1
EXHIBIT 10.2
================================================================================
CREDIT AGREEMENT
among
HORIZON HEALTH CORPORATION
as Borrower,
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Agent,
and
the banks named herein
9 December 1997
================================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.3 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.4 Time of Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 2 Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.1 Revolving Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.3 Repayment of Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.5 Revolving Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.6 Reduction or Termination of Revolving Commitments . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.1 Term Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.3 Repayment of Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5 Term Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6 Reduction or Termination of Term Commitments. . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4 Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Determinations of Margins and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) "Base Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) "Commitment Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) "Eurodollar Rate Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.3 Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.4 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.5 Conversions and Continuations of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.6 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 Administrative Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.3 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.4 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Mandatory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Optional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.5 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.6 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.7 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.8 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
i
3
TABLE OF CONTENTS
(con't.)
Page
----
Section 5.9 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.10 Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 6 Yield Protection and Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.2 Limitation on Eurodollar Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.4 Treatment of Affected Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.6 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 7 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.1 Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Incumbency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Governmental Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(f) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(g) Collateral Documents and Collateral . . . . . . . . . . . . . . . . . . . . . . . . 27
(h) Termination or Assignment of Prior Liens . . . . . . . . . . . . . . . . . . . . . 28
(i) Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(j) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(k) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(l) Attorneys' Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.2 All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Additional Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 8 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.1 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.2 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.3 Corporate Action; No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.4 Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.5 Litigation and Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.6 Rights in Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.7 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.8 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.9 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.11 Margin Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ii
4
TABLE OF CONTENTS
(con't.)
Page
----
Section 8.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.15 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.18 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.21 Benefit Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 9 Positive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.1 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Quarterly Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Annual Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(e) Management Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(f) Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(g) Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(h) ERISA Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(i) Reports to Other Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(j) Notice of Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . 35
(k) Proxy Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(l) General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.2 Maintenance of Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.4 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.6 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.7 Keeping Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.9 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.10 Further Assurances and Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Further Assurance and Exceptions to Perfection . . . . . . . . . . . . . . . . . . 37
(b) Subsidiary Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(c) Borrower Pledge of Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 10 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.1 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.2 Limitation on Liens and Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . 39
Section 10.3 Mergers, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.4 Restrictions on Dividends and other Distributions . . . . . . . . . . . . . . . . . . . . . 41
Section 10.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.6 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 44
iii
5
TABLE OF CONTENTS
(con't.)
Page
----
Section 10.7 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 10.8 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 10.9 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.10 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.11 Prepayment of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 11 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.1 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.2 Indebtedness to Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.3 Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.4 Indebtedness to Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 12 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(a) Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(b) Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(c) Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(d) Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(e) Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 12.3 Performance by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 12.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 12.5 Continuance of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 13 The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.1 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.2 Rights of Agent as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.5 Independent Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.6 Several Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.8 Agent Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 13.9 Intercreditor Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 14 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 14.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 14.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 14.3 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 14.4 No Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 14.5 No Fiduciary Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 14.6 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 14.7 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 14.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
iv
6
TABLE OF CONTENTS
(con't.)
Page
----
(a) Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(b) Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(c) Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(d) Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(e) Pledge to Federal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 14.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 14.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 14.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 14.12 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 14.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 14.14 Governing Law; Venue of Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 14.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 14.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 14.17 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 14.18 Non-Application of Chapter 346 of The Finance Code of Texas . . . . . . . . . . . . . . . . 63
Section 14.19 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 14.20 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 14.21 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
v
7
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
"A" Revolving Note
"B" Term Note
"C" Guaranty
"D" Borrower Security Agreement
"E" Borrower Pledge Agreement
"F" Subsidiary Security Agreement
"G" Subsidiary Pledge Agreement
"H" Subsidiary Joinder Agreement
"I" Assignment and Acceptance
"J" Compliance Certificate
"K" Collateral Assignment
INDEX TO SCHEDULES
Schedule Description of Schedule
-------- -----------------------
1.1(a) Previous Senior Debt
8.14 List of Subsidiaries
10.1 Debt
10.2 Existing Liens
10.5 Existing Investments
vi
8
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of December 9, 1997,
is among HORIZON HEALTH CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Borrower"), each of the
banks or other lending institutions which is or which may from time to time
become a signatory hereto or any successor or assignee thereof (individually, a
"Bank" and, collectively, the "Banks") and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually as a Bank and as agent for itself and the other Banks
(in its capacity as agent, together with its successors in such capacity, the
"Agent").
R E C I T A L S:
The Borrower has requested that the Banks extend credit to the
Borrower in the form of a revolving credit facility and a term loan facility.
The Banks are willing to extend such credit to the Borrower upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Account" means either a Base Rate Account or a Eurodollar Account.
"Additional Costs" has the meaning specified in Section 6.1.
"Adjusted Eurodollar Rate" means, for any Eurodollar Account for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Agent to be equal to the Eurodollar
Rate for such Eurodollar Account for such Interest Period divided by 1 minus
the Reserve Requirement for such Eurodollar Account for such Interest Period.
"Adjustment Date" has the meaning specified in Section 4.2.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person; or (c) five percent (5%) or more of the voting
CREDIT AGREEMENT - PAGE 1
9
stock of which is directly or indirectly beneficially owned or held by the
Person in question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the Agent or any
Bank be deemed an Affiliate of the Borrower or any Subsidiaries.
"Agent" has the meaning set forth in the introductory paragraph of
this Agreement.
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"AHG Partnership" means AHG Partnership, a general partnership
organized under the laws of the State of Texas between HHMC Partners, Inc.(a
Subsidiary) and certain other Persons not Affiliates of the Borrower.
"Applicable Lending Office" means for each Bank and each Type of
Account, the lending office of such Bank (or of an Affiliate of such Bank)
designated for such Account below its name on the signature pages hereof or
such other office of such Bank (or of an Affiliate of such Bank) as such Bank
may from time to time specify to the Borrower and the Agent as the office by
which its Loans subject to Accounts of such Type are to be made and maintained.
"Applicable Rate" has the meaning set forth in Section 4.1.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its assignee and accepted by the Agent pursuant to Section
14.8, in substantially the form of Exhibit "I".
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Margin" has the meaning specified in Section 4.2.
"Base Rate" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1% or (b) the Prime
Rate in effect on such day. For purposes hereof, "Prime Rate" shall mean the
rate of interest per annum then most recently publicly announced from time to
time by Texas Commerce as its prime rate in effect at its Principal Office;
each change in the Prime Rate shall be effective on the date such change is
publicly announced as effective. "Federal Funds Effective Rate" shall mean,
for any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as released on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so released for any day which
is a Business Day, the arithmetic average (rounded upwards to the next 1/100th
of 1%), as determined by the Agent, of the quotations for the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability of the Agent to obtain sufficient quotations in
accordance with the terms thereof, the Base Rate shall be determined without
regard to clause (a)
CREDIT AGREEMENT - PAGE 2
10
of the first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively. The Base Rate may not be any Bank's best or favored rate
and the Banks may make other Loans to other Persons at rates lower than the
Base Rate.
