EX-10.60 4 dex1060.txt CREDIT AGREEMENT Exhibit 10.60 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of April 25, 2002 among LINCARE HOLDINGS INC., as Borrower, CERTAIN SUBSIDIARIES OF THE BORROWER FROM TIME TO TIME PARTY HERETO, as Guarantors, THE SEVERAL LENDERS FROM TIME TO TIME PARTY HERETO and BANK OF AMERICA, N.A., as Agent and SCOTIABANC, INC., as Syndication Agent and CREDIT LYONNAIS NEW YORK BRANCH, as Documentation Agent Arranged by: BANC OF AMERICA SECURITIES LLC as Sole Book Manager and SCOTIABANC, INC. and BANC OF AMERICA SECURITIES LLC as Joint Lead Arrangers TABLE OF CONTENTS SECTION 1 DEFINITIONS ................................................... 1 ----------- 1.1 Definitions ...................................................... 1 ----------- 1.2 Computation of Time Periods ...................................... 27 --------------------------- 1.3 Accounting Terms ................................................. 27 ---------------- SECTION 2 CREDIT FACILITIES ............................................. 27 ----------------- 2.1 Revolving Loans .................................................. 27 --------------- 2.2 Letter of Credit Subfacility ..................................... 29 ---------------------------- 2.3 Swingline Loans .................................................. 34 --------------- SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES ................ 36 ---------------------------------------------- 3.1 Default Rate ..................................................... 36 ------------ 3.2 Extension and Conversion ......................................... 36 ------------------------ 3.3 Prepayments ...................................................... 37 ----------- 3.4 Termination and Reduction of Revolving Committed Amount .......... 38 ------------------------------------------------------- 3.5 Fees ............................................................. 38 ---- 3.6 Capital Adequacy ................................................. 39 ---------------- 3.7 Limitation on Eurodollar Loans ................................... 39 ------------------------------ 3.8 Illegality ....................................................... 40 ---------- 3.9 Requirements of Law .............................................. 40 ------------------- 3.10 Treatment of Affected Revolving Loans ............................ 41 ------------------------------------- 3.11 Taxes ............................................................ 42 ----- 3.12 Compensation ..................................................... 44 ------------ 3.13 Pro Rata Treatment ............................................... 44 ------------------ 3.14 Sharing of Payments .............................................. 45 ------------------- 3.15 Payments, Computations, Etc ...................................... 46 --------------------------- 3.16 Evidence of Debt ................................................. 47 ---------------- 3.17 Replacement of Affected Lenders .................................. 48 ------------------------------- SECTION 4 GUARANTY ...................................................... 49 -------- 4.1 The Guaranty ..................................................... 49 ------------ 4.2 Obligations Unconditional ........................................ 49 ------------------------- 4.3 Reinstatement .................................................... 50 ------------- 4.4 Certain Additional Waivers ....................................... 51 -------------------------- 4.5 Remedies ......................................................... 51 -------- 4.6 Rights of Contribution ........................................... 51 ---------------------- 4.7 Continuing Guarantee ............................................. 52 -------------------- SECTION 5 CONDITIONS .................................................... 52 ---------- 5.1 Closing Conditions ............................................... 52 ------------------ 5.2 Conditions to all Extensions of Credit ........................... 54 -------------------------------------- SECTION 6 REPRESENTATIONS AND WARRANTIES ................................ 55 ------------------------------ 6.1 Financial Condition ............................................. 55 ------------------- 6.2 No Material Change .............................................. 56 ------------------ 6.3 Organization and Good Standing .................................. 56 ------------------------------ 6.4 Power; Authorization; Enforceable Obligations ................... 56 --------------------------------------------- 6.5 No Conflicts .................................................... 57 ------------ 6.6 No Default ...................................................... 57 ---------- 6.7 Ownership ....................................................... 57 --------- 6.8 Indebtedness .................................................... 57 ------------ 6.9 Litigation ...................................................... 57 ---------- 6.10 Taxes ........................................................... 58 ----- 6.11 Compliance with Law ............................................. 58 ------------------- 6.12 ERISA ........................................................... 58 ----- 6.13 Subsidiaries .................................................... 59 ------------ 6.14 Governmental Regulations, Etc ................................... 59 ----------------------------- 6.15 Purpose of Revolving Loans and Letters of Credit ................ 60 ------------------------------------------------ 6.16 Environmental Matters ........................................... 60 --------------------- 6.17 Intellectual Property ........................................... 61 --------------------- 6.18 Solvency ........................................................ 61 -------- 6.19 Investments ..................................................... 61 ----------- 6.20 Disclosure ...................................................... 62 ---------- 6.21 No Unusual Restrictions ......................................... 62 ----------------------- 6.22 Reimbursement from Third Party Payors ........................... 62 ------------------------------------- 6.23 Fraud and Abuse ................................................. 62 --------------- 6.24 Licensing and Accreditation ..................................... 63 --------------------------- SECTION 7 AFFIRMATIVE COVENANTS ......................................... 63 --------------------- 7.1 Information Covenants ........................................... 63 --------------------- 7.2 Preservation of Existence and Franchises ........................ 65 ---------------------------------------- 7.3 Books and Records ............................................... 66 ----------------- 7.4 Compliance with Law ............................................. 66 ------------------- 7.5 Payment of Taxes and Other Indebtedness ......................... 66 --------------------------------------- 7.6 Insurance ....................................................... 66 --------- 7.7 Maintenance of Property ......................................... 66 ----------------------- 7.8 Performance of Obligations ...................................... 67 -------------------------- 7.9 Use of Proceeds ................................................. 67 --------------- 7.10 Audits/Inspections .............................................. 67 ------------------ 7.11 Financial Covenants ............................................. 67 ------------------- 7.12 Additional Guarantors ........................................... 67 --------------------- 7.13 Pledged Stock ................................................... 68 ------------- 7.14 Receivables Financing Further Assurances ........................ 68 ---------------------------------------- SECTION 8 NEGATIVE COVENANTS ............................................ 68 ------------------ 8.1 Indebtedness .................................................... 68 ------------ 8.2 Liens ........................................................... 70 ----- 8.3 Nature of Business .............................................. 70 ------------------ 8.4 Consolidation, Merger, Dissolution, etc ......................... 70 --------------------------------------- 8.5 Asset Dispositions .............................................. 71 ------------------ 8.6 Investments ..................................................... 71 ----------- 8.7 Restricted Payments ............................................. 71 ------------------- 8.8 Prepayments of Indebtedness, etc ................................ 71 -------------------------------- 8.9 Transactions with Affiliates .................................... 72 ---------------------------- 8.10 Fiscal Year; Organizational Documents ........................... 72 ------------------------------------- 8.11 Limitation on Restricted Actions ................................ 72 -------------------------------- 8.12 Ownership of Subsidiaries; Limitations on Borrower .............. 72 -------------------------------------------------- 8.13 Sale Leasebacks ................................................. 73 --------------- 8.14 No Further Negative Pledges ..................................... 73 --------------------------- 8.15 No Foreign Subsidiaries ......................................... 73 ----------------------- SECTION 9 EVENTS OF DEFAULT ............................................ 73 ----------------- 9.1 Events of Default ............................................... 73 ----------------- 9.2 Acceleration; Remedies .......................................... 76 ---------------------- SECTION 10 AGENCY PROVISIONS ............................................ 77 ----------------- 10.1 Appointment and Authorization of Agent .......................... 77 -------------------------------------- 10.2 Delegation of Duties ............................................ 77 -------------------- 10.3 Liability of Agent .............................................. 78 ------------------ 10.4 Reliance by Agent ............................................... 78 ----------------- 10.5 Notice of Default ............................................... 79 ----------------- 10.6 Credit Decision; Disclosure of Information by Agent ............. 79 --------------------------------------------------- 10.7 Indemnification of Agent ........................................ 79 ------------------------ 10.8 Agent in its Individual Capacity ................................ 80 -------------------------------- 10.9 Successor Agent ................................................. 80 --------------- 10.10 Other Agents; Book Managers ..................................... 81 --------------------------- SECTION 11 MISCELLANEOUS ................................................ 81 ------------- 11.1 Notices ......................................................... 81 ------- 11.2 Right of Set-Off; Adjustments ................................... 82 ----------------------------- 11.3 Successors and Assigns .......................................... 83 ---------------------- 11.4 No Waiver; Remedies Cumulative .................................. 86 ------------------------------ 11.5 Expenses; Indemnification ....................................... 