the Liabilities and the Affiliate Term Loan
Liabilities when due or declared due, each Borrower hereby grants, pledges, conveys and transfers
to the Administrative Agent (for the ratable benefit of the Lenders, Issuing Lenders and
Administrative Agent) a continuing security interest in and to all of such Borrower’s right, title
and interest in and to the following property and interests in property, whether now owned or
existing or hereafter owned, arising or acquired, and wheresoever located (collectively, the
“Collateral”): (a) all of Borrower’s Accounts, including, without limitation,
Health-Care-Insurance Receivables (as defined in the Code), contract rights, General Intangibles,
tax refunds, chattel paper, instruments, notes, letters of credit, bills of lading, warehouse
receipts, shipping documents, documents and documents of title, and all of the Borrower’s Tangible
Chattel Paper, Documents, Electronic Chattel Paper, Letter-of-Credit Rights, Software, Supporting
Obligations and Payment Intangibles (each as defined in the Code); (b) all of Borrower’s Deposit
Accounts and other deposit accounts (general or special) with, and credits and other claims
against, the Lender, or any other financial institution with which the Borrower maintains deposits;
(c) all of the Borrower’s monies, and any and all other property and interests in property of the
Borrower, including, without limitation, Investment Property, Instruments, Security Entitlements,
Uncertificated Securities, Certificated Securities, Financial Assets, Chattel Paper and Documents
(each as defined in the Code), now or hereafter coming into the actual possession, custody or
control of Administrative Agent or any Lender or any agent or affiliate thereof in any way or for
any purpose (whether for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), and, independent of and in addition to the Administrative Agent’s and each Lender’s
rights of setoff (which the Borrower acknowledges), the balance of any account or any amount that
may be owing from time to time by Administrative Agent or any Lender to the Borrower; (d) all
insurance proceeds of or relating to any of the foregoing property and interests in property, and
all insurance proceeds relating to any key man life insurance policy covering the life of any
officer or employee of Borrower; (e) all proceeds and profits derived from the operation of the
Borrower’s business (including, without limitation, the proceeds of Government Accounts); (f) all
of the Borrower’s books and records, computer printouts, manuals and correspondence relating to any
of the foregoing and to the Borrower’s business; and (g) all accessions, improvements and additions
to, substitutions for, and replacements, products, profits and proceeds of any of the foregoing.
The Administrative Agent acknowledges that it will not have control over or right of setoff
against the Deposit Accounts into which any Government Accounts of Borrower are
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directly paid to
the extent such control or right of setoff is or would be prohibited by applicable Healthcare Laws,
provided, however, that as soon as any such prohibition or restriction lapses or is
legally removed the Borrower shall immediately take such all actions as are reasonably necessary to
provide the Administrative Agent with control over and/or the right of setoff against such Deposit
Accounts (at Borrower’s cost).
6.2 Preservation of Collateral and Perfection of Security Interests Therein. The Borrower
agrees that it shall execute and deliver to Administrative Agent, concurrently with the execution
of this Agreement, and at any time or times hereafter at the reasonable request of Administrative
Agent instruments and documents as Administrative Agent may reasonably request, in a form
satisfactory to Administrative Agent, to perfect and keep perfected the Liens in the Collateral or
to otherwise protect and preserve the Collateral and Administrative Agent’s Liens therein
(including, without limitation, if and as applicable, financing statements, and Borrower shall pay
the cost of filing or recording the same in all public offices deemed necessary by Administrative
Agent). If the Borrower fails to do so, Administrative Agent is authorized to file such financing
statements. The Borrower further agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement is sufficient as a financing statement.
6.3 Loss of Value of Collateral. The Borrower agrees to immediately notify the
Administrative Agent of any material loss or depreciation in the value of the Collateral or any
portion thereof.
6.4 Right to File Financing Statements. Notwithstanding anything to the contrary
contained herein, the Administrative Agent may at any time and from time to time file financing
statements, continuation statements and amendments thereto that describe the Collateral in
particular and which contain any other information required by the Code for the sufficiency or
filing office acceptance of any financing statement, continuation statement or amendment, including
whether the Borrower is an organization, the type of organization and any organization
identification number issued to the Borrower. The Borrower agrees to furnish any such information
to the Administrative Agent promptly upon request. Any such financing statements, continuation
statements or amendments may be signed (if at any time required) by the Administrative Agent on
behalf of the Borrower and may be filed at any time with or without signature and in any
jurisdiction as reasonably determined by the Administrative Agent. The Administrative Agent agrees
to use its reasonable efforts to notify the Borrower of the Administrative Agent taking any such
action provided in this Section; provided, however, the Borrower agrees that the
failure of the Administrative Agent to so notify the Borrower for any reason shall not in any way
invalidate the actions taken by the Administrative Agent pursuant to this Section.
6.5 Third Party Agreements. The Borrower shall at any time and from time to time take such steps as the Administrative
Agent may reasonably require for the Administrative Agent: (i) to obtain an acknowledgment, in form
and substance reasonably satisfactory to the Administrative Agent, of any third party having
possession of any of the Collateral that the third party holds for the benefit of the
Administrative Agent, (ii) to obtain “control” (as defined in the Code) of any Investment Property,
Deposit Accounts, Letter of Credit Rights or Electronic Chattel Paper (each as defined in the
Code), with any agreements establishing control to be in
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form and substance reasonably satisfactory
to the Administrative Agent, and (iii) otherwise to ensure the continued perfection and priority of
the Administrative Agent’s security interest in any of the Collateral and of the preservation of
its rights therein.
6.6 All Loans One Obligation. All Liabilities of the Borrowers under this Agreement and
each of the Financing Agreements, and all of the Affiliate Term Loan Liabilities under the Term
Loan Agreement and each of the Affiliate Term Loan Financing Agreements, are cross-collateralized
and cross-defaulted. Payment of all sums and indebtedness to be paid by Borrower to Lenders,
Issuing Lender and Administrative Agent under this Agreement shall be secured by, among other
things, the Financing Agreements. All loans or advances made to Borrower under this Agreement
shall constitute one Loan, and all of Borrower’s Liabilities and other liabilities of Borrower to
Lenders, Issuing Lender and Administrative Agent shall constitute one general obligation secured by
Administrative Agent’s Lien on all of the Collateral of Borrower and by all other liens heretofore,
now, or at any time or times granted to Lender to secure the Loans (for the ratable benefit of the
Lenders and the Administrative Agent). Borrower agrees that all of the rights of Administrative
Agent, Issuing Lender and Lenders set forth in this Agreement shall apply to any amendment,
restatement or modification of, or supplement to, this Agreement, any supplements or exhibits
hereto and the Financing Agreements, unless otherwise agreed in writing by the Administrative Agent
or Required Lenders.
6.7 Commercial Tort Claim. If the Borrower shall at any time hereafter acquire a
Commercial Tort Claim (as defined in the Code), the Borrower shall promptly notify the
Administrative Agent of same in a writing signed by the Borrower (describing such claim in
reasonable detail) and grant to the Administrative Agent (for the ratable benefit of the Lenders
and the Administrative Agent) in such writing (at the sole cost and expense of the Borrower) a
continuing, first-priority security interest therein and in the proceeds thereof, with such writing
to be in form and substance satisfactory to the Administrative Agent in its sole and absolute
determination.
6.8 Cash Collateral. If any Letter of Credit is outstanding at any time after or
during (i) the occurrence and during the continuation of an Event of Default, (ii) demand by
Administrative Agent for payment of the Liabilities as provided in Section 11.2, (iii)
this Agreement has terminated for any reason, (iv) the amount of the aggregate outstanding
principal balance of the Revolving Loans plus Letter of Credit Obligations exceeds the Borrowing
Base or (v) prepayment of the Liabilities under Section 2.10 and termination of this
Agreement (but with any Letter of Credit remaining outstanding), each Issuing Lender may (in its
sole and absolute discretion) request of Borrower, and Borrower shall promptly deliver to
Administrative Agent, for the benefit of such Issuing Lender, cash collateral for any Letter
of Credit in an amount equal to the undrawn face amount of such Letters of Credit outstanding at
such time, except, in the case of clause (iv), such cash collateral shall be in an amount equal to
the excess (x) of the sum of (A) the aggregate principal balance of the Revolving Loans plus (B)
the Letter of Credit Obligations over (y) the Borrowing Base. If Borrower fails to deliver such
cash collateral to Administrative Agent promptly upon such Issuing Lender’s request for such cash
collateral, Administrative Agent may, for the benefit of such Issuing Lender, without in any way
limiting Administrative Agent’s rights or remedies arising from such failure to deliver cash,
retain, as cash collateral, cash proceeds of the Collateral in an amount equal to such cash
collateral not delivered by Borrower. Each Issuing Lender or Administrative Agent
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may at any time
apply any or all of such cash and cash collateral to the payment of any or all of the Liabilities
relating to the Revolving Loans, including, without limitation, to the payment of any or all of
Borrower’s reimbursement obligations with respect to any Letter of Credit or any other Letter of
Credit Obligations. Pending such application, Administrative Agent may (but is not obligated to)
(a) invest the same in a savings account, under which deposits are available for immediate
withdrawal, with Administrative Agent or such other bank as Administrative Agent may, in its sole
and absolute discretion select or (b) hold the same as a credit balance in an account with
Administrative Agent in Borrower’s name. Interest payable on any such savings account described
in the foregoing sentence will be collected by Administrative Agent and will be paid to Borrower
as it is received by Administrative Agent less any fees or other amounts owing by Borrower to
Issuing Lender or Administrative Agent with respect to any Letter of Credit and less any amounts
necessary to pay any of the Liabilities which may be due and payable at such time. Administrative
Agent has no obligation to pay interest on any credit balances in any account opened for Borrower
as a result of this Section 6.8. If Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of any of the events described in clause (i) or
clause (iv) above in this Section 6.8, such amount (or the appropriate portion thereof) to
the extent not applied as aforesaid shall upon Borrower’s written request be released and returned
to Borrower within five (5) Business Days after Administrative Agent’s receipt of such request as
long as the event causing such cash collateral to be provided has been cured, eliminated or waived
as determined by Administrative Agent.
7. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to Administrative Agent and Lenders that as of the date
of this Agreement, and continuing as long as any Liabilities remain outstanding, and (even if there
shall be no such Liabilities outstanding) as long as this Agreement remains in effect:
7.1 Existence. The Borrower is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of the state of its incorporation or
formation. The Borrower is duly (a) qualified and in good standing as a foreign corporation or
foreign limited liability company and (b) authorized to do business in each jurisdiction where such
qualification is required because of the nature of its activities or properties. The Borrower has
all requisite power to carry on its business as now being conducted and as proposed to be
conducted. Parent legally and beneficially owns or controls, either directly or indirectly through
its subsidiaries, all of the issued and outstanding capital Stock of the Borrower.
7.2 Corporate Authority. The execution and delivery by the Borrower of this Agreement and
all of the other Financing Agreements to which Borrower is a party and the performance of its
obligations hereunder and thereunder: (i) are within its powers; (ii) are duly authorized by the
board of directors, mangers or members of the Borrower, each as applicable, and, if applicable,
Parent; and (iii) are not in contravention of the terms of its operating agreement, bylaws, or of
an indenture, agreement or undertaking to which it is a party or by which it or any of its property
is bound. The execution and delivery by the Borrower of this Agreement and all of the other
Financing Agreements to which it is a party and the performance of its obligations hereunder and
thereunder: (i) do not require any governmental consent, registration or approval; (ii) do not
contravene any contractual or governmental restriction
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binding upon it; and (iii) will not, except
in favor of Administrative Agent, result in the imposition of any Lien upon any property of
Borrower under any existing indenture, mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which it is a party or by which it or any of its property may
be bound or affected.
7.3 Binding Effect. This Agreement and all of the other Financing Agreements to which the
Borrower is a party are the legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the enforcement of
creditor’s rights and remedies generally.
7.4 Financial Data.
(1) All income statements, balance sheets, cash flow statements, statements of operations,
and other financial data which have been or shall hereafter be furnished to the Administrative
Agent and Lenders for the purposes of or in connection with this Agreement do and will present
fairly in all material respects in accordance with GAAP, consistently applied, the financial
condition of the Borrower as of the dates thereof and the results of its operations for the
period(s) covered thereby. The foregoing notwithstanding all unaudited financial statements
furnished or to be furnished to the Administrative Agent and Lenders by or on behalf of Borrower
are not and will not be prepared in accordance with GAAP to the extent that such financial
statements (a) are subject to cost report and other year-end audit adjustments, (b) do not contain
footnotes, (c) were prepared without physical inventories, (d) are not restated for subsequent
events, (e) may not contain a statement of construction in process, and (f) may not fully reflect
the following liabilities: (i) vacation, holiday and similar accruals, (ii) liabilities payable in
connection with workers’ compensation claims, (iii) liabilities payable to any employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) maintained by Borrower or its affiliates
on account of Borrower’s employees, (iv) federal, state and local income or franchise taxes and (v)
bonuses payable to certain employees (collectively, the “GAAP Exceptions”).
(2) Since December 31, 2009, there has been no Material Adverse Change with respect to
Borrower.
7.5 Collateral. Except for the Permitted Liens, all of the Borrower’s assets and property
(including, without limitation, the Collateral) is and will continue to be owned by Borrower
(except for items of Inventory disposed of in the ordinary course of business and sales of
Equipment being replaced in the ordinary course of business, or as a result of casualty loss or
condemnation, with other Equipment with a value equal to or greater than the Equipment being sold),
has been fully paid for and is free and clear of all Liens. No financing statement or other
document similar in effect covering all or any part of the Collateral is on file in any recording
or filing office, other than those identifying the Administrative Agent as the secured creditor or
except for Permitted Liens. The organizational number assigned by the Secretary of State of the
Borrower’s state of incorporation or formation, as applicable, is as set forth on Schedule
1 hereto.
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7.6 Solvency. The Borrower, as determined on a consolidated basis, is Solvent. The
Borrower, as determined on a consolidated basis, will not be rendered insolvent by the execution
and delivery of this Agreement or any Financing Agreement, or by completion of the transactions
contemplated hereunder or thereunder.
7.7 Principal Place of Business; State of Organization. Set forth on Schedule 1
hereto, is, as of the Closing Date, (a) the principal place of business and chief executive office
of Borrower and (b) the Borrower’s state of incorporation or formation. The books and records of
the Borrower are at the principal place of business and chief executive office of the Borrower.
7.8 Other Names. As of the Closing Date the Borrower is not using, and shall not
thereafter use, any name (including, without limitation, any trade name, trade style, assumed name,
division name or any similar name), other than the names set forth on Schedule 7.8 attached
hereto.
7.9 Tax Liabilities. The Borrower has filed all material federal, state and local tax
reports and returns required by any law or regulation to be filed by it, except for extensions duly
obtained, and has either duly paid all taxes, duties and charges indicated due on the basis of such
returns and reports, or made adequate provision for the payment thereof, and the assessment of any
material amount of additional taxes in excess of those paid and reported is not reasonably
expected.
7.10 Loans. Except as otherwise permitted by Section 9.2 hereof, the Borrower is
not obligated on any loans or other Indebtedness.
7.11 Margin Securities. The Borrower does not own any margin securities and none of the
Loans advanced hereunder will be used for the purpose of purchasing or carrying any margin
securities or for the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase any margin securities or for any other purpose not permitted by Regulation U
of the Board of Governors of the Federal Reserve System.
7.12 Organizational Chart. Set forth on Schedule 7.12 hereto is a true and
complete copy of an organizational chart setting forth the Borrower and each of its Subsidiaries
and Affiliates as of the Closing Date.
7.13 Litigation and Proceedings. As of the Closing Date (and on any date that a request
for a Revolving Loan is made), no judgments are outstanding against the Borrower that could be an
Event of Default under clause (e) of Section 11.1, nor is there as of such date pending, or
to the best of Borrower’s knowledge, threatened, except, as of the Closing Date, as shown on
Schedule 7.13 (and on any date that a request for a Revolving Loan is made, as
Administrative Agent has from time to time been provided notice of in accordance with Section
8.1(e), below) any (i) litigation, suit, action or contested claim (other than a personal
injury tort claim), or federal, state or municipal governmental proceeding, by or against the
Borrower or any of its Property which if adversely determined could have a Material Adverse Effect,
or (ii) any tort claim for personal injury, including death, against the Borrower as to which (a)
litigation has been instituted and is pending or (b) or a request for medical records has been made
upon Borrower by an attorney for the claimant on or after January 1, 2009.
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7.14 Other Agreements. The Borrower is not in default under or in breach of any agreement,
contract, lease, or commitment to which it is a party or by which it is bound which could
reasonably be expected to have a Material Adverse Effect. The Borrower does not know of any
dispute regarding any agreement, contract, instrument, lease or commitment to which it is a party
which could reasonably be expected to have a Material Adverse Effect.
7.15 Compliance with Laws and Regulations. The execution and delivery by the Borrower of
this Agreement and all of the other Financing Agreements to which it is a party and the performance
of the Borrower’s obligations hereunder and thereunder are not in contravention of any applicable
law, rule or regulation. The Borrower has obtained all licenses, authorizations, approvals,
licenses and permits necessary in connection with the operation of its business, except to the
extent the failure to obtain any of the foregoing could reasonably be expected to not result in a
Material Adverse Effect. The Borrower is in compliance with all laws, orders, rules, regulations
and ordinances of all federal, foreign, state and local governmental authorities applicable to it
and its business,
operations, property, and assets, except to the extent any such non-compliance could
reasonably be expected to not result in a Material Adverse Effect.
7.16 Intellectual Property. As of the Closing Date, the Borrower does not own or otherwise
possess any material Intellectual Property. To the Borrower’s best knowledge, none of its
Intellectual Property infringes on the rights of any other Person; provided that the name
“Diversicare” is shared in Canada with various Diversicare entities that were sold in 2004.
7.17 Environmental Matters. The Borrower has not Managed Hazardous Substances on or off
its Property other than in compliance with applicable Environmental Laws, except to the extent any
such non-compliance could reasonably be expected to not result in a Material Adverse Effect.
Except as set forth on Schedule 7.17 hereto, the Borrower has complied in all material
respects with applicable Environmental Laws regarding transfer, construction on and operation of
its business and Property, including, but not limited to, notifying authorities, observing
restrictions on use, transferring, modifying or obtaining permits, licenses, approvals and
registrations, making required notices, certifications and submissions, complying with financial
liability requirements, and, except where not required to do so pursuant to any Commercial Lease,
Managing Hazardous Substances and Responding to the presence or Release of Hazardous Substances
connected with operation of its business or Property. The Borrower does not have any contingent
liability with respect to the Management of any Hazardous Substance that could reasonably be
expected to result in a Material Adverse Effect. As of the Closing Date (and on any date that a
request for a Revolving Loan is made), the Borrower has not received any Environmental Notice that
could reasonably be expected to result in a Material Adverse Effect.
7.18 Disclosure. As of the Closing Date (and on any date that a request for a Revolving
Loan is made), none of the representations or warranties made by the Borrower herein or in any
Financing Agreement to which the Borrower is a party and no other written information provided or
statements made by the Borrower or its representatives to the Administrative Agent or Lenders
contains any untrue statement of a material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading. As of the Closing Date (and on any date that a request for a Revolving
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Loan is made),
the Borrower has disclosed to the Administrative Agent and Lenders all facts of which the Borrower
has knowledge which might result in a Material Adverse Effect either prior or subsequent to the
consummation of the transactions contemplated hereby or which, to Borrower’s knowledge, at any time
hereafter might reasonably be expected to result in a Material Adverse Effect.
7.19 Pension Related Matters. Each employee pension plan (other than a multiemployer plan
within the meaning of Section 3(37) of ERISA and to which the Borrower or any ERISA Affiliate has
or had any obligation to contribute (a “Multiemployer Plan”)) maintained by the Borrower or
any of
its ERISA Affiliates to which Title IV of ERISA applies and (a) which is maintained for
employees of the Borrower or any of its ERISA Affiliates or (b) to which the Borrower or any of its
ERISA Affiliates made, or was required to make, contributions at any time within the preceding five
(5) years (a “Plan”), complies, and is administered in accordance, with its terms and all
material applicable requirements of ERISA and of the Internal Revenue Code of 1986, as amended, and
any successor statute thereto (the “Tax Code”), and with all material applicable rulings
and regulations issued under the provisions of ERISA and the Tax Code setting forth those
requirements. No “Reportable Event” or “Prohibited Transaction” (as each is defined in ERISA) or
withdrawal from a Multiemployer Plan caused by the Borrower has occurred and no funding deficiency
described in Section 302 of ERISA caused by the Borrower exists with respect to any Plan or
Multiemployer Plan which could have a Material Adverse Effect. The Borrower and each ERISA
Affiliate has satisfied all of their respective funding standards applicable to such Plans and
Multiemployer Plans under Section 302 of ERISA and Section 412 of the Tax Code and the Pension
Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA
(“PBGC”) has not instituted any proceedings, and there exists no event or condition caused
by the Borrower which would reasonably be expected to constitute grounds for the institution of
proceedings by PBGC, to terminate any Plan or Multiemployer Plan under Section 4042 of ERISA which
could have a Material Adverse Effect.
7.20 Perfected Security Interests. The Lien in favor of the Administrative Agent provided
pursuant to Section 6.1 hereof is a valid and perfected first priority security interest in
the Collateral (subject only to the Permitted Liens and the terms of the Intercreditor Agreement),
and all filings and other actions necessary to perfect such Lien have been or will be duly taken.
7.21 [Intentionally Omitted.].
7.22 Broker’s Fees. The Borrower does not have any obligation to any Person in respect of
any finder’s, brokers or similar fee in connection with the Loans or this Agreement.
7.23 Investment Company Act. The Borrower is not an “investment company” or a company
“controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940,
as amended.
7.24 [Intentionally Omitted.].
7.25 [Intentionally Omitted.].
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7.26 Offenses and Penalties Under the Medicare/Medicaid Programs. Except as listed on
Schedule 7.26 attached hereto, as of the Closing Date, neither the Borrower nor any
Affiliate and/or employee of the Borrower or any Affiliate is currently, to the best knowledge of
the Borrower, after due inquiry, under investigation or prosecution for, nor has the Borrower or
any Affiliate or, to the best knowledge of Borrower, after due inquiry, any current employee of the
Borrower or any Affiliate been convicted of: (a) any offense related to the delivery of an item or
service under the Medicare or Medicaid programs; (b) a criminal offense related to neglect or abuse
of patients in connection with the delivery of a health care item or service; (c) fraud, theft,
embezzlement or other financial misconduct; (d) the obstruction of an investigation of any crime
referred to in subsections (a) through (c) of this Section; or (e) unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance. Except as listed on
Schedule 7.26, as of the Closing Date, neither the Borrower nor any Affiliate and/or, to
the best knowledge of Borrower, after due inquiry, any current employee of the Borrower or any
Affiliate has been required to pay any civil money penalty under applicable laws regarding false,
fraudulent or impermissible claims or payments to induce a reduction or limitation of health care
services to beneficiaries of any state or federal health care program, nor, to the best knowledge
of the Borrower, after due inquiry, is the Borrower nor any Affiliate and/or to the best knowledge
of Borrower, after due inquiry, any current employee of the Borrower or any Affiliate currently the
subject of any investigation or proceeding that may result in such payment. Neither Borrower nor
any Affiliate and/or employee of the Borrower or any Affiliate has been excluded from participation
in the Medicare, Medicaid or maternal and Child Health Services Program, or any program funded
under the “Block grants” to States for Social Services (Title XX) Program.