"Base Rate Account" means a portion of a Loan that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning set forth in the introductory paragraph of
this Agreement.
"Borrower Pledge Agreement" means the pledge and security agreement
between the Borrower and the Agent for the benefit of itself and the Banks, in
substantially the form of Exhibit "E", as the same may be amended or otherwise
modified.
"Borrower Security Agreement" means the security agreement between the
Borrower and Agent for the benefit of itself and the Banks, in substantially
the form of Exhibit "D", as the same may be amended or otherwise modified.
"Business Day" means (a) any day excluding Saturday, Sunday, and any
day which either is a legal holiday under the laws of the State of Texas or the
State of New York or is a day on which banking institutions located in the
State of Texas or the State of New York are closed, and (b), with respect to
all borrowings, payments, Conversions, Continuations, Interest Periods, and
notices in connection with Loans subject to Eurodollar Accounts, any day which
is a Business Day described in clause (a) above and which is also a day on
which dealings in Dollar deposits are carried out in the European interbank
market.
"Calculation Period" has the meaning specified in Section 4.2.
"Capital Expenditures" means, for any period, all expenditures of the
Borrower and its Subsidiaries which are classified as capital expenditures in
accordance with GAAP including all such expenditures associated with Capital
Lease Obligations.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal property, which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP. For purposes of this Agreement,
the amount of such Capital Lease Obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Closing Date" means December 12, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
CREDIT AGREEMENT - PAGE 3
11
"Collateral" means the property in which Liens have been granted
pursuant to the Borrower Security Agreement, the Borrower Pledge Agreement, the
Subsidiary Security Agreement and the Subsidiary Pledge Agreements whether such
Liens are now existing or hereafter arise.
"Collateral Assignment" means that certain Assignment of Liens in
substantially the form of Exhibit "K", to be executed by Texas Commerce
pursuant to which it shall assign to the Agent all Liens securing the Previous
Senior Debt.
"Commitment Fee Rate" means the per annum rate determined in
accordance with Section 4.2.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of a fraction the numerator of which is the amount of the
Commitments of such Bank and the denominator of which is the aggregate amount
of the Commitments of all of the Banks.
"Commitments" means, as to each Bank, such Bank's Revolving Commitment
and Term Commitment.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit "J" properly completed and executed by the chief financial officer
of the Borrower.
"Consolidated Net Income" has the meaning specified in Section 11.3.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 4.5 of a Eurodollar Account as a Eurodollar
Account from one Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 4.5 or Article 6 of one Type of Account into the other Type
of Account.
"Debt" means as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property
or services, except trade accounts payable of such Person arising in the
ordinary course of business that are not past due by more than ninety (90) days
or that are past due by more than ninety (90) days but are being contested in
good faith by appropriate proceedings diligently pursued; (d) all Capital Lease
Obligations of such Person; (e) all Debt or other obligations of others
Guaranteed by such Person; (f) all obligations secured by a Lien existing on
property owned by such Person, whether or not the obligations secured thereby
have been assumed by such Person or are non-recourse to the credit of such
Person; (g) all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds, and similar instruments; (h) all liabilities of such Person in
respect of all unfunded vested benefits under any Plan; (i) all obligations
of such Person in respect of mandatory redemption or mandatory dividend rights
on capital stock (or other equity); (j) all obligations of such Person,
contingent or otherwise, for the payment of money under any
CREDIT AGREEMENT - PAGE 4
12
noncompete, consulting, performance based or similar agreement entered into
with the seller of a Target or any other similar arrangements providing for the
deferred payment of the purchase price for an acquisition permitted hereby or
an acquisition consummated prior to the date hereof, in each case to the extent
reflected as a liability on the balance sheet of a Person in accordance with
GAAP; (k) all obligations of such Person under any interest rate or currency
swap, cap, collar or similar hedge agreement; and (l) all other amounts which
are required to be reflected as a liability on the balance sheet of a Person in
accordance with GAAP, excluding trade accounts payable excluded from Debt
pursuant to clause (c) of this definition, accruals, deferred credits and loss
contingencies.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, or any
other amount payable by the Borrower under any Loan Document which is not paid
when due (whether at stated maturity, by acceleration, or otherwise), a rate
per annum during the period commencing on the due date until such amount is
paid in full equal to the sum of two percent (2%) plus the Applicable Rate for
Base Rate Accounts as in effect from time to time (provided, that if such
amount in default is principal of a Loan subject to a Eurodollar Account and
the due date is a day other than the last day of an Interest Period therefor,
the "Default Rate" for such principal shall be, for the period from and
including the due date and to but excluding the last day of the Interest Period
therefor, two percent (2%) plus the interest rate for such Loan for such
Interest Period as provided in Section 4.1 hereof, and, thereafter, the rate
provided for above in this definition).
"Dollars" and "$" mean lawful money of the United States of America.
"EBITDA" has the meaning specified in Section 11.3.
"Eligible Assignee" means one or more commercial bank, savings and
loan association, savings bank, finance company, insurance company, pension
fund, mutual fund, or other financial institution (whether a corporation,
partnership, or other entity) which is qualified to make Loans hereunder and
has a combined capital and surplus of at least One Hundred Million Dollars
($100,000,000).
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses,
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
including any Environmental Law, permit, order, or agreement
CREDIT AGREEMENT - PAGE 5
13
with any Governmental Authority or other Person, arising from environmental,
health, or safety conditions or the Release or threatened Release of a
Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Eurodollar Account" means a portion of a Loan that bears interest at
a rate based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Account for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) offered to Texas Commerce or one of its Affiliates at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) two
Business Days prior to the first day of such Interest Period by leading banks
in the European interbank market for Dollar deposits in immediately available
funds having a term comparable to such Interest Period and, if necessary to
obtain such offers, in an amount comparable to the principal amount of the
Eurodollar Account applicable to the Agent to which such Interest Period
relates. If the Agent is not participating in a Eurodollar Account during any
Interest Period therefor (pursuant to Section 6.4 hereof or for any other
reason), the Eurodollar Rate for such Account for such Interest Period shall,
if necessary to obtain the Eurodollar Rate offers, be determined by reference
to the amount of the Account which the Agent would have made had it been
participating in such Account.
"Eurodollar Rate Margin" has the meaning specified in Section 4.2.