86 ------------------------- 11.6 Amendments, Waivers and Consents ................................ 87 -------------------------------- 11.7 Counterparts .................................................... 88 ------------ 11.8 Headings ........................................................ 88 -------- 11.9 Survival ........................................................ 88 -------- 11.10 Governing Law; Submission to Jurisdiction; Venue ................ 89 ------------------------------------------------ 11.11 Severability .................................................... 89 ------------ 11.12 Entirety ........................................................ 89 -------- 11.13 Binding Effect; Termination ..................................... 90 --------------------------- 11.14 Conflict ........................................................ 90 -------- 11.15 Confidentiality ................................................. 90 --------------- SCHEDULES ========= Schedule 1.1(a) Investments Schedule 1.1(b) Liens Schedule 1.1(c) Existing Letters of Credit Schedule 2.1(a) Lenders Schedule 6.9 Litigation Schedule 6.13 Subsidiaries Schedule 8.1 Indebtedness EXHIBITS ======== Exhibit 1.1(a) Pledge Agreement Exhibit 1.1(b) Intercreditor Agreement Exhibit 2.1(b)(i) Form of Notice of Borrowing Exhibit 2.1(e) Form of Revolving Note Exhibit 3.2 Form of Notice of Extension/Conversion Exhibit 7.1(c) Form of Officer's Compliance Certificate Exhibit 7.12 Form of Joinder Agreement Exhibit 11.3(b) Form of Assignment and Acceptance AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 25, 2002, (as amended, modified, restated or supplemented from time to time, the "Credit ------ Agreement"), is by and among LINCARE HOLDINGS INC., a Delaware corporation (the --------- "Borrower"), each of the Subsidiaries of the Borrower identified as a -------- "Guarantor" on the signature pages hereto, the Lenders (as defined herein) from time to time party hereto and BANK OF AMERICA, N.A., as Agent for the Lenders (in such capacity, the "Agent"). ----- W I T N E S S E T H WHEREAS, the Borrower and each of its Subsidiaries are party to that certain Three-Year Credit Agreement, dated as of August 23, 1999, as amended from time to time thereafter (as amended, the "Existing Credit Agreement"), ------------------------- among the Borrower, each of its Subsidiaries, the lenders party thereto, and Bank of America, N.A., as the Agent for the Lenders; WHEREAS, the parties to the Existing Credit Agreement have agreed to amend the Existing Credit Agreement and for ease of reference have agreed to amend and restate the Existing Credit Agreement in this Credit Agreement; and WHEREAS, the Borrower and the Guarantors have requested, and the Lenders have agreed to provide the requested $200,000,000 five-year revolving credit facility (the "Credit Facility") available to the Borrower on the terms --------------- and conditions hereinafter set forth. NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1 DEFINITIONS ----------- 1.1 Definitions. ----------- As used in this Credit Agreement, the following terms shall have the meanings specified below unless the context otherwise requires: "Acquisition", by any Person, means the acquisition by such ----------- Person of all of the Capital Stock or all or substantially all of the Property of another Person, whether or not involving a merger or consolidation with such other Person. "Adjusted Base Rate" means the Base Rate plus the Applicable ------------------ ---- Percentage. "Adjusted Eurodollar Rate" means the Eurodollar Rate plus the ------------------------ ---- Applicable Percentage. "Affiliate" means, with respect to any Person, any other --------- Person (i) directly or indirectly controlling or controlled by or under direct or indirect common control with such Person or (ii) directly or indirectly owning or holding five percent (5%) or more of the equity interest in such Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" shall have the meaning assigned to such term in the ----- heading hereof, together with any successors or assigns. "Agent's Fee Letter" means that certain letter agreement, ------------------ dated as of August 21, 2000, between the Agent and the Borrower, as amended, modified, restated or supplemented from time to time. "Agent's Fees" shall have the meaning assigned to such term in ------------ Section 3.5(d). "Agent-Related Persons" means the Agent (including any --------------------- successor agent), together with its Affiliates (including, in the case of Bank of America in its capacity as the Agent), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Applicable Lending Office" means, for each Lender, the office ------------------------- of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify to the Agent and the Borrower by written notice as the office by which its Eurodollar Loans are made and maintained. "Applicable Percentage" means, for purposes of calculating the --------------------- applicable interest rate for any day for any Revolving Loan, the applicable rate of the Unused Fee for any day for purposes of Section 3.5(b) and the applicable rate of the Letter of Credit Fee for any day for purposes of Section 3.5(c)(i), the appropriate applicable percentage corresponding to the Leverage Ratio in effect as of the most recent Calculation Date as set forth below: 2 ================================================================================ Applicable Percentages -------------------------------------------------------------------------------- For Revolving Loans ------------------------- For For Pricing Leverage Eurodollar Base Rate Letter of Unused Level Ratio Loans Loans Credit Fee Fee -------------------------------------------------------------------------------- I ** 1.0 1.125% 0.125% 1.125% 0.30%* -------------------------------------------------------------------------------- **1.75 II but 1.50% 0.50% 1.50% 0.35%* *** 1.0 -------------------------------------------------------------------------------- III ***1.75 1.75% 0.75% 1.75% 0.40%* ================================================================================ *If on any day, the aggregate outstanding principal amount of all Revolving Loans plus LOC Obligations hereunder is less ---- than the product of (A) one-half (1/2) times (B) the ----- Revolving Committed Amount, the applicable Unused Fee (as shown above) shall be increased by an amount equal to 12.5 basis points. **Less than equal to ***More than The Applicable Percentages shall be determined and adjusted quarterly on the date (each a "Calculation Date") five Business Days ---------------- after the date by which the Borrower is required to provide the officer's certificate in accordance with the provisions of Section 7.1(c) for the most recently ended fiscal quarter of the Consolidated Parties; provided, however, that (i) the initial Applicable Percentages -------- ------- shall be based on Pricing Level I (as shown above) and shall remain at Pricing Level I until the Calculation Date for the fiscal quarter of the Consolidated Parties ending on June 30, 2002, on and after which time the Pricing Level shall be determined by the Leverage Ratio as of the last day of the most recently ended fiscal quarter of the Consolidated Parties preceding the applicable Calculation Date and (ii) if the Borrower fails to provide the officer's certificate as required by Section 7.1(c) for the last day of the most recently ended fiscal quarter of the Consolidated Parties preceding the applicable Calculation Date, the Applicable Percentage from such Calculation Date shall be based on Pricing Level III until such time as an appropriate officer's certificate is provided, whereupon the Applicable Percentages shall be determined by the Leverage Ratio as of the last day of the most recently ended fiscal quarter of the Consolidated Parties preceding such Calculation Date. Each Applicable Percentage shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Applicable Percentages shall be applicable to all existing Revolving Loans and Letters of Credit as well as any new Revolving Loans and Letters of Credit made or issued. "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. "Asset Disposition" means any disposition, other than pursuant ----------------- to an Excluded Asset Disposition, of any or all of the Property (including without limitation the Capital Stock of a Subsidiary) of any Consolidated Party whether by sale, lease, transfer or otherwise, but other than pursuant to any casualty or condemnation event. 3 "Attributed Principal Amount" means, on any day, with respect --------------------------- to any Permitted Receivables Financing entered into by any Credit Party, the aggregate amount (with respect to any such transaction, the "Invested Amount") paid to, or borrowed by, such Person as of such date --------------- under such Permitted Receivables Financing, minus the aggregate amount ----- received by the applicable Receivables Financier and applied to the reduction of the Invested Amount under such Permitted Receivables Financing. "Bank of America" means Bank of America, N.A. and its --------------- successors. "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the --------------- United States Code, as amended, modified, succeeded or replaced from time to time. "Bankruptcy Event" means, with respect to any Person, the ---------------- occurrence of any of the following with respect to such Person: (i) a court or governmental agency having jurisdiction in the premises shall enter a decree or order for relief in respect of such Person in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or ordering the winding up or liquidation of its affairs; or (ii) there shall be commenced against such Person an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed, undischarged or unbonded for a period of sixty (60) consecutive days; or (iii) such Person shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or make any general assignment for the benefit of creditors; or (iv) such Person shall be unable to, or shall admit in writing its inability to, pay its debts generally as they become due. "Base Rate" means, for any day, the rate per annum equal to --------- the higher of (a) the Federal Funds Rate for such day plus one-half of one percent (.5%) and (b) the Prime Rate for such day. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds Rate. "Base Rate Loan" means any Revolving Loan bearing interest at -------------- a rate determined by reference to the Base Rate. "Borrower" means the Person identified as such in the heading -------- hereof, together with any permitted successors and assigns. 