1
================================================================================
CREDIT AGREEMENT
Dated as of May 30, 0000
Xxxxx
XXXXXXX SERVICE GROUP INC.,
as the Borrower,
All of its present and future
Subsidiaries that become parties hereto,
as Guarantors,
the Lenders identified herein,
and
NATIONSBANK OF TENNESSEE, N.A.,
as Administrative Agent
and as Issuing Bank
$ 20,000,000
================================================================================
2
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS, ACCOUNTING TERMS AND
PRINCIPLES OF CONSTRUCTION........................................... 1
1.1 Defined Terms................................................ 1
1.2 Accounting and Commercial Terms..............................24
1.3 General Construction.........................................24
1.4 Defined Terms; Headings......................................24
1.5 References to this Agreement and Parts Thereof...............24
1.6 Documentary References.......................................24
1.7 Legal References.............................................25
ARTICLE 2. LOANS AND LETTERS OF CREDIT .........................................25
2.1 Commitments..................................................25
2.1.1 Amounts of Commitments.........................25
2.1.2 Extension of Commitment Period.................25
2.2 Loans........................................................26
2.2.1 Commitment to Make Loans.......................26
2.2.2 Lenders' Obligations Several;
Proportionate Loans............................26
2.2.3 Revolving Credit; Minimum Borrowings...........27
2.2.4 Notice of Borrowing............................27
2.2.5 Disbursement of Funds..........................28
2.3 Letters of Credit............................................28
2.3.1 Issuance of Letters of Credit..................28
2.3.2 Letter of Credit Requests......................29
2.4 Participations in Letter of Credit Liabilities...............29
2.4.1 Purchase of Participations by Lenders .........29
2.4.2 Notification by Issuing Bank of Drawing .......30
2.4.3 Payments by Lenders Upon a Drawing or
Payment Under a Letter of Credit;
Adjustments....................................30
2.4.4 Failure to Pay by Lenders......................30
2.4.5 Lenders' Obligations Absolute..................30
2.4.6 Information Regarding Letter of Credit
Liabilities....................................31
2.5 Borrower's Obligations Absolute..............................31
2.5.1 Obligations Absolute ..........................31
2.5.2 No Liability ..................................32
2.6 Interest.....................................................33
2.6.1 Interest Rate on Loans.........................33
2.6.2 Interest Rate on Unreimbursed Draws
Under Letters of Credit........................33
i
3
2.6.3 Default Rate...................................33
2.6.4 Conclusive Determination.......................34
2.7 Conversion or Continuation...................................34
2.7.1 Option to Convert or Continue..................34
2.7.2 Notice of Conversion/Continuation..............34
2.7.3 Notice to the Lenders..........................34
2.7.4 Notice Irrevocable.............................35
2.7.5 Automatic Conversion...........................35
2.8 Notes; Records of Payments ..................................35
2.9 Administrative Agent's Right to Assume Funds
Available....................................................35
2.10 Use of Proceeds..............................................36
2.11 Credit Fees..................................................36
2.11.1 Administrative Agent's Fees....................36
2.11.2 Commitment Fees................................36
2.11.3 Opening Fees; Amendment or
Transfer Fees; Drawing Fees....................37
2.12 Computations ................................................37
2.13 Interest and Fees Margins ...................................37
2.14 Special Provisions Governing LIBOR Loans.....................39
2.14.1 Determination of Interest Period...............39
2.14.2 Determination of Interest Rate.................39
2.14.3 Inability to Determine Rate....................39
2.14.4 Illegality; Termination of Commitment
to Make LIBOR Loans............................40
2.14.5 LIBOR Loans After Default......................40
2.15 Expenses.....................................................40
2.16 Replacement or Removal of a Lender...........................41
ARTICLE 3. PAYMENTS, PREPAYMENTS AND COMPUTATIONS...............................42
3.1 General Provisions Relating to Repayment of Loans............42
3.1.1 Interest Payments..............................42
3.1.2 Scheduled Principal Payments ..................42
3.1.3 Prepayments ...................................42
3.1.4 Final Maturity of Loans........................43
3.2 Repayment of Amounts Drawn Under
Letters of Credit..............................43
3.3 Payments and Computations, Etc...............................43
3.3.1 Time and Manner of Payments....................43
3.3.2 Payments on Non-Business Days..................44
3.3.3 Apportionment of Payments......................44
ii
4
3.3.4 Assumption of Payments Made....................44
3.3.5 Application of Proceeds........................45
3.4 Increased Costs, Capital Requirements and Taxes..............45
3.4.1 Increased Costs................................45
3.4.2 Capital Requirements - General.................46
3.4.3 Capital Requirements - Letters of Credit.......46
3.4.4 Increased Reserves - Letters of Credit.........47
3.4.5 Breakage Costs - LIBOR Loans...................47
3.4.6 LIBOR Taxes....................................47
3.4.7 Notice of Increased Costs; Payment.............48
3.5 Taxes........................................................49
3.5.1 Taxes Generally................................49
3.5.2 Withholding Tax Exemption......................49
3.5.3 Withholding Taxes..............................50
3.5.4 Indemnification................................50
3.5.5 Subsequent Lenders.............................50
3.6 Booking of Loans.............................................50
ARTICLE 4. SECURITY.............................................................51
4.1 Initial Security.............................................51
4.2. Further Assurances...........................................51
ARTICLE 5. GUARANTY.............................................................52
5.1 Guaranty.....................................................52
5.2 Maximum Guaranty Liability...................................52
5.3 Contribution.................................................53
5.4 Guaranty Unconditional.......................................53
5.5 Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances.......................54
5.6 Waiver.......................................................54
5.7 Waiver of Reimbursement, Subrogation, Etc....................55
5.8 Stay of Acceleration.........................................55
5.9 Subordination of Indebtedness................................55
5.10 Certain Releases.............................................55
ARTICLE 6. CONDITIONS PRECEDENT.................................................56
6.1 Conditions Precedent to Initial Loans and
Letters of Credit ...........................................56
6.1.1 Deliveries to the Administrative Agent.........56
6.1.2 Compliance with Laws...........................59
6.1.3 No Material Adverse Change.....................60
6.1.4 No Material Misrepresentation..................60
6.1.5 Legal Proceedings..............................60
iii
5
6.1.6 Wilmington Trust Intercreditor Agreement.......60
6.2 Conditions Precedent to All Loans and Letters
of Credit ...................................................60
6.2.1 Satisfaction of Conditions Precedent to
Initial Loans and Letters of Credit............61
6.2.2 Representations and Warranties ................61
6.2.3 No Default or Event of Default.................61
6.2.4 No Violations..................................61
6.2.5 Proceedings Satisfactory ......................61
ARTICLE 7. REPRESENTATIONS AND WARRANTIES.......................................61
7.1 Existence and Power..........................................62
7.2 Authorization and Enforcement of Obligations.................62
7.3 No Consents..................................................62
7.4 No Conflict..................................................62
7.5 Financial Statements; Solvency...............................63
7.6 Absence of Litigation........................................63
7.7 No Default...................................................64
7.8 Security Documents...........................................64
7.9 Capital Stock................................................64
7.10 Taxes........................................................64
7.11 No Burdensome Restrictions...................................65
7.12 Judgments....................................................65
7.13 Subsidiaries.................................................65
7.14 ERISA........................................................65
7.15 Margin Securities............................................65
7.16 Investment Company Act.......................................66
7.17 Indebtedness and Contingent Obligations......................66
7.18 Business Locations and Trade Names...........................66
7.19 Title to Assets..............................................66
7.20 Labor Matters................................................66
7.21 Business.....................................................67
7.22 Compliance with Laws.........................................67
7.23 Service Contracts............................................67
7.24 Governmental Authorizations; Permits, Licenses
and Accreditation; Other Rights..............................68
7.25 No Material Adverse Change...................................68
7.26 Employment and Investment Agreements.........................68
7.27 Environmental Matters........................................69
7.28 Material Contracts...........................................70
7.29 No Misstatements.............................................70
7.30 Operating Leases.............................................70
ARTICLE 8. AFFIRMATIVE COVENANTS................................................70
8.1 Financial Statements.........................................71
8.1.1 Annual Financial Statements and Reports........71
8.1.2 Quarterly Financing Statements and
Reports........................................71
iv
6
8.1.3 Monthly Financial Statements and Reports.......72
8.1.4 GAAP...........................................72
8.2 Certificates and Other Information...........................72
8.2.1 Management Letters.............................72
8.2.2 Shareholder Materials..........................72
8.2.3 Budgets .......................................73
8.2.4 Communications Regarding Service
Contracts......................................73
8.2.5 Lag Studies ...................................73
8.2.6 Reports to Other Persons.......................73
8.2.7 Funded Indebtedness............................73
8.2.8 Employment and Investment Agreements...........73
8.2.9 Additional Information.........................73
8.3 Provision of Notices.........................................74
8.3.1 Default........................................74
8.3.2 Other Default or Litigation....................74
8.3.3 Reportable Events..............................74
8.3.4 Environmental Matters..........................74
8.3.5 Loss of License, Permit, Approval, Etc.........74
8.3.6 Material Contracts.............................75
8.3.7 Casualty Losses................................75
8.4 Payment of Obligations and Performance of
Covenants....................................................75
8.5 Payment of Taxes.............................................75
8.6 Conduct of Business and Maintenance of Existence.............76
8.7 Compliance with Law..........................................76
8.8 Maintenance of Properties and Franchises.....................76
8.9 Insurance....................................................76
8.10 Use of Proceeds..............................................77
8.11 Books and Records............................................77
8.12 Inspection...................................................77
8.13 Compliance With Terms of Material Contracts..................77
8.14 Compliance with Hazardous Materials Laws, Etc................78
8.15 Environmental Monitoring.....................................78
8.16 Maintenance of Licenses, Permits, Approvals, Etc.............78
8.17 Intercompany Indebtedness....................................79
8.18 Further Assurances...........................................79
8.19 Post-Closing Matters.........................................79
8.20 Documentation Relating to Pledged Notes......................79
8.21 Management ..................................................79
ARTICLE 9. NEGATIVE COVENANTS...................................................79
9.1 Indebtedness.................................................80
9.2 Liens........................................................81
9.3 Sale or Transfer of Assets...................................83
9.4 Investments..................................................83
v
7
9.5 Restricted Payments..........................................84
9.6 Issuance of Stock........................................... 84
9.7 Fundamental Changes ........................................ 84
9.8 Transactions With Affiliates................................ 85
9.9 Agreements Restricting Subsidiaries ........................ 85
9.10 ERISA....................................................... 85
9.11 Maintenance of Material Contracts........................... 86
9.12 Adverse Transactions.........................................86
9.13 Additional Restriction on Investments in
Permitted Joint Ventures.....................................86
ARTICLE 10. FINANCIAL COVENANTS................................................ 86
10.1 Borrower Ratios............................................. 86
10.1.1 Funded Indebtedness to Capitalization
Ratio......................................... 86
10.1.2 Fixed Charge Coverage Ratio .................. 87
10.1.3 Adjusted Funded Indebtedness to EBITDA
Ratio......................................... 87
10.1.4 Current Ratio................................. 87
10.1.5 Rent Expense...................................87
10.2 Guarantor Solvency.......................................... 87
ARTICLE 11. EVENTS OF DEFAULT AND LENDERS' REMEDIES..................... 87
11.1 Events of Default........................................... 87
11.1.1 Failure to Pay Loans, Etc..................... 87
11.1.2 Failure to Perform Certain Covenants.......... 87
11.1.3 Failure to Perform Agreements Generally....... 88
11.1.4 Defaults Under Other Loan Documents .......... 88
11.1.5 False Statements.............................. 88
11.1.6 Voluntary Insolvency Proceedings.............. 88
11.1.7 Involuntary Insolvency Proceedings............ 88
11.1.8 Failure to Perform Other Obligations.......... 89
11.1.9 Execution or Attachment....................... 89
11.1.10 Condemnation of Property...................... 89
11.1.11 Suspension of Business ....................... 90
11.1.12 ERISA ........................................ 90
11.1.13 Validity of Loan Documents ................... 90
11.1.14 Guaranty Obligations ......................... 90
11.1.15 Failure of Lien............................... 90
11.1.16 Defaults under Material Contracts............. 91
11.1.17 Material Adverse Change....................... 91
11.1.18 Change in Control............................. 91
11.2 Lenders' Remedies........................................... 91
11.3 Actions in Respect of Letters of Credit..................... 92
11.3.1 Collateral Account............................ 92
vi
8
11.3.2 Security Interest............................. 93
11.3.3 Application of Proceeds....................... 93
11.3.4 Investments................................... 93
11.3.5 Further Liens................................. 94
11.3.6 Remedies...................................... 94
11.3.7 Preservation of the Collateral................ 95
11.3.8 Surplus Funds................................. 95
ARTICLE 12. THE ADMINISTRATIVE AGENT........................................... 96
12.1 Appointment................................................. 96
12.2 Delegation of Duties........................................ 96
12.3 Limitation of Liability..................................... 96
12.4 Reliance by the Administrative Agent........................ 97
12.5 Notice of Default........................................... 98
12.6 Non-Reliance on the Administrative Agent by
the Other Lenders........................................... 98
12.7 Indemnification............................................. 99
12.8 Payments....................................................100
12.9 Administrative Agent in Its Individual Capacity.............100
12.10 Successor Administrative Agent..............................100
ARTICLE 13. ASSIGNMENT AND PARTICIPATIONS......................................101
13.1 Successors and Assigns......................................101
13.2 Assignments.................................................101
13.2.1 Assignments...................................101
13.2.2 Effect of Assignments.........................102
13.2.3 Actions by the Borrower.......................102
13.3 Participations..............................................102
13.4 Disclosure..................................................103
13.5 Assignments and Participations as Units.....................103
ARTICLE 14. GENERAL PROVISIONS.................................................103
14.1 Notices.....................................................103
14.2 Entire Agreement............................................105
14.3 Amendments, Waivers and Consents............................105
14.3.1 Amendments....................................105
14.3.2 Waivers and Consents..........................106
14.3.3 Effect of Waivers.............................106
14.3.4 Consent of All the Lenders....................106
14.3.5 Binding Effect................................107
14.4 Independence of Covenants...................................107
14.5 Interpretation..............................................107
14.6 Inconsistencies With Other Documents........................107
14.7 Severability................................................107
vii
9
14.8 Governing Law...............................................108
14.9 Consent to Jurisdiction.....................................108
14.10 Waiver of Jury Trial........................................109
14.11 Cumulative Remedies.........................................109
14.12 Expenses of Administration and Enforcement..................109
14.13 Indemnification.............................................110
14.14 Adjustment..................................................110
14.15 Setoff......................................................111
14.16 Other Accommodations to the Borrower and the
Guarantors; No Rights By Virtue of Cross-
Collateralization...........................................112
14.17 Survival of Representations and Warranties..................113
14.18 Relationship of the Parties.................................113
14.19 Destruction of Records......................................113
14.20 Counterparts................................................113
14.21 Interest and Loan Charges Not to Exceed Maximum
Amounts Allowed by Law......................................114
14.22 Final Agreement.............................................115
viii
10
SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 1.1 Certain Deferred Liabilities Included in
Capitalization
Schedule 7.1 Borrower, Guarantors and Subsidiaries -
Capitalization and Jurisdictions of
Incorporation and Foreign Qualification
Schedule 7.3 Post-Closing Consents
Schedule 7.6 Pending Litigation
Schedule 7.17A Indebtedness
Schedule 7.17B Contingent Obligations
Schedule 7.18A Business Locations
Schedule 7.18B Trade Names
Schedule 7.23 Service Contracts
Schedule 7.26 Employment Agreements and Executive
Compensation Arrangements
Schedule 7.27 Environmental Matters
Schedule 7.28 Material Contracts
Schedule 7.30 Operating Leases
Schedule 8.19 Post-Closing Matters
Schedule 9.2 Existing Liens
Schedule 9.4 Existing Investments
Exhibits
--------
Exhibit 1.1 Form of Supplement to Credit Agreement
Exhibit 2.1.2 Form of Commitment Period Extension Request
Exhibit 2.2.4 Form of Notice of Borrowing
Exhibit 2.3.2 Form of Letter of Credit Request
Exhibit 2.7.2 Form of Notice of Conversion/Continuation
Exhibit 2.8 Form of Note
Exhibit 4.1A Form of Security Agreement
Exhibit 4.1B Form of Pledge Agreement
Exhibit 4.1C Form of Assignment and Security Agreement
Exhibit 6.1.1A Form of Opinion of Counsel to the Borrower and
the Guarantors
Exhibit 6.1.1B Form of Solvency Certificate of Borrower
Exhibit 6.1.1C Form of Solvency Certificate of Guarantors
Exhibit 13.2 Form of Assignment and Acceptance
ix
11
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), dated as of May 30,, 1997, is
made and entered into on the terms and conditions hereinafter set forth, by and
among AMERICA SERVICE GROUP INC., a Delaware corporation (the "Borrower"), all
subsidiaries of the Borrower now or hereafter becoming parties to this Agreement
(collectively, the "Guarantors" and, individually, a "Guarantor"), those several
lenders who are or become parties to this Agreement (collectively, the "Lenders"
and, individually, a "Lender"), NATIONSBANK OF TENNESSEE, N.A., a national
banking association with principal offices in Nashville, Tennessee
("NationsBank"), as administrative agent for the Lenders and the Issuing Bank
(in such capacity, the "Administrative Agent") and as Issuing Bank.
THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
DEFINITIONS, ACCOUNTING TERMS
AND PRINCIPLES OF CONSTRUCTION
1.1. Defined Terms. In addition to terms defined elsewhere herein, the
following terms, as used in this Agreement, shall have the respective meanings
set forth below (terms defined in the singular to have the same meaning when
used in the plural, and vice versa, unless otherwise expressly indicated):
"Adjusted Consolidated Funded Indebtedness" shall mean, for
the Borrower and its Subsidiaries on a consolidated basis, as of any date of
determination, Consolidated Funded Indebtedness, less the aggregate face amount
of any letters of credit issued for the account of the Borrower or Subsidiary
thereof within the sixty (60) day period prior to the date of determination
(provided that Adjusted Consolidated Funded Indebtedness shall include the
aggregate unreimbursed amount of any drafts drawn under such letters of credit),
less the amount by which (a) the aggregate amount of unrestricted cash and Cash
Equivalents of the Borrower and its Subsidiaries on deposit or maintained with
the Administrative Agent, or an Affiliate thereof, exceeds (b) the consolidated
operating expenses for the Borrower and its Subsidiaries for the Last Four
Fiscal Quarters, determined in conformity with GAAP, divided by twenty-six (26).
"Adjusted Funded Indebtedness to EBITDA Ratio" shall mean, for
the Borrower and its Subsidiaries on a consolidated basis, calculated for the
most recent twelve (12) month period
12
after giving Pro Forma Effect to any Asset Acquisition made during such period,
the ratio of Adjusted Consolidated Funded Indebtedness to EBITDA; provided,
however, that (a) for purposes of calculating the Adjusted Funded Indebtedness
to EBITDA Ratio as of June 30, 1997, EBITDA shall be calculated by multiplying
EBITDA for the two consecutive Fiscal Quarters ending on June 30, 1997 by two
(2), and (b) for purposes of calculating the Adjusted Funded Indebtedness to
EBITDA Ratio as of September 30, 1997, EBITDA shall be calculated by multiplying
EBITDA for the three consecutive Fiscal Quarters ending on September 30, 1997 by
one and one-third (1.33).
"Administrative Agent" shall mean NationsBank or such
successor Administrative Agent as may be appointed by the Lenders pursuant to
Section 12.10.
"Affiliate" shall mean, as to any Person, any other Person
directly or indirectly controlling (including all directors, officers and
employees of such Person), directly or indirectly controlled by or under direct
or indirect common control with such Person.
"Applicable Bankruptcy Law" shall mean, with respect to any
Guarantor, Title 11 of the United States Code, and any other laws governing
bankruptcy, suspension of payments, reorganization, arrangement, adjustment of
debts, relief of debtors, dissolution or insolvency and any other similar laws
applicable to such Guarantor.
"Applicable Base Rate Margin" shall mean the margin to be
added to the Base Rate for purposes of determining the interest rate(s)
applicable to Base Rate Loans from time to time, which shall be determined as
provided in Section 2.13.
"Applicable Letter of Credit Fee Percentage" shall mean the
annualized percentage to be used to calculate Letter of Credit Fees from time to
time, which shall be determined as provided in Section 2.13.
"Applicable LIBOR Margin" shall mean the margin to be added to
LIBOR for purposes of determining the interest rate(s) applicable to LIBOR Loans
from time to time, which shall be determined as provided in Section 2.13.
"Asset Acquisition" shall mean (a) any investment by the
Borrower or any of its Subsidiaries in any other Person pursuant to which such
Person shall become a Subsidiary of the Borrower or any of its Subsidiaries or
shall be merged with the Borrower or any of its Subsidiaries or (b) any
acquisition by the Borrower or any of its Subsidiaries of the assets of any
Person that constitute substantially all of an operating unit or business of
such Person.
2
13
"Assignment and Acceptance" shall mean an assignment and
acceptance, substantially in the form of Exhibit 13.2, between a transferor
Lender and a proposed transferee, regarding the sale, assignment, transfer or
other disposition (other than the sale of a participation) of all or any amount
of the Commitments, Loans and participations in the Letters of Credit of such
Lender.
"Assignment and Security Agreement" shall mean the Assignment
and Security Agreement, substantially in the form of Exhibit 4.1C, executed by
the Borrower and certain of the Guarantors, granting in favor of the
Administrative Agent, the Lenders and the Issuing Bank a valid, first-priority,
perfected security interest in all rights, title and interest of the Borrower
and such Guarantors in all partnerships and joint ventures in which the Borrower
or any of its Subsidiaries own interests aggregating at least fifty percent
(50%) of the ownership interests therein.
"Base LIBOR" shall mean the rate per annum for offered Dollar
deposits in the interbank Eurodollar market appearing on page 3750 of the
TELERATE rate reporting system at about 11:00 a.m., Central time, on the
Interest Rate Determination Date immediately prior to the beginning of the
Interest Period for the corresponding LIBOR Loan, for the number of months
comprised therein and in an amount equal to the amount of such LIBOR Loan to be
outstanding during such Interest Period. Without limiting the provisions of
Section 2.14.3, in the event that prior to the Maturity Date TELERATE quotes for
Base LIBOR are discontinued or become unascertainable, the Administrative Agent
may designate a comparable resource for use in determining Base LIBOR for
purposes hereof.
"Base Rate" shall mean, for any period, the greater of (i) the
fluctuating rate of interest per annum from time to time established by
NationsBank as its "prime rate", regardless of whether published or publicly
announced, or (ii) a fluctuating rate of interest per annum equal to one-half of
one percentage point (0.5%) in excess of the Federal Funds Rate in effect from
time to time. Each change in the Base Rate shall be effective as of the opening
of business on the day such change occurs. The parties hereto acknowledge that
the rate established by NationsBank as its "prime rate" is an index or base rate
and is not necessarily the lowest rate charged to its customers or other banks.
In the event that prior to the Maturity Date NationsBank discontinues or
abandons the practice of establishing a prime rate, or should the same become
unascertainable, the Administrative Agent shall designate a comparable reference
rate for use in determining the Base Rate for purposes hereof.
3
14
"Base Rate Loans" shall mean Loans bearing interest at rates
determined by reference to the Base Rate.
"Borrowing" shall mean a borrowing consisting of Loans made to
the Borrower on the same day by the Lenders ratably according to their
respective Commitments pursuant to the provisions of Section 2.2.
"Business Day" shall mean any day on which commercial banks in
Nashville, Tennessee are neither authorized nor required by law or executive
order to close and on which the New York Stock Exchange is not closed.
"Capital Expenditures" shall mean, as to any Person for any
period, the aggregate capital expenditures recorded by such Person and its
Subsidiaries on a consolidated basis in conformity with GAAP, including charges
in respect of Capitalized Lease Obligations exclusive of imputed interest on
such Capitalized Lease Obligations; provided, however, that for purposes of
determining Capital Expenditures for the Borrower and its Subsidiaries on a
consolidated basis, there shall be excluded therefrom any Capital Expenditures
attributable solely to the making of Permitted Acquisitions.
"Capitalization" shall mean, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of Consolidated Funded
Indebtedness, plus shareholders' equity, plus federal and state net operating
loss carryforwards, plus certain deferred liabilities and other items
specifically approved by the Administrative Agent for inclusion in
Capitalization, as more particularly described on Schedule 1.1.
"Capitalized Lease" shall mean, as to any Person, any lease of
property by such Person as lessee that would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" shall mean, as to any Person,
the capitalized amount of the obligations of such Person and its Subsidiaries
under all Capitalized Leases.
"Cash Equivalents" shall mean, at any time,
(a) Government Obligations having a maturity not exceeding one
hundred eighty (180) days;
(b) commercial paper rated at least A-1 by S&P or P-1 by
Moody's, having a maturity not exceeding one hundred eighty (180) days;
(c) certificates of deposit or time deposits of (i) the
Lenders or (ii) other commercial banks having capital and undivided
surplus of at least $500 million and issuing
4
15
commercial paper rated as described in the preceding clause (b) and
organized and existing under, or chartered or otherwise qualified to
do business under, the laws of the United States of America or any
State thereof or the District of Columbia, having a maturity not
exceeding ninety (90) days;
(d) repurchase agreements or investment contracts having a
maturity not exceeding ninety (90) days with a financial institution
insured by the Federal Deposit Insurance Corporation, or any broker or
dealer (as defined in the Securities Exchange Act of 1934) that is a
dealer in government bonds and that is recognized by trades with and
reports to, a Federal Reserve Bank as a primary dealer in government
securities; provided that in any case (i) collateral is pledged for the
repurchase agreement or investment contract, which collateral consists
of (A) Government Obligations or evidences of ownership of
proportionate interests in future interest and principal payments on
Government Obligations held by a bank or trust company as custodian,
under which the owner of the investment is the real party in interest
and has the right to proceed directly and individually against the
obligor on such obligations, and which underlying obligations are held
in a segregated account and not available to satisfy any claim of the
custodian or any person claiming through the custodian or to whom the
custodian may be obligated or (B) evidences of indebtedness issued by
any of the following: Bank of Cooperatives, Export-Import Bank of the
United States, Farmers Home Administration, Federal Financing Bank,
Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation
(including participation certificates), Federal Housing Administration,
Federal Farm Credit Banks, Federal National Mortgage Association,
Government National Mortgage Association, Inter-American Development
Bank, International Bank for Reconstruction and Development, Small
Business Administration or any other agency or instrumentality of the
United States of America created by an act of Congress that is
substantially similar to the foregoing in its legal relationship to the
United States of America, (ii) the current market value of the
collateral securing the repurchase agreement or investment contract is
at least equal to the amount of the repurchase agreement or investment
contract and (iii) the current market value of the collateral is
determined not less frequently than monthly;
(e) investments in money market funds substantially all of
whose assets consist of securities of the types described in the
foregoing clauses (a) through (d);
5
16
(f) investments in obligations the return with respect to
which is excludable from gross income under Section 103 of the Code,
having a maturity of not more than six (6) months or providing the
holder the right to put such obligations for purchase at par upon not
more than twenty-eight (28) days' notice, and which are rated at least
A-1 by S&P or P-1 by Moody's;
(g) investments in tax free money market funds all of whose
assets consist of securities of the types described in the foregoing
clause (f); and
(h) investments, redeemable upon not more than seven (7) days'
notice, in money market preferred municipal bond funds that are rated
at least AAA by S&P or Aaa by Moody's.
"Code" shall mean the Internal Revenue Code of 1986.
"Collateral" shall mean all property and interests in
property, presently owned or hereafter acquired or presently existing or
hereafter created by the Borrower or the Guarantors, including any and all
proceeds thereof, in which a security interest has been granted in favor of the
Administrative Agent for the ratable benefit of the Lenders, whether under this
Agreement, the Security Documents or any other Loan Document.
"Collateral Account" shall mean the Collateral Account
described in Section 11.3.1.
"Commission" shall mean the Securities and Exchange
Commission or any successor entity.
"Commitment Period" shall mean that period commencing on the
date hereof and continuing to, but not including, the Commitment Period
Expiration Date.
"Commitment Period Expiration Date" shall mean September 30,
1998, as such date may be extended pursuant to Section 2.1.2.
"Commitment Period Extension Request" shall mean a request in
substantially the form of Exhibit 2.1.2.
"Commitments" shall mean the Revolving Credit Commitments and
the Letter of Credit Commitments, which collectively are in the aggregate amount
set forth in Section 2.1 and in the case of each Lender are in the initial
amount set forth with such Lender's signature on this Agreement or the
Assignment and Acceptance pursuant to which such Lender became a party hereto.
6
17
"Commonly Controlled Entity" shall mean a Person that is under
common control with the Borrower within the meaning of subsection 414(b), (c),
(m), (n) or (o) of the Code.
"Consolidated Funded Indebtedness" shall mean, for the
Borrower and its Subsidiaries on a consolidated basis, all Indebtedness that
constitutes (a) indebtedness for borrowed money or for notes, debentures or
other debt securities, (b) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(c) reimbursement obligations in respect of letters of credit issued for the
account of Borrower or a Subsidiary thereof (including any such obligations in
respect of any drafts drawn thereunder), (d) liabilities for all or any part of
the deferred purchase price of property or services, (e) liabilities secured by
any Lien on any property or asset owned or held by the Borrower or any of its
Subsidiaries regardless of whether the Indebtedness secured thereby shall have
been assumed by or is a primary obligation of the Borrower or such Subsidiary,
(f) Capitalized Lease Obligations, and (g) without duplication, all Contingent
Obligations the primary obligation of which is Indebtedness of the type
described in clauses (a) through (f) above; provided, however, that (i)
Consolidated Funded Indebtedness shall not include any unsecured current
liabilities incurred in the ordinary course of business and not represented by
any note, bond, debenture or other instrument, and (ii) for calculations of
Consolidated Funded Indebtedness as of any date prior to July 1, 1997,
Consolidated Funded Indebtedness shall not include any reimbursement obligations
with respect to letters of credit issued in connection with Service Contracts
with the State of Georgia.
"Consolidated Healthcare Revenue" shall mean, as to the
Borrower and its Subsidiaries on a consolidated basis for any period, the
healthcare revenue of the Borrower and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period, determined in conformity
with GAAP, subject to customary exclusions with respect to extraordinary and
nonrecurring items.
"Consolidated Net Income" shall mean, as to the Borrower and
its Subsidiaries on a consolidated basis for any period, the net income (or
loss) after taxes of the Borrower and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period, determined in conformity
with GAAP, subject to customary exclusions with respect to extraordinary and
nonrecurring items; provided, however, that net income attributable to Permitted
Joint Ventures in any Fiscal Quarter shall be excluded to the extent that it
exceeds ten percent (10%) of Consolidated Net Income for such Fiscal Quarter.
7
18
"Contingent Obligations" shall mean, as to any Person, any
contingent obligation calculated in accordance with GAAP, and in any event shall
include (without duplication) all indebtedness, obligations or other liabilities
of such Person guaranteeing or in effect guaranteeing the payment or performance
of any indebtedness, obligation or other liability, whether or not contingent
(collectively, the "primary obligations"), of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including any
indebtedness, obligation or other liability of such Person, (a) to purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss with respect thereto.
"Contractual Obligations" shall mean, as to any Person, any
and all indebtedness, obligations or other liabilities of such Person, now
existing or hereafter arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, direct or indirect, express or implied, individually
or jointly with others, pursuant to the provisions of any document, instrument
or agreement to which such Person is a party or by which such Person or any of
its property is or may be bound or affected or pursuant to the provisions of any
security issued by such Person.
"Credit Fees" shall mean the credit fees payable as provided
in Section 2.11.
"Current Maturities of Long-Term Debt" shall mean, as of any
date of determination, the greater of (a) that portion of Consolidated Funded
Indebtedness that is due and payable within the twelve (12) month period
immediately following the date of determination, calculated in conformity with
GAAP, or (b) an amount equal to the daily average outstanding principal balance
of Consolidated Funded Indebtedness during the twelve (12) month period
immediately preceding the date of determination, divided by four (4).
"Current Ratio" shall mean, for the Borrower and its
Subsidiaries on a consolidated basis, as of any date of determination, the ratio
of (a) current assets, determined in conformity with GAAP, plus the Unused
Working Capital Loan Sublimit, to (b) current liabilities, determined in
conformity with GAAP.
8
19
"Default" shall mean any of the events specified in Section
11.1, regardless of whether any requirement for the giving of notice, the lapse
of time or both has been satisfied.
"Default Rate" shall mean the rate(s) per annum otherwise
applicable to Loans from time to time plus two percentage points (2.00%).
"Dollars" and "$" shall mean lawful money of the United
States of America.
"EBITDA" shall mean, for the Borrower and its Subsidiaries on
a consolidated basis for any period, after giving Pro Forma Effect to any Asset
Acquisition made during such period, the sum of Consolidated Net Income, plus
Interest Expense, plus any provision for taxes based on income or profits that
was deducted in computing Consolidated Net Income, plus depreciation,
amortization of intangible assets and other non-cash charges.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974.
"Event of Default" shall mean any of the events specified in
Section 11.1, provided that any requirement for the giving of notice (and, if
applicable, an opportunity to cure), the lapse of time or both has been
satisfied.
"Existing Liens" shall mean those certain Liens in existence
on the date hereof that are described on Schedule 9.2.
"Facilities" shall mean the Revolving Credit Facility and the
Letter of Credit Facility.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for each
day (or, if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York.
"Financing Statement" shall mean any Uniform Commercial Code
financing statement, on Form UCC-1 or otherwise, executed pursuant to the
provisions of this Agreement or any other Loan Document.
"Fiscal Quarter" shall mean each of the accounting periods of
approximately three (3) months ending on March 31, June 30, September 30 and
December 31, respectively, of each year.
9
20
"Fiscal Year" shall mean the twelve (12) month period ending
on December 31 of each year.
"Fixed Charge Coverage Ratio" shall mean, for the Borrower and
its Subsidiaries on a consolidated basis, calculated for the most recent Fiscal
Quarter after giving Pro Forma Effect to any Asset Acquisition made during the
most recent twelve (12) month period ending on and including the date of
determination, the ratio of (a) Consolidated Net Income, plus Interest Expense,
plus depreciation, amortization of intangible assets and other non-cash charges,
less Restricted Payments, less an amount equal to twenty-five percent (25%) of
budgeted Capital Expenditures for the corresponding Fiscal Year, to (b) Interest
Expense, plus an amount equal to twenty-five percent (25%) of Current Maturities
of Long-Term Debt.
"Funded Indebtedness to Capitalization Ratio" shall mean, for
the Borrower and its Subsidiaries on a consolidated basis, the ratio of
Consolidated Funded Indebtedness to Capitalization.
"Funding Date" shall mean each of the respective dates on
which the funding of a Borrowing made under this Agreement occurs.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Government Obligations" shall mean direct obligations of the
United States of America or obligations for the full and prompt payment of which
the full faith and credit of the United States of America are pledged.
"Governmental Authority" shall mean any nation, province,
state or other political subdivision thereof and any government or any natural
person or entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Obligations" shall mean all the obligations of the
Borrower guaranteed by the Guarantors pursuant to Article 5.
"Guarantors" shall mean those Subsidiaries of the Borrower
that now or hereafter execute this Agreement or any amendment hereto and agree
to guarantee the Obligations of the Borrower.
"Guaranty" shall mean the guaranty of the Obligations of the
Borrower set forth in Article 5.