"Event of Default" has the meaning specified in Section 12.1.
"Federal Funds Effective Rate" has the meaning specified in the
definition of Base Rate.
"Fiscal Quarters" means the four (4) periods falling in each Fiscal
Year, each such period three calendar months in duration with the first such
period in any Fiscal Year beginning on the first day of September and the last
such period in any Fiscal Year ending on the last day of August.
"Fiscal Year" means twelve (12) month period beginning on the first
day of September and ending on the last day of August of the following year.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied
CREDIT AGREEMENT - PAGE 6
14
in a current period are comparable in all material respects to those accounting
principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or pertaining
to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment
thereof or to protect the obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The amount of any Guarantee shall
be equal to the amount of the obligations so guaranteed or otherwise supported
or, if not a fixed and determined amount, the maximum amount so guaranteed.
"Guaranty" means the guaranty of the Subsidiaries in favor of the
Agent and the Banks, in substantially the form of Exhibit "C", as the same may
be amended or otherwise modified from time to time.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
"Indebtedness" has the meaning specified in Section 11.2.
"Indebtedness to EBITDA Ratio" means the ratio of Indebtedness to
Adjusted EBITDA as determined and calculated in accordance with Section 11.4.
"Interest Period" means with respect to any Eurodollar Accounts, each
period commencing on the date such Account is established or Converted from a
Base Rate Account or the last day of the next preceding Interest Period with
respect to such Eurodollar Account, and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as the
Borrower may select as provided in Section 4.5 or 5.1, except that each such
Interest Period which commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. Notwithstanding the foregoing: (a)
each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (or if such succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); (b) any Interest Period in existence under a Loan which would
otherwise extend beyond the Termination Date applicable to
CREDIT AGREEMENT - PAGE 7
15
such Loan shall end on the Termination Date applicable to such Loan; (c) no
more than six (6) Interest Periods shall be in effect at the same time; (d) no
Interest Period for any Eurodollar Account shall have a duration of less than
one (1) month and, if the Interest Period would otherwise be a shorter period,
the related Eurodollar Account shall not be available hereunder; and (e) no
Interest Period in respect of Term Loans may extend beyond a principal
repayment date thereof unless, after giving effect thereto, the aggregate
principal amount of the Term Loans, subject to Eurodollar Accounts having
Interest Periods that end after such principal payment date shall be equal to
or less than such Loans to be outstanding hereunder after such principal
payment date.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment, preference,
priority, or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law, or otherwise.
"Loan Documents" means this Agreement, the Notes, the Borrower
Security Agreement, the Borrower Pledge Agreement, the Guaranties, the
Subsidiary Security Agreement, the Subsidiary Pledge Agreements and all other
promissory notes, security agreements, deeds of trust, assignments, guaranties,
letters of credit, and other instruments, agreements, and other documentation
executed and delivered pursuant to or in connection with this Agreement, as
such instruments, agreements, and other documentation may be amended or
otherwise modified.
"Loans" means Revolving Loans and Term Loans.
"Material Adverse Effect" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower and the Subsidiaries taken as a whole or (b) a
material adverse effect on the validity, perfection, priority, or ability of
the Agent to enforce the Agent's Lien on the Collateral or of the ability of
the Agent or any Bank to enforce a material provision of the Loan Documents.
In determining whether any individual event could reasonably be expected to
result in a Material Adverse Effect, notwithstanding that such event does not
itself have such effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event and all other then existing
events could reasonably be expected to result in a Material Adverse Effect.
"Maximum Rate" means, at any time and with respect to any Bank, the
maximum rate of nonusurious interest under applicable law that such Bank may
charge the Borrower. The Maximum Rate shall be calculated in a manner that
takes into account any and all fees, payments, and other charges contracted
for, charged, or received in connection with the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to the Borrower at the time of such change in
the Maximum Rate. For purposes of determining the Maximum Rate under Texas
law, the applicable rate ceiling shall be the weekly ceiling described in, and
computed in accordance with, Article 5069, Vernon's Texas Civil Statutes.
CREDIT AGREEMENT - PAGE 8
16
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"Notes" means the Revolving Notes and the Term Notes.
"Obligated Party" means the Subsidiaries or any other Person
(exclusive of the Borrower) who is or becomes party to any agreement that
guarantees or secures payment and performance of the Obligations or any part
thereof.
"Obligation" means all obligations, indebtedness, and liabilities of
the Borrower to the Agent and the Banks, or any of them, arising pursuant to
any of the Loan Documents, pursuant to any interest rate swap, interest rate
caps, interest rate collars, or other similar agreements entered into by Agent
or any Bank with the Borrower or any Subsidiary enabling Borrower or a
Subsidiary to fix or limit its interest expense, whether now existing or
hereafter arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligation of the Borrower to repay the
Loans, interest on the Loans and all fees, costs, and expenses (including
attorneys' fees and expenses) provided for in the Loan Documents or such
agreements enabling the Borrower to fix or limit its interest expense.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Permitted Acquisition" means an acquisition of a Person or its assets
in a transaction complying with the conditions set out in Section 10.5(a).
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit plan established or maintained by
the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Previous Senior Debt" means all the obligations, indebtedness and
liability of the Borrower and the Subsidiaries arising under or pursuant to
Debt described in Schedule 1.1(a).
"Principal Office" means the principal office of the Agent, located at
0000 Xxxxxx, Xxxxxxx, Xxxxx.
"Prohibited Transaction" means any transaction set forth in Section
406 or 407 of ERISA or Section 4975(c)(1) of the Code for which there does not
exist a statutory or administrative exemption.
"Quarterly Payment Date" means the last day of February, May, August
and November of each year, the first of which shall be the first such day after
the date of this Agreement.
CREDIT AGREEMENT - PAGE 9
17
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water,
ground water, or property in violation of Environmental Laws.
"Remedial Action" means all actions required to (a) cleanup, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Required Banks" means Banks having (a) sixty-six and two-thirds
percent (66 2/3%) or more of the Commitments or (b), if the Term Commitments
have terminated or have otherwise been fulfilled, sixty-six and two-thirds
percent (66 2/3%) or more of the Revolving Commitments and the aggregate
outstanding principal amount of the Term Loans or (c) if all Commitments have
terminated, sixty-six and two-thirds percent (66 2/3%) or more of the
outstanding principal amount of the Loans.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Reserve Requirement" means, for any Eurodollar Account for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental, or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of
the Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency Liabilities" as such term is used in Regulation
D. Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined or any category of extensions of credit or other assets which
include Eurodollar Accounts.
