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The following is an excerpt from a 10-K SEC Filing, filed by PROSPECT MEDICAL HOLDINGS INC on 6/2/2008.
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PROSPECT MEDICAL HOLDINGS INC - 10-K - 20080602 - EXHIBIT_10

Exhibit 10.32

 

 

 

 

Execution Version

 

 

 

 

 

Published CUSIP Number: 74349EAG9

 

 

Term Loan CUSIP Number: 74349EAH7

 

SECOND LIEN CREDIT AGREEMENT

 

Dated as of August 8, 2007

 

among

 

PROSPECT MEDICAL HOLDINGS, INC.

AND

PROSPECT MEDICAL GROUP, INC.,

as the Borrowers,

 

BANK OF AMERICA, N.A.,
as Administrative Agent,

 

and

 

The Other Lenders Party Hereto

 

BANC OF AMERICA SECURITIES LLC,

as Sole Lead Arranger and Sole Book Manager

 

 



 

TABLE OF CONTENTS

 

Section

 

Page

 

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

1.01

Defined Terms

1

 

1.02

Other Interpretive Provisions

25

 

1.03

Accounting Terms

26

 

1.04

Rounding

26

 

1.05

Times of Day

27

 

1.06

Currency Equivalents Generally

27

 

 

 

 

 

ARTICLE II

 

 

THE COMMITMENTS AND CREDIT EXTENSIONS

 

 

 

 

 

2.01

The Term Loans

27

 

2.02

Borrowing; Conversions and Continuations of Loans

27

 

2.03

Intentionally Omitted.

29

 

2.04

Intentionally Omitted

29

 

2.05

Prepayments

29

 

2.06

Reduction of Term Commitments

32

 

2.07

Repayment of the Term Loans

32

 

2.08

Interest

32

 

2.09

Fees

33

 

2.10

Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate

33

 

2.11

Evidence of Debt

34

 

2.12

Payments Generally; Administrative Agent’s Clawback

34

 

2.13

Sharing of Payments by Lenders

36

 

2.14

Obligations Joint and Several

37

 

2.15

PMG as Borrower Agent

39

 

 

 

 

 

ARTICLE III

 

 

TAXES, YIELD PROTECTION AND ILLEGALITY

 

 

 

 

 

3.01

Taxes

39

 

3.02

Illegality

41

 

3.03

Inability to Determine Rates

42

 

3.04

Increased Costs; Reserves on Eurodollar Rate Loans

42

 

3.05

Compensation for Losses

43

 

3.06

Mitigation Obligations; Replacement of Lenders

44

 

3.07

Survival

44

 

 

i



 

ARTICLE IV

 

 

CONDITIONS PRECEDENT TO CLOSING

 

 

 

 

 

4.01

Conditions Precedent to Borrowing

44

 

 

 

 

 

ARTICLE V

 

 

REPRESENTATIONS AND WARRANTIES

 

 

 

 

 

5.01

Existence, Qualification and Power

52

 

5.02

Authorization; No Contravention

52

 

5.03

Governmental Authorization; Other Consents

53

 

5.04

Binding Effect

53

 

5.05

Financial Statements; No Material Adverse Effect

53

 

5.06

Litigation

54

 

5.07

No Default

54

 

5.08

Ownership of Property; Liens; Investments

54

 

5.09

Environmental Compliance

55

 

5.10

Insurance

56

 

5.11

Taxes

56

 

5.12

ERISA Compliance

56

 

5.13

Subsidiaries; Equity Interests; Loan Parties

57

 

5.14

Margin Regulations; Investment Company Act

57

 

5.15

Disclosure

58

 

5.16

Compliance with Laws

58

 

5.17

Intellectual Property; Licenses, Etc.

58

 

5.18

Solvency

59

 

5.19

Casualty, Etc.

59

 

5.20

Health Care Matters.

59

 

5.21

Labor Matters.

61

 

5.22

Collateral Documents.

61

 

 

 

 

 

ARTICLE VI

 

 

AFFIRMATIVE COVENANTS

 

 

 

 

 

6.01

Financial Statements

61

 

6.02

Certificates; Other Information

62

 

6.03

Notices

66

 

6.04

Payment of Obligations

68

 

6.05

Preservation of Existence, Etc.

68

 

6.06

Maintenance of Properties

68

 

6.07

Maintenance of Insurance

68

 

6.08

Compliance with Laws

69

 

6.09

Books and Records

69

 

6.10

Inspection Rights

69

 

6.11

Use of Proceeds

70

 

6.12

Covenant to Guarantee Obligations and Give Security

70

 

6.13

Compliance with Environmental Laws

73

 

 

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6.14

Preparation of Environmental/Seismic Reports

73

 

6.15

Further Assurances

74

 

6.16

Compliance with Terms of Leaseholds

74

 

6.17

Interest Rate Hedging

74

 

6.18

Material Contracts

74

 

6.19

Post-Closing Covenants.

75

 

 

 

 

 

ARTICLE VII

 

 

NEGATIVE COVENANTS

 

 

 

 

 

7.01

Liens

75

 

7.02

Indebtedness

76

 

7.03

Investments

78

 

7.04

Fundamental Changes

80

 

7.05

Dispositions

81

 

7.06

Restricted Payments

81

 

7.07

Change in Nature of Business; Limitations on Excluded Subsidiaries

82

 

7.08

Transactions with Affiliates

82

 

7.09

Burdensome Agreements

83

 

7.10

Use of Proceeds

83

 

7.11

Financial Covenants

83

 

7.12

Capital Expenditures

84

 

7.13

Amendments of Organization Documents

84

 

7.14

Accounting Changes

84

 

7.15

Prepayments, Etc. of Indebtedness

84

 

7.16

Amendment, Etc. of Related Documents and Indebtedness

84

 

7.17

Designation of Senior Debt

85

 

 

 

 

 

ARTICLE VIII

 

 

EVENTS OF DEFAULT AND REMEDIES

 

 

 

 

 

8.01

Events of Default

85

 

8.02

Remedies upon Event of Default

88

 

8.03

Application of Funds

89

 

 

 

 

 

ARTICLE IX

 

 

ADMINISTRATIVE AGENT

 

 

 

 

 

9.01

Appointment and Authority

90

 

9.02

Rights as a Lender

90

 

9.03

Exculpatory Provisions

90

 

9.04

Reliance by Administrative Agent

92

 

9.05

Delegation of Duties

92

 

9.06

Resignation of Administrative Agent

92

 

9.07

Non-Reliance on Administrative Agent and Other Lenders

93

 

9.08

Intercreditor Agreement

93

 

9.09

No Other Duties, Etc.

93

 

 

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9.10

Administrative Agent May File Proofs of Claim

94

 

9.11

Collateral and Guaranty Matters

94

 

 

ARTICLE X

 

 

MISCELLANEOUS

 

 

 

 

 

10.01

Amendments, Etc.

95

 

10.02

Notices; Effectiveness; Electronic Communications

96

 

10.03

No Waiver; Cumulative Remedies

98

 

10.04

Expenses; Indemnity; Damage Waiver

98

 

10.05

Payments Set Aside

100

 

10.06

Successors and Assigns

100

 

10.07

Treatment of Certain Information; Confidentiality

104

 

10.08

Right of Setoff.

105

 

10.09

Interest Rate Limitation

105

 

10.10

Counterparts; Integration; Effectiveness

105

 

10.11

Survival of Representations and Warranties

106

 

10.12

Severability

106

 

10.13

Replacement of Lenders

106

 

10.14

Governing Law; Jurisdiction; Etc.

107

 

10.15

Waiver of Jury Trial

108

 

10.16

California Judicial Reference.

108

 

10.17

No Advisory or Fiduciary Responsibility

108

 

10.18

USA PATRIOT Act Notice

109

 

10.19

Intercreditor Agreement

109

 

 

 

 

 

SIGNATURES

S-1

 

 

iv



 

SCHEDULES

 

1.01

 

Certain EBITDA Add-Backs

2.01

 

Term Commitments and Applicable Percentages

4.01(a)(vi)

 

Pledged Real Property

4.01(a)(xv)

 

Exceptions to Audited Financial Statements

5.06

 

Disclosed Litigation

5.07

 

Material Contracts

5.08(b)

 

Existing Liens

5.08(c)

 

Owned Real Property

5.08(d)(i)

 

Leased Real Property (Lessee)

5.08(d)(ii)

 

Leased Real Property (Lessor)

5.08(e)

 

Existing Investments

5.09

 

Environmental Compliance

5.11

 

Tax Returns

5.12(c)

 

Past ERISA Events

5.13

 

Subsidiaries and Other Equity Investments; Loan Parties

5.21

 

Labor Matters

7.02

 

Existing Indebtedness

7.09

 

Burdensome Agreements

10.02

 

Administrative Agent’s Office, Certain Addresses for Notices

 

EXHIBITS

 

Form of

 

A

 

Committed Loan Notice

B

 

Term Note

C

 

Compliance Certificate

D

 

Assignment and Assumption

E

 

Calculation of Consolidated Membership

 

v



 

SECOND LIEN CREDIT AGREEMENT

 

This SECOND LIEN CREDIT AGREEMENT (“ Agreement ”) is entered into as of August 8, 2007, among PROSPECT MEDICAL HOLDINGS, INC., a Delaware corporation (“ Holdings ”), PROSPECT MEDICAL GROUP, INC., a California professional corporation (together with Holdings, each a “ Borrower ” and collectively, the “ Borrowers ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and BANK OF AMERICA, N.A., as Administrative Agent.

 

PRELIMINARY STATEMENTS :

 

The Borrowers have requested that the Lenders provide a term loan facility and the Lenders have indicated their willingness to lend on the terms and subject to the conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

 

1.01         Defined Terms .  As used in this Agreement, the following terms shall have the meanings set forth below:

 

Acquisition Co. ” means Prospect Hospitals System LLC, a California limited liability company, which entity’s name shall be changed on the Closing Date to Alta Hospitals System, LLC.

 

Administrative Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

 

Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify to the Borrowers and the Lenders.

 

Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

Agreement ” means this Second Lien Credit Agreement, as the same may be amended, restated, supplemented or modified from time to time.

 

AMVI/Prospect ” means AMVI/Prospect Medical Group, a California general partnership, a/k/a AMVI/Prospect Health Network.

 



 

Applicable Percentage ” means, with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) represented by (a) on or prior to the Closing Date, such Lender’s Term Commitment at such time and (ii) thereafter, the principal amount of such Lender’s Term Loans at such time.  The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

Applicable Rate ” means (a) 7.00% per annum for Base Rate Loans and 8.25% per annum for Eurodollar Rate Loans.

 

Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Arranger ” means Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager.

 

Assignable Option Agreement ” means that certain Third Amended and Restated Assignable Option Agreement dated as of the Closing Date and executed by and among Dr. Terner, PMS and PMG.

 

Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

 

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

 

Attributable Indebtedness ” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person.

 

Audited Financial Statements ” means, collectively, (a) the audited consolidated balance sheet of Holdings and its Subsidiaries (including PMG and its Subsidiaries) for the fiscal year ended September 30, 2006, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Holdings and its Subsidiaries (including PMG and its Subsidiaries), including the notes thereto and (b) the audited consolidated balance sheet of Alta Healthcare System, Inc. and its Subsidiaries for the fiscal year ended December 31, 2006, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Alta Healthcare System, Inc., and its Subsidiaries, including the notes thereto.

 

Bank of America ” means Bank of America, N.A. and its successors.

 

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Base Rate ” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

 

Base Rate Loan ” means a Term Loan that bears interest based on the Base Rate.

 

Borrowers ” has the meaning specified in the introductory paragraph hereto.

 

Borrower Agent ” means PMG.

 

Borrower Materials ” has the meaning specified in Section 6.02 .

 

Borrowing ” means a borrowing consisting of Term Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01 .

 

Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

Capital Expenditures ” means, with respect to any Person for any period, any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations).

 

Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

 

Capitated Contracts ” means, collectively, all of the Loan Parties’ contracts whether presently existing or hereafter executed between Loan Parties and various health maintenance organizations and all proceeds therefrom.

 

Capitated Contract Rights ” means all of the Loan Parties’ rights to payment of any kind arising from or out of Capitated Contracts or any other contracts or rights to payment from health service contracts whether presently existing or hereafter executed between Loan Parties and various health maintenance organizations.

 

Cash Equivalents ” means any of the following types of Investments, to the extent owned by either Borrower or any of their respective Subsidiaries free and clear of all Liens (other than Liens created under the Collateral Documents and other Liens permitted hereunder):

 

3


 

(a)           readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

 

(b)           time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $500,000,000, in each case with maturities of not more than 90 days from the date of acquisition thereof;

 

(c)           commercial paper issued by any issuer and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and

 

(d)           Investments, classified in accordance with GAAP as current assets of either Borrower or any of their respective Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.

 

Cash Management Agreement ” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

 

Cash Management Bank ” means any Person that, at the time it enters into a Cash Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Cash Management Agreement.

 

CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

 

CERCLIS ” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

 

CFC ” means a Person that is a controlled foreign corporation under Section 957 of the Code.

 

Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application

 

4



 

thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

 

Change of Control ” means an event or series of events by which:

 

(a)           (i) Any Person or group (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) (other than Samuel S. Lee, the David and Alexa Topper Family Trust U/D/T September 29, 1997) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934) of more

 

than twenty percent (20%) of the Equity Interests (based on voting power, in the event different classes of stock shall have different voting powers) of Holdings, (ii) such Person or group shall otherwise obtain the power to control the election of a majority of the board of directors of Holdings, or (iii) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the board of directors of Holdings (together with any new directors whose election by the board of directors of Holdings or whose nomination for election by the stockholders of Holdings was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office; or

 

(b)           Holdings shall cease to own and control all of the economic and voting rights associated with ownership of 100% of the outstanding Equity Interests having voting rights of all classes of PMS, SMM, ProMed or Acquisition Co. on a fully diluted basis; or

 

(c)           PMS shall cease to own and control all of the economic and voting rights associated with ownership of 100% of the outstanding Equity Interests having voting rights of all classes of PHR, on a fully diluted basis; or

 

(d)           Dr. Terner shall cease to own and control all of the economic and voting rights associated with ownership of 100% of the outstanding Equity Interests having voting rights of all classes of PMG on a fully diluted basis or Dr. Terner institutes or consents to the institution of any proceeding against him or his estate under any Debtor Relief Law, or makes an assignment for the benefit of creditors or Dr. Terner ceases to be duly licensed to practice in the medical industry in the State of California or Dr. Terner ceases to be designated as a licensed professional in accordance with the California Professional Corporation Act; except that, if Dr. Terner shall cease to own and control such Equity Interests by reason of death or disability, a Change of Control under this clause (d) shall not be deemed to have occurred if Dr. Terner is replaced by another owner and controlling shareholder of such capital Stock reasonably acceptable to Administrative Agent and the Required Lenders within sixty (60) days; or

 

(e)           PMG ceases to own and control all of the economic and voting rights associated with ownership of one hundred percent (100%) of the outstanding Equity Interests of all classes of each PMG Loan Party on a fully diluted basis (except with respect to Nuestra Familia Medical Group, Inc., a California professional corporation, in

 

5



 

which case a Change of Control shall have occurred if PMG ceases to own and control all of the economic and voting rights associated with ownership of fifty five percent (55%) of the outstanding Equity Interests of all classes of Nuestra Familia Medical Group, Inc., on a fully diluted basis); or

 

(f)            the outstanding Equity Interests of any Subsidiary (other than Nuestra Familia Medical Group, Inc. and AMVI) ceases to be owned one hundred percent (100%) by a Loan Party; or

 

(g)           any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of Holdings, or control over the equity securities of Holdings entitled to vote for members of the board of directors or equivalent governing body of Holdings on a fully-diluted basis (and taking into account all such securities that such Person or Persons have the right to acquire pursuant to any option right) representing 25% or more of the combined voting power of such securities.

 

Closing Date ” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 .

 

CMS ” means Centers for Medicare and Medicaid Services.

 

Code ” means the Internal Revenue Code of 1986, as amended.

 

Collateral ” means all of the “ Collateral ” and “ Mortgaged Property ” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties.

 

Collateral Agreement ” has the meaning specified in Section 4.01(a)(v) .

 

Collateral Documents ” means, collectively, the Collateral Agreement, the Intercreditor Agreement, the Terner Pledge, the Mortgages, each intellectual property security agreement, and each other collateral assignment, security agreement, pledge agreement or other similar agreement delivered to the Administrative Agent pursuant to the terms hereof or pursuant to Section 6.12 , and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

 

Collection Account Agreement ” means each agreement with a depositary bank holding a Deposit Account into which Governmental Receivables are initially deposited executed in accordance with Section 4.6(b)  of the Collateral Agreement.

 

Committed Loan Notice ” means a notice of (a) the Borrowings to be made on the Closing Date, (b) a conversion of Term Loans from one Type to the other, or (d) a

 

6



 

continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a) , which, if in writing, shall be substantially in the form of Exhibit A .

 

Company ” means Alta Healthcare System, Inc., a California corporation.

 

Compliance Certificate ” means a certificate substantially in the form of Exhibit C .

 

Consolidated EBITDA ” means, at any date of determination, an amount equal to Consolidated Net Income of the Loan Parties and their Subsidiaries on a consolidated basis for the most recently completed Measurement Period plus (a) the following to the extent deducted in calculating such Consolidated Net Income:  (i) Consolidated Interest Charges, (ii) the provision for Federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense and (iv) other non-recurring expenses reducing such Consolidated Net Income which do not represent a cash item in such period or any future period (in each case of or by Loan Parties and their Subsidiaries for such Measurement Period) and minus (b) the following to the extent included in calculating such Consolidated Net Income:  (i) Federal, state, local and foreign income tax credits, (ii) all non-cash items increasing Consolidated Net Income (in each case of or by Loan Parties and their Subsidiaries for such Measurement Period), (iii) losses (or plus gains) from dispositions of capital assets (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities); plus (iv) extraordinary losses (or plus gains) as defined under GAAP net of related tax effects included in the determination of Consolidated Net Income.   For purposes of this Agreement, Consolidated EBITDA shall be adjusted on a pro forma basis, in a manner reasonably acceptable to the Administrative Agent, to include, as of the first day of any applicable period, any acquisitions and Dispositions of assets permitted under this Agreement, including, without limitation, adjustments reflecting any non-recurring costs and any extraordinary expenses of any such permitted acquisitions and asset dispositions consummated during such period calculated on a basis consistent with GAAP and Regulation S-X of the Securities Exchange Act of 1934, as amended, or as approved by the Administrative Agent.  For purposes of this Agreement and the calculation of Consolidated Leverage Ratio and Consolidated Fixed Charge Coverage Ratio, the add-backs identified on Schedule 1.01(a)  shall be permitted in the amounts and for the periods set forth on such Schedule.

 

Consolidated Fixed Charge Coverage Ratio ” means, at any date of determination, the ratio of (a) (i) Consolidated EBITDA, less (ii) the aggregate amount of all cash Capital Expenditures to (b) the sum of (i) Consolidated Interest Charges, (ii) the aggregate principal amount of all regularly scheduled principal payments or redemptions or similar acquisitions for value of outstanding debt for borrowed money, but excluding any such payments to the extent refinanced through the incurrence of additional Indebtedness otherwise expressly permitted under Section 7.02 , and (iii) the aggregate amount of Federal, state, local and foreign income taxes paid in cash, in each case, of or by Holdings and its Subsidiaries for the most recently completed Measurement Period.