10
21
"Harbour" shall mean Harbour Insurance, Inc., a Delaware
corporation that is a wholly-owned Subsidiary of PHS.
"Hazardous Materials" shall mean any hazardous, toxic or
dangerous materials, substances, chemicals, wastes or pollutants that from time
to time are defined by or pursuant to or are regulated under any Hazardous
Materials Laws, including asbestos, polychlorinated biphenyls, petroleum,
petroleum derivatives or by-products, other hydrocarbons, urea formaldehyde and
any material, substance, pollutant or waste that is defined as a hazardous waste
under RCRA or defined as a hazardous substance under CERCLA.
"Hazardous Materials Laws" shall mean all federal, state,
regional, county or local laws, statutes, rules, regulations or ordinances, now
or hereafter in effect, relating to the generation, recycling, use, reuse, sale,
storage, handling, transport, treatment or disposal of Hazardous Materials,
including the Comprehensive Environmental Response Compensation Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. ss.9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act of
1976, as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C.
ss.6901 et seq. ("RCRA"), the Clean Air Act, 42 U.S.C. ss. 7401, et seq.
("CAA"), the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq. ("TSCA")
and any rules, regulations and guidance documents promulgated or published
thereunder, and any state, regional, county or local statute, law, rule,
regulation or ordinance now or hereafter in effect that relates to public
health, safety or the discharge, emission or disposal of Hazardous Materials in
or to air, water, land or groundwater, to the withdrawal or use of groundwater,
to the use, handling or disposal of asbestos, polychlorinated biphenyls,
petroleum, petroleum derivatives or by-products, other hydrocarbons or urea
formaldehyde, to the treatment, storage, disposal or management of Hazardous
Materials, to exposure to Hazardous Materials or to the transportation, storage,
disposal, management or release of gaseous or liquid substances, and any
regulation, order, injunction, judgment, declaration, notice or demand issued
thereunder.
"Highest Lawful Rate" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on debts
outstanding hereunder or under the Notes, as the case may be, under the laws
applicable to such Lender that are presently in effect or, to the extent allowed
by law, under such applicable laws that may hereafter be in effect and that
allow a higher maximum nonusurious interest rate than applicable laws now allow.
11
22
"Indebtedness" shall mean, as to any Person, all items that in
accordance with GAAP would be shown on the balance sheet of such Person as a
liability and in any event shall include (without duplication) (a) indebtedness
for borrowed money or for notes, debentures or other debt securities, (b) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (c) reimbursement obligations in
respect of letters of credit issued for the account of such Person (including
any such obligations in respect of any drafts drawn thereunder), (d) liabilities
for all or any part of the deferred purchase price of property or services, (e)
liabilities secured by any Lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall have been
assumed by or is a primary liability of such Person, (f) Capitalized Lease
Obligations, and (g) Contingent Obligations.
"Interest Expense" shall mean, as to any Person for any
period, the aggregate interest expense and amortization of deferred loan costs
of such Person and its Subsidiaries on a consolidated basis for such period
(calculated without regard to any limitations on the payment thereof), imputed
interest on Capitalized Lease Obligations, commissions, discounts and other fees
and charges owed with respect to letters of credit and unused commitments and
net costs under interest rate protection agreements, all as determined in
conformity with GAAP.
"Interest Payment Date" shall mean, (a) with respect to any
Base Rate Loan, January 1, April 1, July 1 and October 1 of each year,
commencing on the first such date after the applicable Funding Date, and (b)
with respect to any LIBOR Loan, the last day of the Interest Period applicable
to such Loan; provided, however, that with respect to any Interest Period of six
(6) months "Interest Payment Date" also shall include the day that is three (3)
months after the day on which that Interest Period commenced.
"Interest Period" shall mean any interest period applicable to
a LIBOR Loan as determined pursuant to Section 2.14.1.
"Interest Rate Contracts" shall mean any interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
interest rate insurance and other agreements or arrangements designed to provide
protection against fluctuations in interest rates, in each case between the
Borrower and any Lender, and in an aggregate notional amount at any time not to
exceed an amount equal to Consolidated Funded Indebtedness at such time.
"Interest Rate Determination Date" shall mean each date for
calculating LIBOR for purposes of determining the interest
12
23
rate in respect of an Interest Period, which in each case shall be the second
(2d) Business Day prior to the first (1st) day of the corresponding Interest
Period.
"Investment" shall mean the making of any loan, advance,
extension of credit or capital contribution to, or the acquisition of any stock,
bonds, notes, debentures or other obligations or securities of, or the
acquisition of any other interest in or the making of any other investment in,
any Person.
"Issuing Bank" shall mean NationsBank and any other financial
institution that, subject to approval by the Administrative Agent and the
Borrower, agrees to become a party to this Agreement and to issue Letters of
Credit pursuant to Section 2.3.
"Last Four Fiscal Quarters" shall mean, at any time, the
Fiscal Quarter most recently ended plus the immediately preceding three Fiscal
Quarters.
"Lending Office" shall mean with respect to any Lender or the
Administrative Agent, the office of each such Lender at the address specified on
the signature pages hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or such other office as any such Lender from time to time
may specify to the Borrower and the Administrative Agent.
"Letter of Credit Commitments" shall mean, at any time, (a)
the commitment of the Issuing Bank to issue Letters of Credit pursuant to the
provisions of Section 2.3.1, and (b) the aggregate commitments of all the
Lenders to purchase participations in the Letter of Credit Liabilities pursuant
to the provision of Section 2.4; and the "Letter of Credit Commitment" of any
Lender at any time shall mean an amount equal to such Lender's Percentage
multiplied by the then effective aggregate Letter of Credit Commitments under
clause (b) above. The Letter of Credit Commitments are in the aggregate amount
set forth in Section 2.1.
"Letter of Credit Facility" shall mean the letter of credit
facility provided by the Lenders pursuant to the Letter of Credit Commitments as
more particularly set forth in Section 2.3.
"Letter of Credit Fees" shall have the meaning given such term
in Section 2.11.2.
"Letter of Credit Liabilities" shall mean all liabilities of
the Borrower to the Issuing Bank in respect of Letters of Credit, regardless of
whether any such liability is contingent, and shall consist of the sum, without
duplication, of (a) the amount available to be drawn or that may become
available to be drawn under outstanding Letters of Credit (including all
13
24
amounts committed to be paid by the Issuing Bank thereunder), and (b) all
amounts that have been paid or made available by the Issuing Bank thereunder if
and to the extent the Issuing Bank has not received reimbursement from the
Borrower pursuant to the terms hereof.
"Letter of Credit Request" shall mean a request substantially
in the form of Exhibit 2.3.2 annexed hereto with respect to the proposed
issuance of a Letter of Credit hereunder.
"Letter of Credit Supportable Obligations" shall mean (a)
obligations of the Borrower or any of its Subsidiaries incurred in the ordinary
course of business with respect to workers' compensation, surety bonds and other
similar statutory obligations, (b) obligations of the Borrower or any of its
Subsidiaries in respect of Service Contracts or performance bonds issued in
connection therewith, and (c) such other obligations of the Borrower or any of
its Subsidiaries as are reasonably acceptable to the Issuing Bank and the
Administrative Agent and otherwise permitted to exist pursuant to the terms of
this Agreement.
"Letters of Credit" shall mean the letters of credit issued by
the Issuing Bank pursuant to the provisions of Section 2.3.1.
"LIBOR" shall mean the rate per annum (rounded upwards, if
necessary, to the nearest whole one-eighth of 1%) equal to the product of Base
LIBOR times Statutory Reserves.
"LIBOR Loans" shall mean Loans bearing interest at rates
determined by reference to LIBOR.
"Lien" shall mean, as to any asset, (a) any lien, charge,
claim, mortgage, security interest, pledge, hypothecation or other encumbrance
of any kind with respect to such asset, (b) any interest of a vendor or lessor
under any conditional sale agreement, Capitalized Lease or other title retention
agreement relating to such asset, (c) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception affecting such asset, or (d) any assignment, deposit, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Notes, the
Letters of Credit, the Security Documents, the Interest Rate Contracts and all
other documents, instruments and agreements now
14
25
or hereafter executed or delivered pursuant hereto or in connection herewith.
"Loans" shall mean the loans made by the Lenders to the
Borrower pursuant to the provisions of Section 2.2.
"Material Adverse Effect" and "Material Adverse Change" shall
mean a material adverse effect on, or a material adverse change in, (a) the
properties, business, prospects, operations, management or financial condition
of the Borrower and its Subsidiaries, taken as a whole, or (b) the ability of
the Borrower, any Guarantor or any of their respective Subsidiaries to perform
any of their respective obligations under this Agreement, the Notes or the other
Loan Documents to which it is a party.
"Material Contract" shall mean each contract (including each
Service Contract) to which the Borrower or any of its Subsidiaries is a party or
a guarantor (or by which it is bound) that requires payments (either to or for
the benefit of, or by or on behalf of, the Borrower or any of its Subsidiaries)
in excess of $3,000,000 in any twelve-month period (a) the cancellation,
non-performance or non-renewal of which by any party thereto would have a
Material Adverse Effect, or (b) pursuant to which the Borrower or any of its
Subsidiaries may incur Indebtedness for borrowed money or Capitalized Lease
Obligations.
"Maturity Date" shall mean the fifteenth (15th) day after the
second (2d) anniversary of the Commitment Period Expiration Date (as such
Commitment Period Expiration Date may be extended pursuant to Section 2.1.2), or
such earlier date to which the maturity of the Obligations may be accelerated
pursuant to the terms of this Agreement.
"Maximum Guaranty Liability" shall mean the maximum liability
hereunder of the respective Guarantors permitted by Applicable Bankruptcy Law as
provided in Section 5.2.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
and its successors.
"Multi-Employer Plan" shall mean any multiple employer plan,
as defined in Section 4001(a)(3) of ERISA, that is maintained by the Borrower,
any Guarantor, any of their respective Subsidiaries or a Commonly Controlled
Entity.
"Notes" shall mean the promissory notes, substantially in the
form of Exhibit 2.8, executed by the Borrower in favor of the Lenders,
evidencing the indebtedness of the Borrower to the Lenders in connection with
the Loans.
15
26
"Notice of Borrowing" shall mean a notice substantially in the
form of Exhibit 2.2.4 annexed hereto with respect to a proposed Borrowing.
"Notice of Conversion/Continuation" shall mean a notice
substantially in the form of Exhibit 2.7.2 annexed hereto with respect to a
proposed conversion or continuation of Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis pursuant to Section 2.7.
"Obligations" shall mean, as to any Person, all indebtedness,
obligations and other liabilities of such Person of any kind and description
owing to the Administrative Agent, the Issuing Bank or the Lenders pursuant to
the provisions of this Agreement, the Notes and the other Loan Documents,
howsoever evidenced or acquired, whether now existing or hereafter arising, due
or not due, absolute or contingent, liquidated or unliquidated, direct or
indirect, express or implied, whether owed individually or jointly with others.
"Operating Lease" shall mean, as to any Person, any lease of
property (whether real, personal or mixed) by such Person as lessee that is not
a Capitalized Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to subtitle A of Title IV of ERISA.
"Percentage" shall mean, as to each Lender, the percentage set
forth with such Lender's signature on this Agreement or the Assignment and
Acceptance pursuant to which such Lender became a party hereto.
"Permitted Acquisition" shall mean any Asset Acquisition by
the Borrower or any Subsidiary of the Borrower with respect to which (a) the
Borrower shall have given the Administrative Agent and the Lenders not less than
thirty (30) days' notice of such Asset Acquisition, such notice to include a
description of the terms and conditions of such Asset Acquisition, (b) the
Borrower shall have provided to the Administrative Agent and the Lenders copies
of the executed acquisition agreements promptly after same have been executed,
(c) the Borrower or such Subsidiary is the surviving entity in the transaction,
(d) all assets acquired in the transaction are held or acquired by the Borrower
or such Subsidiary, (e) at the time of such acquisition and after giving Pro
Forma Effect thereto and to any other Asset Acquisition made during the then
most recent twelve (12) month period, no Default or Event of Default shall have
occurred or be continuing or would result therefrom, (f) the Borrower has
furnished to the Administrative Agent and the Lenders a certificate duly
executed by a
16
27
Responsible Officer thereof, in form satisfactory to the Administrative Agent,
certifying that no Default or Event of Default has occurred or is continuing or
will result from such Asset Acquisition, and certifying specifically as to
covenant compliance calculations both prior to and, after giving Pro Forma
Effect to such Asset Acquisition, for the twelve (12) month period following
such Asset Acquisition, and (g) the aggregate cash consideration paid or to be
paid in connection with such Asset Acquisition, inclusive of all Indebtedness
incurred or assumed and any "earnout" or similar payments payable during or with
respect to the twelve (12) month period following the date of such Asset
Acquisition, will not exceed an amount equal to five percent (5%) of the
consolidated assets of the Borrower and its Subsidiaries, determined in
conformity with GAAP, as of the end of the most recently completed Fiscal
Quarter of the Borrower.
"Permitted Harbour Investments" shall mean Investments held by
Harbour consisting of one or more of the following:
(a) Government Obligations;
(b) commercial paper and other obligations rated at least
A-1 by S&P or P-1 by Moody's;
(c) certificates of deposit or time deposits of (i) the
Lenders or (ii) other commercial banks having capital and undivided
surplus of at least $500 million and issuing commercial paper rated as
described in the preceding clause (b) and organized and existing under,
or chartered or otherwise qualified to do business under, the laws of
the United States of America or any State thereof or the District of
Columbia;
(d) other obligations rated higher than A by both S&P and
Moody's;
(e) other obligations rated at least A by both S&P and
Moody's.
Notwithstanding the foregoing, the Investments described only in the preceding
clause (e), shall constitute Permitted Harbour Investments only to the extent
that the aggregate face amount of same do not at any time exceed one-third (1/3)
of the aggregate face amount of all Permitted Harbour Investments at such time.
"Permitted Joint Venture" shall mean a Person other than a
Guarantor in which the Borrower or any Subsidiary of the Borrower maintains an
Investment and which is engaged solely in the business of providing managed
healthcare services to correctional facilities and related businesses that
enhance or support that primary business activity.
17
28
"Permitted Liens" shall mean Liens permitted pursuant to the
provisions of Section 9.2.
"Person" shall mean an individual, corporation, partnership,
limited partnership, limited liability company, limited liability limited
partnership, trust, business trust, association, joint stock company, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or other form of entity not specifically listed herein.
"PHS" shall mean Prison Health Services, Inc., a Delaware
corporation that is a wholly-owned Subsidiary of the Borrower.
"Plan" shall mean an employee pension benefit plan covered by
Title IV of ERISA that is maintained by the Borrower, any Guarantor, any of
their respective Subsidiaries or a Commonly Controlled Entity, and shall include
any Single Employer Plan or any Multi-Employer Plan.
"Pledge Agreement" shall mean the Pledge and Security
Agreement, substantially in the form of Exhibit 4.1B, executed by the Borrower
and the Guarantors, granting in favor of the Administrative Agent, the Lenders
and the Issuing Bank a security interest in the Pledged Stock, the Pledged Notes
and all proceeds thereof, together with all books and records pertaining
thereto.
"Pledged Notes" shall mean all intercompany notes now or
hereafter issued by Subsidiaries of the Borrower to the Borrower or a Guarantor,
and pledged by the Borrower or such Guarantor in favor of the Administrative
Agent, the Lenders and the Issuing Bank pursuant to the Pledge Agreement.
"Pledged Stock" shall mean all of the outstanding capital
stock of the Subsidiaries of the Borrower owned by the Borrower or a Guarantor
and pledged in favor of the Administrative Agent, the Lenders and the Issuing
Bank pursuant to the Pledge Agreement.
"Pricing Tier Determination Date" shall mean the fifth (5th)
Business Day following each date on which the Borrower has delivered to the
Administrative Agent financial statements, financial reports, certificates and
other financial information complying with the requirements of Section 8.1 and
containing information sufficient to enable a calculation of the Funded
Indebtedness to EBITDA Ratio for the Last Four Fiscal Quarters for the purpose
of determining the Applicable Base Rate Margin, the Applicable LIBOR Margin and
the Applicable Letter of Credit Fee Percentage pursuant to Section 2.13.
18
29
"Principal Obligor" shall mean, with respect to a specific
indebtedness or obligation, the Person creating, incurring, assuming or
suffering to exist such indebtedness or obligation without becoming liable for
same as a surety or guarantor.
"Pro Forma Effect" shall mean, in making any calculation
necessary to determine whether the Borrower is in compliance with Sections
10.1.2 or 10.1.3 or whether a Default or Event of Default would result from any
Asset Acquisition, (a) any Asset Acquisition made during the most recent twelve
(12) month period (the "Reference Period") ending on and including the date of
determination (the "Calculation Date") shall be assumed to have occurred on the
first day of the Reference Period, (b) Consolidated Funded Indebtedness, and the
application of proceeds therefrom, incurred or to be incurred in connection with
any Asset Acquisition made or to be made during the Reference Period shall be
assumed to have occurred in the first day of the Reference Period, (c) there
shall be excluded any Interest Expense in respect of Consolidated Funded
Indebtedness outstanding during the Reference Period that was or is to be
refinanced with proceeds of Indebtedness incurred or to be incurred in
connection with any Asset Acquisition made or to be made during the Reference
Period, (d) Interest Expense in respect of Consolidated Funded Indebtedness
bearing a floating rate of interest and assumed to have been incurred on the
first day of the Reference Period shall be calculated on the basis of the
average rate in effect under this Agreement for Base Rate Loans throughout the
period such Consolidated Funded Indebtedness is assumed to be outstanding, and
(e) Rent Expense shall include actual Rent Expense incurred by any Person,
operating unit or business acquired during the Reference Period, plus Rent
Expense projected for the twelve (12) month period following the date of actual
incurrence thereof in respect of any Operating Lease entered into or to be
entered into in connection with any Asset Acquisition made during the Reference
Period, which projected Rent Expense shall be deemed to have been incurred on
the first day of the Reference Period.
"Purchase Money Debt" shall mean (a) Indebtedness of the
Borrower or any of its Subsidiaries that, within thirty (30) days of the
purchase of equipment in which neither the Borrower nor any of its Subsidiaries
at any time prior to such purchase had any interest, is incurred to finance part
or all of (but not more than) the purchase price of such equipment, and that
bears interest at a rate per annum that is commercially reasonable at the time,
and (b) Indebtedness that constitutes a renewal, extension or refunding of, but
not an increase in the principal amount of, Purchase Money Debt that is such by
virtue of clause (a), is binding only upon the obligor or obligors under the
Purchase Money Debt being renewed, extended or refunded and bears
19
30
interest at a rate per annum that is commercially reasonable at the time.
"Rent Expense" shall mean, as to any Person for any period,
the aggregate rent and lease expenses recorded by such Person and its
Subsidiaries on a consolidated basis in conformity with GAAP pursuant to any
Operating Lease.
"Replacement Lender" shall have the meaning given such term in
Section 2.16.
"Reportable Event" shall mean any of the events set forth
under Section 4043(b) of ERISA or the PBGC regulations thereunder.
"Requirement of Law" shall mean, as to any Person (a) the
partnership agreement, certificate of incorporation, bylaws, operating agreement
or other organizational or governing documents of such Person; (b) any federal,
state or local law, treaty, ordinance, rule or regulation; (c) any order, decree
or determination of a court, arbitrator or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to
which such person or any of its property is subject.
"Requisite Lenders" shall mean at any time Lenders having at
least sixty-seven percent (67%) of the Commitments.
"Responsible Officer" shall mean, as to any Person, either (a)
its president or chief executive officer, or (b) with respect to financial
matters, its president, chief executive officer, chief financial officer or any
vice president designated in writing by the chief executive officer to the
Administrative Agent.
"Restricted Payments" shall mean, as to any Person for
any period:
(a) dividends, other distributions and other payments or
deliveries of property on account of the capital stock, or any
warrants, options or other rights in respect of any capital stock, of
such Person or its Subsidiaries, now or hereafter outstanding, that are
recorded by such Person and its Subsidiaries on a consolidated basis
(excluding any such dividends, distributions and other payments made
solely to such Person or a wholly-owned Subsidiary of such Person by a
Subsidiary of such Person),
(b) amounts paid to purchase, redeem, retire or otherwise
acquire for value any of the capital stock, or any warrants, options or
other rights in respect of the capital stock, of such Person, now or
hereafter outstanding
20
31
(excluding any such amounts paid solely to such Person or a
wholly-owned Subsidiary of such Person by a Subsidiary of such Person),
(c) any assets segregated or set apart by such Person or any
of its Subsidiaries for a sinking or analogous fund for the purchase,
redemption or retirement or other acquisition of any capital stock, or
any warrants, options or other rights in respect of any capital stock,
of such Person or its Subsidiaries, now or hereafter outstanding
(excluding any assets so segregated or set apart with respect to any
stock, warrants, options or other rights held by a wholly-owned
Subsidiary of such Person),
(d) payments made or required to be made by such Person with
respect to any stock appreciation rights plan, equity incentive or
achievement plan or any similar plan and any assets segregated or set
apart for such purposes, and
(e) any payment, purchase, redemption or acquisition of
Subordinated Indebtedness other than regularly scheduled payments of
principal and interest made according to the stated terms of such
Subordinated Indebtedness;
all as determined in conformity with GAAP.
"Revolving Credit Commitments" shall mean, at any time, the
commitment of all the Lenders, collectively, to make Loans to the Borrower
during the Commitment Period pursuant to the provisions of Section 2.2, and the
"Revolving Credit Commitment" of any Lender at any time shall mean an amount
equal to such Lender's Percentage multiplied by the then effective aggregate
Revolving Credit Commitments. The Revolving Credit Commitments are in the
aggregate amount set forth in Section 2.1.
"Revolving Credit Facility" shall mean the revolving credit
facility provided by the Lenders pursuant to the Revolving Credit Commitments as
more particularly set forth in Section 2.2.
"S&P" shall mean Standard & Poor's Corporation and its
successors.
"Security Agreement" shall mean the Security Agreement,
substantially in the form of Exhibit 4.1A, executed by the Borrower and the
Guarantors, granting in favor of the Administrative Agent, the Lenders and the
Issuing Bank a security interest in substantially all of the assets of the
Borrower and the Guarantors.
"Security Documents" shall mean the Security Agreement, the
Pledge Agreement, the Assignment and Security Agreement and the Financing
Statements, together with all documents,
21
32
instruments and agreements now or hereafter executed or delivered pursuant
thereto or in connection therewith.
"Service Contracts" shall mean contracts of the Borrower or a
Subsidiary of the Borrower with a Governmental Authority pursuant to which the
Borrower or such Subsidiary provides health care services to jailed or
imprisoned persons incarcerated pursuant to the authority of such Governmental
Authority or a related Governmental Authority.
"Single Employer Plan" shall mean any Plan that is not
a Multi-Employer Plan.
"Solvent" shall mean, with respect to any Person on any
particular date, that on such date (a) the fair value of the assets of such
Person (both at fair valuation and at present fair saleable value) is, on the
date of determination, greater than the total amount of liabilities, including
contingent and unliquidated liabilities, of such Person, (b) such Person is able
to pay all liabilities of such Person as they mature, and (c) such Person does
not have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can be
reasonably expected to become an actual or matured liability.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves), expressed
as a decimal, established by the Federal Reserve Board and/or any other banking
authority to which any Lender or any member bank of the Federal Reserve System
is subject with respect to LIBOR, for Eurocurrency Liabilities (as defined in
Regulation D of the Federal Reserve Board). Such reserve percentages shall
include those imposed under such Regulation D. LIBOR Loans shall be deemed to
constitute Eurocurrency Liabilities and as such shall be deemed to be subject to
such reserve requirements without benefit of or credit for proration, exceptions
or offsets that may be available from time to time to the Lenders under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"Subordinated Indebtedness" shall mean, for the Borrower and
its Subsidiaries on a consolidated basis, all Indebtedness subordinated in right
of payment to the Indebtedness incurred hereunder on terms satisfactory to the
Administrative Agent.
22
33
"Subsidiaries" shall mean, as to any Person (a) a corporation,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock having such
power only by reason of the occurrence of a contingency) to elect a majority of
the board of directors or other managers thereof are at the time owned, or the
management of which is otherwise controlled, directly or indirectly, through one
or more intermediaries, or both, by such Person, or (b) a partnership in which
such Person is a general partner or the management of which is otherwise
controlled, directly or indirectly, through one or more intermediaries or both,
by such Person.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of Tennessee or any other applicable jurisdiction, as the context may
require.
"Unused Working Capital Loan Sublimit" shall mean, as of any
date prior to such time as the Borrower has delivered to the Administrative
Agent and each Lender the financial statements, financial reports, certificates
and other financial information required by Section 8.1.2 for the Fiscal Quarter
ending March 31, 1998, the sum of $5,000,000 less the aggregate amount of Loans
described in paragraph (d) of Section 2.1.1 outstanding on such date.
"Wilmington Credit Facilities" shall mean, collectively, the
following:
(a) the $6,500,000 revolving line of credit provided to the
Borrower by Wilmington Trust pursuant to a Business Loan Agreement
dated September 25, 1996, by and between the Borrower and Wilmington
Trust, evidenced by a Promissory Note of even date therewith, in the
aforesaid principal amount, made and executed by the Borrower, payable
to the order of Wilmington Trust, and secured by a Commercial Security
Agreement of even date therewith, by and among the Borrower, PHS and
Wilmington Trust,
(b) the $5,000,000 revolving line of credit provided to the
Borrower by Wilmington Trust pursuant to a Business Loan Agreement
dated September 25, 1996, by and between the Borrower and Wilmington
Trust, evidenced by a Promissory Note of even date therewith, in the
aforesaid principal amount, made and executed by the Borrower, payable
to the order of Wilmington Trust, and secured by a Commercial Security
Agreement of even date therewith, by and among the Borrower, PHS and
Wilmington Trust, and
(c) the $15,000,000 revolving line of credit provided to the
Borrower by Wilmington Trust pursuant to a Business Loan Agreement
dated September 25, 1996, by and between the
23
34
Borrower and Wilmington Trust, evidenced by a Promissory Note of even
date therewith, in the aforesaid principal amount, made and executed
by the Borrower, payable to the order of Wilmington Trust, and secured
by a Commercial Security Agreement of even date therewith, by and
among the Borrower, PHS and Wilmington Trust.
"Wilmington Trust" shall mean Wilmington Trust Company, a
Delaware banking corporation with principal offices in Wilmington, Delaware.
1.2. Accounting and Commercial Terms. As used in this Agreement, all
accounting terms used but not otherwise defined herein shall have the respective
meanings assigned to them in conformity with GAAP. All terms used but not
otherwise defined herein that are defined or used in Article 9 of the UCC shall
have the respective meanings assigned to them in such Article.
1.3. General Construction. As used in this Agreement, the masculine,
feminine and neuter genders and the plural and singular numbers shall be deemed
to include the others in all cases in which they would so apply. "Includes" and
"including" are not limiting, and shall be deemed to be followed by "without
limitation" regardless of whether such words or words of like import in fact
follow same. The word "or" is not intended and shall not be construed to be
exclusive.
1.4. Defined Terms; Headings. The use of defined terms in the Loan
Documents is for convenience of reference and shall not be deemed to be limiting
or to have any other substantive effect with respect to the persons or things to
which reference is made through the use of such defined terms. Article and
section headings and captions in the Loan Documents are included in such Loan
Documents for convenience of reference and shall not constitute a part of the
applicable Loan Documents for any other purpose.
1.5. References to this Agreement and Parts Thereof. As used in this
Agreement, unless otherwise specified the words "hereof," "herein" and
"hereunder" and words of similar import shall refer to this Agreement including
all schedules and exhibits hereto, as a whole, and not to any particular
provision of this Agreement, and the words "Article", "Section", "Schedule" and
"Exhibit" refer to articles, sections, schedules and exhibits of or to this
Agreement.
1.6. Documentary References. Any reference herein to any instrument,
document or agreement, by whatever terminology used, shall be deemed to include
any and all amendments, modifications, supplements, extensions, renewals,
substitutions and/or replacements thereof as the context may require.
24
35
1.7. Legal References. Any reference herein to any law shall be a
reference to such law as in effect from time to time and shall include any rules
and regulations promulgated or published thereunder and published
interpretations thereof.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1. Commitments.
2.1.1. Amounts of Commitments.
(a) The aggregate amount of the Commitments shall be
$20,000,000.
(b) The aggregate amount of the Revolving Credit Commitments
at any time is equal to the aggregate amount of the Commitments in
effect at such time less the aggregate amount of Letter of Credit
Liabilities outstanding at such time.
(c) The aggregate amount of the Letter of Credit Commitments
at any time is equal to the aggregate amount of the Commitments in
effect at such time less the aggregate amount of Loans outstanding at
such time.
(d) Notwithstanding the foregoing or any other provision of
this Agreement that may be to the contrary, until such time as the
Borrower has delivered to the Administrative Agent and each Lender the
financial statements, financial reports, certificates and other
financial information required by Section 8.1.2 for the Fiscal Quarter
ending March 31, 1998, the aggregate amount of Loans made for purposes
other than (i) financing Permitted Acquisitions, (ii) paying amounts
payable by the Borrower pursuant to Section 3.2, or (iii) refinancing
Loans described in the preceding clauses (i) and (ii), shall not exceed
$5,000,000 in principal amount outstanding at any one time.
2.1.2. Extension of Commitment Period. Contemporaneously
with the delivery to the Administrative Agent and each Lender of the financial
statements, financial reports, certificates and other financial information
required by Section 8.1.1 for any Fiscal Year ending less than twelve (12)
months prior to the Commitment Period Expiration Date as then in effect,
the Borrower at its option may deliver to the Administrative Agent (with copies
to each Lender) a Commitment Period Extension Request. Not later than forty-five
(45) days after receipt of such request, the Administrative Agent, on behalf of
the Lenders,
25
36
will notify the Borrower whether the Lenders will agree to extend the Commitment
Period and will advise the Borrower of any conditions to such extension imposed
by the Lenders. If (a) the Lenders in their discretion determine to grant the
request, (b) the Borrower accepts any conditions to such extension imposed by
the Lenders, and (c) no Default or Event of Default has occurred and is
continuing, the Commitment Period Expiration Date as then in effect shall be
extended to the first anniversary of such Commitment Period Expiration Date. The
Borrower and the Guarantors shall, at their sole cost and expense, execute and
deliver all documents, instruments and agreements and perform all other acts
that reasonably may be required, in the opinion of the Administrative Agent, to
evidence and confirm such extension.
2.2. Loans.
2.2.1. Commitment to Make Loans. Subject to all of the terms
and conditions of this Agreement (including the conditions set forth in Sections
6.1 and 6.2) and in reliance upon the representations and warranties of the
Borrower herein set forth, each Lender hereby severally agrees to make Loans to
the Borrower from time to time during the Commitment Period, in amounts up to
its Percentage of the aggregate Revolving Credit Commitments, for the purposes
identified in Section 2.10. In no event shall (a) the aggregate principal amount
of the Loans made by any Lender outstanding at any time exceed such Lender's
Revolving Credit Commitment, or (b) the aggregate principal amount of the Loans
made by all Lenders outstanding at any time exceed the Revolving Credit
Commitments. Each Lender's Revolving Credit Commitment shall expire upon the
expiration of the Commitment Period, and all Loans shall be paid in full no
later than the Maturity Date.
2.2.2. Lenders' Obligations Several; Proportionate Loans.
The obligations of the Lenders to make Loans under Section 2.2.1 shall be
several and not joint and, subject to Section 2.14.4, all Loans under this
Agreement shall be made by the Lenders simultaneously and proportionately to
their respective Percentages of the Revolving Credit Commitments. It is
understood and agreed that the failure of any Lender to make its Loan as part of
any Borrowing under Section 2.2.1 shall not relieve any other Lender of its
obligation to make its Loan as provided in Section 2.2.1. Neither the
Administrative Agent nor any Lender shall be responsible for the failure of any
other Lender to make a Loan as provided herein nor shall the Revolving Credit
Commitment of any Lender be increased as a result of the default by any other
Lender in such other Lender's obligation to make Loans hereunder.
2.2.3. Revolving Credit; Minimum Borrowings. Amounts
borrowed by the Borrower under the Revolving Credit Commitments may be prepaid
and reborrowed from time to time during the
26
37
Commitment Period. The aggregate amount of Loans made on any Funding Date shall
be in integral multiples of $100,000.
2.2.4. Notice of Borrowing.
(a) Delivery of Notice. Whenever the Borrower desires to
borrow under Section 2.2, it shall deliver to the Administrative Agent
a Notice of Borrowing no later than 11:00 a.m. (Central time) at least
one (1) Business Day in advance of the proposed Funding Date (in the
case of Base Rate Loans) or three (3) Business Days in advance of the
proposed Funding Date (in the case of LIBOR Loans). The Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a
Business Day), (ii) the amount of the proposed Borrowing, (iii) whether
the proposed Borrowing shall be in the form of Base Rate Loans or LIBOR
Loans, and (iv) in the case of LIBOR Loans, the requested Interest
Period. In lieu of delivering a Notice of Borrowing, the Borrower may
give the Administrative Agent telephonic notice by the required time of
notice of any proposed Borrowing under this Section 2.2.4; provided,
however, that such notice shall be promptly confirmed in writing by
delivery of a Notice of Borrowing to the Administrative Agent on or
prior to the Funding Date of the requested Loans. The execution and
delivery of each Notice of Borrowing shall be deemed a representation
and warranty by the Borrower that the requested Loans may be made in
accordance with, and will not violate the requirements of, this
Agreement, including those set forth in Section 2.2.1.
(b) No Liability for Telephonic Notices. Neither the
Administrative Agent nor any Lender shall incur any liability to the
Borrower in acting upon any telephonic notice given pursuant to this
Section 2.2.4 that the Administrative Agent believes in good faith to
have been given by a duly authorized officer or other person authorized
to borrow on behalf of the Borrower or for otherwise acting in good
faith under this Section 2.2.4 and, upon the funding of Loans by the
Lenders in accordance with this Agreement pursuant to any telephonic
notice, the Borrower shall have effected a Borrowing hereunder.
(c) Notice Irrevocable. A Notice of Borrowing for LIBOR
Loans (or a telephonic notice in lieu thereof) shall be irrevocable on
and after the related Interest Rate Determination Date, and the
Borrower shall be bound to make a Borrowing in accordance therewith.
2.2.5. Disbursement of Funds. Promptly after receipt of a
Notice of Borrowing (or telephonic notice in lieu thereof), the Administrative
Agent shall notify each Lender of the proposed Borrowing in writing, or by
telephone promptly confirmed in
27
38
writing. Each Lender shall make the amount of its Loan available to the
Administrative Agent, in immediately available (same day) funds, at the Lending
Office of the Administrative Agent, not later than 11:00 a.m. (Central time) on
the Funding Date. The Administrative Agent shall make the proceeds of such Loans
available to the Borrower on such Funding Date by causing an amount of
immediately available (same day) funds equal to the proceeds of all such Loans
received by the Administrative Agent to be credited to the account of the
Borrower at such office of the Administrative Agent.