"Revolving Commitment" means, as to each Bank, the obligation of such
Bank to make advances of funds in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the name of
such Bank on the signature pages hereto under
CREDIT AGREEMENT - PAGE 10
18
the heading "Revolving Commitment" or in the most recent Assignment and
Acceptance executed by such Bank, as the same may be reduced or terminated
pursuant to Section 2.6 or 12.2. The aggregate amount of the Revolving
Commitments of all Banks equals Ten Million Dollars ($10,000,000).
"Revolving Loans" means, as to any Bank, the advances made by such
Bank pursuant to Section 2.1.
"Revolving Notes" means the promissory notes provided for by Section
2.2 and all amendments or other modifications thereof.
"Revolving Termination Date" means November 30, 2000, such earlier
date on which the Revolving Commitments terminate as provided in this
Agreement.
"Subsidiary" means any corporation (or other entity) of which at least
a majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by the
Borrower or one or more of the Subsidiaries or by the Borrower and one or more
of the Subsidiaries.
"Subsidiary Joinder Agreement" means an agreement which has been or
will be executed by a Subsidiary as required hereby adding it as a party to the
Guaranty and the Subsidiary Security Agreement, in substantially the form of
Exhibit "H", as the same may be amended or otherwise modified.
"Subsidiary Pledge Agreement" means the pledge and security agreement
between a Subsidiary and the Agent for the benefit of itself and the Banks, in
substantially the form of Exhibit "G", as the same may be amended or otherwise
modified.
"Subsidiary Security Agreement" means the security agreement among the
Subsidiaries (other than AHG Partnership) and the Agent for the benefit of
itself and the Banks, in substantially the form of Exhibit "F", as the same may
be amended or otherwise modified.
"Target" means the Person who is to be acquired or whose assets are to
be acquired by a Subsidiary in an acquisition governed by Section 10.5.
"Term Commitment" means, as to each Bank and as of any date of
determination, the obligation of such Bank to make advances of funds under
Section 3.1 in an aggregate principal amount up to but not exceeding the sum of
(A) the amount set forth opposite the name of such Bank on the signature pages
hereto under the heading "Term Commitment" or in the most recent Assignment and
Acceptance executed by such Bank, as the same may be terminated pursuant to
Section 12.2 minus (B) the aggregate amount of all funds advanced by such Bank
under Section
CREDIT AGREEMENT - PAGE 11
19
3.1. The aggregate amount of the Term Commitments of all Banks on the Closing
Date equals Forty Million Dollars ($40,000,000).
"Term Loan" means, as to any Bank, the advances made by such Bank
pursuant to Section 3.1.
"Term Loan Maturity Date" means November 30, 2002, or such earlier
date on which the Term Loan is due in its entirety as provided in this
Agreement.
"Term Notes" means the promissory notes provided for by Section 3.2
and all amendments and other modifications thereto.
"Termination Date" means, either the Term Loan Maturity Date or the
Revolving Loan Termination Date.
"Texas Commerce" means Texas Commerce Bank National Association in its
individual capacity and not as Agent.
"Type" means either type of Account (i.e., either a Base Rate Account
or Eurodollar Account).
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Section 1.2 Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof", "herein", and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. Unless
otherwise specified, all Article and Section references pertain to this
Agreement. Terms used herein that are defined in the UCC, unless otherwise
defined herein, shall have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations. Except as
otherwise expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Banks hereunder
shall be prepared, in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in Section 8.2
hereof. All calculations made for the purposes of determining compliance with
the provisions of this Agreement shall be made by application of GAAP, on a
basis consistent with those used in the preparation of the financial statements
referred to in Section 8.2 hereof. To enable the ready and consistent
determination of compliance by the Borrower with its obligations under this
Agreement, the Borrower will not change the manner in which either the last day
of its Fiscal Year or the last days of the first three Fiscal Quarters of its
Fiscal Year is calculated. In the event any changes in accounting principles
required by GAAP or recommended by the Borrower's certified public accountants
and implemented by the Borrower occur and such changes result in a change in
the method of the calculation of financial covenants, standards, or terms under
this Agreement, then the Borrower, the Agent, and the Banks agree to enter into
negotiations in order to amend such
CREDIT AGREEMENT - PAGE 12
20
provisions of this Agreement so as to equitably reflect such changes with the
desired result that the criteria for evaluating such covenants, standards, or
terms shall be the same after such changes as if such changes had not been
made. Until such time as such an amendment shall have been executed and
delivered by the Agent, the Borrower, and the Banks, all financial covenants,
standards, and terms in this Agreement shall continue to be calculated or
construed as if such changes had not occurred.
Section 1.4 Time of Day. Unless otherwise indicated, all
references in this Agreement to times of day shall be references to Dallas,
Texas time.
ARTICLE 2
Revolving Credit Facility
Section 2.1 Revolving Commitments. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make one or more
advances to the Borrower from time to time from and including the Closing Date
to but excluding the Revolving Termination Date in an aggregate principal
amount at any time outstanding up to but not exceeding the amount of such
Bank's Revolving Commitment as then in effect. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the Borrower
may borrow, prepay, and reborrow hereunder the amount of the Revolving
Commitments and may establish Base Rate Accounts and Eurodollar Accounts
thereunder and, until the Revolving Termination Date, the Borrower may Continue
Eurodollar Accounts established under the Revolving Loans or Convert Accounts
established under the Revolving Loans of one Type into Accounts of the other
Type. Accounts of each Type under the Revolving Loan made by each Bank shall
be established and maintained at such Bank's Applicable Lending Office for
Revolving Loans of such Type.
Section 2.2 Notes. The Revolving Loans made by a Bank shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit "A" hereto, payable to the order of such Bank in a principal amount
equal to its Revolving Commitment and otherwise duly completed.
Section 2.3 Repayment of Revolving Loans. The Borrower shall pay
to the Agent for the account of the Banks the outstanding principal amount of
all of the Revolving Loans on the Revolving Termination Date.
Section 2.4 Use of Proceeds. The proceeds of the Revolving Loans
shall be used by the Borrower for general corporate purposes, including,
without limitation, to finance the purchase price of Permitted Acquisitions and
to refinance Debt.
Section 2.5 Revolving Commitment Fee. The Borrower agrees to pay
to the Agent for the account of each Bank a commitment fee on the daily average
unused amount of such Bank's Revolving Commitment for the period from and
including the Closing Date to and including the Revolving Termination Date, at
a rate equal to the Commitment Fee Rate as determined in
CREDIT AGREEMENT - PAGE 13
21
accordance with subsection 4.2(b). For the purpose of calculating the
commitment fee hereunder, the Revolving Commitments shall be deemed utilized by
all outstanding Revolving Loans. Accrued commitment fees under this Section
2.5 shall be payable in arrears on each Quarterly Payment Date and on the
Revolving Termination Date.