 

 “ Consolidated Interest Charges ” means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the

 

7



 

deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each case, of or by Holdings and its Subsidiaries on a consolidated basis for the most recently completed Measurement Period.

 

Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA of Holdings and its Subsidiaries on a consolidated basis for the most recently completed Measurement Period.

 

Consolidated Net Income ” means, at any date of determination, the net income (or loss) of Holdings and its Subsidiaries on a consolidated basis for the most recently completed Measurement Period; provided that Consolidated Net Income shall exclude (a) extraordinary gains and extraordinary losses for such Measurement Period, (b) the net income of any Subsidiary during such Measurement Period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such income is not permitted by operation of the terms of its Organization Documents or any agreement, instrument or Law applicable to such Subsidiary during such Measurement Period, except that Holdings’ equity in any net loss of any such Subsidiary for such Measurement Period shall be included in determining Consolidated Net Income, and (c) any income (or loss) for such Period of any Person if such Person is not a Subsidiary, except that Holdings’ equity in the net income of any such Person for such Measurement Period shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such Period to Holdings or a Subsidiary as a dividend or other distribution (and in the case of a dividend or other distribution to a Subsidiary, such Subsidiary is not precluded from further distributing such amount to Holdings as described in clause (b) of this proviso).

 

Consolidated Total Indebtedness ” means, as of any date of determination, for Holdings and its Subsidiaries on a consolidated basis, the sum of all Indebtedness of Holdings and its Subsidiaries.

 

Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “ Controlling ” and “ Controlled ” have meanings correlative thereto.

 

Debt Rating ” means, as of any date of determination, the rating as determined by either S&P or Moody’s (collectively, the “ Debt Ratings ”) of each Borrower’s non-credit-enhanced, senior unsecured long-term debt.

 

Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors,

 

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moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

Default Rate ” means (a) when used with respect to Obligations other than Eurodollar Rate Loans, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum, and (b) when used with respect to Obligations consisting of Eurodollar Rate Loans, an interest rate equal (i) the Eurodollar Rate plus (ii) the Applicable Rate plus (iii) 2% per annum.

 

Defaulting Lender ” means any Lender that (a) has failed to fund any portion of the Term Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (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 (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

 

 “ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

Dollar ” and “ $ ” mean lawful money of the United States.

 

Domestic Subsidiary ” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

 

Dr. Terner ” means Jacob Y. Terner, M.D.

 

Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) , (v) and (vi) (subject to such consents, if any, as may be required under Section 10.06(b)(iii) ).

 

Environmental Laws ” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to human health, safety, pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous/biohazardous substances or wastes, air emissions and discharges to waste or public systems.

 

Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of either Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the

 

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generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

 

Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting.

 

ERISA ” means the Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with either Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by either Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by either Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon either Borrower or any ERISA Affiliate.

 

Eurodollar Rate ” means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum determined by the

 

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Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

 

Eurodollar Rate Loan ” means a Term Loan that bears interest at a rate based on the Eurodollar Rate.

 

Event of Default ” has the meaning specified in Section 8.01 .

 

Excess Cash Flow ” means, for any fiscal year of Holdings, the excess (if any) of (a) Consolidated EBITDA for such fiscal year minus (b) the sum (for such fiscal year) of (i) Consolidated Interest Charges actually paid in cash by the Borrowers or any of their respective Subsidiaries, (ii) scheduled principal repayments, to the extent actually made, of the First Lien Term Loans pursuant to the terms of Section 2.07 of the First Lien Credit Agreement, (iii) all income taxes actually paid in cash by the Borrowers or any of their respective Subsidiaries and (iv) Capital Expenditures actually made by the Borrowers or any of their respective Subsidiaries in such fiscal year (excluding Capital Expenditures made in connection with an insurance and/or condemnation event and reinvested in accordance with Section 2.05(b)(iv)) .

 

Excluded Subsidiary ” means Alta Healthcare Building Corporation.

 

 “ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of either Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which either Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower Agent under Section 10.13 ), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(e) , except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from either Borrower with respect to such withholding tax pursuant to Section 3.01(a) .

 

Existing Credit Agreements ” means, collectively, (a) that certain Credit Agreement dated as of June 1, 2007 among the Borrowers, Bank of America, as agent, and a syndicate of lenders and (b) that certain Financing Agreement dated as of December 6, 2005 among the Company, Alta Hollywood Hospitals, Inc., Alta Los Angeles Hospitals, Inc. and CIT Lending Services Corporation.

 

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Extraordinary Receipt ” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments.

 

Facility ” means, at any time, (a) on or prior to the Closing Date, the aggregate amount of the Term Commitments at such time and (b) thereafter, the aggregate principal amount of the Term Loans of all Lenders outstanding at such time.

 

Federal Funds Rate ” means, for any day, the rate per annum 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 (a) 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 as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

 

Fee-For-Service Accounts ” means Accounts other than Capitated Contract Rights.

 

Fee Letter ” means the letter agreement, dated May 23, 2007, among the Borrowers, the Administrative Agent and the Arranger.

 

First Lien Administrative Agent ” means Bank of America, N.A., in its capacity as the administrative agent under the First Lien Credit Agreement, and its successors in such capacity.

 

First Lien Credit Agreement ” means that certain First Lien Credit Agreement of even date herewith by and among the Borrowers, the First Lien Lenders, and the First Lien Administrative Agent, as the same may be amended, restated, supplemented or modified from time to time.

 

First Lien Event of Default ” means any “Event of Default” as defined in the First Lien Credit Agreement.

 

First Lien Lenders ” means the “Lenders” as defined in the First Lien Credit Agreement.

 

First Lien Loan Documents ” means the “Loan Documents” as defined in the First Lien Credit Agreement.

 

First Lien Obligations ” means the “Obligations” as defined in the First Lien Credit Agreement.

 

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First Lien Revolving Credit Commitment ” means the “Revolving Credit Commitment” as defined in the First Lien Credit Agreement.

 

First Lien Revolving Loans ” means the “Revolving Loans” as defined in the First Lien Credit Agreement.

 

First Lien Term Loans ” means the “Term Loans” as defined in the First Lien Credit Agreement.

 

 “ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which either Borrower is resident for tax purposes.  For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

FRB ” means the Board of Governors of the Federal Reserve System of the United States.

 

Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Guarantee ” means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in

 

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part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “ Guarantee ” as a verb has a corresponding meaning.

 

Guarantors ” means, collectively, the Subsidiaries of each Borrower (other than the Excluded Subsidiary) and each other Subsidiary of the Borrowers that shall be required to execute and deliver a guaranty or guaranty supplement pursuant to Section 6.12 .

 

Guaranty ” means, collectively, the Continuing Guaranty (Second Lien) made by the Guarantors in favor of the Secured Parties, together with each other guaranty and guaranty supplement delivered pursuant to Section 6.12 .

 

Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

Health Care Laws ” means (i) any and all federal, state and local fraud and abuse and self-referral laws, including, without limitation, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), the Stark Law (42 U.S.C. § 1395nn and § 1395x(q)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the Emergency Medical Treatment and Labor Act.(42 U.S.C. § 1395dd), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code and the regulations promulgated pursuant to such statutes; (ii) the federal Food, Drug & Cosmetic Act (21 U.S.C. §§ 301 et seq.) and the regulations promulgated thereunder; (iii) the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191) and the regulations promulgated thereunder; (iv) Medicare and the regulations promulgated thereunder; (v) Medicaid and the regulations promulgated thereunder; (vi) the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173) and the regulations promulgated thereunder; (vii) quality, safety and accreditation standards and requirements of all applicable state laws or regulatory bodies; (viii) requirements of Law relating to the ownership or operation of a health care facility or business, or assets used in connection therewith; (ix) requirements of Law relating to the billing or submission of claims, collection of accounts receivable, underwriting the cost of, or provision of management or administrative services in connection with, any and all of the foregoing, by any Loan Party and its Subsidiaries, including, but not limited to, laws and regulations relating to practice of medicine and other health care professions, professional fee splitting, tax-exempt organization and charitable trust law applicable to health care organizations, certificates of need, certificates of operations and authority; and (x) any and all other applicable health care laws, regulations, manual provisions, policies and administrative guidance, each of (i) through (x) as may be amended from time to time.

 

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Healthcare Service Plan License ” means a license issued by the California Department of Corporations or the corresponding agency of another state and/or any other applicable agency or successor.

 

Hedge Bank ” means any Person that, at the time it enters into a Secured Hedge Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Secured Hedge Agreement.

 

Holdings ” has the meaning specified in the introductory paragraph hereto.

 

Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)           all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)           the maximum amount of all direct or contingent obligations of such Person arising under letters of credit, including standby and commercial, solely to the extent that such letters of credit are not fully cash collateralized, bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)           net obligations of such Person under any Swap Contract;

 

(d)           all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due for more than 90 days after the date on which such trade account was created);

 

(e)           indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)            all Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease Obligations of such Person and all Synthetic Debt of such Person;

 

(g)           all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

 

(h)           all Guarantees of such Person in respect of any of the foregoing; and

 

(i)            all obligations owing in respect of Medicare and/or Medicaid.

 

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For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

 

Indemnified Taxes means Taxes other than Excluded Taxes.

 

Indemnitees ” has the meaning specified in Section 10.04(b) .

 

Information ” has the meaning specified in Section 10.07 .

 

Intercreditor Agreement ” means that certain Intercreditor Agreement of even date herewith by and among the Administrative Agent, the First Lien Administrative Agent and each of the Credit Parties, as amended, restated, supplemented or otherwise modified from time to time.

 

Interest Payment Date ” means, (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Term Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

 

Interest Period ” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower Agent in its Committed Loan Notice or such other period that is twelve months or less requested by the Borrower Agent and consented to by all the Lenders; provided that:

 

(a)           any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

 

(b)           any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(c)           no Interest Period shall extend beyond the Maturity Date.

 

Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of

 

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assets of another Person that constitute a business unit or all or a substantial part of the business of, such Person.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

IP Rights ” has the meaning specified in Section 5.17 .

 

IRS ” means the United States Internal Revenue Service.

 

Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities (including Seismic Compliance Laws, Health Care Laws, regulations and permits), including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

Lender ” has the meaning specified in the introductory paragraph hereto.

 

Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower Agent and the Administrative Agent.

 

Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

Loan Documents ” means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d) the Collateral Documents, (e) the Fee Letter, (f) each Secured Hedge Agreement, (g) each Secured Cash Management Agreement, and (h) the Terner Pledge; provided that for purposes of the definition of “Material Adverse Effect” and Articles IV through IX , “Loan Documents” shall not include Secured Hedge Agreements or Secured Cash Management Agreements.

 

Loan Parties ” means, collectively, each Borrower and each Guarantor.

 

Management Agreements ” means, the agreements identified as management agreements on Schedule 5.07 .

 

Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrowers and their Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of any Loan Party to perform its obligations

 

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under any Loan Document or any First Lien Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

 

 “ Material Contract ” means, with respect to any Person, each contract to which such Person is a party that is material to the business, condition (financial or otherwise), operations, performance, properties or prospects of such Person; and, in the case of the Borrowers and their Subsidiaries, “Material Contracts” shall include, among other contracts, all Management Agreements and all Capitated Contracts.

 

Maturity Date ” means February 8, 2015; provided , however , that, in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

 

Maximum First Lien Indebtedness ” has the meaning set forth in the Intercreditor Agreement.

 

Measurement Period ” means, at any date of determination, the most recently completed four fiscal quarters of Holdings or, if fewer than four consecutive fiscal quarters of Holdings have been completed since the Closing Date, the fiscal quarters of Holdings that have been completed since the Closing Date.

 

Medicaid ” means that government-sponsored entitlement program under Title XIX, P.L. 89-97 of the Social Security Act, which provides federal grants to states for medical assistance based on specific eligibility criteria, as set forth at Section 1396, et seq. of Title 42 of the United States Code.

 

Medicare ” means that government-sponsored insurance program under Title XVIII, P.L. 89-97, of the Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as set forth at Section 1395, et seq. of Title 42 of the United States Code.

 

Membership ” means, as to any Loan Party as of the end of any calendar month, the number of Persons who are subject to Capitated Contracts with such Loan Party.

 

Merger ” means the merger of the Company with and into Acquisition Co. as contemplated under the terms of the Merger Agreement.

 

Merger Agreement ” means that certain Agreement and Plan of Reorganization dated as of July 25, 2007 by and among the Company, Samuel S. Lee, The David & Alexa Topper Family Trust, U/D/T September 29, 1997, Holdings and Acquisition Co.

 

Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

 

Mortgage ” has the meaning specified in Section 4.01(a)(vi) .

 

Mortgage Policy ” has the meaning specified in Section 4.01(a)(vi)(B) .

 

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Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

Net Cash Proceeds ” means, with respect to any Disposition by either Borrower or any of their respective Subsidiaries or any Extraordinary Receipt received or paid to the account of either Borrower or any of their respective Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents or the First Lien Loan Documents), (B) the reasonable and customary out-of-pocket expenses incurred by either Borrower or such Subsidiary in connection with such transaction and (C) income taxes reasonably estimated to be actually payable within two years of the date of the relevant transaction as a result of any gain recognized in connection therewith; provided that, if the amount of any estimated taxes pursuant to subclause (C) exceeds the amount of taxes actually required to be paid in cash in respect of such Disposition, the aggregate amount of such excess shall constitute Net Cash Proceeds.

 

Note ” means a promissory note made by the Borrowers in favor of a Lender, evidencing the Term Loans made by such Lender, substantially in the form of Exhibit B .

 

NPL ” means the National Priorities List under CERCLA.

 

Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Term Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

Obligor ” means any Person that is obligated to make payment with respect to any Capitated Contract or other account receivable.

 

Offset ” means any amount, including any overpayment made to a Loan Party or an Affiliate, with respect to any Obligor that is to be repaid by offset against amounts then due to such Loan Party by such Obligor.  Offsets shall include any amounts constituting penalties or assessments due to any state or federal tax authorities, amounts deemed by any Obligor to be recoupments, inter-agency or inter-creditor offsets and recoupments and any other amounts withheld or paid to any person or entity other than the Administrative Agent to offset against any purported liability of any Loan Party.

 

Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive

 

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documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

Other Taxes ” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

Participant ” has the meaning specified in Section 10.06(d) .

 

PBGC ” means the Pension Benefit Guaranty Corporation.

 

Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by either Borrower or any ERISA Affiliate or to which either Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

 

Permits ” means any permit, approval, authorization, license, registration, certification, certificate of authority, variance, permission, franchise, qualification, order, filing or consent required from a Governmental Authority or other Person under an applicable requirement of Law.

 

Permitted Encumbrances ” has the meaning specified in the Mortgages.

 

Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

PHR ” means Pinnacle Health Resources, a California corporation.

 

Plan ” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by either Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

 

Platform ” has the meaning specified in Section 6.02 .

 

PMG ” means Prospect Medical Group, Inc., a California professional corporation.

 

PMG Loan Parties ” means PMG, Prospect Health Source Medical Group, Inc., Prospect Professional Care Medical Group, Inc., Nuestra Familia Medical Group, Inc., APAC

 

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Medical Group, Inc., Prospect NWOC Medical Group, Inc., Sierra Primary Care Medical Group, Inc., StarCare Medical Group, Inc., Pegasus Medical Group, Inc., Antelope Valley Medical Associates, Inc., Santa Ana/Tustin Physicians Group, Inc., AMVI/Prospect, Genesis HealthCare of Southern California, A Medical Group, Inc., Pomona Valley Medical Group, Inc., Upland Medical Group, A Professional Medical Corporation, Prospect Physician Associates, Inc. and each future direct or indirect subsidiary of PMG required to be joined as a Guarantor pursuant to Section 6.12 .

 

PMS ” means Prospect Medical Systems, Inc., a Delaware corporation.

 

ProMed ” means ProMed Health Services Company, a California corporation.

 

Public Lender ” has the meaning specified in Section 6.02 .

 

Real Property ” means, collectively, all real property together with all buildings and improvements thereon and all appurtenances and rights pertaining thereto, currently or formerly held by any of the Loan Parties that is or was used or held for use in the operation of the Business.

 

Register ” has the meaning specified in Section 10.06(c) .

 

Related Documents ” means the Merger Agreement, the documents effecting the Merger, and Assignable Option Agreement, and the Management Agreements (including any Management Agreement with any seller under the Merger Agreement).

 

Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

 

Required Lenders ” means, as of any date of determination, Lenders holding more than 50% of the Facility on such date; provided that the portion of the Facility held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

 

Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party and any other officer of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

 

Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property),

 

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including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to any Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment.

 

S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

 

Second Priority Lien ” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien, and is second in priority to the Liens granted by the Loan Parties under the First Lien Loan Documents.

 

Seismic Compliance Laws ” means all Federal, state and local statutes (including California State Senate Bill 1953), rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities related to seismic evaluation, retrofit requirements, and disaster preparedness for hospitals (including any requirements to assure the provision of services to the public and continuity of care, structural soundness, maintenance of building contents, and integrity of nonstructural systems).

 

SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

Secured Cash Management Agreement ” means any Cash Management Agreement that is entered into by and between either Borrower and any Cash Management Bank.

 

Secured Hedge Agreement ” means any interest rate Swap Contract required or permitted under Article VI or VII that is entered into by and between either Borrower and any Hedge Bank.

 

Secured Parties ” means, collectively, the Administrative Agent, the Lenders, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05 , and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents.

 

Social Security Act ” means the Social Security Act of 1965.

 

Solvent ” and “ Solvency ” mean, with respect to any Person on any date of determination, 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 such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to

 

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pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

SMM ” means Sierra Medical Management, Inc., a Delaware corporation.

 

Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified or the context otherwise requires, all references herein to a “ Subsidiary ” or to “ Subsidiaries ” shall refer to a Subsidiary or Subsidiaries of Holdings and shall include the PMG Loan Parties; provided , however, that the parties agree that Brotman Medical Center, Inc., a California corporation, in which Holdings’ Subsidiary, Prospect Hospital Advisory Services, Inc., holds less than a majority or the shares, is not considered a Subsidiary.

 

Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

 

Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

Synthetic Debt ” means, with respect to any Person as of any date of determination thereof, all obligations of such Person in respect of transactions entered into by such Person that are intended to function primarily as a borrowing of funds but are not otherwise

 

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included in the definition of “ Indebtedness ” or as a liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP.

 

Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Term Commitment ” means, as to each Lender, its obligation to make Term Loans to the Borrowers pursuant to Section 2.01 in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Term Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

 

Term Loan ” means, collectively, the advances made by the Lenders under the Facility.

 

Terner Pledge ” means that certain Second Lien Pledge Agreement dated as of the Closing Date by Dr. Terner in favor of the Administrative Agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

 

Third Party Payor means Medicare, Medicaid, TRICARE, Blue Cross and/or Blue Shield, state government insurers, private insurers and any other person or entity which presently or in the future maintains Third Party Payor Programs.

 

Third Party Payor Programs means all third party payor programs in which any of the Loan Parties or their respective Subsidiaries participates (including, without limitation, Medicare, Medicaid, TRICARE or any other federal or state health care programs, as well as Blue Cross and/or Blue Shield, managed care plans, or any other private insurance programs)

 

Threshold Amount ” means $3,750,000.

 

Total Outstandings ” means, as of any date, the aggregate outstanding principal amount of the Term Loans after giving effect to any prepayments or repayments of Term Loans occurring on such date.