7.27 Medicaid/Medicare and Private Insurance/Managed Care Contracts.
(1) The Borrower has:
(2) Obtained and maintains Medicaid Certification and Medicare Certification to the extent
required for reimbursement under the Medicaid Regulations or the Medicare Regulations, as the case
may be; and
(3) Entered into and maintains in good standing its Medicaid Provider Agreement and its
Medicare Provider Agreement to the extent required for reimbursement under Medicaid Regulations or
the Medicare Regulations, as the case may be, and its Private Insurance/Managed Care Contracts.
(4) There are no proceedings pending, or, to the best knowledge of the Borrower, after due
inquiry, threatened by any governmental authority seeking to modify, revoke or suspend, to the
extent required for reimbursement, any Medicaid Provider Agreement, Medicare Provider Agreement,
Medicare Certification or Medicaid Certification. Since the date of the most recent Medicare
Certification and Medicaid Certification, the Borrower has not taken any action that would have a
material adverse effect on the Certification or the Medicare Provider Agreement or Medicaid
Provider Agreement.
(5) Neither the Borrower nor any Affiliate of the Borrower nor any current officer or
director of the foregoing has engaged in any of the following: (i) knowingly and willfully making
or causing to be made a false statement or representation of a material fact in any application for
any benefit or payment under Medicare or Medicaid; (ii) knowingly and willfully making or causing
to be made any false statement or representation of a
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material fact for use in determining rights
to any benefit or payment under Medicare or Medicaid; (iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right to any benefit or
payment under Medicare or Medicaid on its own behalf or on behalf of another, with intent to secure
such benefit or payment fraudulently; or (iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind or offering to pay such remuneration: (A) in return for referring any
individual to a Person for the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in party by Medicare or Medicaid; or (B) in return for
purchasing, leasing or ordering or arranging for or recommending the purchasing, leasing or
ordering of any good, facility, service or item for which payment may be made in whole in part by
Medicare or Medicaid.
(6) The Borrower is not out of material compliance with any applicable conditions of
participation of the Medicare or Medicaid programs nor with any Private Insurance/Managed Care
Contracts, nor does any condition exist or has any event occurred which, in itself, or with the
giving of notice or lapse of time, or both, would reasonably be expected to result in the
suspension, revocation, impairment, forfeiture or non-renewal of (i) any contract of the Borrower
in connection with the Medicare or Medicaid programs or (ii) any Private Insurance/Managed Care
Contracts.
7.28 Consideration. Each Borrower is a direct or indirect subsidiary of Parent, and are
Affiliates of each other. The Affiliates of the Borrower will derive substantial direct and
indirect benefit (financial and otherwise) from funds made available to the Borrower pursuant to
this Agreement, and it is and will be to such Affiliates’ advantage to assist the Borrower in
procuring such funds from the Lenders. Each of the Borrower’s Affiliates desires to induce the
Lender to enter into this Agreement with the Borrower.
7.29 USA Patriot Act. Borrower represents and warrants to Administrative Agent and Lenders
that neither the Borrower nor any of its Affiliates is identified in any list of known or suspected
terrorists published by any United States government agency (collectively, as such lists may be
amended or supplemented from time to time, referred to as the “Blocked Persons Lists”)
including, without limitation, (a) the annex to Executive Order 13224 issued on September 23, 2001,
and (b) the Specially Designated Nationals List published by the Office of Foreign Assets Control.
7.30 Absence of Foreign or Enemy Status. Neither the Borrower nor any Affiliate of the Borrower is an “enemy” or an “ally of the
enemy” within the meaning of Section 2 of the Trading with the Enemy Act (50 U.S.C. App. §§ 1
et seq.), as amended. Neither the Borrower nor any Affiliate of the Borrower is in
violation of, nor will the use of any of the Loans violate, the Trading with the Enemy Act, as
amended, or any executive orders, proclamations or regulations issued pursuant thereto, including,
without limitation, regulations administered by the Office of Foreign Asset Control of the
Department of the Treasury (31 C.F.R. Subtitle B, Chapter V).
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7.31 HIPAA Compliance. Borrower has not received any notice from any governmental
authority that such governmental authority has imposed or intends to impose any enforcement
actions, fines or penalties for any failure or alleged failure to comply with HIPAA, or its
implementing regulations.
7.32 Labor Matters. Except as shown on Schedule 7.32, as of the Closing Date,
there are no strikes or other labor disputes pending or, to the knowledge of Borrower, threatened
against Borrower or any Affiliate of Borrower. Except as shown on Schedule 7.32, as of the
Closing Date, hours worked and payments made to the employees of the Borrower and Affiliates of
Borrower have not been in violation of the Fair Labor Standards Act or any other applicable Law
dealing with such matters. All payments due from the Borrower or Affiliates of Borrower, or for
which any claim may be made against any of them, on account of wages and employee and retiree
health and welfare insurance and other benefits have been paid or accrued as a liability on their
books, as the case may be. The consummation of the transactions contemplated by the Financing
Agreements will not give rise to a right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which Borrower is a party or by which it is
bound.
7.33 Capitalization. The authorized Stock of each Borrower, as of the Closing Date, is set
forth on Schedule 7.33 hereto. Parent or another Borrower, as the case may be, legally and
beneficially owns all of the issued and outstanding Stock of each Borrower. All issued and
outstanding Stock of the Borrower is duly authorized and validly issued, fully paid, nonassessable,
free and clear of all Liens or pledges other than Permitted Liens, and such Stock was issued in
compliance with all applicable state, federal and foreign laws concerning the issuance of
securities. No shares of the Stock of Borrower, other than those owned by Parent or Borrower, are
issued and outstanding. There are no preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for the purchase or acquisition from
Borrower of any equity securities of Borrower.
7.34 Government Contracts. The Borrower is not a party to any contract or agreement
(including, but not limited to, any Lease) that requires Borrower to comply with the Federal
Assignment of Claims
Act, as amended (31 U.S.C. Section 3727) or, to the best of Borrower’s knowledge, any similar
state or local law.
7.35 OFAC. Neither the Borrower, nor Guarantor, nor any beneficial owner of the Borrower
or Guarantor, is currently listed on the OFAC Lists.
7.36 Commercial Leases. As of the Closing Date, the Commercial Leases as to which a
Borrower is the lessee and the expiration dates of their current terms are as set forth on
Schedule 7.36 attached hereto. The Borrower has delivered correct and complete copies of
the fully-signed Commercial Leases to the Administrative Agent on or prior to the Closing Date.
The Borrower is not in default or breach of any Commercial Lease and, to the Borrower’s knowledge,
no other party to any Commercial Lease is in default or breach thereunder.
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8. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees with Administrative Agent and Lenders that, as long as any
Liabilities of the Borrower remain outstanding, and (even if there shall be no such Liabilities
outstanding) as long as this Agreement remains in effect:
8.1 Reports, Certificates and Other Information. The Borrower Agent shall deliver to the
Administrative Agent and each Lender:
(1) Financial Statements.
(2) On or before the one hundred twentieth (120th) day after each of Parent’s Fiscal Years, a
copy of the annual financial statements on a consolidated basis for Parent, duly certified and
audited by independent certified public accountants of nationally recognized standing selected by
the Borrower, together with the supporting consolidating statements for each Borrower, consisting
of, at least, balance sheets and statements of income and cash flow for such period, prepared in
conformity with GAAP. In lieu of its obligations hereunder, Parent may submit to Administrative
Agent and Lenders, upon its filing thereof, a copy of its form 10-K as filed with the United States
Security and Exchange Commission.
(3) On or before the forty-fifth (45th) day of the end of each of Parent’s first, second and
third Fiscal Quarters, a copy of internally prepared quarterly financial statements for Borrower
prepared in accordance with GAAP and in a manner substantially consistent with the financial
statements referred to in Section 8.1(a)(1) hereof (subject, however, to the GAAP
Exceptions), signed on behalf of the Borrower by a Duly Authorized Officer and consisting of, at
least, an income statement, a balance sheet, and statement of cash flow as at the close of such
Fiscal Quarter and statements of earnings for such Fiscal Quarter and for the period from the
beginning of such Fiscal Year to the close of such Fiscal Quarter.
(4) Borrower Base Certificates. On or before the thirtieth (30th) day after the end of
each calendar month, a borrowing base certificate (in form and substance satisfactory to the
Administrative Agent), signed on behalf of the Borrower by a Duly Authorized Officer.
(5) Compliance Certificates. Contemporaneously with the furnishing of each quarterly
financial statements, a duly completed compliance certificate with appropriate insertions, in form
and substance satisfactory to the Administrative Agent (a “Compliance Certificate”), dated the date
of such annual financial statement or such calendar month and signed on behalf of the Borrower by a
Duly Authorized Officer, which Compliance Certificate shall state that no Default or Event of
Default has occurred and is continuing, or, if there is any such event, describes it and the steps,
if any, being taken to cure it. Each Compliance Certificate shall contain a computation of, and
show compliance with, each of the financial ratios and restrictions set forth in Section 9.12
hereof (each such computation and calculation to be in form and substance acceptable to the
Administrative Agent).
(6) Schedule of Accounts. On or before the tenth (10th) day of each calendar month, a
Schedule of Accounts, as of the last day of the immediately preceding calendar month and in form
and substance reasonably satisfactory to the Administrative Agent.
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(7) Notice of Default, Regulatory Matters, Litigation Matters or Adverse Change in
Business. Forthwith upon learning of the occurrence of any of the following, written notice
thereof which describes the same and the steps being taken by the Borrower with respect thereto:
(i) the occurrence of a Default or an Event of Default; (ii) the institution or threatened
institution of, or any adverse determination in, any litigation (other than a personal injury tort
claim), arbitration proceeding or governmental proceeding in which any injunctive relief or money
damages is sought which if adversely determined could have a Material Adverse Effect; (iii) the
receipt of any notice from any governmental agency concerning any violation or potential violation
of any regulations, rules or laws applicable to Borrower which could have a Material Adverse
Effect; or (iv) any Material Adverse Change. With regard to personal injury tort claims, upon
request by Administrative Agent, Borrower shall review with Administrative Agent the occurrence of
any personal injury or other action which could reasonably give rise to a personal injury tort
claim against the Borrower as to which (i) litigation has been instituted and is pending or (ii) a
request for medical records has been made upon Borrower by an attorney for the claimant on or after
January 1, 2009.
(8) Insurance Reports. (i) At any time after a Default and upon the request of the
Administrative Agent, a certificate signed by a Duly Authorized Officer that summarizes the
property, casualty, liability and malpractice insurance policies carried by the Borrower, and (ii)
written notification of any material change in any such insurance by the Borrower within five (5)
Business Days after receipt of any notice (whether formal or informal) of such change by any of its
insurers.
(9) Annual Projections. Upon the Administrative Agent’s reasonable request from time to
time, an annual projection for the current Fiscal Year showing Borrower’s projected operating plan,
revenues and expenses on a monthly basis and a balance
sheet and cash flow statement for the Borrower, in form and substance reasonably
satisfactory to Administrative Agent.
(10) Affiliate Transactions. Upon the Administrative Agent’s reasonable request from time
to time, a reasonably detailed description of each of the material transactions between the
Borrower and any of its Affiliates during the time period reasonably requested by the
Administrative Agent, which shall include, without limitation, the amount of money either paid or
received, as applicable, by the Borrower in such transactions.
(11) Health Care. Furnish to the Administrative Agent each of the following, to the
extent applicable: (i) upon Administrative Agent’s request, a copy of any healthcare related
licensure and annual or biannual certification survey report and any statement of deficiencies and
any survey (other than the annual or biannual survey) indicating a violation or deficiency, and
within the time period required by the particular agency for submission, a copy of the plan of
correction with respect thereof if such Plan of Correction is required by such agency issuing the
statement of deficiency or notice of violation, and correct or cause to be corrected any deficiency
or violation within the time period required for cure by such agency, subject to such agency’s
normal appeal process, if such deficiency or violation could adversely affect either the right to
continue participation in Medicare, Medicaid or other reimbursement programs for existing patients
or the right to admit new Medicare patients, Medicaid patients or other reimbursement program
patients or result in the loss or suspension of Borrower’s licenses
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and permits to operate
Borrower’s business; (ii) within five (5) Business Days of the receipt by the Borrower, any and all
notices disclosing an adverse finding from any licensing, certifying and/or reimbursement agencies
that Borrower’s license, Medicare or Medicaid certification or entitlement to payments pursuant to
any reimbursement contract or program of Borrower is being downgraded to a substandard category,
revoked, or suspended, or that action is pending or being considered to downgrade to a substandard
category, revoke, or suspend any rights pursuant to the Borrower’s license, certification or
reimbursement contract or program; and (iii) upon request of Administrative Agent, a complete and
accurate copy of the annual Medicaid, Medicare and other cost reports for Borrower.
(12) Interim Reports. Promptly upon receipt thereof, copies of any reports submitted to
Parent or Borrower by the independent accountants in connection with any interim audit of the books
of any such Person and copies of each management control letter provided to Parent or Borrower by
independent accountants.
(13) Reports to the SEC. Upon the Administrative Agent’s reasonable request from time to
time, copies of any and all regular, annual, periodic or special reports of Parent, any Borrower or
any Affiliate thereof filed with the Securities and Exchange Commission (“SEC”); copies of any and
all registration statements of Parent, any Borrower or any Affiliate thereof filed with the SEC;
and copies of any and all proxy statements or other written communications made to security holders
generally.
(14) Other Information. Such other information, certificates, schedules, exhibits or
documents (financial or otherwise) concerning the Borrower and its operations, business,
properties, condition or otherwise as the Administrative Agent or any Lender may reasonably request
from time to time.
8.2 Inspection; Audit Fees. Borrower shall keep proper books of record and account in
accordance with GAAP in which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and shall permit (at the expense of the
Borrower provided the Borrower shall be responsible for such reasonable expenses no more than one
(1) time per year unless an Event of Default has occurred and is continuing), representatives of
the Administrative Agent or any Person appointed by Administrative Agent to visit and inspect any
of their respective properties, to examine and make abstracts or copies from any of their
respective books and records (in each case excluding patient medical records and other records to
the extent confidential or where such examination is prohibited under applicable Laws, including
without limitation HIPPA), to conduct a collateral audit and analysis of their respective Inventory
and Accounts and to discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants as often as may reasonably be desired. In
the absence of an Event of Default, the Administrative Agent shall give the Borrower commercially
reasonable prior written notice of such exercise. No notice shall be required during the existence
and continuance of any Event of Default.
8.3 Conduct of Business. The Borrower shall maintain its corporate existence, shall
maintain in full force and effect all licenses, permits, authorizations, bonds, franchises, leases,
patents, trademarks and other Intellectual Property, contracts and other rights necessary to
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the
conduct of its business, shall continue in, and limit its operations to, the same general line of
business as that currently conducted and shall comply with all applicable laws (including, without
limitation, Healthcare Laws), orders, regulations and ordinances of all federal, foreign, state and
local governmental authorities, except to the extent any such non-compliance could reasonably be
expected to result in a Material Adverse Effect. The Borrower shall keep proper books of record
and account in which full and true entries will be made of all dealings or transactions of or in
relation to the business and affairs of the Borrower, in accordance with GAAP (subject, however, to
the GAAP Exceptions), consistently applied.
8.4 Claims and Taxes. The Borrower agrees to pay or cause to be paid all license fees,
bonding premiums and related taxes and charges and shall pay or cause to be paid all of the
Borrower’s real and personal property taxes, assessments and charges and all of the Borrower’s
franchise, income, unemployment, use, excise, old age benefit, withholding, sales and other taxes
and other governmental charges assessed against the Borrower, or payable by the Borrower, at such
times and in such manner as to prevent any penalty from accruing or any Lien from attaching to its
property, provided that the Borrower shall have the right to contest in good faith, by an
appropriate proceeding promptly initiated and diligently conducted, the validity, amount or
imposition of any such tax, assessment or charge, and upon such good faith contest to delay or
refuse payment thereof, if (a) the Borrower establishes adequate reserves to cover such contested
taxes, assessments or charges, and (b) such contest does not have a Material Adverse Effect.
8.5 State of Incorporation or Formation. The Borrower’s state of incorporation or formation, as applicable, set forth on
Schedule 1 hereto shall remain the Borrower’s state of incorporation or formation, as
applicable, unless: (a) the Borrower provides the Administrative Agent with at least thirty (30)
days prior written notice of any proposed change, (b) no Event of Default then exists or will exist
immediately after such proposed change, and (c) the Borrower provides the Administrative Agent
with, at Borrower’s sole cost and expense, such financing statements, and if applicable, landlord
waivers, bailee letters and processor letters, and such other agreements and documents as the
Administrative Agent shall reasonably request in connection therewith.
8.6 Liability and Malpractice Insurance. The Borrower shall maintain, at its expense,
general liability and professional malpractice insurance through commercial insurance in such
amounts and with such deductibles consistent with its past practices, and shall deliver to the
Administrative Agent the original (or a certified) copy of each policy of insurance and evidence of
the payment of all premiums therefor. Such policies of insurance shall contain an endorsement
showing the Administrative Agent as additional insured thereunder. Administrative Agent
acknowledges that general liability and professional malpractice insurance coverage is currently
unavailable generally in the nursing home industry at commercially affordable rates. Borrower has
in place and will maintain either (i) so long it is available at commercially affordable rates,
indemnity insurance with coverage limits of One Million Dollars ($1,000,000.00) per medical
incident, subject to a deductible of Four Hundred Ninety-Five Thousand Dollars ($495,000.00) per
claim, with a total annual aggregate policy limit of Fifteen Million Dollars ($15,000,000.00) and a
sublimit per Facility of Three Million Dollars ($3,000,000.00) or (ii) general liability and
professional malpractice insurance with single limit coverage of Two Hundred Fifty Thousand and
No/100 Dollars ($250,000.00) per occurrence and
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Seven Hundred Fifty Thousand and No/100 Dollars
($750,000.00) cumulative. Administrative Agent agrees that until such time as insurance coverage
is generally available in the nursing home industry at commercially affordable rates,
Administrative Agent agrees to accept Borrower’s current coverage. Borrower shall provide
Administrative Agent, (a) on an annual basis, information from its insurance representative,
insurance carrier or from comparable insurance carriers regarding availability of insurance and (b)
with respect to the insurance policies contemplated by this Section 8.6 and those certain
insurance policies contemplated by Section 8.7 below, prompt (but in any event, within five
(5) Business Days of any such occurrence) written notice of any alteration or cancellation of such
insurance policy.
8.7 Property and Other Insurance. The Borrower shall, at its expense, keep and maintain
its assets material to the Business of Borrower insured against (i) loss or damage by fire, theft,
explosion, spoilage and all other hazards and risks and (ii) business interruption, in such amounts
with such deductibles (which may include self-insurance trusts) ordinarily insured against by other
owners or users of such properties in similar businesses of comparable size operating in the same
or similar locations but in all events as required by the Omega Debt Documents and any other
Commercial Leases. Borrower, at Borrower’s expense, shall keep and maintain workers compensation
insurance as may be required by applicable Laws. The Borrower Agent shall deliver to the
Administrative Agent the original (or a certified) copy of each policy of insurance and
evidence of payment of all premiums therefor.
Upon the occurrence of an Event of Default under this Agreement, the Borrower irrevocably
makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents
designated by the Administrative Agent in writing to the Borrower) as the Borrower’s true and
lawful attorney-in-fact for the purpose, subject at all times to the terms and conditions of the
Omega Debt Documents and any other Commercial Leases, of making, settling and adjusting claims on
behalf of the Borrower under all such policies of insurance, endorsing the name of the Borrower on
any check, draft, instrument or other item of payment received by the Borrower or the
Administrative Agent pursuant to any such policies of insurance, and for making all determinations
and decisions of Borrower with respect to such policies of insurance.
UNLESS THE BORROWER PROVIDES THE ADMINISTRATIVE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE
REQUIRED BY THIS AGREEMENT WITHIN THREE BUSINESS DAYS FOLLOWING ADMINISTRATIVE AGENT’S REQUEST, THE
ADMINISTRATIVE AGENT MAY PURCHASE INSURANCE AT THE BORROWER’S EXPENSE TO PROTECT THE ADMINISTRATIVE
AGENT’S INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT THE INTERESTS IN
THE COLLATERAL. THE COVERAGE PURCHASED BY THE ADMINISTRATIVE AGENT MAY NOT PAY ANY CLAIMS THAT THE
BORROWER MAKES OR ANY CLAIM THAT IS MADE AGAINST THE BORROWER IN CONNECTION WITH THE COLLATERAL.
THE BORROWER MAY LATER CANCEL ANY SUCH INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY
AFTER PROVIDING THE ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE BORROWER HAS OBTAINED INSURANCE AS
REQUIRED BY THIS AGREEMENT. IF THE ADMINISTRATIVE AGENT PURCHASES INSURANCE FOR THE COLLATERAL,
THE BORROWER WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER
CHARGES THAT THE
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ADMINISTRATIVE AGENT MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE,
UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE
INSURANCE MAY BE ADDED TO THE LIABILITIES SECURED HEREBY. THE COSTS OF THE INSURANCE MAY BE MORE
THAN THE COST OF INSURANCE THE BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN.
8.8 Environmental. The Borrower shall promptly notify and furnish Administrative Agent
with a copy of any and all Environmental Notices which are received by it. Except where not
required to do so pursuant to any Commercial Lease, the Borrower shall take prompt and appropriate
action in response to any and all such Environmental Notices and shall promptly furnish
Administrative Agent with a description of the Borrower’s Response thereto. The Borrower shall (a)
obtain and maintain all permits required under all applicable federal, state, and local
Environmental Laws, except as to which the failure to obtain or maintain would not have a Material
Adverse Effect; and (b) except where not required to do so pursuant to any Commercial Lease, keep
and maintain the Property and each portion thereof in compliance with, and not
cause or permit the Property or any portion thereof to be in violation of, any Environmental
Law, except as to which the failure to comply with or the violation of which, would not have a
Material Adverse Effect. During the term of this Agreement, the Borrower shall not permit others
to, Manage, whether on or off Borrower’s Property, Hazardous Substances, except to the extent such
Management does not or is not reasonably likely to result in or create a Material Adverse Effect.