Section 2.6 Reduction or Termination of Revolving Commitments.
The Borrower shall have the right to terminate or reduce in part the unused
portion of the Revolving Commitments at any time and from time to time,
provided that: (a) the Borrower shall give notice of each such termination or
reduction as provided in Section 5.3; and (b) each partial reduction shall be
in an aggregate amount at least equal to Three Million Dollars ($3,000,000).
The Revolving Commitments may not be reinstated after they have been terminated
or reduced.
ARTICLE 3
Term Loan
Section 3.1 Term Commitments. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make one or more
advances to Borrower from the Closing Date through November 30, 1999, in an
aggregate principal amount not to exceed the amount of such Bank's Term
Commitment as then in effect. Subject to the foregoing limitations and the
other terms are of this Agreement, the Borrower may establish Base Rate
Accounts or Eurodollar Accounts under the Term Loan and, until the Term Loan
Maturity Date, the Borrower may Continue Eurodollar Accounts established under
the Term Loan or Convert Accounts established under the Term Loan of one Type
into Accounts of another Type. Accounts of each Type established under the
Term Loan made by each Bank shall be made and maintained at such Bank's
Applicable Lending Office for Accounts of such Type.
Section 3.2 Notes. The Term Loan made by a Bank shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit "B", payable to the order of such Bank in a principal amount equal
its Term Commitment and otherwise duly completed.
Section 3.3 Repayment of Term Loans. The Borrower shall pay to
the Agent for the account of the Banks the Term Loans which are outstanding on
November 30, 1999 in twelve (12) installments as follows: (a) Eleven (11)
installments in the principal amount equal to the Amortization Amount, each due
and payable on each Quarterly Payment Date, beginning February 28, 2000; and
thereafter (b) one final installment in the aggregate amount of all Term Loans
outstanding as of the Term Loan Maturity Date, due and payable on the Term Loan
Maturity Date. The term "Amortization Amount" means an amount equal to the
quotient obtained by dividing the aggregate amount of the Term Loans which are
outstanding on November 30, 1999 by twenty (20).
Section 3.4 Use of Proceeds. The proceeds of Term Loans shall be
used by the Borrower to repay the Previous Senior Debt and to finance Permitted
Acquisitions.
CREDIT AGREEMENT - PAGE 14
22
Section 3.5 Term Commitment Fee. The Borrower agrees to pay to
the Agent for the account of each Bank a commitment fee on the daily average
unused amount of such Bank's Term Commitment for the period from and including
the Closing Date to and including November 30, 1999, at a rate equal to the
Commitment Fee Rate as determined in accordance with subsection 4.2(b). For
the purpose of calculating the commitment fee hereunder, the Term Commitments
shall be deemed utilized by all outstanding Term Loans. Accrued commitment
fees under this Section 3.5 shall be payable in arrears on each Quarterly
Payment Date and on November 30, 1999.
Section 3.6 Reduction or Termination of Term Commitments. The
Borrower shall have the right to terminate or reduce in part the unused portion
of the Term Commitments at any time and from time to time, provided that: (a)
the Borrower shall give notice of each such termination or reduction as
provided in Section 5.3; and (b) each partial reduction shall be in an
aggregate amount at least equal to Three Million Dollars ($3,000,000). The
Term Commitments may not be reinstated after they have been terminated or
reduced.
ARTICLE 4
Interest and Fees
Section 4.1 Interest Rate. Subject to Section 14.12, the
Borrower shall pay to the Agent for the account of each Bank interest on the
unpaid principal amount of each Loan made by such Bank for the period
commencing on the date of such Loan to but excluding the date such Loan is due,
at a fluctuating rate per annum equal to the Applicable Rate. The term
"Applicable Rate" means (i) during the period that such Loans or portions
thereof are subject to a Base Rate Account, the Base Rate plus the Base Margin
and (ii) during the period that such Loans or portions thereof are subject to a
Eurodollar Account, the Adjusted Eurodollar Rate plus the Eurodollar Rate
Margin.
Section 4.2 Determinations of Margins and Fees. The margins
identified in Section 4.1 and the fees payable under Section 2.5 and 3.5 shall
be defined and determined as follows:
(a) "Base Margin" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date (as defined below), zero percent (0.00%) per
annum and (ii) during each period, from and including one Adjustment
Date to but excluding the next Adjustment Date (herein a "Calculation
Period"), the percent per annum set forth in the table below in this
Section 4.2 under the heading "Base Margin" opposite the Indebtedness
to EBITDA Ratio which corresponds to the Indebtedness to EBITDA Ratio
set forth in, and as calculated in accordance with, the applicable
Compliance Certificate.
(b) "Commitment Fee Rate" shall mean (i) during the
period commencing on the Closing Date and ending on but not including
the first Adjustment Date, one quarter of one percent (0.25%) per
annum and (ii) during each Calculation Period, the percent per annum
set forth in the table below under the heading "Commitment Fee"
opposite the
CREDIT AGREEMENT - PAGE 15
23
Indebtedness to EBITDA Ratio which corresponds to the Indebtedness to
EBITDA Ratio set forth in, and as calculated in accordance with, the
applicable Compliance Certificate.
(c) "Eurodollar Rate Margin" shall mean (i) during the
period commencing on the Closing Date and ending on but not including
the first Adjustment Date, three quarters of one percent (0.75%) per
annum and (ii) during each Calculation Period, the percent per annum
set forth in the table below under the heading Eurodollar Margin
opposite the Indebtedness to EBITDA Ratio which corresponds to the
Indebtedness to EBITDA Ratio set forth in, and as calculated in
accordance with, the applicable Compliance Certificate.