 

Transaction means, collectively, (a) the consummation of the Merger, (b) the entering into by the Loan Parties and their applicable Subsidiaries of the Loan Documents, the First Lien Loan Documents and the Related Documents to which they are or are intended to be a party, (c) the refinancing of certain outstanding Indebtedness of the Borrowers and their respective Subsidiaries evidenced by the Existing Credit Agreements (and related documents)

 

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and the termination of all commitments with respect thereto and (d) the payment of the fees and expenses incurred in connection with the consummation of the foregoing.

 

Type ” means, with respect to a Term Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

 

UCC ” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “ UCC ” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

 

Unfunded Pension Liability ” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

 

United States ” and “ U.S. ” mean the United States of America.

 

U.S. Loan Party ” means any Loan Party that is organized under the laws of one of the states of the United States of America and that is not a CFC.

 

1.02         Other Interpretive Provisions .  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)   The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.”  The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “ asset ” and

 

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property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b)   In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ;” the words “ to ” and “ until ” each mean “ to but excluding ;” and the word “ through ” means “ to and including .”

 

(c)   Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

1.03         Accounting Terms .

 

(a)           Generally .  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

 

(b)           Changes in GAAP .  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower Agent or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrowers shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

(c)           Consolidation of Variable Interest Entities .  All references herein to consolidated financial statements of Holdings and its Subsidiaries or to the determination of any amount for Holdings and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that Holdings is required to consolidate pursuant to FASB Interpretation No. 46 – Consolidation of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a Subsidiary as defined herein.

 

1.04         Rounding .  Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

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1.05         Times of Day .  Unless otherwise specified, all references herein to times of day shall be references to Pacific time (daylight or standard, as applicable).

 

1.06         Currency Equivalents Generally .  Any amount specified in this Agreement (other than in Articles II and X ) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Administrative Agent at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars.  For purposes of this Section 1.07 , the “ Spot Rate ” for a currency means the rate determined by the Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.

 

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01         The Term Loans .  Subject to the terms and conditions set forth herein, each Term Lender severally agrees to make a single loan to the Borrowers on the Closing Date in an amount not to exceed such Lender’s Term Commitment.  The Borrowing shall consist of Term Loans made simultaneously by the Lenders in accordance with their respective Term Commitments.  Amounts borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed.

 

2.02         Borrowing; Conversions and Continuations of Loans .

 

(a)  Term Loans may be Base Rate Loans or Eurodollar Rate Loans as further provided herein.  The Borrowing on the Closing Date, each conversion of Term Loans from one Type to the other and each continuation of Eurodollar Rate Loans shall be made upon the Borrower Agent’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans and (ii) on the requested date of any Borrowing of Base Rate Loans; provided , however , that if the Borrower Agent wishes to request Eurodollar Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period,” the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the Lenders of such request and determine whether the requested Interest Period is acceptable to all of them.  Not later than 11:00 a.m., three Business Days before the requested date of such Borrowing, conversion or continuation, the Administrative Agent shall notify the Borrower Agent (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders.  Each telephonic notice by the Borrower Agent pursuant to this Section 2.02(a)

 

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must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower Agent.  Each conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Each conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Committed Loan Notice  (whether telephonic or written) shall specify (i) whether the Borrowers are requesting a conversion of Term Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Term Loans to be converted or continued, (iv) the Type of Term Loans to be borrowed or to which existing Term Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto.  If the Borrower Agent fails to specify a Type of Term Loan in a Committed Loan Notice or if the Borrower Agent fails to give a timely notice requesting a conversion or continuation, then the applicable Term Loans shall be converted to Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans.  If the Borrower Agent requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, the Borrowers will be deemed to have specified an Interest Period of one month.

 

(b)           Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the Term Loans, and if no timely notice of a conversion or continuation is provided by the Borrower Agent, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in Section 2.02(a) .  In the case of the Term Loans to be made on the Closing Date, each Lender shall make the amount of its Term Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Closing Date.   Upon satisfaction of the applicable conditions set forth in Section 4.01 , the Administrative Agent shall make all funds so received available to the Borrowers in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrowers on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower Agent.

 

(c)           Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Term Loans may be converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders.

 

(d)           The Administrative Agent shall promptly notify the Borrower Agent and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.  At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower Agent and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

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(e)           After giving effect to all Borrowings, all conversions of Term Loans from one Type to the other, and all continuations of Term Loans as the same Type, there shall not be more than 4 Interest Periods in effect.

 

2.03         Intentionally Omitted.

 

2.04         Intentionally Omitted .

 

2.05         Prepayments .

 

(a)  Optional .

 

(i)            Generally .   Subject to (A) the prior payment in full of the First Lien Obligations, (B) Section 2.05(a)(ii) and (C) the last two sentences of this Section 2.05(a)(i) , the Borrowers may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay the Term Loans in whole or in part; provided that (A) such notice must be received by the Administrative Agent not later than 11:00 a.m. (1) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (2) on the date of prepayment of Base Rate Loans; (B) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (C) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Term Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Term Loans.  The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s ratable portion of such prepayment (based on such Lender’s Applicable Percentage).  If such notice is given by the Borrower Agent, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 .  Each prepayment of the outstanding Term Loans pursuant to this Section 2.05(a)  shall be applied to the outstanding principal balance of the Term Loans, and each such prepayment shall be paid to the Lenders in accordance with their respective Applicable Percentages.

 

(ii)           Prepayment Premiums .

 

(A)          Notwithstanding anything herein to the contrary, all prepayments of the Term Loan that are made in accordance with this Section 2.05(a) prior to the second anniversary of the Closing Date shall be subject to a prepayment premium equal to the present value, as determined by Holdings and certified by a Responsible Officer of Holdings to the Administrative Agent, of (1) all required interest payments due on such Term Loans from the date of prepayment through and including the second anniversary of the Closing Date (excluding accrued interest) (assuming that the interest rate applicable to all such interest is the swap

 

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rate at the close of business on the third Business Day prior to the date of such prepayment with the termination date nearest to the second anniversary of the Closing Date plus the Applicable Rate for Eurodollar Rate Loans) plus (2) the prepayment premium that would be due pursuant to Section  2.05(a)(ii)(B)  if such prepayment were made on the day after the second anniversary of the Closing Date, in each case discounted to the date of prepayment on a quarterly basis (assuming a 360-day year and actual days elapsed) at a rate equal to the sum of such swap rate plus 0.50%.

 

(B)           Notwithstanding anything herein to the contrary, all prepayments of the Term Loan that are made in accordance with this Section 2.05(a)  prior to (1) the third anniversary of the Closing Date, but on or after the second anniversary of the Closing Date, shall be subject to an additional premium equal to the amount of such prepayment multiplied by 3%, with respect to each such prepayment made prior to the third anniversary of the Closing Date, (2) the fourth anniversary of the Closing Date but on or after the third anniversary of the Closing Date shall be subject to an additional premium equal to the amount of such prepayment multiplied by 2%; and (3) the fifth anniversary of the Closing Date but on or after the fourth anniversary of the Closing Date shall be subject to an additional premium equal to the amount of such prepayment multiplied by 1%.  On or after the fifth anniversary of the Closing Date, no premiums or penalties shall be payable pursuant to this Section 2.05(a)(ii)  in connection with any prepayments of the Term Loan.

 

(b)  Mandatory .  Subject to the provisions of the Intercreditor Agreement and subject to the prior payment in full of (1) the First Lien Term Loan and (2) the First Lien Revolving Loans (but not including the permanent reduction of the First Lien Revolving Credit Commitment), in each case as provided in Section 2.05 of the First Lien Credit Agreement (or the waiver of such payment in accordance with Section 10.01 of the First Lien Credit Agreement), the Borrowers shall prepay the Term Loans pursuant to, and in accordance with, clauses (i) through (iv) below.  For the avoidance of doubt, it is understood and agreed that, notwithstanding anything to the contrary set forth in this Agreement, the Borrowers shall not be required or permitted to prepay the Term Loans hereunder as a result of any incurrence of Indebtedness, any Asset Disposition, any Extraordinary Receipt or any Excess Cash Flow if the First Lien Term Loan or the First Lien Revolving Loans (but not the First Lien Revolving Credit Commitment) remain outstanding.

 

(i)            Subject to the first two sentences of this subsection (b), within five Business Days after financial statements have been delivered pursuant to Section 6.01(a)  and the related Compliance Certificate has been delivered pursuant to Section 6.02(b) , the Borrowers shall prepay an aggregate principal amount of Term Loans equal to the excess (if any) of (A) 50% of Excess Cash Flow for the fiscal year covered by such financial statements over (B) the aggregate principal amount of Term Loans prepaid pursuant to Section 2.05(a)(i)  (such prepayments to be applied as set forth in clause (v) below).

 

(ii)           Subject to the first two sentences of this subsection (b), if any Borrower or any of its Subsidiaries Disposes of any property (other than any Disposition of any

 

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property permitted by Sections 7.05(b) , (c) , (d)  or (e) ) which results in the realization by such Person of Net Cash Proceeds, the Borrowers shall prepay an aggregate principal amount of Term Loans equal to 100% of such Net Cash Proceeds immediately upon receipt thereof by such Person (such prepayments to be applied as set forth in clause (v) below) ; provided , however , that, with respect to any Net Cash Proceeds realized under a Disposition described in this Section 2.05(b)(ii) , at the election of the Borrowers (as notified by the Borrower Agent to the Administrative Agent on or prior to the date of such Disposition), and so long as no Default shall have occurred and be continuing, the Borrowers or such Subsidiary may reinvest all or any portion of such Net Cash Proceeds in operating assets so long as within 270 days after the receipt of such Net Cash Proceeds, such purchase shall have been consummated (as certified by the Borrowers in writing to the Administrative Agent); and provided further , however , that any Net Cash Proceeds not subject to such definitive agreement or so reinvested shall be immediately applied to the prepayment of the Term Loans as set forth in this Section 2.05(b)(ii) .

 

(iii)          Subject to the first two sentences of this subsection (b), upon the incurrence or issuance by either Borrower or any of their respective Subsidiaries of any Indebtedness (other than Indebtedness expressly permitted to be incurred or issued pursuant to Section 7.02 ), the Borrowers shall prepay an aggregate principal amount of Term Loans equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by either Borrower or such Subsidiary (such prepayments to be applied as set forth in clause (v) below).

 

(iv)          Subject to the first two sentences of this subsection (b), upon any Extraordinary Receipt received by or paid to or for the account of either Borrower or any of their Subsidiaries, and not otherwise included in clause (ii) or (iii) of this Section 2.05(b) , the Borrower shall prepay an aggregate principal amount of Term Loans equal to 50% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by such Borrower or such Subsidiary (such prepayments to be applied as set forth in clause (v) below); provided , however , that with respect to any proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments, at the election of the applicable Borrower (as notified by the Borrower Agent to the Administrative Agent on or prior to the date of receipt of such insurance proceeds, condemnation awards or indemnity payments), and so long as no Default shall have occurred and be continuing, the applicable Borrower or such Subsidiary may apply within 270 days after the receipt of such cash proceeds to replace or repair the equipment, fixed assets or real property in respect of which such cash proceeds were received; and provided , further , however , that any cash proceeds not so applied shall be immediately applied to the prepayment of the Term Loans as set forth in this Section 2.05(b)(iv) .

 

(v)           Each prepayment of Term Loans pursuant to the foregoing provisions of this Section 2.05(b)  shall be applied to the outstanding principal balance of the Term Loans; provided that each Lender having outstanding Term Loans may elect to decline its Applicable Percentage of any mandatory prepayment by notifying the Administrative Agent within three days of receipt of the notice of such prepayment. All mandatory prepayments declined in accordance with the foregoing shall be re-offered to those Lenders under this Agreement who have initially accepted such prepayment (such re-

 

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offer to be made to each such Lender based on the percentage which such Lender’s Term Loans represents of the aggregate Term Loans of all such Lenders who have initially accepted such prepayment).  In the event of such a re-offer, the relevant Lenders may elect to decline, by notice to the Administrative Agent within two days of such re-offering, all of the amount of such prepayment that is re-offered to them, in which case the aggregate amount of the prepayment that would have been applied to prepay such Loans pursuant to such re-offer but was so declined shall be returned to the Borrowers.  Any Lender that does not promptly notify the Administrative Agent in accordance with the foregoing that it is declining a mandatory prepayment shall automatically be deemed to have accepted such prepayment and any re-offer in respect thereof.

 

2.06         Reduction of Term Commitments .  The Term Commitments shall be automatically and permanently reduced to zero on the date of the Borrowing.

 

2.07         Repayment of the Term Loans .  The Borrowers, jointly and severally, shall repay to the Lenders the aggregate outstanding principal amount of the Term Loans on the Maturity Date (or on such earlier date on which the Term Loans become due and payable pursuant to Article VIII ).

 

2.08         Interest .

 

(a)           Subject to the provisions of Section 2.08(b) , (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b)           (i)  If any amount of principal of any Term Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)           If any amount (other than principal of any Term Loan) payable by either Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)          Upon the request of the Required Lenders, while any Event of Default exists, the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iv)          Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

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(c)           Interest on each Term Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.09         Fees   The Borrowers, jointly and severally, shall pay to the Arranger and the Administrative Agent for their own respective accounts and for the accounts of the Lenders, fees in the amounts and at the times specified in the Fee Letter (without duplication of any fees payable pursuant to the First Lien Credit Agreement).  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

2.10         Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate .

 

(a)  All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Term Loan for the day on which the Term Loan is made, and shall not accrue on a Term Loan, or any portion thereof, for the day on which the Term Loan or such portion is paid, provided that any Term Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a) , bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

(b)           If, as a result of any restatement of or other adjustment to the financial statements of Holdings or for any other reason, either Borrower or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrowers as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrowers shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to either Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent or any Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period.  This paragraph shall not limit the rights of the Administrative Agent or any Lender, as the case may be, under Section 2.08(b)  or under Article VIII .  The Borrowers’ obligations under this paragraph shall survive the repayment of all Obligations hereunder.

 

2.11         Evidence of Debt .  The Term Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Term Loans made by the Lenders to the Borrowers and the interest and payments

 

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thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrowers shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Term Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Term Loans and payments with respect thereto.

 

2.12         Payments Generally; Administrative Agent’s Clawback .

 

(a)           General .  All payments to be made by either Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by either Borrower hereunder shall be made to the Administrative Agent, for the account of the Lenders at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected on computing interest or fees, as the case may be.

 

(b)           Presumptions by Administrative Agent .

 

(i)            Funding by Lenders; Presumption by Administrative Agent .  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) and may, in reliance upon such assumption, make available to the Borrowers a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender on the one hand and the Borrowers on the other severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to either Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank

 

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compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrowers, the interest rate applicable to Base Rate Loans.  If the Borrowers and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Term Loan included in such Borrowing.  Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(ii)           Payments by Borrowers; Presumptions by Administrative Agent .  Unless the Administrative Agent shall have received notice from the Borrowers prior to the time at which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.  In such event, if the Borrowers have not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

A notice of the Administrative Agent to any Lender or the Borrower Agent with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

 

(c)           Failure to Satisfy Conditions Precedent .  If any Lender makes available to the Administrative Agent funds for any Term Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrowers by the Administrative Agent because the conditions to the Term Loans set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(d)           Obligations of Lenders Several .  The obligations of the Lenders hereunder to make Term Loans and to make payments pursuant to Section 10.04(c)  are several and not joint.  The failure of any Lender to make any Term Loan on the Closing Date or to make any payment under Section 10.04(c)  on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Term Loan or to make its payment under Section 10.04(c) .

 

(e)           Funding Source .  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Term Loan in any particular place or manner or to constitute a

 

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representation by any Lender that it has obtained or will obtain the funds for any Term Loan in any particular place or manner.

 

(f)            Insufficient Funds .  If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i)  first , toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii)  second , toward payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

 

2.13         Sharing of Payments by Lenders .  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time) of payment on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Term Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that:

 

(i)            if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)           the provisions of this Section shall not be construed to apply to (A) any payment made by the Borrowers pursuant to and in accordance with the express terms of this Agreement or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Term Loans, other than to the Borrowers or any Subsidiary thereof (as to which the provisions of this Section shall apply).

 

Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrowers rights of setoff and counterclaim

 

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with respect to such participation as fully as if such Lender were a direct creditor of the Borrowers in the amount of such participation.

 

2.14         Obligations Joint and Several .

 

(a)                           Nature of Obligations .  Each of the Borrowers shall be jointly and severally liable for the Obligations, however incurred.  References to the Borrowers with respect to the Obligations or any portion thereof shall mean each Borrower on a joint and several basis.

 

(b)                           Bankruptcy Limitations .    Notwithstanding anything to the contrary contained in this Agreement, it is the intention of each Borrower, the Administrative Agent and the Lenders that, in any proceeding involving the bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution or insolvency or any similar proceeding with respect to any Borrower or its assets, the amount of such Borrower’s obligations with respect to the Obligations shall be equal to, but not in excess of, the maximum amount thereof not subject to avoidance or recovery by operation of Applicable Insolvency Laws (as defined below) after giving effect to Section 2.14(c) .   To that end, but only in the event and to the extent that after giving effect to Section 2.14(c) , such Borrower’s obligations with respect to the Obligations or any payment made pursuant to such Obligations would, but for the operation of the first sentence of this Section 2.14(b) , be subject to avoidance or recovery in any such proceeding under Applicable Insolvency Laws after giving effect to Section 2.14(c) , the amount of such Borrower’s obligations with respect to the Obligations shall be limited to the largest amount which, after giving effect thereto, would not, under Applicable Insolvency Laws, render such Borrower’s obligations with respect to the Obligations unenforceable or avoidable or otherwise subject to recovery under Applicable Insolvency Laws.  To the extent any payment actually made pursuant to the Obligations exceeds the limitation of the first sentence of this Section 2.14(b)  and is otherwise subject to avoidance and recovery in any such proceeding under Applicable Insolvency Laws, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment exceeds such limitation and the Obligations as limited by the first sentence of this Section 2.14(b)  shall in all events remain in full force and effect and be fully enforceable against such Borrower.   The first sentence of this Section 2.14(b)  is intended solely to preserve the rights of the Administrative Agent and the Lenders hereunder against such Borrower in such proceeding to the maximum extent permitted by Applicable Insolvency Laws and neither such Borrower nor any other Person shall have any right or claim under such sentence that would not otherwise be available under Applicable Insolvency Laws in such proceeding.  For the purposes of this Section 2.14(b) , “ Applicable Insolvency Laws ” means all applicable laws governing bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws, whether foreign or domestic (including, without limitation, 11 U.S.C. Sections 544, 547, 548 and 550 and other “avoidance” provisions of Title 11 of the United States Code, as amended or supplemented).