4 "BRM" means Beta Risk Management Limited, a British Virgin --- Islands corporation and a wholly-owned Subsidiary of the Borrower, which may be formed following the Closing Date. "Business Day" means a day other than a Saturday, Sunday or ------------ other day on which commercial banks in Charlotte, North Carolina or New York, New York are authorized or required by law to close, except that, ----------- when used in connection with a Eurodollar Loan, such day shall also be a day on which dealings between banks are carried on in U.S. dollar deposits in London, England. "Calculation Date" shall have the meaning assigned to such ---------------- term in the definition of "Applicable Percentage" set forth in this Section 1.1. "Capital Lease" means, as applied to any Person, any lease of ------------- any Property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person. "Capital Stock" means (i) in the case of a corporation, ------------- capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (a) securities issued or directly and ---------------- fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) U.S. dollar denominated time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank being an "Approved Bank"), in each case with maturities of not more than 270 ------------- days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition, (d) repurchase agreements with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America in which any Credit Party shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations and (e) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by reputable 5 financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subdivisions (a) through (d). "Change of Control" means the occurrence of any of the ----------------- following events: (i) any Person or two or more Persons acting in concert (other than Persons owning 30% or more of the Voting Stock of the Borrower on the Closing Date) shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of, control over, Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 30% or more of the combined voting power of all Voting Stock of the Borrower, (ii) any Person or two or more Persons acting in concert (other than Persons owning 30% or more of the Voting Stock of the Borrower on the Closing Date) has the ability directly or indirectly, to elect a majority of the board of directors of the Borrower, (iii) during any period of up to 12 consecutive months, commencing on the Closing Date, individuals (or their designees or other individuals appointed by the same designating party) who at the beginning of such 12 month period were directors of the Borrower (together with any new directors whose election to the board of directors of the Borrower or whose nomination for election by the stockholders of the Borrower was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) shall cease for any reason to constitute a majority of the board of directors of the Borrower or (iv) the occurrence of a "Change of Control" under the Senior Note Purchase Agreement, the Senior Notes, or other documents evidencing the Senior Notes. "Closing Date" means the date hereof. ------------ "CMS" means the Centers for Medicare and Medicaid Services of --- the United States Department of Health and Human Services and any successor thereto. "Code" means the Internal Revenue Code of 1986, as amended, ---- and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. References to sections of the Code shall be construed also to refer to any successor sections. "Collateral Agent" means Bank of America, N.A., in its ---------------- capacity as collateral agent for the benefit of the Lenders and the Senior Noteholders under the Pledge Agreement and as contemplated by the Intercreditor Agreement, together with its successors and assigns. "Commitment" means (i) with respect to each Lender, the ---------- commitment of such Lender in an aggregate principal amount at any time outstanding of up to such Lender's Commitment Percentage of the Revolving Committed Amount, (a) to make Revolving Loans in accordance with the provisions of Section 2.1(a) and (b) to purchase Participation Interests in Letters of Credit in accordance with the provisions of Section 2.2(c), (ii) with respect to the Issuing Lender, the LOC Commitment and (iii) with respect to the Swingline Lender, the Swingline Commitment. 6 "Commitment Percentage" means, for any Lender, the percentage --------------------- identified as its Commitment Percentage on Schedule 2.1(a), as such --------------- percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.3. "Consolidated Capital Expenditures" means, for any period, all --------------------------------- capital expenditures of the Consolidated Parties on a consolidated basis for such period, as determined in accordance with GAAP. "Consolidated Cash Interest Expense" means, for any period, ---------------------------------- interest expense (including the amortization of debt discount and premium, the interest component under Capital Leases and the implied interest component under Synthetic Leases), as determined in accordance with GAAP, to the extent the same are paid in cash during such period. "Consolidated Cash Taxes" means, for any period, the aggregate ----------------------- of all taxes of the Consolidated Parties on a consolidated basis for such period, as determined in accordance with GAAP, to the extent the same are paid in cash during such period. "Consolidated EBITDA" means, for any period, the sum of (i) ------------------- Consolidated Net Income for such period, plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for (A) Consolidated Interest Expense, (B) total federal, state, local and foreign income, value added and similar taxes, (C) depreciation and amortization expense and (D) other extraordinary non-recurring, non-cash charges, all as determined in accordance with GAAP. "Consolidated EBITDAR" means, for any period, the sum of (i) -------------------- Consolidated EBITDA for such period, plus (ii) an amount which in the determination of Consolidated Net Income for such period has been interest expense (including the amortization of debt discount and premium, the interest component under Capital Leases and the implied interest component under Synthetic Leases and Permitted Receivables Financings) of the Consolidated Parties on a consolidated basis for such period, as determined in accordance with GAAP. "Consolidated Net Income" means, for any period, net income ----------------------- (excluding extraordinary items) after taxes for such period of the Consolidated Parties on a consolidated basis, as determined in accordance with GAAP. "Consolidated Net Worth" means, as of any date, shareholders' ---------------------- equity or net worth of the Consolidated Parties on a consolidated basis, as determined in accordance with GAAP. "Consolidated Parties" means a collective reference to the --------------------- Borrower and its Subsidiaries, and "Consolidated Party" means any one ------------------ of them. 7 "Consolidated Rent Expense" means, for any period, with ------------------------- respect to the Consolidated Parties on a consolidated basis, all rent payable under an Operating Lease of real property, as determined in accordance with GAAP. "Consolidated Scheduled Funded Debt Payments" means, as of the ------------------------------------------- end of each fiscal quarter of the Consolidated Parties, for the Consolidated Parties on a consolidated basis, the sum of all scheduled payments of principal on Funded Indebtedness for the applicable period ending on such date (including the principal component of payments due on Capital Leases during the applicable period ending on such date); it being understood that Consolidated Scheduled Funded Debt Payments shall not include voluntary prepayments or the mandatory prepayments required pursuant to Section 3.3. "Continue", "Continuation", and "Continued" shall refer to the -------- ------------ --------- continuation pursuant to Section 3.2 or Sections 3.7 through 3.9, inclusive, of a Eurodollar Loan from one Interest Period to the next Interest Period. "Contract Provider" means any Person or any employee, agent or ----------------- subcontractor of such Person who provides professional health care services under or pursuant to any contract with any Consolidated Party. "Convert", "Conversion", and "Converted" shall refer to a ------- ---------- --------- conversion pursuant to Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base Rate Loan into a Eurodollar Loan. "Credit Documents" means a collective reference to this Credit ---------------- Agreement, the Revolving Notes, if any, the LOC Documents, each Joinder Agreement, the Agent's Fee Letter, the Pledge Agreement and all other related agreements and documents issued or delivered hereunder or thereunder or pursuant hereto or thereto (in each case as the same may be amended, modified, restated, supplemented, extended, renewed or replaced from time to time), and "Credit Document" means any one of --------------- them. "Credit Parties" means a collective reference to the Borrower -------------- and the Guarantors, and "Credit Party" means any one of them. ------------ "Credit Party Obligations" means, without duplication, (i) all -------------------------- of the obligations of the Credit Parties to the Lenders (including the Swingline Lender and Issuing Lender) and the Agent, whenever arising, under this Credit Agreement, the Revolving Notes, if any, the Pledge Agreement or any of the other Credit Documents (including, but not limited to, any interest accruing after the occurrence of a Bankruptcy Event with respect to any Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy Code) and (ii) all liabilities and obligations, whenever arising, owing from any Credit Party to any Lender, or any Affiliate of a Lender, arising under any Hedging Agreement or any Equity Swap Agreement. "Default" means any event, act or condition which with notice ------- or lapse of time, or both, would constitute an Event of Default. 8 "Defaulting Lender" means, at any time, any Lender, as ----------------- determined by the Agent, that (a) has failed to make a Revolving Loan or purchase a Participation Interest required pursuant to the term of this Credit Agreement, (b) has failed to pay to the Agent or any Lender an amount owed by such Lender pursuant to the terms of this Credit Agreement, or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or a receiver, trustee or similar official has been appointed. "Dollars" and "$" means dollars in lawful currency of the ------- - United States of America. "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a ----------------- Lender; (c) an Approved Fund; and (d) any other Person (other than a natural Person) approved by the Agent and, unless (x) such Person is taking delivery of an assignment in connection with physical settlement of a credit derivatives transaction or (y) an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed). "Environmental Laws" means any and all lawful and applicable ------------------ Federal, state, local and foreign statutes, laws (including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act, the Water Pollution Control Act, the Clean Air Act and the Hazardous Materials Transportation Act), regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes. "Equity Issuance" means any issuance by any Consolidated Party --------------- to any Person (other than a Credit Party) of (a) shares of its Capital Stock, (b) any shares of its Capital Stock pursuant to the exercise of options or warrants or (c) any shares of its Capital Stock pursuant to the conversion of any debt securities to equity. The term "Equity Issuance" shall not include any Asset Disposition. "Equity Swap Agreements" means any agreement entered into by ---------------------- the Borrower in order to manage existing or anticipated risk associated with