2.3. Letters of Credit.
2.3.1. Issuance of Letters of Credit.
(a) The Borrower may request the Issuing Bank at any time
and from time to time during the Commitment Period to issue, and
subject to and upon all of the terms and conditions of this Agreement
(including the conditions set forth in Sections 6.1 and 6.2) and in
reliance upon the representations and warranties of the Borrower herein
set forth the Issuing Bank shall issue, for the account of the Borrower
and for the benefit of the holder(s) (or any trustee, agent or other
representative of such holder(s)) of Letter of Credit Supportable
Obligations of the Borrower and its Subsidiaries, one or more
irrevocable standby letters of credit in the form customarily used by
such Issuing Bank, or in such other form as has been approved by the
Issuing Bank and the Administrative Agent, in support of such Letter of
Credit Supportable Obligations; provided, however, that (1) each Letter
of Credit shall be in a minimum stated amount of $50,000, (2) each
Letter of Credit by its terms shall terminate no later than three
hundred sixty-six (366) days after the date of issuance (or the date of
the most recent extension, as the case may be), nor later than fifteen
(15) days prior to the Maturity Date, (3) in no event shall any Letter
of Credit be issued if the issuance thereof would cause the aggregate
amount of the then outstanding Letter of Credit Liabilities to exceed
the aggregate amount of the Letter of Credit Commitments then in
effect, and (4) the Issuing Bank shall not issue any Letter of Credit
relating to a new Service Contract that individually will represent
more than $25 million in annual revenue for the Borrower and its
Subsidiaries unless such Letter of Credit is specifically approved by
Requisite Lenders, in their discretion.
(b) The Borrower may request the Issuing Bank at any time
and from time to time during the one-year period following the
Commitment Period Expiration Date to extend, and subject to and upon
all of the terms and conditions of this Agreement (including the
conditions set forth in
28
39
Sections 6.1 and 6.2) and in reliance upon the representations and
warranties of the Borrower herein set forth the Issuing Bank shall
extend, the expiration date of a Letter of Credit outstanding on the
Commitment Period Expiration Date; provided, however, that each such
extension shall be subject to all applicable limitations and other
provisions set forth in paragraph (a) of this Section 2.3.1.
2.3.2. Letter of Credit Requests. At least five (5) Business
Days prior to (i) the date on which the Borrower desires that a Letter of Credit
be issued hereunder or (ii) the date on which the Borrower desires that the
expiration date of an outstanding Letter of Credit be extended, as the case may
be, the Borrower shall deliver to the Issuing Bank (with copies to the
Administrative Agent and each Lender) a Letter of Credit Request therefor. The
execution and delivery of each Letter of Credit Request shall be deemed a
representation and warranty by the Borrower that the requested Letter of Credit
issuance or extension may be accomplished in accordance with, and will not
violate the requirements of, this Agreement, including those set forth in
Section 2.3.1. Unless the Issuing Bank has received notice from the
Administrative Agent or Requisite Lenders before it issues or extends the
requested Letter of Credit that a Default exists or that the requested issuance
or extension would violate the requirements of this Agreement, including those
set forth in Section 2.3.1, then the Issuing Bank may issue or extend, as the
case may be, the requested Letter of Credit for the account of the Borrower in
accordance with the Issuing Bank's usual and customary practices. Upon the
issuance or extension of any Letter of Credit, the Issuing Bank shall promptly
notify the Administrative Agent and each Lender of such issuance or extension,
which notice to the Administrative Agent shall be accompanied by a copy of the
Letter of Credit so issued or the instrument(s) evidencing such extension.
2.4. Participations in Letter of Credit Liabilities.
2.4.1. Purchase of Participations by Lenders. Each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
from the Issuing Bank, without recourse or warranty and without any further
action on the part of any party, an undivided interest and participation to the
extent of such Lender's Percentage in all Letter of Credit Liabilities as to
each Letter of Credit and any security therefor or guarantee relating thereto.
2.4.2. Notification by Issuing Bank of Drawing. The Issuing
Bank shall notify the Administrative Agent and each Lender promptly after the
presentation of any draft and certificate or equivalent documents to the Issuing
Bank in connection with any drawing under a Letter of Credit not
29
40
reimbursed by or on behalf of the Borrower on the date such drawing is made.
2.4.3. Payments by Lenders Upon a Drawing or Payment Under a
Letter of Credit; Adjustments. Each of the Lenders, shall, on or before 11:00
a.m. (Central time) on the date of any drawing under a Letter of Credit,
unconditionally pay to the Administrative Agent, for distribution by the
Administrative Agent to the Issuing Bank, such Lender's Percentage of such
drawing; provided, however, that, if the Borrower should pay in full or in part
such drawing on the date thereof, the obligation of each Lender to pay to the
Issuing Bank pursuant to this Section 2.4.3 such Lender's Percentage of such
drawing shall be reduced by the amount equal to such Lender's Percentage of such
payment by the Borrower. Amounts paid in excess of the net amount so owed by
each Lender to the Issuing Bank shall promptly be refunded by the Issuing Bank
to the Administrative Agent for distribution by the Administrative Agent to the
respective Lenders.
2.4.4. Failure to Pay by Lenders. If any Lender shall fail
to pay its Percentage of any drawing under a Letter of Credit as provided in
Section 2.4.3 above, the Issuing Bank shall be deemed to have advanced funds on
behalf of such Lender. Any advance made by the Issuing Bank on behalf of a
Lender hereunder and not paid by such Lender to the Issuing Bank shall bear
interest for each day from the day such payment is due until such payment shall
be paid in full at a rate per annum equal to the Federal Funds Rate or any other
rate customarily used by banks for the correction of errors among banks, but in
no event to exceed the Highest Lawful Rate, and shall be repaid by application
by the Administrative Agent (for the account of the Issuing Bank) of any payment
that such Lender otherwise is entitled to receive under this Agreement. Pending
repayment, each such advance shall be secured by such Lender's participation
interest in the Letter of Credit drawn upon, the Letter of Credit Liabilities
arising therefrom and any security therefor, and the Issuing Bank shall be
subrogated to such Lender's rights hereunder in respect thereof.
2.4.5. Lenders' Obligations Absolute. The obligation of each
Lender to pay to the Administrative Agent, for the benefit of the Issuing Bank,
its Percentage of each drawing under a Letter of Credit not indefeasibly repaid
by the Borrower shall be unconditional and irrevocable, shall not be subject to
any qualification or exception whatsoever, shall be made in accordance with the
terms and conditions of this Agreement under all circumstances and shall be
binding in accordance with the terms and conditions of this Agreement under all
circumstances, including the following circumstances:
30
41
(a) any lack of validity or enforceability of this
Agreement, any of the other Loan Documents or any other instrument,
document or agreement relating to the transactions that are the subject
thereof;
(b) the existence of any claim, set-off, defense or other
right that the Borrower, any Guarantor or any Lender may have at any
time against the Administrative Agent, the Issuing Bank, any Lender or
any other Person, whether in connection with this Agreement or the
transactions contemplated herein or any related transactions;
(c) any draft, statement or other document presented under
or in connection with any Letter of Credit, this Agreement or any other
Loan Document proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in
any respect;
(d) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement;
(e) the occurrence or continuance of any Default or
Event of Default;
(f) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of the Letter of Credit, except for any such payment
resulting from the Issuing Bank's gross negligence or willful
misconduct; or
(g) any other reason.
2.4.6. Information Regarding Letter of Credit Liabilities.
Upon request by the Administrative Agent from time to time, the Issuing Bank
shall advise the Administrative Agent and the Lenders as to the various amounts
of the outstanding Letter of Credit Liabilities as shown on the records of the
Issuing Bank.
2.5. Borrower's Obligations Absolute.
2.5.1. Obligations Absolute. The obligations of the
Borrower under this Agreement in respect of any Letter of Credit and under any
other agreement or instrument relating to any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement and such other agreement or instrument under all
circumstances, to the extent permitted by law, including the following
circumstances:
31
42
(a) any lack of validity or enforceability of this
Agreement, any of the other Loan Documents or any other instrument,
document or agreement relating to the transactions that are the subject
thereof;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the obligations of the Borrower
in respect of the Letters of Credit or any other amendment or waiver of
or any consent to departure from all or any of the Loan Documents;
(c) any exchange or release of, or the non-perfection of any
Lien on any Collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Letter of
Credit Obligations;
(d) the existence of any claim, set-off, defense or other
right that the Borrower or any Guarantor may have at any time against
any beneficiary or any transferee of a Letter of Credit (or any Persons
for whom any such beneficiary or transferee may be acting), any of the
Lenders, the Issuing Bank, the Administrative Agent or any other
Person, whether in connection with this Agreement, any of the other
Loan Documents or the transactions contemplated hereby or thereby or
any unrelated transaction;
(e) any draft, statement or other document presented under
or in connection with any Letter of Credit, this Agreement or any other
Loan Document proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in
any respect;
(f) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of the Letter of Credit, except for any such payment
resulting from the Issuing Bank's gross negligence or willful
misconduct;
(g) any consequences arising from causes beyond the
control of the Issuing Bank; and
(h) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing, that might otherwise constitute
a defense available to, or a discharge of, the Borrower or any
Guarantor.
2.5.2. No Liability. No action taken or omitted by the
Issuing Bank under or in connection with the Letters of Credit or the related
applications, agreements or certificates, if taken or omitted in good faith,
shall put the Administrative Agent, the Issuing Bank or any Lender under any
resulting liability to the Borrower.
32
43
2.6. Interest.
2.6.1. Interest Rate on Loans. Subject to Section 2.6.3, the
unpaid principal balances of the Loans shall bear interest from their respective
Funding Dates through maturity (whether by acceleration or otherwise) (including
post-petition interest in any proceeding under applicable bankruptcy laws) at a
rate determined by reference to the Base Rate or LIBOR. The applicable basis for
determining the rate of interest for Loans shall be selected by the Borrower at
the time a Notice of Borrowing is given pursuant to Section 2.2.4 or at the time
a Notice of Conversion/Continuation is given pursuant to Section 2.7.2. If on
any day any Loan is outstanding with respect to which notice has not been
delivered to the Administrative Agent in accordance with the terms of this
Agreement specifying the basis for determining the rate of interest, then for
that day such Loan shall bear interest determined by reference to the Base Rate.
The Loans shall bear interest as follows:
(a) if a Base Rate Loan, then at a fluctuating rate per
annum equal to the sum of the Base Rate, as it varies from time to
time, plus the Applicable Base Rate Margin; or
(b) if a LIBOR Loan, then at a rate per annum equal to the
sum of LIBOR plus the Applicable LIBOR Margin.
2.6.2. Interest Rate on Unreimbursed Draws Under
Letters of Credit. The unpaid principal amount of all draws under Letters of
Credit not immediately repaid pursuant to Section 3.2 shall bear interest from
the date of such drawing until the principal balance thereof is paid in full at
the Default Rate applicable to Base Rate Loans, but in no event to exceed the
Highest Lawful Rate. Interest accruing pursuant to this Section 2.6.2 shall be
payable upon demand.
2.6.3. Default Rate. Upon the occurrence and during the
continuance of an Event of Default, the unpaid principal balances of the Loans
and, to the extent permitted by applicable law, any unpaid interest accrued in
respect of the Loans shall bear interest at the Default Rate, but in no event to
exceed the Highest Lawful Rate; provided, however, that in the case of LIBOR
Loans, upon the expiration of the Interest Period in effect at the time any such
increase in interest rate is effective, such LIBOR Loans shall thereupon become
Base Rate Loans and thereafter bear interest at the corresponding Default Rate,
but in no event to exceed the Highest Lawful Rate. Interest accruing pursuant to
this Section 2.6.3 shall be payable upon demand.
2.6.4. Conclusive Determination. Each determination
by the Administrative Agent of an interest rate under this
33
44
Agreement shall be conclusive and binding for all purposes, absent manifest
error.
2.7. Conversion or Continuation.
2.7.1. Option to Convert or Continue. Subject to the
provisions of Section 2.14, the Borrower shall have the option (a) at any time
to convert all or any part of any outstanding Base Rate Loans in an aggregate
minimum amount of $100,000 and integral multiples of $50,000 in excess of that
amount from Base Rate Loans to LIBOR Loans, and (b) upon the expiration of any
Interest Period applicable to a specific Borrowing of LIBOR Loans, to continue
all or any portion of such Loans in an aggregate minimum amount of $100,000 and
integral multiples of $50,000 in excess of that amount as LIBOR Loans, and the
succeeding Interest Period of such continued LIBOR Loans shall commence on the
expiration date of the Interest Period previously applicable thereto.
2.7.2. Notice of Conversion/Continuation. The Borrower shall
deliver a Notice of Conversion/Continuation to the Administrative Agent no later
than 11:00 a.m. (Central time) at least three (3) Business Days in advance of
the proposed conversion/continuation date. A Notice of Conversion/Continuation
shall specify (a) the proposed conversion/continuation date (which shall be a
Business Day), (b) the aggregate amount of Loans to be converted/continued, (c)
the nature of the proposed conversion/continuation, and (d) the requested
Interest Period. In lieu of delivering a Notice of Conversion/Continuation, the
Borrower may give the Administrative Agent telephonic notice by the required
time of any proposed conversion/continuation under this Section 2.7; provided,
however, that such notice shall be promptly confirmed in writing by a Notice of
Conversion/Continuation delivered to the Administrative Agent on or before the
proposed conversion/continuation date. The execution and delivery of each Notice
of Conversion/Continuation shall be deemed a representation and warranty by the
Borrower that the requested conversion/continuation may be made in accordance
with, and will not violate the requirements of, this Agreement, including those
set forth in Sections 2.7.1 and 2.14.1.
2.7.3. Notice to the Lenders. Promptly after receipt of a
Notice of Conversion/Continuation (or telephonic notice in lieu thereof), the
Administrative Agent shall notify each Lender of the proposed conversion or
continuation. Neither the Administrative Agent nor the Lender shall incur any
liability to the Borrower in acting upon any telephonic notice referred to above
that the Administrative Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to act on behalf of the
Borrower or for otherwise acting in good faith under this Section 2.7 and, upon
34
45
conversion/continuation by the Administrative Agent in accordance with this
Agreement pursuant to any telephonic notice, the Borrower shall have effected a
conversion/continuation of Loans hereunder.
2.7.4. Notice Irrevocable. Except as provided in
Section 3.4.5, a Notice of Conversion/Continuation shall be irrevocable on and
after the related Interest Rate Determination Date, and the Borrower shall be
bound to convert or continue such Loan in accordance therewith.
2.7.5. Automatic Conversion. In the event any LIBOR Loan is
unpaid upon the expiration of the Interest Period applicable thereto and a
Notice of Conversion/Continuation has not been given in the manner provided in
Section 2.7.2, such LIBOR Loan shall, effective as of the last day of such
Interest Period, become a Base Rate Loan.
2.8. Notes; Records of Payments. Each Loan made by a Lender to the
Borrower pursuant to this Agreement shall be evidenced by a Note payable to the
order of such Lender in an amount equal to such Lender's Percentage of the
aggregate amount of the Commitments. Each Lender hereby is authorized to record
and endorse the date and principal amount of each Loan made by it, and the
amount of all payments and prepayments of principal and interest made to such
Lender with respect to such Loans, on a schedule annexed to and constituting a
part of such Lender's Note, which recordation and endorsement shall constitute
prima facie evidence of the Loans made by such Lender to the Borrower and
payments made by the Borrower to such Lender, absent manifest error; provided,
however, that (a) failure by any Lender to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
the Borrower or the rights and remedies of the Lenders under this Agreement or
the Notes, and (b) payments of principal and interest on the Loans to the
Lenders shall not be affected by the failure to make any such recordation or
endorsement thereof. In lieu of making recordation or endorsement, the Lenders
hereby are authorized, at their option, to record the payments or prepayments on
their respective books and records in accordance with their usual and customary
practice, which recordation shall constitute prima facie evidence of the Loans
made by the Lenders to the Borrower and the payments and prepayments made by the
Borrower to the Lenders, absent manifest error.
2.9. Administrative Agent's Right to Assume Funds Available. The
Administrative Agent may assume that each Lender has made the proceeds of its
Loans available to the Administrative Agent on the corresponding Funding Date in
the event the applicable conditions precedent to funding the requested Loans
set forth in Article 6 have been satisfied or waived in accordance with Section
14.3, and the Administrative
35
46
Agent, in its sole discretion, may, but shall not be obligated to, advance all
or any portion of the amount of any requested Borrowing on such Funding Date to
the Borrower prior to receiving the proceeds of the corresponding Loans from the
Lenders. If the Administrative Agent has advanced proceeds of any Loan to the
Borrower on behalf of any Lender and such Lender fails to make available to the
Administrative Agent its Percentage share of such Loan as required by Section
2.2, the Administrative Agent shall be entitled to recover such amount on demand
from such Lender. If such Lender does not pay such amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall notify
the Borrower and the Borrower shall pay such amount to the Administrative Agent.
The Administrative Agent also shall be entitled to recover from such Lender
interest at the Federal Funds Rate or any other rate customarily used by banks
for the correction of errors among banks, but in no event to exceed the Highest
Lawful Rate, on such amount so advanced on behalf of a Lender for each day from
the date such amount was made available by the Administrative Agent to the
Borrower to the date such amount is recovered by the Administrative Agent, with
interest at the applicable rate for such Loan. Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill such Lender's Commitments or
to prejudice any rights that the Administrative Agent or the Borrower may have
against any Lender as a result of any default by such Lender hereunder.
2.10. Use of Proceeds. The proceeds of the Loans will be used by the
Borrower for working capital purposes and for other general corporate purposes,
and will not be used by the Borrower for any purpose prohibited by the terms of
this Agreement or by any law.
2.11. Credit Fees. In consideration for the obligations of the
Administrative Agent, the Issuing Bank and the Lenders set forth herein, the
Borrower shall pay the following credit fees:
2.11.1. Administrative Agent's Fees. Pursuant to one
or more separate agreements with the Administrative Agent, the Borrower shall
pay to the Administrative Agent the fees and charges specified therein for the
services of the Administrative Agent in acting as such hereunder.
2.11.2. Letter of Credit Fees.
(a) The Borrower agrees to pay to the Administrative Agent,
for distribution to each Lender in proportion to that Lender's
Percentage of the Commitments, letter of credit fees ("Letter of Credit
Fees") in respect of each Letter of Credit as provided in paragraph (b)
below.
(b) Upon the issuance of a Letter of Credit and on the
corresponding day in each third month thereafter while
36
47
such Letter of Credit is outstanding, a Letter of Credit Fee in an
amount equal to the amount available to be drawn under such Letter of
Credit on the date of payment, multiplied by twenty-five percent (25%)
of the Applicable Letter of Credit Fee Percentage in effect on the
date of payment, shall be due and payable in respect of such Letter of
Credit.
(c) Letter of Credit Fees shall be deemed earned on and as
of the date due and payable, and shall not be subject to refund or
reduction because of any subsequent event, including the cancellation
or expiration of such Letter of Credit or the drawing of a draft
thereunder.
2.11.3. Opening Fees; Amendment or Transfer Fees; Drawing
Fees. Pursuant to one or more separate agreements with the Issuing Bank,
Borrower shall pay to the Issuing Bank its fees for the issuance of Letters of
Credit pursuant to this Agreement, together with the normal and customary fees
charged by the Issuing Bank upon the establishment of any Letter of Credit, upon
any amendment or transfer of a Letter of Credit and upon the payment of any
drawing under any Letter of Credit.
2.12. Computations. To the extent permitted by applicable law, all
computations of fees and interest under this Agreement payable in respect of any
period shall be made by the Administrative Agent on the basis of a 360-day year,
in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such fees or interest
are payable. In computing interest on any Loan, the date of the making of such
Loan or the first day of an Interest Period, as the case may be, shall be
included and the date of payment or the expiration date of an Interest Period,
as the case may be, shall be excluded; provided, however, that if a Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that Loan.
2.13. Interest and Fees Margins. For purposes of interest and fee
computations hereunder involving the Applicable Base Rate Margin, the Applicable
LIBOR Margin and the Applicable Letter of Credit Fee Percentage, such margins
and percentages shall be determined as follows:
37
48
Applicable
Applicable Applicable Letter of
LIBOR Base Rate Credit Fee
Tier Margin Margin Percentage
---- ---------- ---------- -----------
1 1.00% 0.00% 0.85%
2 1.25% 0.00% 1.10%
3 1.60% 0.15% 1.45%
4 2.15% 0.50% 2.00%
If the Borrower establishes to the satisfaction of the Administrative
Agent that more than half of the treasury management services (i.e., banking
services relating to management of daily cash balances) utilized by the Borrower
are being provided by the Administrative Agent, each of the Applicable Letter of
Credit Fee Percentages set forth above shall be reduced by fifteen one
hundredths of a percentage point (0.15%). If the Borrower establishes to the
satisfaction of the Administrative Agent that more than half of the treasury
management services and half of all financial services (i.e., banking services
relating to management of term cash balances) utilized by the Borrower are being
provided by the Administrative Agent, each of the Applicable Letter of Credit
Fee Percentages set forth for Tiers 2-4 above shall be reduced by thirty one
hundredths of a percentage point (0.30%). The Applicable Letter of Credit Fee
Percentage reduction provided in the immediately preceding sentence is not
cumulative with and is not in addition to the reduction provided in the second
preceding sentence.
Except as expressly hereinafter provided, the applicable tier at any
time shall be determined with reference to the Borrower's Funded Indebtedness to
EBITDA Ratio for the Last Four Fiscal Quarters, as follows:
Tier Funded Indebtedness to EBITDA Ratio
---- -----------------------------------
1 Less than 2.00 to 1.00
2 Equal to or greater than 2.00 to 1.00 but less
than 2.50 to 1.00
3 Equal to or greater than 2.50 to 1.00 but less
than 2.75 to 1.00
4 Equal to or greater than 2.75 to 1.00
From the date hereof to but not including the first Pricing Tier
Determination Date after the date hereof, Tier 1 shall be applicable. Any
adjustment in the margins set forth above shall take effect on the first Pricing
Tier Determination Date
38
49
following the Last Four Fiscal Quarters as to which such ratio was calculated.
2.14. Special Provisions Governing LIBOR Loans. Notwithstanding other
provisions of this Agreement, the following provisions shall govern with respect
to LIBOR Loans as to the matters covered:
2.14.1. Determination of Interest Period. By giving a Notice
of Borrowing pursuant to Section 2.2.4, the Borrower shall have the option,
subject to the other provisions of this Section 2.14.1, to specify whether the
Interest Period commencing on the date specified therein shall be a one, two,
three or six-month period; provided that:
(a) in the case of immediately successive Interest Periods,
each successive Interest Period shall commence on the day on which the
next preceding Interest Period expires;
(b) if any Interest Period otherwise would expire on a day
that is not a Business Day, that Interest Period shall be extended to
expire on the next succeeding Business Day; provided, however, that if
any such Interest Period would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business
Day occurs in that month, that Interest Period shall expire on the
immediately preceding Business Day;
(c) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to paragraph (d) below, end on the last Business
Day of a calendar month; and
(d) no Interest Period shall extend beyond the Maturity
Date.
2.14.2. Determination of Interest Rate. As soon as is
practicable after 11:00 a.m. (Central time) on the Interest Rate Determination
Date, the Administrative Agent shall determine (which determination shall,
absent manifest error, be final, conclusive and binding upon all parties) the
interest rate that shall apply to the LIBOR Loans for which an interest rate is
then being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the Borrower
and to each Lender.
2.14.3. Inability to Determine Rate. In the event the
Administrative Agent shall have determined (which determination shall be
conclusive and binding absent manifest error) that by reason of circumstances
affecting the London
39
50
interbank Eurodollar market, adequate and reasonable means do not exist for
ascertaining Base LIBOR, the Administrative Agent forthwith shall give
telephonic notice of such determination, confirmed in writing, to the Borrower
and to each Lender. If such notice is given, and until such notice has been
withdrawn by the Administrative Agent, no additional LIBOR Loans shall be made.
2.14.4. Illegality; Termination of Commitment to Make LIBOR
Loans. Notwithstanding any other provisions of this Agreement, if any law,
treaty, rule or regulation or determination of a court or other governmental
authority, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender to make or maintain LIBOR Loans,
as contemplated by this Agreement, then, and in any such event, such Lender
shall be an "Affected Lender" and shall promptly give notice (by telephone
confirmed in writing) to the Borrower and the Administrative Agent (which notice
the Administrative Agent shall promptly transmit to each Lender in writing, or
by telephone confirmed in writing) of such determination, and the obligation of
the Affected Lender to make LIBOR Loans shall be terminated, and its obligation
to maintain its LIBOR Loans during such period shall be terminated at the
earlier to occur of the termination of the last Interest Period then in effect
or when required by law. Thereafter, and until such notice has been withdrawn by
the Affected Lender, the Affected Lender shall have no obligation to make LIBOR
Loans, and any LIBOR Loans of the Affected Lender then outstanding shall be
converted into Base Rate Loans as of the end of the corresponding Interest
Period for each.
2.14.5. LIBOR Loans After Default. Unless all Lenders shall
otherwise agree, after the occurrence of and during the continuance of a Default
or an Event of Default, the Borrower may not elect to have a Loan be made or
continued as, or converted to, a LIBOR Loan.
2.15. Expenses. The Borrower shall reimburse the Administrative
Agent, on demand, for all reasonable attorneys' and paralegals' fees and
expenses of counsel to the Administrative Agent, all fees and expenses for
title, lien and other public records searches, all filing and recordation fees
and taxes, all duplicating expenses, corporation search fees, appraisal fees and
escrow agent fees and expenses and all other customary fees and expenses
incurred in connection with (a) the negotiation, documentation and closing of
the transactions contemplated hereby, (b) the perfection of or the continued
perfection of the security interests contemplated hereby, and (c) the review and
preparation of any documentation in connection with, and the approval by the
Lenders of any matter for which the Lenders' approval is requested or required
hereunder. The obligations described in this Section 2.15 regarding the payment
40
51
of expenses are independent of all other obligations of the Borrower hereunder,
shall survive the expiration or termination of the Commitments and shall be
payable regardless of whether the financing transactions contemplated by this
Agreement shall be consummated.
2.16. Replacement or Removal of a Lender. If the Administrative Agent
receives a notice pursuant to Section 3.4.7 claiming compensation, reimbursement
or indemnity pursuant to Section 3.4 or Section 3.5, and the aggregate amount of
all such compensation, reimbursement or indemnity payments made or required to
be made by the Borrower pursuant to Section 3.4 or Section 3.5 to the Lender
giving notice is materially greater (as determined by the Borrower in its
reasonable judgment) than the weighted average amount of payments made or
required to be made to the other Lenders pursuant to Section 3.4 or Section 3.5,
or if the Administrative Agent receives a notice from an Affected Lender
pursuant to Section 2.14.4, then, so long as no Default or Event of Default
shall have occurred and be continuing, the Borrower may, within sixty (60) days
after receipt of any such notice, elect to terminate such Lender as a party to
this Agreement. If the amount of such Lender's Commitment, together with the
amount of any other Commitments theretofore or concurrently therewith to be
reduced in accordance with this Section 2.16, aggregates twenty-five percent
(25%) or less of the aggregate Commitments, the Borrower may elect either to
replace such Lender with another financial institution reasonably satisfactory
to the Administrative Agent and the Issuing Bank (a "Replacement Lender") or to
reduce the Commitments by the amount of the Commitment of such Lender. If the
amount of such Lender's Commitment, together with the amount of any other
Commitments theretofore or concurrently therewith to be reduced in accordance
with this Section 2.16, aggregates in excess of twenty-five percent (25%) of the
aggregate Commitments, the Borrower may elect to terminate such Lender only if,
together with its notice of termination, it provides to the Administrative Agent
a commitment from a Replacement Lender to replace the Commitment of the
terminated Lender on the terms and conditions set forth herein. The Borrower's
election to terminate a Lender under this Section 2.16 shall be set forth in a
written notice from the Borrower to the Administrative Agent (with a copy to
such Lender), setting forth (a) the basis for termination of such Lender, (b)
whether the Borrower intends to replace such Lender with a Replacement Lender
or, if the Borrower is not required to replace such Lender, to reduce the
Commitments by the amount of the Commitment of such Lender, and (c) the date
(not later than thirty [30] days after the date of such notice) when such
termination shall become effective. On the date on which such termination
becomes effective, (i) the Borrower and/or the Replacement Lender, as
applicable, shall pay the terminated Lender an amount equal to all principal,
interest, fees and other amounts owed to such Lender pursuant to this Agreement
(including
41
52
any amounts owed under Sections 3.4 and 3.5) through such date, and (ii) there
shall have been received by the Administrative Agent an executed Assignment and
Acceptance and all other documents and supporting materials necessary, in the
reasonable judgment of the Administrative Agent, to evidence the substitution of
the Replacement Lender for such terminated Lender, or if there is no Replacement
Lender, to reflect the adjustment of the Commitments, including any necessary or
appropriate adjustments to the Lenders' Percentages (adjustments to the
Commitments and Percentages of the remaining Lenders to be based upon the
relative proportions of their respective Percentages).
ARTICLE 3
PAYMENTS, PREPAYMENTS AND COMPUTATIONS
3.1. General Provisions Relating to Repayment of Loans. The Loans
shall be repaid as provided in this Section 3.1.
3.1.1. Interest Payments. The interest accrued on each
Loan shall be payable on each Interest Payment Date applicable to such Loan,
upon any prepayment of any LIBOR Loan (to the extent accrued on the amount being
prepaid) and at maturity.
3.1.2. Scheduled Principal Payments. On the last day of the
third month following the first anniversary of the Commitment Period Expiration
Date (as such date may have been extended pursuant to Section 2.1.2), and on the
last day of each succeeding third month thereafter, Borrower shall make a
payment in respect of outstanding Loans in an aggregate amount equal to
one-fourth (25%) of the aggregate principal balance of the Loans outstanding on
the Commitment Period Expiration Date. Each principal payment pursuant to this
Section 3.1.2 shall be applied first to Base Rate Loans to the full extent
thereof before application to LIBOR Loans.
3.1.3. Prepayments.
(a) Optional Prepayments. The Borrower may, upon not less
than one (1) Business Day's prior written or telephonic notice
confirmed in writing to the Administrative Agent (in the case of Base
Rate Loans), and upon not less than three (3) Business Days' prior
written or telephonic notice confirmed in writing to the Administrative
Agent (in the case of LIBOR Loans) (each of which notices the
Administrative Agent will promptly transmit to each Lender in writing,
or by telephone confirmed in writing), at any time and from time to
time prepay any Borrowing of Loans (as the Borrower may specify to the
Administrative Agent) in
42
53
whole or in part in integral multiples of $50,000; provided, however,
that LIBOR Loans may only be prepaid in part if, after such
prepayment, the unpaid portion of such Loans shall have aggregate
minimum balances of $100,000; and provided further that, in connection
with any prepayment of LIBOR Loans, the Borrower shall pay to the
Administrative Agent, for distribution to the Lenders, the accrued
interest on such Loan required to be paid pursuant to Section 3.1.1
and any amounts required to be paid pursuant to Section 3.4.5;
(b) Mandatory Prepayments. The Borrower shall prepay Loans
to the extent necessary for the aggregate principal amount of Loans and
Letter of Credit Liabilities outstanding at any time does not exceed
the Commitments then in effect; provided, however, that in connection
with any prepayment of LIBOR Loans, the Borrower shall pay to the
Administrative Agent, for distribution to the Lenders, the accrued
interest on such Loan required to be paid pursuant to Section 3.1.1 and
any amounts required to be paid pursuant to Section 3.4.5; and
(c) Application of Prepayments. Any prepayment pursuant to
this Section 3.1.3 shall be applied first to Base Rate Loans to the
full extent thereof before application to LIBOR Loans.
3.1.4. Final Maturity of Loans. In all events, the entire
aggregate principal balances of, all accrued and unpaid interest on and all fees
and other sums due and payable in respect of the Loans shall be due and payable
in full on the Maturity Date if not sooner paid.
3.2. Repayment of Amounts Drawn Under Letters of Credit. On each day
the Issuing Bank honors a drawing under a Letter of Credit, the Borrower shall,
after the Issuing Bank has honored such drawing, immediately reimburse the
Issuing Bank for the account of the Lenders, by 11:00 a.m. (Central time) (or as
soon thereafter as the drawing has been honored) in an amount equal to the
amount of such drawing.
3.3. Payments and Computations, Etc.
3.3.1. Time and Manner of Payments. Except as otherwise
expressly set forth herein, all payments of principal, interest and fees
hereunder and under the Notes shall be in lawful currency of the United States
of America, in immediately available (same day) funds, and delivered to the
Administrative Agent at its Lending Office for its account, the account of the
Lenders or the account of the Issuing Bank, as the case may be, not later than
11:00 a.m. (Central time) on the date due. As soon as is practicable thereafter,
the Administrative Agent shall
43
54
cause to be distributed like funds relating to the payment of principal or
interest or fees ratably to the Lenders in accordance with their respective
Percentages (other than amounts payable pursuant to Sections 2.11.1, 3.4 and
3.5, which are to be distributed other than ratably). Funds received by the
Administrative Agent after the time specified in the first sentence of this
paragraph shall be deemed to have been paid by the Borrower on the next
succeeding Business Day.
3.3.2. Payments on Non-Business Days. Whenever any payment
to be made hereunder or under the Notes shall be stated to be due on a day that
is not a Business Day, the payment shall be made on the next succeeding Business
Day and such extension of time shall be included in the computation of the
payment of interest hereunder or under the Notes or of the fees payable
hereunder, as the case may be; provided, however, that in the event that the day
on which payment relating to a LIBOR Loan is due is not a Business Day but is a
day of the month after which no further Business Day occurs in that month, then
the due date thereof shall be the next preceding Business Day.
3.3.3. Apportionment of Payments. Aggregated principal and
interest payments shall be apportioned among all outstanding Loans to which such
payments relate, ans shall be apportioned ratably among the Lenders in
proportion to the Lenders' respective Percentages of the corresponding Loans.
The Administrative Agent shall promptly distribute to each Lender at its Lending
Office its Percentage of all such payments received by the Administrative Agent.
Notwithstanding the foregoing provisions of this Section 3.3.3, if, pursuant to
the provisions of Section 2.14.4, any Notice of Borrowing is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its
Percentage of LIBOR Loans, the Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
3.3.4. Assumption of Payments Made. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the benefit of
the Lenders hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at
44
55
the Federal Funds Rate, but in no event to exceed the Highest Lawful Rate.
3.3.5. Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, unless otherwise set forth in
this Agreement or the other Loan Documents, all payments received by the
Administrative Agent from the enforcement of remedies under the Loan Documents
or otherwise with respect to the Obligations shall be applied (a) first, to the
payment of any fees, expenses, reimbursements or indemnities then due from the
Borrower to the Administrative Agent; (b) second, to the payment of any fees,
expenses, reimbursements or indemnities then due from the Borrower to the
Lenders, or any of them; (c) third, to the ratable payment of interest due from
the Borrower with respect to any of the Loans and fees in respect of the Letters
of Credit; (d) fourth, to the ratable payment of principal of any of the Loans
of the Borrower and all obligations of the Borrower to reimburse the Issuing
Bank and the Lenders in respect of drawings under Letters of Credit; (e) fifth,
to be held as cash collateral by the Administrative Agent for the ratable
benefit of the Lenders, as security for outstanding Letter of Credit
Liabilities, and (f) sixth, to pay all other Obligations.
3.4. Increased Costs, Capital Requirements and Taxes.
3.4.1. Increased Costs. Except to the extent reimbursed
pursuant to other provisions of this Section 3.4, in the event that either (i)
the introduction of, or any change in, or in the interpretation of, any law or
regulation or (ii) compliance with any guideline or request from any central
bank or other Governmental Authority (regardless of whether having the force of
law):
(a) does or shall subject any Lender to any additional
income, preference, minimum or excise tax or to any additional tax of
any kind whatsoever with respect to this Agreement, the Notes, the
Letters of Credit or any of the Loans or change the basis of taxation
of payments to such Lender of principal, commitment fees, interest or
any other amount payable hereunder (except for changes in the rate of
tax on the overall gross or net income of that Lender or its foreign
branch, agency or subsidiary); or
(b) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such Lender
(except, with respect to LIBOR Loans, to the extent that the
45
56
reserve requirements are reflected in the definition of "LIBOR"); or
(c) does or shall impose on that Lender any other
condition;
and the result of any of the foregoing is to increase the cost to that Lender of
issuing or participating in the Letters of Credit or of making, renewing or
maintaining the Loans or the Commitments or to reduce any amount receivable
hereunder or thereunder; then, in any such case, the Borrower shall promptly pay
to such Lender, upon demand, such additional amounts as are sufficient to
compensate such Lender for any such additional cost or reduced amount received.