 

(c)           Agreement for Contribution .  The Borrowers hereby agree among themselves that, if either Borrower shall make an Excess Payment (as defined below), such Borrower shall have a right of contribution from the other Borrower in an amount equal to such other Borrower’s Contribution Share (as defined below) of such Excess Payment.  The payment obligations of any Borrower under this Section 2.14(c)  shall be subordinate and subject in right

 

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of payment to the Obligations until such time as the Obligations have been paid in full, and neither Borrower shall exercise any right or remedy under this Section 2.14(c)  against the other Borrower until such Obligations have been paid in full.  For purposes of this Section 2.14(c) , (i) “Excess Payment” shall mean the amount paid by any Borrower in excess of its Ratable Share of any Obligations; (ii) “Ratable Share” shall mean, for any Borrower in respect of any payment of Obligations, the ratio (expressed as a percentage) as of the date of such payment of Obligations of (A) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Borrower (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Borrower hereunder) to (B) the amount by which the aggregate present fair salable value of all assets and other properties of all of the Borrowers exceeds the amount of all of the debts and liabilities (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Borrowers hereunder) of the Borrowers; provided, however, that, for purposes of calculating the Ratable Shares of the Borrowers in respect of any payment of Obligations, any Borrower that became a Borrower subsequent to the date of any such payment shall be deemed to have been a Borrower on the date of such payment and the financial information for such Borrower as of the date such Borrower became a Borrower shall be utilized for such Borrower in connection with such payment; and (iii) “Contribution Share” shall mean, for any Borrower in respect of any Excess Payment made by any other Borrower, the ratio (expressed as a percentage) as of the date of such Excess Payment of (A) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Borrower (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Borrower hereunder) to (B) the amount by which the aggregate present fair salable value of all assets and other properties of the Borrower other than the maker of such Excess Payment exceeds the amount of all of the debts and liabilities (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Borrowers) of the Borrower other than the maker of such Excess Payment.  Each Borrower recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution.  No Borrower shall have any right of subrogation, indemnity or reimbursement under applicable law in respect of any payment of Obligations (other than the contribution rights set forth in this Section 2.14(c) ) against any other Borrower.  No Person other than a Lender or a Borrower may rely on the provisions of this Section 2.14(c) .

 

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2.15          PMG as Borrower Agent .  Holdings hereby irrevocably appoints and authorizes PMG, and PMG hereby accepts such appointment and agrees to act, as the Borrower Agent (a) to provide the Administrative Agent with all notices with respect to the Borrowings obtained for the benefit of the Borrowers and all other notices and instructions under this Agreement, (b) to take such action on behalf of the Borrowers as the Borrower Agent deems appropriate on its behalf to obtain Borrowings and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement and (c) to act as its agent for service of process and notices required to be delivered under this Agreement or the other Loan Documents, it being understood and agreed that receipt by the Borrower Agent of any summons, notice or other similar item shall be deemed effective receipt by the Borrowers and their Subsidiaries.

 

ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01          Taxes .

 

(a)  Payments Free of Taxes .  Any and all payments by or on account of any obligation of the Borrowers hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if either Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or any Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) the Borrowers shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)            Payment of Other Taxes by the Borrowers .  Without limiting the provisions of subsection (a) above, the Borrowers shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)            Indemnification by the Borrowers .  The Borrowers shall , jointly and severally, indemnify the Administrative Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower Agent by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(d)            Evidence of Payments .  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by either Borrower to a Governmental Authority, the applicable Borrower shall deliver to the Administrative Agent the original or a certified copy of a

 

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receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)            Status of Lenders .  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which either Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower Agent (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower Agent or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrower Agent or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower Agent or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

 

Without limiting the generality of the foregoing, if either Borrower is resident for tax purposes in the United States, any Foreign Lender shall deliver to the Borrower Agent and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower Agent or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(i)             duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

(ii)            duly completed copies of Internal Revenue Service Form W-8ECI,

 

(iii)           in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (A) a certificate to the effect that such Foreign Lender is not (1) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of either Borrower within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN, or

 

(iv)           any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrowers to determine the withholding or deduction required to be made.

 

(f)             Treatment of Certain Refunds .  If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to

 

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which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this Section, it shall pay to the Borrowers an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrowers, upon the request of the Administrative Agent or such Lender, agree to repay the amount paid over to the Borrowers ( plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender if the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This subsection shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to either Borrower or any other Person.

 

3.02          Illegality .  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower Agent through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower Agent that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower Agent shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.

 

3.03          Inability to Determine Rates .  If the Required Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Term Loan, the Administrative Agent will promptly so notify the Borrower Agent and each Lender.  Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower Agent may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.

 

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3.04          Increased Costs; Reserves on Eurodollar Rate Loans .

 

(a)  Increased Costs Generally .  If any Change in Law shall:

 

(i)             impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e) );

 

(ii)            subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender); or

 

(iii)           impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Eurodollar Rate Loan), or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrowers will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)            Capital Requirements .  If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Term Commitment of such Lender or the Term Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

 

(c)            Certificates for Reimbursement .  A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower Agent shall be conclusive absent manifest error.  The Borrowers shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)            Delay in Requests .  Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section for any

 

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increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower Agent of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

(e)            Reserves on Eurodollar Rate Loans .  The Borrowers shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Term Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Term Loan, provided the Borrower Agent shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.

 

3.05          Compensation for Losses .  Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

 

(a)    any continuation, conversion, payment or prepayment of any Term Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Term Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)    any failure by either Borrower (for a reason other than the failure of such Lender to make a Term Loan) to prepay, borrow, continue or convert any Term Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower Agent; or

 

(c)    any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrowers (through the Borrower Agent) pursuant to Section 10.13 ;

 

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Term Loan or from fees payable to terminate the deposits from which such funds were obtained .  The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Term Loan by a matching deposit or other borrowing in the

 

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London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

 

3.06          Mitigation Obligations; Replacement of Lenders .

 

(a)  Designation of a Different Lending Office .  If any Lender requests compensation under Section 3.04 , or either Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Term Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  Each Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)            Replacement of Lenders .  If any Lender requests compensation under Section 3.04 , or if either Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , the Borrowers may replace such Lender in accordance with Section 10.13 .

 

3.07          Survival .  All of the Borrowers’ obligations under this Article III shall survive the repayment of all Obligations hereunder.

 

ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING

 

4.01          Conditions Precedent to Borrowing .  The obligation of each Lender to make its Term Loan is subject to satisfaction of the following conditions precedent:

 

(a)    The Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)             executed counterparts of this Agreement and the Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrowers;
 
(ii)            a Note or Notes executed by the Borrowers in favor of each Lender requesting a Note;
 
(iii)           the Terner Pledge executed by Dr. Terner;
 

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(iv)           the Amended and Restated Assignable Option Agreement duly executed by PMS, PMG and Dr. Terner;
 
(v)            a second lien security agreement (together with each other security agreement and security agreement supplement delivered pursuant to Section 6.12 , in each case as amended, the “ Collateral Agreement ”), duly executed by each Loan Party, together with:
 

(A)           delivery to the First Lien Administrative Agent of certificates representing all certificated pledged Equity Interests referred to therein accompanied by undated stock powers executed in blank and instruments evidencing pledged debt indorsed in blank,

 

(B)            the Administrative Agent shall have received the results of Lien searches (including a search as to judgments, pending litigation and tax matters), in form and substance reasonably satisfactory thereto, made against the Loan Parties and certain of the sellers under the Merger Agreement under the Uniform Commercial Code (or applicable judicial docket) as in effect in any state in which any of the assets of such Loan Party are located, indicating among other things that its assets are free and clear of any Lien except Permitted Encumbrances and the other Liens permitted under the Loan Documents,

 

(C)            proper Financing Statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Collateral Agreement, covering the Collateral described in the Collateral Agreement,

 

(D)           completed requests for information, dated on or before the Closing Date, listing all effective financing statements filed in the jurisdictions referred to in clause (B) above that name any Loan Party as debtor, together with copies of such other financing statements,

 

(E)            evidence of the completion of all other actions, recordings and filings of or with respect to the Collateral Agreement that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created thereby,

 

(F)            the deposit account control agreements and the securities account control agreements as referred to in the Collateral Agreement and duly executed by the appropriate parties, in each case perfecting Liens against such accounts in accordance with the Collateral Agreement, and the Administrative Agent shall be satisfied with the Loan Parties’ cash management system with respect to Medicaid/Medicare receivables,

 

(G)            evidence that all other action that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created

 

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under the Collateral Agreement has been taken (including receipt of duly executed payoff letters, UCC-3 termination statements and landlords’ and bailees’ waiver and consent agreements) and all filing and recording fees and taxes shall have been duly paid; and

 

(H)           to the extent applicable, intellectual property security agreements in recordable form and otherwise acceptable to the Administrative Agent and duly executed by each applicable Loan Party, together with evidence that all action that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Collateral Agreement has been taken;

 

(vi)           Second Priority Lien deeds of trust, trust deeds, deeds to secure debt, and mortgages covering the properties listed on Schedule 4.01(a)(vi)   (together with the Assignments of Leases and Rents referred to therein and each other mortgage delivered pursuant to Section 6.12 , in each case as amended, the “ Mortgages ), duly executed by the appropriate Loan Party, together with:
 

(A)           evidence that counterparts of the Mortgages have been duly executed, acknowledged and delivered and are in form suitable for filing or recording in all filing or recording offices that the Administrative Agent may deem necessary or desirable in order to create a valid and subsisting Second Priority Lien on the property described therein in favor of the Administrative Agent for the benefit of the Secured Parties and that all filing, documentary, stamp, intangible and recording taxes and fees have been paid,

 

(B)            fully paid American Land Title Association Lender’s Extended Coverage title insurance policies (the “ Mortgage Policies ”), with endorsements and in amounts acceptable to the Administrative Agent, issued, coinsured and reinsured by title insurers acceptable to the Administrative Agent, insuring the Mortgages to be valid and subsisting Second Priority Liens on the property described therein, free and clear of all defects (including, but not limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting only Permitted Encumbrances and other Liens permitted under the Loan Documents, and providing for such other affirmative insurance (including endorsements for mechanics’ and materialmen’s Liens and for zoning of the applicable property) and such coinsurance and direct access reinsurance as the Administrative Agent may deem necessary or desirable,

 

(C)            property condition assessments as to the properties described in the Mortgages, from professional firms acceptable to the Administrative Agent,

 

(D)           an environmental assessment report from an environmental consulting firm acceptable to the Lenders, which report (1) shall be

 

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addressed to the Administrative Agent and the Lenders or otherwise permit reliance by the Administrative Agent and the Lenders thereon, (2) shall identify existing and potential environmental concerns, (3) shall quantify related costs and liabilities, associated with any facilities of either Borrower or any of their respective Subsidiaries and (4) shall be satisfactory to the Lenders with respect to the nature and amount of any matters covered thereby and the Lenders shall be satisfied with the Borrowers’ plans with respect thereto,

 

(E)            estoppel and consent agreements executed by each of the lessors of the leased real properties listed on Schedule 5.08(d)(i) , together with legal descriptions sufficient for recording in the real property records of the applicable county; provided , however , that to the extent that any estoppel and consent agreements for the leased real properties listed on Schedule 5.08(d)(i)  are not obtained prior to the Closing Date, the Borrowers shall use commercially reasonable efforts deliver such agreements and memoranda within 60 days following the Closing Date ,

 

(F)            evidence of the insurance required by the terms of the Mortgages, and

 

(G)            evidence that all other action that the Administrative Agent may deem necessary or desirable in order to create valid and subsisting Second Priority Liens on the property described in the Mortgages has been taken;

 

(vii)          such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to be a party;
 
(viii)         such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Borrower and each Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect ;
 
(ix)            a favorable opinion of Theodora Oringher Miller and Richman PC, counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to such matters concerning the Loan Parties and the Loan Documents as the Administrative Agent or the Required Lenders may reasonably request;
 

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(x)            a favorable opinion of Strategic Law Partners, LLP , counsel for the Company and its Subsidiaries, delivered in connection with the Merger which opinion is either (A) addressed to the Administrative Agent and the Lenders or (B) accompanied by a reliance letter from such counsel addressed to the Administrative Agent and the Lenders that expressly states that the Administrative Agent and the Lenders may rely on such opinion;
 
(xi)           evidence of the receipt of all Governmental Approvals (including all applicable healthcare and other applicable regulatory), shareholder and third party consents (including Hart-Scott-Rodino clearance) and approvals necessary or, in the opinion of the Administrative Agent, desirable in connection with the Transactions and the related financings and other transactions contemplated hereby and expiration of all applicable waiting periods without any action being taken by any authority that could restrain, prevent or impose any material adverse conditions on the Borrowers and their Subsidiaries or such other transactions or that could seek or threaten any of the foregoing, and no law or regulation shall be applicable which in the reasonable judgment of the Administrative Agent could have such an effect;
 
(xii)          a Business Associate Agreement duly executed by each Loan Party and AMVI/Prospect;
 
(xiii)         a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the consummation by such Loan Party of the Transaction and the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;
 
(xiv)        evidence that the Borrowers have obtained corporate/corporate family ratings from Moody’s and S&P, as applicable, of at least B3/B-, respectively, and in each case, with a stable outlook or better;
 
(xv)         a certificate signed by a Responsible Officer of each Borrower certifying (A) that the conditions specified in Sections 4.02(a)  and (b)  have been satisfied , (B) except as set forth on Schedule 4.01(a)(xv) , that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect; and (C)  a calculation as of the last day of the fiscal quarter of Holdings most recently ended prior to the Closing Date reflecting that the Consolidated Leverage Ratio of Holdings and its Subsidiaries (which ratio shall be calculated reflecting the Transactions contemplated hereby on a pro forma basis) is not greater than 3.5:1.0;
 
(xvi)        pro forma consolidated financial statements of Holdings and its Subsidiaries as of as of the last day of the fiscal quarter of Holdings most recently
 

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ended prior to the Closing Date giving effect to all elements of the Transactions, and forecasts prepared by management of the Borrowers, each in form satisfactory to the Lenders, of balance sheets, income statements and cash flow statements on a monthly basis for the first year following the Closing Date and on an annual basis for each year thereafter during the term of this Agreement;
 
(xvii)       the annual (or other audited) financial statements of each of (A) the Borrowers and their respective Subsidiaries and (B) the Company and its Subsidiaries for the fiscal years ended 2004, 2005, and 2006, and interim financial statements of each of (A) the Borrowers and their respective Subsidiaries and (B) the Company and its Subsidiaries dated of the end of the most recent fiscal quarter for which financial statements are available;
 
(xviii)      evidence that all Term Loans will be in full compliance with the Federal Reserve’s margin regulations;
 
(xix)         certificates attesting to the Solvency of each Loan Party before and after giving effect to the Transaction, from each Borrower’s chief financial officer;
 
(xx)          the Lenders shall be satisfied with the amount, terms, conditions and holders of all intercompany indebtedness and all material indebtedness and other material liabilities owing to third parties to be outstanding on and after the Closing Date;
 
(xxi)         evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect , together with the certificates of insurance, naming the First Lien Administrative Agent, as control agent, as loss payee on all certificates for property hazard insurance maintained with respect to the assets and properties of the Loan Parties that constitutes Collateral and naming the Administrative Agent as an additional insured on all certificates for liability insurance;
 
(xxii)        certified copies of each of the Related Documents, duly executed by the parties thereto, together with all agreements, instruments and other documents delivered in connection therewith as the Administrative Agent shall request;
 
(xxiii)       certified copies of a certificate of merger or other confirmation satisfactory to the Lenders of the consummation of the Merger from the Secretary of State of the State of California;
 
(xxiv)       a duly completed Compliance Certificate as of the last day of the fiscal quarter of Holdings ended March 31, 2007, signed by chief executive officer, chief financial officer, treasurer or controller of Holdings;
 
(xxv)        evidence that each Existing Credit Agreement has been, or concurrently with the Closing Date is being, terminated and all Liens securing
 

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obligations under each Existing Credit Agreement have been, or concurrently with the Closing Date are being, released;
 
(xxvi)       evidence that Holdings has received approval from the American Stock Exchange for the listing of common shares of Holdings stock thereon in connection with the conversion of the preferred equity issued to Samuel S. Lee and The David and Alexa Topper Family Trust U/D/T September 29, 1997 ;
 
(xxvii)      a copy of each duly-executed Voting Agreement delivered in connection with the Merger Agreement;
 
(xxviii)     duly executed counterparts to the Intercreditor Agreement ; and
 
(xxix)       such other assurances, certificates, documents, consents, reports, audits or opinions as the Administrative Agent or any Lender reasonably may require.
 

(b)   (i) All fees required to be paid to the Administrative Agent and the Arranger on or before the Closing Date shall have been paid and (ii) all fees required to be paid to the Lenders on or before the Closing Date shall have been paid.

 

(c)   Unless waived by the Administrative Agent, the Borrowers shall have paid all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings ( provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Administrative Agent).

 

(d)   (i) The final terms and conditions of each aspect of the Merger, including, without limitation, all tax aspects thereof, shall be satisfactory to the Lenders and t he Merger shall have been consummated strictly in accordance with the terms of the Merger Agreement, without any waiver or amendment not consented to by the Lenders of any term, provision or condition set forth therein, and in compliance with all applicable requirements of Law; (ii) the Lenders shall be reasonably satisfied with the Merger Agreement (including all schedules and exhibits thereto) which shall provide for an aggregate purchase price not in excess of $144,000,000 (less the indebtedness of the Company), and all other agreements, instruments and documents relating to the Merger; (iii) and the Related Documents shall not have been altered, amended or otherwise changed or supplemented prior to the Closing Date or any condition therein waived without the prior written consent of the Lenders; and (iv) in connection with any and all judgment liens shown of record as a Lien against any real or personal property of any Loan Party, the Borrowers shall have provided the Administrative Agent either (A) evidence reasonably acceptable to the Administrative Agent that such judgment lien has been satisfied and that the applicable Loan Party has, or is diligently pursuing, a release of lien to be filed in all public records, with such release of lien to be so filed in any event

 

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no later than thirty (30) days after the Closing Date or (B) if the Lien has not been paid, or if the applicable Loan Party is unable to establish to the satisfaction of the Administrative Agent that such judgment lien has been paid and is no long of force and effect, the Borrowers have deposited funds with an escrow agent reasonably acceptable to the Administrative Agent in an amount sufficient to pay in full each such judgment lien and have delivered to the Administrative Agent a demand from the corresponding judgment creditor for each such outstanding judgment lien; and (iv) in connection with any and all state and federal tax liens shown of record as a Lien against any Loan Party’s personal or real property, the Borrowers shall have delivered to the Administrative Agent evidence acceptable to the Administrative Agent that each such tax lien has been satisfied and that the applicable Loan Party has, or is diligently pursuing, a release of lien to be filed in all public records, with such release of lien to be so filed in any event no later than thirty (30) days after the Closing Date.

 

(e)   The Lenders shall have completed a due diligence investigation of the Borrowers, the Company and their respective Subsidiaries in scope, and with results, satisfactory to the Lenders, and shall have been given such access to the management, records, books of account, contracts and properties of the Borrowers, the Company, their respective Subsidiaries and shall have received such financial, business and other information regarding each of the foregoing Persons and businesses as they shall have requested, including information as to possible contingent liabilities, tax matters, collective bargaining agreements and other arrangements with employees, and no changes or developments shall have occurred, and no new or additional information shall have been received or discovered by the Administrative Agent or the Lenders regarding the Borrowers, the Company and their respective Subsidiaries or the Transaction after May 23, 2007 that (A) either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect or (B) purports to adversely affect the Facility or any other aspect of the Transaction, and nothing shall have come to the attention of the Lenders during the course of such due diligence investigation to lead them to believe (i) that the Information Memorandum was or has become misleading, incorrect or incomplete in any material respect, (ii) that, following the consummation of the Transaction, Holdings would not have good and marketable title to all material assets of the Company and its Subsidiaries reflected in the Information Memorandum or (iii) that the Transaction will have a Material Adverse Effect.

 

(f)    The Lenders shall be satisfied with the pro forma capital and ownership structure and the shareholder arrangements of the Loan Parties and their Affiliates after giving effect to the Transactions, including, without limitation,  the respective charter and bylaws (or equivalent document/agreement) of each Loan Party and each agreement or instrument relating thereto.