Except where not required to do so pursuant to any Commercial Lease, the Borrower shall take prompt
action in material compliance with applicable Environmental Laws to Respond to the on-site or
off-site Release of Hazardous Substances connected with operation of its business or Property.
8.9 Banking Relationship. The Borrower and the Parent shall at all times maintain all of
their respective primary deposit and operating accounts with the Administrative Agent and the
Administrative Agent will act as the principal depository and remittance agent for the Borrower and
Parent. The Borrower agrees to pay to the Administrative Agent reasonable and customary fees for
banking services/cash management services of Borrower and Guarantor (the “Service Fee”).
The Administrative Agent shall be and hereby is authorized to charge any deposit or operating
account of the Borrower in respect of the Service Fee. Notwithstanding the foregoing in this
Section 8.9, Borrower maintains as of the Closing Date certain non-material accounts with
Regions Bank as identified on Schedule 8.9 and the existence of such accounts will not
violate this Section 8.9 as long as the aggregate amount contained therein does not at any
time exceed Fifty Thousand Dollars ($50,000), and (ii) Borrower maintains as of the Closing Date
certain employee payroll accounts with Bank of America as identified on Schedule 8.9 and
the existence of such accounts will not violate this Section 8.9; provided,
however, that upon written notice to Borrower from Administrative Agent, Borrower and
Guarantor shall move all such employee payroll accounts to Administrative Agent within ninety (90)
days, which ninety (90) day timeframe will be reasonably extended by Administrative Agent as long
as Borrower and Guarantor are making a good faith effort to move such accounts to Administrative
Agent.
8.10 Intellectual Property. Subject to the terms of the Intercreditor Agreement, if after
the Closing Date the Borrower shall own or otherwise possess any registered patents, copyrights,
trademarks, trade names, or service marks other than those owned by Parent or any
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derivation
thereof (or file an application to attempt to register any of the foregoing), the Borrower shall
promptly notify the Administrative Agent in writing of same and execute and deliver any documents
or instruments (at the Borrower’s sole cost and expense) reasonably required by Administrative
Agent to perfect a security interest in and lien on any such federally registered Intellectual
Property in favor of the Administrative Agent and assist in the filing of such documents or
instruments with the United States Patent and Trademark Office and/or United States Copyright
Office or other applicable registrar.
8.11 Change of Location; Etc. Any of the Collateral may be moved to another location
within the continental United States so long as: (i) the Borrower provides the Administrative Agent
with at least thirty
(30) days prior written notice, (ii) no Event of Default then exists, and (iii) the Borrower
provides the Administrative Agent with, at Borrower’s sole cost and expense, such financing
statements, landlord waivers, bailee and processor letters and other such agreements and documents
as the Administrative Agent shall reasonably request. The Borrower shall defend and protect the
Collateral against and from all claims and demands of all Persons at any time claiming any interest
therein adverse to the Administrative Agent. If the Borrower desires to change its principal place
of business and chief executive office or its name, the Borrower shall notify the Administrative
Agent thereof in writing no later than thirty (30) days prior to such change and the Borrower shall
provide the Administrative Agent with, at Borrower’s sole cost and expense, such financing
statements, amendment statements and other documents as the Administrative Agent shall reasonably
request in connection with such change. If the Borrower shall decide to change the location where
its books and records are maintained, the Borrower shall notify the Administrative Agent thereof in
writing no later than thirty (30) days prior to such change.
8.12 Health Care Related Matters. The Borrower shall cause all licenses, permits,
certificates of need, reimbursement contracts and programs, and any other agreements necessary for
the use and operation of its business or as may be necessary for participation in Medicaid,
Medicare and other applicable reimbursement programs, to remain in full force and effect, except to
the extent that the failure to do so would not cause a Material Adverse Effect or a material
adverse effect on the prospects of the Borrowers on a consolidated basis. The Borrower shall at
all times maintain in full force and effect the Medicare Certification, the Medicaid Certification,
the Medicare Provider Agreement and the Medicaid Provider Agreement, except to the extent that the
failure to do so would not cause a Material Adverse Effect or a material adverse effect on the
prospects of the Borrower on a consolidated basis. The Borrower shall comply at all times with the
CMS, except to the extent that such failure to comply would not cause a Material Adverse Effect or
a material adverse effect on the prospects of the Borrower on a consolidated basis. The Borrower
shall take all necessary steps to protect personally identifiable health information for each
patient substantially in accordance with the CMS laws and regulations, except to the extent that
the failure to do so would not cause a Material Adverse Effect or a material adverse effect on the
prospects of the Borrower on a consolidated basis.
8.13 US Patriot Act. Borrower covenants to Administrative Agent and Lenders that if
Borrower becomes aware that it or any of its Affiliates is identified on any Blocked Persons List
(as identified in Section 7.29 hereof), Borrower shall immediately notify Administrative
Agent and Lenders in writing of such information. Borrower further agrees that
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in the event any of
them or any Affiliate is at any time identified on any Blocked Persons List, such event shall be an
Event of Default, and shall entitle Administrative Agent and Lenders to exercise any and all
remedies provided in any Financing Agreements or otherwise permitted by Law. In addition,
Administrative Agent and Lenders may immediately contact the Office of Foreign Assets Control and
any other government agency Administrative Agent or Lenders deem appropriate in order to comply
with its respective obligations under any Law regulating or relating to terrorism and international
money laundering.
8.14 Government Accounts. If the Borrower desires Government Accounts to be considered
Eligible Accounts, the Borrower shall take any and all action reasonably required by the
Administrative Agent in order to provide the Administrative Agent with a perfected security
interest in such Government Accounts and execute and deliver all documentation reasonably required
by the Administrative Agent in connection therewith, including, without limitation, a Blocked
Account Agreement.
8.15 Further Assurances. The Borrower shall, at its own cost and expense, cause to be
promptly and duly taken, executed, acknowledged and delivered all such further acts, documents and
assurances as may from time to time be necessary or as the Administrative Agent or any Lender may
from time to time reasonably request in order to carry out the intent and purposes of this
Agreement and the other Financing Agreements and the transactions contemplated hereby and thereby,
including, subject to the terms of the Intercreditor Agreement, all such actions to establish,
create, preserve, protect and perfect a first-priority Lien in favor of the Administrative Agent
(for the ratable benefit of Lenders and Administrative Agent) on the Collateral (including
Collateral acquired after the date hereof), including on any and all unencumbered assets of
Borrower whether now owned or hereafter acquired.
8.16 Compliance with Anti-Terrorism Orders. Administrative Agent and Lenders hereby notify
Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56,
signed into law October 26, 2001) (the “Patriot Act”), and the policies and practices of
Administrative Agent and Lenders, the Administrative Agent and Lenders are required to obtain,
verify and record certain information and documentation that identifies each Borrower, which
information includes the name and address of each Borrower and such other information that will
allow the Administrative Agent and Lenders to identify each Borrower in accordance with the Patriot
Act. In addition, Borrowers shall (a) ensure that no Person who owns a controlling interest in or
otherwise controls any Borrower is or shall be listed on the OFAC Lists, (b) not use or permit the
use of the proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or
any enabling statute or Executive Order relating thereto, and (c) comply with all applicable Bank
Secrecy Act laws and regulations, as amended. Borrower shall not permit the transfer of any
interest in Borrower to any Person (or any beneficial owner of such entity) who is listed on the
OFAC Lists. Borrower shall not knowingly enter into a Lease with any party who is listed on the
OFAC Lists. Borrower shall immediately notify Administrative Agent and Lenders if Borrower has
knowledge that the Guarantor, manger or any member or beneficial owner of Borrower, Guarantor,
Manager is listed on the OFAC Lists or (i) is indicted on or (ii) arraigned and held over on
charges involving money laundering or predicate crimes to money laundering. Borrower shall
immediately notify Administrative Agent and Lenders if Borrower knows that any Tenant is listed on
the OFAC Lists or (A) is
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convicted on, (B) pleads nolo contendere to, (C) is indicted on or (D) is
arraigned and held over on charges involving money laundering or predicate crimes to money
laundering.
8.17 Blocked Account Agreements and Account Debtors.
(1) The Borrower shall have entered into the Blocked Account Agreement.
(2) The Borrower shall instruct and direct each Account Debtor to send all payments with
respect to each Account to the Commercial Blocked Account and the Government Blocked Account, as
the case may be, for deposit established pursuant to this Agreement.
9. NEGATIVE COVENANTS.
The Borrower covenants and agrees with Administrative Agent and Lenders that as long as any
Liabilities remain outstanding, and (even if there shall be no such Liabilities outstanding) as
long as this Agreement remains in effect (unless the Required Lenders shall give (or Administrative
Agent upon instruction by Required Lenders to give) prior written consent thereto):
9.1 Encumbrances. The Borrower shall not create, incur, assume or suffer to exist any
Lien of any nature whatsoever on any of its assets or property, including, without limitation, the
Collateral, other than the following (“Permitted Liens”): (i) Liens securing the payment of
taxes, either not yet due or the validity of which is being contested in good faith by appropriate
proceedings, and as to which the Borrower shall, if appropriate under GAAP, have set aside on its
books and records adequate reserves, provided, that such contest does not have a material adverse
effect on the ability of the Borrower to pay any of the Liabilities, or the priority or value of
the Administrative Agent’s Lien in the Collateral; (ii) deposits under workmen’s compensation,
unemployment insurance, social security and other similar laws; (iii) Liens in favor of the
Administrative Agent (for the ratable benefit of Lenders and Administrative Agent); (iv) liens
imposed by law, such as mechanics’, materialmen’s, landlord’s, warehousemen’s, carriers’ and other
similar liens, securing obligations incurred in the ordinary course of business that are not past
due for more than thirty (30) calendar days, or that are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been established, or that are not
yet due and payable; (v) purchase money security interests upon or in any property acquired or held
by the Borrower in the ordinary course of business to secure the purchase price of such property so
long as: (a) the aggregate indebtedness relating to such purchase money security interests and
Capitalized Lease Obligations does not at any time exceed Seven Hundred Fifty Thousand and No/100
Dollars ($750,000.00) in the aggregate at any time, (b) each such lien shall only attach to the
property to be acquired; and (c) the indebtedness incurred shall not exceed one hundred percent
(100%) of the purchase price of the item or items purchased; (v) pledges and deposits made in the
ordinary course of business in compliance with workmen’s compensation laws, unemployment insurance
and other social security laws or regulations, or deposits to secure performance of tenders,
statutory obligations, trade contracts (other than for
Indebtedness), leases (other than Capital Lease Obligations), surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the ordinary course of
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Borrower’s business as presently conducted; (vi) any Lien securing a judgment; provided, that any
Lien securing a judgment in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) that remains
unsatisfied or undischarged for more than thirty (30) days shall not be a Permitted Lien, unless
such judgment is either (x) fully insured and such insurer has admitted liability or (y) is being
contested or appealed by appropriate proceedings and the enforcement of such judgment is stayed
during the course of such contest or appeal, provided that Borrower has established reserves
adequate for payment of such judgment and in the event such contest or appeal is ultimately
unsuccessful pays such judgment within ten (10) days of the final, non-appealable ruling rendered
in such contest or appeal; (vii) financing statements with respect to a lessor’s rights in and to
personal property leased to a Borrower in the ordinary course of business other than through a
Capitalized Lease Obligations; (viii) Liens in favor of Omega and the Omega Senior Lessor, subject
in all cases to the provisions of the Intercreditor Agreement; and (ix) Liens securing any HUD
Financing, subject to satisfaction of Section 6.8 of the Term Loan Agreement (as well as
execution of a customary intercreditor agreement required by HUD (as defined in the Term Loan
Agreement) reasonably acceptable to Administrative Agent and Lenders); and (x) Liens securing any
Indebtedness incurred in connection with the acquisition of the land and improvements comprising
the Rose Terrace Facility pursuant to the purchase option provided under the Rose Terrace Lease.
9.2 Indebtedness; Capital Expenditures. Borrower shall not incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any Indebtedness, except (i) the
Liabilities, (ii) the HUD Financing (subject to satisfaction of Section 6.8 of the Term
Loan Agreement), (iii) the Commercial Leases, and any extensions or renewals thereof, (iv) trade
obligations and normal accruals in the ordinary course of business not yet due and payable, (v) the
indebtedness not to at any time exceed Three Million and No/100 Dollars ($3,000,000.00) relating to
the purchase money security interests and Capitalized Lease Obligations permitted pursuant to
Section 9.1 hereof (which shall include the purchase of a certain electronic medical
records system), (vi) intercompany Indebtedness of the Borrower to the extent permitted under
Section 9.4, and (vii) the Indebtedness incurred in connection with the exercise of the
purchase option contained in the Rose Terrace Lease.
9.3 Consolidations, Mergers or Transactions. The Borrower shall not be a party to any
merger, consolidation, or exchange of Stock, or purchase, except in connection with the exercise of
the purchase option contained in the Rose Terrace Lease, or otherwise acquire all or substantially
all of the assets or Stock of any class of, or any other evidence of an equity interest in, or any
partnership, limited liability company, or joint venture interest in, any other Person,
provided, that, with prior written notice to Administrative Agent, a Borrower may merge or
consolidate with, or dissolve into, another Borrower so long as the surviving entity remains a
Borrower for all purposes under this Agreement and the other Financing Agreements. The Borrower
shall not form or establish any Subsidiary without the Administrative Agent’s prior written
consent, unless each of the requirements identified on Schedule 9.3 hereto are satisfied,
as reasonably determined by the
Administrative Agent. With prior notice to Administrative Agent, Borrower may dissolve an
inactive Subsidiary that does not conduct any business operations and has assets with a book value
not in excess of Ten Thousand and No/100 Dollars ($10,000.00) (“Inactive Subsidiary”),
provided that any assets are transferred to Parent or an existing Subsidiary which is a Borrower
under this Agreement.
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9.4 Investments or Loans. The Borrower shall not make, incur, assume or permit to exist
any loans or advances, or any investments in or to any other Person, except (i) investments in
short-term direct obligations of the United States Government, agency or instrumentality thereof;
or any (ii) investments in negotiable certificates of deposit issued by the Administrative Agent or
by any other bank reasonably satisfactory to the Administrative Agent, payable to the order of the
Borrower or to bearer, (iii) investments in commercial paper rated at least A-1 by Standard &
Poor’s Corporation or P-1 by Moody’s Investors Service, Inc., or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies cease publishing
ratings of investments, (iv) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (i) through (iii), above; provided that, in
each case, such investment is reasonably acceptable to the Administrative Agent, (iv) other
short-term investments as may be permitted by Administrative Agent, (vi) loans or advances made by
any Borrower to Parent or any other Borrower, (vii) loans and advances to employees permitted under
Section 9.8; and (viii) investments by the Borrowers in their respective Subsidiaries
existing on the date hereof and additional investments by the Borrower in their respective
Subsidiaries so long as such Subsidiary is a Borrower under this Agreement.
9.5 Guarantees. The Borrower shall not guarantee, endorse or otherwise in any way become
or be responsible for obligations of any other Person, whether by agreement to purchase the
Indebtedness of any other Person or through the purchase of goods, supplies or services, or
maintenance of working capital or other balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the purpose of paying or discharging any
Indebtedness or obligation of such other Person or otherwise, except (i) endorsements of negotiable
instruments for collection in the ordinary course of business, and (ii) the Indebtedness permitted
under Section 9.2, above. Administrative Agent acknowledges that, prior to entering into
this Agreement, the Borrower has guaranteed certain ordinary course obligations for supply
purchases of Morris Memorial Convalescing and Crippled Children’s Home, Inc. and acknowledges such
guarantees do not violate this Section 9.2.
9.6 Disposal of Property. The Borrower shall not sell, assign, lease, convey, lease,
transfer or otherwise dispose of (whether in one transaction or a series of transactions) all or
any substantial part of its properties, assets and rights to any Person (or sell or assign, with or
without recourse, any receivables) except (a) sales of Inventory in the ordinary course of
business, (b) sales of Equipment being replaced in the ordinary course of business with other
Equipment with a fair market value and orderly liquidation value equal to or greater than the
Equipment being
replaced, and (c) transfers of Inventory and Equipment located at a Facility made by Borrower
to the owner or new operator of the Facility in connection with the transfer of operations upon the
termination of the Commercial Lease for such Facility, and (d) the conveyance, sale, transfer,
assignment or other disposition (a “Disposition”) of any one or more of the Real Property
Assets listed on Schedule 9.6 (which shall be limited to that certain vacant Carolina Beach
property and the five unencumbered Facilities that were once Capmark Facilities) provided that:
(a) at the time of each such Disposition, no Default or Event of Default shall have occurred
and be continuing or would result from such transaction (including, without
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limitation, any breach
or violation of any financial ratio covenant set forth in Section 9.12 hereof);
(b) that such Disposition is an arm’s length transaction for the fair value of the Real
Property Asset being sold, transferred or otherwise disposed of;
(c) such Disposition shall be consummated in accordance with all applicable Law; and
(d) at least five (5) Business Days prior to the consummation of the Disposition, the Borrower
whose Real Property Asset is being disposed of shall have delivered to the Administrative Agent an
Officer’s Certificate certifying that such transactions comply with the foregoing provisions (which
shall have attached thereto reasonable back-up data and calculations showing such compliance).
Solely for purposes of this Section 9.6, to the extent the applicable Licenses constitute
General Intangibles that are a part of the Collateral, Administrative Agent will (upon written
request of Borrower and at Borrower’s cost) release any security interest granted hereunder in such
Licenses required, necessary or used in connection with the Real Property Asset that is the subject
of such a Disposition.
9.7 Use of Proceeds. The Borrower shall use the proceeds of the Revolving Loan for
working capital purposes.
9.8 Loans to Officers; Consulting and Management Fees. The Borrower shall not make any
loans to its officers, directors, shareholders, manager, member, or employees or to any other
Person, and the Borrower shall not pay any consulting, management fees or similar fees to its
officers, directors, manager, member, shareholders, manager, employees, or Affiliates or any other
Person, whether for services rendered to the Borrower or otherwise; provided,
however, the Borrower shall be permitted to (i) make advances to its employees in an
aggregate amount not to exceed One Hundred Thousand Dollars ($100,000) in any Fiscal Year of
Borrower for all such employees collectively, in each case, provided that both immediately before
such contemplated payment(s) or after giving effect to any such payment(s) no Default or Event of
Default shall exist or have occurred or result therefrom; (ii) pay reasonable outside directors
fees; and (iii) pay the management fees permitted
by the Management Agreements. Administrative Agent acknowledges that travel advances issued
in the ordinary course of business do not constitute loans for purposes of this Section
9.8.
9.9 Dividends and Stock Redemptions. The Borrower shall not (a) declare, make or pay any
dividend or other distribution (whether in cash, property or rights or obligations) to or for the
benefit of any officer, shareholder, member, manager, director, or any Affiliate other than (i) to
Guarantor, provided that both immediately before such contemplated payment(s) or after
giving effect to any such payment(s) Borrower is in compliance with Section 9.12(a) hereof,
(ii) the Required Dividends and Redemption Amounts, (iii) distributions under the Borrower Cash
Management Program, including distributions for Guarantor’s normal quarterly dividends to common
shareholders, and (iv) payment of the management fees under the Management Agreements, or (b)
purchase or redeem any of the Stock of the Borrower or any
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options or warrants with respect
thereto, declare or pay any dividends or distributions thereon, or set aside any funds for any such
purpose. Notwithstanding the foregoing or anything to the contrary contained herein, the foregoing
declarations, payments, distributions, purchases or redemptions set forth in this Section
9.9 shall, in each case, be in both manner and amount consistent with the Borrower’s historical
practices.
9.10 Payments in Respect of Subordinated Debt.
(1) The Borrower shall not make any payment, directly or indirectly, to Omega (or any
Affiliate or Subsidiary thereof) in contravention of the Intercreditor Agreement.
(2) The Borrower shall not make any payment in respect of any Indebtedness for borrowed
money that is subordinated to the Liabilities (including, without limitation, the Subordinated
Debt); provided, however, the Borrower shall be permitted to make solely those payments expressly
permitted pursuant to the terms of the Subordination Agreements, in each case, as long as the
Borrower is in compliance with Section 9.12 hereof both immediately before and after any such
contemplated or actual payment, provided, further, that both immediately before any such
contemplated payment or after giving effect to any such payments no Default or Event of Default
shall exist or have occurred or result therefrom, unless otherwise permitted expressly under the
terms of the Subordinations Agreements.
9.11 Transactions with Affiliates. Except as expressly permitted under this Agreement, and
except for the Management Agreements and payment of the fee permitted by the terms of the
Management Agreements, and the Borrower Cash Management Program, the Borrower shall not transfer
any cash or property to any Affiliate or enter into any transaction, including, without limitation,
the purchase, lease, sale or exchange of property or the rendering of any service to any Affiliate;
provided, however, except as otherwise expressly restricted under this Agreement,
that the Borrower may transfer cash or property to Affiliates and enter into transactions with
Affiliates for fair value in the ordinary course of business pursuant to terms that are no less
favorable to the
Borrower than the terms upon which such transfers or transactions would have been made had
such transfers or transactions been made to or with a Person that is not an Affiliate.
9.12 Financial Ratios. Commencing with the Fiscal Quarter ending March 31, 2011 and
continuing thereafter:
(a) Minimum Fixed Charge Coverage Ratio. The Parent shall not permit its Fixed
Charge Coverage Ratio to be less than 1.05 to 1.00, measured as of the last day of each Fiscal
Quarter for the trailing twelve (12) month period.
(b) Minimum Adjusted EBITDA. The Parent shall not permit its Adjusted EBITDA to be
less than Ten Million and No/100 Dollars ($10,000,000.00), measured as of the last day of each
Fiscal Quarter for the trailing twelve (12) month period.
(c) Parent’s Cash Balance. The Parent shall not permit its Cash Balance (as defined
below), tested as of the last day of each month, to be less than Four Million Dollars ($4,000,000);
provided, a violation of this requirement for any month may be cured within
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fifteen (15)
days of the last day of such month and will not constitute an Event of Default unless not cured by
such day. As used in this Section, the term “Cash Balances” means the aggregate amount of
unrestricted cash of Parent collectively on deposit with PrivateBank. For the avoidance of doubt,
(x) cash deposits contained in any escrow, pledged, hypothecated, assigned or restricted accounts
shall not be included in the calculation of the Cash Balance; and (y) any draws on the Revolving
Loan Commitment deposited in any account ultimately controlled by the Parent shall also not be
included in the calculation of Cash Balance.
The Borrower acknowledges and agrees that the calculation and computation of the foregoing
financial ratios and covenants shall be pursuant to and in accordance with the last sentence of
Section 8.1(e) hereof.
9.13 Change in Nature of Business. Borrower shall not engage, directly or indirectly, in
any business other than providing residential long term care, assisted living and skilled nursing
care; provided, however, that Diversicare Therapy Services, LLC shall not engage,
directly or indirectly, in any business other than physical and occupational therapies and speech
pathology services to residents and patients of nursing centers, acute and long term care
hospitals, outpatient clinics, home health agencies, assisted living facilities and hospice
providers.