3.4.2. Capital Requirements - General. If either (i) the
introduction of, or any change in, or in the interpretation of, any law or
regulation or (ii) compliance with any guideline or request from any central
bank or other Governmental Authority (regardless of whether having the force of
law), affects or would affect in any way the amount of capital required or
expected to be maintained by any Lender or any corporation controlling such
Lender with the effect of reducing the rate of return on such capital to a level
below the rate that such Lender or such other corporation could have achieved
but for such introduction, change or compliance, and such Lender reasonably
determines that such reduction is based on the existence of such Lender's
Commitments hereunder and other commitments of this type, then upon demand by
such Lender, the Borrower shall further pay to such Lender from time to time as
specified by such Lender such additional amounts as are sufficient to compensate
such Lender or other corporation for such reduction.
3.4.3. Capital Requirements - Letters of Credit. If the
Issuing Bank or any Lender determines that either (i) the introduction of, or
any change in, or in the interpretation of, any law or regulation or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (regardless of whether having the force of law), affects
or would affect in any way the amount of capital required or expected to be
maintained by the Issuing Bank or such Lender or any corporation controlling the
Issuing Bank or such Lender with the effect of reducing the rate of return on
such capital below the rate that the Issuing Bank or such Lender or such other
corporation could have achieved but for such introduction, change or compliance,
and the Issuing Bank or such Lender reasonably determines that such reduction is
based on the existence of the Letters of Credit issued hereunder and other
commitments of this type, then upon demand by the Issuing Bank or such Lender,
the Borrower shall further pay to the Issuing Bank and such Lender from time to
time as specified by the Issuing Bank and such
46
57
Lender such additional amounts as are sufficient to compensate the Issuing Bank
and such Lender or other corporation for such reduction.
3.4.4. Increased Reserves - Letters of Credit. If either
(i) the introduction of, or any change in, or in the interpretation of, any law
or regulation or (ii) compliance with any guideline or request from any central
bank or other Governmental Authority (regardless of whether having the force of
law), shall either (a) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit or similar instruments
issued by, or assets held by, or deposits in or for the account of, the Issuing
Bank or any Lender, or (b) impose on the Issuing Bank or any Lender any other
condition regarding this Agreement as it pertains to the Letters of Credit, or
any letter of credit, and the result of any event referred to in the preceding
clause (a) or (b) shall be to increase the cost to the Issuing Bank or any
Lender of issuing or maintaining any Letter of Credit or any participation
therein (which increase in cost shall be determined by the Issuing Bank's or
such Lender's, as the case may be, reasonable allocations of the aggregate of
such cost increases resulting from such event), then, upon demand by the Issuing
Bank or such Lender, as the case may be, the Borrower shall forthwith pay to the
Issuing Bank or such Lender, as the case may be, from time to time as specified
by the Issuing Bank or such Lender, as the case may be, such additional amounts
as are sufficient to compensate the Issuing Bank or such Lender, as the case may
be, for such increased cost.
3.4.5. Breakage Costs - LIBOR Loans. The Borrower shall
indemnify and hold each Lender free and harmless from all losses, liabilities
and reasonable expenses (including any loss sustained by that Lender in
connection with the re-employment of such funds), that such Lender may sustain:
(a) if for any reason (other than a default by such Lender) a Borrowing of LIBOR
Loans does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing or a continuation of or conversion to LIBOR
Loans does not occur on a date specified therefor in a Notice of
Conversion/Continuation or in a telephonic request for conversion/continuation,
(b) if any prepayment of any of its LIBOR Loans occurs on a date that is not the
last day of an Interest Period, (c) if any prepayment of any of its LIBOR Loans
is not made on any date specified in a notice of prepayment given by the
Borrower, or (d) as a consequence of any other default by the Borrower to repay
its LIBOR Loans when required by the terms of this Agreement.
3.4.6. LIBOR Taxes. The Borrower shall indemnify and hold
each Lender free and harmless from, and shall pay, prior to the date on which
penalties attach thereto, all present and future income, stamp and other taxes,
levies or costs and charges whatsoever imposed, assessed, levied or collected on
or in
47
58
respect of a Loan solely as a result of the interest rate being determined by
reference to LIBOR and/or the provisions of this Agreement related to LIBOR
and/or the recording, registration, notarization or other formalization of any
thereof and/or any payments of principal, interest or other amounts made on or
in respect of a Loan when the interest rate is determined by reference to LIBOR
(all such taxes, levies, costs and charges being herein collectively called
"LIBOR Taxes"); provided, however, that LIBOR Taxes shall not include: taxes
imposed on or measured by the overall gross or net income of such Lender or any
foreign branch, agency or subsidiary of such Lender by the United States of
America or any political subdivision or taxing authority thereof or therein, or
taxes on or measured by the overall gross or net income of that Lender or any
foreign branch, agency or subsidiary of that Lender by any foreign country or
subdivision thereof in which that Lender, branch, agency or subsidiary is doing
business. The Borrower also shall indemnify and hold each Lender free and
harmless from, and shall pay such additional amounts equal to, increases in
taxes payable by that Lender described in the foregoing proviso that are
attributable to payments made by the Borrower described in the immediately
preceding sentence or this sentence. Promptly after the date on which payment of
any such LIBOR Tax is due pursuant to applicable law, the Borrower will, at the
request of such Lender, furnish to such Lender evidence, in form and substance
satisfactory to such Lender, that the Borrower has met its obligation under this
Section 3.4.6; and the Borrower will indemnify each Lender against, and
reimburse each Lender on demand for, any LIBOR Taxes payable by that Lender.
Such Lender shall provide the Borrower with appropriate receipts for any
payments or reimbursements made by the Borrower pursuant to this Section 3.4.6.
3.4.7. Notice of Increased Costs; Payment. Each Lender and
the Issuing Bank will promptly notify the Administrative Agent (with a copy to
the Borrower) of any event of which it has knowledge, occurring after the date
hereof, that entitles such Lender or the Issuing Bank to compensation,
reimbursement or indemnity pursuant to this Section 3.4 or Section 3.5, and
shall furnish to the Administrative Agent (with a copy to the Borrower) a
certificate of such Lender or the Issuing Bank claiming compensation,
reimbursement or indemnity under this Section 3.4 or Section 3.5, setting forth
in reasonable detail the additional amount or amounts to be paid to it hereunder
if not theretofore paid by the Borrower as provided in Section 3.5 (which
certificate shall be presumed correct and binding in the absence of manifest
error). In determining such amount, such Lender and the Issuing Bank may use any
reasonable averaging, attribution or allocation methods. Within fifteen (15)
days following receipt of such notice, the Borrower shall pay to the
Administrative Agent, for distribution to such Lender, or to the Issuing Bank,
as the case may be, the amount shown to be due and payable by such certificate.
48
59
3.5. Taxes.
3.5.1. Taxes Generally. Any and all payments by the Borrower
or any Guarantor hereunder or under the Notes or the other Loan Documents shall
be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect to such payments (including interest, additions to tax
and penalties thereon), excluding, in the case of each Lender, the
Administrative Agent and the Issuing Bank, (i) taxes imposed on or measured by
its net income or, in the State of Tennessee, net assets, and franchise taxes
imposed on it, by the jurisdiction of such Lender's Lending Office or any
political subdivision or taxing authority thereof, and (ii) withholding taxes
that are the subject of Sections 3.5.2 through 3.5.5. If the Borrower or any
Guarantor shall be required by law to deduct any such taxes from or in respect
of any sum payable hereunder or under any Note or any other Loan Document to any
Lender or the Administrative Agent, (a) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.5) such
Lender or the Administrative Agent (as the case may be) shall receive an amount
equal to the sum it would have received had no such deductions been made, and
(b) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. If and to the
extent that any Lender subsequently shall be refunded or otherwise recover all
or any part of any such deduction, it shall refund to the Borrower the amount so
recovered.
3.5.2. Withholding Tax Exemption. If any Lender is a
"foreign corporation" within the meaning of the Code, such Lender shall deliver
to the Administrative Agent either: (a) if such Lender qualifies for an
exemption from or a reduction of United States withholding tax under a tax
treaty, a properly completed and executed Internal Revenue Service Form 1001
before the payment of any interest is due in the first calendar year and in each
third succeeding calendar year during which interest may be paid under this
Agreement, or (b) if such Lender qualifies for an exemption for interest paid
under this Agreement from United States withholding tax because it effectively
is connected with a United States trade or business of such Lender, two properly
completed and executed copies of Internal Revenue Service Form 4224 before the
payment of any interest is due in the first taxable year of such Lender, and in
each succeeding taxable year of such Lender, during which interest may be paid
under this Agreement, and (c) such other form or forms as may be required or
reasonably requested by the Administrative Agent to establish or substantiate
exemption from, or reduction of, United States withholding tax under the Code or
other laws of the United States. Each such Lender agrees to notify the
Administrative
49
60
Agent of any change in circumstances that would modify or render invalid any
claimed exemption or reduction.
3.5.3. Withholding Taxes. If any Lender is entitled to a
reduction in the applicable withholding tax, the Administrative Agent may
withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by Section 3.5.2 are not delivered to the
Administrative Agent, then the Administrative Agent may withhold from any
interest payment to any Lender not providing such forms or other documentation,
an amount equivalent to the applicable withholding tax.
3.5.4. Indemnification. If the Internal Revenue Service or
any authority of the United States or other jurisdiction asserts a claim that
the Administrative Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered or
was not properly executed, or because such Lender failed to notify the
Administrative Agent of a change in circumstances that rendered the exemption
from or reduction of withholding tax ineffective, or for any other reason) such
Lender shall indemnify the Administrative Agent fully for all amounts paid,
directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, together with all expenses incurred, including
legal expenses, allocated staff costs, and any out-of-pocket expenses.
3.5.5. Subsequent Lenders. If any Lender sells, assigns,
grants participations in or otherwise transfers it rights under this Agreement,
the participant shall comply and be bound by the terms of Sections 3.5.2, 3.5.3
and 3.5.4 as though it were such Lender.
3.6. Booking of Loans. Any Lender may make, carry or transfer Loans at,
to or for the account of, any of its branch or agency offices, provided,
however, that in the event that any Lender transfers its Loans to another branch
or agency office in a transaction that does not involve the transfer by such
Lender of any of its other loans to such branch or agency office, such Lender
shall not be entitled to reimbursement for additional costs or taxes with
respect to such Loans pursuant to Section 3.4 or Section 3.5 if the Borrower
would be subject to additional liability under Section 3.4 or Section 3.5 to
which it would not be subject if such Lender's Loans were maintained at the
office at which such Loans were carried prior to such transfer.
The Borrower acknowledges and agrees that (a) each Lender's method of
funding its Loans hereunder shall be in the sole discretion of such Lender, so
long as such funding complies with all applicable requirements of this
Agreement, and (b) for
50
61
purposes of any determination to be made pursuant to Sections 2.14.4 or 3.4.5 of
this Agreement, each Lender shall be presumed conclusively to have funded its
LIBOR Loans with the proceeds of Dollar deposits obtained by such Lender in the
interbank Eurodollar market.
ARTICLE 4
SECURITY
4.1. Initial Security. The Obligations of the Borrower shall be
secured by:
(a) the Security Agreement;
(b) the Pledge Agreement;
(c) the Assignment and Security Agreement; and
(d) the security interest in the Collateral Account herein
granted in favor of the Administrative Agent for the ratable benefit of
the Lenders, and the other Liens provided in this Agreement and the
other Security Documents.
4.2. Further Assurances. The Borrower and the Guarantors shall, and
shall cause each of their respective Subsidiaries to, at their sole cost and
expense, execute and deliver to the Administrative Agent, the Lenders and the
Issuing Bank all such further documents, instruments and agreements and perform
all such other acts that reasonably may be required in the opinion of the
Administrative Agent to enable the Administrative Agent, the Lenders and the
Issuing Bank to exercise and enforce their respective rights as the secured
parties under the Security Documents and to carry out the provisions or
effectuate the purposes of this Agreement and the other Loan Documents. To the
extent permitted by applicable law, the Borrower and the Guarantors hereby
authorize the Administrative Agent on behalf of itself, the Lenders and the
Issuing Bank to file Financing Statements and continuation statements with
respect to the security interests granted or assigned under the Security
Documents and to execute such Financing Statements and continuation statements
on behalf of the Borrower, the Guarantors and their respective Subsidiaries. The
Administrative Agent shall furnish to the Borrower and the Guarantors copies of
all such Financing Statements and continuation statements filed by the
Administrative Agent on behalf of the Lenders pursuant to this Section 4.2.
51
62
ARTICLE 5
GUARANTY
5.1. Guaranty. Each of the Guarantors hereby unconditionally and
irrevocably, jointly and severally, guarantees to the Administrative Agent, the
Lenders and the Issuing Bank the due and punctual payment and performance of all
of the Obligations (except to the extent such Guarantor is a Principal Obligor
on such Obligations), in each case as and when the same shall become due and
payable, whether at maturity, by acceleration, mandatory prepayment or
otherwise, according to their terms. In case of failure by a Principal Obligor
of any Obligation punctually to pay or perform such Obligation, each of the
Guarantors (other than a Principal Obligor on such Obligation) hereby
unconditionally and irrevocably agrees to cause such payment to be made
punctually as and when the same shall become due and payable, whether at
maturity, by prepayment, declaration or otherwise, and to cause such performance
to be rendered punctually as and when due, in the same manner as if such payment
or performance were made by such Principal Obligor. This guaranty is and shall
be a guaranty of payment and performance and not merely of collection.
5.2. Maximum Guaranty Liability,
(a) Each Guarantor's respective obligations hereunder and
under the other Loan Documents shall be in an amount equal to, but not
in excess of, the maximum liability permitted under Applicable
Bankruptcy Law (the "Maximum Guaranty Liability"). To that end, but
only to the extent such obligations otherwise would be subject to
avoidance under Applicable Bankruptcy Law if any Guarantor is deemed
not to have received valuable consideration, fair value or reasonably
equivalent value for its obligations hereunder or under the other Loan
Documents, each such Guarantor's respective obligations hereunder and
under the other Loan Documents shall be reduced to that amount which,
after giving effect thereto, would not render such Guarantor insolvent,
or leave such Guarantor with an unreasonably small capital to conduct
its business, or cause such Guarantor to have incurred debts (or to be
deemed to have intended to incur debts), beyond its ability to pay such
debts as they mature, at the time such obligations are deemed to have
been incurred under Applicable Bankruptcy Law. As used herein, the
terms "insolvent" and "unreasonably small capital" shall likewise be
determined in accordance with Applicable Bankruptcy Law. This Section
5.2 is intended solely to preserve the rights of the Lenders, the
Administrative Agent and the Issuing Bank hereunder and under the
other Loan Documents to the maximum extent permitted by Applicable
Bankruptcy Law, and neither the Guarantors nor any other Person shall
have any right or
52
63
claim under this Section 5.2 that otherwise would not be available
under Applicable Bankruptcy Law.
(b) Each Guarantor agrees that the Guaranteed Obligations at
any time and from time to time may exceed the Maximum Guaranty
Liability of such Guarantor, and may exceed the aggregate Maximum
Guaranty Liability of all Guarantors hereunder, without impairing this
Guaranty or affecting the rights and remedies of the Lenders, the
Administrative Agent or the Issuing Bank hereunder.
5.3. Contribution. In the event any Guarantor (a "Funding Guarantor")
shall make any payment or payments under this Guaranty or shall suffer any loss
as a result of any realization upon any of its property granted as Collateral
under any Loan Document, each other Guarantor (each, a "Contributing Guarantor")
shall contribute to such Funding Guarantor an amount equal to such Contributing
Guarantor's "Pro Rata Share" of such payment or payments made, or losses
suffered, by such Funding Guarantor. For the purposes hereof, each Contributing
Guarantor's Pro Rata Share with respect to any such payment or loss by a Funding
Guarantor shall be determined as of the date on which such payment or loss was
made by reference to the ratio of (a) such Contributing Guarantor's Maximum
Guaranty Liability as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder) to (b) the aggregate
Maximum Guaranty Liability of all Guarantors (including such Funding Guarantor)
as of such date (without giving effect to any right to receive, or obligation to
make, any contribution hereunder). Nothing in this Section 5.3 shall affect each
Guarantor's several liability for the entire amount of the Guaranteed
Obligations (up to such Guarantor's Maximum Guaranty Liability). Each Guarantor
covenants and agrees that its right to receive any contribution hereunder from a
Contributing Guarantor shall be subordinate and junior in right of payment to
all the Guaranteed Obligations.
5.4. Guaranty Unconditional. The obligations of each Guarantor under
this Article 5 shall be continuing, unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver
or release in respect of any Obligation of the Borrower under this
Agreement or any other Loan Document, by operation of law or otherwise;
(b) any modification or amendment or supplement to
this Agreement or any other Loan Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect
53
64
security, or of any guaranty or other liability of any third party,
for any Obligation of the Borrower under this Agreement or any other
Loan Document;
(d) any change in the existence, structure or ownership of
the Borrower or any Guarantor, or any insolvency, bankruptcy,
reorganization or other similar case or proceeding affecting the
Borrower or any Guarantor or any of their respective assets, or any
resulting release or discharge of any Obligation of the Borrower under
this Agreement or any other Loan Document;
(e) the existence of any claim, set-off or other right that
any Guarantor at any time may have against the Borrower, the
Administrative Agent, the Issuing Bank, any Lender or any other Person,
whether or not arising in connection with this Agreement or any other
Loan Document;
(f) any invalidity or unenforceability relating to or
against the Borrower for any reason of the whole or any provision of
this Agreement or any other Loan Document, or any provision of
Applicable Bankruptcy Law purporting to prohibit the payment or
performance by the Borrower of any Obligation or the payment by the
Borrower of any other amount payable by it under this Agreement or any
other Loan Document; or
(g) any other act or omission to act or delay of any kind by
the Borrower, the Administrative Agent, the Issuing Bank, any Lender or
any other Person or any other circumstance whatsoever that might but
for the provisions of this Section 5.4 constitute a legal or equitable
discharge of the obligations of any Guarantor under this Article 5.
5.5. Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances. Each Guarantor's obligations under this Article 5 shall remain in
full force and effect so long as any Obligations are unpaid or outstanding, any
Obligation under the Loan Documents is not performed or any of the Commitments
are in effect. If at any time any payment of the Obligations or any other amount
payable by the Borrower under this Agreement or the other Loan Documents is
rescinded or otherwise must be restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, each Guarantor's
obligations under this Article 5 with respect to such payment shall be
reinstated at such time as though such payment had become due but not been made
at such time.
5.6. Waiver. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest, notice of any breach or default by the Borrower
and any other notice not specifically provided for herein, as well as any
requirement that at any time
54
65
any action be taken by any Person against the Borrower or any other Person or
any Collateral granted as security for the Obligations or the Guaranteed
Obligations. Each Guarantor hereby specifically waives any right to require that
an action be brought against the Borrower or any other Principal Obligor with
respect to the Obligations under the provisions of Title 47, Chapter 12,
Tennessee Code Annotated, as the same may be amended from time to time.
5.7. Waiver of Reimbursement, Subrogation, Etc. Each Guarantor hereby
waives to the fullest extent possible as against the Borrower and its assets any
and all rights, whether at law, in equity, by agreement or otherwise, to
subrogation, indemnity, reimbursement, contribution, exoneration or any other
similar claim, right, cause of action or remedy that otherwise would arise out
of such Guarantor's performance of its obligations to the Administrative Agent,
any Lender or the Issuing Bank under this Article 5. The preceding waiver is
intended by the Guarantors, the Administrative Agent, the Issuing Bank and the
Lenders to be for the benefit of the Borrower or any of its successors and
permitted assigns as an absolute defense to any action by any Guarantor against
the Borrower or its assets that arises out of such Guarantor's having made any
payment to the Administrative Agent, the Issuing Bank or any Lender with respect
to any of the Guaranteed Obligations.
5.8. Stay of Acceleration. If acceleration of the time for payment of
any amount payable by the Borrower under this Agreement is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of this Agreement shall
nonetheless be payable by the Guarantors hereunder forthwith on demand by the
Administrative Agent as directed by Requisite Lenders.
5.9. Subordination of Indebtedness. Any indebtedness of the Borrower
for borrowed money now or hereafter owed to any Guarantor is hereby subordinated
in right of payment to the payment by the Borrower of the Obligations, and if a
default in the payment of the Obligations shall have occurred and be continuing,
any such indebtedness of the Borrower owed to any Guarantor, if collected or
received by such Guarantor, shall be held in trust by such Guarantor for the
holders of the Obligations and be paid over to the Administrative Agent for
application in accordance with this Agreement and the other Loan Documents.
5.10. Certain Releases. In the event that any asset sale permitted
under Section 9.3(d) consists in whole or in part of the sale of all of the
capital stock of (or other ownership interests in) a Subsidiary that is owned
by the Borrower or any other Subsidiary of the Borrower, upon the request of
the
55
66
Borrower, the Administrative Agent shall release the Subsidiary whose stock (or
other ownership interests) has (have) been sold from any duties and obligations
to the Lenders pursuant to this Agreement and the other Loan Documents to which
such Subsidiary may be a party; provided that (a) at the times of such request
and release any Indebtedness evidenced by a Pledged Note made by such Subsidiary
has been fully satisfied, and (b) no Default or Event of Default has occurred
and is continuing or would result from such releases.
ARTICLE 6
CONDITIONS PRECEDENT
6.1. Conditions Precedent to Initial Loans and Letters of Credit. The
effectiveness of this Agreement, the obligations of the Issuing Bank to issue
Letters of Credit, the obligations of the Lenders to purchase participations in
Letters of Credit and the obligations of the Lenders to make the Loans are all
subject to the satisfaction by the Borrower and the Guarantors, to the extent
not waived by the Lenders, of the following conditions precedent, except to the
extent that any of such conditions are to be satisfied after the date hereof
pursuant to Section 8.19:
6.1.1. Deliveries to the Administrative Agent. The
Administrative Agent shall have received, for the ratable benefit of each Lender
(and in such number of original counterparts or copies as the Administrative
Agent reasonably may specify), each of the following, in form and substance
satisfactory to the Administrative Agent, the Lenders, the Issuing Bank and
their respective counsel:
(a) Agreement. Counterpart originals of this
Agreement, each duly and validly executed and delivered by
or on behalf of all the appropriate parties thereto;
(b) Notes. The Notes, each duly and validly executed
and delivered on behalf of the Borrower;
(c) Security Documents. The Security Agreement, the Pledge
Agreement, the Assignment and Security Agreement and all of the other
Security Documents, each duly and validly executed and delivered by or
on behalf of all the appropriate parties thereto, together with (i)
acknowledgment copies of the financing statements duly filed under the
UCC of all jurisdictions necessary or, in the opinion of the
Administrative Agent, desirable to perfect the security interests
created by such Security Documents, and (ii) evidence of the public
recordation or filing of such of the Security Documents as the
Administrative Agent deems it necessary or desirable to
56
67
record or file publicly, in such offices as the Administrative Agent
shall require;
(d) Pledged Stock. Certificates evidencing the
Pledged Stock, together with an appropriate stock power for
each certificate, duly executed in blank by the Borrower or
the appropriate Guarantor, as the case may be;
(e) Pledged Notes. The Pledged Notes, together with
appropriate instruments of assignment attached thereto, duly
endorsed in blank by the Borrower or the appropriate
Guarantor, as the case may be;
(f) Perfected Security Interest. Evidence of Lien
searches, through a date satisfactory to the Administrative
Agent, showing no Liens affecting the Collateral other than
Liens in favor of the Administrative Agent for the ratable
benefit of the Lenders in connection herewith;
(g) Charter Documents. Copies of the articles or
certificates of incorporation or other organizational
documents of the Borrower and each of its Subsidiaries,
certified by the Secretary of State or other appropriate
public official in each jurisdiction of incorporation, all
in form and substance satisfactory to the Lenders;
(h) Bylaws. Copies of the bylaws, and all amendments
thereto, of the Borrower and each of its Subsidiaries, together with
certificates of the respective Secretaries or Assistant Secretaries of
the Borrower and each of such Subsidiaries, dated the date hereof,
stating that such copy is complete and correct;
(i) Good Standing and Authority. Certificates of the
appropriate governmental officials of each jurisdiction as the
Administrative Agent reasonably may request, dated within ten (10) days
of the date hereof, stating that the Borrower and each of its
Subsidiaries exists, is in good standing with respect to the payment of
franchise and similar taxes and is duly qualified to transact business
therein;
(j) Incumbency. Certificates of the respective Secretaries
or Assistant Secretaries of the Borrower and each of the Guarantors,
dated the date hereof, as to the incumbency and signature of all
officers of the Borrower or such Guarantor authorized to execute or
attest to this Agreement, the Notes and the other Loan Documents to
which the Borrower or each such Guarantor is a party, together with
evidence of the incumbency of each such Secretary or Assistant
Secretary;
57
68
(k) Resolutions. With respect to the Borrower and each of
the Guarantors (i) copies of the resolutions authorizing, approving and
ratifying this Agreement, the Notes, the Security Documents and the
other Loan Documents and the transactions contemplated herein and
therein, duly adopted by the respective boards of directors or other
managers of the Borrower and each of the Guarantors, together with (ii)
certificates of the respective Secretaries or Assistant Secretaries of
the Borrower and each of the Guarantors, dated the date hereof, stating
that each such copy is a true and correct copy of resolutions duly
adopted at a meeting, or by action taken on written consent, of the
board of directors or other managers of the Borrower or such Guarantor
and that such resolutions have not been modified, amended, rescinded or
revoked in any respect and are in full force and effect as of the date
hereof;
(l) Legal Opinions of the Borrower's and Guarantors'
Counsel. The favorable legal opinion of Xxxxxxx Xxxxxxxx,
General Counsel of the Borrower, dated the date hereof, and
addressed to the Administrative Agent, the Lenders and the
Issuing Bank, substantially in the form of Exhibit 6.1.1A;
(m) Evidence of Indebtedness. If requested by the
Administrative Agent, (i) a copy of each indenture, loan agreement,
guaranty, promissory note or other evidence of Indebtedness other than
Contingent Obligations, Indebtedness incurred under the Loan Documents,
trade debt incurred in the ordinary course of business and obligations
under Operating Leases (together with all modifications, amendments,
restatements or supplements thereto) to which the Borrower, the
Guarantors or their respective Subsidiaries are parties constituting a
liability (contingent or otherwise) equal to or in excess of $500,000,
the terms and conditions of which shall be satisfactory to the
Administrative Agent, and (ii) a report certified by the respective
chief executive officers of the Borrower and each of the Guarantors
describing any default or failure of performance or any event that with
the giving of notice of, or the lapse of time, or both, would become a
default by the Borrower, the Guarantors or any of their respective
Subsidiaries under any of such documents, instruments or agreements;
(n) December 31, 1996 Financial Statements. The final
December 31, 1996 consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries and the related consolidated and
consolidating statements of income and consolidated statements of
shareholders' equity and of cash flows for the Fiscal Year then ended,
together with a calculation of the financial ratios and covenants
contained
58
69
in this Agreement after giving effect to the transactions that are the
subject hereof, in each case certified by a Responsible Officer of the
Borrower;
(o) Officer's Certificate. A certificate of a Responsible
Officer of the Borrower and each of the Guarantors, dated the date
hereof, stating that (i) each of the representations and warranties
contained in Article 7 is true and correct at and as of the date hereof
with the same force and effect as if made on such date, (ii) all
obligations, covenants, agreements and conditions contained in this
Agreement to be performed or satisfied by the Borrower or such
Guarantor on or prior to the date hereof have been performed or
satisfied in all respects, (iii) since December 31, 1996, there has
been no Material Adverse Change, and (iv) no Default or Event of
Default has occurred or is continuing, and in addition setting forth in
such detail as shall be required by the Lenders calculations showing
that as of the date hereof and after giving effect to the transactions
that are the subject hereof the Borrower and the Guarantors are in
compliance with Article 10;
(p) Solvency Certificates. (i) A solvency certificate of a
Responsible Officer of the Borrower, in substantially the form of
Exhibit 6.1.1B hereto, and (ii) a solvency certificate of the
Responsible Officer of each Guarantor, in substantially the form of
Exhibit 6.1.1C (collectively, the "Solvency Certificates");
(q) Consents. Evidence that the Borrower and each Guarantor
have obtained all requisite consents and approvals required to be
obtained from any Person to permit the transactions contemplated by
this Agreement, the Notes and the other Loan Documents to be
consummated in accordance with their respective terms and conditions;
and
(r) Other Matters. All other documents, instruments,
agreements, opinions, certificates, insurance policies, consents and
evidences of other legal matters, in form and substance satisfactory to
the Administrative Agent and its counsel, as the Administrative Agent
reasonably may request.
6.1.2. Compliance with Laws. The Borrower, the Guarantors
and their respective Subsidiaries shall not be in violation of, and shall not
have received notice of any violation of, any applicable Requirement of Law,
including any building, zoning, occupational safety and health, fair employment,
equal opportunity, pension, environmental control, health care, certificate of
need, health care facility licensing or similar federal, state or local law,
ordinance or regulation, relating to the ownership or operation of its business
or assets, if such violation or non-compliance could have a Material Adverse
Effect,
59
70
and if requested by the Administrative Agent the Borrower, the Guarantors or
their respective Subsidiaries shall have furnished to the Administrative Agent
and the Lenders copies of all required approvals (including required operating
licenses and permits) of any Governmental Authority.
6.1.3. No Material Adverse Change. Since December 31,
1996, no Material Adverse Change, as determined by the Administrative Agent, the
Lenders and the Issuing Bank, shall have occurred.
6.1.4. No Material Misrepresentation. No material
misrepresentation or omission shall have been made by or on behalf of the
Borrower or any Guarantor to the Administrative Agent, the Lenders or the
Issuing Bank with respect to the Borrower's or such Guarantor's business
operations or financial or other condition.
6.1.5. Legal Proceedings. No action, suit, proceeding or
investigation shall be pending before or threatened by any court or Governmental
Authority with respect to the transactions contemplated hereby or that may have
a Material Adverse Effect (as determined by the Administrative Agent, the
Lenders and the Issuing Bank).
6.1.6. Wilmington Trust Intercreditor Agreement. The
Borrower, PHS, Wilmington Trust and the Administrative Agent shall have entered
into an intercreditor agreement in form and substance satisfactory to the
Administrative Agent, providing for, among other things (a) the agreement of
Wilmington Trust that no further extensions of credit will be made in respect of
the Wilmington Credit Facilities, and (b) the cancellation, release and
discharge of the instruments, documents and agreements evidencing, securing or
otherwise related to the Wilmington Credit Facilities promptly upon satisfaction
of the indebtedness and other obligations of the Borrower and PHS to Wilmington
Trust in respect of the Wilmington Credit Facilities.
6.2. Conditions Precedent to All Loans and Letters of Credit. The
obligations of each of the Lenders to make any Loans (including Loans used to
refinance or repay other Loans or Letter of Credit Liabilities) on any date
(including the date hereof), and the obligations of the Issuing Bank to issue or
extend Letters of Credit on any date (including the date hereof), are subject to
the satisfaction of the conditions set forth below in this Section 6.2. Each
request for Loans or for a Letter of Credit hereunder shall constitute a
representation and warranty by the Borrower to the Administrative Agent, each
Lender and the Issuing Bank, as of the date of the making of such Loans or the
issuance of such Letter(s) of Credit, that the conditions in this Section 6.2
have been satisfied.
60
71
6.2.1. Satisfaction of Conditions Precedent to Initial
Loans and Letters of Credit. The conditions precedent set forth in Section
6.1 shall have been satisfied.
6.2.2. Representations and Warranties. The
representations and warranties of the Borrower and the Guarantors set forth in
this Agreement, the Notes and the other Loan Documents and in any certificate,
opinion or other statement provided at any time by or on behalf of the Borrower
or any Guarantor in connection herewith shall be true and correct on and as of
the date of the making of such Loans or the issuance of such Letter(s) of Credit
as if made on and as of such date, except for such changes as are permitted by
the terms of this Agreement.
6.2.3. No Default or Event of Default. No Default or Event
of Default shall have occurred and be continuing on the date of the requested
Borrowing or Letter of Credit issuance or after giving effect to such Borrowing
or Letter of Credit issuance.
6.2.4. No Violations. No law or regulation shall prohibit
the making of the requested Loan or the issuance of the requested Letter of
Credit and no order, judgment or decree of any court or Governmental Authority
shall, and no litigation shall be pending that in the judgment of the
Administrative Agent or Requisite Lenders would, enjoin, prohibit or restrain
any Lender from making a requested Loan or the Issuing Bank from issuing a
requested Letter of Credit.
6.2.5. Proceedings Satisfactory. All proceedings in
connection with the making of any Loan, the issuance of any Letter of Credit and
the other transactions contemplated by this Agreement, the Loan Documents and
all documents incidental thereto shall be reasonably satisfactory to the
Administrative Agent, and the Administrative Agent shall have received all such
information and such counterpart originals or certified or other copies of such
documents as the Administrative Agent reasonably may request.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent, the Lenders and the
Issuing Bank to enter into this Agreement, to make the Loans, to issue the
Letters of Credit and to provide the other financial accommodations provided
for herein, the Borrower and each of the Guarantors hereby make the following
representations and warranties to the Administrative Agent, each Lender and the
Issuing Bank:
61
72
7.1. Existence and Power. The Borrower, each of the Guarantors and each
of their respective Subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of the jurisdiction indicated next
to the name of such entity on Schedule 7.1. The Borrower, each of the Guarantors
and each of their respective Subsidiaries have the power, authority and legal
right to own and operate their respective properties and assets, to lease the
properties and assets they operate under lease and to carry on their respective
businesses as they are now being conducted and intended to be conducted, and are
duly qualified to transact business in, and in good standing under the laws of,
each jurisdiction in which their ownership, lease or operation of property or
the conduct of their respective businesses requires such qualification, except
to the extent that failure to qualify to transact business will not have a
Material Adverse Effect.
7.2. Authorization and Enforcement of Obligations. The Borrower, each
of the Guarantors and each of their respective Subsidiaries (a) have the power,
authority and legal right to enter into this Agreement and such of the Loan
Documents to which each is a party and to enter into and perform their
respective obligations hereunder and thereunder, and (b) have taken all
necessary action on the part of each to authorize the execution and delivery of
such documents, instruments and agreements and the performance of their
respective obligations hereunder and thereunder. This Agreement, the Notes and
the other Loan Documents have been duly executed and delivered on behalf of the
Borrower, each of the Guarantors and such of their respective Subsidiaries as
are parties to such Loan Documents, and constitute legal, valid and binding
obligations, enforceable against the Borrower, the Guarantors and their
respective Subsidiaries as are parties hereto or thereto in accordance with
their respective terms.
7.3. No Consents. Except as set forth on Schedule 7.3, all necessary
consents, approvals and authorizations of, filings with and acts by or with
respect to all Governmental Authorities and other Persons required to be
obtained, made or taken in connection with the execution, delivery, performance,
validity or enforceability of this Agreement, the Notes and the other Loan
Documents, or otherwise in connection with the transactions contemplated hereby,
have been obtained, made or taken and remain in effect.