 

(g)   (i)  The First Lien Loan Documents shall be in form and substance satisfactory to the Administrative Agent and (ii) concurrent with the closing of the Facility and the funding of the Term Loan, the Borrowers shall have borrowed at least $95,000,000 pursuant to, and in accordance with, the First Lien Credit Agreement.

 

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(h)   No action, suit, investigation or proceeding shall be pending or, to the knowledge of the Borrowers or the Company, or any Subsidiary thereof, threatened in any court or before any arbitrator or Governmental Authority that could reasonably be expected to have a Material Adverse Effect.

 

(i)    The representations and warranties of the Borrowers contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the Closing Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date.

 

(j)    No Default shall exist.

 

Without limiting the generality of the provisions of the last paragraph of Section 9.03 , for purposes of determining compliance with the conditions specified in this Section 4.01 , 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 the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES

 

Each Borrower represents and warrants to the Administrative Agent and the Lenders that:

 

5.01         Existence, Qualification and Power .  Each Loan Party and each of its Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents and Related Documents to which it is a party and consummate the Transaction, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

5.02         Authorization; No Contravention .  The execution, delivery and performance by each Loan Party of each Loan Document and Related Document to which such Person is or is to be a party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries (other than Liens arising under the First Lien Loan Documents)

 

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or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.

 

5.03         Governmental Authorization; Other Consents .  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document or Related Document, or for the consummation of the Transaction, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (c) the perfection or maintenance of the Liens created under the Collateral Documents (including the second priority nature thereof) or (d) the exercise by the Administrative Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents.  All applicable waiting periods in connection with the Transaction have expired without any action having been taken by any Governmental Authority restraining, preventing or imposing materially adverse conditions upon the Transaction or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them.

 

5.04         Binding Effect .  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.

 

5.05         Financial Statements; No Material Adverse Effect .  (a)  The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrowers and their respective Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrowers and their Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

 

(b)           The unaudited consolidated balance sheet of Holdings and its Subsidiaries dated March 31, 2007, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of Holdings and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

 

(c)           Except as set forth on Schedule 4.01(a)(xv) , since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

 

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(d)           The consolidated and consolidating pro forma balance sheet of Holdings and its Subsidiaries as at March 31, 2007, and the related consolidated and consolidating pro forma statements of income and cash flows of the Borrowers and their Subsidiaries for the twelve months then ended, certified by the chief financial officer or treasurer of the Borrowers, copies of which have been furnished to each Lender, fairly present the consolidated and consolidating pro forma financial condition of Holdings and its Subsidiaries as at such date and the consolidated and consolidating pro forma results of operations of Holdings and its Subsidiaries for the period ended on such date, in each case giving effect to the Transaction, all in accordance with GAAP.

 

(e)           The consolidated and consolidating forecasted balance sheet, statements of income and cash flows of Holdings and its Subsidiaries delivered pursuant to Section 4.01 or Section 6.01(d)  were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrowers’ best estimate of its future financial condition and performance.

 

5.06         Litigation .  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of either Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against either Borrower or any of their respective Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document, or any Related Document, (b) except as disclosed on Schedule 5.06(b) , purport to affect or pertain to the consummation of the Transaction or (c) except as specifically disclosed in Schedule 5.06(c) , either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

 

5.07         No Default Schedule 5.07 sets forth a complete and accurate list of all Material Contracts to which any Loan Party is a party.  Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

 

5.08         Ownership of Property; Liens; Investments .

 

(a)           Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)           Schedule 5.08(b)  sets forth a complete and accurate list of all Liens on the property or assets of each Loan Party and each of its Subsidiaries, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto.  The property of each Loan Party and each of its Subsidiaries is subject to no Liens, other than Liens set forth on Schedule 5.08(b) , and as otherwise permitted by Section 7.01 .

 

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(c)           Schedule 5.08(c)  sets forth a complete and accurate list of all real property owned by each Loan Party and each of its Subsidiaries, showing as of the date hereof the street address, county or other relevant jurisdiction, state, record owner and book and estimated fair value thereof.  Each Loan Party and each of its Subsidiaries has good, marketable and insurable fee simple title to the real property owned by such Loan Party or such Subsidiary, free and clear of all Liens, other than Liens created or permitted by the Loan Documents.

 

(d)           (i)  Schedule 5.08(d)(i)  sets forth a complete and accurate list of all leases of real property under which any Loan Party or any Subsidiary of a Loan Party is the lessee, showing as of the date hereof the street address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof.  Each such lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms.

 

(ii)           Schedule 5.08(d)(ii)  sets forth a complete and accurate list of all leases of real property under which any Loan Party or any Subsidiary of a Loan Party is the lessor, showing as of the date hereof the street address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof.  Each such lease is the legal, valid and binding obligation of the lessee thereof, enforceable in accordance with its terms.
 

(e)           Schedule 5.08(e)  sets forth a complete and accurate list of all Investments held by any Loan Party or any Subsidiary of a Loan Party on the date hereof, showing as of the date hereof the amount, obligor or issuer and maturity, if any, thereof.

 

5.09         Environmental Compliance .

 

(a)           (i) each of the Loan Parties and their respective Subsidiaries is in compliance with all Environmental Laws except where non-compliance would not, individually or in the aggregate, have a Material Adverse Effect; and (ii) all operations or activities upon, or any use, occupancy or operation of the Real Property, are in compliance with all Environmental Laws except where non-compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)           No Loan Party has stored, manufactured, used, generated or dumped any Hazardous Materials on, in, under or upon any of the Real Property, except for uses and temporary storage of Hazardous Materials reasonably necessary to the customary operation of a general acute care hospital in material compliance with applicable Environmental Laws.

 

(c)           None of the Real Property is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property.

 

(d)           No Loan Party has ever received any written communication from a Governmental Authority or any other Person that alleges that such Loan Party is not in material compliance with Environmental Laws or is otherwise subject to liability relating to Environmental Laws;

 

(e)           There is no claim pending or, to either Borrower’s knowledge, threatened against any Loan Party or any of the Real Property , and no material work, repairs, remedy,

 

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remediation, clean-up, construction or capital expenditures are required by any Environmental Laws with respect to the Real Property in order for the continued lawful use of the Real Property operated by any Loan Party as of the Closing Date, as it has been and is currently used, subject to such exceptions that would not have a Material Adverse Effect;

 

(f)            Each of the Loan Parties is in compliance with OSHA requirements respecting friable asbestos, if any, located on the Real Property, or any portion thereof, except where non-compliance would not have a Material Adverse Effect; and in this regard, each Loan Party has properly implemented an operations and maintenance training program where required for certain of its employees in the proper handling and removal of asbestos in compliance with OSHA requirements except where non-compliance would not have a Material Adverse Effect;

 

(g)           There are no above or underground storage tanks located on or beneath the Real Property except as disclosed on Schedule 5.09 .  All above or underground storage tanks currently operated on any of the Real Property by any Loan Party, if any, are in compliance with applicable Environmental Laws, except where non-compliance would not have a Material Adverse Effect.  For any underground storage tanks which were formerly located on any Real Property, and of which any Loan Party has knowledge, such tanks were removed or closed in place in compliance with applicable Environmental Laws except where non-compliance would not have a Material Adverse Effect, and any remediation work required as a result of any release, leakage or discharge of Hazardous Materials from such tanks or related lines has been fully completed in accordance with Environmental Laws and accepted by the applicable Governmental Authority, subject to such exceptions that would not have a Material Adverse Effect.

 

5.10         Insurance .  The properties of the Borrowers and their respective Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrowers, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrowers or the applicable Subsidiary operates.

 

5.11         Taxes .  Other than as set forth on Schedule 5.11 , the Borrowers and their respective Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against any Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.  Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.  The Merger will not be taxable to either Borrower or any of their respective Subsidiaries (including the Company) or AMVI/Prospect.

 

5.12         ERISA Compliance .  (a)  Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed

 

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by the IRS with respect thereto and, to the best knowledge of each Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.  Each Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

 

(b)           There are no pending or, to the best knowledge of each Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(c)           (i) Except as set forth on Schedule 5.12(c) , no ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

 

5.13         Subsidiaries; Equity Interests; Loan Parties .  No Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13 , and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except those created under the Collateral Documents.  No Loan Party has any equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13 .  All of the outstanding Equity Interests in Holdings have been validly issued, are fully paid and non-assessable and Holdings’ authorized Equity Interests are set forth on Part (c) of Schedule 5.13 .  Set forth on Part (d) of Schedule 5.13 is a complete and accurate list of all Loan Parties, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the address of its principal place of business and its U.S. taxpayer identification number or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer identification number, its unique identification number issued to it by the jurisdiction of its incorporation.  The copy of the charter of each Loan Party and each amendment thereto provided pursuant to Section 4.01(a)(viii)  is a true and correct copy of each such document, each of which is valid and in full force and effect.

 

5.14         Margin Regulations; Investment Company Act .

 

(a)           Neither Borrower is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

 

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(b)           None of the Borrowers, any Person Controlling either Borrower, or any Subsidiary of either Borrower is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

5.15         Disclosure .  The Borrowers have disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which they or any of their respective Subsidiaries or any other Loan Party is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

5.16         Compliance with Laws .  Each Loan Party and each Subsidiary thereof is in compliance in all respects with the requirements of all Laws (including all Health Care Laws and Seismic Compliance Laws (giving effect to any extensions or exemptions then in existence), all applicable Medicare and Medicaid rules and regulations, and to the extent applicable, the California Department of Managed Care financial solvency regulations) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  There is no basis for (a) any Offsets asserted or threatened to be asserted against any Loan Party by any Obligor (including but not limited to amounts due to Medicare or the IRS), or (b) any overdue or delinquent liabilities or Indebtedness which could give rise to a right of a federal Governmental Authority or any other Person to offset or levy with respect to such liabilities or Indebtedness against any accounts receivable of a Loan Party or payments due thereon.  No condition exists and no event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any governmental consent or permit applicable to any Loan Party or any facility owned or operated by it.

 

5.17         Intellectual Property; Licenses, Etc .   Each Loan Party and each of its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “ IP Rights ”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person.  To the best knowledge of each Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party or any of its Subsidiaries infringes upon any rights held by any other Person.  No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of each Borrower,

 

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threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.18         Solvency .  Each Loan Party is, individually and together with its Subsidiaries on a consolidated basis, Solvent.

 

5.19         Casualty, Etc .  Neither the businesses nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.20         Health Care Matters .

 

(a)           Compliance with Health Care Laws; Permits .   Without limiting the generality of Section 5.16 , each Loan Party and each of its Subsidiaries, and any Person acting on their behalf, is in compliance in all material respects with all Health Care Laws applicable to it, its products and its properties or other assets or its business or operation, including its provision of professional services.  Each Loan Party and each of its Subsidiaries, and any Person acting on their behalf, has in effect all material Permits, including, without limitation, all material Permits necessary for it to own, lease or operate its properties and other assets and to carry on its business and operations, including its provision of professional services, as presently conducted.  All such material Permits are in full force and effect and there has occurred no default under, or violation of, any such material Permit.  No action, demand, or investigation by any Governmental Authority and no suit, action or proceeding by any other person, in each case with respect to each Loan Party, any of its Subsidiaries, any Person acting on their behalf, or any of their respective properties, other assets or provision of professional services under any requirements of Law, is pending or, to the knowledge of any Loan Party or its Subsidiaries, threatened.

 

(b)           Filings .   All reports, documents, claims, notices or approvals required to be filed, obtained, maintained or furnished to any Governmental Authority have been so filed, obtained, maintained or furnished, and all such reports, documents, claims and notices were complete and correct in all material respects on the date filed (or were corrected in or supplemented by a subsequent filing).

 

(c)           Material Statements .   No Loan Party nor any of its Subsidiaries, nor any officer, affiliate, employee or agent of any Loan Party or any of its Subsidiaries, has made an untrue statement of a material fact or fraudulent statement to any Governmental Authority, failed to disclose a material fact required to any Governmental Authority, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to constitute a violation of any Health Care Law.  No Loan Party nor any of its Subsidiaries, nor any officer, affiliate or employee of any Loan Party, nor to any Loan Party’s knowledge, any agent of any Loan Party or any of its Subsidiaries, has made any untrue statement of fact regarding claims incurred but not reported.

 

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(d)           Billing .   Each Loan Party, each of its Subsidiaries and each contracting physician of a Loan Party or Subsidiary (to the extent required) has the requisite provider number or other Permit to bill the Medicare program (to the extent such entity participates in the Medicare program), the respective Medicaid program in the state or states in which such entity operates, and all other Third Party Payor Programs, including but not limited to Capitated Contracts with managed care organizations, that each Loan Party and each of its Subsidiaries currently bill.  There is no investigation, audit, claim review, or other action pending, or to the knowledge of any Loan Party or its Subsidiaries, threatened which could result in a revocation, suspension, termination, probation, restriction, limitation, or non-renewal of any Third Party Payor provider number or result in any Loan Party’s or any Subsidiaries’ exclusion from any Third Party Payor Program.  No Loan Party nor each of its Subsidiaries has billed or received any payment or reimbursement in excess of amounts allowed by any Health Care Law or other Law.

 

(e)           Proceedings .   There are no facts, circumstances or conditions that would reasonably be expected to form the basis for any material investigation, suit, claim, audit, action (legal or regulatory) or proceeding (legal or regulatory) by a Governmental Authority against or affecting any Loan Party or any of its Subsidiaries relating to any of the Health Care Laws.

 

(f)            Prohibited Transactions .  Neither the Loan Parties nor any Subsidiary nor any Person acting on behalf of the Loan Parties or any Subsidiary is a party to any contract, lease agreement or other arrangement (including any joint venture or consulting agreement) with any physician, health care facility, hospital, nursing facility, home health agency or other person who is in a position to make or influence referrals to or otherwise generate business to provide services, lease space, lease equipment or engage in any other venture or activity, other than agreements which are in compliance with all applicable Health Care Laws.  Neither the Loan Parties nor any Subsidiary, nor any person acting on behalf of the Loan Parties or any Subsidiary, directly or indirectly:  (1) offered, paid or received any remuneration, in cash or in kind, to, or made any financial arrangements with, any past, present or potential patient, supplier, medical staff member, referral source, contractor or Third Party Payor of the Loan Parties and/or any Subsidiary in order to illegally obtain or refer business or receive payments from such person; (2) given, received or agreed to give or receive, or is aware that there has been made or that there is any illegal agreement to make or receive, any illegal gift or gratuitous payment of any kind, nature or description (whether in money, property or services) to any past, present or potential patient, supplier, contractor, Third Party Payor or any other person; (3) made or agreed to make, or is aware that there has been made or that there is any agreement to make, any contribution, payment or gift of funds or property to, or for the private use of, any governmental official, employee or agent where either the contribution, payment or gift or the purpose of such contribution, payment or gift is or was illegal under the laws of any government entity having jurisdiction over such payment, contribution or gift; (4) established or maintained any unrecorded fund or asset for any purpose or made any misleading, false or artificial entries on any of its books or records for any reason; or (5) made, or agreed to make, or is aware that there has been made or that there is any agreement to make, any payment to any person with the intention or understanding that any part of such payment would be used or was given for any purpose other than that described in the documents supporting such payment.

 

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(g)           Medicare/Medicaid .   There are no Medicare or Medicaid termination proceedings underway with respect to any of the Loan Parties, each entity meets the Medicare conditions of participation and no employee or independent contractor to any of the Loan Parties has been excluded from participating in Medicare or Medicaid or any similar federal programs.

 

(h)           Compliance .   Each Loan Party possesses and implements all requisite policies and procedures to ensure that all aspects of Loan Parties’ operations, their employees, and all healthcare providers under contract with any Loan Party, comply with all applicable Health Care Laws.

 

5.21         Labor Matters.   Except as set forth on Schedule 5.21 , there are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or any of its Subsidiaries as of the Closing Date and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years.

 

5.22         Collateral Documents .   The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable Second Priority Lien (subject to Liens permitted by Section  7.01(a)-(i)  and (k)-(l) ) on all right, title and interest of the respective Loan Parties in the Collateral described therein.  Except for filings completed prior to the Closing Date and as contemplated hereby and by the Collateral Documents, no filing or other action will be necessary to perfect or protect such Liens.

 

ARTICLE VI
AFFIRMATIVE COVENANTS

 

So long as any Term Loan or other Obligation hereunder shall remain unpaid or unsatisfied each Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01 , 6.02 , 6.03 and 6.11 ) cause each of its respective Subsidiaries to:

 

6.01         Financial Statements .  Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

 

(a)   as soon as available, but in any event within 120 days after the end of each fiscal year of Holdings (commencing with the fiscal year ended September 30, 2007), a consolidated and consolidating balance sheet of Holdings and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit,

 

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and together with any letters from such accountants to the board of directors or management of Holdings;

 

(b)   as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of Holdings (commencing with the fiscal quarter ended June 30, 2007), a consolidated and consolidating balance sheet of Holdings and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of Holdings’ fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of Holdings as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of Holdings and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

 

(c)   as soon as available, but in any event within 30 days after the end of each of the first 11 months of each fiscal year of Holdings (commencing with the fiscal month ended June 30, 2007), a consolidated and consolidating balance sheet of Holdings and its Subsidiaries as of the end of such month, and the related consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for such month and for the portion of Holdings’ fiscal year than ended setting forth in each case in comparative form for the corresponding month of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and duly certified by the chief executive officer, chief financial officer, treasurer or controller of Holdings; and

 

(d)   as soon as available, but in any event at least 15 days before the beginning of each fiscal year of Holdings, an annual business plan and budget of the Borrowers and their respective Subsidiaries on a consolidated basis, including forecasts prepared by management of the Borrowers, in form satisfactory to the Administrative Agent and the Required Lenders, of consolidated balance sheets and statements of income or operations and cash flows of Holdings and its Subsidiaries on a monthly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs).

 

As to any information contained in materials furnished pursuant to Section 6.02(d) , the Borrowers shall not be separately required to furnish such information under Section 6.01(a)  or (b)  above, but the foregoing shall not be in derogation of the obligation of the Borrowers to furnish the information and materials described in Sections 6.01(a)  and (b)  above at the times specified therein.

 

6.02         Certificates; Other Information .  Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

 

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(a)   concurrently with the delivery of the financial statements referred to in Section 6.01(a)   (commencing with the delivery of the financial statements for the fiscal year ended September 30, 2007), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default under the financial covenants set forth in Section 7.11 or, if any such Default shall exist, stating the nature and status of such event;

 

(b)   concurrently with the delivery of the financial statements referred to in Sections 6.01(a)  and (b)   (commencing with the delivery of the financial statements for the fiscal quarter ended June 30, 2007), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of Holdings;

 

(c)   within thirty (30) days following the end of each calendar month, a certificate substantially in the form attached hereto as Exhibit E signed by the chief executive officer, chief financial officer, treasurer or controller of Holdings certifying Holdings’ and its Subsidiaries’ compliance with Section 7.11(c)  and setting forth detail in support of such certification.