the repurchase by the Borrower of shares of its Capital Stock at a predetermined purchase price. "ERISA" means the Employee Retirement Income Security Act of ----- 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA Affiliate" means an entity which is under common --------------- control with any Credit Party within the meaning of Section 4001(a)(14) of ERISA, or is a member of a 9 group which includes the Borrower and which is treated as a single employer under Sections 414(b) or (c) of the Code. "ERISA Event" means (i) with respect to any Plan, the ----------- occurrence of a Reportable Event with respect to which the Department of Labor has not waived the reporting requirement or the substantial cessation of operations (within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any Consolidated Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii) the distribution of a notice of intent to terminate or the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to terminate or the actual termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (vi) the complete or partial withdrawal of any Consolidated Party or any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions for imposition of a lien under Section 302(f) of ERISA exist with respect to any Plan that could reasonably be expected to cause a Material Adverse Effect; or (viii) the adoption of an amendment to any Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA. "Eurodollar Loan" means any Revolving Loan that bears interest --------------- at a rate based upon the Eurodollar Rate. "Eurodollar Rate" means, for any Eurodollar Loan for any --------------- Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Agent to be equal to the quotient obtained by dividing (a) the Interbank Offered Rate for such Eurodollar Loan for such Interest Period by (b) 1 minus the Eurodollar Reserve Requirement for such Eurodollar Loan for such Interest Period. "Eurodollar Reserve Requirement" means, at any time, the ------------------------------ maximum rate at which reserves (including, without limitation, any marginal, special, supplemental, or emergency reserves) are required to be maintained under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) by member banks of the Federal Reserve System against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Eurodollar Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Requirement. "Event of Default" means such term as defined in Section 9.1. ---------------- "Excluded Asset Disposition" means, with respect to any -------------------------- Consolidated Party, (i) the sale of inventory in the ordinary course of such Consolidated Party's business, (ii) the sale or disposition of machinery and equipment no longer used or useful in the conduct of 10 such Consolidated Party's business, (iii) any Equity Issuance by such Consolidated Party, (iv) any disposition on account of any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any Property of the Consolidated Parties and (v) any sale, lease, transfer or other disposition of Property by such Consolidated Party to any other Consolidated Party. "Executive Officer" of any Person means any of the chief ----------------- executive officer, chief operating officer, president, vice president, chief financial officer or treasurer of such Person. "Existing Credit Agreement" means that certain Three-Year Credit ------------------------- Agreement, dated as of August 23, 1999, by and among the Borrower, the Lenders identified therein and Bank of America, N.A., as Agent (as amended). "Existing Letters of Credit" means the letters of credit -------------------------- described by date of issuance, letter of credit number, undrawn amount, name of beneficiary and date of expiry on Schedule 1.1(c). --------------- "Fees" means all fees payable pursuant to Section 3.5. ---- "Federal Funds Rate" means, for any day, the rate per annum ------------------ (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank 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 charged to the Agent (in its individual capacity) on such day on such transactions as reasonably determined by the Agent. "Fixed Charge Coverage Ratio" means, as of the end of each fiscal --------------------------- quarter of the Consolidated Parties for the twelve month period ending on such date, the ratio of (a) Consolidated EBITDAR for the applicable period minus Consolidated Capital Expenditures for the applicable ----- period minus Consolidated Cash Taxes for the applicable period to (b) ----- the sum of (i) Consolidated Cash Interest Expense for the applicable period plus (ii) Consolidated Scheduled Funded Debt Payments for the ---- applicable period plus (iii) Consolidated Rent Expense for the ---- applicable period. "Foreign Lender" means any Lender that is organized under the -------------- laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "Foreign Subsidiary" means any direct or indirect Subsidiary of ------------------ the Borrower which is not incorporated or organized under the laws of any state of the United States or the District of Columbia. 11 "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 business. "Funded Indebtedness" means, with respect to any Person, ------------------- without duplication, (a) all obligations of such Person for borrowed money, (b) the outstanding Attributed Principal Amount under any Permitted Receivables Financing, (c) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (d) all obligations of such Person under conditional sale or other title retention agreements relating to Property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (e) all obligations of such Person issued or assumed as the deferred purchase price of Property or services purchased by such Person (other than trade debt incurred in the ordinary course of business and due within six months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person, (f) the principal portion of all obligations of such Person under Capital Leases, (g) the maximum amount of all standby letters of credit issued or bankers' acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (h) all preferred Capital Stock issued by such Person and required by the terms thereof to be redeemed, or for which mandatory sinking fund payments are due, by a fixed date, (i) the principal portion of all obligations of such Person under Synthetic Leases, (j) all Indebtedness of another Person of the type referred to in clause (a)-(i) above secured by (or for which the holder of such Funded Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (k) all Guaranty Obligations of such Person with respect to Indebtedness of the type referred to in clauses (a)-(i) above of another Person and (l) Indebtedness of the type referred to in clauses (a)-(i) or (k) above of any partnership or unincorporated joint venture in which such Person is legally obligated or has a reasonable expectation of being liable with respect thereto. "GAAP" means generally accepted accounting principles in the ---- United States applied on a consistent basis and subject to the terms of Section 1.3. "Governmental Authority" means any Federal, state, local or ---------------------- foreign court or governmental agency, authority, instrumentality or regulatory body. "Guarantors" means each of the Subsidiaries of the Borrower ---------- (other than Lincare of Columbia and BRM), and each Person which may hereafter execute a Joinder Agreement pursuant to Section 7.12, together with their successors and assigns, and "Guarantor" means any --------- one of them. "Guaranty Obligations" means, with respect to any Person, -------------------- without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, 12 and including without limitation any obligation, whether or not contingent, (i) to purchase any such Indebtedness or any Property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including without limitation keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (iii) to lease or purchase Property, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made. "Hedging Agreement" means any interest rate protection agreement. ----------------- "Indebtedness" of any Person means, without duplication, (a) all ------------ obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person under conditional sale or other title retention agreements relating to Property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations of such Person issued or assumed as the deferred purchase price of Property or services purchased by such Person which would appear as liabilities on a balance sheet of such Person, (e) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guaranty Obligations of such Person, (h) the principal portion of all obligations of such Person under Capital Leases, (i) all obligations of such Person under Hedging Agreements and under Equity Swap Agreements, (j) the maximum amount of all standby letters of credit issued or bankers' acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (k) all preferred Capital Stock issued by such Person and required by the terms thereof to be redeemed, or for which mandatory sinking fund payments are due, by a fixed date (l) the principal portion of all obligations of such Person under Synthetic Leases, (m) the Indebtedness of any partnership or unincorporated joint venture in which such Person is a general partner or a joint venturer and (n) the aggregate amount of uncollected accounts receivable of such Person subject at such time to a sale of receivables (or similar transaction) regardless of whether such transaction is effected without recourse to such Person or in a manner that would not be reflected on the balance sheet of such Person in accordance with GAAP, including without limitation with respect to any Credit Party, the outstanding Attributed Principal Amount under any Permitted Receivables Financing. 