9.14 Other Agreements. The Borrower shall not enter into any agreement containing any
provision which would be violated or breached by the performance of its obligations hereunder or
under any Financing Agreement to which Borrower is a party or which would violate or breach any
provision hereof or thereof, or that would or is reasonably likely to adversely affect the
Administrative Agent’s or any Lender’s interests or rights under this Agreement and the other
Financing Agreements to which Borrower is a party or the likelihood that the Liabilities will be
paid in full when due, nor shall the Borrower’s bylaws, articles of incorporation, operating
agreement, partnership agreement or other governing document (each a “Governing Document”),
as applicable, be amended or modified in any way that would violate or breach any provision hereof
or of any Financing Agreement to which Borrower is a party, or that would or is reasonably likely
to adversely affect the Administrative Agent’s or any Lender’s interests or rights under this
Agreement and the other Financing Agreements to which Borrower is a party or the likelihood that
the Liabilities will be paid in full when due; provided, prior to any amendment or modification of
any of the Borrower’s Governing Documents, the Borrower shall furnish a correct and complete copy
of any such proposed amendment or modification to the Administrative Agent.
9.15 Blocked Accounts and Lock Box Accounts. The Borrower shall not establish or open any
other blocked account (other than the Commercial Blocked Account and the Government Blocked
Account) or any lock box accounts after the Closing Date. The Borrower shall not amend, modify or
otherwise change any terms of the Commercial Blocked Account Agreement or the Government Blocked
Account Agreement, without the Administrative Agent’s prior written consent.
9.16 Amendments to Restricted Agreements. The Borrower shall not amend, modify or
supplement any Restricted Agreement, in any manner that would or is reasonably likely to adversely
affect the Administrative Agent’s or any Lender’s interests under this
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Agreement and the other
Financing Agreements to which Borrower is a party, without the Administrative Agent’s prior written
consent (including, without limitation, except as expressly permitted by the terms of the
Intercreditor Agreement, amending or modifying the Omega Debt Documents in order to (a) increase
the rate of interest on or fees payable in respect of the debt unless such increase is not due and
payable prior to the date the Liabilities are repaid in full, (b) accelerate the date of any
regularly scheduled fees, interest or principal payment on the debt, (c) shorten the final maturity
date of the debt, (d) increase the principal amount of the debt, or (e) make the covenants or
events of default contained in the Omega Debt Documents materially more restrictive). Within three
(3) Business Days after entering into any non-adverse amendment, modification or supplement to any
Restricted Agreement, the Borrower Agent shall deliver to the Administrative Agent a complete and
correct copy of such amendment, modification or supplement.
9.17 State of Incorporation or Formation. The Borrower shall not change its state of
incorporation or formation, as applicable, from that set forth on Schedule 1 hereto.
9.18 Environmental. Except as to environmental conditions for which it is not responsible
pursuant to any Commercial Lease, the Borrower shall not permit the Property or any portion thereof
to be involved in the use, generation, manufacture, storage, disposal or transportation of
Hazardous Substances except in compliance in all material respects with all Environmental Laws.
9.19 Fiscal Year. The Borrower shall not change its Fiscal Year.
9.20 Restrictions on Fundamental Changes. Without duplication of any of the foregoing,
Borrower shall not:
(1) except as expressly permitted in accordance with Section 9.3 hereof, liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution);
(2) except as required upon the termination of a Commercial Lease, transfer, assign,
convey or grant to any other Person, other than another Borrower, the right to operate or control
any Location, whether by lease, sublease, management agreement, joint venture agreement or
otherwise;
(3) without providing Administrative Agent with thirty (30) days’ prior written notice,
change its legal name (and Borrower shall provide Administrative Agent with, at Borrower’s sole
cost and expense, such amendment and financing statements and other documents as Administrative
Agent shall reasonably request in connection with such contemplated change);
(4) except as expressly permitted in accordance with Section 9.3 hereof, suffer or permit
to occur any change in the legal or beneficial ownership of the capital stock, partnership
interests or membership interests, or in the capital structure, or any material change in the
organizational documents or governing documents, of Borrower;
(5) change the licensed operator, manager or property manager for any Property; or
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(6) consent to or acknowledge any of the foregoing.
9.21 Margin Stock. Borrower shall not carry or purchase any “margin security” within the
meaning of Regulations U, T or X of the Board of Governors of the Federal Reserve System.
9.22 Truth of Statements and Certificates. Borrower shall not furnish to the
Administrative Agent or any Lender any certificate or other document that contains any untrue
statement of a material fact or that omits to state a material fact necessary to make it not
misleading in light of the circumstances under which it was furnished.
The Borrower agrees that compliance with this Article 9 is a material inducement to
the Lenders’ advancing credit under this Agreement. The Borrower further agrees that in addition
to all other remedies available to the Administrative Agent and the Lenders, the Administrative
Agent and Lenders shall be entitled to specific enforcement of the covenants in this
Article 9, including injunctive relief.
10. HEALTH CARE MATTERS.
Without limiting the generality of any representation or warranty made in Article 7 or
any covenant made in Articles 8 or 9, each Borrower represents and warrants on a
joint and several basis to and covenants with the Administrative Agent and each Lender, and shall
be deemed to represent, warrant and covenant on each day on which any advance or accommodation in
respect of any Loan is requested or made or any Liabilities shall be outstanding under this
Agreement, that:
10.1 Funds from Restricted Grants. None of the Property or the Collateral is subject to,
and Borrower shall indemnify and hold the Administrative Agent and Lenders harmless from and
against, any liability in respect of amounts received by Borrower or others for the purchase or
improvement of the Property or Collateral or any part thereof under restricted or conditioned
grants or donations, including, without limitation, monies received under the Public Health Service
Act, 42 U.S.C. Section 291 et seq.
10.2 Certificate of Need. If required under applicable Law, each Borrower has and shall
maintain in full force and effect a valid certificate of need (“CON”) or similar
certificates, license, permit, registration, certification or approval issued by the State
Regulator for the requisite number of beds in each Property (the “Licenses”). Borrower
shall cause to be operated the Location and the Property in a manner such that the Licenses shall
remain in full force and effect at all times, except to the extent the failure to do so would not
cause a Material Adverse Effect or a material adverse effect on the prospects of the Borrowers on a
consolidated basis. True and complete copies of the Licenses have been delivered to Administrative
Agent.
10.3 Licenses. The Licenses: (i) are and shall continue in full force and effect at all
times throughout the term of this Agreement and are and shall be free from restrictions or known
conflicts which would materially impair the use or operation of any Property for its current use,
and if any Licenses become provisional, probationary, conditional or restricted in any way
(collectively “Restrictions”), Borrower shall take or cause to be taken prompt action to
correct such Restrictions; (ii) may not be, and have not been, and will not be transferred to any
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location other than the Property; and (iii) other than the Omega Security Interest and any HUD
Financing (subject to satisfaction of Section 6.8 of the Term Loan Agreement) have not been
and will not be pledged as collateral security for any other loan or indebtedness. Except as may
be required under and pursuant to the Omega Debt Documents, Borrower shall not do (or suffer to be
done) any of the following:
(1) Rescind, withdraw, revoke, amend, modify, supplement, or otherwise alter the nature,
tenor or scope of the Licenses for any Property without Administrative Agent’s prior written
consent;
(2) Amend or otherwise change any Property’s licensed beds capacity and/or the number of
beds approved by the State Regulator without Administrative Agent’s prior written consent; or
(3) Replace, assign or transfer all or any part of any Property’s beds to another site or
location (other than to any other Property) without Administrative Agent’s prior written
consent.
11. DEFAULT, RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT.
11.1 Event of Default. Any one or more of the following shall constitute an “Event of
Default” under this Agreement:
(1) the Borrower fails to pay (i) any principal or interest payable hereunder or under the
Revolving Credit Note on the date due, declared due or demanded (including, without limitation, any
amount due under Section 2.15); or (ii) any other amount payable to the Administrative Agent or any
Lender or Issuing Lender under this Agreement or under any other Financing Agreement to which the
Borrower is a party (including, without limitation, the Revolving Credit Note) within five (5)
calendar days after the date when any such payment is due and, with respect to clause (ii) only,
such failure is not cured within five (5) calendar days after notice to Borrower by Administrative
Agent;
(2) the Borrower fails or neglects to perform, keep or observe any of the covenants,
conditions or agreements set forth in (i) Sections 2.4, 4.3, 8.5, 8.6, 8.9, 8.11, or Section 8.12
hereof, (ii) any Section of Article 9 hereof (other than Section 9.18 hereof), or (iii) any Section
of Article 10 hereof and, with respect to such Sections in Article 10 only, such failure or neglect
shall continue for a period of five (5) calendar days after the earlier of (1) the date the
Borrower actually knew of such failure or neglect and (2) notice to the Borrower by the
Administrative Agent.
(3) the Borrower fails or neglects to perform, keep or observe any of the covenants,
conditions, promises or agreements contained in this Agreement (which is not otherwise specifically
referenced in this Section 11.1) and such failure or neglect shall continue for a period of thirty
(30) calendar days after the earlier of (i) the date the Borrower actually knew of such failure or
neglect and (ii) notice to the Borrower by the Administrative Agent;
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(4) any representation or warranty heretofore, now or hereafter made by the Borrower in
connection with this Agreement or any of the other Financing
Agreements to which Borrower is a party is untrue, misleading or incorrect in any material
respect, or any schedule, certificate, statement, report, financial data, notice, or writing
furnished at any time by the Borrower to the Administrative Agent or any Lender or Issuing Lender
is untrue, misleading or incorrect in any material respect, on the date as of which the facts set
forth therein are stated or certified;
(5) a judgment, decree or order requiring payment in excess of Two Hundred Fifty Thousand
Dollars ($250,000) shall be rendered against the Borrower and such judgment or order shall remain
unsatisfied or undischarged and in effect for thirty (30) consecutive days without a stay of
enforcement or execution, provided that this clause (e) shall not apply to any judgment, decree or
order for which the Borrower is fully insured and with respect to which the insurer has admitted
liability, or such judgment, decree or order is being contested or appealed by appropriate
proceedings;
(6) a notice of Lien, levy or assessment is filed or recorded with respect to any of the
assets of the Borrower (including, without limitation, the Collateral), by the United States, or
any department, agency or instrumentality thereof, or by any state, county, municipality or other
governmental agency or any taxes or debts owing at any time or times hereafter to any one or more
of them become a Lien, upon any of the assets of the Borrower (including, without limitation, the
Collateral), provided that this clause (f) shall not apply to any Liens, levies, or assessments
which a Borrower is contesting in good faith (provided the Borrower has complied with the
provisions of clauses (a) and (b) of Section 8.4 hereof) or which relate to current taxes not yet
due and payable;
(7) any material portion of the Collateral is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors;
(8) a proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt or receivership law or statute is filed against the Borrower or any guarantor
of the Liabilities, including Parent, and any such proceeding is not dismissed within sixty (60)
days of the date of its filing, or a proceeding under any bankruptcy, reorganization, arrangement
of debt, insolvency, readjustment of debt or receivership law or statute is filed by the Borrower
or any guarantor of the Liabilities, including Parent, or the Borrower or any guarantor of the
Liabilities, including Parent, makes an assignment for the benefit of creditors, or the Borrower or
any guarantor of the Liabilities, including Parent, takes any action to authorize any of the
foregoing;
(9) except as permitted for an Inactive Subsidiary, the Borrower or Parent voluntarily or
involuntarily dissolves or is dissolved, or its existence terminates or is terminated; provided
that in the case of an administrative dissolution or revocation of existence for failure to file
the proper reports or returns with the applicable governmental authorities, no Event of Default
shall be deemed to have occurred if an application for reinstatement is (i) filed promptly (but in
any event, within fifteen (15) calendar days) upon Parent or Borrower receiving notice of such
dissolution or revocation from the applicable
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governmental authority and (ii) diligently pursued to
completion (if reasonably capable of being completed), as determined by the Administrative Agent in
its sole and absolute discretion;
(10) the Credit Parties, taken as a whole, fail, at any time, to be Solvent;
(11) the Borrower or any guarantor of the Liabilities, including Parent, is enjoined,
restrained, or in any way prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of its business affairs;
(12) a breach by the Borrower shall occur under any agreement, document or instrument
(other than an agreement, document or instrument evidencing the lending of money), whether
heretofore, now or hereafter existing between the Borrower and any other Person and the effect of
such breach if not cured within any applicable cure period will or is likely to have or create a
Material Adverse Effect;
(13) the Borrower shall fail to make any payment due on any other obligation for borrowed
money or shall be in breach of any agreement evidencing the lending of money and the effect of such
failure or breach if not cured within any applicable cure period would be to permit the
acceleration of any obligation, liability or indebtedness in excess of Five Hundred Thousand
Dollars ($500,000);
(14) there shall be instituted in any court criminal proceedings against the Borrower, or
the Borrower shall be indicted for any crime, in either case for which forfeiture of a material
amount of its property is a potential penalty, unless (i) such actions are being contested or
appealed in good faith by appropriate proceedings, (ii) the potential forfeiture has been stayed
during the pendency of such proceedings, and (iii) no Medicare or Medicaid reimbursement
obligations are materially adversely affected by such proceedings;
(15) Parent shall at any time after the Closing Date have voting power over less than one
hundred percent (100%) of the issued and outstanding Stock of Diversicare Management Services
Co.;
(16) any Lien securing the Liabilities shall, in whole or in part, cease to be a perfected
first priority Lien (subject only to the Permitted Liens); this Agreement or any of the Financing
Agreements to which the Borrower is a party, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligations of the Borrower; or the Borrower shall directly or indirectly, contest in
any manner such effectiveness, validity, binding nature or enforceability;
(17) any default or event of default shall occur under or pursuant to any Omega Debt
Document, or any breach of, noncompliance with or default under the Intercreditor Agreement, any
Subordination Agreement, or any other Financing Agreement (including, without limitation, the
Guaranty, each Pledge Agreement and the Master Letter of Credit Agreement) by any party thereto
(other than by the Administrative Agent), and the same is not cured or remedied within any
applicable cure period, provided that if such default or event of default, breach, noncompliance or
default, requires the giving of notice by Administrative
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Agent to any party in addition to or other
than Borrower, Administrative Agent shall have
provided Borrower with such notice at the same time as it provides such notice to such
other party;
(18) if the Borrower fails, within three (3) Business Days of receipt to forward any
collections it receives with respect to any Accounts to the Commercial Blocked Account or the
Government Blocked Account, as the case may be;
(19) institution by the PBGC, the Borrower or any ERISA Affiliate of steps to terminate
any Plan or to organize, withdraw from or terminate a Multiemployer Plan if as a result of such
reorganization, withdrawal or termination, the Borrower or any ERISA Affiliate could be required to
make a contribution to such Plan or Multiemployer Plan, or could incur a liability or obligation to
such Plan or Multiemployer Plan, in excess of Two Hundred Fifty Thousand Dollars ($250,000), or
(ii) a contribution failure occurs with respect to any Plan sufficient to give rise to a Lien under
ERISA, which Lien is not fully discharged within fifteen (15) days;
(20) a Material Adverse Change shall occur;
(21) Borrower or any Affiliate of Borrower, shall challenge or contest, in any action,
suit or proceeding, the validity or enforceability of this Agreement, or any of the other Financing
Agreements, the legality or the enforceability of any of the Liabilities or the perfection or
priority of any Lien granted to the Administrative Agent;
(22) Parent shall revoke or attempt to revoke, terminate or contest its obligations under
the Guaranty, or the Guaranty or any provision thereof shall cease to be in full force and effect
in accordance with its terms and provisions;
(23) any Pledgor shall revoke or attempt to revoke, terminate or contest in any way any
Pledge Agreement, or any provision thereof shall cease to be in full force and effect in accordance
with its terms and provisions;
(24) Borrower shall be prohibited or otherwise restrained from conducting the business
theretofore conducted by it in any manner that has or could reasonably be expected to have or
result in a Material Adverse Effect;
(25) there shall occur with respect to the Operator of any Location any Medicare or
Medicaid survey deficiencies at Level I, J, K, L or worse (i) which deficiencies are not cured
within the amount of time permitted by the applicable reviewing agency; (ii) which result in the
imposition by any Government Authority or the applicable state survey agency of sanctions in the
form of either a program termination, temporary management, denial of payment for new admission
(which continues for thirty (30) days or more or pertains to more than one Location) or facility
closure and (iii) which sanctions could have a Material Adverse Effect as determined by
Administrative Agent in its reasonable discretion. Upon the occurrence of such event, Borrower
shall submit to Administrative Agent its plan of correction for dealing with such event, and shall
periodically review its progress under the plan of correction with Administrative Agent. Provided
that Administrative Agent remains satisfied
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with the progress under the plan of correction, then
such Event shall not be an Event of Default unless formal notice is given by Administrative Agent
to Borrower;
(26) a state or federal regulatory agency shall have revoked any license, permit,
certificate or Medicaid or Medicare qualification pertaining to the Real Property or any Location,
regardless of whether such license, permit, certificate or qualification was held by or originally
issued for the benefit of Borrower, a tenant or any other Person, the revocation of which could
reasonably be expected to have a Material Adverse Effect;
(27) any material default by Borrower under the terms of any material Lease following the
expiration of any applicable notice and cure period (if any);
(28) William R. Council III or L. Glynn Riddle, Jr. shall not be senior officers of the
Borrower and devote significant time and energy to the business of the Borrower; provided, however,
it shall not constitute an Event of Default if any such individual shall fail for any reason to be
a senior officer of the Borrower or fail to devote significant time and energy to the business of
the Borrower, and such individual shall be promptly replaced by the Borrower, whether on an interim
or permanent basis, with an individual with substantially similar skills and experience (but in no
event later than within 90 calendar days of the former individual’s resignation, termination,
permanent disability or death) and otherwise acceptable to the Administrative Agent in its
reasonable and good faith determination;
(29) any subordination provision in any document or instrument governing Subordinated
Debt, or any subordination provision in any guaranty by any Subsidiary of any Subordinated Debt,
shall cease to be in full force and effect, or any Credit Party or any other Person (including the
holder of any applicable Subordinated Debt) shall contest in any manner the validity, binding
nature or enforceability of any such provision; or
(30) an “Event of Default” shall occur under or pursuant to the Term Loan Agreement or any
Affiliate Term Loan Financing Agreement.
Notwithstanding the foregoing, in the situations described in clauses (l), (t), (x) and (z),
above, where an Event of Default is triggered by the occurrence of a Material Adverse Change or a
Material Adverse Effect, events which could reasonably be expected to have or result in a Material
Adverse Effect or Material Adverse Change, such occurrence shall not be deemed to be an Event of
Default hereunder provided that Borrower shall within forty-eight (48) hours after the occurrence
thereof submit to Administrative Agent in writing a plan of correction for dealing with such
Material Adverse Change or Material Adverse Effect that is acceptable to Administrative Agent in
its sole and absolute discretion, and, if such plan of correction is so acceptable, for so long as
Administrative Agent remains satisfied in all respects with the progress under such plan of
correction and until written notice that Administrative Agent is not so satisfied is given by
Administrative Agent to Borrower.
11.2 Acceleration. Upon the occurrence of any Event of Default described in Sections
11.1(h), (i), or (j), the Commitment (if it has not theretofore terminated)
shall automatically and immediately terminate and all of the Liabilities shall immediately and
automatically, without presentment, demand, protest or notice of any kind (all of which are
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hereby
expressly waived), be immediately due and payable; and upon the occurrence of any other Event of
Default, the Administrative
Agent may at its sole option (or, upon written request of Required Lenders shall) declare the
Commitment (if it has not theretofore terminated) to be terminated and any or all of the
Liabilities may, at the sole option of the Administrative Agent (or, upon written request of
Required Lenders shall), and without presentment, demand, protest or notice of any kind (all of
which are hereby expressly waived), be declared, and thereupon shall become, immediately due and
payable, whereupon the Commitment shall immediately terminate. Upon the occurrence of any Default
or Event of Default the Lender may, at its option, cease making any additional Revolving Loans.
11.3 Rights and Remedies Generally.
(1) Upon the occurrence of any Event of Default, the Administrative Agent and Lenders
shall have, in addition to any other rights and remedies contained in this Agreement and in any of
the other Financing Agreements, all of the rights and remedies of a secured party under the Code or
other applicable laws, all of which rights and remedies shall be cumulative, and non-exclusive, to
the extent permitted by Laws, including, without limitation, the right of Administrative Agent to
sell, assign, or lease any or all of the Collateral. The exercise of any one right or remedy shall
not be deemed a waiver or release of any other right or remedy, and the Administrative Agent, upon
the occurrence of an Event of Default, may proceed against Borrower, and/or the Collateral, at any
time, under any agreement, with any available remedy and in any order. All sums received from
Borrower and/or the Collateral in respect of the Loans may be applied by the Administrative Agent
to any Liabilities in such order of application and in such amounts as the Administrative Agent
shall deem appropriate in its discretion (subject to Section 12.8). Borrower waives any right it
may have to require the Administrative Agent to pursue any Person for any of the Liabilities.
(2) Upon notice to Borrower after an Event of Default, Borrower at its own expense shall
assemble all or any part of the Collateral as determined by Administrative Agent and make it
available to Administrative Agent at any location designated by Administrative Agent. In such
event, Borrower shall, at its sole cost and expense, store and keep any Collateral so assembled at
such location pending further action by Administrative Agent and provide such security guards and
maintenance services as shall be necessary to protect and preserve such Collateral. In addition to
all such rights and remedies, the sale, lease or other disposition of the Collateral, or any part
thereof, by the Administrative Agent after an Event of Default may be for cash, credit or any
combination thereof, and the Administrative Agent (on behalf of Lenders and itself) may purchase
all or any part of the Collateral at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set-off the amount of such purchase price against the
Liabilities of the Borrower then owing. Any sales of such Collateral may be adjourned from time to
time with or without notice. The Administrative Agent may, in its sole discretion, cause the
Collateral to remain on the Borrower’s premises, at the Borrower’s expense, pending sale or other
disposition of such Collateral. The Administrative Agent shall have the right after an Event of
Default to conduct such sales on the Borrower’s premises, at the Borrower’s expense, or elsewhere,
on such occasion or occasions as the Administrative Agent may see fit.
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11.4 Entry Upon Premises and Access to Information. Upon the occurrence of any Event of
Default, the Administrative Agent shall have the right to enter upon the premises of the Borrower
where the Collateral is located without any obligation to pay rent to the Borrower, or any other
place or places where such Collateral is believed to be located and kept, and remove such
Collateral therefrom to the premises of the Administrative Agent or any agent of the Administrative
Agent, for such time as the Administrative Agent may desire, in order to effectively collect or
liquidate such Collateral. Upon the occurrence of any Event of Default, the Administrative Agent
shall have the right to obtain access to the Borrower’s data processing equipment, computer
hardware and software relating to the Collateral and subject to the privacy requirements and
regulations of HIPPA and of any applicable state or federal patients bill of rights, to use all of
the foregoing and the information contained therein in any manner the Administrative Agent deems
appropriate. Upon the occurrence of any Event of Default, the Administrative Agent shall have the
right to receive, open and process all mail addressed to the Borrower and relating to the
Collateral.