 

(d)   promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of any Loan Party by independent accountants in connection with the accounts or books of any Loan Party or any of its Subsidiaries, or any audit of any of them;

 

(e)   promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Holdings, and copies of all annual, regular, periodic and special reports and registration statements which Holdings may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

(f)    promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02 ;

 

(g)   as soon as available, but in any event within 30 days after the end of each fiscal year of Holdings, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Subsidiaries and containing such additional information as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably specify;

 

(h)   promptly, and in any event within seven Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other

 

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correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof;

 

(i)    not later than five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of all notices, requests and other documents (including amendments, waivers and other modifications) (i) alleging that a default or an event of default has occurred, (ii) pertaining to any matter that is, or could be, in any manner adverse to any Secured Party or (iii) pertaining to any matter that is otherwise prohibited under the terms of any Loan Document, in each case so received under or pursuant to any Related Document or instrument, indenture, loan or credit or similar agreement and, from time to time upon request by the Administrative Agent, such information and reports regarding the Related Documents and such instruments, indentures and loan and credit and similar agreements as the Administrative Agent may reasonably request;

 

(j)    promptly after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could (i) reasonably be expected to have a Material Adverse Effect or (ii) cause any property described in the Mortgages to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law;

 

(k)   copies of all required operating, medical or provider licenses, as they are renewed, but no less frequently than every year;

 

(l)    copies of the results of any licensing survey or other inspection report noting any deficiency within five (5) Business Days of its receipt by any Loan Party;

 

(m)  quarterly, on or prior to the thirtieth (30th) day following the end of each fiscal quarter, the Borrowers shall provide the Administrative Agent with a schedule listing the revenue for such quarter of each existing Capitated Contract and the corresponding expiration date for each such Capitated Contract.  In addition, promptly, but in any case not later than three (3) Business Days after any Loan Party obtains knowledge thereof, the Loan Parties shall advise the Administrative Agent in writing of the termination or non-renewal of any Capitated Contract, any adjustment in the per-patient price or rate of payment under any Capitated Contract, or any adjustment, offset or deduction in respect of Capitated Contract Rights for retroactive additions and/or deletions of patients covered by Capitated Contracts during any consecutive 60-day period the payments under which Capitated Contract constituted, alone or together with payments under all other Capitated Contracts terminated or non-renewed or with respect to which any adjustment in the per-patient price or rate of payment under any Capitated Contract or any adjustment, offset or deduction in respect of Capitated Contract rights for retroactive additions and/or deletions of patients covered by Capitated Contracts was made during such 60-day period, in excess of ten percent (10%) of the aggregate payments under all Capitated Contracts during the immediately preceding twelve month period;

 

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(n)   monthly, on or prior to the thirtieth (30th) day after the end of each calendar month, the Borrowers shall provide a report of incurred but not reported items for such month, which report shall include, but not be limited to, the claims lag analysis prepared by Borrowers for PMG and each of its Subsidiaries.  Such reports shall be in form and substance satisfactory to the Administrative Agent and shall be prepared using the per-member-per-month (“PMPM” ) method, and will include all medical expenses

 

(o)   promptly upon receipt thereof, copies of actuarial reports as of March 31 and September 30 of each year;

 

(p)   as soon as available but not later than thirty (30) days after submission thereof to the California Department of Managed Health Care or the corresponding agency of another state and/or any other applicable or successor state agency or body, each Loan Party will provide the Administrative Agent (a) written notice of any application for, or the grant of, any Healthcare Service Plan License and (b) all reports and/or financial statements required under any such Loan Party’s Healthcare Service Plan License, if any; and

 

(q)   promptly, such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

 

Documents required to be delivered pursuant to Section 6.01(a)  or (b)  or Section 6.02(d)  (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which either Borrower posts such documents, or provides a link thereto on either Borrower’s website on the Internet at the website address listed on Schedule 10.02 ; or (ii) on which such documents are posted on either Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that:  (i) the Borrowers shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrowers to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrowers shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents.  Notwithstanding anything contained herein, in every instance the Borrowers shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(b)  to the Administrative Agent.  Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrowers with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

 

Each Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make available to the Lenders materials and/or information provided by or on

 

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behalf of the Borrowers hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrowers or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities.  Each Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent, the Arranger and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrowers or their securities for purposes of United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor;” and (z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.”

 

6.03         Notices .  Promptly notify the Administrative Agent and each Lender:

 

(a)   of the occurrence of any Default;

 

(b)   any notice (other than a “Committed Loan Notice” (as defined under the First Lien Credit Agreement)) delivered to any Loan Party, or sent by or on behalf of any Loan Party, with respect to the First Lien Loan Documents (including a copy of each such notice);

 

(c)   of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of either Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between either Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting either Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

 

(d)   of the occurrence of any ERISA Event;

 

(e)   of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof , including any determination by Holdings or the Borrowers referred to in Section 2.10(b) ;

 

(f)    of the (i) occurrence of any Disposition of property or assets for which the Borrowers are required to make a mandatory prepayment pursuant to Section 2.05(b)(ii) , (ii) incurrence or issuance of any Indebtedness for which the Borrower is required to

 

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make a mandatory prepayment pursuant to Section 2.05(b)(iii)  and (iii) receipt of any Extraordinary Receipt for which either Borrower is required to make a mandatory prepayment pursuant to Section 2.05(b)(iv) ;

 

(g)   of any announcement by Moody’s or S&P of any change or possible change in a Debt Rating;

 

(h)   of any investigation or audit, or pending or threatened proceedings relating to any violation or potential violation by any Loan Party, any Subsidiary of a Loan Party, or any health care facility to which a Loan Party or any Subsidiary of a Loan Party provides services, of any Health Care Laws (including, without limitation, any investigation or audit or proceeding involving violation of any of the Medicare and/or Medicaid fraud and abuse provisions);

 

(i)    copies of any written recommendation from any Governmental Authority or other regulatory body that any Loan Party or any Subsidiary of a Loan Party, or any Obligor to which any Loan Party or any Subsidiary of a Loan Party provides services should have its licensure, provider or supplier number, or accreditation suspended, revoked, or limited in any way, or have its eligibility to participate in TRICARE, Medicare or Medicaid or to accept assignments or rights to reimbursement under TRICARE, Medicaid or Medicare regulations suspended, revoked, or limited in any way;

 

(j)    notice of any claim to recover any alleged material overpayments, including by way of Offset, with respect to any receivables including, without limitation, payments received from TRICARE, Medicare, Medicaid or from any private insurance carrier;

 

(k)   notice of termination of eligibility of any Loan Party, any Subsidiary of any Loan Party, or any health care facility to which any Loan Party provides services to participate in any reimbursement program of any private insurance carrier, managed care or similar organization, or other Obligor applicable to it;

 

(l)    notice of any material reduction in the level of reimbursement expected to be received with respect to any accounts receivables;

 

(m)  notice of any reimbursement payment contract or process that results or is reasonably expected to result in any material claim against a Loan Party or any Subsidiary of such Loan Party (including on account of overpayments, settlement payments, appeals, repayment plan requests);

 

(n)   copies of any material report or communication from any Governmental Authority in connection with any inspection of any facility of a Loan Party or any Subsidiary of such Loan Party;

 

(o)   notice of any material fee dispute; and

 

(p)   any complaint, order, citation or notice of violation with respect to, or if any Loan Party becomes aware of, (i) the existence or alleged existence of which any Loan Party becomes aware, of a violation of any applicable Environmental Law, (ii) any

 

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release of any Hazardous Material into the environment in an amount or a concentration for which reporting, investigation, or remediation is required under any applicable Environmental Law, (iii) the commencement of any cleanup pursuant to or in accordance with any applicable Environmental Law of any Hazardous Materials, (iv) any pending legislative or threatened proceeding for the termination, suspension or non-renewal of any permit required under any applicable Environmental Law, and (v) any Real Property that is or will be subject to a Lien imposed pursuant to any Environmental Law, which in each of cases (i) through (v) above, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Each notice pursuant to Section 6.03 (other than Section 6.03(e)  or (f) ) shall be accompanied by a statement of a Responsible Officer of the Borrower Agent setting forth details of the occurrence referred to therein and stating what action the Borrowers have  taken and propose to take with respect thereto.  Each notice pursuant to Section 6.03(a)  shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

6.04         Payment of Obligations .  Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrowers or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrowers or such Subsidiary; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

 

6.05         Preservation of Existence, Etc .  (a)  Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05 ; provided , however , that Holdings and its Subsidiaries may consummate the Merger; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

 

6.06         Maintenance of Properties .  (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

 

6.07         Maintenance of Insurance .  Maintain with financially sound and reputable insurance companies not Affiliates of either Borrower, insurance with respect to its properties

 

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and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days’ prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance.

 

6.08         Compliance with Laws .

 

(a)           Comply in all respects with the requirements of all Laws (including all Health Care Laws, Seismic Compliance Laws (giving effect to any extensions or exemptions then in existence), all applicable Medicare and Medicaid rules and regulations, and to the extent applicable, the California Department of Managed Care financial solvency regulations) and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (ii) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

(b)           Regularly review and revise the policies and procedures of the Loan Parties to ensure continuing compliance by all Loan Parties, their employees and all healthcare providers under contract with any Loan Party with all applicable Health Care Laws and maintain appropriate programs and procedures for communicating such policies and procedures to all employees of any Loan Party and healthcare providers under contract with any Loan Party and for making sure that all employees of any Loan Party are able to report violations of any Health Care Laws and have such reports adequately addressed and corrected as soon as practicable.

 

(c)           As soon as practically feasible, but in no event later than six (6) months from the Closing Date, Loan Parties engaged in the hospital line of business shall adopt a compliance program which satisfies the Compliance Program Guidance for Hospitals issued by the U.S. Department of Health and Human Services Office of Inspector General, and within six months of the closing date or within six months of the issuance of applicable OIG Compliance Program Guidance, whichever is later, the Loan Parties, Subsidiaries and Affiliates engaged in other lines of business shall adopt a compliance program which satisfies all Compliance Program Guidance that applies to such business line(s), including without limitation any Program Guidance that may be developed for management companies or independent physician associations in the future by the Office of Inspector General.

 

6.09         Books and Records .  (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be.

 

6.10         Inspection Rights .  Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrowers and at such reasonable times during

 

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normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrowers; provided , however , that when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice.

 

6.11         Use of Proceeds .  Use the proceeds of the Term Loans to (i) finance the Transactions (together with the proceeds of the First Lien Term Loan and First Lien Revolving Loans) and (ii) for general corporate purposes, in each case, not in contravention of any Law or of any Loan Document.

 

6.12         Covenant to Guarantee Obligations and Give Security .

 

(a)           Upon the formation or acquisition of any new direct or indirect Subsidiary by any Loan Party, then the Borrowers shall, at the Borrowers’ expense:

 

(i)            within 15 days after such formation or acquisition, cause such Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent a guaranty, guaranty supplement, or joinder in form and substance satisfactory to the Administrative Agent, guaranteeing the other Loan Parties’ obligations under the Loan Documents,
 
(ii)           within 10 days after such formation or acquisition, furnish to the Administrative Agent a description of the real and personal properties of such Subsidiary, in detail satisfactory to the Administrative Agent,
 
(iii)          within 30 days after such formation or acquisition, cause such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to duly execute and deliver to the Administrative Agent deeds of trust, trust deeds, deeds to secure debt, mortgages, joinders, and other security and pledge agreements, as specified by and in form and substance satisfactory to the Administrative Agent (including, subject to the Intercreditor Agreement, delivery of all pledged Equity Interests in and of such Subsidiary to the First Lien Administrative Agent, and other instruments of the type specified in Section 4.01(a)(v) ), securing payment of all the Obligations of such Subsidiary or such parent, as the case may be, under the Loan Documents and constituting Second Priority Liens on all such real and personal properties,
 
(iv)          within 45 days after such formation or acquisition, cause such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to take whatever action (including the recording of mortgages, the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Second Priority Liens on the properties purported to be subject to the deeds of trust, trust deeds, deeds to secure debt, mortgages and security and pledge agreements delivered pursuant to this Section 6.12 , enforceable against all third parties in accordance with their terms,

 

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(v)           within 60 days after such formation or acquisition, deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties acceptable to the Administrative Agent as to the matters contained in clauses (i), (iii) and (iv) above, and as to such other matters as the Administrative Agent may reasonably request, and

 

(vi)          as promptly as practicable after such formation or acquisition, deliver, upon the request of the Administrative Agent in its sole discretion, to the Administrative Agent with respect to each parcel of real property owned or held by the entity that is the subject of such formation or acquisition title reports, surveys and engineering, soils and other reports, property condition assessments and environmental assessment reports, each in scope, form and substance satisfactory to the Administrative Agent, provided , however , that to the extent that any Loan Party or any of its Subsidiaries shall have otherwise received any of the foregoing items with respect to such real property, such items shall, promptly after the receipt thereof, be delivered to the Administrative Agent.

 

(b)           Upon the acquisition of any property by any Loan Party, if such property, in the judgment of the Administrative Agent, shall not already be subject to a perfected Second Priority Lien (subject to Liens permitted pursuant to Section 7.01(i) ) in favor of the Administrative Agent for the benefit of the Secured Parties, then the Borrowers shall, at the Borrowers’ expense:

(i)            within 10 days after such acquisition, furnish to the Administrative Agent a description of the property so acquired in detail satisfactory to the Administrative Agent,
 
(ii)           within 30 days after such acquisition, cause the applicable Loan Party to duly execute and deliver to the Administrative Agent deeds of trust, trust deeds, deeds to secure debt, mortgages, joinders, and other security and pledge agreements, as specified by and in form and substance satisfactory to the Administrative Agent, securing payment of all the Obligations of the applicable Loan Party under the Loan Documents and constituting Second Priority Liens on all such properties,
 
(iii)          within 45 days after such acquisition, cause the applicable Loan Party to take whatever action (including the recording of mortgages, the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Second Priority Liens on such property, enforceable against all third parties,
 
(iv)          within 60 days after such acquisition, deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties acceptable to the Administrative Agent as to the matters

 

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contained in clauses (ii) and (iii) above and as to such other matters as the Administrative Agent may reasonably request, and
 
(v)           as promptly as practicable after any acquisition of a real property, deliver, upon the request of the Administrative Agent in its sole discretion, to the Administrative Agent with respect to such real property title reports, surveys and engineering, soils and other reports, property condition assessments, and environmental assessment reports, each in scope, form and substance satisfactory to the Administrative Agent, provided , however , that to the extent that any Loan Party or any of its Subsidiaries shall have otherwise received any of the foregoing items with respect to such real property, such items shall, promptly after the receipt thereof, be delivered to the Administrative Agent,

 

(c)           Upon the request of the Administrative Agent following the occurrence and during the continuance of a Default, the Borrowers shall, at the Borrowers’ expense:

 
(i)            within 10 days after such request, furnish to the Administrative Agent a description of the real and personal properties of the Loan Parties and their respective Subsidiaries in detail satisfactory to the Administrative Agent,
 
(ii)           within 30 days after such request, duly execute and deliver, and cause each Loan Party (if it has not already done so) to duly execute and deliver, to the Administrative Agent deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust, and other security and pledge agreements, as specified by and in form and substance satisfactory to the Administrative Agent (including, subject to the Intercreditor Agreement, delivery of all pledged Equity Interests and pledged debt in and of such Subsidiary to the First Lien Administrative Agent, and other instruments of the type specified in Section 4.01(a)(v)) , securing payment of all the Obligations of the applicable Loan Party under the Loan Documents and constituting Second Priority Liens on all such properties,
 
(iii)          within 45 days after such request, take, and cause each Loan Party to take, whatever action (including the recording of mortgages, the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Second Priority Liens on the properties purported to be subject to the deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust, and security and pledge agreements delivered pursuant to this Section 6.12 , enforceable against all third parties in accordance with their terms,
 
(iv)          within 60 days after such request, deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties acceptable to the Administrative Agent as to the matters contained in clauses (ii) and (iii) above, and as to such other matters as the Administrative Agent may reasonably request, and

 

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(v)           as promptly as practicable after such request, deliver, upon the request of the Administrative Agent in its sole discretion, to the Administrative Agent with respect to each parcel of real property owned or held by either Borrowers or their respective Subsidiaries, title reports, surveys and engineering, soils and other reports, property condition assessments, and environmental assessment reports, each in scope, form and substance satisfactory to the Administrative Agent, provided , however , that to the extent that any Loan Party or any of its Subsidiaries shall have otherwise received any of the foregoing items with respect to such real property, such items shall, promptly after the receipt thereof, be delivered to the Administrative Agent.

 

(d)           At any time upon request of the Administrative Agent, promptly execute and deliver any and all further instruments and documents and take all such other action as the Administrative Agent may deem necessary or desirable in obtaining the full benefits of, or (as applicable) in perfecting and preserving the Liens of, such guaranties, deeds of trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust, and other security and pledge agreements.

 

6.13         Compliance with Environmental Laws .  Comply, and cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided , however , that neither Borrower nor any of their respective Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

 

6.14         Preparation of Environmental/Seismic Reports .

 

(a)           At the request of the Required Lenders from time to time, provide to the Lenders within 60 days after such request, at the expense of the Borrowers, an environmental site assessment report for any of its properties described in such request, prepared by an environmental consulting firm acceptable to the Administrative Agent, indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance, removal or remedial action in connection with any Hazardous Materials on such properties; without limiting the generality of the foregoing, if the Administrative Agent determines at any time that a material risk exists that any such report will not be provided within the time referred to above, the Administrative Agent may retain an environmental consulting firm to prepare such report at the expense of the Borrowers, and each Borrower hereby grants and agrees to cause any Subsidiary that owns any property described in such request to grant at the time of such request to the Administrative Agent, the Lenders, such firm and any agents or representatives thereof an irrevocable non-exclusive license, subject to the rights of tenants, to enter onto their respective properties to undertake such an assessment.

 

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(b)           Within 30 days following its request therefor, the Borrowers shall deliver to the Administrative Agent a written evaluation and report with a current cost estimate to bring the real properties described in the Mortgages into compliance with Seismic Compliance Laws.

 

6.15         Further Assurances .  Promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable law, subject any Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

 

6.16         Compliance with Terms of Leaseholds .  Make all payments and otherwise perform all obligations in respect of all leases of real property to which either Borrower or any of their respective Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not be reasonably likely to have a Material Adverse Effect.

 

6.17         Interest Rate Hedging .  Within sixty (60) days of the Closing Date, the Borrowers shall enter into and maintain for at least two years following the Closing Date, interest rate Swap Contracts with Persons acceptable to the Administrative Agent, covering a notional amount of not less than fifty percent (50%) of the aggregate Term Loan and First Lien Term Loan and otherwise with terms and conditions reasonably satisfactory to the Administrative Agent.

 

6.18         Material Contracts .  Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so.

 

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6.19         Post-Closing Covenants.

 

(a)   Within 30 days following the Closing Date (provided that the Administrative Agent may extend such deadline in its sole discretion), the Borrowers shall deliver to the Administrative Agent evidence satisfactory to the Administrative Agent in its sole discretion that each Loan Party that participates in Medicare or Medicaid has properly filed CMS Form 855 with CMS.

 

(b)   Within 30 days following the Closing Date (provided that the Administrative Agent may extend such deadline in its sole discretion), the Borrowers shall deliver to the Administrative Agent evidence satisfactory to the Administrative Agent in its sole discretion that (i) each lien set forth on Schedule 5.08(b)  noted for termination has been terminated and (ii) Alta Healthcare Building Corporation, a California corporation, has been dissolved by the California Secretary of State.

 

(c)   As soon as possible following the Closing Date, but in any event no later than September 15, 2007, the Borrowers shall have filed, or shall have caused its appropriate Subsidiary to file, tax returns for Alta Heathcare Systems, Inc., and its Subsidiaries for such entities’ 2003 tax year.