7.4. No Conflict. The execution and delivery of this Agreement, the
Notes and the other Loan Documents, the transactions contemplated hereby, the
use of the proceeds of the Loans and the Letters of Credit and the performance
by the Borrower, the Guarantors and their respective Subsidiaries as are parties
to the Loan Documents of their respective obligations
62
73
hereunder and thereunder (a) do not conflict with or violate any Requirement of
Law or any Contractual Obligation of the Borrower, such Guarantor or such
Subsidiary, except to the extent that any such violation or conflict will not
have a Material Adverse Effect, and (b) do not conflict with, constitute a
default or require any consent under, or result in the creation of any Lien upon
any property or assets of the Borrower, such Guarantor or such Subsidiary
pursuant to any Contractual Obligation of the Borrower, such Guarantor or such
Subsidiary (other than Liens in favor of the Administrative Agent, the Lenders
and the Issuing Bank), except to the extent that any such conflict or default or
the failure to obtain any necessary consent will not have a Material Adverse
Effect.
7.5. Financial Statements; Solvency.
(a) The consolidated balance sheet of the Borrower and its
Subsidiaries as of December 31, 1996 and the related consolidated
statements of income, shareholders' equity and cash flows for the
Fiscal Year then ended, together with the opinion of Ernst & Young LLP
with respect thereto, copies of which have been furnished to the
Administrative Agent, are complete and correct and fairly present the
assets, liabilities and consolidated financial position of the Borrower
and its Subsidiaries as at such date and the consolidated results of
their operations and their cash flow for the Fiscal Year then ended.
All such financial statements, including the related schedules and
notes thereto, have been prepared in compliance with GAAP applied
consistently throughout the periods involved. Neither the Borrower nor
any of its Subsidiaries has any material Indebtedness, obligation or
other unusual forward or long-term commitment that is not fairly
reflected in the foregoing financial statements or in the notes
thereto.
(b) After giving effect to the consummation of the
transactions contemplated by this Agreement, the making of Loans
hereunder, the issuance of Letters of Credit hereunder, the incurrence
by the Borrower of the Obligations and the incurrence by the Guarantors
of the Guaranteed Obligations, each of the Borrower, the Guarantors and
their respective Subsidiaries is Solvent.
7.6. Absence of Litigation. Except as otherwise set forth in
Schedule 7.6, there are no actions, suits, proceedings or other litigation
(including proceedings by or before any arbitrator or Governmental Authority)
pending or threatened against or affecting the Borrower, the Guarantors or any
of their respective Subsidiaries, nor to the knowledge of the Borrower and the
Guarantors is there any basis therefor, (a) that challenge the validity or
propriety of the transactions contemplated hereby, or (b) that reasonably can be
expected to be adversely
63
74
determined and, if adversely determined, to have a Material Adverse Effect,
either individually or in the aggregate.
7.7. No Default. Neither the Borrower nor any Guarantor nor any of
their respective Subsidiaries is in default (nor has any event occurred that
with notice or lapse of time or both would constitute a default) under any
Contractual Obligation of the Borrower, any Guarantor or any of their respective
Subsidiaries, if such default or event could have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
7.8. Security Documents. The Security Documents create in favor of the
Administrative Agent for the benefit of the Issuing Bank and the ratable benefit
of the Lenders valid, perfected security interests in the Collateral subject to
no Liens other than Permitted Liens. The security interests granted in favor of
the Administrative Agent as contemplated by this Agreement and the Security
Documents do not constitute a fraudulent conveyance under the federal Bankruptcy
Code or any applicable state law.
7.9. Capital Stock. The capitalization of the Borrower, the Guarantors
and their respective Subsidiaries consists of such number of shares, authorized,
issued and outstanding, of such classes and series, with or without such par
value, as are set forth in Schedule 7.1. All such outstanding shares have been
duly authorized and validly issued and are fully paid and nonassessable. There
are no outstanding stock purchase warrants, subscriptions, options, securities,
instruments or other rights of any type or nature whatsoever that are
convertible into, exchangeable for or otherwise provide for the issuance of
capital stock of the Borrower, any Guarantor or any of their respective
Subsidiaries, except as described in Schedule 7.1.
7.10. Taxes. The Borrower, the Guarantors and their respective
Subsidiaries have filed all tax returns that were required to be filed in any
jurisdiction and have paid all taxes shown thereon to be due or otherwise due
upon the Borrower, the Guarantors, their respective Subsidiaries or their
respective properties, income or franchises, including interest, assessments,
fees and penalties, or have provided adequate reserves for the payment thereof.
To the knowledge of the Borrower and the Guarantors, no claims are threatened,
pending or being asserted with respect to, or in connection with, any return
referred to in this Section 7.10 that, if adversely determined, could have a
Material Adverse Effect.
7.11. No Burdensome Restrictions. No Contractual Obligation of the
Borrower, any Guarantor or any of their respective Subsidiaries, and no
Requirement of Law relating to or otherwise affecting the Borrower, the
Guarantors or any of their respective Subsidiaries or any of their respective
properties,
64
75
businesses or operations, materially and adversely affects, or insofar as any of
them may reasonably foresee could so affect, the properties, businesses,
prospects, results of operations, management or financial or other condition of
the Borrower and its Subsidiaries, taken as a whole, or could affect the ability
of the Borrower, any Guarantor or any of their respective Subsidiaries to
perform its obligations under this Agreement, the Notes and the other Loan
Documents to which it is a party.
7.12. Judgments. There are no outstanding or unpaid judgments against
the Borrower, any of the Guarantors or any of their respective Subsidiaries.
7.13. Subsidiaries. Each of the Subsidiaries of the Borrower and the
Guarantors as of the date hereof is set forth in Schedule 7.1. Each such
Subsidiary is wholly owned by the Borrower or a Guarantor. Schedule 7.1 also
shows as of the date hereof as to each such Subsidiary the jurisdiction of its
incorporation or formation, the number of shares of each class of capital stock
outstanding, the direct owner of the outstanding shares of each such class
owned, and the jurisdictions in which such Subsidiary is qualified to do
business as a foreign corporation.
7.14. ERISA. No "prohibited transaction" or "accumulated funding
deficiency" (each as defined in ERISA) or Reportable Event has occurred with
respect to any Single Employer Plan, or to the knowledge of Borrower and the
Guarantors with respect to any Multi-Employer Plan. As of the most recent
actuarial valuation of any such Plan, the actuarial present value of all
benefits under each Plan (based on those assumptions used to fund the Plan) does
not exceed the fair market value of the assets of the Plan allocable to such
benefits. The Borrower, the Guarantors, their respective Subsidiaries and each
Commonly Controlled Entity are in compliance in all material respects with ERISA
and the rules and regulations promulgated thereunder.
7.15. Margin Securities. None of the Borrower, the Guarantors or any of
their respective Subsidiaries is engaged principally in, nor has as one of its
significant activities, the business of extending credit for the purpose of
purchasing or carrying "margin stock" as that term is defined in Regulation U
promulgated by the Board of Governors of the Federal Reserve System, as now in
effect. No part of the Indebtedness evidenced by the Notes, or otherwise created
in connection with this Agreement or the other Loan Documents, has been or will
be used, directly or indirectly, for the purpose of purchasing any such
margin stock. If requested by the Administrative Agent or any of the Lenders,
the Borrower shall furnish or cause to be furnished to the Administrative Agent
and each such Lender a statement, in conformity with the requirements of Federal
Reserve Form U-1 referred to in Regulation U, to the foregoing effect.
65
76
7.16. Investment Company Act. None of the Borrower, the Guarantors
or any of their respective Subsidiaries is an "investment company," or company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as now in effect.
7.17. Indebtedness and Contingent Obligations. Set forth on Schedule
7.17A hereto is a complete and correct list of all Indebtedness (other than
Contingent Obligations, Indebtedness incurred under the Loan Documents, trade
debt incurred in the ordinary course of business and obligations under Operating
Leases) of the Borrower, each Guarantor and each of their respective
Subsidiaries and the aggregate principal amount thereof outstanding on the date
hereof. Set forth on Schedule 7.17B is a complete and correct list of all
Contingent Obligations (other than any Contingent Obligations created under the
Loan Documents) of the Borrower, each Guarantor and each of their respective
Subsidiaries and the aggregate amount thereof outstanding on the date hereof.
7.18. Business Locations and Trade Names. Set forth on Schedule 7.18A
is a complete and correct list of the locations where each of the Borrower, the
Guarantors and their respective Subsidiaries maintain their respective chief
executive offices, their principal places of business, an office, a place of
business or any material financial records. Set forth on Schedule 7.18B is a
complete and correct list of each name under or by which each of the Borrower,
the Guarantors and their respective Subsidiaries presently conducts its business
or has conducted its business during the past seven years.
7.19. Title to Assets. The Borrower, the Guarantors and their
respective Subsidiaries have good and marketable title (or good and marketable
leasehold interests with respect to leased property) to all their respective
assets (including all assets constituting a part of the Collateral and all
assets reflected in the consolidated balance sheet as of December 31, 1996),
subject to no Liens other than Permitted Liens.
7.20. Labor Matters. There are no disputes or controversies pending
between the Borrower, the Guarantors or their respective Subsidiaries and their
respective employees, the outcome of which reasonably may be expected to have a
Material Adverse Effect.
7.21. Business. There is no pending or threatened claim, action, suit,
proceeding or other litigation against or affecting the Borrower, the Guarantors
or their respective Subsidiaries contesting the right of the Borrower, the
Guarantors or their respective Subsidiaries to conduct their businesses as
presently conducted or as proposed to be conducted, and there are no other
66
77
facts or circumstances that have had or reasonably may be expected to have a
Material Adverse Effect.
7.22. Compliance with Laws. The Borrower and its Subsidiaries (a) have
not been, are not and will not be in violation of any applicable Requirement of
Law, including any building, zoning, occupational safety and health, fair
employment, equal opportunity, pension, environmental control, health care,
certificate of need, health care facility licensing or similar federal, state or
local law, ordinance or regulation, relating to the ownership or operation of
their respective businesses or assets, (b) have not failed to obtain any
license, permit, certificate or other governmental authorization necessary for
the conduct of their businesses or the ownership and operation of their assets,
(c) have not received any notice from any Governmental Authority, and to their
knowledge no such notice is pending or threatened, alleging that the Borrower,
any Guarantor or any of their respective Subsidiaries has violated, or has not
complied with, any Requirement of Law, condition or standard applicable with
respect to any of the foregoing, and (d) are not a party to any agreement or
instrument, or subject to any judgment, order, writ, rule, regulation, code or
ordinance, except to the extent that any violation, noncompliance, failure,
agreement, judgment, etc. as described in this Section 7.22 will not have a
Material Adverse Effect.
7.23. Service Contracts. Schedule 7.23 is a true, correct and complete
listing of all Service Contracts in effect on the date of this Agreement. Other
than as set forth on Schedule 7.23, each such Service Contract is in full force
and effect in accordance with the terms thereof and there are no material
defaults under any Service Contract by the Borrower, the Guarantors or any of
their respective Subsidiaries as are parties thereto. To the knowledge of the
Borrower and the Guarantors, there is no pending or threatened claim, action,
suit, proceeding, litigation or investigation in connection with any Service
Contract involving the Borrower, any Guarantor or any of their respective
Subsidiaries. The Borrower, the Guarantors and their respective Subsidiaries
have timely filed or caused to be timely filed all reports required to be made
with respect to payment under the Service Contracts, and all such reports are,
or when filed will be, complete and accurate. Except as may be disclosed in the
financial statements referred to in Section 7.5, the Borrower, the Guarantors
and each of their respective Subsidiaries have no liability (whether or not
disclosed in any report heretofore or hereafter made) under or in connection
with the Service Contracts for any refund, discount or adjustment to any Person
that has not been fully reserved for, and no interest or penalties are accruing
with respect thereto, except to the extent that the aggregate amount of all such
liabilities will not have a Material Adverse Effect.
67
78
7.24. Governmental Authorizations; Permits, Licenses and Accreditation;
Other Rights. The Borrower and its Subsidiaries have all licenses, permits,
approvals, registrations, contracts, consents, franchises, qualifications,
certificates of need, accreditations and other authorizations necessary for the
lawful conduct of their respective businesses or operations wherever now
conducted and as planned to be conducted, pursuant to all applicable statutes,
laws, ordinances, rules and regulations of all Governmental Authorities having,
asserting or claiming jurisdiction over the Borrower and its Subsidiaries or
over any part of their respective operations. Copies of all such licenses,
permits, approvals, registrations, contracts, consents, franchises,
qualifications, certificates of need, accreditations and other authorizations
shall be provided to the Administrative Agent upon request. The Borrower and its
Subsidiaries are not in default under any of such licenses, permits, approvals,
registrations, contracts, consents, franchises, qualifications, certificates of
need, accreditations and other authorizations, and no event has occurred, and no
condition exists, that with the giving of notice, the passage of time or both
would constitute a default thereunder or would result in the suspension,
revocation, impairment, forfeiture or non-renewal of any thereof, except to the
extent that the cumulative effect of all such defaults, events, conditions,
suspensions, revocations, impairments, forfeitures and non-renewals will not
have a Material Adverse Effect. The continuation, validity and effectiveness of
all such licenses, permits, approvals, registrations, contracts, consents,
franchises, qualifications, certificates of need, accreditations and other
authorizations will not be adversely affected by the transactions contemplated
by this Agreement. The Borrower and its Subsidiaries know of no reason why they
will not be able to maintain after the date hereof all licenses, permits,
approvals, registrations, contracts, consents, franchises, qualifications,
certificates of need, accreditations and other authorizations necessary or
appropriate to conduct the businesses of the Borrower and its Subsidiaries as
now conducted and presently planned to be conducted.
7.25. No Material Adverse Change. Since December 31, 1996 there has
been no Material Adverse Change.
7.26. Employment and Investment Agreements. Set forth on Schedule
7.26 is a complete and accurate list, as of the date hereof, of (a) all
employment agreements and executive compensation arrangements to which the
Borrower, the Guarantors or any of their respective Subsidiaries is a party and
which provide for aggregate compensation (including bonuses) to any Person
(assuming compliance with or satisfaction of all contingencies or conditions) of
$200,000 or more per year, and (b) all agreements relating to the voting or
disposition of any outstanding shares of capital stock of the Borrower's
Subsidiaries and, to the Borrower's knowledge, of the Borrower.
68
79
7.27. Environmental Matters. Except as disclosed in Schedule 7.27, (a)
none of the Borrower, the Guarantors or any of their respective Subsidiaries,
nor any of the properties owned or leased thereby or operations thereof, nor, to
the knowledge of the Borrower and the Guarantors, any current or prior owner,
lessor or operator (other than the Borrower or any Guarantor or any of their
respective Subsidiaries) of any properties owned or leased by Borrower or any
Guarantor or any of their respective Subsidiaries, is in violation of any
applicable Hazardous Materials Law or any restrictive covenant or deed
restriction relating to environmental matters (recorded or otherwise) or subject
to any existing, pending or threatened investigation, inquiry or proceeding by
any Governmental Authority or subject to any remedial obligations under any
Hazardous Materials Law, except to the extent that the cumulative effect of all
such violations, investigations, inquiries, proceedings and remedial obligations
will not have a Material Adverse Effect; (b) all permits, licenses and approvals
required of the Borrowers, the Guarantors or any of their respective
Subsidiaries with respect to Hazardous Materials, including past or present
treatment, storage, disposal or release of any Hazardous Materials or solid
waste into the environment, have been obtained or filed; (c) all Hazardous
Materials or solid waste generated by the Borrower, any Guarantor or any of
their respective Subsidiaries have in the past been, and will continue to be,
transported, treated and disposed of only by carriers maintaining valid permits
under all applicable Hazardous Materials Laws and only at treatment, storage and
disposal facilities maintaining valid permits under applicable Hazardous
Materials Laws, which carriers and facilities have been and are, to the
knowledge of the Borrower and the Guarantors, operating in compliance with such
permits; (d) the Borrower, the Guarantors and their respective Subsidiaries have
taken all reasonable steps necessary to determine, and have determined, that no
Hazardous Materials or solid wastes have been disposed of or otherwise released
by them except in compliance with Hazardous Material Laws; and (e) neither the
Borrower nor any Guarantor nor any of their respective Subsidiaries has a
material contingent liability in connection with any release of any Hazardous
Materials or solid waste into the environment, and in connection herewith the
Borrower hereby agrees to pursue diligently the resolution of any environmental
issues disclosed in Schedule 7.27 by all necessary and appropriate actions and
shall report to the Administrative Agent not less frequently than
quarter-annually as to the status of the resolution of such issues.
7.28. Material Contracts. Set forth on Schedule 7.28 hereto is a
complete and accurate list of all Material Contracts of the Borrower, each of
the Guarantors and each of their respective Subsidiaries. Other than as set
forth on Schedule 7.28, each such Material Contract is in full force and effect
in accordance with the terms thereof and there are no material
69
80
defaults by the Borrower, the Guarantors or any of their respective Subsidiaries
as are parties thereto or, to the knowledge of the Borrower and the Guarantors,
by any other party, under any such Material Contract. The Borrower has delivered
to the Administrative Agent a true and complete copy of each Material Contract
required to be listed on Schedule 7.28.
7.29. No Misstatements. Neither this Agreement nor any of the other
Loan Documents, nor any agreement, instrument or other document pursuant
executed hereto or thereto or in connection herewith or therewith, nor any
certificate, statement or other information referred to herein or therein or
furnished to the Administrative Agent, any Lender or the Issuing Bank pursuant
hereto or thereto or in connection herewith or therewith, contains any
misstatement of a material fact or omits to state any material fact necessary to
make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading on the date hereof or
on the date furnished, as the case may be, except as otherwise disclosed to the
Administrative Agent, the Lenders and the Issuing Bank in writing on or prior to
the date hereof. Neither the Borrower nor any Guarantor is aware of any fact
that it has not disclosed in writing to the Administrative Agent that materially
and adversely affects, or insofar as the Borrower or such Guarantor can now
foresee, could materially and adversely affect, the properties, businesses,
prospects, results of operations, management or financial or other condition of
the Borrower and its Subsidiaries, taken as a whole, the Administrative Agent's,
the Lenders' or the Issuing Bank's rights or the ability of the Borrower, any
Guarantor or any of their respective Subsidiaries to perform its obligations
under this Agreement and the other Loan Documents to which it is a party.
7.30. Operating Leases. Schedule 7.30 sets forth each Operating
Lease existing on the date hereof providing for annual lease payments in excess
of $100,000.
ARTICLE 8
AFFIRMATIVE COVENANTS
So long as any Obligations are unpaid or outstanding, any Obligation
under the Loan Documents is unperformed or any of the Commitments are in effect,
the Borrower and Guarantors shall:
8.1. Financial Statements.
8.1.1. Annual Financial Statements and Reports. Furnish to
the Administrative Agent and each Lender, as soon as available and in any event
within ninety (90) days after the end of each Fiscal Year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such Fiscal
70
81
Year and the related consolidated statements of income, shareholders' equity and
cash flows of the Borrower and its Subsidiaries for such Fiscal Year, audited
and reported upon, without qualification, by Ernst & Young LLP or other
independent public accountants acceptable to Requisite Lenders, accompanied by
an unaudited consolidating balance sheet of the Borrower and its Subsidiaries as
of the end of such period and an unaudited consolidating statement of income for
such period, together with (a) a certificate of a Responsible Officer of the
Borrower stating that no Default or Event of Default has occurred and is
continuing or, if in the opinion of such officer, a Default or Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
action that the Borrower proposes to take with respect thereto, (b) a
certificate of a Responsible Officer of the Borrower, in form satisfactory to
the Administrative Agent and the Lenders, setting forth computations
demonstrating compliance with all financial covenants contained herein as of the
end of such Fiscal Year, and (c) a written discussion and analysis by the
management of the Borrower of the financial statements furnished in respect of
such annual fiscal period.
8.1.2. Quarterly Financial Statements and Reports. Furnish
to the Administrative Agent and each Lender, as soon as available and in any
event within forty-five (45) days after the end of each Fiscal Quarter of the
Borrower (other than the last Fiscal Quarter in any Fiscal Year) an unaudited
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Quarter, the related consolidated and
consolidating statements of income of the Borrower and its Subsidiaries for the
period commencing at the beginning of the current Fiscal Year and ending with
the end of such Fiscal Quarter and the related consolidated statements of
shareholders' equity and cash flows of the Borrower and its Subsidiaries for the
period commencing at the beginning of the current Fiscal Year and ending with
the end of such Fiscal Quarter, certified by a Responsible Officer of the
Borrower, together with (a) a certificate of said Responsible Officer stating
that no Default or Event of Default has occurred and is continuing or, if in the
opinion of such officer, a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action that the
Borrower proposes to take with respect thereto, (b) a certificate of a
Responsible Officer of the Borrower, in form satisfactory to the Administrative
Agent and the Lenders, setting forth computations demonstrating compliance
with all financial covenants contained herein as of the end of such period, and
(c) a written discussion and analysis by the management of the Borrower of the
financial statements furnished in respect of such period.
8.1.3. Monthly Financial Statements and Reports. Furnish to
the Administrative Agent and each Lender, as soon as
71
82
available and in any event within thirty (30) days after the end of each month,
an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as
of the end of such month, the related consolidated statement of income of the
Borrower and its Subsidiaries for such month and a schedule of Service Contract
operating margins for such month, certified by a Responsible Officer of the
Borrower, together with a certificate of said Responsible Officer stating that
no Default or Event of Default has occurred and is continuing or, if in the
opinion of such officer, a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action that the
Borrower proposes to take with respect thereto.
8.1.4. GAAP. Take all actions necessary to cause all such
financial statements to be complete and correct in all material respects and to
be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as may be approved
by such accountants or Responsible Officer, as the case may be, and disclosed
therein).
8.2. Certificates and Other Information. Furnish to the
Administrative Agent and each Lender, each in form and substance acceptable to
Requisite Lenders:
8.2.1. Management Letters. Promptly after the same are
received by the Borrower, copies of management letters provided to the Borrower
by its independent certified public accountants that describe or refer to any
inadequacy, defect, problem, qualification or other lack of satisfactory
accounting controls utilized by the Borrower or any of its Subsidiaries.
8.2.2. Shareholder Materials. (a) Within two (2) Business
Days after the delivery of same to the shareholders of the Borrower, copies of
all financial statements and reports that the Borrower, any Guarantor or any of
their respective Subsidiaries sends to the shareholders of the Borrower, and (b)
concurrently with the filing thereof, copies of all reports and statements of
the Borrower, the Guarantors and their respective Subsidiaries (including proxy
and information statements, quarterly, annual and current reports and
registration statements, but excluding those pertaining only to employee benefit
plans) that it may make to, or file with, the Commission.
8.2.3. Budgets. As soon as available, and in any event not
later than sixty (60) days after the end of each Fiscal Year of the Borrower,
twelve (12) month budgeted financial statements (including balance sheets and
statements of income, shareholders' equity and cash flows) for the following
Fiscal Year of the Borrower and its Subsidiaries on a consolidated basis
(including underlying assumptions), and twelve (12) month
72
83
consolidating budgeted statements of income for the following Fiscal Year of the
Borrower and each of its Subsidiaries, all in a format reasonably acceptable to
Requisite Lenders and certified by a Responsible Officer of the Borrower as
being fairly stated in good faith. Any updates thereto shall be provided upon
request of the Administrative Agent.
8.2.4. Communications Regarding Service Contracts. Within
fifteen (15) days following the receipt thereof, a copy of any audit, statement,
notice of deficiency or default, or other report or communication from any
Governmental Authority or other Person relating to performance by the Borrower
or any of its Subsidiaries under any Service Contract.
8.2.5. Lag Studies. Promptly after any time that the
aggregate liability of the Borrower and its Subsidiaries for medical claims
payable under Service Contracts is less than an amount equal to forty-five (45)
days' health care expense under Service Contracts, updated lag studies prepared
by Txen, Inc. or another independent medical claims processing consultant
acceptable to the Administrative Agent, in form satisfactory to the
Administrative Agent, regarding the Service Contracts.
8.2.6. Reports to Other Persons. Promptly after the
furnishing thereof, copies of any statement or report furnished to any other
holder of any Indebtedness of the Borrower, any of the Guarantors or any of
their respective Subsidiaries pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be furnished to the
Administrative Agent or Lenders pursuant to any other clause of this Section
8.2.
8.2.7. Funded Indebtedness. Promptly upon request by
the Administrative Agent, copies of all agreements, instruments and/or
documents evidencing or otherwise related to Consolidated Funded Indebtedness.
8.2.8. Employment and Investment Agreements. Promptly upon
request by the Administrative Agent, a true and complete copy of each of the
agreements required to be listed on Schedule 7.26.
8.2.9. Additional Information. Promptly, such
additional financial and other information as the Administrative
Agent or any Lender from time to time reasonably may request.
8.3. Provision of Notices. Notify the Administrative Agent and each
Lender of the occurrence of any of the following events not later than five
(5) days after the Borrower or any Guarantor knows or has reason to know of
such event:
8.3.1. Default. Any Default or Event of Default.
73
84
8.3.2. Other Default or Litigation. (a) Any default or event
of default under any Contractual Obligation of the Borrower, any Guarantor or
any of their respective Subsidiaries that reasonably could be expected to have a
Material Adverse Effect, (b) any litigation, investigation or proceeding that
may exist at any time between the Borrower, any Guarantor or any of their
respective Subsidiaries and any Governmental Authority (excluding, however,
audits and inquiries made in the ordinary course of business), or (c) any other
litigation that if adversely determined reasonably could be expected to have a
Material Adverse Effect.
8.3.3. Reportable Events. (a) Any Reportable Event with
respect to any Plan, (b) the institution of proceedings or the taking or
expected taking of any other action by the PBGC, the Borrower, any Guarantor,
any of their respective Subsidiaries or any Commonly Controlled Entity to
terminate, withdraw or partially withdraw from any Plan, and (c) with respect to
any Multi-Employer Plan, the reorganization or insolvency of such Plan. In
addition to such notice, the Borrower and the Guarantors shall deliver or cause
to be delivered to the Administrative Agent and each Lender whichever of the
following may be applicable: (i) a certificate of a Responsible Officer of the
Borrower or such Guarantor setting forth details as to such Reportable Event and
the action that it, such Subsidiary or the Commonly Controlled Entity proposes
to take with respect thereto, together with the copy of any notice of such
Reportable Event that may be required to be filed with the PBGC, or (ii) any
notice delivered by the PBGC evidencing its intent to institute such proceedings
or any notice to the PBGC that such Plan is to be terminated, as the case may
be.
8.3.4. Environmental Matters. (a) Any event that makes any
of the representations set forth in Section 7.27 inaccurate in any respect or
(b) the receipt by the Borrower, any of the Guarantors or any of their
respective Subsidiaries of any notice, order, directive or other communication
from a Governmental Authority alleging a violation of or noncompliance with any
Hazardous Material Laws.
8.3.5. Loss of License, Permit, Approval, Etc.
(a) The loss or, if known by the Borrower, any Guarantor or
any of their respective Subsidiaries, threatened loss, by the
Borrower, any Guarantor or any of their respective Subsidiaries, of
any license, permit, approval, registration, contract, consent,
franchise, qualification, certificate of need, accreditation or other
authorization issued by any Governmental Authority referenced in
Section 7.24, if such loss reasonably could be expected to have a
Material Adverse Effect; or
74
85
(b) The decertification or, if known by the Borrower, any
Guarantor or any of their respective Subsidiaries, potential
decertification, of the Borrower, any Guarantor or any of their
respective Subsidiaries, under any program relating to Service
Contracts, if such decertification reasonably could be expected to have
a Material Adverse Effect.
8.3.6. Material Contracts. (a) Any proposed material
amendment, change or modification to, or waiver of any material
provision of, or any termination of, any Material Contract and
(b) any Default or Event of Default under any Material Contract.
8.3.7. Casualty Losses. Any casualty loss or event not
insured against in an amount in excess of $100,000.
8.4. Payment of Obligations and Performance of Covenants.
(a) Make full and timely payment of the Obligations,
including the Loans and Letter of Credit Liabilities, whether now
existing or hereafter arising;
(b) Duly comply with all terms, covenants and conditions
contained in each of the Loan Documents, at the times and places and in
the manner set forth therein; and
(c) Take all action necessary to maintain the security
interests provided for under this Agreement and the Security Documents
as valid and perfected Liens on the property intended to be covered
thereby, subject to no other Liens except Permitted Liens, and supply
all information to the Administrative Agent or the Lenders necessary to
accomplish same.
8.5. Payment of Taxes. Pay, and cause their respective Subsidiaries to
pay, or cause to be paid before the same shall become delinquent and before
penalties have accrued thereon, all taxes, assessments and governmental charges
or levies imposed on the income, profits, franchises, property or businesses of
the Borrower, the Guarantors or their respective Subsidiaries, except to the
extent and so long as (a) the same are being contested in good faith by
appropriate proceedings and (b) adequate reserves with respect thereto in
conformity with GAAP have been provided on the books of the Borrower or any such
Guarantor or Subsidiary, as appropriate.
8.6. Conduct of Business and Maintenance of Existence. Continue, and
cause their respective Subsidiaries to continue, (a) to engage solely in the
business of providing managed healthcare services to correctional facilities and
related businesses that enhance or support that primary business activity, and
(b) except as permitted by Sections 9.3 and 9.7, to preserve, renew and keep in
full force and effect their existence
75
86
and present corporate, partnership or other organizational structure, as the
case may be.
8.7. Compliance with Law. Observe and comply with, and cause their
respective Subsidiaries to observe and comply with, all present and future
Requirements of Law relating to the conduct of their businesses or to their
properties or assets, except to the extent and so long as the nonobservance
thereof or noncompliance therewith will not have a Material Adverse Effect.
8.8. Maintenance of Properties and Franchises. Maintain, preserve and
keep and cause their respective Subsidiaries to maintain, preserve and keep (a)
all of their buildings, tangible properties, equipment and other property and
assets used and necessary in their businesses, whether owned or leased, in good
repair, working order and condition, from time to time making all necessary and
proper repairs and replacements so that at all times the utility, efficiency and
value thereof shall not be impaired, and (b) all rights, privileges and
franchises necessary or desirable in the normal conduct of their businesses.
8.9. Insurance.
(a) Maintain and cause their respective Subsidiaries
to maintain:
(i) insurance (in addition to any insurance required
under the Security Documents) on all insurable operations of
and insurable property and assets owned or leased by the
Borrower, the Guarantors or any of their respective
Subsidiaries in the manner, to the extent and against at
least such risks (in any event including professional and
comprehensive general liability, workers' compensation,
employer's liability, automobile liability and physical
damage, fiduciary liability, commercial fidelity, employee
benefits liability and all-risk property) usually maintained
by owners of similar businesses and properties in similar
geographic areas; provided that the amounts of property
insurance coverages shall not be less than the full
replacement cost of all such insurable property and assets,
except for coverage limitations with respect to flood,
earthquake and windstorm perils that are acceptable to the
Administrative Agent and Requisite Lenders; and
(ii) self-insurance reserves covering those risks for
which the Borrower, the Guarantors and each of their
respective Subsidiaries presently self-insure in appropriate
amounts as determined from time to time by independent
insurance claims auditors acceptable to the Administrative
Agent and Requisite Lenders.
76
87
All such insurance shall be in such amounts, in such form and with such
insurance companies as are reasonably satisfactory to the
Administrative Agent and Requisite Lenders.
(b) Furnish to the Administrative Agent not less frequently
than annually and at any time upon written request, (i) full
information as to such insurance carried, including the amounts of all
self-insurance reserves of the Borrower, the Guarantors and their
respective Subsidiaries, and (ii) certificates of insurance from the
insurance companies and certified copies of such insurance policies.
All policies of insurance (or certificates of insurance in favor of the
Administrative Agent with respect thereto) shall provide for not less
than fifteen (15) days' prior written notice to the Administrative
Agent of the cancellation or any material alteration of the policy.
8.10. Use of Proceeds. Use, and cause their respective Subsidiaries
to use, the proceeds of the Facilities for the purposes specified in Section
2.10 and for no other purpose.
8.11. Books and Records. Keep and maintain, and cause their respective
Subsidiaries to keep and maintain, full and accurate books of record and
accounts of their operations, dealings and transactions in relation to their
business and activities, in conformity with GAAP and all Requirements of Law.
8.12. Inspection. Permit, and cause their respective Subsidiaries to
permit, any employees, agents or other representatives of the Administrative
Agent or the Lenders and any attorneys, accountants or other agents or
representatives designated by the Administrative Agent or the Lenders to (a)
have access to and visit and inspect any of the books of account, financial
records and properties, real, personal or mixed, of the Borrower, the Guarantors
and their respective Subsidiaries (b) examine and make abstracts from any such
books and records, and (c) discuss the affairs, finances and accounts of the
Borrower, the Guarantors and their respective Subsidiaries with their officers,
employees or agents, all at such reasonable business times as the Administrative
Agent or the Lenders deem necessary or advisable to protect their respective
interests.
8.13. Compliance With Terms of Material Contracts. Comply, and cause
their respective Subsidiaries to comply, with all agreements, covenants, terms,
conditions and provisions of all Material Contracts, except to the extent and so
long as noncompliance therewith will not have a Material Adverse Effect .
8.14. Compliance With Hazardous Materials Laws, Etc..
77
88
(a) Employ, and cause their respective Subsidiaries to
employ, in connection with the use of any real property, appropriate
technology (including appropriate secondary containment measures) to
maintain compliance with any applicable Hazardous Materials Laws;
(b) take, and cause their respective Subsidiaries to take,
all actions necessary to comply with all Hazardous Materials Laws,
including any actions identified as necessary in any environmental
compliance reports delivered to the Administrative Agent pursuant to
the provisions of this Agreement;
(c) obtain and maintain, and cause their respective
Subsidiaries to obtain and maintain, any and all permits required by
applicable Hazardous Materials Laws in connection with the operations
of the Borrower, the Guarantors or any of their respective Subsidiaries
or any Affiliate thereof;
(d) dispose of, and cause their respective Subsidiaries to
dispose of, any and all Hazardous Materials only at facilities and with
carriers maintaining valid permits under any applicable federal, state
and local Hazardous Materials Laws; and
(e) use best efforts to obtain, and cause their respective
Subsidiaries to use their best efforts to obtain, certificates of
disposal from all contractors employed by the Borrower, the Guarantors
or any of their respective Subsidiaries in connection with the
transportation or disposal of any Hazardous Materials.
8.15. Environmental Monitoring. Establish and maintain, and cause their
respective Subsidiaries to establish and maintain, a system to assure and
monitor continued compliance with all applicable Hazardous Material Laws,
noncompliance with which would have a Material Adverse Effect, which system
shall include annual reviews of such compliance by employees or agents of the
Borrower, the Guarantors and their respective Subsidiaries who are familiar with
the requirements of applicable Hazardous Material Laws.
8.16. Maintenance of Licenses, Permits, Approvals, Etc. Preserve and
maintain, and cause their respective Subsidiaries to preserve and maintain, all
licenses, permits, approvals, registrations, contracts, consents, franchises,
qualifications, certificates of need, accreditations and other authorizations
required under applicable state or local laws and regulations in connection with
the ownership or operation of their businesses, except to the extent that a
failure to preserve and maintain any of same will not have a Material Adverse
Effect.