11.5 Sale or Other Disposition of Collateral by the Administrative Agent. Any notice
required to be given by the Administrative Agent of a sale, lease or other disposition or other
intended action by the Administrative Agent, with respect to any of the Collateral, which is
deposited in the United States mails, postage prepaid and duly addressed to the Borrower at the
address specified in Section 12.12 hereof, at least ten (10) calendar days prior to such
proposed action shall constitute fair and reasonable notice to the Borrower of any such action.
The net proceeds realized by the Administrative Agent upon any such sale or other disposition,
after deduction for the expense of retaking, holding, preparing for sale, selling or the like and
the attorneys’ and paralegal’ fees and legal expenses incurred by the Administrative Agent in
connection therewith, shall be applied as provided herein toward satisfaction of the Liabilities,
including, without limitation, such Liabilities described in Sections 8.2 and 11.2
hereof. The Administrative Agent shall account to the Borrower for any surplus realized upon such
sale or other disposition, and the Borrower shall remain liable for any deficiency. The
commencement of any action, legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Administrative Agent’s Liens in the Collateral until the
Liabilities are fully paid in cash. The Borrower agrees that the Administrative Agent has no
obligation to preserve rights to the Collateral against any other Person. If and to the extent
applicable, the Administrative Agent is hereby granted a license or other right to use, without
charge, the Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trade styles, trademarks, service marks and advertising matter or any property of a similar
nature, as it pertains to the Collateral, in completing production of, advertising for sale and
selling any such Collateral, and the Borrower’s rights and benefits under all licenses and
franchise agreements, if any, shall inure to the Administrative Agent’s benefit until the
Liabilities of the Borrower are paid in full in cash. Borrower covenants and agrees not to
interfere with or impose any obstacle to Administrative Agent’s exercise of its rights and remedies
with respect to the Collateral.
11.6 Waivers (General).
(1) Except as otherwise provided for in this Agreement and to the fullest extent permitted
by applicable Law, Borrower hereby waives: (i) presentment, demand and protest, and notice of
presentment, dishonor, intent to accelerate, acceleration,
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protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all Financing Agreements, the
Revolving Credit Notes or any other notes, commercial paper, Accounts, contracts, documents,
instruments, chattel paper and guaranties at any time held by Administrative Agent or any Lender on
which Borrower may in any way be liable, and hereby ratifies and confirms whatever Administrative
Agent and Lenders may do in this regard; (ii) all rights to notice and a hearing prior to
Administrative Agent’s taking possession or control of, or to Administrative Agent’s replevy,
attachment or levy upon, any Collateral or any bond or security which might be required by any
court prior to allowing Administrative Agent to exercise any of its remedies; and (iii) the benefit
of all valuation, appraisal and exemption Laws. Borrower acknowledges that it has been advised by
counsel of its choice and decision with respect to this Agreement, the other Financing Agreements
and the transactions evidenced hereby and thereby.
(2) Borrower for itself and all endorsers, guarantors and sureties and their heirs, legal
representatives, successors and assigns, (i) agrees that its liability shall not be in any manner
affected by any indulgence, extension of time, renewal, waiver, or modification granted or
consented to by Administrative Agent; (ii) consents to any indulgences and all extensions of time,
renewals, waivers, or modifications that may be granted by Administrative Agent with respect to the
payment or other provisions of this Agreement, the Revolving Credit Notes, and to any substitution,
exchange or release of the Collateral, or any part thereof, with or without substitution, and
agrees to the addition or release of any Borrower, endorsers, guarantors, or sureties, or whether
primarily or secondarily liable, without notice to Borrower and without affecting its liability
hereunder; (iii) agrees that its liability shall be unconditional and without regard to the
liability of any other tax; and (iv) expressly waives the benefit of any statute or rule of law or
equity now provided, or which may hereafter be provided, which would produce a result contrary to
or in conflict with the foregoing.
(3) Each and every covenant and condition for the benefit of Administrative Agent and
Lenders contained in this Agreement and the other Financing Agreements may be waived by
Administrative Agent; provided, however, that to the extent that Administrative Agent may have
acquiesced in any noncompliance with any requirements or conditions precedent to the Closing of any
Loan or to any subsequent disbursement of Loan proceeds, such acquiescence shall not be deemed to
constitute a waiver by Administrative Agent of such requirements with respect to any future
disbursements of Loan proceeds and Administrative Agent may at any time after such acquiescence
require Borrower to comply with all such requirements. Any forbearance by Administrative Agent in
exercising any right or remedy under any of the Financing Agreements, or otherwise afforded by
applicable Law, including any failure to accelerate the Stated Maturity Date shall not be a waiver
of or preclude the exercise of any right or remedy nor shall it serve as a novation of the
Revolving Credit Note or as a reinstatement of the Loan or a waiver of such right of acceleration
or the right to insist
upon strict compliance of the terms of the Financing Agreements. Administrative Agent’s
acceptance of payment of any sum secured by any of the Financing Agreements after the due date of
such payment shall not be a waiver of Administrative Agent’s right to either require prompt payment
when due of all other sums so secured or to declare a default for failure to make prompt payment.
The procurement of insurance or the payment of taxes or other liens or charges by Administrative
Agent shall not be a waiver of Administrative Agent’s right to accelerate the maturity of the Loan,
nor shall Administrative Agent’s receipt of any condemnation awards,
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insurance proceeds, or damages
under this Agreement operate to cure or waive Borrower’s or Guarantor’s default in payment of sums
secured by any of the Financing Agreements.
(4) Without limiting the generality of anything contained in this Agreement or the other
Financing Agreements, Borrower agrees that if an Event of Default is continuing (i) Administrative
Agent is not subject to any “one action” or “election of remedies” law or rule, and (ii) all liens
and other rights, remedies or privileges provided to Administrative Agent shall remain in full
force and effect until Administrative Agent has exhausted all of its remedies against the
Collateral and any other properties owned by Borrower and the Financing Agreements and other
security instruments or agreements securing the Liabilities has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Liabilities.
(5) Nothing contained herein or in any other Financing Agreement shall be construed as
requiring Administrative Agent to resort to any part of the Collateral for the satisfaction of any
of Borrower’s obligations under the Financing Agreements in preference or priority to any other
Collateral, and Administrative Agent may seek satisfaction out of all of the Collateral or any part
thereof, in its absolute discretion in respect of Borrower’s obligations under the Financing
Agreements. In addition, Administrative Agent shall have the right from time to time to partially
foreclose upon any Collateral in any manner and for any amounts secured by the Financing Agreements
then due and payable as determined by Administrative Agent in its sole discretion, including,
without limitation, the following circumstances: (i) if Borrower defaults beyond any applicable
grace period in the payment of one or more scheduled payments of principal and interest,
Administrative Agent may foreclose upon all or any part of the Collateral to recover such
delinquent payments, or (ii) if Administrative Agent elects to accelerate less than the entire
outstanding principal balance of the Revolving Credit Note, Administrative Agent may foreclose all
or any part of the Collateral to recover so much of the principal balance of the Revolving Credit
Note as Administrative Agent may accelerate and such other sums secured by one or more of the
Financing Agreements as Administrative Agent may elect. Notwithstanding one or more partial
foreclosures, any unforeclosed Collateral shall remain subject to the Financing Agreements to
secure payment of sums secured by the Financing Agreements and not previously recovered.
(6) To the fullest extent permitted by law, Borrower, for itself and its successors and
assigns, waives in the event of foreclosure of any or all of the Collateral any equitable right
otherwise available to Borrower which would require the separate sale of any of the Collateral or
require Administrative Agent to exhaust its remedies against any part of the Collateral before
proceeding against any other part of the Collateral; and further in the event of such foreclosure
Borrower does hereby expressly consent to and authorize, at the option of
Administrative Agent, the foreclosure and sale either separately or together of each part
of the Collateral.
11.7 Waiver of Notice. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE BORROWER HEREBY
WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE ADMINISTRATIVE
AGENT OF ITS RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL
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PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
11.8 Injunctive Relief. The parties acknowledge and agree that, in the event of a breach
or threatened breach of any Credit Party’s obligations under any Financing Agreements,
Administrative Agent may have no adequate remedy in money damages and, accordingly, shall be
entitled to an injunction (including without limitation, a temporary restraining order, preliminary
injunction, writ of attachment, or order compelling an audit) against such breach or threatened
breach, including, without limitation, maintaining the cash management and collection procedure
described herein. However, no specification in this Agreement of a specific legal or equitable
remedy shall be construed as a waiver or prohibition against any other legal or equitable remedies
in the event of a breach or threatened breach of any provision of this Agreement. Each Credit
Party waives the requirement of the posting of any bond in connection with such injunctive relief.
11.9 Marshalling; Recourse to Borrower. Administrative Agent shall have no obligation to
marshal any assets in favor of any Credit Party, or against or in payment of any of the other
Liabilities or any other obligation owed to the Administrative Agent or Lenders by any Credit
Party. Notwithstanding anything to the contrary contained herein or in any other Financing
Agreement, the Loans and the other Liabilities shall be fully recourse to Borrower, and
Administrative Agent shall be authorized, in its sole and absolute discretion, to enforce any or
all of its remedies hereunder against Borrower, including all present and future revenue and assets
of Borrower, whether or not such assets have been pledged as collateral for the Loans.
11.10 Advice of Counsel. The Borrower acknowledges that it has been advised by its counsel
with respect to this transaction and this Agreement, including, without limitation, all waivers
contained herein.
12. MISCELLANEOUS.
12.1 Waiver; Amendment. The Administrative Agent’s or Lenders’ failure, at any time or times hereafter, to require
strict performance by the Borrower of any provision of this Agreement shall not waive, affect or
diminish any right of the Administrative Agent thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by the Administrative Agent, Issuing Lender or the
Lenders, as applicable, of an Event of Default under this Agreement or a default under any of the
other Financing Agreements shall not suspend, waive or affect any other Event of Default under this
Agreement or any other default under any of the other Financing Agreements, whether the same is
prior or subsequent thereto and whether of the same or of a different kind or character. None of
the undertakings, agreements, warranties, covenants and representations of the Borrower contained
in this Agreement or any of the other Financing Agreements and no Event of Default under this
Agreement or default under any of the other Financing Agreements shall be deemed to have been
suspended or waived by the Administrative Agent unless such suspension or waiver is in writing
signed by an officer of the Administrative Agent, and directed to the Borrower specifying such
suspension or waiver.
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Except as otherwise set forth herein, no amendment or modification or waiver of,
or consent with respect to (as reasonably determined by Administrative Agent) any provision
of this Agreement or the other Financing Agreements shall in any event be effective unless the same
shall be in writing and acknowledged by Borrower and either (i) Required Lenders, or (ii) Administrative
Agent with a certification that consent from the Required Lenders has been obtained, and then any such
amendment, modification, waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. Notwithstanding anything contained herein to the contrary, no
amendment, modification, waiver or consent shall (a) extend or increase the Commitment of any
Lender without the written consent of such Lender, as applicable, (b) extend the date scheduled for
payment of any principal (exclusive of mandatory prepayments) of or interest on the Loans or any
fees payable hereunder without the written consent of each Lender directly affected thereby, (c)
extend the Stated Maturity Date of the Loans without the written consent of all Lenders
(except in accordance with the terms of this Agreement), (d) reduce the principal amount of the Loans,
the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby
(except for any periodic adjustments of interest rates and fees as provided for in this Agreement), or (e) release any party from its
obligations under any guaranty at any time hereafter provided, if any, or all or substantially all of the Collateral granted hereunder
or under any of the Financing Agreements (except as otherwise specifically permitted or provided in this Agreement),
change the definition of Required Lenders, any provision of this Section 12.1 or reduce the aggregate Pro Rata
Share required to effect an amendment, modification, waiver or consent, without, in each case with respect to
this subsection (e), the written consent of all Lenders, or (f) waive any material condition set forth in Section 5
without the prior written consent of each Lender directly affected thereby. No provision in this Agreement
with respect to the timing or application of mandatory prepayments of the Loans shall be amended, modified
or waived without the consent of Required Lenders. No provision of Section 13 or other provision of this Agreement
affecting Administrative Agent or any Issuing Lender, in such capacity, as such shall be amended, modified or waived
without the consent of Administrative Agent or such Issuing Lender, as applicable. Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the prior written consent of such Lender.
12.2
Costs and Attorneys’ Fees.
(1) Borrower agrees to pay jointly and severally on demand all of the costs and expenses
of the Administrative Agent (including, without limitation, the reasonable fees and out-of-pocket
expenses of the Administrative Agent’s counsel, all UCC tax, lien, judgment, pending suit, and
bankruptcy search fees and costs, UCC filing fee and costs, recording, filing and registration fees
and charges, mortgage or documentary taxes, all costs of Intralinks or other similar transmission
system, if applicable, all corporate search fees and certified documents, all financial and legal
due diligence expenses, all audit, field exam and appraisal costs and fees, costs incurred by
Administrative Agent in connection with travel expenses of its associates, background checks on
members of management of Borrower, and, if applicable, real estate appraisal fees, survey fees,
recording and title insurance costs, and any environmental report or analysis) in connection with
the structuring, preparation, negotiation, execution, delivery and closing of: (i) this Agreement,
the other Financing Agreements and all
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other instruments, agreements, certificates or documents
provided for herein or delivered or to be delivered hereunder, and (ii) any and all amendments,
modifications, supplements and waivers executed and delivered pursuant hereto or any other
Financing Agreement or in connection herewith or therewith. Borrower further agrees that the
Administrative Agent, in its sole discretion, may deduct all such unpaid amounts from the aggregate
proceeds of the Loans or debit such amounts from the operating accounts of Borrower maintained with
the Administrative Agent.
(2) The costs and expenses that the Administrative Agent and Lenders incur in any manner
or way with respect to the following shall be part of the Liabilities, payable by Borrower jointly
and severally on demand if at any time after the date of this Agreement the Administrative Agent or
any Lender: (i) employs counsel in good faith for advice or other representation, (ii) with respect
to the amendment, modification or enforcement of this Agreement or the other Financing Agreements,
or with respect to any Collateral securing the Liabilities hereunder, (iii) to represent the
Administrative Agent and Lender in any work-out or any type of restructuring of the Liabilities, or
any litigation, contest, dispute, suit or proceeding or to commence, defend or intervene or to take
any other action in or with respect to any litigation, contest, dispute, suit or proceeding
(whether instituted by the Administrative Agent, Lenders, Borrower or any other Person) in any way
or respect relating to this Agreement, the other Financing Agreements, Borrower’s affairs or any
Collateral hereunder or (iv) to enforce any of the rights of the Administrative Agent or Lenders
with respect to Borrower provided in this Agreement, under any of the other Financing Agreements,
or otherwise (whether at law or in equity) (including any foreclosure sale, deed in lieu
transaction or costs incurred in connection with any litigation or bankruptcy or administrative
hearing and any appeals therefrom and any post-judgment enforcement action including, without
limitation, supplementary proceedings in connection with the enforcement of this Agreement); (v)
takes any action to protect, preserve, store, ship, appraise, prepare for sale, collect, sell,
liquidate or otherwise dispose of any Collateral hereunder; and/or (vi) seeks to enforce or
enforces any of the rights and remedies of the Administrative Agent or Lenders with respect to
Borrower or any guarantor of the Liabilities. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees include: reasonable fees, costs and expenses of attorneys,
accountants and consultants; court costs and expenses; court reporter fees, costs and expenses;
long distance telephone charges; and courier and telecopier charges.
(3) Borrower further agrees to pay, and to save the Administrative Agent and Lenders
harmless from all liability for, any documentary stamp tax, intangible tax, or other stamp tax or
taxes of any kind which may be payable in connection with or related to the execution or delivery
of this Agreement, the other Financing Agreements, the borrowing hereunder, the issuance of the
Revolving Credit Note or of any other instruments, agreements, certificates or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith, provided that
Borrower shall not be liable for Administrative Agent’s or any Lender’s income tax liabilities.
(4) All of the Borrower’s obligations provided for in this Section 12.2 shall be
Liabilities secured by the Collateral and shall survive repayment of the Loans or any termination
of this Agreement or any Financing Agreements.
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12.3 Expenditures by the Administrative Agent. In the event the Borrower shall fail to pay
taxes, insurance, audit fees and expenses, consulting fees, filing, recording and search fees,
assessments, fees, costs or expenses which the Borrower is, under any of the terms hereof or of any
of the other Financing Agreements, required to pay, or fails to keep the Collateral free from other
Liens, except as permitted herein, the Administrative Agent may, in its sole discretion, pay or
make expenditures for any or all of such purposes, and the amounts so expended, together with
interest thereon at
the Default Rate (from the date the obligation or liability of Borrower is charged or incurred
until actually paid in full to Administrative Agent and Lenders, as applicable) and shall be part
of the Liabilities of the Borrower, payable on demand and secured by the Collateral.
12.4 Custody and Preservation of Collateral. The Administrative Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as the Borrower shall request in writing, but
failure by the Administrative Agent to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care, and no failure by the Administrative Agent to preserve or
protect any right with respect to such Collateral against prior parties, or to do any act with
respect to the preservation of such Collateral not so requested by a Borrower, shall of itself be
deemed a failure to exercise reasonable care in the custody or preservation of such Collateral.
12.5 Reliance by the Lenders. The Borrower acknowledges that the Lenders and
Administrative Agent, in entering into this Agreement and agreeing to make Loans and otherwise
extend credit to the Borrower hereunder, has relied upon the accuracy of the covenants, agreements,
representations and warranties made herein by the Borrower and the information delivered by the
Borrower to the Administrative Agent and Lenders in connection herewith (including, without
limitation, all financial information and data).
12.6 Assignability; Parties. This Agreement (including, without limitation, any and all of
the Borrower’s rights, obligations and liabilities hereunder) may not be assigned by the Borrower
without the prior written consent of Administrative Agent and Required Lenders. Whenever in this
Agreement there is reference made to any of the parties hereto, such reference shall be deemed to
include, wherever applicable, a reference to the successors and permitted assigns of the Borrower
and the successors and assigns of the Administrative Agent and (subject to Section 12.15
hereof) the Lenders.
12.7 Severability; Construction. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Agreement. The parties hereto
have participated jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
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12.8 Application of Payments. Notwithstanding any contrary provision contained in this Agreement or in any of the other
Financing Agreements, after the occurrence of a Default or an Event of Default the Borrower
irrevocably waives the right to direct the application of any and all payments at any time or times
hereafter received by the Administrative Agent or any Lender from the Borrower or with respect to
any of the Collateral, and the Borrower does hereby irrevocably agree that any and all payments so
received shall be applied in the following manner:
First, to payment of that portion of the Liabilities constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of counsel to Administrative
Agent) payable to Administrative Agent;
Second, to payment of that portion of the Liabilities constituting fees, indemnities
and other amounts (other than principal, interest and L/C Fees) payable to Lenders and the Issuing
Lenders (including fees, charges and disbursements of counsel to the respective Lenders and Issuing
Lenders), ratably among them in proportion to the respective amounts described in this clause
Second payable to them;
Third, to payment of that portion of the Liabilities constituting accrued and unpaid
L/C Fees and interest on the Loans, Letter of Credit Obligations and other Liabilities, ratably
among Lenders and the Issuing Lenders in proportion to the respective amounts described in this
clause Third payable to them;
Fourth, to payment of that portion of the Liabilities constituting unpaid principal of
the Loans and L/C Disbursements, ratably among Lenders and the Issuing Lenders in proportion to the
respective amounts described in this clause Fourth held by them;
Fifth, to Administrative Agent for the account of the Issuing Lenders, to Cash
Collateralize that portion of Letter of Credit Obligations comprised of the aggregate undrawn
amount of Letters of Credit; and
Last, to all other Liabilities, and then, after all such Liabilities have been
indefeasibly paid in full in cash, any balance to the Borrower or as otherwise required by
applicable law.
Amounts used to cash collateralize the aggregate undrawn amount of Letters of Credit pursuant to
clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as
they occur. If any amount remains on deposit as cash collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to the other
Liabilities, if any, in the order set forth above.
12.9 Payments Set Aside. To the extent that the Borrower makes a payment or payments to
the Administrative Agent or Lenders or the Administrative Agent or Lenders enforce their respective
Liens or exercises their respective rights of setoff, and such payment or payments or the proceeds
of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such recovery, the obligation or part thereof originally
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intended to be satisfied
shall be revived and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
12.10 Sections and Titles; UCC Termination Statements. The sections and titles contained in
this Agreement shall be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto. At such time as all of the Liabilities shall
have been indefeasibly paid in full in cash and this Agreement shall terminate in accordance with
its terms, the Administrative Agent will, upon Borrower’s written request and at the Borrower’s
cost and expense, timely file all Uniform Commercial Code termination statements reasonably
required by the Borrower to evidence the termination of the Liens in the Collateral in favor of the
Administrative Agent (for the ratable benefit of Lenders and Administrative Agent).
12.11 Continuing Effect; Inconsistency. This Agreement, the Administrative Agent’s Liens in
the Collateral, and all of the other Financing Agreements shall continue in full force and effect
so long as any Liabilities shall be owed to the Lenders, Issuing Lender and Administrative Agent,
and (even if there shall be no such Liabilities outstanding) so long as this Agreement has not been
terminated as provided in Section 2.9 hereof. To the extent any terms or provisions
contained in any Financing Agreement are inconsistent or conflict with the terms and provisions of
this Agreement, the terms and provisions of this Agreement shall control and govern. The
relationship between Administrative Agent, Issuing Lenders and Lenders on the one hand and Borrower
on the other hand shall be that of creditor-debtor only. No term in this Agreement or in any other
Financing Agreement and no course of dealing between the parties shall be deemed to create any
relationship or agency, partnership or joint venture or any fiduciary duty by Administrative Agent,
any Issuing Lender or any Lender to Borrower or any other party. In exercising its rights
hereunder and under any other Financing Agreements or taking any actions herein or therein,
Administrative Agent, Issuing Lenders and Lenders may act through its respective employees, agents
or independent contractors as authorized by Administrative Agent, such Issuing Lender or such
Lender.