Indebtedness to EBITDA Base Margin Commitment Fee Eurodollar Margin
---------------------- ----------- -------------- -----------------
Greater than or equal to 2.00 0.50% 0.3750% 1.50%
Greater than or equal to 1.50 but less 0.250% 0.250% 1.250%
than 2.00
Greater than or equal to 1.00 but less 0.00% 0.250% 1.00%
than 1.50
Less than 1.00 0.00% 0.250% .750%
Upon delivery of the Compliance Certificate pursuant to subsection 9.1(c) in
connection with the financial statements of the Borrower and the Subsidiaries
required to be delivered pursuant to Section 9.1(b) at the end of each Fiscal
Quarter commencing with such Compliance Certificate delivered with respect to
the Fiscal Quarter ending on November 30, 1997, the Base Margin, the Eurodollar
Rate Margin (for Interest Periods commencing after the applicable Adjustment
Date) and, the Commitment Fee Rate shall automatically be adjusted in
accordance with the Indebtedness to EBITDA Ratio set forth therein and the
table set forth above, such automatic adjustment to take effect as of the first
Business Day after the receipt by the Agent of the related Compliance
Certificate pursuant to Section 9.1(c) (each such Business Day when such
margins or fees change pursuant to this sentence or the next following
sentence, herein an "Adjustment Date"). If the Borrower fails to deliver such
Compliance Certificate which so sets forth the Indebtedness to EBITDA Ratio
within the period of time required by subsection 9.1(c): (i) the Base Margin
shall automatically be adjusted to one-half of one percent (0.50%) per annum;
(ii) the Eurodollar Rate Margin (for Interest Periods commencing after the
applicable Adjustment Date) shall automatically be adjusted to one and one-half
percent (1.50%) per annum; and (iii) the Commitment Fee Rate shall
automatically be adjusted to three-eighths of one percent (0.375%), such
automatic adjustments to take effect as of the first Business Day after the
last day on which the Borrower was required to deliver the applicable
Compliance Certificate in accordance with Section 9.1(c) and to remain in
effect until subsequently adjusted in accordance herewith upon the delivery of
a Compliance Certificate.
Section 4.3 Payment Dates. Accrued interest on the Loans shall
be due and payable as follows: (i) in the case of Loans subject to Base Rate
Accounts, on each Quarterly Payment Date and on the applicable Termination
Date; and (ii) in the case of Loans subject to Eurodollar Accounts and with
respect to each such Account, on the last day of such Interest Period, the
applicable Termination Date and, if such Interest Period is six (6) months
long, on the date ninety (90) days from the start of such Interest Period.
CREDIT AGREEMENT - PAGE 16
24
Section 4.4 Default Interest. Notwithstanding the foregoing, the
Borrower will pay to the Agent for the account of each Bank interest at the
applicable Default Rate on any principal of any Loan made by such Bank, and (to
the fullest extent permitted by law) any other amount payable by the Borrower
under any Loan Document to or for the account of the Agent or such Bank, that
is not paid in full when due (whether at stated maturity, by acceleration, or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full. Interest payable at the Default
Rate shall be payable from time to time on demand.
Section 4.5 Conversions and Continuations of Accounts. Subject
to Section 5.2, the Borrower shall have the right from time to time to Convert
all or part of any Base Rate Account in existence under a Loan into a
Eurodollar Account under the same Loan or to Continue Eurodollar Accounts in
existence under a Loan as Eurodollar Accounts under the same Loan, provided
that: (a) the Borrower shall give the Agent notice of each such Conversion or
Continuation as provided in Section 5.3; (b) a Eurodollar Account may only be
Converted on the last day of the Interest Period therefor; and (c) except for
Conversions into Base Rate Accounts, no Conversions or Continuations shall be
made while a Default has occurred and is continuing.
Section 4.6 Computations. Interest and fees payable by the
Borrower hereunder and under the other Loan Documents shall be computed as
follows: (i) with respect to Eurodollar Accounts on the basis of a year of 360
days and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which payable unless such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be; (ii)
with respect to Base Rate Accounts (A) if based on the Prime Rate, on the basis
of a year of 365 or 366 days, as the case may be and the actual number of days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable or (B) if based on the Federal Funds Effective Rate on
the basis of a year of 360 days and the actual number of days elapsed
(including the first day but excluding the last day) occurring in the period
for which payable unless in the case of clauses (i) or (ii) (B) such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be.
ARTICLE 5
Administrative Matters
Section 5.1 Borrowing Procedure. The Borrower shall give the
Agent, and the Agent will give the Banks, notice of each borrowing under any
Commitment in accordance with Section 5.3. Not later than 1:00 p.m. on the
date specified for each borrowing under the applicable Commitment each Bank
will make available to the Agent the amount of the Loan to be made by it on
such date, at the Principal Office, in immediately available funds, for the
account of the Borrower. The amount so received by the Agent shall, subject to
the terms and conditions of this Agreement, be made available to the Borrower
by (a) depositing the same, in immediately available funds, in an account of
the Borrower (designated by the Borrower) maintained with the
CREDIT AGREEMENT - PAGE 17
25
Agent at the Principal Office or (b) wire transferring such funds to a Person
or Persons designated by the Borrower in writing.
Section 5.2 Minimum Amounts. Except for prepayments pursuant to
Article 6, each borrowing under a Loan and each prepayment of principal of a
Loan shall be in an amount at least equal to Five Hundred Thousand Dollars
($500,000) with respect to the Revolving Loans, One Million Dollars
($1,000,000) with respect to the borrowings under the Term Loans, and One
Million Dollars ($1,000,000) with respect to prepayments on the Term Loans, or,
in each case, any larger amounts in increments of One Hundred Thousand Dollars
($100,000). Except for Conversions pursuant to Article 6, each Eurodollar
Account applicable to a Loan shall be in a minimum principal amount of One
Million Dollars ($1,000,000) or any larger amounts in increments of Five
Hundred Thousand Dollars ($500,000).
Section 5.3 Certain Notices. Notices by the Borrower to the
Agent of terminations or reductions of Commitments, of borrowings and
prepayments of Loans, and of Conversions and Continuations of Accounts shall be
irrevocable and shall be effective only if received by the Agent not later than
10:00 a.m. (a) on the Business Day of the borrowing, prepayment or repayment of
Loans subject to Base Rate Accounts or of the Conversion into Base Rate
Accounts and (b) with respect to any other repayments, terminations,
reductions, borrowings, Conversions, Continuations, or prepayments, on the
Business Day which is the number of Business Days prior to the day of the
relevant action specified below:
Action Number of Business Days Prior
to Action
Termination or reduction of Commitments, prepayment of Loans 5
Borrowing of Loans subject to Eurodollar Accounts, Conversions into or
Continuations as Eurodollar Accounts 3
Any notices of the type described in this Section 5.3 which are received by the
Agent after 10:00 a.m. on a Business Day shall be deemed to be received and
shall be effective on the next Business Day. Each such notice of termination
or reduction shall specify the applicable Commitments to be affected and the
amount of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation, or prepayment shall: (a) specify the Loans
to be borrowed or prepaid or the Accounts to be Converted or Continued; (b) the
amount (subject to Section 5.2 hereof) to be borrowed, Converted, Continued, or
prepaid; (c) in the case of a Conversion, the Type of Account to result from
such Conversion; (d) in the case of a borrowing the Type of Account or Accounts
to be applicable to such borrowing and the amounts thereof; (e) in the event a
Eurodollar Account is selected, the duration of the Interest Period therefor;
and (f) the date of borrowing, Conversion, Continuation, or prepayment (which
shall be a Business Day). The Agent shall notify the Banks of the contents of
each such notice on the date of its receipt of the same or, if received on or
after 10:00 a.m. on a Business Day, on the next Business Day. In the event the
Borrower fails to select the Type of Account applicable to a Loan, or the
duration of any Interest Period for any Eurodollar Account, within the time
period and otherwise as provided in this Section 5.3, such Account (if
outstanding as a Eurodollar Account) will be
CREDIT AGREEMENT - PAGE 18
26
automatically Converted into a Base Rate Account on the last day of the
preceding Interest Period for such Account or (if outstanding as a Base Rate
Account) will remain as, or (if not then outstanding) will be made as, a Base
Rate Account. The Borrower may not borrow any Loans subject to a Eurodollar
Account, Convert any Base Rate Accounts into Eurodollar Accounts, or Continue
any Eurodollar Account as a Eurodollar Account if the Applicable Rate for such
Eurodollar Accounts would exceed the Maximum Rate or if a Default exists.