 

(d)   Within 15 days following the Closing Date (provided that the First Lien Administrative Agent may extend such deadline in its sole discretion), the Borrowers shall deliver, or shall cause their appropriate Subsidiaries to deliver to the First Lien Administrative Agent, in each case, in form and substance satisfactory to the First Lien Administrative Agent, deposit account control agreements and/or collection account agreements (as applicable) for all accounts held with Wells Fargo Bank, National Association (or any Affiliate thereof).

 

ARTICLE VII
NEGATIVE COVENANTS

 

So long as any Term Loan or other Obligation hereunder shall remain unpaid or unsatisfied, neither Borrower shall, nor shall either Borrower permit any Subsidiary to, directly or indirectly:

 

7.01         Liens .  Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or file or suffer to exist under the Uniform Commercial Code of any jurisdiction a financing statement that names either Borrower or any of their respective Subsidiaries as debtor, or assign any accounts or other right to receive income, other than the following:

 

(a)   Liens pursuant to any Loan Document;

 

(b)   Liens existing on the date hereof and listed on Schedule 5.08(b)  and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as

 

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contemplated by Section 7.02(d) , (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.02(d) ;

 

(c)   Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

 

(d)   carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

 

(e)   pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

 

(f)    deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(g)   easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

 

(h)   Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) ;

 

(i)    Liens securing Indebtedness permitted under Section 7.02(f) ; provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

 

(j)    other Liens securing Indebtedness permitted under Section 7.02 outstanding in an aggregate principal amount not to exceed $2,500,000, provided that no such Lien shall extend to or cover any Collateral;

 

(k)   Liens in favor of any lender to Brotman Medical Center, Inc. on the shares held by Prospect Hospital Advisory Services, Inc. in Brotman Medical Center, Inc.; and

 

(l)    Liens securing Indebtedness permitted under Section 7.02(i) .

 

7.02         Indebtedness .  Create, incur, assume or suffer to exist any Indebtedness, except:

 

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(a)   obligations (contingent or otherwise) existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with fluctuations in interest rates or foreign exchange rates and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

 

(b)   Indebtedness of a Guarantor owed to a Borrower or another Guarantor, or owed by a Borrower to a Guarantor or the other Borrower, which Indebtedness shall be on terms (including subordination terms) acceptable to the Administrative Agent;

 

(c)   Indebtedness under the Loan Documents;

 

(d)   Indebtedness outstanding on the date hereof and listed on Schedule 7.02 and any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and the direct or any contingent obligor with respect thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal or extension ; and provided , still further , that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;

 

(e)   Guarantees of either Borrower or any Subsidiary thereof in respect of Indebtedness otherwise permitted hereunder of any Loan Party;

 

(f)    Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(i) ; provided , however , that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $2,500,000;

 

(g)   Indebtedness of any Person that becomes a Subsidiary of either Borrower after the date hereof in accordance with the terms of Section 7.03(h) , which Indebtedness is existing at the time such Person becomes a Subsidiary of such Borrower (other than Indebtedness incurred solely in contemplation of such Person’s becoming a Subsidiary of such Borrower);

 

(h)   letters of credit required under any Capitated Contract in favor of an HMO and any renewals thereof required by such HMO under the terms of the Capitated Contract; and

 

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(i)    Indebtedness of the Borrowers and Guarantors under the First Lien Loan Documents in an aggregate principal amount not to exceed at any time the Maximum First Lien Indebtedness.

 

7.03         Investments .  Make or hold any Investments, except:

 

(a)   Investments held by either Borrower or any of their respective Subsidiaries in the form of Cash Equivalents;

 

(b)   (i) Investments by either Borrower or any of their respective Subsidiaries in their respective Subsidiaries (other than an Excluded Subsidiary) outstanding on the date hereof and (ii) additional Investments by either Borrower or their respective Subsidiaries in Loan Parties (other than Holdings and the Excluded Subsidiary);

 

(c)   Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

 

(d)   Guarantees permitted by Section 7.02 ;

 

(e)   Investments existing on the date hereof (other than those referred to in Section 7.03(b)(i) ) and set forth on Schedule 5.08(e) ;

 

(f)    Investments by the Borrowers in Swap Contracts permitted under Section 7.02(a) ;

 

(g)   the purchase or other acquisition of all of the Equity Interests in, or all or substantially all of the property of, any Person that, upon the consummation thereof, will be wholly-owned directly by either of the Borrowers or one or more of their wholly-owned Subsidiaries (including as a result of a merger or consolidation); provided that, with respect to each purchase or other acquisition made pursuant to this Section 7.03(g) :

 
(i)            any such newly-created or acquired Subsidiary shall comply with the requirements of Section 6.12 ;
 
(ii)           the lines of business of the Person to be (or the property of which is to be) so purchased or otherwise acquired shall be substantially the same lines of business as one or more of the principal businesses of either of the Borrowers or their respective Subsidiaries in the ordinary course;
 
(iii)          such purchase or other acquisition shall not include or result in any contingent liabilities that could reasonably be expected to be material to the business, financial condition, operations or prospects of the Borrowers and their Subsidiaries, taken as a whole (as determined in good faith by the board of directors (or the persons performing similar functions) of such Borrower or such

 

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Subsidiary if the board of directors is otherwise approving such transaction and, in each other case, by a Responsible Officer);

 

(iv)          the total cash and noncash consideration (including all indemnities, earnouts and other contingent payment obligations to, and the aggregate amounts paid or to be paid under noncompete, consulting and other affiliated agreements with, the sellers thereof, all write-downs of property and reserves for liabilities with respect thereto and all assumptions of debt, liabilities and other obligations in connection therewith but excluding all Equity Interests permitted to be issued under the terms of this Agreement issued or transferred to the sellers thereof) paid by or on behalf of the respective Borrower and its Subsidiaries for any such purchase or other acquisition, when aggregated with the total cash and noncash consideration paid by or on behalf of the Borrowers and their Subsidiaries for all other purchases and other acquisitions made by the Borrowers and their Subsidiaries pursuant to this Section 7.03(g)  during the term of this Agreement, shall not exceed $6,125,000;
 
(v)           (A) immediately before and immediately after giving pro forma effect to any such purchase or other acquisition, no Default shall have occurred and be continuing and (B) immediately after giving effect to such purchase or other acquisition, Holdings and its Subsidiaries shall be in pro forma compliance with all of the covenants set forth in Section 7.11 , such compliance to be determined on the basis of the financial information most recently delivered to the Administrative Agent and the Lenders pursuant to Section 6.01(a)  or (b)  as though such purchase or other acquisition had been consummated as of the first day of the fiscal period covered thereby; and
 
(vi)          the Borrowers shall have delivered to the Administrative Agent and each Lender, at least five Business Days prior to the date on which any such purchase or other acquisition is to be consummated, a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders, certifying that all of the requirements set forth in this subsection (h) have been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition;

 

(h)   Investments by the Borrowers and their Subsidiaries (other than the Excluded Subsidiary) not otherwise permitted under this Section 7.03 in an aggregate amount not to exceed $2 ,500,000; provided that, with respect to each Investment made pursuant to this Section 7.03(h) :

 
(i)            such Investment shall not include or result in any contingent liabilities that could reasonably be expected to be material to the business, financial condition, operations or prospects of the Borrowers and their Subsidiaries, taken as a whole (as determined in good faith by the board of directors (or persons performing similar functions) of such Borrower or such Subsidiary if the board of directors is otherwise approving such transaction and, in each other case, by a Responsible Officer);

 

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(ii)           such Investment shall be in property that is part of, or in lines of business that are, substantially the same lines of business as one or more of the principal businesses of the Borrowers and their Subsidiaries in the ordinary course;
 
(iii)          any determination of the amount of such Investment shall include all cash and noncash consideration (including the fair market value of all Equity Interests issued or transferred to the sellers thereof, all indemnities, earnouts and other contingent payment obligations to, and the aggregate amounts paid or to be paid under noncompete, consulting and other affiliated agreements with, the sellers thereof, all write-downs of property and reserves for liabilities with respect thereto and all assumptions of debt, liabilities and other obligations in connection therewith) paid by or on behalf of the respective Borrower in connection with such Investment; and
 
(iv)          (A) immediately before and immediately after giving pro forma effect to any such purchase or other acquisition, no Default shall have occurred and be continuing and (B) immediately after giving effect to such purchase or other acquisition, Holdings and its Subsidiaries shall be in pro forma compliance with all of the covenants set forth in Section 7.11 , such compliance to be determined on the basis of the financial information most recently delivered to the Administrative Agent and the Lenders pursuant to Section 6.01(a)  or (b)  as though such Investment had been consummated as of the first day of the fiscal period covered thereby; and

 

(i)    other Investments not exceeding $2,500,000 in the aggregate in any fiscal year of Holdings.

 

7.04         Fundamental Changes .  Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

 

(a)   other than where prohibited under applicable Law (including Health Care Law), any Subsidiary (other than an Excluded Subsidiary) may merge with (i) any Borrower, provided that the respective Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that (A) when any Loan Party (other than Holdings) is merging with another Subsidiary, such Loan Party shall be the continuing or surviving Person and (B) the PMG Loan Parties may not merge with Holdings or any other Subsidiary outside the PMG Loan Party group;

 

(b)   to the extent permitted under all applicable Law, any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to either Borrower or to another Loan Party;

 

(c)   Holdings and its Subsidiaries may consummate the Merger;

 

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(d)           in connection with any acquisition permitted under Section 7.03 , any Subsidiary of either Borrower (other than an Excluded Subsidiary) may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided that (i) the Person surviving such merger shall be a wholly-owned Subsidiary of either Borrower and (ii) in the case of any such merger to which any Loan Party (other than a Borrower) is a party, such Loan Party is the surviving Person; and

 

(e)           so long as no Default has occurred and is continuing or would result therefrom, any Subsidiary of a Borrower (other than PMG or an Excluded Subsidiary) may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided , however , that in each case, immediately after giving effect thereto in the case of any such merger to which any Loan Party is a party, such Loan Party is the surviving corporation.

 

7.05         Dispositions .  Make any Disposition or enter into any agreement to make any Disposition, except:

 

(a)     Dispositions of obsolete, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

 

(b)     Dispositions of inventory in the ordinary course of business;

 

(c)     Dispositions of equipment to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;

 

(d)     Dispositions of property by any Subsidiary to either Borrower or to a wholly-owned Subsidiary (other than an Excluded Subsidiary); provided that if the transferor of such property is a Guarantor, the transferee thereof must either be a Borrower or a Guarantor;

 

(e)     Dispositions permitted by Section 7.04 ; and

 

(f)      Dispositions (other than of real property) by the Borrowers and any of their Subsidiaries not otherwise permitted under this Section 7.05 ; provided that (i) at the time of such Disposition, no Default shall exist or would result from such Disposition, (ii) the aggregate book value of all property Disposed of in reliance on this clause (f) in any fiscal year shall not exceed $2,500,000 and (iii) the purchase price for such asset shall be paid to such Borrower or such Subsidiary solely in cash.

 

provided , however , that any Disposition pursuant to Section 7.05(a)  through Section 7.05(f)  shall be for fair market value.

 

7.06         Restricted Payments .  Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests or accept any capital contributions, except that, so long as no Default shall

 

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have occurred and be continuing at the time of any action described below or would result therefrom:

 

(a)           each Subsidiary (other than a Borrower) may make Restricted Payments to (i) the Borrowers and (ii) any Subsidiaries of either Borrower that are Guarantors;

 

(b)           each Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;

 

(c)           PMG may make payments to Holdings in an amount not to exceed an amount necessary to permit Holdings to pay (i) reasonable and customary corporate and operating expenses (including reasonable out-of-pocket expenses for legal, administrative and accounting services provided by third parties, and compensation, benefits and other amounts payable to officers and employees in connection with their employment in the ordinary course of business and to board of director observers and (ii) franchise fees or similar taxes and fees required to maintain its corporate existence;

 

(d)           Restricted Payments by any Loan Party or its Subsidiary to any other Loan Party in an amount necessary to fund federal and state income taxes attributable to the taxable income of such Loan Party for the sole purpose of funding such tax payments;

 

(e)           Holdings may issue and sell its common Equity Interests;

 

(f)            Holdings may issue preferred Equity Interests; provided , that such preferred equity may not (i) require the payment of any dividends (other than dividends payable solely in shares of Holdings’ common stock or additional Holdings’ preferred stock meeting the requirements of this Section 7.06(f)) , (ii) mature or be mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase, in each case in whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund obligation on a fixed date or otherwise (including as the result of a failure to maintain or achieve any financial performance standards) or (c) be convertible or exchangeable, automatically or at the option of any holder thereof, into any Indebtedness or other assets, other than Holdings’ common stock or additional Holdings’ preferred stock meeting the requirements of this Section 7.06(f) ).

 

7.07         Change in Nature of Business; Limitations on Excluded Subsidiary .

 

(a)           Engage in any material line of business substantially different from those lines of business conducted by the Borrowers and their respective Subsidiaries on the date hereof or any business substantially related or incidental thereto.

 

(b)           With respect to the Excluded Subsidiary, enter into any business, operations or activities other than dissolving such Excluded Subsidiary in accordance with Section 6.19 .

 

7.08         Transactions with Affiliates .  Enter into any transaction of any kind with any Affiliate of either Borrower, whether or not in the ordinary course of business, other than on

 

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fair and reasonable terms substantially as favorable to such Borrower or such Subsidiary as would be obtainable by such Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to transactions between or among the Loan Parties.

 

7.09         Burdensome Agreements .  Except where required under applicable Laws, enter into or permit to exist any Contractual Obligation (other than this Agreement, any other Loan Document or any First Lien Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrowers or any Guarantor or to otherwise transfer property to or invest in the Borrowers or any Guarantor, except for any agreement in effect (A) on the date hereof and set forth on Schedule 7.09 or (B) at the time any Subsidiary becomes a Subsidiary of either Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of such Borrower, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrowers or (iii) of either Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided , however , that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 7.02(f)  solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person .

 

7.10         Use of Proceeds .  Use the proceeds of the Term Loans, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

 

7.11         Financial Covenants .

 

(a)           Consolidated Leverage Ratio .  Permit the Consolidated Leverage Ratio at any time during any period of four fiscal quarters of Holdings set forth below to be greater than the ratio set forth below opposite such period:

 

Four Fiscal Quarters Ending

 

Maximum Consolidated Leverage
Ratio

Closing Date through March 31, 2008

 

4.00:1.00

April 1, 2008 through December 31, 2008

 

3.50:1.00

January 1, 2009 and each fiscal quarter ending thereafter

 

3.00:1.00

 

(b)           Consolidated Fixed Charge Coverage Ratio .  Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter of Holdings to be less than 1.10 to 1.00.

 

(c)           Consolidated Membership .  (i) Permit the aggregate Membership of the Loan Parties, as of the end of any calendar month to be less than 85% of such aggregate

 

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Membership as of the end of the previous calendar month or permit the aggregate Membership of the Loan Parties, for any fiscal quarter to be less than 85% of the aggregate Membership from the prior Fiscal Quarter unless any such decline shall have resulted from the Borrowers’ termination of an existing contract and the Borrowers (a) shall have provided the Administrative Agent with notice of such termination of such contract contemporaneously with the delivery of such notice to the counterparty and (b) shall have delivered to Administrative Agent, prior to giving  the notice of termination, projections satisfactory to the Required Lenders confirming that the Borrowers will remain in compliance with this Agreement and that such termination will not impair the Borrowers’ ability to repay its Obligations hereunder; or (ii) permit the aggregate monthly revenues for the Loan Parties, in any calendar month to be less than 85% of the average aggregate monthly revenues for the consecutive three-month period ending as of such month, or permit the aggregate revenue for any Fiscal Quarter of the Loan Parties, to be less than 85% of the aggregate revenue for the preceding Fiscal Quarter.

 

7.12         Capital Expenditures .  Make or become legally obligated to make any Capital Expenditure, except for Capital Expenditures in the ordinary course of business not exceeding $8,000,000 (the “ Maximum Capital Expenditure ”), in the aggregate for the Borrowers and their respective Subsidiaries during each fiscal year; provided , however , that so long as no Default has occurred and is continuing or would result from such expenditure, any portion of the Maximum Capital Expenditure, if not expended in the fiscal year for which it is permitted, may be carried over for expenditure in the next following fiscal year; and provided , further , if any such amount is so carried over, it will be deemed used in the applicable subsequent fiscal year before the Maximum Capital Expenditure allocated for such fiscal year.

 

7.13         Amendments of Organization Documents .  Amend any of its Organization Documents in any manner adverse to the Administrative Agent or the Lenders.

 

7.14         Accounting Changes .  Make any change in (a) accounting policies or reporting practices, except as required by GAAP, or (b) fiscal year.

 

7.15         Prepayments, Etc. of Indebtedness .  Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Indebtedness, except (a) the prepayment of the Term Loans in accordance with the terms of this Agreement and (b) regularly scheduled or required repayments or redemptions of Indebtedness set forth in Schedule 7.02 in accordance with any applicable Subordination Agreement and refinancings and refundings of such Indebtedness in compliance with Section 7.02(d) .

 

7.16         Amendment, Etc. of Related Documents and Indebtedness .  (a)  Cancel or terminate any Related Document or consent to or accept any cancellation or termination thereof, (b) amend, modify or change in any manner any term or condition of any Related Document or give any consent, waiver or approval thereunder, (c) waive any default under or any breach of any term or condition of any Related Document, (d) take any other action in connection with any Related Document that would impair the value of the interest or rights of any Loan Party thereunder or that would impair the rights or interests of the Administrative Agent or any Lender, (e) amend, modify or change in any manner any term or condition of any Indebtedness set forth in Schedule 7.02 , except for any refinancing, refunding, renewal or extension thereof permitted

 

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by Section 7.02(d) , or (f) amend, modify, supplement or otherwise change, or consent to any amendment, modification, supplement or change to, any First Lien Loan Document, except pursuant to the terms of the Intercreditor Agreement.

 

7.17         Designation of Senior Debt .  Designate any Indebtedness (other than the Indebtedness under the Loan Documents) of either Borrower or any of their respective Subsidiaries as “ Designated Senior Debt ” (or any similar term) under any agreement.

 

ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES

 

8.01         Events of Default .  Any of the following shall constitute an Event of Default:

 

(a)        Non-Payment .  Either Borrower or any other Loan Party fails to (i) pay when and as required to be paid herein, any amount of principal of any Term Loan, or (ii) pay within three days after the same becomes due, any interest on any Term Loan, or any fee due hereunder, or (iii) pay within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

 

(b)        Specific Covenants .  (i) Either Borrower fails to perform or observe (or fails to cause any Subsidiary thereof to perform and observe) any term, covenant or agreement contained in any of Section 6.01 , 6.02 , 6.03 , 6.05 , 6.08 , 6.10 , 6.11 , 6.12 , 6.14 , 6.17 , 6.19 or Article VII , (ii) any of the Guarantors fails to perform or observe any term, covenant or agreement contained in the Guaranty or (iii) any of the Loan Parties fails to perform or observe any term, covenant or agreement contained in the Collateral Agreement or the respective Mortgages to which it is a party; or

 

(c)        Other Defaults .  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 8.01(a)  or (b)  above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

 

(d)        Representations and Warranties .  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrowers or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or

 

(e)        Cross-Default .