12.12 Notices. Any notice or other communication required or permitted under this Agreement
shall be in writing and personally delivered, mailed by registered or certified U.S. mail (return
receipt requested and postage prepaid), sent by telecopier (with a confirming copy sent by regular
mail), or sent by prepaid nationally recognized overnight courier service, and addressed to the
relevant party at its address set forth below, or at such other address as such party may, by
written notice, designate as its address for purposes of notice under this Agreement:
(1) If to the Administrative Agent, at:
The PrivateBank and Trust Company
120 South LaSalle Street
Chicago, Illinois 60603
Attention: Adam Panos
Telephone No.: 312-564-1278
Facsimile No.: 312-564-6889
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With a copy to:
Duane Morris LLP
190 South LaSalle Street — Suite 3700
Chicago, Illinois 60603
Attention: Brian P. Kerwin
Telephone No: 312-499-6737
Facsimile No: 312-499-6701
(2) If to the Borrower or Borrower Agent, at:
Advocat Inc.
1621 Galleria Boulevard
Brentwood, Tennessee 37027
Attention: Glynn Riddle
Telephone No.: 615-771-7575
Facsimile No.: 615-771-7409
With a copy to:
Harwell Howard Hyne Gabbert & Manner
315 Deaderick Street, Suite 1800
Nashville, Tennessee 37238
Attention: John N. Popham IV
Telephone No.: 615-251-1093
Facsimile No.: 615-251-1059
(c) If to Lenders, as identified on Annex A hereto.
If mailed, notice shall be deemed to be given three (3) days after being sent, and if sent by
personal delivery, telecopier or prepaid courier, notice shall be deemed to be given when
delivered. If any notice is tendered to an addressee and delivery thereof is refused by such
addressee, such notice shall be effective upon such tender unless expressly set forth in such
notice.
12.13 Equitable Relief. The Borrower recognizes that, in the event the Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this Agreement, any
remedy at law may prove to be inadequate relief to the Administrative Agent and Lenders; therefore,
the Borrower agrees that the Administrative Agent and Lenders, if the Administrative Agent or
Lenders so request, shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
12.14 Entire Agreement. This Agreement, together with the Financing Agreements executed in
connection herewith, constitutes the entire agreement among the parties with respect to the subject
matter hereof, and supersedes all prior written or oral understandings, discussions and agreements
with respect thereto (including, without limitation, any term sheet, proposal letter or commitment
letter).
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12.15 Participations and Assignments. (a) Any Lender may at any time assign to one or more
Persons (other than (i) a natural person or (ii) any Defaulting Lender or its wholly-owned
subsidiaries) (any such Person, an “Assignee”) all or any portion of such Lender’s Pro Rata
Share of the Loans, with the prior written consent of Administrative Agent, and, so long as no
Event of Default has occurred and is continuing, Borrower (all of which consents shall not be
unreasonably withheld, conditioned or delayed and shall not be required for an assignment by a
Lender to another Lender or an Affiliate of a Lender). Except as Administrative Agent may
otherwise agree (and, so long as no Event of Default has occurred and is continuing, Borrower
otherwise consents in writing, which consent shall not be unreasonably withheld, conditioned or
delayed), any such assignment shall be in a minimum aggregate amount equal to Five Million Dollars
($5,000,000) or, if less, the remaining Loan held by the assigning Lender. Borrower and
Administrative Agent shall be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned to an Assignee until Administrative Agent shall have
received and accepted an effective assignment agreement in substantially the form of Exhibit
C hereto (an “Assignment Agreement”) executed, delivered and fully completed by the
applicable parties thereto and a processing fee of Five Thousand Dollars ($5,000). No assignment
may be made to any Person if at the time of such assignment Borrower would be obligated to pay any
greater amount under Sections 3.1 or 3.3 to the Assignee than Borrower is then
obligated to pay to the assigning Lender under such Sections (and if any assignment is made in
violation of the foregoing, Borrower will not be required to pay such greater amounts). Any
attempted assignment not made in accordance with this Section 12.15 shall be treated as the
sale of a participation hereunder. Borrower shall be deemed to have granted its consent to any
assignment requiring its consent hereunder unless Borrower has expressly objected to such
assignment within three (3) Business Days after notice thereof. Notwithstanding the foregoing, (x)
no consent of Borrower or Administrative Agent shall be required for any assignment to a Lender or
an Affiliate of a Lender (provided that no assignment shall be made to any Defaulting Lender or its
wholly-owned subsidiaries) and (y) the consent of each Issuing Lender (such consent not to be
unreasonably withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters of Credit (whether
or not then outstanding).
(b) From and after the date on which the conditions described above have been met, (i) such
Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights
and obligations hereunder have been assigned to such Assignee pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and (ii) the assigning
Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to
such Assignment Agreement, shall be released from its rights (other than its
indemnification rights) and obligations hereunder. Upon the request of the Assignee (and, as
applicable, the assigning Lender) pursuant to an effective Assignment Agreement, Borrower shall
execute and deliver to Administrative Agent for delivery to the Assignee (and, as applicable, the
assigning Lender) a Revolving Credit Note in the principal amount of the Assignee’s Revolving Loan
Commitment (and, as applicable, a Revolving Credit Note in the principal amount of the Revolving
Loan Commitment retained by the assigning Lender). Each such Revolving Credit Note shall be dated
the effective date of such assignment. Upon receipt by the assigning Lender of such Revolving
Credit Note, the assigning Lender shall return to Borrower any prior Revolving Credit Note held by
it.
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(c) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.
(d) Subject to the last sentence in Section 13.9, any Lender may at any time (without
any required consent) sell to one or more Persons (other than (i) a natural person or (ii) a
Defaulting Lender or its wholly-owned subsidiaries) participating interests in its respective Loan
or other interests hereunder (any such Person, a “Participant”). In the event of a sale by
a Lender of a participating interest to a Participant, (a) such Lender’s obligations under this
Agreement shall remain unchanged for all purposes, (b) Administrative Agent and Borrower shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and (c) all amounts payable by Borrower shall be determined as if
such Lender had not sold such participation and shall be paid directly to such Lender. No
Participant shall have any direct or indirect voting rights under this Agreement except with
respect to any event described in Section 12.1 expressly requiring the unanimous vote of
all Lenders or, as applicable, all affected Lenders. Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which such Lender enters
into with any Participant. Borrower agrees that if amounts outstanding under this Agreement are
due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were owing directly to
it as a Lender under this Agreement; provided that such right of set-off shall be subject to the
obligation of each Participant to share with Lenders, and Lenders agree to share with each
Participant, as provided in Section 2.13(d). Borrower agrees that each Participant shall
be entitled to the benefits of Sections 3.1 or 3.3 as if it were a Lender (provided
that on the date of the participation no Participant shall be entitled to any greater compensation
pursuant to Sections 3.1 or 3.3 than would have been paid to the participating
Lender on such date if no participation had been sold and that each Participant complies with
Section 3.3 as if it were an Assignee).
(d) Administrative Agent will maintain a copy of each Assignment Agreement delivered and
accepted by it and register (the “Register”) for the recordation of names and addresses of
Lenders, the Revolving Loan Commitment Percentage of each Lender and the Loans of each Lender from
time to time and whether such Lender is the original Lender
or the Assignee. No assignment shall be effective unless and until the Assignment Agreement
is accepted and registered in the Register. All records of transfer of a Lender’s interest in the
Register shall be conclusive, absent manifest error, as to the ownership of the interests in such
Loan. Administrative Agent shall not incur any liability of any kind with respect to any Lender
with respect to the maintenance of the Register. Upon the reasonable written request of Borrower,
Administrative Agent will furnish a copy of the Register to the Borrower Agent or Borrower (at the
cost, if any, to Borrower).
12.16 Indemnity. The Borrower agrees to jointly and severally defend, protect, indemnify
and hold harmless the Administrative Agent, each Lender and the Issuing Lender and
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each and all of
their respective officers, directors, employees, attorneys, affiliates, and agents
(“Indemnified Parties”) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel for
the Indemnified Parties in connection with any investigative, administrative or judicial
proceeding, whether or not the Indemnified Parties shall be designated by a party thereto, or
otherwise), claim, cause of action, judgment, suit, action or proceeding, which may ever be imposed
on, incurred by, or asserted against any Indemnified Party (whether direct, indirect or
consequential, and whether based on any federal or state laws or other statutory regulations,
including, without limitation, securities, environmental and commercial laws and regulations, under
common law or at equitable cause, or on contract or otherwise) in any manner relating to or arising
out of this Agreement or the other Financing Agreements, or any act, event or transaction related
or attendant thereto, the making and the management of the Loans (including, without limitation,
any liability under federal, state or local environmental laws or regulations) or the use or
intended use of the proceeds of the Loans hereunder; provided, that the Borrower shall not
have any obligation to any Indemnified Party hereunder with respect to matters caused by or
resulting from the gross negligence, willful misconduct or illegal activity of such Indemnified
Party. To the extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or public policy, the
Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under
applicable Law, to the payment and satisfaction of all matters incurred by the Indemnified Parties.
Any liability, obligation, loss, damage, penalty, cost or expense incurred by the Indemnified
Parties shall be paid to the Indemnified Parties on demand, together with interest thereon at the
Default Rate from the date incurred by the Indemnified Parties until paid by the Borrower, be added
to the Liabilities, and be secured by the Collateral. The provisions of and undertakings and
indemnifications set out in this Section 12.16 shall survive the satisfaction and payment
of the Liabilities of the Borrower and the termination of this Agreement. NO INDEMNIFIED PERSON
SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWER OR TO ANY OTHER PARTY TO ANY FINANCING AGREEMENT,
ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH
MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS
AGREEMENT OR ANY OTHER FINANCING AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
12.17 Representations and Warranties. Notwithstanding anything to the contrary contained
herein, (i) each representation or warranty contained in this Agreement or any of the other
Financing Agreements shall survive the execution and delivery of this Agreement and the other
Financing Agreements and the making of the Loans and the repayment of the Liabilities hereunder,
and (ii) each representation and warranty contained in this Agreement and each other Financing
Agreement shall be remade on the date of each Loan made hereunder.
12.18 Counterparts. This Agreement and any amendment or supplement hereto or any waiver
granted in connection herewith may be executed in any number of counterparts and by the different
parties on separate counterparts and each such counterpart shall be deemed
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to be an original, but
all such counterparts shall together constitute but one and the same Agreement.
12.19 Limitation of Liability of Administrative Agent and Lenders. It is hereby expressly
agreed that:
(1) Administrative Agent and Lenders may conclusively rely and shall be protected in
acting or refraining from acting upon any document, instrument, certificate, instruction or
signature believed to be genuine and may assume and shall be protected in assuming that any Person
purporting to give any notice or instructions in connection with any transaction to which this
Agreement relates has been duly authorized to do so. Administrative Agent and Lenders shall not be
obligated to make any inquiry as to the authority, capacity, existence or identity of any Person
purporting to have executed any such document or instrument or have made any such signature or
purporting to give any such notice or instructions;
(2) Administrative Agent and Lenders shall not be liable for any acts, omissions, errors
of judgment or mistakes of fact or law, including, without limitation, acts, omissions, errors or
mistakes with respect to the Collateral, except for those arising out of or in connection with
Administrative Agent’s and Lender’s gross negligence, willful misconduct or illegal activity.
Without limiting the generality of the foregoing, Administrative Agent and Lenders shall be under
no obligation to take any steps necessary to preserve rights in the Collateral against any other
parties, but may do so at its option, and all expenses incurred in connection therewith shall be
payable by Borrower; and
(3) Administrative Agent and Lenders shall not be liable for any action taken in good
faith and believed to be authorized or within the rights or powers conferred by this Agreement and
the other Financing Agreements.
12.20 Borrower Authorizing Accounting Firm. Borrower shall authorize its accounting firm
and/or service bureaus to provide Administrative Agent with such information as is requested by
Administrative Agent in accordance with this Agreement. Borrower authorizes Administrative Agent
to contact directly any such accounting firm and/or service bureaus to obtain such information.
12.21 Joint and Several Liability; Binding Obligations.
(1) Borrower is defined collectively to include all Persons constituting the Borrower;
provided, however, that any references herein to “any Borrower”, “each Borrower” or similar
references, shall be construed as a reference to each individual Person comprising the Borrower;
provided, further, in case of any question as to which particular Person is to be deemed a Borrower
in any given context for purposes of any term or provision contained in this Agreement, the Lender
shall make such determination. Each Person comprising Borrower shall be jointly and severally
liable for all of the liabilities and obligations of Borrower under this Agreement, regardless of
which of the Borrowers actually receives the proceeds of the Loans or the benefit of any other
extensions of credit hereunder, or the manner in which the Borrowers, or the Administrative Agent
or Lenders accounts therefor in their respective books and records. In addition, each entity
comprising Borrower hereby
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acknowledges and agrees that all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in this Agreement shall be
applicable to and shall be binding upon and measured and enforceable individually against each
Person comprising Borrower as well as all such Persons when taken together. By way of
illustration, but without limiting the generality of the foregoing, the terms of Article XI of this
Agreement are to be applied to each individual Person comprising the Borrower (as well as to all
such Persons taken as a whole), such that the occurrence of any of the events described in Article
XI of this Agreement as to any Person comprising the Borrower shall constitute an Event of Default
even if such event has not occurred as to any other Persons comprising the Borrower or as to all
such Persons taken as a whole (except as otherwise expressly provided therein by, for example, the
use of the term “Material Adverse Effect”).
(2) Each Borrower acknowledges that it will enjoy significant benefits from the business
conducted by the other Borrowers because of, inter alia, their combined ability to bargain with
other Persons including, without limitation, their ability to receive the credit facilities
hereunder and other Financing Agreements which would not have been available to an individual
Borrower acting alone. Each Borrower has determined that it is in its best interest to procure the
Loans with the credit support of the other Borrowers as contemplated by this Agreement and the
other Financing Agreements as well as permit the cross-collateralization and cross-default with the
Affiliate Term Loan Liabilities, Term Loan Agreement and Affiliate Term Loan Financing Agreements
as contemplated hereunder.
(3) The Administrative Agent and the Lenders have advised the Borrowers that the
Administrative Agent and the Lenders are unwilling to enter into this Agreement and the other
Financing Agreements and make available the Loans extended hereby or thereby to any Borrower unless
each Borrower agrees, among other things, to be jointly and severally liable for the due and proper
payment of the Liabilities of each other Borrower under this Agreement and other Financing
Agreements. Each Borrower has determined that it is in its best interest and in pursuit of its
purposes that it so induce the Lenders to extend credit pursuant to this Agreement and the other
documents executed in connection herewith (i) because of the desirability to each Borrower of the
Loans and the interest rates and the modes of borrowing available hereunder, (ii) because each
Borrower may engage in transactions jointly with other
Borrowers and (iii) because each Borrower may require, from time to time, access to funds
under this Agreement for the purposes herein set forth. Each Borrower, individually, expressly
understands, agrees and acknowledges, that the Loans would not be made available on the terms
herein in the absence of the collective credit of all of the Persons constituting the Borrower, the
joint and several liability of all such Persons, and the cross-collateralization of the collateral
of all such Persons hereunder and under the other Financing Agreements. Accordingly, each
Borrower, individually acknowledges that the benefit to each of the Persons comprising the Borrower
as a whole constitutes reasonably equivalent value, regardless of the amount of the Loans actually
borrowed by, advanced to, or the amount of collateral provided by, any individual Borrower.
(4) Each Borrower has determined that it has and, after giving effect to the transactions
contemplated by this Agreement and the other Financing Agreements (including, without limitation,
the inter-Borrower arrangement set forth in this Section) will have, assets having a fair saleable
value in excess of the amount required to pay its probable
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liability on its existing debts as they
fall due for payment and that the sum of its debts is not and will not then be greater than all of
its property at a fair valuation, that such Borrower has, and will have, access to adequate capital
for the conduct of its business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature and that the value of the benefits to be derived by such
Borrower from the access to funds under this Agreement (including, without limitation, the
inter-Borrower arrangement set forth in this Section) is reasonably equivalent to the obligations
undertaken pursuant hereto.
(5) The Borrower Agent (on behalf of each Borrower) shall maintain records specifying (a)
all Liabilities incurred by each Borrower, (b) the date of such incurrence, (c) the date and amount
of any payments made in respect of such Liabilities and (d) all inter-Borrower obligations pursuant
to this Section. The Borrower Agent shall make copies of such records available to the
Administrative Agent, upon request.
(6) To the extent that applicable Law otherwise would render the full amount of the joint
and several obligations of any Borrower hereunder and under the other Financing Agreements invalid
or unenforceable, such Borrower’s obligations hereunder and under the other Financing Agreements
shall be limited to the maximum amount which does not result in such invalidity or
unenforceability, provided, however, that each Borrower’s obligations hereunder and under the other
Financing Agreements shall be presumptively valid and enforceable to their fullest extent in
accordance with the terms hereof or thereof, as if this Section were not a part of this
Agreement.
(7) To the extent that any Borrower shall make a payment under this Section of all or any
of the Liabilities (other than any Loan made to that Borrower for which it is primarily liable) (a
“Joint Liability Payment”) which, taking into account all other Joint Liability Payments then
previously or concurrently made by any other Borrower, exceeds the amount which such Borrower would
otherwise have paid if each Borrower had paid the aggregate Liabilities satisfied by such Joint
Liability Payments in the same proportion that such Borrower’s “Allocable Amount” (as defined
below) (as determined immediately prior to such Joint Liability Payments) bore to the aggregate
Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such
Joint Liability Payments, then, following
indefeasible payment in full in cash of the Liabilities and termination of the Loans, such
Borrower shall be entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Joint Liability Payments. As of
any date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum
amount of the claim which could then be recovered from such Borrower under this Section without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code
or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law.
(8) The term “Borrower” as used herein shall mean either one or more particular Borrowers
or all of the Borrowers collectively as the Administrative Agent shall determine in its sole and
absolute good faith discretion.
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(9) The term “Revolving Borrower” as used herein shall mean either one or more particular
Revolving Borrowers or all of the Revolving Borrowers collectively as the Administrative Agent
shall determine in its sole and absolute good faith discretion.
(10) [Intentionally Omitted.]
(11) Each Borrower hereby agrees that, except as hereinafter provided, its obligations
hereunder shall be unconditional, irrespective of (i) the absence of any attempt to collect the
Liabilities from any obligor or other action to enforce the same; (ii) the waiver or consent by
Administrative Agent with respect to any provision of any instrument evidencing the Liabilities, or
any part thereof, or any other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Administrative Agent or any Lender; (iii) failure by Administrative Agent to take any
steps to perfect and maintain its security interest in, or to preserve its rights to, any security
or collateral for the Liabilities; (iv) the institution of any proceeding under the United States
Bankruptcy Code, or any similar proceeding, by or against a Borrower or Administrative Agent’s
election in any such proceeding of the application of Section 1111(b)(2) of the United States
Bankruptcy Code; (v) any borrowing or grant of a security interest by a Borrower as
debtor-in-possession, under Section 364 of the United States Bankruptcy Code; (vi) the
disallowance, under Section 502 of the United States Bankruptcy Code, of all or any portion of
Administrative Agent’s claim(s) for repayment of any of the Liabilities; or (vii) any other
circumstance other than payment in full of the Liabilities which might otherwise constitute a legal
or equitable discharge or defense of a guarantor or surety.
(12) Until all Liabilities have been paid and satisfied in full, no payment made by or for
the account of a Borrower including, without limitation, (i) a payment made by such Borrower on
behalf of the liabilities of any other Borrower or (ii) a payment made by any other Person under
any guaranty, shall entitle such Borrower, by subrogation or otherwise, to any payment from any
other Borrower or from or out of any other Borrower’s property and such Borrower shall not exercise
any right or remedy against any other Borrower or any property of any other Borrower by reason of
any performance of such Borrower of its joint and several obligations hereunder.
(13) Any notice given by one Borrower hereunder shall constitute and be deemed to be
notice given by all Borrowers, jointly and severally. Notice given by Administrative Agent to any
one Borrower hereunder or pursuant to any Financing Agreements in accordance with the terms hereof
or thereof shall constitute notice to each and every Borrower. The knowledge of one Borrower shall
be imputed to all Borrowers and any consent by one Borrower shall constitute the consent of and
shall bind all Borrowers.
(14) This Section is intended only to define the relative rights of Borrower and nothing
set forth in this Section is intended to or shall impair the obligations of Borrower, jointly and
severally, to pay any amounts as and when the same shall become due and payable in accordance with
the terms of this Agreement or any other Financing Agreements. Nothing contained in this Section
shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that
Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall
be primarily liable.
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(15) The parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of each Borrower to which such contribution and indemnification
is owing. The rights of any indemnifying Borrower against the other Borrowers under this Section
shall be exercisable upon the full and indefeasible payment of the Liabilities and the termination
of the Loans.
12.22 Confidentiality. Borrower shall not disclose the contents of this Agreement and the
other Financing Agreements to any third party (including, without limitation, any financial
institution or intermediary) unless required by applicable Laws without Administrative Agent’s
prior written consent, other than to Borrower’s officers, lawyers and other professional advisors
on a need-to-know basis, Omega, and in connection with any filings required to be made under any
applicable federal or state securities laws or regulations (“Securities Laws”). Borrower
agrees to inform all such Persons who receive information concerning this Agreement that such
information is confidential and may not be disclosed to any other Person, except as required by
applicable Laws, including Securities Laws.
12.23 Fax Signatures. A signature hereto sent or delivered by facsimile or other electronic
transmission shall be as legally binding and enforceable as a signed original for all purposes.
12.24 Release. For and in consideration of any Loan and each advance or other financial
accommodation hereunder, each Borrower, voluntarily, knowingly, unconditionally, and irrevocably,
with specific and express intent, for and on behalf of itself and its agents, attorneys, heirs,
successors, and assigns (collectively the “Releasing Parties”) does hereby fully and
completely release, acquit and forever discharge the Administrative Agent, Issuing Lender and each
Lender, and each of their respective successors, assigns, heirs, affiliates, subsidiaries, parent
companies, principals, directors, officers, employees, shareholders and agents (hereinafter called
the “Lender Parties”), and any other person, firm, business, corporation, insurer, or
association
which may be responsible or liable for the acts or omissions of the Lender Parties, or who may
be liable for the injury or damage resulting therefrom (collectively the “Released
Parties”), of and from any and all actions, causes of action, suits, debts, disputes, damages,
claims, obligations, liabilities, costs, expenses, fees (including, without limitation, reasonable
attorneys’ fees) and demands of any kind whatsoever, at law or in equity, whether matured or
unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown
that the Releasing Parties (or any of them) have or may have, against the Released Parties or any
of them (whether directly or indirectly) relating to events occurring on or before the date of this
Agreement, other than any claim as to which a final determination is made in a judicial proceeding
(in which the Administrative Agent and Lenders or any of the Released Parties have had an
opportunity to be heard) which determination includes a specific finding that one of the Released
Parties acted in a grossly negligent manner or with actual willful misconduct. Each Borrower
acknowledges that the foregoing release is a material inducement to Administrative Agent’s and each
Lender’s decision to extend to Borrower the financial accommodations hereunder and has been relied
upon by the Lenders in agreeing to make the Loans and in making each advance of Loan proceeds
hereunder.