13 "Interbank Offered Rate" means, for any Eurodollar Loan for ---------------------- any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100/th/ of 1%) in each case determined by the Agent to be equal to: (i) the offered rate that appears on the Dow Jones Telerate Screen Page 3750 (or any successor page) that displays an average British Bankers Association Libor Rate for deposits in Dollars (for delivery on the first day of the applicable Interest Period) for a term equivalent to the applicable Interest Period at approximately 11:00 a.m. (London time) two Business Days prior to the first day of the applicable Interest Period; or (ii) if for any reason the foregoing rate in clause (i) is unavailable or undeterminable, the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of the applicable Interest Period) for a term equivalent to the applicable Interest Period at approximately 11:00 a.m. (London time) two Business Days prior to the first day of the applicable Interest Period; or (iii) if for any reason the foregoing rates in clauses (i) and (ii) are unavailable or undeterminable, the rate of interest at which deposits in Dollars for delivery on the first day of the applicable Interest in same day funds in the approximate amount of the applicable Eurodollar Loan for a term equivalent to the applicable Interest Period would be offered by the London branch of Bank of America to major banks in the offshore Dollar market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of the applicable Interest Period. "Interest Payment Date" means (a) as to Base Rate Loans --------------------- (including Swingline Loans), the first Business Day following the last Business Day of each March, June, September and December and the Maturity Date and (b) as to Eurodollar Loans, the last day of each applicable Interest Period and the Maturity Date, and in addition where the applicable Interest Period for a Eurodollar Loan is greater than three months, then also the date three months from the beginning of the Interest Period and each three months thereafter. "Intercreditor Agreement" means that certain Intercreditor and ----------------------- Collateral Agency Agreement dated September 6, 2000, a copy of which is attached hereto as Exhibit 1.1(b). -------------- "Interest Period" means, as to Eurodollar Loans, a period of --------------- one, two, three or six months' duration, as the Borrower may elect, commencing, in each case, on the date of the borrowing (including continuations and conversions thereof); provided, however, (a) if any -------- ------- Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (b) in the case of Revolving Loans, no Interest Period shall extend beyond the Maturity Date and (c) where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the 14 Interest Period is to end, such Interest Period shall end on the last Business Day of such calendar month. "Investment" means (a) the acquisition (whether for cash, property, ---------- services, assumption of Indebtedness, securities or otherwise) of assets, shares of Capital Stock, bonds, notes, debentures, partnership, joint ventures or other ownership interests or other securities of any Person, (b) any deposit with, or advance, loan or other extension of credit to, any Person (other than deposits made in connection with the purchase of equipment or other assets in the ordinary course of business) or (c) any other capital contribution to or investment in such Person, including, without limitation, any Guaranty Obligations (including any support for a letter of credit issued on behalf of such Person) incurred for the benefit of such Person. Investments which are capital contributions or purchases of Capital Stock which have a right to participate in the profits of the issuer thereof shall be valued at the amount (or, in the case of any Investment made with Property other than cash, the book value of such Property) actually contributed or paid (including cash and non-cash consideration and any assumption of Indebtedness) to purchase such Capital Stock as of the date of such contribution or payment, less the amount of all repayments and returns of principal or capital thereon to the extent paid in cash or Cash Equivalents. Investments which are loans, advances, extensions of credit or Guaranty Obligations shall be valued at the principal amount of such loan, advance or extension of credit outstanding as of the date of determination or, as applicable, the principal amount of the loan or advance outstanding as of the date of determination actually guaranteed by such Guaranty Obligation. "Issuing Lender" means Bank of America, N.A. and its successors. -------------- "Joinder Agreement" means a Joinder Agreement substantially in ----------------- the form of Exhibit 7.12 hereto, executed and delivered by a new ------------ Guarantor in accordance with the provisions of Section 7.12. "Lender" means any of the Persons identified as a "Lender" on the ------ signature pages hereto, and any Person which may become a Lender by way of assignment in accordance with the terms hereof, together with their successors and permitted assigns. "Letter of Credit" means (i) a Letter of Credit issued by the ---------------- Issuing Lender for the account of the Borrower in accordance with the terms of Section 2.2 and (ii) any Existing Letter of Credit, as such Letter of Credit or Existing Letter of Credit may be amended, modified, extended, renewed or replaced. "Letter of Credit Fee" shall have the meaning assigned to such -------------------- term in Section 3.5(c)(i). "Leverage Ratio" means, as of the end of each fiscal quarter of -------------- the Consolidated Parties for the twelve month period ending on such date, the ratio of (a) Funded Indebtedness of the Consolidated Parties on the last day of such period to (b) Consolidated EBITDA for such period. 15 "Lien" means any mortgage, pledge, hypothecation, assignment, deposit ---- arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction or other similar recording or notice statute, and any lease in the nature thereof). "Lincare of Columbia" means Lincare of Columbia LP, a South Carolina ------------------- limited partnership, together with any successors and permitted assigns. "LOC Commitment" means the commitment of the Issuing Lender to issue -------------- Letters of Credit in an aggregate face amount at any time outstanding (together with the amounts of any unreimbursed drawings thereon) of up to the LOC Committed Amount. "LOC Committed Amount" shall have the meaning assigned to such term in -------------------- Section 2.2. "LOC Documents" means, with respect to any Letter of Credit, such ------------- Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations. "LOC Obligations" means, at any time, the sum of (i) the maximum --------------- amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus ---- (ii) the aggregate amount of all drawings under Letters of Credit honored by the Issuing Lender but not theretofore reimbursed by the Borrower. "Material Adverse Effect" means a material adverse effect on (i) the ----------------------- business condition (financial or otherwise), operating results, liabilities or assets of the Consolidated Parties taken as a whole, (ii) the ability of the Credit Parties as a whole to perform any material obligations under the Credit Documents or (iii) the material rights and remedies of the Agent and the Lenders under the Credit Documents. "Materials of Environmental Concern" means any gasoline or petroleum ---------------------------------- (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Laws, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation. "Maturity Date" means five years from the Closing Date. ------------- "Medicaid Program" means the medical assistance program operated by ---------------- Governmental Authorities set forth in the Medicaid Regulations. 16 "Medicaid Supplier" means an entity entitled to receive payments from ----------------- the Medicaid Program and authorized to provide services and supplies for Medicaid patients in accordance with the Medicaid Regulations. "Medicaid Regulations" means, collectively, (i) all federal statutes -------------------- (whether set forth in Title XIX of the Social Security Act or elsewhere) affecting the medical assistance program established by Title XIX of the Social Security Act and any statutes succeeding thereto; (ii) all applicable provisions of all federal rules, regulations, manuals and orders of all Governmental Authorities promulgated pursuant to or in connection with the statutes described in clause (i) above and all federal administrative, reimbursement and other guidelines of all Governmental Authorities having the force of law promulgated pursuant to or in connection with the statutes described in clause (i) above; (iii) all state statutes and plans for medical assistance enacted in connection with the statutes and provisions described in clauses (i) and (ii) above; and (iv) all applicable provisions of all rules, regulations, manuals and orders of all Governmental Authorities promulgated pursuant to or in connection with the statutes described in clause (iii) above and all state administrative, reimbursement and other guidelines of all Governmental Authorities having the force of law promulgated pursuant to or in connection with the statutes described in clause (ii) above, in each case as may be amended, supplemented or otherwise modified from time to time. "Medicare Program" means the health insurance program operated by ---------------- Governmental Authorities pursuant to the Medicare Regulations. "Medicare Supplier" means an entity eligible to receive payment from ----------------- the Medicare Program and authorized to provide services and supplies for Medicare patients in accordance with the Medicare Regulations. "Medicare Regulations" means, collectively, all federal statutes -------------------- (whether set forth in Title XVIII of the Social Security Act or elsewhere) affecting the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act and any statutes succeeding thereto; together with all applicable provisions of all rules, regulations, manuals and orders and administrative, reimbursement and other guidelines having the force of law of all Governmental Authorities (including, without limitation, Health and Human Services ("HHS"), CMS, the --- Office of the Inspector General for HHS, or any person succeeding to the functions of any of the foregoing) promulgated pursuant to or in connection with any of the foregoing having the force of law, as each may be amended, supplemented or otherwise modified from time to time. "Moody's" means Moody's Investors Service, Inc., or any successor or ------- assignee of the business of such company in the business of rating securities. "Multiemployer Plan" means a Plan which is a multiemployer plan as ------------------ defined in Sections 3(37) or 4001(a)(3) of ERISA. 17 "Multiple Employer Plan" means a Plan which any Consolidated Party or ---------------------- any ERISA Affiliate and at least one employer other than a Consolidated Party or any ERISA Affiliate are contributing sponsors. "Net Cash Proceeds" means the aggregate cash proceeds (including cash ----------------- actually received by way of deferred payment pursuant to a promissory note, receivable, or otherwise) received by a Consolidated Party of any Equity Issuance, net of (a) direct costs (including, without limitation, legal, accounting and investment banking fees and sales commissions) and (b) taxes paid or payable as a result thereof; it being understood that "Net Cash Proceeds" shall include, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received by any Consolidated Party in any Equity Issuance. "Notice of Borrowing" means a written notice of borrowing in ------------------- substantially the form of Exhibit 2.1(b)(i), as required by Section ----------------- 2.1(b)(i). "Notice of Extension/Conversion" means the written notice of extension ------------------------------ or conversion in substantially the form of Exhibit 3.2, as required by ----------- Section 3.2. "Operating Lease" means, as applied to any Person, any lease --------------- (including, without limitation, leases which may be terminated by the lessee at any time) of any Property (whether real, personal or mixed) which is not a Capital Lease other than any such lease in which that Person is the lessor. "Other Taxes" shall have the meaning assigned to such term in Section ----------- 3.11. "Participation Interest" means a purchase by a Lender of a ---------------------- participation in Letters of Credit or LOC Obligations as provided in Section 2.2, in Swingline Loans as provided in Section 2.3 or in any Revolving Loans as provided in Section 3.14. "PBGC" means