78
89
8.17. Intercompany Indebtedness. Maintain, and cause their respective
Subsidiaries to maintain, accounting practices and procedures that enable the
Borrower, the Guarantors and their respective Subsidiaries to report to the
Administrative Agent at any time upon its request the amount of proceeds of any
unsecured advances or loans that any such Subsidiary has received from the
Borrower or a Guarantor. All such advances or loans shall be evidenced by
Pledged Notes delivered to the Administrative Agent pursuant to the Pledge
Agreement.
8.18. Further Assurances. Perform, make, execute and deliver, and cause
their respective Subsidiaries to perform, make, execute and deliver, all such
additional and further acts, deeds, occurrences and instruments as the
Administrative Agent, the Lenders or the Issuing Bank reasonably may require to
document and consummate the transactions contemplated hereby and to vest
completely in and to ensure the Administrative Agent, the Lenders and the
Issuing Bank their respective rights under this Agreement, the Notes and the
other Loan Documents.
8.19. Post-Closing Matters. Deliver to the Administrative Agent each
item listed on Schedule 8.19 prior to the deadline therefor as set forth on said
schedule.
8.20. Documentation Relating to Pledged Notes. Contemporaneously with
the delivery to the Administrative Agent of any Pledged Note, assign and deliver
to the Administrative Agent any loan agreement or other instrument, document or
agreement further evidencing, securing or otherwise relating to the indebtedness
evidenced by such Pledged Note.
8.21. Management. Cause substantially all of the principal executive
management functions of the Borrower and its Subsidiaries to be vested in and
the responsibility of not less than three of Xxxxx X. Mercy, Xxxxxxx X.
Xxxxxxxx, Xxxxx X. Xxxx and Xxxxxxx Xxxxxxxx.
ARTICLE 9
NEGATIVE COVENANTS
So long as any Obligations are unpaid or outstanding, any Obligation
under the Loan Documents is unperformed or any of the Commitments are in
effect, the Borrower and the Guarantors shall not:
9.1. Indebtedness. Create, incur, assume or suffer to exist, or
permit any of their respective Subsidiaries to create, incur, assume or suffer
to exist, any Indebtedness, except:
79
90
(a) Indebtedness of the Borrower or any of the Guarantors
under or pursuant to this Agreement and the other Loan Documents;
(b) Indebtedness existing, or arising pursuant to
commitments existing, on the date hereof, all as set forth in Schedules
7.17A and 7.17B, and any extensions, refundings or renewals thereof on
the same terms or other terms satisfactory to Requisite Lenders;
provided, however, that neither the principal amount thereof nor the
interest rate thereon shall be increased, nor shall the amortization
schedule thereof be shortened;
(c) Purchase Money Debt in an aggregate amount not to
exceed $500,000 outstanding at any one time, and Capitalized
Lease Obligations;
(d) Subordinated Indebtedness;
(e) Indebtedness constituting current liabilities incurred
in the ordinary course of business and not represented by any note,
bond, debenture or other instrument, and which is not past due for a
period in excess of that which is customary for similar businesses, or
if overdue for a greater period of time, which are being contested in
good faith and by appropriate actions and for which adequate reserves
in accordance with GAAP have been established on the books of the
primary obligor with respect thereto;
(f) Contingent Obligations under guarantees executed by the
Borrower, any Guarantor or any of their respective Subsidiaries with
respect to Indebtedness of the Borrower and its Subsidiaries otherwise
permitted by this Agreement;
(g) Contingent Obligations consisting of the indemnification
by the Borrower or any of its Subsidiaries of (i) the officers,
directors, employees and agents of the Borrower or such Subsidiary, to
the extent permissible under the corporation law of the jurisdiction in
which the Borrower or such Subsidiary is organized, (ii) commercial
banks, investment bankers and other independent consultants or
professional advisors pursuant to agreements relating to the
underwriting of the Borrower's or such Subsidiary's securities or the
rendering of banking or professional services to the Borrower or such
Subsidiary and (iii) landlords, licensors, licensees and other parties
pursuant to agreements entered into in the ordinary course of business
by the Borrower or such Subsidiary;
(h) Indebtedness with respect to financed insurance
premiums not past due;
80
91
(i) Indebtedness of the Borrower or a Subsidiary of the
Borrower that is owed to the Borrower or a Subsidiary of the Borrower
and that is described in clauses (d), (e) or (h) of Section 9.4;
(j) unsecured Indebtedness of the Borrower and its
Subsidiaries, not otherwise described in this Section 9.1, in an
aggregate amount not to exceed $500,000 outstanding at any one time;
and
(k) Indebtedness of Harbour under insurance policies issued
by Harbour in the ordinary course of business.
9.2. Liens. Create, incur, assume or suffer to exist, or permit any of
their respective Subsidiaries to create, incur, assume or suffer to exist, any
Lien upon any real or personal property, fixtures, revenues or other assets
whatsoever (including the Collateral), whether now owned or hereafter acquired,
of the Borrower, the Guarantors or any of their respective Subsidiaries, except:
(a) Liens securing the Obligations;
(b) Existing Liens;
(c) Liens for taxes not yet due or that are being contested
in good faith and by appropriate actions and for which adequate
reserves in accordance with GAAP have been established on the books of
the Borrower or such Guarantor or Subsidiary;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business that are not overdue for a period of more than thirty (30)
days, or if overdue for more than thirty (30) days, (i) which are being
contested in good faith and by appropriate proceedings, (ii) for which
adequate reserves in accordance with GAAP have been established on the
books of the Borrower or such Guarantor or Subsidiary; and (iii) with
respect to which the obligations secured thereby are not material;
(e) pledges or deposits in connection with workers'
compensation insurance, unemployment insurance and like
matters;
(f) Liens securing Purchase Money Debt or arising under
Capitalized Leases; provided, however, that any such Lien attaches only
to the item or items of property or asset financed with such Purchase
Money Debt or Capitalized Lease;
81
92
(g) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(h) easements, reservations, exceptions, rights-of-way,
covenants, conditions, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, are
not substantial in amount, and that do not in any case materially
detract from the value of the property subject thereto or interfere
with the ordinary conduct of business by the Borrower or such Guarantor
or Subsidiary;
(i) Liens in respect of any writ of execution, attachment,
garnishment, judgment or award in an amount less than $100,000, if (i)
the time for appeal or petition for rehearing has not expired, an
appeal or appropriate proceeding for review is being prosecuted in good
faith and a stay of execution pending such appeal or proceeding for
review has been secured, or (ii) the underlying claim is fully covered
by insurance, the insurer has acknowledged in writing its
responsibility to pay such claim and no action has been taken to
enforce such execution, attachment, garnishment, judgment or award;
(j) Liens of lessors under or in connection with
Operating Leases;
(k) Liens securing Indebtedness permitted under clause (b)
of Section 9.1, but only to the extent that such Indebtedness is
presently secured as set forth on Schedule 7.17A; and
(l) Other non-consensual Liens not securing Indebtedness,
the existence of which in the aggregate will not have a Material
Adverse Effect; provided that any Lien permitted by this clause (l) is
permitted only for so long as is reasonably necessary for the Borrower
or the affected Subsidiary, using its best efforts, to remove or
eliminate such Lien.
9.3. Sale or Transfer of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of their respective Subsidiaries to sell,
lease, assign, transfer or otherwise dispose of, any of their assets (including
the stock of Subsidiaries) except:
(a) sales of personal property assets in the ordinary
course of business of the Borrower and its Subsidiaries;
82
93
(b) the disposition of obsolete or worn-out equipment or
other property no longer required by or useful to the Borrower or any
of its Subsidiaries in connection with the operation of their
businesses;
(c) the sale or transfer to the Borrower or any
Guarantor of any asset owned by the Borrower or any of its
Subsidiaries; and
(d) sale(s) of assets not otherwise permitted by this
Section 9.3 in an aggregate amount not to exceed, in any Fiscal Year,
an amount equal to five percent (5%) of the consolidated assets of the
Borrower and its Subsidiaries, determined in conformity with GAAP, as
of the end of the most recently completed Fiscal Year of the Borrower.
9.4. Investments. Make, commit to make or suffer to exist, or permit
any of their respective Subsidiaries to make, commit to make or suffer to
exist, any Investment except:
(a) Cash Equivalents;
(b) Investments existing on the date hereof and set
forth in Schedule 9.4;
(c) accounts receivable representing trade credit
extended in the ordinary course of business;
(d) unsecured loans or advances by the Borrower or
any Guarantor to any Guarantor or the Borrower;
(e) unsecured loans or advances by any Subsidiary of
the Borrower to the Borrower or any Guarantor;
(f) Investments consisting of Permitted Acquisitions;
(g) Investments in Guarantors that otherwise are
permitted by the terms of this Agreement;
(h) Investments in Permitted Joint Ventures in an aggregate
amount not to exceed, at any time, five percent (5%) of the
consolidated assets of the Borrower and its Subsidiaries, determined in
conformity with GAAP, as of the end of the most recently completed
Fiscal Year of the Borrower; and
(i) Permitted Harbour Investments.
9.5. Restricted Payments. Declare, pay or make, or permit
any of their respective Subsidiaries to declare, pay or make any
Restricted Payments except:
83
94
(a) the Borrower may declare and deliver dividends and make
distributions payable solely in common stock of the Borrower, and may
distribute cash in lieu of fractional shares otherwise distributable
pursuant to this clause (a); and
(b) the Borrower may purchase or otherwise acquire shares of
its capital stock by exchange for or out of the proceeds received from
a substantially concurrent issue of new shares of its capital stock.
9.6. Issuance of Stock. Issue any capital stock or permit any
Subsidiary to issue any capital stock; provided, however, that
(a) the Borrower may issue common stock and may issue
preferred stock to the extent the aggregate of all preferred stock
outstanding does not require the payment of dividends in excess of
amounts permitted under Section 9.5, and provided such preferred stock
is not redeemable, payable or subject to being required to be purchased
or otherwise retired or extinguished (i) at a fixed or determinable
date, whether by operation of a sinking fund or otherwise, (ii) at the
option of any Person other than the Borrower or (iii) upon the
occurrence of a condition not solely within the control of the
Borrower, such as a redemption required to be made out of future
earnings; and
(b) any Subsidiary of the Borrower may issue capital
stock to the Borrower or any wholly-owned Subsidiary of the
Borrower.
9.7. Fundamental Changes. Directly or indirectly, or permit any of
their respective Subsidiaries directly or indirectly, (whether in one
transaction or a series of transactions), to (a) enter into any transaction of
merger, consolidation or amalgamation; (b) liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution); (c) make any Asset Acquisition other
than a Permitted Acquisition; (d) make any material change in its present method
of conducting business; or (e) enter into any agreement or transaction to do or
permit any of the foregoing; provided, however, that notwithstanding clause (b)
of this Section 9.7, the Borrower may permit the dissolution of any of its
Subsidiaries (and any such Subsidiary may suffer such dissolution) if at the
time of such dissolution such Subsidiary has no assets, engages in no business
and otherwise has no activities other than activities related to the maintenance
of its corporate existence and good standing.
9.8. Transactions With Affiliates. Enter into, or permit any of their
respective Subsidiaries to enter into, any transaction, including any purchase,
sale, lease or exchange of
84
95
property or the rendering of any service, with any Affiliate or employee of the
Borrower or any of its Subsidiaries, except transactions that are in the
ordinary course of business of the Borrower or such Guarantor or Subsidiary and
that are upon fair and reasonable terms no less favorable to the Borrower or
such Guarantor or Subsidiary than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate.
9.9. Agreements Restricting Subsidiaries. Enter into or become a party
to, or permit any of their respective Subsidiaries to enter into or become a
party to, any agreement with any Person (other than this Agreement and the Loan
Documents) that in any way prohibits, restricts or limits the ability of the
Borrower, any Guarantor or any such Subsidiary to:
(a) transfer cash or other assets to the Borrower or
of its Subsidiaries, or
(b) create, incur, assume or suffer to exist any Lien with
respect to any real or personal property, fixtures, revenues or other
assets whatsoever, whether now owned or hereafter acquired, of the
Borrower, any Guarantor or any such Subsidiary.
9.10. ERISA.
(a) terminate or permit any of their respective
Subsidiaries to terminate any Plan so as to result in any
material liability to the PBGC;
(b) engage or permit any of their respective Subsidiaries to
engage in any "prohibited transaction" (as defined in Section 4975 of
the Code) involving any Plan that would result in a material liability
for an excise tax or civil penalty in connection therewith;
(c) incur or suffer to exist, or permit any of their
respective Subsidiaries to incur or suffer to exist, any material
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
regardless of whether waived, involving any Plan; or
(d) allow or suffer to exist, or permit any of their
respective Subsidiaries to allow or suffer to exist, any event or
condition that presents a material risk of incurring a material
liability to the PBGC by reason of the termination of any Plan.
9.11. Maintenance of Material Contracts. Without the prior written
consent of Requisite Lenders, enter into an agreement to cancel, terminate or
surrender, or enter into any material amendment of, any Material Contract,
unless the cumulative effect
85
96
of all such cancellations, terminations, surrenders, and amendments will not
have a Material Adverse Effect.
9.12. Adverse Transactions. Enter into or become a party to, or permit
any of their respective Subsidiaries to enter into or become a party to, any
transactions the performance of which in the future would be inconsistent with
or would result in a breach of any covenant contained herein or any other Loan
Document or giving rise to any Default or Event of Default.
9.13. Additional Restriction on Investments in Permitted Joint
Ventures. Without the prior written consent of Requisite Lenders, make new or
additional Investments in Permitted Joint Ventures during any Fiscal Quarter
following a Fiscal Quarter in which any net income of the Borrower and its
Subsidiaries attributable to Permitted Joint Ventures was excluded from
Consolidated Net Income pursuant to the proviso included in the definition of
that term.
ARTICLE 10
FINANCIAL COVENANTS
10.1. Borrower Ratios. So long as any Obligations are unpaid or
outstanding, any Obligation under the Loan Documents is unperformed or any of
the Commitments are in effect, the Borrower and the Guarantors shall not:
10.1.1. Funded Indebtedness to Capitalization Ratio. Permit
the Funded Indebtedness to Capitalization Ratio (a) as of the end of any Fiscal
Quarter ending on or after June 30, 1997 but on or before September 30, 1997 to
be greater than 0.65 to 1.00, or (b) as of the end of any Fiscal Quarter ending
on or after December 31, 1997 but on or before December 31, 1998 to be greater
than 0.60 to 1.00, (c) as of the end of any Fiscal Quarter ending on or after
March 31, 1999 to be greater than 0.55 to 1.00.
10.1.2. Fixed Charge Coverage Ratio. Permit the Fixed
Charge Coverage Ratio as of the end of any Fiscal Quarter ending on or after
June 30, 1997 to be less than 1.25 to 1.00.
10.1.3. Adjusted Funded Indebtedness to EBITDA Ratio.
Permit the Adjusted Funded Indebtedness to EBITDA Ratio as of the
end of any Fiscal Quarter ending on or after June 30, 1997 to be
greater than 2.50 to 1.00.
10.1.4. Current Ratio. Permit (a) the Current Ratio as of
the end of any Fiscal Quarter ending on or after June 30, 1997 to be less than
1.00 to 1.00, or (b) permit, as of the end of any Fiscal Quarter ending on or
after June 30, 1997, advance
86
97
xxxxxxxx of the Borrower and its Subsidiaries on a consolidated basis to exceed
deferred revenue of the Borrower and its Subsidiaries on a consolidated basis,
all determined in conformity with GAAP.
10.1.5. Rent Expense. Permit Rent Expense of the Borrower
and its Subsidiaries during any Fiscal Quarter ending on or after June 30, 1997
to exceed two percent (2%) of Consolidated Healthcare Revenue for such Fiscal
Quarter.
10.2. Guarantor Solvency. So long as any Obligations or any
Guaranteed Obligations are unpaid or outstanding, any Obligations under the
Loan Documents are unperformed or any of the Commitments are in effect, each
of the Guarantors at all times shall be Solvent.
ARTICLE 11
EVENTS OF DEFAULT AND LENDERS' REMEDIES
11.1. Events of Default. Any one or more of the following described
events shall constitute an Event of Default hereunder, whether such occurrence
shall be voluntary or involuntary, or come about or be effected by operation of
law or otherwise:
11.1.1. Failure to Pay Loans, Etc. The Borrower shall fail
to pay when due any amount of principal of or interest payable on or in respect
of the Loans, the Letter of Credit Liabilities, the Credit Fees, any other
Obligations or any other amount payable under this Agreement, the Notes or the
other Loan Documents.
11.1.2. Failure to Perform Certain Covenants. (a) The
Borrower or any Guarantor shall fail to perform or observe any of its covenants
and agreements set forth in Article 9, and such failure shall continue for more
than fifteen (15) days after the earlier of (i) written notice from the
Administrative Agent to the Borrower or such Guarantor, as applicable, of the
existence of such Default, or (ii) the date any Responsible Officer of the
Borrower or such Guarantor, as applicable, first obtains knowledge of such
failure, or (b) the Borrower or any Guarantor shall fail to perform or observe
any of its covenants and agreements set forth in Sections 8.6, 8.10 or 8.12 or
in Article 10.
11.1.3. Failure to Perform Agreements Generally. The
Borrower or any Guarantor shall fail to perform or observe any of its other
covenants and agreements set forth in this Agreement (other than those described
in Sections 11.1.1 and 11.1.2) or the other Loan Documents, and such failure
shall continue for more than thirty (30) days after the earlier of (a) written
notice
87
98
from the Administrative Agent to the Borrower or such Guarantor, as applicable,
of the existence of such Default, or (b) the date any Responsible Officer of the
Borrower or such Guarantor, as applicable, first obtains knowledge of such
failure.
11.1.4. Defaults Under Other Loan Documents. Any default or
event of default shall occur under any other Loan Document, and, if subject to a
cure right, shall fail to be cured or corrected within the applicable cure
period.
11.1.5. False Statements. Any representation or warranty of
the Borrower or any Guarantor set forth in this Agreement, the Notes or the
other Loan Documents or in any other certificate, opinion or other statement at
any time provided by or on behalf of the Borrower or any Guarantor in connection
herewith or therewith shall prove to be false or misleading in any material
respect at the time made or given.
11.1.6. Voluntary Insolvency Proceedings. The Borrower, any
Guarantor or any of their respective Subsidiaries (a) shall commence a voluntary
case or other proceeding seeking dissolution, liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a receiver, trustee, liquidator, custodian or other similar
official with respect to it or any substantial part of its property, (b) shall
consent to any such relief or to the appointment of, or the taking of possession
of any of its property by, any such official in any involuntary case or other
proceeding commenced against it, (c) shall make a general assignment for the
benefit of creditors, (d) shall take any action to authorize any of the
foregoing, or (e) shall become insolvent or fail generally to pay its debts as
they become due.
11.1.7. Involuntary Insolvency Proceedings. Any
involuntary case or other proceeding shall be commenced against the Borrower,
any Guarantor or any of their respective Subsidiaries seeking dissolution,
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a receiver, trustee, liquidator, custodian or
other similar official with respect to it or any substantial part of its
property, an (a) an order for relief (or the equivalent) shall be entered in
such involuntary case or other proceeding or (b) such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of thirty (30)
days after the commencement thereof.
11.1.8. Failure to Perform Other Obligations. The
Borrower, any Guarantor or any of their respective Subsidiaries shall (a) fail
to pay any amount of any Indebtedness or interest thereon, or (b) fail to
observe or perform any term, covenant or
88
99
agreement contained in any Contractual Obligation (including Contractual
Obligations evidencing, securing or relating to any Indebtedness) executed by
it, which failure (i) would cause or permit the holder or holders or beneficiary
or beneficiaries of such Indebtedness (or any agent or trustee on their behalf)
to cause such Indebtedness to become due or otherwise payable prior to its
stated maturity, so long as the aggregate principal amount of all such
Indebtedness that would then become due or payable would equal or exceed
$500,000, or (ii) would impair the Administrative Agent's, the Lenders' or the
Issuing Bank's rights or the performance of the obligations of the Borrower, any
Guarantor or any of their respective Subsidiaries under this Agreement, the
Notes or the other Loan Documents or the business or operations of the Borrower,
any Guarantor or any of their respective Subsidiaries; unless in the case of a
Contractual Obligation that is not for borrowed money, such failure of
performance is being contested by the Borrower, such Guarantor or such
Subsidiary in good faith and adequate reserves with respect thereto have been
established on the books of the Borrower, such Guarantor or such Subsidiary in
conformity with GAAP.
11.1.9. Execution or Attachment. Any judgment lien shall be
filed, or any writ of execution, attachment, garnishment or other legal process
shall be issued, against any of the property of the Borrower, any Guarantor or
any of their respective Subsidiaries, which by itself or together with all other
such legal processes is for an amount in excess of $100,000, and which shall
remain unvacated, unbonded or unstayed for a period of thirty (30) days, or in
any event later than five (5) days prior to the date of any proposed sale
thereunder.
11.1.10. Condemnation of Property. All or substantially all
of the property of the Borrower, any Guarantor or any of their respective
Subsidiaries shall be condemned, seized or otherwise appropriated, and the
condemnation award (together with any net proceeds of insurance then payable in
respect thereof, if any) is materially less than the book value of such property
at the date hereof (if such property was owned by the Borrower or any of its
Subsidiaries on the date hereof) or at the time such property was acquired by
the Borrower or such Subsidiary (if such property was acquired by the Borrower
or such Subsidiary after the date hereof).
11.1.11. Suspension of Business. The Borrower, any Guarantor
or any of their respective Subsidiaries shall voluntarily suspend the
transaction of its business for more than five (5) Business Days in any Fiscal
Year after the date hereof without the prior express written consent of
Requisite Lenders.
11.1.12. ERISA. (a) The Borrower or any Commonly Controlled
Entity shall engage in any "prohibited transaction" (as defined in ERISA or
Section 4975 of the Code) involving any
89
100
Plan, (b) any "accumulated funding deficiency" (as defined in ERISA), whether or
not waived, shall exist with respect to any Plan, (c) a Reportable Event shall
occur with respect to, or a proceeding shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or proceeding presents a material
risk of termination of such Plan for purposes of Title IV of ERISA, and, in the
case of a Reportable Event, shall continue unremedied for ten (10) days after
notice of such Reportable Event is given pursuant to Section 4043(a), (c) or (d)
of ERISA and, in the case of such proceeding, shall continue for ten (10) days
after commencement thereof, (d) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (e) the withdrawal or partial withdrawal by the
Borrower or any Commonly Controlled Entity from any Multi-Employer Plan, or (f)
the reorganization or insolvency of a Plan or any other event or condition shall
occur or exist with respect to a Plan and in each case in clauses (a) through
(f) above, such event or condition together with all other such events or
conditions, if any, could subject the Borrower, any Guarantor or any of their
respective Subsidiaries to any tax, penalty or other liability in excess of
$100,000 or otherwise would have a Material Adverse Effect.
11.1.13. Validity of Loan Documents. Any of the Loan
Documents or any provision thereof, for any reason whatsoever, ceases to be
binding on the Borrower, any Guarantor or any of their respective Subsidiaries
as is a party thereto, or the Borrower or any Guarantor shall so assert.
11.1.14. Guaranty Obligations. Any Guarantor shall default
in the performance or observance of its guarantee hereunder, or such guarantee
for any reason whatsoever shall cease to be a valid and binding obligation of
any such Guarantor, or any such Guarantor shall so assert.
11.1.15. Failure of Lien. Any Security Document, after
delivery thereof pursuant to this Agreement, for any reason ceases to create a
valid Lien on any of the Collateral purported to be covered thereby or, after
recordation of such Security Document as provided in this Agreement, ceases to
be a perfected and first priority Lien on such Collateral, subject only to
Permitted Liens.
11.1.16. Defaults under Material Contracts. Any default or
event of default shall occur under any Material Contract, and, if subject to a
cure right, shall fail to be cured or corrected within the applicable cure
period.
11.1.17. Material Adverse Change. Any Material Adverse
Change shall occur.
90
101
11.1.18. Change in Control. An event or series of events by
which (a) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), becomes the "beneficial owner"
(within the meaning of Rule 13d-3 and/or Rule 13d-5 under the Securities
Exchange Act of 1934, except that a Person shall be deemed to have "beneficial
ownership" of all shares that such Person has the right to acquire without
condition, other than the passage of time, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than thirty percent (30%) of the combined voting power of all securities of the
Borrower entitled to vote in the election of directors, other than securities
having such power only by reason of the happening of a contingency (other than
the passage of time), (b) the Borrower consolidates with or merges into another
Person or conveys, transfers or leases all or substantially all of its assets to
any Person, or any corporation consolidates with or merges into the Borrower
pursuant to a transaction in which the outstanding securities of the Borrower
entitled to vote in the election of directors are changed into or exchanged for
cash, securities or other property, other than a transaction between the
Borrower and a Subsidiary of the Borrower, or (c) individuals who at the
beginning of any period of two (2) consecutive calendar years constituted the
Board of Directors (together with any new directors whose election by such Board
of Directors or whose nomination for election by the Borrower's shareholders was
approved by a vote of at least two-thirds (2/3) of the members of the Board of
Directors then still in office who either were members of the Board of Directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board of Directors then in office.
11.2. Lenders' Remedies. Upon the occurrence of an Event of Default
or at any time thereafter, and in each and every case, unless such Event of
Default shall have been remedied or waived in writing by Requisite Lenders, any
one or all of the following actions may be taken:
(a) upon the request of Requisite Lenders, the
Administrative Agent shall, by notice to the Borrower terminate any or
all of the Commitments, whereupon such Commitments of the Lenders
thereunder immediately shall terminate; provided, however, that upon
the occurrence of any event specified in either Section 11.1.6 or
Section 11.1.7 the Commitments shall terminate automatically without
further action by the Administrative Agent, the Lenders or the Issuing
Bank;
(b) upon request of Requisite Lenders, the Administrative
Agent shall declare all outstanding Obligations and other amounts owing
under this Agreement,
91
102
the Notes and the other Loan Documents to be due and payable
immediately, and all such Obligations and other amounts immediately
shall be due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived to the
extent permitted by ap plicable law; provided, however, that upon the
occurrence of any event specified in either Section 11.1.6 or Section
11.1.7 all such Obligations and other amounts immediately shall be due
and payable in full without declaration or other notice;
(c) the Administrative Agent immediately, and without
expiration of any period of grace, may enforce payment of all
Obligations of the Borrower and the Guarantors to the Administrative
Agent and the Lenders under this Agreement, the Notes and the other
Loan Documents, and the Administrative Agent shall be entitled to all
remedies available hereunder or thereunder; and
(d) the Administrative Agent shall be entitled to exercise,
for the ratable benefit of the Lenders, all other rights, powers,
privileges, options and remedies available under or by virtue of the
Loan Documents or otherwise available at law or in equity.
11.3. Actions in Respect of Letters of Credit.
11.3.1. Collateral Account. If an Event of Default shall
have occurred and be continuing, the Administrative Agent may, and upon the
request of Requisite Lenders shall, whether in addition to the taking by the
Administrative Agent of any of the actions described in Section 11.2 or
otherwise, make demand upon the Borrower or any of the Guarantors to, and
forthwith upon such demand such Person(s) will, pay to the Administrative Agent
at its Lending Office, for its benefit and the ratable benefit of the Lenders
and the Issuing Bank, in immediately available (same day) funds for deposit in a
Collateral Account to be maintained for the benefit of the Administrative Agent
and the ratable benefit of the Lenders and the Issuing Bank at such place as
shall be designated by the Administrative Agent, an amount equal to the amount
of the Letter of Credit Liabilities.
11.3.2. Security Interest. The Borrower and the Guarantors
hereby pledge and assign to the Administrative Agent, for its benefit and the
ratable benefit of the Lenders and the Issuing Bank, and grant to the
Administrative Agent for its benefit and the ratable benefit of the Lenders and
the Issuing Bank, a lien on and a security interest in the Collateral Account,
all cash deposited therein, all notes, certificates and instruments, if any,
from time to time representing or evidencing the Collateral Account and all
interest and other earnings thereon, additions thereto, substitutions therefor
and proceeds
92
103
thereof. The lien and security interest granted hereby secures the payment of
all of the Obligations.
11.3.3. Application of Proceeds. The Borrower and the
Guarantors hereby authorize the Administrative Agent to apply, from time to time
after funds are deposited in the Collateral Account, funds then held in the
Collateral Account to the payment of any amounts, in such order as the
Administrative Agent may elect, as shall have become or shall become due and
payable by the Borrower to the Lenders in respect of the Letter of Credit
Liabilities and thereafter to the satisfaction of the other Obligations.
11.3.4. Investments. Neither the Borrowers, nor the
Guarantors, nor any Person claiming or acting on behalf of or through the
Borrowers or the Guarantors shall have any right to withdraw any of the funds
held in the Collateral Account, except as provided in Section 11.3.8; provided,
however, that with the consent of the Administrative Agent, and to the extent
that there is an amount in excess of $100,000 in the Collateral Account at the
end of any Business Day after taking into account applications of funds, if any,
from the Collateral Account made pursuant to Section 11.3.8, the Administrative
Agent may, at the written request of the Borrower, from time to time invest
amounts on deposit in the Collateral Account in Cash Equivalents; provided,
further that in order to provide the Administrative Agent with a perfected
security interest therein, each investment in Cash Equivalents shall be
evidenced by negotiable certificates or instruments of which the Administrative
Agent shall take physical possession. If the Borrower or any Guarantor shall
have the right to have any amounts on deposit in the Collateral Account invested
by the Administrative Agent, but shall have failed to request the Administrative
Agent to invest such amounts, the Administrative Agent will endeavor to invest
such amounts in such Cash Equivalents as the Administrative Agent shall select;
provided, however, that in order to provide the Administrative Agent with a
perfected security interest therein, each such investment in Cash Equivalents
shall be evidenced by negotiable certificates or instruments of which the
Administrative Agent shall take physical possession. Any interest or other
proceeds received by the Administrative Agent in respect of Cash Equivalents
that are not invested or reinvested in Cash Equivalents as provided above shall
be deposited and held in cash in the Collateral Account under the sole dominion
and control of the Administrative Agent and shall be applied as provided in
Section 11.3.3.
11.3.5. Further Liens. The Borrower and the Guarantors agree
that they will not sell or otherwise dispose of any interest in the Collateral
Account or the funds on deposit therein or create or permit to exist any Lien on
or with respect
93
104
to the Collateral Account or the funds on deposit therein except for the
security interest created by this Section 11.3.
11.3.6. Remedies.
(a) Requisite Lenders may, without notice to the Borrower or
any Guarantor except as required by law and at any time and from time
to time, direct any Lender to charge, set-off and otherwise apply all
or any part of first, the Letter of Credit Liabilities and second, the
other Obligations, against the Collateral Account, or any part thereof,
in such order as the Administrative Agent shall elect. The
Administrative Agent agrees to notify promptly the Borrower or such
Guarantor after any such set-off and application made by any Lender, at
the direction of Requisite Lenders, provided that the failure to give
such notice shall not affect the validity of such set-off and
application. The rights of the Lenders under this Section 11.3.6 are in
addition to other rights and remedies (including other rights of
set-off) which any Lender may have.
(b) The Administrative Agent may exercise, in respect of the
Collateral Account, in addition to the other rights and remedies
provided for herein or otherwise available to it, all the rights and
remedies of a secured party upon default under the UCC, and the
Administrative Agent may, without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any office of the Administrative Agent or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable. The Borrower and the Guarantors agree that to the extent
notice of sale shall be required by law, at least ten (10) days' notice
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notice. The
Administrative Agent shall not be obligated to make any sale of the
Collateral or any part thereof, regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(c) Any cash or other property held in the Collateral
Account, and all proceeds received by the Administrative Agent in
respect of any sale of, collection from or other realization upon all
or any part of the Collateral Account may, in the discretion of the
Administrative Agent, then or at any time thereafter be applied (after
payment of any amounts payable pursuant to this Section 11.3) in whole
or
94
105
in part by the Administrative Agent for the ratable benefit of the
Lenders against all or any part of the Obligations in such order as the
Administrative Agent may elect.
11.3.7. Preservation of the Collateral. The Administrative
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral Account if the Collateral Account is accorded
treatment substantially equal to that which the Administrative Agent accords its
own property, it being understood that the Administrative Agent shall not have
any responsibility or liability (a) for ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Cash Equivalents, regardless of whether the Administrative Agent
has or is deemed to have knowledge of such matters, (b) for taking any necessary
steps to preserve rights against any parties with respect to the Collateral
Account, (c) for the collection of any proceeds from Cash Equivalents, (d) by
reason of any invalidity, lack of value or uncollectability of any of the
payments received by the Administrative Agent from obligors with respect to Cash
Equivalents, (e) for any loss resulting from investments made in compliance with
Section 11.3.4, except to the extent such loss was attributable to the
Administrative Agent's gross negligence or willful misconduct in complying with
Section 11.3.4, as determined by a final judgment of a court of competent
jurisdiction, or (f) in connection with any investments made in compliance with
Section 11.3.4 without a written request from the Borrower or any Guarantor, or
any failure by the Administrative Agent to make any such investment.
11.3.8. Surplus Funds. Any surplus funds held in the
Collateral Account and remaining after the Obligations are fully satisfied
shall be paid to the Borrower or such other Person(s) as may be lawfully
entitled to receive such surplus.
ARTICLE 12
THE ADMINISTRATIVE AGENT
12.1. Appointment. Each Lender hereby (a) irrevocably appoints
NationsBank as the Administrative Agent for such Lender and the other Lenders
under this Agreement, the Notes and the other Loan Documents, and (b)
irrevocably authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement, the Notes and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement, the Notes
and the other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent shall, among other things, take
such actions as the Administrative Agent is authorized to
95
106
take pursuant to this Agreement, the Notes and the other Loan Documents. As to
any matters not expressly provided for in this Agreement, the Administrative
Agent may, but shall not be required to, exercise any discretion or take any
action; however, the Administrative Agent shall be required to act or to refrain
from acting upon the written instructions of Requisite Lenders if the
Administrative Agent shall be indemnified to its satisfaction by the Lenders
against any and all liability and expense that may be incurred by it by reason
of so acting or refraining from acting. Notwithstanding anything to the contrary
herein, the Administrative Agent shall have no duties, responsibilities or
fiduciary relationships with any Lender except those expressly set forth in this
Agreement, the Notes and the other Loan Documents, and no implied covenants,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement, the Notes or the other Loan Documents or otherwise exist against the
Administrative Agent.
12.2. Delegation of Duties. The Administrative Agent may exercise any
of its powers or execute any of its duties under this Agreement, the Notes and
the other Loan Documents by or through one or more agents or attorneys-in-fact
and shall be entitled to obtain, and to rely on, advice of counsel concerning
all matters pertaining to such rights and duties. The Administrative Agent may
utilize the services of such agents and attorneys-in-fact as the Administrative
Agent reasonably determines, and all reasonable fees and expenses of such agents
and attorneys-in-fact shall be paid by the Borrower on demand. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by the Administrative Agent in good
faith.