12.25 Time; Reliance. Time is of the essence in Borrower’s performance under this Agreement
and all other Financing Agreements. Notwithstanding anything to the contrary
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contained in any
Financing Agreement, if and to the extent any terms or provisions contained in any Financing
Agreement are inconsistent or conflict with the terms and provisions of this Agreement, the terms
and provisions of this Agreement shall control and govern.
12.26 Relationship. The relationship between, on the one hand, the Administrative Agent and
Lenders, and the Borrower, on the other hand, shall be that of creditor-debtor only. No term in
this Agreement or in the other Financing Agreements and no course of dealing between the parties
shall be deemed to create any relationship of agency, partnership or joint venture or any fiduciary
duty by the Administrative Agent and Lenders to Borrower or any other party.
12.27 Borrower Agent. Each Borrower hereby irrevocably appoints Borrower Agent as the
borrowing agent and attorney-in-fact for all Borrowers which appointment shall remain in full force
and effect unless and until Administrative Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower has been appointed
Borrower Agent. Each Borrower hereby irrevocably appoints and authorizes the Borrower Agent (i) to
provide Administrative Agent with all notices with respect to Loans obtained for the benefit of
Borrower and all other notices and instructions under this Agreement, (ii) for all purposes of
delivery or receipt of communications, preparation and delivery of financial reports, receipt and
payment of Liabilities, requests for waivers, amendments or other accommodations and/or actions
under this Agreement, and to duly execute and deliver on behalf of Borrower any and all
instruments, amendments, modifications, reaffirmations, agreements, certificates and documents made
to, in favor of or with Administrative Agent and Lenders in
connection with this Agreement or the Financing Agreements, and (iii) to take such other
action as Borrower Agent deems appropriate on its behalf to obtain Loans and to exercise such other
powers as are reasonably incidental thereto to carry out the purposes of this Agreement. Each
Borrower agrees that any notice, election, communication, representation, instrument, amendment,
modification, reaffirmation, certificate, document, agreement or undertaking made on its behalf by
Borrower Agent shall be legally binding upon and enforceable against each such Borrower. It is
understood that the handling of the Loan Account and Collateral of Borrowers in a combined fashion,
as more fully set forth in this Agreement, is done solely as an accommodation to Borrowers in order
to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner
and at their request, and Administrative Agent and Lenders shall not incur liability to any
Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance of the integrated
group. To induce the Administrative Agent and Lenders to do so, and in consideration thereof, but
without limiting any other provision contained in this Agreement, each Borrower hereby jointly and
severally agrees to indemnify Administrative Agent and each Lender and hold Administrative Agent
and Lenders harmless against any and all liability, expense, loss or claim of damage or injury,
made against Administrative Agent or any Lender by any Borrower or by any third party or Person
whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and
Collateral as herein provided, (b) the Administrative Agent’s relying on any instructions of the
Borrower Agent, or (c) any other action taken by the Administrative Agent hereunder or under the
other Financing Agreements, except that Borrowers will have no liability to the Administrative
Agent under this Section with respect to any liability that has been finally
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determined by a court
of competent jurisdiction to have resulted solely from the gross negligence, willful misconduct, or
illegal activity of Administrative Agent.
12.28 Acting Through Agents. In exercising any rights under the Financing Agreements or
taking any actions provided for therein, the Administrative Agent may act through its employees,
agents or independent contractors as authorized by the Administrative Agent.
12.29 Additional Provisions.
(1) Consents. Each Borrower, as joint and several primary obligor of the Liabilities
directly incurred by any other Borrower, authorizes Administrative Agent, without giving notice to
such Borrower or to any other Borrower (to the extent permitted hereunder) or obtaining such
Borrower’s consent or any other Borrower’s consent (to the extent permitted hereunder) and without
affecting the liability of such Borrower for the Liabilities directly incurred by the other
Borrower, from time to time to:
(2) compromise, settle, renew, extend the time for payment, change the manner or terms of
payment, discharge the performance of, decline to enforce, or
release all or any of the Liabilities; grant other indulgences to any Borrower in respect
thereof; or modify in any manner any documents relating to the Liabilities;
(3) declare all Liabilities due and payable upon the occurrence and during the continuance of
an Event of Default;
(4) take and hold security for the performance of the Liabilities of any Borrower and
exchange, enforce, waive and release any such security;
(5) apply and reapply such security and direct the order or manner of sale thereof as
Administrative Agent, in its sole discretion, may determine;
(6) release, surrender or exchange any deposits or other property securing the Liabilities or
on which Administrative Agent at any time may have a Lien; release, substitute or add any one or
more endorsers or guarantors of the Liabilities of any other Borrower or such Borrower; or
compromise, settle, renew, extend the time for payment, discharge the performance of, decline to
enforce, or release all or any obligations of any such endorser or guarantor or other Person who is
now or may hereafter be liable on any Liabilities or release, surrender or exchange any deposits or
other property of any such Person;
(7) apply payments received by Administrative Agent from any Borrower to any Liabilities, in
such order as Administrative Agent shall determine, in its sole discretion, subject to Section
12.8; and
(8) assign this Agreement in whole or in part.
(9) Waivers. Each Borrower, as a primary, joint and several obligor with respect to the
Liabilities directly incurred by any other Borrower, hereby waives:
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(10) any defense based upon any legal disability or other defense of any other Borrower, or by
reason of the cessation or limitation of the liability of any other Borrower from any cause (other
than full payment of all Liabilities), including, but not limited to, failure of consideration,
breach of warranty, statute of frauds, statute of limitations, accord and satisfaction, and usury;
(11) any defense based upon any legal disability or other defense of any other guarantor or
other Person;
(12) any defense based upon any lack of authority of the officers, directors, members,
managers, partners or agents acting or purporting to act on behalf of any other Borrower or any
principal of any other Borrower or any defect in the formation of any other Borrower or any
principal of any other Borrower;
(13) any defense based upon the application by any other Borrower of the proceeds of the Loans
for purposes other than the purposes represented by such other Borrower to Administrative Agent or
intended or understood by Administrative Agent or such Borrower;
(14) any defense based on such Borrower’s rights, under statute or otherwise, to require
Administrative Agent to sue any other Borrower or otherwise to exhaust its rights and remedies
against any other Borrower or any other Person or against any collateral before seeking to enforce
its right to require such Borrower to satisfy the Liabilities of any other Borrower;
(15) any defense based on Administrative Agent’s failure at any time to require strict
performance by any Borrower of any provision of the Financing Agreements. Such Borrower agrees
that no such failure shall waive, alter or diminish any right of Administrative Agent thereafter to
demand strict compliance and performance therewith. Nothing contained herein shall prevent
Administrative Agent from foreclosing on any Lien, or exercising any rights available to
Administrative Agent thereunder, and the exercise of any such rights shall not constitute a legal
or equitable discharge of such Borrower;
(16) [intentionally omitted];
(17) any defense based upon Administrative Agent’s election of any remedy against such
Borrower or any other Borrower or any of them; any defense based on the order in which
Administrative Agent enforces its remedies;
(18) any defense based on (A) Administrative Agent’s surrender, release, exchange,
substitution, dealing with or taking any additional collateral, (B) Administrative Agent’s
abstaining from taking advantage of or realizing upon any Lien or other guaranty, and (C) any
impairment of collateral securing the Liabilities, including, but not limited to, Administrative
Agent’s failure to perfect or maintain a Lien in such collateral;
(19) any defense based upon Administrative Agent’s failure to disclose to such Borrower any
information concerning any other Borrower’s financial condition or any other circumstances bearing
on any other Borrower’s ability to pay the Liabilities;
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(20) any defense based upon any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in any other respects more burdensome than that of a
principal;
(21) any defense based upon Administrative Agent’s election, in any proceeding instituted
under the Bankruptcy Code, of the application of Bankruptcy Code §1111(b)(2) or any successor
statute;
(22) any defense based upon any borrowing or any grant of a security interest under Bankruptcy
Code §364;
(23) [intentionally omitted];
(24) except as otherwise expressly set forth herein : notice of acceptance hereof; notice of
the existence, creation or acquisition of any Liability; notice of any Event of Default; notice of
the amount of the Liabilities outstanding from time to time; notice of any other fact which might
increase such Borrower’s risk; diligence; presentment; demand of payment; protest; filing of claims
with a court in the event of any other Borrower’s receivership
or bankruptcy and all other notices and demands to which such Borrower might otherwise be
entitled (and agrees the same shall not have to be made on the other Borrower as a condition
precedent to such Borrower’s obligations hereunder);
(25) [intentionally omitted];
(26) any defense based on application of fraudulent conveyance or transfer law or shareholder
distribution law to any of the Liabilities or the security therefor;
(27) any defense based on Administrative Agent’s failure to seek relief from stay or adequate
protection in any other Borrower’s bankruptcy proceeding or any other act or omission by
Administrative Agent which impairs such Borrower’s prospective subrogation rights;
(28) any defense based on legal prohibition of Administrative Agent’s acceleration of the
maturity of the Liabilities during the occurrence of an Event of Default or any other legal
prohibition on enforcement of any other right or remedy of Administrative Agent with respect to the
Liabilities and the security therefor;
(29) any defense available to a surety under applicable Law; and
(30) the benefit of any statute of limitations affecting the liability of such Borrower
hereunder or the enforcement hereof.
Each Borrower further agrees that its obligations hereunder shall not be impaired in any
manner whatsoever by any bankruptcy, extensions, moratoria or other relief granted to any other
Borrower pursuant to any statute presently in force or hereafter enacted.
(31) Additional Waivers. Each Borrower authorizes Administrative Agent to exercise, in
its sole discretion, any right, remedy or combination thereof
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which may then be available to
Administrative Agent, since it is such Borrower’s intent that the Liabilities be absolute,
independent and unconditional obligations of such Borrower under all circumstances.
Notwithstanding any foreclosure of any Lien with respect to any or all of any property securing the
Liabilities, whether by the exercise of the power of sale contained therein, by an action for
judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, each Borrower shall
remain bound under such Borrower’s guaranty of the Liabilities directly incurred by any other
Borrower.
(32) Primary Obligations. This Agreement is a primary and original obligation of each of
the Borrowers and each of the Borrowers shall be liable for all existing and future Liabilities of
any other Borrower as fully as if such Liabilities were directly incurred by such Borrower.
12.30 Nonliability of Administrative Agent and Lenders. The relationship between the
Borrowers on the one hand and the Administrative Agent and Lenders on the other hand shall be
solely that of borrower and lender. The Administrative Agent and Lenders do not have any fiduciary
relationship with or duty to any
Credit Party arising out of or in connection with this Agreement or any of the other Financing
Agreements, and the relationship between the Credit Parties, on the one hand, and the
Administrative Agent and Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor. The Administrative Agent does not undertake any responsibility to any
Credit Party to review or inform any Credit Party of any matter in connection with any phase of any
Credit Party’s business or operations. The Borrower Agent agrees, on behalf of itself and each
other Borrower, that the Administrative Agent and Lenders shall have no liability to any Credit
Party (whether sounding in tort, contract or otherwise) for losses suffered by any Credit Party in
connection with, arising out of, or in any way related to the transactions contemplated and the
relationship established by the Financing Agreements, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence, willful misconduct or
illegal activity of the party from which recovery is sought. NO LENDER OR ADMINISTRATIVE AGENT
SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER
MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN
CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY LENDER OR ADMINISTRATIVE AGENT HAVE ANY LIABILITY
WITH RESPECT TO, AND THE BORROWER AGENT ON BEHALF OF ITSELF AND EACH OTHER CREDIT PARTY, HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING AGREEMENT OR ARISING OUT OF
ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE).
Each Borrower and the Borrower Agent acknowledges that it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Financing Agreements to which
it is a party. No joint venture is created hereby or by the other Financing Agreements or
otherwise exists by virtue of the transactions contemplated hereby by the Administrative Agent and
Lenders or among the Credit Parties and the Administrative Agent and Lenders.
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12.31 Amendment and Restatement. On the date hereof (the “Restatement Date”), the
Original Loan Agreement shall be amended, restated and superseded in its entirety by this
Agreement. The parties hereto acknowledge and agree that (a) this Agreement, the Revolving Credit
Notes delivered pursuant to this Agreement (the “Restated Notes”) and the other Financing
Agreements executed and delivered in connection herewith do not constitute a novation, payment and
reborrowing, or termination of the “Liabilities” (as defined in the Original Loan Agreement) under
the Original Loan Agreement as in effect prior to the Restatement Date; (b) such “Liabilities” are
in all respects continuing with only the terms thereof being amended and modified as provided in
this Agreement; (c) the Liens granted in the Collateral pursuant to the Financing Agreements
securing payment of such “Liabilities” are in all respects continuing and in full force and effect
and secure the payment of the Liabilities (as defined in this Agreement) and are hereby fully
ratified and affirmed; and (d) upon the effectiveness of this Agreement all loans outstanding under
the Original Loan Agreement immediately before the effectiveness of this Agreement will be part of
the Loans hereunder on the terms and conditions set forth in this Agreement. Without limitation on
the foregoing, each of the Borrowers hereby fully and unconditionally ratifies and
affirms all of the Financing Agreements, as amended, and agrees that all security interests
granted to PrivateBank in the collateral thereunder shall from and after the date hereof secure all
Liabilities hereunder but in favor of the Administrative Agent for the ratable benefit of the
Lenders and the Administrative Agent. Notwithstanding the modifications effected by this Agreement
of the representations, warranties and covenants of the Borrowers contained in the Original Loan
Agreement, each of the Borrowers acknowledges and agrees that any choses in action or other rights
created in favor of PrivateBank and its successors and assigns arising out of the representations
and warranties of the Borrowers contained in or delivered (including representations and warranties
delivered in connection with the making of the loans or other extensions of credit thereunder) in
connection with the Original Loan Agreement, shall survive the execution and delivery of this
Agreement but in favor of the Lenders and the Administrative Agent; provided, however, that it is
understood and agreed that the Borrowers’ monetary obligations under the Original Loan Agreement in
respect of the loans and letters of credit thereunder are evidenced by this Agreement. All
indemnification obligations of the Borrowers pursuant to the Original Loan Agreement shall survive
the amendment and restatement of the Original Loan Agreement pursuant to this Agreement. On and
after the Restatement Date, (a) each reference in the Financing Agreements to the “Loan Agreement”,
“Loan and Security Agreement”, “thereunder”, “thereof” or similar words referring to the Loan
Agreement shall mean and be a reference to this Agreement and (b) each reference in the Financing
Agreements to a “Note” or “Revolving Credit Note” shall mean and be a Revolving Credit Note as
defined in this Agreement.
13. AGENCY.
Administrative Agent, Lenders and Borrower agree that, except for the rights expressly granted
to Borrower under Section 13.9, Borrower shall not be a party to the agreements contained
in this Section 13, and shall have no obligations under this Section 13. Without
limitation of the foregoing, Administrative Agent, Lenders and Borrower agree that in no event
shall Borrower be required to seek comment from, deliver notices to or otherwise deal with any
Lender other than Administrative Agent (except as otherwise specifically stated in this Agreement),
nor shall Borrower be required to make an independent investigation of whether Administrative Agent
has obtained any consents from the Lenders or as may be required (it
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being agreed that all
communications from Administrative Agent may conclusively be deemed to be authorized by Lenders in
accordance with this Section 13). Borrower shall not have any benefits or rights as a
third party beneficiary of any term or condition contained in this Section 13.
13.1 Appointment and Authorization. Each Lender hereby irrevocably appoints,
designates and authorizes Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Financing Agreement and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this Agreement or any other
Financing Agreement, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other
Financing Agreement, Administrative Agent shall not have any duty or responsibility except those
expressly set forth herein, nor shall Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this
Agreement or any other Financing Agreement or otherwise exist against Administrative Agent.
The duties of Administrative Agent shall be mechanical and administrative in nature. Without
limiting the generality of the foregoing sentence, the use of the term “agent” herein and in other
Financing Agreements with reference to Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting parties.
13.2 Delegation of Duties. Administrative Agent may execute any of its duties under
this Agreement or any other Financing Agreement by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of legal counsel, independent public accountants,
and other consultants or experts concerning all matters pertaining to such duties. Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.
13.3 Exculpation of Administrative Agent. None of Administrative Agent nor any of its
directors, officers, employees, Affiliates or agents shall (a) be liable to any Lender or any other
Person for any action taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Financing Agreement or the transactions contemplated hereby (except to the
extent resulting from its own gross negligence or willful misconduct in connection with its duties
expressly set forth herein as determined by a final, nonappealable judgment by a court of competent
jurisdiction), or (b) be responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by Borrower or any Affiliate, or any officer thereof,
contained in this Agreement or in any other Financing Agreement, or in any certificate, report,
statement or other document referred to or provided for in, or received by Administrative Agent
under or in connection with, this Agreement or any other Financing Agreement, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing
Agreement (or the creation, perfection or priority of any Lien or security interest therein), or
for any failure of Borrower or any other party to any Financing Agreement to perform its
obligations and Liabilities hereunder or thereunder, or be responsible for or have any duty to
ascertain or verify the satisfaction of any conditions specified in this Agreement or any other
Financing Agreement,
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except receipt of items required to be delivered to Administrative Agent.
Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or conditions of, this
Agreement or any other Financing Agreement, or to inspect the properties, books or records of
Borrower or its Affiliates.
13.4 Reliance by Administrative Agent. Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, electronic mail message, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel (including legal counsel
to Borrower), independent accountants and other experts selected by Administrative Agent.
Administrative Agent shall be fully justified in failing or refusing to take any action under this
Agreement or any other Financing Agreement unless it shall first receive such advice or concurrence
of the Required Lenders or such other number or percentage of Lenders as shall be
required elsewhere in this Agreement as it deems appropriate and, if it so requests,
confirmation from Lenders of their obligation to indemnify Administrative Agent against any and all
liability and expense which may be incurred by it by reason of taking or continuing to take any
such action. Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Financing Agreement in accordance with a
request or consent of the Required Lenders or such other number or percentage of Lenders as shall
be required elsewhere in this Agreement and such request and any action taken or failure to act
pursuant thereto shall be binding upon each Lender. For purposes of determining compliance with
the conditions specified in Section 5.2, each Lender that has signed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable or satisfactory to
a Lender unless Administrative Agent shall have received written notice from such Lender prior to
the Closing Date specifying its objection thereto.
13.5 Notice of Default. Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default except with respect to defaults in the
payment of principal, interest and fees required to be paid to Administrative Agent for the account
of the Lenders, unless Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default”. Administrative Agent will notify Lenders of its receipt of
any such notice. Administrative Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with Section 11.2;
provided that unless and until Administrative Agent has received any such request, Administrative
Agent may (but shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable or in the best interest
of Lenders.
13.6 Credit Decision. Each Lender acknowledges that Administrative Agent has not made
any representation or warranty to it, and that no act by Administrative Agent hereafter taken,
including any consent and acceptance of any assignment or review of the affairs of Borrower, shall
be deemed to constitute any representation or warranty by Administrative Agent to any Lender as to
any matter, including whether Administrative Agent has disclosed
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material information in its
possession. Each Lender represents to Administrative Agent that it has, independently and without
reliance upon Administrative Agent and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower, and made its own decision
to enter into this Agreement and to extend credit to Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon Administrative Agent and based on
such documents and information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under this Agreement and
the other Financing Agreements, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents expressly herein
required to be furnished to Lenders by Administrative Agent, Administrative Agent shall not have
any duty or responsibility to provide any Lender with any credit or other information concerning
the
business, prospects, operations, property, financial or other condition or creditworthiness of
Borrower which may come into the possession of Administrative Agent.
13.7 Indemnification. Whether or not the transactions contemplated hereby are
consummated, each Lender shall indemnify, defend and hold harmless upon demand Administrative Agent
and its directors, officers, employees, Affiliates and agents (to the extent not reimbursed by or
on behalf of Borrower and without limiting the obligation of Borrower to do so), according to its
applicable Pro Rata Share, from and against any and all liability, loss, damage, claim, demand,
action, penalty, cost or expense (including, without limitation, reasonable attorneys’ fees),
provided that no Lender shall be liable for any payment to any such Person of any portion thereof
to the extent determined by a final, non-appealable judgment by a court of competent jurisdiction
to have resulted from the applicable Person’s own gross negligence or willful misconduct. No
action taken in accordance with the directions of Required Lenders shall be deemed to constitute
gross negligence or willful misconduct for purposes of this Section. Without limitation of the
foregoing, each Lender shall reimburse Administrative Agent upon demand for its ratable share of
any costs or out-of-pocket expenses (including, without limitation, reasonable attorneys’ fees and
costs) incurred by Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this
Agreement, any other Financing Agreement, or any document contemplated by or referred to herein, to
the extent that Administrative Agent is not reimbursed for such expenses by or on behalf of
Borrower. If any indemnity furnished to Administrative Agent for any purpose shall, in the
reasonable, good faith opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional reasonable indemnity and cease, or not commence, to do
the acts indemnified against even if so directed by Required Lenders until such additional
reasonable indemnity is furnished. The undertaking in this Section shall survive repayment of the
Loans and other Liabilities, cancellation of any promissory notes, any foreclosure under, or
modification, release or discharge of, any or all of the Financing Agreements, termination of this
Agreement and the resignation or replacement of Administrative Agent.
13.8 Administrative Agent in Individual Capacity. PrivateBank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
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acquire equity
interests in and generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with Borrower and its Affiliates as though PrivateBank were not Administrative
Agent hereunder and without notice to or consent of any Lender. Each Lender acknowledges that,
pursuant to such activities, PrivateBank or its Affiliates may receive information regarding
Borrower or its Affiliates (including information that may be subject to confidentiality
obligations in favor of Borrower or such Affiliates) and acknowledge that Administrative Agent
shall be under no obligation to provide such information to them. With respect to its Loans,
PrivateBank and its Affiliates shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though PrivateBank were not Administrative Agent, and the
terms “Lender” and “Lenders” include PrivateBank and its Affiliates, to the extent applicable, in
their individual capacities.
13.9 Successor Administrative Agent. Administrative Agent may resign as
Administrative Agent upon thirty (30) days’ notice to Lenders. If Administrative Agent resigns
under this Agreement, Required Lenders shall, with (so long as no Default or Event of Default
exists) the consent of Borrower (which shall not be unreasonably withheld, conditioned or delayed),
appoint from among Lenders a successor agent for Lenders. Notwithstanding the immediately
foregoing sentence, if no successor agent is appointed prior to the effective date of the
resignation of Administrative Agent, Administrative Agent may appoint, after consulting with
Lenders and Borrower, a successor agent from among Lenders. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to and become vested with all the
rights, powers and duties of the retiring Administrative Agent and the term “Administrative Agent”
shall mean such successor agent, and the retiring Administrative Agent’s appointment, powers and
duties as Administrative Agent shall be terminated. After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this Section 13 and
Sections 12.2 and 12.16 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor
agent has accepted appointment as Administrative Agent by the date which is thirty (30) days
following a retiring Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective and Lenders shall perform all of
the duties of Administrative Agent hereunder until such time, if any, as Required Lenders appoint a
successor agent as provided for above. The fees payable by Borrower to a successor agent in its
capacity as such agent shall be the same as those payable to its predecessor unless otherwise
agreed in writing between Borrower and such successor.