Section 5.4 Prepayments.
(a) Mandatory.
(i) Excess Cash Flow. If the aggregate
outstanding principal amount of the Term Loans equals or
exceeds Fifteen Million Dollars ($15,000,000) as of the date
ninety (90) days after the end of a Fiscal Year (the "Excess
Cash Flow Payment Date") beginning with the Fiscal Year ending
August 31, 1998, then Borrower shall prepay the Term Loans on
or before the Excess Cash Flow Date relating to such Fiscal
Year in an amount equal to fifty percent (50%) of the Excess
Cash Flow calculated for the Fiscal Year then most recently
ended on the basis of the audited financial statement for such
Fiscal Year delivered to Agent pursuant to Section 9.1(a). As
used herein, the term "Excess Cash Flow" means, for any Fiscal
Year, the total of the following for the Borrower and its
Subsidiaries on a consolidated basis, each calculated for such
period (without duplication): (a) net income; plus (b)
amortization and depreciation expense deducted in determining
net income; plus (c) any other noncash charges reducing net
income; less (d) the unfinanced portion of Capital
Expenditures (including those funded with advances under the
Revolving Loan); less (e) scheduled amortization of Debt
actually paid; less (f) the aggregate of all voluntary
prepayments of the Term Loans made in accordance with Section
5.4; less (g) cash interest expense (including the interest
portion of Capital Lease Obligations) deducted in determining
net income; less (h) any noncash gains increasing net income.
(ii) Prepayments from Asset Dispositions. If the
Net Proceeds relating to any Asset Disposition exceed Two
Hundred Thousand Dollars ($200,000) (it being understood that
if the Net Proceeds exceed Two Hundred Thousand Dollars
($200,000), the entire Net Proceeds and not just the portion
in excess of the foregoing amount shall be subject to this
subsection) for any single transaction or series of related
transactions or if such Net Proceeds when aggregated with all
other Net Proceeds from Asset Dispositions received during the
same Fiscal Year exceed Three Hundred Thousand Dollars
($300,000) (it being understood that if the Net Proceeds
exceed Three Hundred Thousand Dollars ($300,000), the entire
Net Proceeds not just the portion in excess of the foregoing
amount shall be subject to this Subsection), Borrower shall
within five (5) days of receipt of such Net Proceeds prepay
the Term Loans as of such date in an amount equal to the Net
Proceeds of such Asset Disposition required to be applied
under this Subsection 5.4(a)(ii). Notwithstanding the
foregoing, Borrower or a Subsidiary may retain proceeds
otherwise required to be delivered in accordance with the
CREDIT AGREEMENT - PAGE 19
27
foregoing from an Asset Disposition if no Default exists and
in the event the Person disposing of the asset in question
reasonably expects the proceeds of such Asset Disposition to
be reinvested in productive assets then used or useable in its
business or, in case of proceeds received due to loss, damage,
destruction or condemnation, to be used for rebuilding,
repairing or replacing assets, in each case within ninety (90)
days after receipt of such proceeds. For purposes of this
Subsection 5.4 (a)(ii) the following terms shall have the
following meanings:
"Asset Disposition" means the disposition
whether by sale, lease, transfer, loss, damage,
destruction, condemnation or otherwise of any assets
of Borrower or any Subsidiary other than sales of
inventory in the ordinary course of business.
"Net Proceeds" means cash proceeds (including
casualty insurance proceeds paid with respect to
damage to property) received by Borrower or any
Subsidiaries from any Asset Disposition (including
payments under notes or other debt securities
received in connection with any Asset Disposition and
insurance proceeds and awards of condemnation), net
of (a) the costs of such sale, lease, transfer or
other disposition (including professional fees and
expenses and taxes attributable to such sale, lease
or transfer which are actually expected to be paid)
and (b) amounts applied to repayment of Debt (other
than the Obligations) secured by a Lien on the asset
disposed.
Each prepayment under Subsections 5.4(a)(i) and (ii) shall
be accompanied with accrued and unpaid interest on the amount prepaid
to the date of prepayment and any amounts payable under Section 6.5
and, if paid after November 30, 1999, shall be applied to the
installments of principal due under the Term Loans in the inverse
order of maturity.
(b) Optional. Subject to Section 5.2 and the provisions
of this clause (b), the Borrower may, at any time and from time to
time without premium or penalty upon prior notice to the Agent as
specified in Section 5.3, prepay or repay any Loan in full or in part.
Any optional prepayment of the Term Loans shall be accompanied with
accrued interest on the amount prepaid to the date of prepayment and
any partial prepayments thereof received after November 30, 1999 shall
be applied to the principal installments due in the inverse order of
maturity. Loans subject to a Eurodollar Account may be prepaid or
repaid only on the last day of the Interest Period applicable thereto
unless (i) the Borrower pays to the Agent for the account of the
applicable Banks any amounts due under Section 6.5 as a result of such
prepayment or repayment or (ii) after giving effect to such prepayment
or repayment the aggregate principal amount of the Eurodollar Accounts
applicable to the Loan being prepaid or repaid having Interest Periods
that end after such payment date shall be equal to or less than the
principal amount of such Loan after such prepayment or repayment.