the Pension Benefit Guaranty Corporation established ---- pursuant to Subtitle A of Title IV of ERISA and any successor thereof. "Permitted Acquisition" means an Acquisition by the Borrower or any --------------------- Subsidiary of the Borrower for the fair market value of the Capital Stock or Property acquired, provided that (i) the Capital Stock or Property -------- acquired in such Acquisition relates to a line of business similar to the business of the Borrower or any of its Subsidiaries, (ii) in the case of an Acquisition of Capital Stock of another Person, (A) the board of directors (or other comparable governing body) of such other Person shall have duly approved such Acquisition and (B) such Person shall become a wholly-owned direct or indirect Subsidiary of the Borrower, (iii) the representations and warranties made by the Credit Parties in any Credit Document shall be true and correct in all material respects at and as if made as of the date of such Acquisition (after giving effect thereto) except to the extent such representations and warranties expressly relate to an earlier date and no Default or Event of Default exists as of the date of such Acquisition (after giving effect thereto) and (iv)(A) if the aggregate consideration for such Acquisition, exceeds $50,000,000 but is less than $100,000,000, the Borrower shall have delivered to the Agent a Pro Forma Compliance Certificate demonstrating that, upon giving effect to the Acquisition on a Pro 18 Forma Basis, the Borrower will be in compliance with all of the financial covenants set forth in Section 7.11 or (B) if the aggregate consideration (including cash and non-cash consideration and any assumption of Indebtedness) for such Acquisition exceeds $100,000,000 or if any such Acquisition would cause the aggregate consideration for all Acquisitions in any fiscal year to exceed $250,000,000, the Borrower shall have received the approval of the Required Lenders, which approval shall be given in the Required Lenders' sole discretion. "Permitted Investments" means Investments which are: --------------------- (i) cash and Cash Equivalents; (ii) accounts receivable created, acquired or made by any Consolidated Party in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (iii) Investments consisting of Capital Stock, obligations, securities or other property received by any Consolidated Party in settlement of accounts receivable (created in the ordinary course of business); (iv) Investments existing as of the Closing Date and set forth in Schedule 1.1(a); --------------- (v) advances or loans to officers, employees, agents, customers or suppliers that do not exceed $1,000,000 in the aggregate at any one time outstanding for all of the Consolidated Parties; (vi) advances or loans to non-officer, non-employee directors that do not exceed $5,000,000 in the aggregate at any one time outstanding for all of the Consolidated Parties; (vii) Investments in any Credit Party; (viii) Permitted Acquisitions; (ix) advances in respect of repurchases by the Borrower of its Capital Stock following the Closing Date in an amount not to exceed $225,000,000; (x) Investments by any Credit Party in a Receivables Financing SPE made as part of a Permitted Receivables Financing; and (xi) additional Investments not included within the foregoing clauses hereof; provided that the aggregate outstanding amount of all -------- Investments made pursuant to this clause (xi) shall not at any time exceed an amount equal to 10% of Consolidated Net Worth as of the end of the most recently completed fiscal year of the Borrower with respect to which the Agent shall have received the Required Financial Information. 19 "Permitted Liens" means: --------------- (i) Liens in favor of the Agent, for the benefit of the Lenders, to secure the Credit Party Obligations; (ii) Liens in favor of the Collateral Agent (for the ratable benefit of the Lenders and the Senior Noteholders) securing the Credit Party Obligations and the obligations under the Senior Notes; (iii) Liens (other than Liens created or imposed under ERISA) for taxes, assessments or governmental charges or levies not yet due or Liens for taxes being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the Property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof); (iv) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and suppliers and other Liens imposed by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided that such -------- Liens secure only amounts not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same or are being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the Property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof); (v) Liens (other than Liens created or imposed under ERISA) incurred or deposits made by any Consolidated Party in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (vi) Liens in connection with attachments or judgments (including judgment or appeal bonds) provided that the judgments -------- secured shall, within 30 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within 30 days after the expiration of any such stay; (vii) easements, rights-of-way, restrictions (including zoning restrictions), minor defects or irregularities in title and other similar charges or encumbrances not, in any material respect, impairing the use of the encumbered Property for its intended purposes; (viii) Liens on Property securing purchase money Indebtedness (including Capital Leases and Synthetic Leases) to the extent permitted under 20 Section 8.1(c), provided that any such Lien attaches to such Property -------- concurrently with or within 90 days after the acquisition thereof; (ix) leases or subleases granted to others not interfering in any material respect with the business of any Consolidated Party; (x) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Credit Agreement; (xi) normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions; (xii) Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection; (xiii) Liens of sellers of goods to the Borrower and any of its Subsidiaries arising under Article 2 of the Uniform Commercial Code or similar provisions of applicable law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related expenses; (xiv) Liens existing as of the Closing Date and set forth on Schedule 1.1(b); provided that no such Lien shall at any time be --------------- -------- extended to or cover any Property other than the Property subject thereto on the Closing Date; (xv) Liens on Property in an aggregate amount not to exceed $8,000,000 securing obligations of the Borrower under Equity Swap Agreements permitted under Section 8.1(f); (xvi) Liens in favor of a Receivables Financing SPE or Receivables Financier created or deemed to exist in connection with a Permitted Receivables Financing (including any related filings of any financing statements), but only to the extent that any such Lien relates to the applicable Transferred Assets actually sold, contributed, financed or otherwise conveyed or pledged pursuant to such transaction; and (xvii) additional Liens not otherwise permitted by the foregoing clauses hereof; provided that such additional Liens permitted by this -------- clause (xvii) do not secure Indebtedness of more than $5,000,000. "Permitted Receivables Financing" means any one or more receivables ------------------------------- financings in which any Credit Party, to the extent permitted by law, sells, conveys or otherwise contributes any accounts receivable, notes receivable, rights to future lease payments or residuals or capital (collectively, together with certain related property relating thereto and the right to collections thereon, being the "Transferred Assets") to a ------------------ Receivables Financing SPE, which Receivables Financing SPE then either sells (as determined in accordance with GAAP) undivided interests in such Transferred Assets, and/or grants a 21 security interest in such Transferred Assets as security for a loan, to any Person that is not a Subsidiary or Affiliate of the Borrower (with respect to any such transaction, the "Receivables Financier"); provided that (i) --------------------- -------- the aggregate Attributed Principal Amount for all such receivables financings shall not at any time exceed $100,000,000, (ii) such receivables financing may include a grant of a security interest in the Transferred Assets to the Receivables Financier, which security interest may be a security interest free and clear of any adverse claim or Lien, (iii) such receivables financing shall not involve any recourse to any Credit Party for any reason other than (A) repurchases of non-eligible receivables and (B) indemnifications for losses other than credit losses related to the receivables sold in such financing, (iv) the Agent shall be reasonably satisfied with the terms of, structure of and documentation for any such transaction and (v) the documentation for such transaction shall not be amended or modified, in any material respect, without the prior written approval of the Agent. "Person" means any individual, partnership, joint venture, firm, ------ corporation, limited liability company, association, trust or other enterprise (whether or not incorporated) or any Governmental Authority. "Plan" means any employee benefit plan (as defined in Section 3(3) of ---- ERISA) which is covered by ERISA and with respect to which any Consolidated Party or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" within the meaning of Section 3(5) of ERISA. "Pledge Agreement" means that certain Second Amended and Restated ---------------- Pledge Agreement dated as of September 6, 2000, a copy of which is attached hereto as Exhibit 1.1(a). -------------- "Pledged Collateral" shall have the meaning assigned to such term in ------------------ the Pledge Agreement. "Prime Rate" means the per annum rate of interest established from ---------- time to time by Bank of America as its prime rate, which rate may not be the lowest rate of interest charged by Bank of America to its customers. "Pro Forma Basis" means, for purposes of calculating compliance with --------------- each of the financial covenants set forth in Section 7.11(b) and (c) in respect of a proposed transaction, that such transaction shall be deemed to have occurred as of the first day of the four fiscal-quarter period ending as of the most recent fiscal quarter end preceding the date of such transaction with respect to which the Agent has received the information required pursuant to Section 7.1. In connection with any calculation of the financial covenants set forth in Section 7.11(b) and (c) upon giving effect to a transaction on a Pro Forma Basis, (a) any Indebtedness incurred by the Borrower in connection with such transaction (i) shall be deemed to have been incurred as of the first day of the applicable period and (ii) if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination and (b) income statement items (whether positive or 22 negative) attributable to the Property acquired in such transaction or to the Acquisition comprising such transaction, as applicable, shall be included to the extent relating to the relevant period. "Pro Forma Compliance Certificate" means a certificate of an Executive -------------------------------- Officer of the Borrower delivered to the Agent in connection