12.3. Limitation of Liability. Neither the Administrative
Agent nor its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (a) liable for any waiver, consent or
approval given or any action taken or omitted to be taken by it or by such
Person under or in connection with this Agreement, the Notes or the other Loan
Documents, if authorized or permitted hereunder, except for its or such Person's
own gross negligence or willful misconduct, or (b) responsible for the
consequences of any oversight or error in judgment by it or such Person
whatsoever, except for its or such Person's own gross negligence or willful
misconduct. The Administrative Agent shall not be responsible for (i) the
execution, validity, genuineness, effectiveness, sufficiency, enforceability,
perfection or priority of this Agreement, the Notes or the other Loan Documents,
(ii) the collectability of any amounts owing under this Agreement, the Notes or
the other Loan Documents, (iii) the value, sufficiency, enforceability,
perfection or collectability of any Collateral, (iv) the failure by the
Borrower, any Guarantor or any of their respective Subsidiaries to perform its
obligations under this Agreement, the
96
107
Notes or the other Loan Documents or to observe any conditions hereof or
thereof, (v) the truth, accuracy and completeness of the recitals, statements,
representations or warranties made by the Borrower, any Guarantor or any of
their respective Subsidiaries or any officer or agent thereof contained in this
Agreement, the Notes or the other Loan Documents, or in any certificate, report,
statement, document or other writing referred to or provided for in, or received
by the Administrative Agent in connection with, this Agreement, the Notes or the
other Loan Documents believed by the Administrative Agent to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons.
12.4. Reliance by the Administrative Agent. The Administrative Agent
shall not have any obligation (a) to ascertain or to inquire as to the
observance or performance of any of the conditions, covenants or agreements in
this Agreement, the Notes or the other Loan Documents or in any document,
instrument or agreement at any time constituting, or intended to constitute,
Collateral, (b) to ascertain or inquire as to whether any notice, consent,
waiver or request delivered to it shall have been duly authorized or is genuine,
accurate and complete or (c) to inspect the properties, books or records of the
Borrower, any Guarantor or any of their respective Subsidiaries. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying (i) upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document, instrument or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and (ii) upon advice and statements of legal counsel
(including counsel to the Borrower or the Guarantors), independent accountants
and other experts selected by the Administrative Agent. The Administrative Agent
may deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of the assignment, negotiation or transfer thereof, in
accordance with the provisions of this Agreement, shall have been delivered to
the Administrative Agent identifying the name of the subsequent payee or holder
thereof. The Administrative Agent shall be entitled to fail or refuse, and shall
be fully protected in failing or refusing, to take any action required or
permitted by it under this Agreement, the Notes or the other Loan Documents
unless (A) it first shall receive such advice or concurrence of Requisite
Lenders as it deems appropriate, or (B) it first shall be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action. In
all cases the Administrative Agent shall be fully protected in acting, or in
refraining from acting, under this Agreement, the Notes or the other Loan
Documents in accordance with a request of Requisite Lenders, and such request
and any action taken or failure to act
97
108
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Notes.
12.5. Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received notice from a Lender, the Borrower
or any Guarantor referring to this Agreement, describing such Default or Event
of Default and stating that such notice is a "Notice of Default." If the
Administrative Agent receives such a notice, the Administrative Agent shall give
telephonic and written notice thereof to the Lenders as soon as is practicable.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by Requisite Lenders; provided,
however, that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it deems advisable in the best interests of the Lenders.
12.6. Non-Reliance on the Administrative Agent by the Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representations or warranties to such Lender. The Administrative
Agent shall have no obligation, responsibility or liability to any of the
Lenders regarding the creditworthiness or financial condition of the Borrower,
any of the Guarantors or any of their respective Subsidiaries or for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectability, priority or sufficiency of this Agreement or any
other Loan Document. No act by the Administrative Agent hereinafter taken,
including any review of the Borrower, the Guarantors and their respective
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, it has made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower, the Guarantors and their
respective Subsidiaries and has made its own decision to enter into this
Agreement and to make its Loans and otherwise participate in the transactions
hereunder. Each Lender also represents that, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it deems appropriate at the time, it shall continue to make
its own credit analysis, appraisals and
98
109
decisions in taking or not taking action under this Agreement, the Notes and the
other Loan Documents and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower, the Guarantors and their
respective Subsidiaries. The Administrative Agent shall not be required to make
any inquiry concerning the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Loan Document, or the
financial condition of the Borrower or the Guarantors or the existence or
possible existence of any Default or Event of Default. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, the Administrative Agent shall have no
obligation or liability to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Borrower, the Guarantors or their
respective Subsidiaries that may come into the possession of the Administrative
Agent or any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates.
12.7. Indemnification. Each of the Lenders shall indemnify, defend and
hold harmless the Administrative Agent in its capacity as such (to the extent
not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Percentages, from and
against any and all claims, demands, lawsuits, costs, expenses, fees,
liabilities, obligations, losses, damages, actions, recoveries, judgments,
suits, costs, expenses or disbursements of any kind whatsoever, including
interest, penalties and reasonable attorneys' and paralegals' fees and costs and
amounts paid in settlement of any of the foregoing, whether direct, indirect,
consequential or incidental, that at any time (including at any time following
the satisfaction of the Obligations) may be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to, resulting from or
arising out of this Agreement, the Notes or the other Loan Documents, the
transactions contemplated hereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided,
however, that no Lender shall be liable for the payment of any portion of such
claims, demands, lawsuits, costs, expenses, fees, liabilities, obligations,
losses, damages, actions, remedies, judgments, suits, costs, expenses or
disbursements to the extent such result arose solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this Section
12.7 shall survive the repayment of the Loans and the satisfaction of the other
Obligations and shall be in addition to and not in lieu of any other
indemnification agreements set forth in the Loan Documents.
99
110
12.8. Payments. If in the opinion of the Administrative Agent, the
distribution of any amount received by the Administrative Agent in such capacity
under this Agreement, the Notes or the other Loan Documents might involve it in
liability, the Administrative Agent may refrain from making the distribution
thereof until the Administrative Agent's right to make such distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received from and
distributed by the Administrative Agent in such capacity as Administrative Agent
is to be repaid, each Person to whom any such distribution shall have been made
either (a) shall repay to the Administrative Agent its proportionate share of
the amount so adjudged to be repaid, or (b) shall repay the same in such manner
and to such Persons as shall be determined by such court.
12.9. Administrative Agent in Its Individual Capacity. The
Administrative Agent in its individual capacity, and its Affiliates, may make
loans and other financial accommodations to, accept deposits from and generally
engage in any kind of business with the Borrower or any of the Guarantors and
their respective Subsidiaries as though the Administrative Agent were not the
Administrative Agent hereunder. With respect to Loans made or renewed by it, any
Notes issued to it and its participation in the Letter of Credit Liabilities,
the Administrative Agent in its individual capacity shall have the same
benefits, rights, powers and privileges under this Agreement, the Notes and the
other Loan Documents as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the terms "Lender", "Lenders" and
"Requisite Lenders" shall include the Administrative Agent in its individual
capacity.
12.10. Successor Administrative Agent. The Administrative Agent may
resign as such upon thirty (30) days' prior written notice to the Lenders. If
the Administrative Agent shall resign as such under this Agreement, then
Requisite Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall be reasonably acceptable to the Borrower;
provided, however, that acceptability to the Borrower shall not be required if a
Default or Event of Default has occurred and is continuing. Upon acceptance of
its appointment as successor agent, (a) such successor agent shall succeed to
the rights, powers, privileges and duties of the Administrative Agent, (b) the
retiring Administrative Agent shall be discharged of all its obligations and
liabilities in such capacity under this Agreement, the Notes and the other Loan
Documents, (c) the term "Administrative Agent" shall mean such successor agent
effective upon its appointment and (d) the retiring Administrative Agent's
rights, powers and duties as Administrative Agent shall be terminated, without
any other or further act or deed on the part of such retiring Administrative
Agent or any of the parties to this Agreement or any holders of
100
111
the Notes. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article 12 shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
ARTICLE 13
ASSIGNMENTS AND PARTICIPATIONS
13.1. Successors and Assigns. This Agreement, the Notes and the other
Loan Documents shall be binding on and shall inure to the benefit of the
Borrower, the Guarantors, the Administrative Agent, the Lenders, the Issuing
Bank and their respective successors and assigns, except as otherwise provided
herein or therein. Neither the Borrower nor the Guarantors may assign, transfer,
hypothecate or otherwise convey their respective rights, benefits, obligations
or duties hereunder or thereunder without the prior express written consent of
the Lenders. Any purported assignment, transfer, hypothecation or other
conveyance by the Borrower or the Guarantors without the prior express written
consent of all the Lenders shall be void. Neither the Administrative Agent nor
any of the Lenders may sell, assign, transfer, grant a participation in or
otherwise dispose of all or any portion of its interest in this Agreement, the
Notes or the other Loan Documents except as expressly provided herein.
13.2. Assignments.
13.2.1. Assignments. With prior notice to the Borrower,
each Lender may assign (other than the sale of a participation) up to one
hundred percent (100%) of its right, title and interest under this Agreement,
the Notes, the Letters of Credit and the other Loan Documents (including all or
a portion of its Commitments and the same portion of the Loans at the time owing
to it) to one or more banks or other financial institutions reasonably
satisfactory to the Administrative Agent and the Issuing Bank; provided,
however, that (a) each such assignment shall be of a constant, and not a
varying, percentage of all such Lender's right, title and interest hereunder and
thereunder, (b) such share equals no less than $5,000,000 in the case of any one
assignee, (c) any assignee shall execute and deliver to the Administrative Agent
an Assignment and Acceptance, and (d) a Lender may not assign any interest
without the prior approval of the Administrative Agent, the Issuing Bank and the
Borrower, which approval shall not be unreasonably withheld. Notwithstanding the
foregoing, any Lender may assign, as collateral or otherwise, any of its rights
(including such Lender's rights to payments of principal and/or interest on the
Notes) under this Agreement to any Federal Reserve Bank without
101
112
notice to or consent of the Administrative Agent, the Issuing Bank or the
Borrower.
13.2.2. Effect of Assignments. Upon the sale, assignment,
transfer or other disposition (other than the sale of a participation) of any of
a Lender's right, title and interest under this Agreement, the Notes, the
Letters of Credit and the other Loan Documents to any assignee in accordance
with this Section 13.2, then upon the execution, delivery and acceptance of the
Assignment and Acceptance, from and after the effective date specified therein,
(a) the transferor Lender no longer shall have the rights, benefits and
obligations under this Agreement, the Notes, the Letters of Credit or the other
Loan Documents to the extent of the interest transferred (except for such
rights, benefits and obligations that such Lender would retain under or with
respect to this Agreement, the Notes, the Letters of Credit or the other Loan
Documents upon payment in full of the Obligations), and (b) the assignee shall
become a Lender, shall succeed to the rights and benefits and assume the
obligations of such transferor Lender hereunder and thereunder to the extent of
the interest transferred.
13.2.3. Actions by the Borrower. The Borrower hereby agrees
that it shall execute and deliver, at the request of the Administrative Agent
(a) one or more substitute Notes to the order of such Lenders to evidence the
portions of the Loans retained and sold and (b) any amendment to any Loan
Document to effectuate the provisions of this Section 13.2.
13.3. Participations. Subject to the provisions of this Section 13.3,
each Lender shall have the right at any time to sell undivided participating
interests in all or any part of its Commitments, the Loans and the Letters of
Credit to one or more banks or other financial institutions; provided, however,
that (a) such sale or transfer shall not relieve such Lender of any obligation
or liability hereunder, (b) such Lender shall make and receive all payments for
the account of its participants and shall retain exclusively, and shall continue
to exercise exclusively, all rights of approval and administration available
hereunder with respect to such Lender's Commitments, the Loans and the Letters
of Credit, even after giving effect to the sale of any such participation
(although such Lender may at its option agree with its participants that it will
not consent to any matter described in clauses (a) through (f) of Section 14.3.4
without their concurrence), and (c) such Lender shall make such arrangements
with its participants as may be necessary to accomplish the foregoing. No such
participant shall be a Lender for any purpose of this Agreement, other than for
purposes of Section 14.13, without the consent of the Administrative Agent and
the Issuing Bank.
102
113
13.4. Disclosure. In connection with any assignments, participations or
offers therefor pursuant to this Article 13, each Lender may disclose to any
assignee or participant or prospective assignee or participant such information
pertaining to the Borrower, the Guarantors or any of their respective
Subsidiaries as such Lender may deem appropriate or such assignee or participant
or prospective assignee or participant may request; provided, however, that
prior to any such disclosure such assignee or participant or prospective
assignee or participant shall agree to preserve the confidentiality of any
confidential information relating to the Borrower or its Subsidiaries received
by it on the same basis as provided in this Section 13.4.
13.5. Assignments and Participations as Units. No Lender shall assign
or sell any participation in its Commitments, the Loans or the Letters of
Credit, except in the form of units consisting of pro rata interests in its
Commitments, the Loans and the Letters of Credit.
ARTICLE 14
GENERAL PROVISIONS
14.1. Notices. Any notice, request, demand or other communication
required or permitted under this Agreement, the Notes or the other Loan
Documents shall be in writing and shall be deemed to be properly given (a) when
received, if personally delivered or sent by overnight courier with appropriate
confirmation of delivery, (b) two (2) Business Days after deposit in the mail,
if mailed by United States first class, certified or registered mail, postage
prepaid, (c) one (1) Business Day after deposit with a public telegraph company
for transmittal, charges prepaid, or (d) when received, if given by telecopy,
with appropriate confirmation, each to the appropriate address set forth below
or to such other address that any such party or the Administrative Agent may
designate by written notice to other parties.
If to the Borrower:
America Service Group Inc.
Xxxxx 000
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Treasurer
Telecopy No. 615/376-9862
103
114
with a copy to:
America Service Group Inc.
Xxxxx 000
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
Telecopy No. 615/376-9862
If to any of the Guarantors:
c/o America Service Group Inc.
Xxxxx 000
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Treasurer
Telecopy No. 615/376-9862
with a copy to:
America Service Group Inc.
Xxxxx 000
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
Telecopy No. 615/376-9862
If to any of the Lenders:
Their respective addresses as set forth with their
signatures on this Agreement.
If to NationsBank as Administrative Agent:
NationsBank of Tennessee, N.A.
Xxx XxxxxxxXxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxx
Telecopy No. 615/749-4951
If to NationsBank as Issuing Bank:
NationsBank of Tennessee, N.A.
Xxx XxxxxxxXxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxx
Telecopy No. 615/749-4951
104
115
14.2. Entire Agreement. The execution and delivery of this Agreement
and the other Loan Documents supersede all the negotiations or stipulations
concerning the matters that preceded or accompanied the execution and delivery
hereof and thereof (other than with respect to fees payable pursuant to separate
agreements among the Borrower, the Administrative Agent and the Issuing Bank).
This Agreement, the Notes and the other Loan Documents also are intended, by the
parties hereto and thereto, as a complete and exclusive statement of the terms
and conditions hereof and thereof.
14.3. Amendments, Waivers and Consents.
14.3.1. Amendments. Except as otherwise set forth in this
Agreement, the provisions of (a) this Agreement may not be modified, amended,
restated or supplemented, except by a written instrument duly executed and
delivered on behalf of the Borrower, the Guarantors and Requisite Lenders, and
(b) the Notes and all Loan Documents other than this Agreement may not be
modified, amended, restated or supplemented, except by a written instrument duly
executed and delivered on behalf of the Borrower and any of the Guarantors, to
the extent that the Borrower or any such Guarantor is a signatory party to such
Note or such Loan Document, and on behalf of the Administrative Agent, with the
written consent of Requisite Lenders. Notwithstanding anything to the contrary
herein, the Administrative Agent and Requisite Lenders may modify, amend,
restate, supplement or waive any provision of Article 12 without the consent of
the Borrower or any Guarantor; provided, however, that the requirement of
Section 12.10 that a successor agent be reasonably acceptable to the Borrower
may not be modified without the written consent of the Borrower.
14.3.2. Waivers and Consents. Except as otherwise set forth
in this Agreement, any waiver of the terms and conditions of this Agreement, the
Notes or the other Loan Documents, or any waiver of any Default or Event of
Default and its consequences hereunder or thereunder, and any consent or
approval required or permitted by this Agreement, the Notes or the other Loan
Documents to be given by the Lenders, may be made or given with, but only with,
the written consent of Requisite Lenders on such terms and conditions as
specified in the written instrument granting such waiver, consent or approval. A
waiver, to be effective, must be in writing and signed by the party making the
waiver.
14.3.3. Effect of Waivers. In the case of any waiver, the
Borrower, the Guarantors, the Lenders and the Administrative Agent shall be
restored to their former positions and rights under this Agreement, the Notes
and the other Loan Documents to the extent of such waiver, and any Default or
Event
105
116
of Default waived shall be deemed to be cured and not continued; provided,
however, that no waiver shall constitute the waiver of any subsequent or other
Default or Event of Default or impair any right consequent thereon. No failure
or delay on the part of the Administrative Agent or any Lender to exercise or
enforce any right or remedy under or in connection with this Agreement, the
Notes or the other Loan Documents, whether by their respective terms, at law, in
equity or otherwise, shall operate as a waiver thereof. No single or partial
exercise of any such right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
14.3.4. Consent of All the Lenders. Without in each
instance the prior express written consent of the Administrative
Agent and all the Lenders, no such modification, amendment,
restatement, supplement, waiver or consent shall:
(a) increase the aggregate Commitments, or increase
the Commitment of any Lender without such Lender's approval;
(b) reduce the amounts or extend the dates for the payment
of any Credit Fees that are payable ratably to all of the Lenders in
accordance with their respective Percentages of the Commitments;
(c) extend the maturity of the Notes or the date of
any scheduled principal payments or mandatory prepayments
hereunder or thereunder;
(d) reduce the rate or extend the time of payment of
interest hereunder or under the Notes;
(e) waive the payment of any principal, interest or
Credit Fees payable hereunder or under the Notes;
(f) extend the termination dates of any of the
Commitments or the Maturity Date except as expressly
provided for in this Agreement;
(g) consent to the assignment or transfer by the
Borrower of any of its Obligations under this Agreement, the
Notes or the other Loan Documents;
(h) release a material portion of the Collateral or
release any of the guarantees hereunder, except as expressly
provided herein; or
(i) amend or modify the definitions of "Percentages"
or "Requisite Lenders" contained in this Agreement.
14.3.5. Binding Effect. Any such modification, amendment,
restatement, supplement, waiver or consent shall apply equally to each of the
Lenders and shall be binding upon the
106
117
Borrower, the Guarantors, the Lenders, the Administrative Agent and all future
holders of the Notes.
14.4. Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or otherwise would be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.
14.5. Interpretation. Neither this Agreement, the Notes or the other
Loan Documents, nor any uncertainty or ambiguity herein or therein, shall be
construed or resolved against the Administrative Agent, the Lenders, the Issuing
Bank, the Borrower or the Guarantors whether under any rule of construction or
otherwise. This Agreement, the Notes and the other Loan Documents have been
reviewed by all the parties hereto and thereto and shall be construed and
interpreted according to the ordinary meaning of the words used as to accomplish
fairly the purposes and intentions of all such parties.
14.6. Inconsistencies With Other Documents. In the event there is a
conflict or inconsistency between this Agreement, the Notes or the other Loan
Documents, the terms of this Agreement shall control; provided, however, that
any provision of the Security Documents that imposes additional burdens on the
Borrower or any Guarantor or further restricts the rights of the Borrower or any
Guarantor or gives the Lenders additional rights shall not be deemed to be in
conflict or inconsistent with this Agreement and shall be given full force and
effect.
14.7. Severability. If any portion of this Agreement, the
Notes or any of the other Loan Documents shall be judged by a court of competent
jurisdiction to be unenforceable, the remaining portions shall be valid and
enforceable to the extent that the remaining terms thereof provide for the
creation of the Obligations and the consummation of the issuance of the Notes,
the grant of collateral security therefor, the guarantee thereof and the payment
of principal and interest in respect of the Obligations substantially on the
same terms and subject to the same conditions as set forth herein and therein.
14.8. Governing Law. This Agreement, the Notes and the other Loan
Documents, unless otherwise expressly set forth therein, shall be governed by,
construed and enforced in accordance with the laws of the State of Tennessee,
without reference to the conflicts or choice of law principles thereof, except
to the extent that the laws of a particular jurisdiction govern the creation,
perfection, priority and enforcement of liens on and security interests in the
Collateral. Notwithstanding the foregoing, if at any time the laws of the
107
118
United States of America permit any Lender to contract for, take, reserve,
charge or receive interest or loan charges in amounts greater than are allowed
by the laws of such state (whether such federal laws directly so provide or
refer to the law of the state where such Lender is located), then such federal
laws shall to such extent govern as to the interest and loan charges that such
Lender is allowed to contract for, take, reserve, charge or receive under this
Agreement, the Notes and the other Loan Documents. References to laws in this
section are to such laws as are now in effect, and, with respect to usury laws,
if any, applicable to any Lender and to the extent allowed thereby, to such laws
as hereafter may be in effect that allow a higher maximum nonusurious interest
rate than such laws now allow.
14.9. CONSENT TO JURISDICTION. THE BORROWER AND EACH GUARANTOR HEREBY
IRREVOCABLY CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN DAVIDSON COUNTY, TENNESSEE IN ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER AND EACH GUARANTOR
HEREBY IRREVOCABLY CONSENT TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER
PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT,
ANY LENDER OR THE ISSUING BANK IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR
THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS
PROPERTY, IN THE MANNER SPECIFIED IN SECTION 14.1. NOTHING IN THIS SECTION 14.9
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING
BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING BANK TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER, ANY OF THE GUARANTORS OR THEIR
RESPECTIVE PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
14.10. WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT, EACH LENDER, THE
ISSUING BANK, THE BORROWER AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM,
COUNTERCLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. The
scope of this waiver is intended to be all-encompassing with respect to any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each of the parties hereto (a) acknowledges that this waiver is a material
inducement for the parties to the Loan Documents to enter into a business
relationship, that the parties to the Loan Documents have already relied on this
waiver
108
119
in entering into same and the transactions that are the subject thereof,
and that they will continue to rely on this waiver in their related future
dealings, and (b) further warrants and represents that each has reviewed this
waiver with its legal counsel and that each knowingly and voluntarily waives its
jury trial rights following consultation with legal counsel. This waiver is
irrevocable, meaning that it may not be modified either orally or in writing,
and this waiver shall apply to any subsequent amendments, modifications,
supplements, extensions, renewals and/or replacements of this Agreement. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
14.11. Cumulative Remedies. All rights and remedies provided in or
contemplated by this Agreement, the Notes and the other Loan Documents are
cumulative and not exclusive of any right or remedy otherwise provide herein,
therein, at law or in equity.
14.12. Expenses of Administration and Enforcement. The Borrower shall
pay on demand all reasonable expenses of the Administrative Agent in connection
with this Agreement, the Notes and the other Loan Documents, and the preparation
of any modifications, amendments, restatements, supplements or waivers,
including all attorneys' and paralegals' fees and expenses, all fees and
expenses for title, lien and other public records searches, filing and
recordation fees and taxes, duplicating expenses, corporation search fees,
appraisal fees, escrow agent fees and expenses, and all other customary
expenses. If there shall occur a Default or Event of Default, all reasonable
out-of-pocket expenses incurred by the Lenders and the Administrative Agent
(including administrative expenses of the Administrative Agent and the Lenders
and fees and disbursements of in-house and outside counsel) in connection with
such Default or Event of Default and collection and other enforcement
proceedings (including bankruptcy proceedings) resulting therefrom shall be paid
by the Borrower, regardless of whether suit is actually commenced to obtain any
relief provided hereunder. The Borrower shall indemnify, defend and hold
harmless the Administrative Agent, each of the Lenders and the Issuing Bank from
and against any and all documentary or filing taxes, assessments or charges by
any Governmental Authority by reason of the execution and delivery of this
Agreement, the Notes and the other Loan Documents and the consummation of the
transactions that are the subject thereof.
14.13. Indemnification. The Borrower and each of the Guarantors,
jointly and severally, shall indemnify, defend and hold harmless the
Administrative Agent, the Lenders and the Issuing Bank (to the fullest extent
permitted by law) from and against any and all claims, demands, lawsuits, costs,
expenses, fees, obligations, liabilities, losses, damages, recoveries and
109
120
deficiencies, including interest, penalties and reasonable attorneys' and
paralegals' fees and costs and amounts paid in settlement of any of the
foregoing, whether direct, indirect, consequential or incidental, that the
Administrative Agent, the Lenders or the Issuing Bank may incur or suffer or
that may arise out of, result from or relate to (a) this Agreement, the Notes,
the Letters of Credit or the other Loan Documents or the transactions
contemplated hereby or thereby (excluding actions arising out of the
Administrative Agent's, the Lenders' or the Issuing Bank's own gross negligence
or willful misconduct and actions arising out of claims made by the
Administrative Agent, any Lender or the Issuing Bank against any of the others),
or (b) any action under this Agreement, the Notes, the Letters of Credit or the
other Loan Documents or the transactions contemplated hereby or thereby
(excluding actions arising out of the Administrative Agent's, the Lenders' or
the Issuing Bank's own gross negligence or willful misconduct and actions
arising out of claims made by the Administrative Agent, any Lender or the
Issuing Bank against any of the others). In no event shall the Administrative
Agent, any Lender or the Issuing Bank be liable to the Borrower or any of the
Guarantors for any matter or thing in connection with this Agreement, the Notes,
the Letters of Credit or the other Loan Documents other than to account for
monies actually received by them in accordance with the terms hereof. This
Section 14.13 shall survive termination of this Agreement.
14.14. Adjustment. If any Lender (a "benefitted Lender") at any time
shall receive any payment of all or part of its Loans or its participation in
the Letter of Credit Liabilities or the interest thereon or receive any
collateral therefor, whether voluntarily or involuntarily, by set-off or
otherwise, in a greater portion of any such payment to and collateral received
by any other Lender, if any, in respect of such other Lender's Loans
or its participation in the Letter of Credit Liabilities or the interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders
such portion of each Lender's Loan and participation in the Letter of Credit
Obligations, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits thereafter is recovered from such
benefitted Lender or set aside, such purchase shall be rescinded and the
purchase price and benefit returned to the extent of such recovery, but without
interest. Each Lender so purchasing a portion of another Lenders' Loan and
participation in the Letter of Credit Obligations may exercise all rights of
payment (including rights of setoff) with respect to such portion as fully as if
such Lender were the direct holder of such portion.
110
121
14.15. Setoff. In addition to any rights and remedies of the Lenders
provided by law, the Lenders each shall have a security interest in any and all
deposits of the Borrower and the Guarantors (general or special, time or demand,
provisional or final) at any time held by any Lender or any Affiliate thereof,
which security interest shall secure the Obligations. Upon the occurrence and
during the continuance of any Event of Default, with the consent of the
Administrative Agent without prior notice to the Borrower or the Guarantors, any
notice being specifically waived by the Borrower and the Guarantors to the
fullest extent permitted by applicable law, each Lender may set off and apply
against any indebtedness, whether matured or unmatured, of the Borrower or any
Guarantor to the Lenders, any amount owing from any Lender or any Affiliate
thereof to the Borrower or any Guarantor at, or at any time after, the
occurrence of an Event of Default (and each Affiliate of any Lender is
irrevocably authorized to permit such setoff and application), and the aforesaid
right of setoff may be exercised by any Lender against the Borrower or the
Guarantors or against any trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, receiver or execution, judgment, or attachment
creditor of the Borrower or any Guarantor, or against anyone else claiming
through or against the Borrower or any such Guarantor or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or other attachment creditor, notwithstanding
the fact that such right of setoff shall not have been exercised by any Lender
prior to the making, filing or issuance, or service upon any Lender of, or of
notice of, any such petition, assignment for the benefit of creditors,
appointment or application for the appointment of a receiver, or issuance of
execution, subpoena, order or warrant. Each Lender promptly shall notify the
Borrower or the Guarantors and the Administrative Agent after any such setoff
and application made by any Lender; provided, however, that failure to give
such notice shall not affect the validity of such setoff and application.
14.16. Other Accommodations to the Borrower and the Guarantors;
No Rights By Virtue of Cross-Collateralization.
(a) Each Lender (including the Administrative Agent) may,
without notice to or consent by any other Lender, make or participate
in loans, extensions of credit or other financial accommodations to or
for the benefit of the Borrower and/or any of its Subsidiaries on any
terms that it deems desirable, and engage in other business
transactions, in the same manner as if this Agreement were not in
existence, all without limiting, waiving or otherwise impairing any
rights of such Lender or any other Lender under this Agreement. Without
limiting the generality of the foregoing, the Lenders acknowledge and
agree that so long as a Lender acts in good faith and the other
Lenders'
111
122
interests in the Obligations and the Collateral are not impaired
thereby, (i) such Lender may be preferred or secured in any manner
that it deems advisable with respect to such other loans, extensions
of credit, financial accommodations and transactions, (ii) such Lender
shall be under no obligation to collect or attempt to collect any
payments in respect of the Obligations in preference to the collection
or enforcement of any other borrowings or obligations of the Borrower
and/or its Subsidiaries to such Lender, and (iii) any amounts
collected by such Lender from the Borrower and/or its Subsidiaries
that are not expressly designated (or reasonably determinable to be
intended) as being in payment of the Obligations may be applied to any
of the obligations of such Person to such Lender in any manner deemed
appropriate by such Lender.
(b) The Lenders acknowledge and agree that the Collateral
constitutes all of the collateral security for the Obligations and
that, as among themselves, no Lender shall have any interest in (i) any
property or interests of the Borrower or any of its Subsidiaries, other
than the Collateral, that now or hereafter secures loans, extensions of
credit, other financial accommodations and other transactions
(excluding the Obligations), of the Borrower or any of its Subsidiaries
with any other Lender, whether entered into directly or acquired by
such Lender, (ii) any property of the Borrower or any of its
Subsidiaries, other than the Collateral, now or hereafter in the
possession or control of any other Lender, (iii) any deposit, not
constituting Collateral, now or hereafter held by any other Lender, or
(iv) any other indebtedness now or hereafter owing to any other Lender;
any of which may be or become security for or otherwise available for
payment or performance of the Obligations by reason of any cross-
collateralization or any general description of secured
indebtedness(es) and/or obligation(s) contained in any mortgage,
security agreement or other security instrument or agreement held by
any Lender, or by reason of the right of setoff, counterclaim or
otherwise. Notwithstanding the foregoing, if any such property, deposit
or indebtedness, or any proceeds thereof, in the discretion of the
Lender holding same, is applied to the reduction of the Obligations,
then all of the Lenders shall be entitled to their respective
Percentages of such application in the manner provided in Sections 3.3
and 14.14.
14.17. Survival of Representations and Warranties. All representations
and warranties of the Borrower and the Guarantors set forth in this Agreement,
the Notes and the other Loan Documents and in any other certificate, opinion or
other statement provided at any time by or on behalf of the Borrower and the
Guarantors in connection herewith shall survive the
112
123
execution of the delivery of this Agreement, the Notes and the other Loan
Documents, the purchase and sale of the Notes hereunder and the payment or other
satisfaction of the Obligations.
14.18. Relationship of the Parties. None of the Administrative Agent,
the Lenders or the Issuing Bank shall be deemed partners or joint venturers with
the Borrower or the Guarantors or any Affiliate thereof in making this Agreement
or by any action taken hereunder. The Borrower and the Guarantors, jointly and
severally, shall indemnify, defend and hold harmless the Lenders and the
Administrative Agent from and against any and all claims, demands, lawsuits,
costs, expenses, fees, obligations, liabilities, losses, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees and
costs, whether direct, indirect, consequential or incidental, that the Lenders
or the Administrative Agent may incur or suffer or that may arise out of, result
from or relate to such a construction of the parties and their relationship.
This Section 14.18 shall survive termination of this Agreement.
14.19. Destruction of Records. Any documents, schedules, invoices or
other papers delivered to the Administrative Agent, the Lenders or the Issuing
Bank at their option may be destroyed or otherwise disposed of by them six (6)
months after they are delivered to or received by them, unless the Borrower or
any Guarantor requests, in writing, the return of such documents, schedules,
invoices or other papers and makes reasonably acceptable arrangements, at the
Borrower's or such Guarantor's expense, for their return.
14.20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document. This Agreement shall become
effective when (a) the Administrative Agent shall have received counterparts
executed by the Borrower, the Guarantors, the Administrative Agent, the Lenders
and the Issuing Bank, or (b) in the case of any Lender, the Administrative Agent
shall have received telecopied notice from such Lender that it has executed a
counterpart thereof and forwarded the same to the Administrative Agent by first
class, registered or certified mail as set forth in Section 14.1. A set of the
copies of this Agreement or counterparts signed by all of the parties shall be
lodged with the Borrower, on behalf of itself and the Guarantors, and the
Administrative Agent.
14.21. Interest and Loan Charges Not to Exceed Maximum Amounts Allowed
by Law. It is the intention of the Borrower and the Lenders to conform strictly
to all laws applicable to the Lenders that govern or limit the interest and loan
charges that may be charged in respect of the Obligations. Anything in this
113
124
Agreement, the Notes or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced hereunder exceed the maximum amounts
collectible by such Lender pursuant to applicable law. If for any reason
whatsoever the interest or loan charges paid or contracted to be paid by the
Borrower to any of the Lenders in respect of the Obligations shall exceed the
maximum amounts collectible under the law applicable to such Lender, then, in
that event, and notwithstanding anything to the contrary in this Agreement, the
Notes or any other Loan Document: (a) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such Lender
that is contracted for, taken, reserved, charged or received under this
Agreement, the Notes or any other Loan Document or otherwise in connection with
the Obligations under no circumstances shall exceed the maximum amounts allowed
by such applicable law, and any excess shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal amount
outstanding under this Agreement, the Notes and the other Loan Documents has
been or thereby would be paid in full, refunded to the Borrower); and (b) in the
event that the maturity of any or all of the Obligations is accelerated by
reason of an election of the Lenders resulting from any Default under this
Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum amounts allowed
by the law applicable to such Lender, and any excess interest or loan charges
provided for in this Agreement or otherwise shall be canceled automatically as
of the date of such acceleration or prepayment and, if theretofore paid, shall
be credited by such Lender on the principal amount of the Obligations (or, to
the extent the principal amount of the Obligations has been or thereby would be
paid in full, refunded by such Lender to the Borrower). All sums paid or agreed
to be paid to the Lenders for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until payment
in full so that the rate or amount of interest and loan charges on account of
the Obligations will not exceed any applicable legal limitation. The right to
accelerate the maturity of the Obligations does not include the right to
accelerate the maturity of any interest or loan charges not otherwise accrued on
the date of such acceleration, and the Lenders do not intend to charge or
collect any unearned interest or loan charges in the event of any such
acceleration.
114
125
14.22. Final Agreement. This written agreement represents the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first written above.
BORROWER:
AMERICA SERVICE GROUP INC.
a Delaware corporation
By:_____________________________________
Name: ____________________________
Title: ___________________________
GUARANTORS:
PRISON HEALTH SERVICES, INC.
a Delaware corporation
By:_____________________________________
Name: ____________________________
Title: ___________________________
UNISOURCE, INC.
a Delaware corporation
By:_____________________________________
Name: ____________________________
Title: ___________________________
[LENDERS' SIGNATURE PAGES FOLLOW]
115
126
[Lender's Signature Page to
$20,000,000 America Service Group Inc.