13.10. Collateral Matters. Lenders irrevocably authorize Administrative Agent, at its
option and in its discretion, (a) to release any Lien granted to or held by Administrative Agent
under this Agreement and any other Financing Agreement (i) if all Liabilities are indefeasibly paid
in full in cash; (ii) constituting property sold or to be sold or disposed of, financed or
refinanced, as part of or in connection with any sale, disposition, financing or refinancing which
is expressly permitted by this Agreement or the Term Loan Agreement at any time; or (iii) subject
to Section 13.1, if approved, authorized or ratified in writing by Required Lenders; or (b)
to subordinate its interest in any Collateral to any holder of a Lien on such Collateral which is
expressly permitted by this Agreement at any time. Upon request by Administrative Agent at any
time, Lenders will promptly confirm in writing Administrative Agent’s authority to release, or
subordinate its interest in, particular types or items of Collateral pursuant to this Section
13.10. Administrative Agent and each Lender hereby appoint each other
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Lender as agent for the
purpose of perfecting Administrative Agent’s security interest in assets and Collateral which, in
accordance with the Uniform Commercial Code in any applicable jurisdiction, can be perfected by
possession or control. Should any Lender (other than Administrative Agent) obtain possession or
control of any such assets or Collateral, such Lender shall promptly notify Administrative Agent
thereof in writing, and, promptly upon Administrative Agent’s written request therefor, shall
deliver such assets or Collateral to Administrative Agent or in accordance with Administrative
Agent’s instructions or transfer control to Administrative Agent in accordance with Administrative
Agent’s instructions. Each Lender agrees that, except as otherwise expressly provided herein, it
will not have any right individually to enforce or seek to enforce this Agreement or any Financing
Agreement or to realize upon any Collateral for the Liabilities unless instructed in writing to do
so by Administrative Agent, it being understood and agreed that such rights and remedies may be
exercised only by Administrative Agent.
13.11 Administrative Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to Borrower, Administrative Agent (irrespective
of whether the principal of the Loans shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether Administrative Agent shall have made any
demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, and all other Liabilities that are owing and unpaid and to file
such other documents as may be necessary or advisable in order to have the claims of Lenders and
Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements
and advances of Lenders and Administrative Agent and their respective agents and attorneys and all
other amounts due Lenders and Administrative Agent under this Agreement) allowed in such judicial
proceedings; and
(b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to
Administrative Agent and, in the event that Administrative Agent shall consent to the making of
such payments directly to Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and its agents and
attorneys, and any other amounts due Administrative Agent under this Agreement.
Nothing contained herein shall be deemed to authorize Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Liabilities or the rights of any Lender or to authorize
Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
13.12 Other Agents; Arrangers and Managers. None of Lenders or other Persons
identified on the facing page or signature pages of this Agreement as, if applicable, a “joint
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arranger,” “syndication agent,” “documentation agent,” “co-agent,” “book manager,” “lead manager,”
“joint lead lender”, “arranger,” “lead arranger” or “co-arranger”, if any, shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other than, in the case
of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of
Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship
with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of
Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
13.13 Revolving Loan Principal Payment; Return of Payments; Defaulting Lender. (a)(i)
As long as Administrative Agent does not have actual knowledge that the material conditions set
forth in Section 5.1 have not been satisfied, Administrative Agent shall have the right, on
behalf of Lenders, to disburse funds to Borrower for all Revolving Loans requested by Borrower
pursuant to the terms of this Agreement (“Administrative Agent Advances”). Absent
the prior receipt by Administrative Agent of a written notice from any Lender pursuant to which
such Lender notifies Administrative Agent that such Lender shall cease making Revolving Loans
(whether due to the existence of a Default or Event of Default or otherwise), Administrative Agent
shall be conclusively entitled to assume, for purposes of the preceding sentence, that each Lender
will fund its Pro Rata Share of all Revolving Loans requested by Borrower. Each Lender shall
reimburse Administrative Agent on demand, in accordance with the provisions of the immediately
following paragraph, for all funds disbursed on its behalf by Administrative Agent pursuant to the
first sentence of this subsection (i), or if Administrative Agent so requests, each Lender will
remit to Administrative Agent its Pro Rata Share of any Revolving Loan before Administrative Agent
disburses the same to Borrower. If Administrative Agent elects to require that each Lender make
funds available to Administrative Agent prior to a disbursement by Administrative Agent to
Borrower, Administrative Agent shall advise each Lender by telephone, facsimile or e-mail of the
amount of such Lender’s Pro Rata Share of the Revolving Loan requested by Borrower no later than
noon (Chicago time) on the date of funding of such Revolving Loan, and each such Lender shall pay
Administrative Agent on such date such Lender’s Pro Rata Share of such requested Revolving Loan, in
same day funds, by wire transfer to the account specified in writing by Administrative Agent to
Lenders at any time or from time to time (“Payment Account”). If any Lender fails to pay
the amount of its Pro Rata Share within one (1) Business Day after Administrative Agent’s demand,
Administrative Agent shall promptly notify Borrower, and Borrower shall immediately repay such
amount to Administrative Agent. Any repayment required pursuant to this Section shall be without
premium or penalty. Nothing in this Section or elsewhere in this Agreement or the other Financing
Agreements shall be deemed to require Administrative Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice
any rights that Administrative Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
(ii) On a Business Day of each week as selected from time to time by Administrative Agent, or
more frequently (including daily), if Administrative Agent so elects (each such day being a
“Settlement Date”), Administrative Agent will advise each Lender by telephone, facsimile or
e-mail of the amount of each such Lender’s Pro Rata Share of the Revolving Loan balance (including
any Administrative Agent Advances) as of the close of business of the Business Day immediately
preceding the Settlement Date. If payments are necessary to adjust
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the amount of such Lender’s
actual Pro Rata Share of the Revolving Loan facility balance to such Lender’s required Pro Rata
Share of the Revolving Loan facility balance as of any Settlement Date, the party from which such
payment is due (i) shall be deemed, irrevocably and unconditionally, to have purchased, without
recourse or warranty, an undivided interest and participation in the Revolving Loan facility
sufficient to equate such Lender’s actual Pro Rata Share of the Revolving Loan facility balance as
of such Settlement Date with such Lender’s required Pro Rata Share of the Revolving Loan facility
as of such date, and (ii) shall pay Administrative Agent, without setoff or discount, in same day
funds, by wire transfer to the Payment Account not later than noon (Chicago time) on the Business
Day following the Settlement Date the full purchase price for such interest and participation,
equal to one hundred percent (100%) of the principal amount of the Revolving Loans being purchased
and sold. In the event settlement shall not have occurred by the date and time specified in the
immediately preceding sentence, interest shall accrue on the unsettled amount at the Federal Funds
Rate (as defined below).
(iii) On each Settlement Date, Administrative Agent shall advise each Lender by telephone,
facsimile or e-mail of the amount of such Lender’s Pro Rata Share of principal, interest and fees
paid for the benefit of Lenders with respect to each applicable Loan, to the extent of such
Lender’s credit exposure with respect thereto, and shall make payment to such Lender not later than
noon (Chicago time) on the Business Day following the Settlement Date of such amounts in accordance
with wire instructions delivered by such Lender to Administrative Agent, as the same may be
modified from time to time by written notice to Administrative Agent; provided, that, in the case
such Lender is a Defaulted Lender, Administrative Agent shall be entitled to set off the funding
short-fall against that Defaulted Lender’s respective share of all payments received from Borrower.
(iv) The provisions of this Section 13.13(a) shall be deemed to be binding upon
Administrative Agent and Lenders notwithstanding the occurrence of any Default or Event of Default,
or any insolvency or bankruptcy proceeding pertaining to Borrower or any other Credit Party,
provided that absent Required Lenders’ consent, Administrative Agent shall not make any advances to
Borrower in the event Administrative Agent has actual knowledge that the material conditions set
forth in Section 5.1 have not been satisfied.
(b) Payments of principal of the Revolving Loan facility will be settled on the date of
receipt if received by Administrative Agent prior to noon (Chicago time) or on the Business Day
immediately following the date of receipt if received after noon (Chicago time).
(c) If Administrative Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Administrative Agent from
Borrower and such related payment is not received by Administrative Agent, then Administrative
Agent will be entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind, together with interest accruing on a daily basis at the
Federal Funds Rate. If Administrative Agent determines at any time that any amount received by
Administrative Agent under this Agreement must be returned to Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of
this Agreement or any other Financing Agreement, Administrative Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
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repay to
Administrative Agent on demand any portion of such amount that Administrative Agent has distributed
to such Lender, together with interest at such rate, if any, as Administrative Agent is required to
pay to Borrower or such other Person, without setoff, counterclaim or deduction of any kind.
As used herein, the term “Federal Funds Rate” means, for any day, the rate of interest per
annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day, provided that (i) if such day is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day and (ii) if no such rate is so published on such next preceding
Business Day, the Federal Funds Rate for such day shall be the average rate quoted to
Administrative Agent on such day on such transactions as determined by Administrative Agent.
(d) The failure of any Defaulting Lender to make any Loan, advance or any payment required by
it hereunder shall not relieve any other Lender of its obligations to make such Loan, advance or
payment, but neither any Lender nor Administrative Agent shall be responsible for the failure of
any Defaulting Lender to make a Loan, advance or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Defaulting Lender shall not have any
voting or consent rights under or with respect to any Financing Agreement or constitute a “Lender”
(or be included in the calculation of “Required Lenders” hereunder) for any voting or consent
rights under or with respect to any Financing Agreement except with respect to items which require
the vote or consent of all Lenders or all affected Lenders. At Borrower’s written request,
Administrative Agent or a Person reasonably acceptable to Administrative Agent shall have the right
with Administrative Agent’s consent and in Administrative Agent’s sole discretion (but shall have
no obligation) to purchase from any Defaulting Lender, and each Defaulting Lender agrees that it
shall, at Administrative Agent’s request, sell and assign to Administrative Agent or such Person,
all of the lending commitments and commitment interests of that Defaulting Lender for an amount
equal to the principal balance of all Loans held by such Defaulting Lender and all accrued interest
and fees with respect thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.
13.14 PrivateBank Credit Hold. As between PrivateBank and Bankers Trust Company,
PrivateBank agrees to hold and maintain in its own portfolio at least fifty-one percent (51.0%) of
the Revolving Loan Commitment until the earlier of the Stated Maturity Date (unless sooner
accelerated in accordance with the terms of this Agreement) or Bankers Trust Company is no longer a
Lender hereof.
14. JURISDICTION; JURY TRIAL WAIVER
14.1 SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY:
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(1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND THE OTHER FINANCING AGREEMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF ILLINOIS AND APPELLATE COURTS FROM ANY THEREOF;
(2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES
TO THE FULLEST EXTENT PERMITTED BY LAW IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING (i) ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME, (ii) THE RIGHT TO ASSERT OR IMPOSE ANY
CLAIM, NONCOMPULSORY SET-OFF, COUNTERCLAIM OR CROSS-CLAIM IN RESPECT THEREOF IN SUCH PROCEEDING;
PROVIDED, HOWEVER, THIS WAIVER DOES NOT PRECLUDE THE RIGHT TO ASSERT A DEFENSE IN SUCH ACTION OR
PROCEEDING OR TO ASSERT OR IMPOSE ANY CLAIM, COUNTERCLAIM OR CROSS-CLAIM WHICH THE BORROWER WISHES
TO PURSUE IN A SEPARATE PROCEEDING AT ITS SOLE COST AND EXPENSE, AND (iii) ALL STATUTES OF
LIMITATIONS WHICH MAY BE RELEVANT THERETO; AND
(3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, RETURN RECEIPT REQUESTED, TO THE BORROWER AT ITS ADDRESS SET FORTH ABOVE OR AT SUCH OTHER
ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. THE BORROWER AGREES THAT
SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE BORROWER IN ANY SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN AND
HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO THE BORROWER. SOLELY TO THE EXTENT
PROVIDED BY APPLICABLE LAW, SHOULD THE BORROWER, AFTER BEING SERVED, FAIL TO APPEAR OR ANSWER TO
ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW
AFTER THE DELIVERY OR MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR
JUDGMENT MAY BE ENTERED BY THE COURT AGAINST THE BORROWER AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. NOTHING HEREIN SHALL AFFECT THE ADMINISTRATIVE AGENT’S OR
ANY LENDER’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR LIMIT THE
ADMINISTRATIVE AGENT’S OR ANY LENDER’S RIGHT TO BRING PROCEEDINGS AGAINST THE BORROWER OR ITS
PROPERTY IN ANY COURT OR ANY OTHER JURISDICTION.
- 113 -
14.2 GOVERNING LAW
. THIS AGREEMENT SHALL BE CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH, AND ENFORCED AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.
14.3 JURY TRIAL. THE BORROWER, ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND KNOWINGLY WAIVE (TO THE FULLEST EXTENT PERMITTED BY LAW) ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF
THIS AGREEMENT, THE FINANCING AGREEMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR
THERETO,
INCLUDING, WITHOUT LIMITATION, ANY ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (B) ARISING FROM ANY DISPUTE OR
CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT AND THE FINANCING AGREEMENTS. THE
ADMINISTRATIVE AGENT, THE LENDERS AND THE BORROWER AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT A JURY.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Amended and Restated Revolving Loan and Security Agreement has been
duly executed as of the day and year first above written.
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BORROWER:
DIVERSICARE MANAGEMENT SERVICES CO.,
a Tennessee
corporation, as Borrower Agent
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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ADVOCAT ANCILLARY SERVICES, INC., a
Tennessee
corporation
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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ADVOCAT FINANCE, INC., a Delaware corporation
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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DIVERSICARE MANAGEMENT SERVICES
CO., a Tennessee corporation
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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ADVOCAT DISTRIBUTION SERVICES, INC., a Tennessee
corporation
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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Amended and Restated Revolving Loan and Security Agreement
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DIVERSICARE ASSISTED LIVING SERVICES, INC., a
Tennessee corporation
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, a
Tennessee limited liability company
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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DIVERSICARE LEASING CORP., a Tennessee corporation
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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STERLING HEALTH CARE MANAGEMENT,
INC., a
Kentucky corporation
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
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SENIOR CARE CEDAR HILLS, LLC, a Delaware
limited liability company
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BY:
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SENIOR CARE FLORIDA LEASING,
LLC, its sole
member |
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BY: |
DIVERSICARE LEASING CORP.,
its sole member
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
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Its: |
Executive Vice President &
Chief Financial
Officer |
|
Amended and Restated Revolving Loan and Security Agreement
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SENIOR CARE GOLFCREST, LLC, a
Delaware
limited liability company
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BY:
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SENIOR CARE FLORIDA LEASING,
LLC, its sole
member |
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BY: |
DIVERSICARE LEASING CORP.,
its sole member
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief Financial
Officer |
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SENIOR CARE GOLFVIEW, LLC, a Delaware
limited
liability company
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BY:
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SENIOR CARE FLORIDA LEASING,
LLC, its sole
member |
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BY: |
DIVERSICARE LEASING CORP.,
its sole member
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
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|
Its: | Executive Vice President &
Chief Financial
Officer |
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SENIOR CARE FLORIDA LEASING, LLC, a
Delaware
limited liability company
BY: DIVERSICARE LEASING CORP.,
its sole member
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By: |
/s/ Glynn Riddle
|
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|
Name: |
Glynn Riddle |
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|
Its: | Executive Vice President &
Chief Financial
Officer |
|
| |
Amended and Restated Revolving Loan and Security Agreement
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SENIOR CARE SOUTHERN PINES, LLC, a Delaware
limited
liability company
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|
BY:
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SENIOR CARE FLORIDA LEASING,
LLC, its sole
member |
|
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BY: |
DIVERSICARE LEASING CORP.,
its sole member
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|
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By: |
/s/Glynn Riddle
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|
Name: |
Glynn Riddle |
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|
Its: | Executive Vice President &
Chief Financial
Officer |
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DIVERSICARE AFTON OAKS, LLC, a Delaware
limited
liability company
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BY: |
DIVERSICARE LEASING CORP.,
its sole member
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE ASSISTED LIVING
SERVICES NC I, LLC, a Delaware limited liability company
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BY:
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DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, its
sole member
|
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|
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By: |
/s/ Glynn Riddle
|
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|
Name: |
Glynn Riddle |
|
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|
Its: | Executive Vice President &
Chief
Financial Officer |
|
| |
Amended and Restated Revolving Loan and Security Agreement
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DIVERSICARE ASSISTED LIVING SERVICES NC II, LLC, a
Delaware
limited liability company
BY: DIVERSICARE ASSISTED LIVING SERVICES NC, LLC, its sole member
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
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|
Its: | Executive Vice President &
Chief Financial
Officer |
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DIVERSICARE BRIARCLIFF, LLC, a Delaware
limited
liability company
BY: DIVERSICARE LEASING CORP.,
its sole member
|
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE CHISOLM, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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|
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
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|
Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE HARTFORD, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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|
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By: |
/s/ Glynn Riddle
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| |
|
Name: |
Glynn Riddle |
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| |
|
Its: | Executive Vice President &
Chief
Financial Officer |
|
| |
Amended and Restated Revolving Loan and Security Agreement
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DIVERSICARE HILLCREST, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE LAMPASAS, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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|
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By: |
/s/ Glynn Riddle
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| |
|
Name: |
Glynn Riddle |
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|
Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE PINEDALE, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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|
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|
|
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By: |
/s/ Glynn Riddle
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| |
|
Name: |
Glynn Riddle |
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|
Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE WINDSOR HOUSE, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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|
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|
|
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By: |
/s/ Glynn Riddle
|
|
| |
|
Name: |
Glynn Riddle |
|
| |
|
Its: | Executive Vice President &
Chief
Financial Officer |
|
| |
Amended and Restated Revolving Loan and Security Agreement
| |
|
|
|
|
| |
DIVERSICARE YORKTOWN, LLC, a Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
|
|
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|
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
|
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|
Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE BALLINGER, LLC, a Delaware limited
liability company
BY: DIVERSICARE TEXAS I, LLC, its sole member
|
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|
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
|
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|
Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE DOCTORS, LLC, a Delaware limited
liability company
BY: DIVERSICARE TEXAS I, LLC, its sole member
|
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|
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By: |
/s/ Glynn Riddle
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|
Name: |
Glynn Riddle |
|
| |
|
Its: | Executive Vice President &
Chief
Financial Officer |
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| |
DIVERSICARE ESTATES, LLC, a Delaware limited
liability company
BY: DIVERSICARE TEXAS I, LLC, its sole member
|
|
| |
|
|
| |
By: |
/s/ Glynn Riddle
|
|
| |
|
Name: |
Glynn Riddle |
|
| |
|
Its: | Executive Vice President &
Chief
Financial Officer |
|
| |
Amended and Restated Revolving Loan and Security Agreement
| |
|
|
|
|
| |
DIVERSICARE HUMBLE, LLC, a Delaware limited liability
company
BY: DIVERSICARE TEXAS I, LLC, its sole member
|
|
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|
|
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By: |
/s/ Glynn Riddle
|
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|
Name: |
Glynn Riddle |
|
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|
Its: | Executive Vice President &
Chief
Financial Officer |
|
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| |
DIVERSICARE KATY, LLC, a Delaware
limited liability
company
BY: DIVERSICARE TEXAS I, LLC, its sole member
|
|
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|
|
| |
By: |
/s/ Glynn Riddle
|
|
| |
|
Name: |
Glynn Riddle |
|
| |
|
Its: | Executive Vice President &
Chief
Financial Officer |
|
| |
| |
DIVERSICARE NORMANDY TERRACE,
LLC, a
Delaware limited liability company
BY: DIVERSICARE TEXAS I, LLC, its sole member
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE TEXAS I, LLC, a Delaware limited
liability company
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief Financial
Officer |
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Amended and Restated Revolving Loan and Security Agreement
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DIVERSICARE TREEMONT, LLC, a Delaware
limited
liability company
BY: DIVERSICARE TEXAS I, LLC, its sole member
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE ROSE TERRACE, LLC, a Delaware
limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE PARIS, LLC, a Delaware
limited liability
company
BY: DIVERSICARE TEXAS I, LLC, its sole member
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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DIVERSICARE THERAPY SERVICES, LLC, a
Delaware limited
liability company
BY: DIVERSICARE LEASING CORP., its sole member
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By: |
/s/ Glynn Riddle
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Name: |
Glynn Riddle |
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Its: | Executive Vice President &
Chief
Financial Officer |
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Amended and Restated Revolving Loan and Security Agreement
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Acknowledged and Agreed
solely for purposes of Sections 8.9 and 9.12 hereof:
ADVOCAT INC.
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By: |
/s/ Matthew J. Weishaar
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Name: |
Matthew J. Weishaar |
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Its: Asst Secretary |
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Amended and Restated Revolving Loan and Security Agreement
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ADMINISTRATIVE AGENT:
THE PRIVATEBANK AND TRUST COMPANY, in its capacity as
administrative agent
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By: |
/s/ Adam D. Panos
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Name: |
Adam D. Panos |
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Its: |
Associate Managing Director |
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Amended and Restated Revolving Loan and Security Agreement
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LENDER:
THE PRIVATEBANK AND TRUST COMPANY
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By: |
/s/ Adam D. Panos
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Name: |
Adam D. Panos |
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Its: Associate Managing Director |
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Amended and Restated Revolving Loan and Security Agreement
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LENDER:
BANKERS TRUST COMPANY
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By: |
/s/ Ron M. Doll
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Name: |
Ron M. Doll |
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Its: Vice President |
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Amended and Restated Revolving Loan and Security Agreement
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
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Schedule 1
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Borrowers |
Schedule 1.1(a)
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Facilities |
Schedule 1.1(b)
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Intentionally Omitted |
Schedule 1.1(d)
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Certain Capital Expenditures |
Schedule 1.1(e)
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Omega Leases |
Schedule 7.8
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Other Names |
Schedule 7.12
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Organizational Chart |
Schedule 7.13
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Litigation |
Schedule 7.17
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Environmental Matters |
Schedule 7.26
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Medicare and Medicaid Penalties |
Schedule 7.32
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Labor Matters |
Schedule 7.33
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Capitalization |
Schedule 7.36
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Commercia Leases |
Schedule 8.9
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Certain Corporate Accounts |
Schedule 9.3
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Requirements for Subsidiary Formation |
Schedule 9.6
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Real Property Assets |
EXHIBITS
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Exhibit A
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Form of Revolving Credit Note |
Exhibit B
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Form of Borrowing Notice |
Exhibit C
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Form of Assignment Agreement |
ANNEX
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Annex A
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Lenders, Revolving Loan Commitment Percentages, and Notice Information |