with any Acquisition as referred to in the definition of "Permitted Acquisition" set --------------------- forth in this Section 1.1, as applicable, and containing reasonably detailed calculations, upon giving effect to the applicable transaction on a Pro Forma Basis, of the Leverage Ratio and Consolidated Net Worth as of the most recent fiscal quarter end preceding the date of the applicable transaction with respect to which the Agent shall have received the Required Financial Information. "Property" means any interest in any kind of property or asset, -------- whether real, personal or mixed, or tangible or intangible. "Receivables Financier" shall have the meaning assigned to such term --------------------- in the definition of "Permitted Receivables Financing" set forth in this Section 1.1. "Receivables Financing SPE" shall mean, in respect of any Permitted ------------------------- Receivables Financing, any Subsidiary or Affiliate of the Borrower to which any Credit Party sells, contributes or otherwise conveys any Transferred Assets in connection with such Permitted Receivables Financing. "Register" shall have the meaning given such term in Section 11.3(c). -------- "Regulation T, U, or X" means Regulation T, U or X, respectively, of --------------------- the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof. "Release" means any spilling, leaking, pumping, pouring, emitting, ------- emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Materials of Environmental Concern). "Reportable Event" means any of the events set forth in Section ---------------- 4043(c) of ERISA, other than those events as to which the notice requirement has been waived by regulation. "Required Financial Information" means, with respect to the applicable ------------------------------ Calculation Date, (i) the financial statements of the Consolidated Parties required to be delivered pursuant to Section 7.1(a) or (b) for the fiscal period or quarter ending as of such Calculation Date, and (ii) the certificate of an Executive Officer of the Borrower required by Section 7.1(c) to be delivered with the financial statements described in clause (i) above. "Required Lenders" means, at any time, Lenders holding in the ---------------- aggregate more than 50% of (i) the Commitments (and Participation Interests therein), or (ii) if the Commitments have been terminated, the outstanding Revolving Loans and Participation 23 Interests (including the Participation Interests of the Issuing Lender in any Letters of Credit and the Participation Interests of the Swingline Lender in any Swingline Loans), provided that the Commitments of and the -------- outstanding principal amount of Revolving Loans and Participation Interests owing to a Defaulting Lender shall be excluded for purposes hereof in making a determination of Required Lenders. In addition to the foregoing, "Required Lenders" shall further require the vote of at least three (3) of the Lenders party hereto. "Requirement of Law" means, as to any Person, the certificate of ------------------ incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its material property is subject. "Restricted Payment" means (i) any dividend or other distribution, ------------------ direct or indirect, on account of any shares of any class of Capital Stock of any Consolidated Party, now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of Capital Stock of any Consolidated Party, now or hereafter outstanding, and (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of any Consolidated Party, now or hereafter outstanding. "Revolving Committed Amount" means TWO HUNDRED MILLION DOLLARS -------------------------- ($200,000,000), as such amount may be reduced from time to time as provided in Section 3.4. "Revolving Loans" shall have the meaning assigned to such term in --------------- Section 2.1(a), but in any event shall include any portion of any Revolving Loan bearing interest at the Adjusted Base Rate or the Adjusted Eurodollar Rate and referred to as a Base Rate Loan or a Eurodollar Loan. "Revolving Note" shall have the meaning assigned to such term in -------------- Section 2.1(e). "S&P" means Standard & Poor's Ratings Group, a division of The McGraw --- Hill Companies, Inc., or any successor or assignee of the business of such division in the business of rating securities. "Sale and Leaseback Transaction" means any arrangement pursuant to ------------------------------ which any Consolidated Party, directly or indirectly, becomes liable as lessee, guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any Property (a) which such Consolidated Party has sold or transferred (or is to sell or transfer) to a Person which is not a Consolidated Party or (b) which such Consolidated Party intends to use for substantially the same purpose as any other Property which has been sold or transferred (or is to be sold or transferred) by such Consolidated Party to another Person which is not a Consolidated Party in connection with such lease. 24 "Senior Note Purchase Agreement" means that certain Note Purchase ------------------------------ Agreement dated as of September 1, 2000 by and among the Borrower and each of the respective Senior Noteholders. "Senior Noteholders" means a collective reference to the holders from ------------------ time to time of the Senior Notes and "Senior Noteholder" means any one of ----------------- them. "Senior Notes" means a collective reference to the Borrower's senior ------------ secured notes in an aggregate principal amount of $125,000,000, consisting of (a) $30,000,000 8.91% Senior Secured Notes, Series A due September 15, 2003, (b) $50,000,000 9.01% Senior Secured Notes, Series B due September 15, 2004 and (c) $45,000,000 9.11% Senior Secured Notes, Series C due September 15, 2005 (each as amended, modified, extended, renewed or restated from time to time). "Single Employer Plan" means any Plan which is covered by Title IV of -------------------- ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan. "Social Security Act" means the Social Security Act as set forth in ------------------- Title 42 of the United States Code, as amended, and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. References to sections of the Social Security Act shall be construed also to refer to any successor sections. "Solvent" or "Solvency" means, with respect to any Person as of a ------- -------- particular date, that on such date (i) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (ii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature in their ordinary course, (iii) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's Property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (iv) the fair value of the Property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities and obligations, of such Person and (v) 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. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Subsidiary" means, as to any Person, (a) any corporation more than ---------- 50% of whose Capital Stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and (b) any partnership, association, 25 limited liability company, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time. "Swingline Commitment" means the commitment of the Swingline Lender to -------------------- make Swingline Loans in an aggregate principal amount at any time outstanding of up to the Swingline Committed Amount. "Swingline Committed Amount" shall have the meaning assigned to such -------------------------- term in Section 2.3(a). "Swingline Lender" means Bank of America, N.A., and its successors. ---------------- "Swingline Loan" shall have the meaning assigned to such term in -------------- Section 2.3(a). "Synthetic Lease" means any tax retention operating lease, off-balance --------------- sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an Operating Lease in accordance with GAAP. "Taxes" means such term as is defined in Section 3.11. ----- "Transferred Assets" shall have the meaning assigned to such term in ------------------ the definition of "Permitted Receivables Financing" set forth in this Section 1.1. "Unused Fee" shall have the meaning assigned to such term in Section ---------- 3.5(b). "Unused Fee Calculation Period" shall have the meaning assigned to ----------------------------- such term in Section 3.5(b). "Unused Revolving Committed Amount" means, for any period, the amount --------------------------------- by which (a) the then applicable Revolving Committed Amount exceeds (b) the daily average sum for such period of (i) the outstanding aggregate principal amount of all Revolving Loans (but not including any Swingline Loans) plus (ii) the outstanding aggregate principal amount of all LOC ---- Obligations. "Upfront Fee" shall have the meaning assigned to such term in Section ----------- 3.5(a). "Voting Stock" means, with respect to any Person, Capital Stock issued ------------ by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. "Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of ----------------------- whose Voting Stock or other equity interests is at the time owned by such Person directly or indirectly through other Wholly Owned Subsidiaries. 26 1.2 Computation of Time Periods. --------------------------- For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding." 1.3 Accounting Terms. ---------------- Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. All calculations made for the purposes of determining compliance with this Credit Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to Section 7.1 (or, prior to the delivery of the first financial statements pursuant to Section 7.1, consistent with the financial statements as at December 31, 2001); provided, -------- however, if (a) the Borrower shall object to determining such compliance on such ------- basis at the time of delivery of such financial statements due to any change in GAAP or the rules promulgated with respect thereto or (b) the Agent or the Required Lenders shall so object in writing within 60 days after delivery of such financial statements, then such calculations shall be made on a basis consistent with the most recent financial statements delivered by the Borrower to the Lenders as to which no such objection shall have been made. Notwithstanding the above, the parties hereto acknowledge and agree that, for purposes of all calculations made under the financial covenants set forth in Section 7.11 (including without limitation for purposes of the definitions of "Applicable Percentage" and "Pro Forma Basis" set forth in Section 1.1), in connection with any merger or consolidation as referred to in Section 8.4 or any Acquisition as referred to in the definition of "Permitted Acquisition" set --------------------- forth in Section 1.1, income statement items (whether positive or negative) attributable to any Person or Property acquired in any Permitted Acquisition shall, to the extent not otherwise included in such income statements items for the Consolidated Parties in accordance with GAAP or in accordance with any defined terms set forth in Section 1.1, be included to the extent relating to any period applicable in such calculations. SECTION 2 CREDIT FACILITIES 2.1 Revolving Loans. --------------- (a) Commitment. Subject to the terms and conditions hereof and in ---------- reliance