Credit Agreement dated May 30, 1997]
NATIONSBANK OF TENNESSEE, N.A., as a
Lender and as Administrative Agent and
Issuing Bank
By:_____________________________________
Title:_____________________________
Address: Second Floor
Xxx XxxxxxxXxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Healthcare Group
Telecopy No. 615/749-4951
Initial Commitment: $ 20,000,000
Percentage: 100.0%
116
127
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.1 Certain Deferred Liabilities Included in
Capitalization
Schedule 7.1 Borrower, Guarantors and Subsidiaries -
Capitalization and Jurisdictions of
Incorporation and Foreign Qualification
Schedule 7.3 Post-Closing Consents
Schedule 7.6 Pending Litigation
Schedule 7.17A Indebtedness
Schedule 7.17B Contingent Obligations
Schedule 7.18A Business Locations
Schedule 7.18B Trade Names
Schedule 7.23 Service Contracts
Schedule 7.26 Employment Agreements and Executive
Compensation Arrangements
Schedule 7.27 Environmental Matters
Schedule 7.28 Material Contracts
Schedule 7.30 Operating Leases
Schedule 8.19 Post-Closing Matters
Schedule 9.2 Existing Liens
Schedule 9.4 Existing Investments
EXHIBITS
Exhibit 1.1 Form of Supplement to Credit Agreement
Exhibit 2.1.2 Form of Commitment Period Extension Request
Exhibit 2.2.4 Form of Notice of Borrowing
117
128
Exhibit 2.3.2 Form of Letter of Credit Request
Exhibit 2.7.2 Form of Notice of Conversion/Continuation
Exhibit 2.8 Form of Note
Exhibit 4.1A Form of Security Agreement
Exhibit 4.1B Form of Pledge Agreement
Exhibit 4.1C Form of Assignment and Security Agreement
Exhibit 6.1.1A Form of Opinion of Counsel to the Borrower and
the Guarantors
Exhibit 6.1.1B Form of Solvency Certificate of Borrower
Exhibit 6.1.1C Form of Solvency Certificate of Guarantors
Exhibit 13.2 Form of Assignment and Acceptance
118
129
EXHIBIT 4.1A
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of May 30, 1997,
is made and entered into by AMERICA SERVICE GROUP INC., a Delaware corporation
(the "Borrower"), and all Subsidiaries of the Borrower now or hereafter becoming
parties to the Credit Agreement (as hereinafter defined) (such Subsidiaries are
sometimes hereinafter referred to individually as a "Guarantor" and collectively
as the "Guarantors"; such Subsidiaries and the Borrower are sometimes
hereinafter referred to individually as a "Debtor" and collectively as the
"Debtors"), in favor of NATIONSBANK OF TENNESSEE, N.A., a national banking
association ("NationsBank"), as administrative agent (in such capacity, the
"Administrative Agent") for itself, the Lenders and the Issuing Bank under the
Credit Agreement.
RECITALS:
A. Pursuant to a Credit Agreement of even date herewith, among the
Debtors, the Lenders listed therein, the Administrative Agent and NationsBank,
as Issuing Bank (as the same may be amended, restated, supplemented, extended,
renewed, replaced or otherwise modified from time to time, the "Credit
Agreement"; except as otherwise defined herein, terms used herein and defined in
the Credit Agreement shall be used herein as so defined), the Lenders will make
Loans to the Borrower and purchase participations in Letters of Credit issued
for the account of the Borrower, and the Issuing Bank will issue such Letters of
Credit, all as more specifically described in the Credit Agreement.
B. It is a condition precedent to the obligations of the Lenders to
make the Loans under the Credit Agreement and to purchase participations in the
Letters of Credit and of the Issuing Bank to issue the Letters of Credit under
the Credit Agreement that the Debtors execute and deliver this Agreement to the
Administrative Agent.
C. The Debtors desire to execute this Agreement to satisfy the
condition described in the preceding paragraph.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and in order to insure
the Borrower's compliance with and to induce the Lenders to extend credit under
the Credit Agreement, and in consideration of the benefits accruing to the
Debtors, the receipt and sufficiency of all of which are hereby acknowledged,
each Debtor hereby makes the following representations and
130
warranties to the Administrative Agent and hereby covenants and agrees with the
Administrative Agent, all for the benefit of the Lenders, the Administrative
Agent and the Issuing Bank as provided in the Credit Agreement, as follows:
SECTION 1. Security for Obligations, Etc. This Agreement is for the
benefit of the Administrative Agent, the Issuing Bank, and the Lenders to secure
the payment and performance in full when due, whether at stated maturity, by
acceleration, mandatory prepayment, declaration or otherwise, of all the
Obligations of the Borrower and the Guaranteed Obligations of the Guarantors as
described and defined in the Credit Agreement (the Obligations and the
Guaranteed Obligations being collectively referred to herein as the "Secured
Obligations"), subject, however, to the proviso that the liability of each
Guarantor under this Agreement, the Credit Agreement, the Notes and the other
Loan Documents shall never exceed its Maximum Guaranty Liability.
SECTION 2. Definition of Collateral. As used herein, the term
"Collateral" shall mean the following property and interests in property of each
Debtor and any and all proceeds and products thereof and accessions thereto:
(a) Equipment. All equipment of Debtor of every kind and
description, whether now in existence or owned or hereafter acquired
and wherever located, together with all parts, accessories and
attachments and all replacements therefor and additions thereto;
(b) Inventory. All of Debtor's inventory, whether held for
lease or sale or for furnishing under contracts of service, whether
now in existence or owned or hereafter acquired and wherever located;
(c) Accounts, Contract Rights, Instruments, Documents and
Chattel Paper. All of Debtor's accounts, accounts receivable, contract
rights, instruments, documents and chattel paper, whether now in
existence or owned or hereafter arising or acquired, entered into or
created, and wherever located or deemed located;
(d) General Intangibles. All of Debtor's general intangibles,
whether now in existence or owned or hereafter arising or acquired,
entered into or created, and wherever located or deemed located,
including but not limited to (i) copyrights registered with the United
States Copyright Office and applications therefor, (ii) patents
registered with the United States Patent and Trademark Office and
applications therefor, and (iii) trademarks and service marks
registered with the United States Patent and Trademark Office or any
other office or agency of the United States or any state, and
applications therefor, together with any
2
131
unregistered trademarks and service marks used by Debtor and trade
dress including logos, designs, trade names, company names, business
names, fictitious names and other business identifiers used by Debtor,
together with the goodwill associated with any of the foregoing.
SECTION 3. Grant of Security Interest. To secure the payment and
performance of the Secured Obligations and for the purposes set forth in Section
1, each Debtor hereby pledges, assigns, transfers, hypothecates, sets over and
delivers to the Administrative Agent, and grants to the Administrative Agent a
security interest in, all such Debtor's right, title and interest in and to the
Collateral;
TO HAVE AND TO HOLD the Collateral, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto the Administrative Agent, its successors and assigns; subject, however, to
the terms, covenants and conditions set forth in this Agreement.
SECTION 4. Additional Debtors. Simultaneously with the acquisition or
creation by any Debtor of any Subsidiary that is not, but is required by the
Credit Agreement to be, a Debtor under this Agreement, such Subsidiary shall
become a party to this Agreement, shall assign, transfer, convey and set over to
the Administrative Agent, and grant to the Administrative Agent, for the benefit
of the Lenders and the Issuing Bank, a security interest in all of such
Subsidiary's Collateral, and shall become a party to this Agreement for all
purposes as if such Subsidiary had executed and delivered this Agreement to the
Administrative Agent on the date hereof, all pursuant to a Supplement to
Security Agreement to be executed and delivered by such Subsidiary to the
Administrative Agent in the form of Exhibit A hereto.
SECTION 5. General Representations, Warranties and Agreements of
Debtors. Each Debtor represents, warrants and agrees as follows:
(a) Debtor is the owner of and has the right to grant a
security interest in its Collateral, free and clear of any Liens other
than Permitted Liens, and Debtor will defend the Administrative Agent's
right, title and security interest in and to the Collateral against the
claims and demands of all Persons other than those in respect of
Permitted Liens. Debtor will have like title to and right to grant a
security interest in any other property at any time hereafter
constituting Collateral and likewise will defend the right thereto and
security interest therein of the Administrative Agent.
(b) Annex I accurately sets forth the locations of (i)
Debtor's chief executive office, (ii) all other places
3
000
xx xxxxxxxx xx Xxxxxx, (xxx) all of Debtor's tangible Collateral, and
(iv) all records concerning Debtor's intangible Collateral. Debtor
will promptly notify the Administrative Agent, in writing, of (1) any
new place or places of business of Debtor, (2) any change in the
location of Debtor's chief executive office, and (3) any location or
relocation of any Collateral such that the aggregate value of the
tangible Collateral of all Debtors located in any one state or the
District of Columbia equals or exceeds $250,000.
(c) Annex II is a true, correct and complete list of all
copyrights, patents, trademarks and service marks, and applications
therefor, held by Debtor. Debtor will promptly notify the
Administrative Agent, in writing, of any new Collateral consisting of
copyrights, patents, trademarks or service marks, and applications
therefor, hereafter acquired by Debtor.
(d) If at any time any of the Collateral or any proceeds
thereof shall be represented by any instruments, chattel paper or
documents of title, then all such instruments, chattel paper or
documents of title shall be delivered promptly to the Administrative
Agent.
(e) Debtor will not permit any liens or security interests
other than those created by this Agreement and Permitted Liens to
attach to any of the Collateral, nor permit any of the Collateral to be
levied upon under any legal process, nor permit anything to be done
that may impair the security intended to be afforded by this Agreement,
nor permit any tangible Collateral to become attached to or commingled
with other goods without the prior written consent of the
Administrative Agent.
(f) Upon the occurrence of an Event of Default, Debtor shall
assemble the Collateral and make it available to the Administrative
Agent at a place reasonably convenient to the Administrative Agent and
Debtor.
SECTION 6. Special Agreements Regarding Equipment. As to any
Collateral consisting of equipment, each Debtor additionally covenants and
agrees as follows:
(a) Debtor will not permit any of the Collateral to be removed
from the location(s) specified herein, except for temporary periods in
the normal and customary use thereof, without the prior written consent
of the Administrative Agent.
(b) If any of the Collateral consists of goods of a type
normally used in more than one state (whether or not
4
133
actually so used), Debtor will contemporaneously herewith furnish the
Administrative Agent a list of the states wherein such goods are or
will be used, and hereafter will notify the Administrative Agent in
writing of any other states in which such goods are so used.
(c) Debtor will not allow the Collateral to be attached to any
real estate in such manner as to become a fixture or a part of such
real estate (other than any real estate on which the Administrative
Agent has a first and prior perfected fixture filing).
SECTION 7. Special Agreements Regarding Inventory and Certain
Intangible Collateral. As to Collateral consisting of inventory, accounts or
general intangibles, each Debtor additionally covenants and agrees as follows:
(a) Prior to the occurrence of an Event of Default, Debtor
shall have the right to process and sell Debtor's inventory in the
regular course of business. The security interest hereof shall attach
to all proceeds of all sales or other dispositions of the Collateral.
(b) By its execution of this Agreement, none of the
Administrative Agent, any Lender or the Issuing Bank shall be obligated
to do or perform any of the acts or things provided in any contracts
covered hereby that are to be done or performed by Debtor, but if an
Event of Default shall occur, then the Administrative Agent may, at its
election, perform some or all of the obligations provided in said
contracts to be performed by Debtor, and if the Administrative Agent
incurs any liability or expenses by reason thereof, the same shall be
payable by Debtor upon demand and be a part of the Secured Obligations
until fully paid.
SECTION 8. Insurance. Each Debtor will at all times keep its Collateral
insured against all insurable hazards in compliance with all applicable
requirements of the Credit Agreement. All policies of property insurance with
respect to Collateral shall contain provisions satisfactory to the
Administrative Agent for payment of all losses thereunder to the Administrative
Agent, for the benefit of the Administrative Agent, the Lenders and the Issuing
Bank as their respective interests may appear. If required by the Administrative
Agent, Debtor shall deposit such policies with the Administrative Agent. Any
money received by the Administrative Agent under said policies may be applied to
the payment of the Secured Obligations, whether or not due and payable, or at
the Administrative Agent's option may be delivered by the Administrative Agent
to Debtor for the purpose of repairing or restoring the Collateral. Each Debtor
hereby assigns to the
5
134
Administrative Agent, for the benefit of the Administrative Agent, the Lenders
and the Issuing Bank as their respective interests may appear, all right to
receive the proceeds of such insurance not exceeding the aggregate amount of the
Secured Obligations, directs any insurer to pay all proceeds directly to the
Administrative Agent, and appoints the Administrative Agent Debtor's attorney in
fact to endorse any draft or check made payable to Debtor in order to collect
the benefits of such insurance.
SECTION 9. Remedies in Case of Event of Default. If an Event of Default
shall have occurred and be continuing, the Administrative Agent shall be
entitled to exercise all of its rights, powers and remedies (whether vested in
it by this Agreement, the Credit Agreement or the other Loan Documents or by
law, including all rights and remedies of a secured party of a debtor in default
under the Uniform Commercial Code (the "UCC") in effect in any relevant
jurisdiction at that time, for the protection, preservation and enforcement of
its rights in respect of the Collateral, and to the extent permitted by
applicable law the Administrative Agent shall be entitled, without limitation,
to exercise the following rights, which each Debtor hereby agrees to be
commercially reasonable:
(a) The Administrative Agent shall be entitled to immediate
possession of the Collateral.
(b) The Administrative Agent shall be entitled to collect and
receive all amounts otherwise payable to any Debtor in respect of the
Collateral. Without limitation of the foregoing, the Administrative
Agent shall have the right to notify the account debtors obligated on
any or all of Debtor's accounts to make payment thereof directly to the
Administrative Agent.
(c) The Administrative Agent shall be entitled at any time or
from time to time to sell, transfer and deliver, or grant options to
purchase, all or any part of the Collateral or any interest therein, at
any public or private sale at the Administrative Agent's offices or
elsewhere, without demand for performance, advertisement or notice of
intention to sell or of the time or place of sale or adjournment
thereof (all of which are hereby expressly and irrevocably waived by
the Debtors), for cash, on credit or for other property, for immediate
or future delivery without any assumption of credit risk, and for such
price or prices and on such terms as the Administrative Agent in its
reasonable discretion may determine. Each Debtor agrees that to the
extent that notice of sale shall be required by law that at least ten
(10) days' notice to such Debtor of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification.
6
135
The Administrative Agent shall not be obligated to make any sale of
Collateral regardless of whether notice of sale has been given. The
Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and any
such sale may, without further notice, be made at the time and place
to which it was so adjourned. Each Debtor hereby waives and releases
to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after
sale hereunder, and all rights, if any, to marshalling the Collateral
and any other security for the Secured Obligations or otherwise. At
any such sale, unless prohibited by applicable law, the Administrative
Agent may bid for and purchase all or any part of the Collateral so
sold free from any such right or equity of redemption. The
Administrative Agent shall not be liable for failure to collect or
realize upon any or all of the Collateral or for any delay in so doing
nor shall the Administrative Agent or any Lender be under any
obligation to take any action whatsoever with regard thereto.
(d) The Administrative Agent shall be entitled to settle,
adjust, compromise and arrange all accounts, controversies, questions,
claims and demands whatsoever in relation to all or any part of the
Collateral, in its reasonable discretion.
(e) The Administrative Agent shall be entitled, in respect of
the Collateral, to execute all such contracts, agreements, assignments,
documents and instruments, to bring, defend and abandon all such
actions, suits or proceedings, and to take all other actions in
relation to all or any part of the Collateral as the Administrative
Agent in its reasonable discretion may determine.
(f) The Administrative Agent shall be entitled to appoint
managers, sub-agents, officers and servants for any of the purposes
mentioned in the foregoing provisions of this Section 9 and to dismiss
the same, all as the Administrative Agent in its reasonable discretion
may determine.
(g) The Administrative Agent shall be entitled generally to
take all such other action as the Administrative Agent in its
reasonable discretion may determine as incidental or conducive to any
of the matters or powers mentioned in the foregoing provisions of this
Section 9 and that the Administrative Agent may or can do lawfully and
to use the name of any Debtor for the purposes aforesaid and in any
proceedings arising therefrom.
SECTION 10. Remedies, Etc. Cumulative. Each right, power and remedy of
the Administrative Agent provided for in this
7
136
Agreement, the Credit Agreement or any of the other Loan Documents, or now or
hereafter existing at law or in equity or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or the commencement of the exercise by the
Administrative Agent of any one or more of the rights, powers or remedies
provided for in this Agreement, the Credit Agreement or any of the other Loan
Documents, or now or hereafter existing at law or in equity or by statute or
otherwise, shall not preclude the simultaneous or later exercise by the
Administrative Agent of all such other rights, powers or remedies, and no
failure or delay on the part of the Administrative Agent to exercise any such
right, power or remedy shall operate as a waiver thereof.
SECTION 11. Application of Proceeds. All moneys collected by the
Administrative Agent upon any sale or other disposition of the Collateral,
together with all other moneys received by the Administrative Agent hereunder
shall be applied as follows:
(a) first, to the payment of any and all expenses and fees
(including reasonable attorney's and paralegal's fees and expenses)
actually incurred by the Administrative Agent in obtaining, taking
possession of, removing, storing and disposing of the Collateral and
any and all amounts incurred by the Administrative Agent in connection
therewith or owing to the Administrative Agent hereunder;
(b) next, any surplus then remaining to the payment of the
other Secured Obligations in such order as required or permitted by
the Credit Agreement; and
(c) if all of the Commitments are then terminated under the
Credit Agreement, all Secured Obligations have been indefeasibly paid
and performed in full and no Obligations remain unpaid, outstanding or
unperformed, any surplus then remaining shall be paid to the Borrower;
subject, however, to the rights of the holder of any then existing Lien
encumbering same of which the Administrative Agent has actual notice
(without investigation);
it being understood that the Debtors shall, subject to Section 1 hereof and
Article 5 of the Credit Agreement, remain liable to the extent of any deficiency
between the amount of the proceeds of the Collateral and the aggregate amount of
the sums referred to in clauses (a) and (b) of this Section 11.
SECTION 12. Purchases of Collateral. Upon any sale of any of the
Collateral hereunder (whether by virtue of the power(s) of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Administrative
Agent or the officer or agent making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Collateral so sold, and such purchaser or
8
137
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Administrative Agent or such officer or be
answerable in any way for the misapplication or nonapplication thereof.
SECTION 13. Further Assurances. Each Debtor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Administrative Agent at any time
reasonably may request in connection with the administration and enforcement of
this Agreement or relative to the Collateral or any part thereof, or to
effectuate the purposes hereof or in order better to assure and confirm unto the
Administrative Agent its rights, powers and remedies hereunder. Without limiting
the foregoing, each Debtor agrees that it will join with the Administrative
Agent in executing and, at its own expense, file and refile under the UCC such
financing statements, continuation statements and other documents in such
offices as the Administrative Agent may deem necessary or appropriate and
wherever required or permitted by law in order to perfect and preserve the
Administrative Agent's security interest in the Collateral, and each Debtor
hereby authorizes the Administrative Agent to file financing statements and
amendments thereto relative to all or any part of the Collateral without the
signature of such Debtor where permitted by law.
SECTION 14. Collateral in Possession of the Administrative Agent. The
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Administrative Agent
accords its own property, it being understood that the Administrative Agent
shall have no responsibility for taking any necessary steps to preserve rights
against any parties with respect to any Collateral.
SECTION 15. Debtors' Obligations Absolute, Etc. The obligations of each
Debtor under this Agreement shall be absolute and unconditional in accordance
with the terms hereof and shall remain in full force and effect without regard
to, and shall not be released, suspended, discharged, terminated or otherwise
affected by, any circumstance or occurrence whatsoever, including, without
limitation: (a) any change in the time, place or manner of payment of, or in any
other term of, all or any of the Secured Obligations, any waiver, indulgence,
renewal, extension, amendment or modification of or addition, consent or
supplement to or deletion from or any other action or inaction under or in
respect of this Agreement, the Credit Agreement, any of the other Loan Documents
or any other instrument or agreement referred to therein or any assignment or
transfer of any thereof; (b) any lack of validity or enforceability of this
Agreement, the Credit Agreement, any of the other Loan Documents or any other
9
138
documents, instruments or agreement referred to therein or any assignment or
transfer of any thereof; (c) any limitation on any party's liability or
obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; (d) any furnishing of any additional security to the
Administrative Agent or its assignees or any acceptance thereof or any release
of any security by the Administrative Agent or its assignees; (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to any Debtor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, regardless of whether such Debtor shall have notice or
knowledge of any of the foregoing; (f) any exchange, release or nonperfection of
any other collateral, or any release or amendment or waiver of or consent to
departure from any guarantee or security, for all or any of the Secured
Obligations; or (g) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Debtor.
SECTION 16. Notices, Etc. All notices and other communications
hereunder shall be given to each Debtor and the Administrative Agent at the
addresses and in the manner specified in the Credit Agreement.
SECTION 17. Power of Attorney. Each Debtor hereby absolutely and
irrevocably makes, constitutes and appoints the Administrative Agent such
Debtor's true and lawful agent and attorney-in-fact, with full power of
substitution, in the name of such Debtor, upon the occurrence and during the
continuance of an Event of Default: (a) to execute and do all such assurances,
acts and things that such Debtor should do but has failed to do under the
covenants and provisions contained in this Agreement; (b) to take any and all
such action as the Administrative Agent or any of its sub-agents or attorneys
may, in its or their discretion, reasonably determine to be necessary or
advisable for the purpose of maintaining, preserving or protecting the security
constituted by this Agreement or any of the rights, remedies, powers or
privileges of the Administrative Agent under this Agreement; and (c) generally,
in the name of such Debtor, to exercise all or any of the powers, authorities
and discretion conferred on or reserved to the Administrative Agent by or
pursuant to this Agreement, and (without prejudice to the generality of any of
the foregoing) to execute and deliver or otherwise perfect any deed, assignment,
financing statement, assurance, agreement, instrument or act as the
Administrative Agent may deem proper in or for the purpose of exercising any of
such powers, authorities or discretion. Such Debtor hereby ratifies and
confirms, and hereby agrees to ratify and confirm, whatever lawful and
reasonable acts the Administrative Agent or any of the Administrative Agent's
sub-agents or attorneys shall do or purport to do in the exercise of this power
of attorney,
10
139
which power of attorney, being given for security, is irrevocable for the term
of this Agreement.
SECTION 18. Termination, Release. After all of the Commitments have
been terminated under the Credit Agreement, all Secured Obligations have been
indefeasibly paid and performed in full and no Obligations remain unpaid,
outstanding or unperformed, this Agreement shall terminate, and the
Administrative Agent, at the request and expense of the Debtors, will execute
and deliver to the Debtors a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to the Debtors (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the
Administrative Agent and as has not theretofore been sold or otherwise applied
or released pursuant to this Agreement, together with any proceeds at the time
held by the Administrative Agent hereunder.
SECTION 19. Miscellaneous. Each Debtor agrees with the Administrative
Agent that each of the obligations and liabilities of such Debtor to the
Administrative Agent under this Agreement may be enforced against such Debtor
without the necessity of joining any other Debtor or any other Person as a
party. This Agreement shall create a continuing security interest in the
Collateral and shall be binding upon the respective successors and assigns of
any Debtor and the Administrative Agent, and shall inure to the benefit of and
be enforceable by the Administrative Agent, its successors and assigns. Without
limiting the generality of the foregoing sentence, any Lender, the
Administrative Agent and the Issuing Bank may assign or otherwise transfer any
right, title or interest under the Credit Agreement, the Notes, the Letters of
Credit and the other Loan Documents to any other Person in accordance with the
provisions of the Credit Agreement, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to the Administrative
Agent herein. This Agreement may be amended, changed or waived only as provided
in Section 14.3 of the Credit Agreement and may be terminated only as provided
in Section 21 hereof. Unless otherwise defined herein or in the Credit
Agreement, terms defined in Article 9 of the UCC in the State of Tennessee are
used herein as therein defined. The headings in this Agreement are for
convenience of reference only and shall not limit or define the meaning of the
substantive provisions hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement, which shall remain
binding on all parties hereto.
11
140
SECTION 20. Governing Law. Unless otherwise expressly set forth herein,
this Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Tennessee, without reference to the conflicts or
choice of law principles thereof, except to the extent that the laws of a
particular jurisdiction govern the creation, perfection and enforcement of liens
on and security interests in the Collateral.
SECTION 21. CONSENT TO JURISDICTION. THE BORROWER AND EACH OTHER DEBTOR
HEREBY IRREVOCABLY CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN DAVIDSON COUNTY, TENNESSEE IN ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
CREDIT AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. THE BORROWER AND EACH OTHER DEBTOR HEREBY IRREVOCABLY CONSENT TO
THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR
PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING BANK
IN CONNECTION WITH THIS AGREEMENT, THE CREDIT AGREEMENT, THE NOTES OR THE OTHER
LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY,
IN THE MANNER SPECIFIED IN SECTION 14.1 OF THE CREDIT AGREEMENT. NOTHING IN THIS
SECTION 21 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE
ISSUING BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING ANY ACTION
OR PROCEEDING AGAINST THE BORROWER, ANY OF THE OTHER DEBTORS OR THEIR RESPECTIVE
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
SECTION 22. WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT, EACH
LENDER, THE ISSUING BANK, THE BORROWER AND EACH OTHER DEBTOR HEREBY IRREVOCABLY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE CREDIT AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. The scope of this waiver is intended to be all-encompassing
with respect to any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each of the parties hereto (i) acknowledges that this waiver
is a material inducement for the parties to the Loan Documents to enter into a
business relationship, that the parties to the Loan Documents have already
relied on this waiver in entering into same and the transactions that are the
subject thereof, and that they will continue to rely on this waiver in their
related future dealings, and (ii) further warrants and represents that
each has reviewed this waiver with
12
141
its legal counsel and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. This waiver is irrevocable,
meaning that it may not be modified either orally or in writing, and this waiver
shall apply to any subsequent amendments, modifications, supplements,
extensions, renewals and/or replacements of this Agreement. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 23. Conflicts. In the event of any conflict between the
Credit Agreement and this Agreement, the Credit Agreement shall control.
SECTION 24. Final Agreement. This written agreement represents the
final agreement between the parties with respect to the subject matter hereof
and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties. There are no unwritten oral agreements between
the parties.
IN WITNESS WHEREOF, each Debtor and the Administrative Agent have
caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
DEBTORS:
AMERICA SERVICE GROUP INC., as Debtor
By:_____________________________________
Name:________________________________
Title:_______________________________
PRISON HEALTH SERVICES, INC., as Debtor
By:_____________________________________
Name:________________________________
Title:_______________________________
UNISOURCE, INC., as Debtor
By:_____________________________________
Name:________________________________
Title:_______________________________
13
142
ADMINISTRATIVE AGENT:
NATIONSBANK OF TENNESSEE, N.A.,
as Administrative Agent
By: ____________________________________
Title:______________________________
14
143
ANNEX I
[to Security Agreement]
144
ANNEX II
[to Security Agreement]
NONE
2
145
EXHIBIT A
SUPPLEMENT TO SECURITY AGREEMENT
THIS SUPPLEMENT TO SECURITY AGREEMENT (this "Agreement"), dated as of
____________, ____, is made and entered into by _______________________________
______________________________________________________, a _____________________
________________________ (the "Additional Debtor"), in favor of NATIONSBANK OF
TENNESSEE, N.A., a national banking association ("NationsBank"), as
administrative agent (in such capacity, the "Administrative Agent") for itself,
the Lenders and the Issuing Bank under the Credit Agreement.
RECITALS:
A. America Service Group Inc., a Delaware corporation (the "Borrower"),
certain Subsidiaries of the Borrower now or hereafter becoming parties thereto,
as guarantors (the "Guarantors"), certain Lenders, the Administrative Agent, and
NationsBank, as Issuing Bank, are parties to a certain Credit Agreement dated as
of May 30, 1997 (as the same heretofore may have been and/or hereafter may be
amended, restated, supplemented, extended, renewed, replaced or otherwise
modified from time to time, the "Credit Agreement"), pursuant to which the
Lenders have made and will make Loans and purchase participations in Letters of
Credit issued for the account of the Borrower, and the Issuing Bank will issue
such Letters of Credit, all as more specifically described in the Credit
Agreement.
B. The Borrower and the Guarantors have agreed to grant in favor of the
Administrative Agent for the benefit of the Issuing Bank and the ratable benefit
of the Lenders a valid perfected security interest in certain Collateral now or
hereafter owned or acquired by them, together with all proceeds thereof and
books and records pertaining thereto, all pursuant to the terms of that certain
Security Agreement of even date with the Credit Agreement (as the same may have
been or hereafter may be amended, restated, supplemented, replaced or otherwise
modified from time to time, the "Security Agreement") by and among the Borrower,
the Guarantors (such Subsidiaries and the Borrower are sometimes hereinafter
referred to individually as a "Debtor" and collectively as the "Debtors") and
the Administrative Agent.
C. Except as otherwise defined herein, terms used herein and defined in
the Security Agreement shall be used herein as so defined.
D. Pursuant to the provisions of the Credit Agreement and Section 4 of
the Security Agreement, the Borrower is required to
146
cause the Additional Debtor to execute and deliver to the Administrative Agent
this Agreement, and it is a condition to the obligations of the Lenders to
continue to extend credit under the Credit Agreement that the Additional Debtor
execute and deliver to the Administrative Agent this Agreement, and the
Additional Debtor desires to execute and deliver this Agreement to satisfy such
requirement and condition.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and in order to ensure
the Borrower's compliance with and to induce the Lenders to extend credit under
the Credit Agreement, and in consideration of the benefits accruing to the
Additional Debtor, the receipt and sufficiency of all of which are hereby
acknowledged, the Additional Debtor hereby makes the following representations
and warranties to the Administrative Agent and hereby covenants and agrees with
the Administrative Agent, all for the benefit of the Lenders, the Administrative
Agent and the Issuing Bank as provided in the Credit Agreement, as follows:
SECTION 1. Additional Debtor. The Additional Debtor hereby assumes all
obligations of a Debtor under and shall be a Debtor for all purposes of the
Security Agreement, and the Additional Debtor shall be fully liable thereunder
to the Administrative Agent, the Issuing Bank and the Lenders to the same extent
and with the same effect as though the Additional Debtor had been one of the
Debtors originally executing and delivering the Security Agreement. Without
limiting the foregoing:
(a) To secure the Secured Obligations and for the purposes set
forth in Section 1 of the Security Agreement, the Additional Debtor
hereby pledges, assigns, transfers, hypothecates, sets over and
delivers to the Administrative Agent, and grants to the Administrative
Agent a security interest in, all of the Additional Debtor's right,
title and interest in and to any and all Collateral now owned or
hereafter acquired by the Additional Debtor, subject to and upon the
terms and conditions set forth in this Agreement and the Security
Agreement; subject, however, to the proviso that the liability of the
Additional Debtor hereunder and under the Security Agreement shall
never exceed its Maximum Guaranty Liability (as such term is defined in
the Credit Agreement).
(b) The Additional Debtor represents, warrants and agrees as
follows:
(i) The Additional Debtor is the owner of and has
the right to grant a security interest in its Collateral,
free and clear of any Liens other than
2
147
Permitted Liens, and the Additional Debtor will defend the
Administrative Agent's right, title and security interest in
and to the Collateral against the claims and demands of all
Persons other than those in respect of Permitted Liens. The
Additional Debtor will have like title to and right to grant
a security interest in any other property at any time
hereafter constituting Collateral and likewise will defend
the right thereto and security interest therein of the
Administrative Agent.
(ii) Annex I to this Agreement accurately sets forth the
locations of (i) the Additional Debtor's chief executive
office, (ii) all other places of business of the Additional
Debtor, (iii) all of the Additional Debtor's tangible
Collateral, and (iv) all records concerning the Additional
Debtor's intangible Collateral.
(iii) Annex II to this Agreement is a true, correct and
complete list of all copyrights, patents, trademarks and
service marks, and applications therefor, held by the
Additional Debtor.
(c) All references in the Security Agreement to the "Debtors"
or any "Debtor" shall be deemed to include and to refer to the
Additional Debtor.
SECTION 2. Miscellaneous. The Additional Debtor agrees with the
Administrative Agent that each of the obligations and liabilities of the
Additional Debtor to the Administrative Agent under this Agreement may be
enforced against the Additional Debtor without the necessity of joining any
other Debtor or any other Person as a party. This Agreement shall create a
continuing security interest in the Collateral and shall be binding upon the
respective successors and assigns of the Additional Debtor and the
Administrative Agent and shall inure to the benefit of and be enforceable by the
Administrative Agent, its successors and assigns. Without limiting the
generality of the foregoing sentence, any Lender, the Administrative Agent and
the Issuing Bank may assign or otherwise transfer any right, title or interest
under the Credit Agreement, the Notes, the Letters of Credit and the other Loan
Documents to any other Person in accordance with the provisions of the Credit
Agreement, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Administrative Agent herein. This
Agreement may be amended, changed or waived only as provided in Section 14.3 of
the Credit Agreement and may be terminated only as provided in Section 18 of the
Security Agreement. Unless otherwise defined in the Security Agreement or in the
Credit Agreement, terms defined in Article 9 of the UCC in the State of
Tennessee are used herein as therein defined. The
3
148
headings in this Agreement are for convenience of reference only and shall not
limit or define the meaning of the substantive provisions hereof. This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument. In the event that
any provision of this Agreement shall prove to be invalid or unenforceable, such
provision shall be deemed to be severable from the other provisions of this
Agreement which shall remain binding on all parties hereto.
SECTION 3. Governing Law. This Agreement and the Security Agreement,
unless otherwise expressly set forth herein or therein, shall be governed by and
construed and enforced in accordance with the laws of the State of Tennessee,
without reference to the conflicts or choice of law principles thereof, except
to the extent that the laws of a particular jurisdiction cover the creation,
perfection and enforcement of liens on and security interests in the Collateral.
SECTION 4. CONSENT TO JURISDICTION. THE ADDITIONAL DEBTOR HEREBY
IRREVOCABLY CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN DAVIDSON COUNTY, TENNESSEE IN ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
SECURITY AGREEMENT, THE CREDIT AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. THE ADDITIONAL DEBTOR HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR
PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING BANK
IN CONNECTION WITH THIS AGREEMENT, THE SECURITY AGREEMENT, THE CREDIT AGREEMENT,
THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF
ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN SECTION 14.1 OF THE CREDIT
AGREEMENT AND AT THE ADDRESS SPECIFIED ON THE SIGNATURE PAGE HEREOF. NOTHING IN
THIS SECTION 4 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR
THE ISSUING BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING BANK TO
BRING ANY ACTION OR PROCEEDING AGAINST THE DEBTOR OR ITS PROPERTIES IN THE
COURTS OF ANY OTHER JURISDICTIONS.
SECTION 5. WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT, EACH LENDER,
THE ISSUING BANK AND THE ADDITIONAL DEBTOR HEREBY IRREVOCABLY WAIVES THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
SECURITY AGREEMENT, THE CREDIT AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. The scope of this waiver is intended to be
all-encompassing with respect to
4
149
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each of the parties hereto (i) acknowledges that this waiver
is a material inducement for the parties to the Loan Documents to enter into a
business relationship, that the parties to the Loan Documents have already
relied on this waiver in entering into same and the transactions that are the
subject thereof, and that they will continue to rely on this waiver in their
related future dealings, and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. This waiver is irrevocable, meaning that it may not be modified either
orally or in writing, and this waiver shall apply to any subsequent amendments,
modifications, supplements, extensions, renewals and/or replacements of this
Agreement. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 6. Final Agreement. This written agreement represents the final
agreement between the parties with respect to the subject matter hereof and may
not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.
IN WITNESS WHEREOF, the Additional Debtor has caused this Agreement to
be duly executed and delivered by its duly authorized officer as of the date
first above written.
ADDITIONAL DEBTOR:
-----------------------------------
By:________________________________
Name:______________________________
Title:_____________________________
Address for notices c/o America Service Group Inc.
under Section 14.1 of 000 Xxxxxxxx Xxxxx, Xxxxx 000
the Credit Agreement: Xxxxxxxxx, Xxxxxxxxx 00000
Attn: _______________________
Telecopier No: 615/376-9862
5
150
ANNEX I
6
151
ANNEX II
7