 

(i)         Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due after giving effect to any applicable notice and cure periods (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount,

 

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(B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs after giving effect to any applicable notice and cure period, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded, or (C) incurs a loss or has a material breach or other occurrence with respect to a Material Contract which would be likely to result in a Material Adverse Effect; or

 

(ii)           there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or

 

(iii)          (A) any First Lien Event of Default shall have occurred and remain continuing sixty (60) days after the First Lien Administrative Agent has received notice thereof; or (B) a First Lien Event of Default shall have occurred and remain continuing and the First Lien Obligations are accelerated pursuant to Section 8.02(a)  of the First Lien Credit Agreement with respect to such First Lien Event of Default; or

 

(iv)          any (A) Collection Account Agreement is terminated without the prior written consent of the Administrative Agent or (B) any Loan Party shall give notice to the depositary bank under any Collection Account Agreement amending, waiving, rescinding, revoking or terminating the instructions previously given for the disposition of funds deposited into the applicable deposit accounts without the prior written consent of the Administrative Agent; or

 

(f)            Insolvency Proceedings, Etc .  Any Loan Party or any Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

 

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(g)     Inability to Pay Debts; Attachment .  (i) Any Loan Party or any Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

 

(h)     Judgments .  There is entered against any Loan Party or any Subsidiary thereof (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding the Threshold Amount (to the extent not covered by (A) independent third-party insurance as to which the insurer (1) is rated at least “A” by A.M. Best Company, (2) has been notified of the potential claim and (3) does not dispute coverage or (B) indemnification proceeds actually received by the applicable Loan Party pursuant to the Merger Agreement to the extent not required to be reimbursed by any Loan Party), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)      ERISA .  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of either Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) either Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

(j)      Invalidity of Loan Documents .  Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

 

(k)     Change of Control .  There occurs any Change of Control; or

 

(l)      Collateral Documents .  Any Collateral Document after delivery thereof pursuant to Section 4.01 or 6.12 shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected Second Priority Lien (subject to Liens permitted by Section 7.01 ) on the Collateral purported to be covered thereby; or

 

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(m)    Material Permits and Licenses .  The loss, suspension or revocation of, or failure to renew, any license, accreditation or Permit now held or hereafter acquired by any Loan Party or any Subsidiary thereof if such loss, suspension, revocation or failure to renew would have a Material Adverse Effect; or the occurrence of any other Material Adverse Effect; or

(n)     Material Contracts .  Any Material Contract the loss of which could reasonably be expected to have a Material Adverse Effect is terminated or fails to be in full force and effect for any reason without being replaced by a Material Contract reasonably satisfactory to the Administrative Agent at the time of its termination or failure to be in full force and effect, or any breach, a default or an event of default occurs under any Material Contract which is not remedied within ten (10) days after its occurrence; or

 

(o)     Subordination .  (i)  The subordination provisions of the documents evidencing or governing any subordinated Indebtedness (collectively, the “ Subordinated Provisions ”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable subordinated Indebtedness; or (ii) either Borrower or any other Loan Party shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordination Provisions, (B) that the Subordination Provisions exist for the benefit of the Administrative Agent and the Lenders or (C) that all payments of principal of or premium and interest on the applicable subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party, shall be subject to any of the Subordination Provisions;

 

(p)     Financial Solvency Requirements . Any Loan Party fails to comply with the California Department of Managed Care financial solvency regulations, if applicable; or

 

(q)     Indictment .  The indictment or, as the Administrative Agent may reasonably and in good faith determine, the threatened indictment by any Governmental Authority of any Loan Party or any Subsidiary or Affiliate of a Loan Party, in either case, as to which there is a reasonable probability of an adverse determination under any criminal statute, or commencement or threatened commencement of criminal or civil proceedings against a Loan Party or any Subsidiary or Affiliate of a Loan Party, pursuant to which statute or proceeding the penalties or remedies sought or available include forfeiture of (i) any material portion of the Collateral, or (ii) any other assets of a Loan Party that are necessary or material to the conduct of its business.

 

8.02   Remedies upon Event of Default .  Subject to the terms of the Intercreditor Agreement, if any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

 

(a)     declare the unpaid principal amount of all outstanding Term Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment,

 

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demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers; and

 

(b)     exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;

 

provided , however , that upon the occurrence of an actual or deemed entry of an order for relief with respect to either Borrower under the Bankruptcy Code of the United States, the unpaid principal amount of all outstanding Term Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Administrative Agent or any Lender.

 

8.03         Application of Funds .  After the exercise of remedies provided for in Section 8.02 (or after the Term Loans have automatically become immediately due and payable), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

 

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such;

 

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders (including fees and time charges for attorneys who may be employees of any Lender) and amounts payable under Article III , 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 Obligations constituting interest on the Term Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

 

Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Term Loans and amounts owing under Secured Hedge Agreements and Secured Cash Management Agreements, ratably among the Lenders, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them; and

 

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrowers or as otherwise required by Law.

 

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ARTICLE IX
ADMINISTRATIVE AGENT

 

9.01         Appointment and Authority .

 

(a)           Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and neither Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.

 

(b)           The Administrative Agent shall also act as the “collateral agent” and/or “control agent” under the Loan Documents, and each of the Lenders (in its capacities as a Lender, potential Hedge Bank and potential Cash Management Bank) hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent, as “collateral agent” and/or “control agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.04(c) , as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” or “control agent” under the Loan Documents) as if set forth in full herein with respect thereto.

 

9.02         Rights as a Lender .  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with either Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

9.03         Exculpatory Provisions .  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:

 

(a)     shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

 

(b)     shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any

 

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action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

 

(c)     shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrowers or any of their respective Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02 ) or (ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower Agent or a Lender.

 

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

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9.04         Reliance by Administrative Agent .  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Term Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Term Loan.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

9.05         Delegation of Duties .  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facility provided for herein as well as activities as Administrative Agent.

 

9.06         Resignation of Administrative Agent .  The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower Agent.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower Agent, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower Agent and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the

 

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retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

 

9.07         Non-Reliance on Administrative Agent and Other Lenders .  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

9.08         Intercreditor Agreement .  Each of the Lenders hereby acknowledges that it has received and reviewed the Intercreditor Agreement and agrees to be bound by the terms thereof.  Each Lender (and each person that becomes a Lender hereunder pursuant to Section 10.06) hereby (i) acknowledges that Bank of America is acting under the Intercreditor Agreement in multiple capacities as the Administrative Agent, the First Lien Administrative Agent and the Control Agent (as defined in the Intercreditor Agreement) and (ii) waives any conflict of interest, now contemplated or arising hereafter, in connection therewith and agrees not to assert against Bank of America any claims, cause of action, damages or liabilities of whatever kind or nature relating thereto.  Each Lender (and each Person that becomes a Lender hereunder pursuant to Section 10.06 ) hereby authorizes and directs Bank of America to enter into the Intercreditor Agreement on behalf of such Lender and agrees that Bank of America, in its various capacities thereunder, may take such actions on its behalf as is contemplated by the terms of the Intercreditor Agreement.  Notwithstanding the foregoing, at any time during which the Administrative Agent hereunder is also the First Lien Administrative Agent, upon the occurrence and during the continuance of an Event of Default, Lenders holding 66 2/3rds percent of the aggregate outstanding Loans (excluding, solely for purposes of this provision, the Administrative Agent to the extent that it is also a Lender hereunder and any Loans held by the Administrative Agent as a Lender hereunder) may, by affirmative written consent, elect, in consultation with the Borrower Agent, to remove the Administrative Agent under this Agreement and to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.

 

9.09         No Other Duties, Etc.   Anything herein to the contrary notwithstanding, none of the Bookrunners, Arrangers or other titled entities listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender.

 

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9.10         Administrative Agent May File Proofs of Claim .  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Term Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on either 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 Term Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.09 and 10.04 ) allowed in such judicial proceeding; 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 the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04 .

 

Nothing contained herein shall be deemed to authorize the 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 Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.

 

9.11         Collateral and Guaranty Matters .  The Lenders irrevocably authorize the Administrative Agent at its option and in its discretion,

 

(a)   to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon payment in full of all Obligations (other than contingent indemnification obligations), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii)  if approved, authorized or ratified in writing in accordance with Section 10.01 ;

 

(b)   to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder; and

 

(c)   to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(i) .

 

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Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.11 .  In each case as specified in this Section 9.11 , the Administrative Agent will, at the Borrowers’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.11 .

 

ARTICLE X

MISCELLANEOUS

 

10.01       Amendments, Etc.   No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by either Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrowers or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no such amendment, waiver or consent shall:

 

(a)   waive any condition set forth in Section 4.01 (other than Section 4.01(b)(i)  or (c) ), without the written consent of each Lender;

 

(b)   postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under such other Loan Document without the written consent of each Lender entitled to such payment;

 

(c)   reduce the principal of, or the rate of interest specified herein on, any Term Loan, or (subject to clause (ii) of the second proviso to this Section 10.01 ) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender entitled to such amount; provided , however , that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Term Loan or to reduce any fee payable hereunder;

 

(d)   change (i)  Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender or (ii) the order of application of any prepayment of Term Loans from the application thereof set forth in the applicable provisions of Section 2.05(b)  or 2.06(c) , respectively, in any manner that materially and adversely affects the Lenders under the Facility without the written consent of the Required Lenders;

 

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(e)   change any provision of this Section 10.01 or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender or;

 

(f)    release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender;

 

(g)   release all or substantially all of the value of the Guaranty, without the written consent of each Lender, except to the extent the release of any Subsidiary from the Guaranty is permitted pursuant to Section 9.11 (in which case such release may be made by the Administrative Agent acting alone); or

 

(h)   impose any greater restriction on the ability of any Lender to assign any of its rights or obligations hereunder without the written consent of the Required Lenders;

 

and provided , further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder.

 

10.02       Notices; Effectiveness; Electronic Communications .

 

(a)  Notices Generally .  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(i)            if to the Borrower Agent (on behalf of the Borrowers) or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and
 
(ii)           if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.
 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).

 

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(b)           Electronic Communications .  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower Agent may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

(c)           The Platform .  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to either Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of either Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to either Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc .  Each of the Borrowers and the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrowers and the Administrative Agent.  In addition, each Lender agrees to notify

 

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the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.  Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrowers or their securities for purposes of United States Federal or state securities laws.

 

(e)           Reliance by Administrative Agent and Lenders .   The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of either Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  Each Borrower (jointly and severally) shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of either Borrower.  All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

10.03       No Waiver; Cumulative Remedies .  No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

10.04       Expenses; Indemnity; Damage Waiver .

 

(a)  Costs and Expenses .  The Borrowers, jointly and severally, shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facility provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii)  all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent or any Lender) , and shall pay all fees and time charges for attorneys who may be employees of the Administrative Agent or any Lender, in connection with the

 

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enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Term Loans made, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Term Loans.

 

(b)           Indemnification by the Borrowers .  The Borrowers, jointly and severally, shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrowers or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Term Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by either Borrower or any of their respective Subsidiaries, or any Environmental Liability related in any way to either Borrower or any of their respective Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by either Borrower or any other Loan Party or any of either Borrower’s or such Loan Party’s directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by either Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders .  To the extent that either Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such

 

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sub-agent) in connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d) .

 

(d)           Waiver of Consequential Damages, Etc .  To the fullest extent permitted by applicable law, neither Borrower shall assert, and each Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Term Loan or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

(e)           Payments .  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

 

(f)            Survival .  The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, and the repayment, satisfaction or discharge of all Obligations.

 

10.05       Payments Set Aside .  To the extent that any payment by or on behalf of either Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

10.06       Successors and Assigns .

 

(a)  Successors and Assigns Generally .  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower may assign or otherwise transfer any of its respective rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its

 

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rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 10.06(b) , (ii) by way of participation in accordance with the provisions of Section 10.06(d) , or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.06(f)  (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments by Lenders .  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Term Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts .

 

(A)               in the case of an assignment of the entire amount of the Term Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

 

(B)                in any case not described in subsection (b)(i)(A) of this Section, the principal outstanding balance of the Term Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower Agent otherwise consents (each such consent not to be unreasonably withheld or delayed); provided , however , that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met;

 

(ii)           Proportionate Amounts .  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Term Loans or the Term Commitment assigned;

 

(iii)          Required Consents .  No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

 

(A)  the consent of the Borrower Agent (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of

 

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Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; and

 

(B)   the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Term Loan to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund.

 

(iv)          Assignment and Assumption .  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)           No Assignment to Either Borrower .  No such assignment shall be made to either of the Borrowers or any of the Borrowers’ respective Affiliates or Subsidiaries.

 

(vi)          No Assignment to Natural Persons .  No such assignment shall be made to a natural person.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrowers (at their expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.06(d) .

 

(c)           Register .  The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Term Commitments of, and principal amounts of the Term Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”).  The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

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(d)           Participations .  Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrowers or any of the Borrowers’ respective Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of the Term Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.  Subject to subsection (e)  of this Section, each Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.06(b) .  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a Lender.

 

(e)           Limitations upon Participant Rights .  A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower Agent’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower Agent is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 3.01(e)  as though it were a Lender.

 

(f)            Certain Pledges .  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)           Electronic Execution of Assignments .  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

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10.07       Treatment of Certain Information; Confidentiality .  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrowers and their obligations, (g) with the consent of the Borrowers, (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrowers or (i) subject to each such Person being informed of the confidential nature of the Information and to their agreement to keep such Information confidential on substantially the same terms as required by this Section, to (A) an investor or prospective investor in securities issued by an Approved Fund that also agrees that the Information shall be used solely for the purpose of evaluating an investment in such securities issued by the Approved Fund, (B) a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in securities issued by an Approved Fund in connection with the administration, servicing and reporting on the assets serving as collateral for securities issued by an Approved Fund, or (C) a nationally recognized rating agency that requires access to information regarding the Loan Parties, the Loans and Loan Documents in connection with rating issued in respect of securities issued by an Approved Fund.

 

For purposes of this Section, “ Information ” means all information received from any Loan Party or any Subsidiary thereof relating to any Loan Party or any Subsidiary thereof or their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party or any Subsidiary thereof, provided that, in the case of information received from a Loan Party or any such Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

Each of the Administrative Agent and the Lenders acknowledges that (a) the Information may include material non-public information concerning the Borrowers or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

 

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10.08       Right of Setoff .  If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of either Borrower  against any and all of the obligations of such Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have.  Each Lender agrees to notify the Borrowers and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.  Notwithstanding the provisions of this Section 10.08 , if at any time any Lender or any of its Affiliates maintains one or more deposit accounts for either Borrower or any other Loan Party into which Medicare and/or Medicaid receivables are deposited, such Person shall waive the right of setoff set forth herein.

 

10.09       Interest Rate Limitation .  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”).  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Term Loans or, if it exceeds such unpaid principal, refunded to the Borrowers.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

10.10       Counterparts; Integration; Effectiveness .  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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10.11       Survival of Representations and Warranties .  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of Borrowing, and shall continue in full force and effect as long as any Term Loan or any other Obligation hereunder shall remain unpaid.

 

10.12       Severability .  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

10.13       Replacement of Lenders .  If any Lender requests compensation under Section 3.04 , or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , or if any Lender is a Defaulting Lender, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent by the Borrower Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06 ), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

 

(a)   the Borrowers shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b) ;

 

(b)   such Lender shall have received payment of an amount equal to the outstanding principal of its Term Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

 

(c)   in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter; and

 

(d)   such assignment does not conflict with applicable Laws.

 

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A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

 

10.14       Governing Law; Jurisdiction; Etc.   (a)  GOVERNING LAW .  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b)           SUBMISSION TO JURISDICTION .  EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST EITHER BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE .  EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE OF PROCESS .  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 .  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

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10.15       Waiver of Jury Trial .  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16       California Judicial Reference.

 

If any action or proceeding is filed in a court of the State of California by or against any party hereto in connection with any of the transactions contemplated by this Agreement or any other Loan Document, (a) the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee (who shall be a single active or retired judge) to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision, provided that at the option of any party to such proceeding, any such issues pertaining to a “provisional remedy” as defined in California Code of Civil Procedure Section 1281.8 shall be heard and determined by the court, and (b) without limiting the generality of Section 10.04, the Borrowers shall be solely responsible to pay all fees and expenses of any referee appointed in such action or proceeding.

 

10.17       No Advisory or Fiduciary Responsibility .  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Arranger are arm’s-length commercial transactions between each Borrower and their respective Affiliates, on the one hand, and the Administrative Agent and the Arranger, on the other hand, (B) each of the Borrowers has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Borrowers is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent and the Arranger each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for either Borrowers or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent nor the Arranger has any obligation to either Borrower or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and the Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrowers and their respective Affiliates, and neither the

 

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Administrative Agent nor the Arranger has any obligation to disclose any of such interests to either Borrower or any of their respective Affiliates.  To the fullest extent permitted by law, each of the Borrowers hereby waives and releases any claims that it may have against the Administrative Agent and the Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

10.18       USA PATRIOT Act Notice .  Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the 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 “ Act ”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act.

 

10.19       Intercreditor Agreement .  Until the Discharge of the First Lien Obligations (as defined in the Intercreditor Agreement), notwithstanding anything herein to the contrary, the lien and security interest granted to the Administrative Agent pursuant to any Loan Document and the exercise of any right or remedy in respect of the Collateral by the Administrative Agent hereunder or under any other Loan Document are subject to the provisions of the Intercreditor Agreement.  In the event of any conflict between the terms of the Intercreditor Agreement, this Agreement and any other Loan Document, the terms of the Intercreditor Agreement shall govern and control with respect to any right or remedy.  Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, all rights and remedies of the Administrative Agent (and the Secured Parties) shall be subject to the terms of the Intercreditor Agreement.  Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, all rights and remedies with respect to the Collateral of the Administrative Agent (and the Secured Parties) shall be subject to the terms of the Intercreditor Agreement, and until the Discharge of the First Lien Obligations (as defined in the Intercreditor Agreement), (i) no Loan Party shall be required hereunder or under any other Loan Document to take any action with respect to the Collateral that is inconsistent with such Loan Parties’ obligations under the First Lien Loan Documents and (ii) any obligation of any Loan Party hereunder or under any other Loan Document with respect to the delivery or control of any Collateral, the novation of any lien on any certificate of title, bill of lading or other document, the giving of any notice to any bailee or other Person, the provision of voting rights or the obtaining of any consent of any Person, shall be deemed to be satisfied if the Loan Party complies with the requirements of the similar provision of the applicable First Lien Loan Document.  Until the Discharge of the First Lien Obligations (as defined in the Intercreditor Agreement), the Administrative Agent may not require any Loan Party to take any action with respect to the creation, perfection or priority of its security interest, whether pursuant to the express terms hereof or of any other Loan Document or pursuant to the further assurances provisions hereof or any other Loan Document, to the extent the First Lien Administrative Agent under the First Lien Loan Documents shall have required such Loan Party to take similar action, and delivery of any Collateral to the First Lien Administrative Agent pursuant to the First Lien Loan Documents shall satisfy any delivery requirement hereunder or under any other Loan Document.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

 

PROSPECT MEDICAL HOLDINGS, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

PROSPECT MEDICAL GROUP, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

[Prospect Medical Holdings, Inc. Second Lien Credit Agreement]

 



 

 

BANK OF AMERICA, N.A., as

 

Administrative Agent

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

[Prospect Medical Holdings, Inc. Second Lien Credit Agreement]

 



 

 

BANK OF AMERICA, N.A., as a Lender

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

[Prospect Medical Holdings, Inc. Second Lien Credit Agreement]

 



BROKERAGE PARTNERS