upon the representations and warranties set forth herein, each Lender severally agrees to make available to the Borrower such Lender's Commitment Percentage of the revolving credit loans requested by the Borrower in Dollars (the "Revolving Loans") from time to time from the --------------- Closing Date until the Maturity Date, or such earlier date as the Commitments shall have been terminated as provided herein for the purposes hereinafter set forth; provided, however, that (i) with regard to each -------- ------- Lender individually, such Lender's share of outstanding Revolving Loans and Swingline Loans and LOC 27 Obligations shall not exceed such Lender's Commitment Percentage of the Commitment Amount, and (ii) with regard to the Lenders collectively, the aggregate principal amount of outstanding Revolving Loans, Swingline Loans and LOC Obligations shall not exceed the Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower may request, and may be repaid and reborrowed in accordance with the provisions hereof; provided, however, -------- ------- that no more than ten (10) Eurodollar Loans shall be outstanding hereunder at any time. For purposes hereof, Eurodollar Loans with different Interest Periods shall be considered as separate Eurodollar Loans, even if they begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new single Eurodollar Loan with a single Interest Period. (b) Revolving Loan Borrowings. ------------------------- (i) Notice of Borrowing. The Borrower shall request a Revolving ------------------- Loan borrowing by written notice (or telephonic notice promptly confirmed in writing) to the Agent not later than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day prior to the date of the requested borrowing in the case of Base Rate Loans, and on the third Business Day prior to the date of the requested borrowing in the case of Eurodollar Loans. Each such request for borrowing shall be irrevocable and shall specify (A) that a Revolving Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed, and (D) whether the borrowing shall be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof, and if Eurodollar Loans are requested, the Interest Period(s) therefor. If the Borrower shall fail to specify in any such Notice of Borrowing (I) an applicable Interest Period in the case of a Eurodollar Loan, then such notice shall be deemed to be a request for an Interest Period of one month, or (II) the type of Revolving Loan requested, then such notice shall be deemed to be a request for a Base Rate Loan hereunder. The Agent shall give notice to each affected Lender promptly upon receipt of each Notice of Borrowing pursuant to this Section 2.1(b)(i), the contents thereof and each such Lender's share of any borrowing to be made pursuant thereto. (ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan --------------- that is a Revolving Loan shall be in a minimum aggregate principal amount of $1,000,000 and integral multiples of $100,000 in excess thereof (or the remaining amount of the Revolving Committed Amount, if less). (iii) Advances. Each Lender will make its Commitment Percentage -------- of each Revolving Loan borrowing available to the Agent for the account of the Borrower as specified in Section 3.15(a), or in such other manner as the Agent may specify in writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date specified in the applicable Notice of Borrowing in Dollars and in funds immediately available to the Agent. Such borrowing will then be made available to the Borrower by the Agent by crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Agent by the Lender. 28 (c) Repayment. The principal amount of all Revolving Loans shall be --------- due and payable in full on the Maturity Date, unless accelerated sooner pursuant to Section 9.2. (d) Interest. Subject to the provisions of Section 3.1, -------- (i) Base Rate Loans. During such periods as Revolving Loans --------------- shall be comprised in whole or in part of Base Rate Loans, such Base Rate Loans shall bear interest at a per annum rate equal to the Adjusted Base Rate. (ii) Eurodollar Loans. During such periods as Revolving Loans ---------------- shall be comprised in whole or in part of Eurodollar Loans, such Eurodollar Loans shall bear interest at a per annum rate equal to the Adjusted Eurodollar Rate. Interest on Revolving Loans shall be payable in arrears on each applicable Interest Payment Date (or at such other times as may be specified herein). (e) Revolving Notes. Any Lender may request that Revolving Loans made --------------- by it be evidenced by a duly executed promissory note of the Borrower to such Lender in an original principal amount equal to such Lender's Commitment Percentage of the Committed Amount and in substantially the form of Exhibit 2.1(e), with appropriate insertions as to date and principal -------------- amount (each such promissory note a "Revolving Note"). -------------- 2.2 Letter of Credit Subfacility. ---------------------------- (a) Issuance. Subject to the terms and conditions hereof and of the -------- LOC Documents, if any, and any other terms and conditions which the Issuing Lender may reasonably require and in reliance upon the representations and warranties set forth herein, the Issuing Lender agrees to issue, and each Lender severally agrees to participate in the issuance by the Issuing Lender of, standby Letters of Credit in Dollars from time to time from the Closing Date until the Maturity Date as the Borrower may request, in a form acceptable to the Issuing Lender; provided, however, that (i) the LOC -------- ------- Obligations outstanding shall not at any time exceed TWENTY MILLION DOLLARS ($20,000,000) (the "LOC Committed Amount"); (ii) with regard to each Lender -------------------- individually, such Lender's share of outstanding Revolving Loans and Swingline Loans and LOC Obligations shall not exceed such Lender's Commitment Percentage of the Revolving Committed Amount; and (iii) with regard to the Lenders collectively, the aggregate principal amount of outstanding Revolving Loans, Swingline Loans and LOC Obligations shall not exceed the Revolving Committed Amount. No Letter of Credit shall (x) have an original expiry date more than one year from the date of issuance or (y) as originally issued or as extended, have an expiry date extending beyond the date five (5) Business Days prior to the Maturity Date. Each Letter of Credit shall comply with the related LOC Documents. The issuance and expiry dates of each Letter of Credit shall be a Business Day. (b) Notice and Reports. The request for the issuance of a Letter of ------------------ Credit shall be submitted by the Borrower to the Issuing Lender at least three (3) Business Days 29 prior to the requested date of issuance. The Issuing Lender will, at least quarterly and more frequently upon request, deliver to each of the Lenders, with a copy to the Borrower, a detailed report specifying the Letters of Credit which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of the prior report, and including therein, among other things, the beneficiary, the face amount and the expiry date, as well as any payment or expirations which may have occurred. (c) Participation. Each Lender, upon issuance of a Letter of Credit ------------- (or, in the case of each Existing Letter of Credit, on the Closing Date), shall be deemed to have purchased without recourse a Participation Interest from the Issuing Lender in such Letter of Credit and the obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its pro rata share of the obligations under such Letter of Credit (based on the respective Commitment Percentages of the Lenders) and shall absolutely, unconditionally and irrevocably assume and be obligated to pay to the Issuing Lender and discharge when due, its pro rata share of the obligations arising under such Letter of Credit. Without limiting the scope and nature of each Lender's Participation Interest in any Letter of Credit, to the extent that the Issuing Lender has not been reimbursed as required hereunder or under any such Letter of Credit, each such Lender shall pay to the Issuing Lender its pro rata share of such unreimbursed drawing in same day funds on the day of notification by the Issuing Lender of an unreimbursed drawing pursuant to the provisions of subsection (d) below. The obligation of each Lender to so reimburse the Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Lender under any Letter of Credit, together with interest as hereinafter provided. (d) Reimbursement. In the event of any drawing under any Letter of ------------- Credit, the Issuing Lender will promptly notify the Borrower. Unless the Borrower shall immediately notify the Issuing Lender that the Borrower intends to otherwise reimburse the Issuing Lender for such drawing, the Borrower shall be deemed to have requested that the Lenders make a Revolving Loan in the amount of the drawing as provided in subsection (e) below on the related Letter of Credit, the proceeds of which will be used to satisfy the related reimbursement obligations. The Borrower promises to reimburse the Issuing Lender on the day of drawing under any Letter of Credit (either with the proceeds of a Revolving Loan obtained hereunder or otherwise) in same day funds. If the Borrower shall fail to reimburse the Issuing Lender as provided hereinabove, the Borrower promises to pay the Issuing Lender interest on the unreimbursed amount of such drawing on demand at a per annum rate equal to the Adjusted Base Rate plus 2%. The Borrower's reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of setoff, counterclaim or defense to payment the Borrower may claim or have against the Issuing Lender, the Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or any other Person, including without limitation any defense based on any failure of the Borrower or any other Credit Party to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit. The Issuing Lender will promptly notify the other Lenders of the amount of any unreimbursed drawing and each Lender shall promptly pay to the Agent for the 30 account of the Issuing Lender in Dollars and in immediately available funds, the amount of such Lender's pro rata share of such unreimbursed drawing. Such payment shall be made on the day such notice is received by such Lender from the Issuing Lender if such notice is received at or before 2:00 P.M. (Charlotte, North Carolina time) otherwise such payment shall be made at or before 12:00 Noon (Charlotte, North Carolina time) on the Business Day next succeeding the day such notice is received. If such Lender does not pay such amount to the Issuing Lender in full upon such request, such Lender shall, on demand, pay to the Agent for the account of the Issuing Lender interest on the unpaid amount during the period from the date of such drawing until such Lender pays such amount to the Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date that such Lender is required to make payments of such amount pursuant to the preceding sentence, the Federal Funds Rate and thereafter at a rate equal to the Base Rate. Each Lender's obligation to make such payment to the Issuing Lender, and the right of the Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Credit Agreement or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the