CREDIT AGREEMENT - PAGE 20
28
Section 5.5 Method of Payment. Except as otherwise expressly
provided herein, all payments of principal, interest, and other amounts to be
made by the Borrower or any Obligated Party under the Loan Documents shall be
made to the Agent at the Principal Office for the account of each Bank's
Applicable Lending Office in Dollars and in immediately available funds,
without setoff, deduction, or counterclaim, not later than 1:00 p.m. on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). The Borrower and each Obligated Party shall, at the time of
making each such payment, specify to the Agent the sums payable under the Loan
Documents to which such payment is to be applied (and in the event that the
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Agent may apply such payment and any proceeds of any Collateral
to the Obligations in such order and manner as the Required Banks may elect in
their sole discretion, subject to Section 5.6 hereof). Each payment received
by the Agent under any Loan Document for the account of a Bank shall be paid to
such Bank by 3:00 p.m. on the date the payment is deemed made to the Agent in
immediately available funds, for the account of such Bank's Applicable Lending
Office. Whenever any payment under any Loan Document shall be stated to be due
on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
Section 5.6 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Loan shall be made by the Banks, each payment of
commitment fees under Section 2.5 shall be made for the account of the Banks,
and each termination or reduction of the Commitments shall be applied to the
Commitments of the Banks, pro rata according to their respective Commitment
Percentages; (b) the making, Conversion, and Continuation of Accounts of a
particular Type (other than Conversions provided for by Section 6.4) shall be
made pro rata among the Banks holding Accounts of such Type according to their
respective Commitment Percentages; (c) each payment and prepayment of principal
of or interest on Loans by the Borrower shall be made to the Agent for the
account of the Agent or the Banks holding such Loans pro rata in accordance
with the respective unpaid principal amounts of such Loans or participation
interests held by the Agent or such Banks; and (d) proceeds of Collateral shall
be shared by the Agent and the Banks pro rata in accordance with the respective
unpaid principal amounts of and interest on the Obligations then due the Agent
and the Banks. If at any time payment, in whole or in part, of any amount
distributed by the Agent hereunder is rescinded or must otherwise be restored
or returned by Agent as a preference, fraudulent conveyance, or otherwise under
any bankruptcy, insolvency, or similar law, then each Person receiving any
portion of such amount agrees, upon demand, to return the portion of such
amount it has received to the Agent.
Section 5.7 Sharing of Payments. If a Bank shall obtain payment
of any principal of or interest on any of the Obligations due to such Bank
hereunder directly (and not through the Agent) through the exercise of any
right of set-off, banker's lien, counterclaim, or similar right, or otherwise,
it shall promptly purchase from the other Banks participations in the
Obligations held by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share the benefit of such payment pro rata in accordance with the
unpaid principal of and interest on the Obligations then due to each of them.
To such end, all of the Banks shall make appropriate adjustments among
themselves (by the resale
CREDIT AGREEMENT - PAGE 21
29
of participations sold or otherwise) if all or any portion of such excess
payment is thereafter rescinded or must otherwise be restored. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any Bank so purchasing a participation in the Obligations held by the
other Banks may exercise all rights of set-off, banker's lien, counterclaim, or
similar rights with respect to such participation as fully as if such Bank were
a direct holder of Obligations in the amount of such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
Section 5.8 Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Borrower (the "Payor") prior to the
date on which such Bank is to make payment to the Agent hereunder or the
Borrower is to make a payment to the Agent for the account of one or more of
the Banks, as the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does
not intend to make the Required Payment to the Agent, the Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Agent, (a) the recipient of such payment shall, on
demand, pay to the Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to the Federal Funds Effective Rate for such period and (b) the
Agent shall be entitled to offset against any and all sums to be paid to such
recipient, the amount calculated in accordance with the foregoing clause (a).
Section 5.9 Withholding Taxes. All payments by the Borrower of
amounts payable under any Loan Document shall be payable without deduction for
or on account of any present or future taxes, duties, or other charges levied
or imposed by the United States of America or by the government of any
jurisdiction outside the United States of America or by any political
subdivision or taxing authority of or in any of the foregoing through
withholding or deduction with respect to any such payments (but excluding any
tax imposed on or measured by the net income or profit of a Bank pursuant to
the laws of the jurisdiction in which it is organized or in which the principal
office or Applicable Lending Office of such Bank is located or any subdivision
thereof or therein). If any such taxes, duties, or other charges are so levied
or imposed, the Borrower will make additional payments in such amounts so that
every net payment of amounts payable by it under any Loan Document, after
withholding or deduction for or on account of any such present or future taxes,
duties, or other charges, will not be less than the amount provided for herein
or therein, provided that the Borrower may withhold to the extent required by
law and shall have no obligation to pay such additional amounts to any Bank to
the extent that such taxes, duties, or other charges are levied or imposed by
reason of the failure or inability of such Bank to comply with the provisions
of Section 5.10. The Borrower shall furnish promptly to the Agent for
distribution to each affected Bank, as the case may be, official receipts
evidencing any such withholding or reduction.
Section 5.10 Withholding Tax Exemption. Each Bank that is not
organized under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Agent two duly completed
copies of United States Internal Revenue Service Form 1001
CREDIT AGREEMENT - PAGE 22
30
or 4224 (or a successor form), certifying in either case that such Bank is
entitled to receive payments from the Borrower under any Loan Document without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to the
Borrower and the Agent two (2) additional copies of such form (or a successor
form) on or before the date such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying that
such Bank is entitled to receive payments from the Borrower under any Loan
Document without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law,
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with
respect to it and such Bank advises the Borrower and the Agent that it is not
capable of receiving such payments without any deduction or withholding of
United States federal income tax.
ARTICLE 6
Yield Protection and Illegality
Section 6.1 Additional Costs.
(a) The Borrower shall pay directly to each Bank from
time to time such amounts as such Bank may determine to be necessary
to compensate it for any reasonable costs incurred by such Bank which
such Bank determines are attributable to its making or maintaining of
any Loans subject to Eurodollar Accounts hereunder or its obligation
to make any of such Loans hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any such Loans or such
obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its Notes in
respect of any of such Loans (other than franchise taxes and
taxes imposed on the overall net income of such Bank or its
Applicable Lending Office for any of such Loans by the United
States of America or the jurisdiction in which such Bank has
its Principal Office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special
deposit, minimum capital, capital ratio, or similar
requirement relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or
commitments of, such Bank (including any of such Loans or any
deposits referred to in the definition of "Eurodollar Rate" in
Section 1.1 hereof); or
CREDIT AGREEMENT - PAGE 23
31
(iii) imposes any other condition affecting this
Agreement or the Notes or any of such extensions of credit or
liabilities or commitments.
Each Bank will notify the Borrower (with a copy to the Agent) of any
event occurring after the date of this Agreement which will entitle
such Bank to compensation pursuant to this subsection 6.1(a) as
promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and will designate a
different Applicable Lending Office for the Loans affected by such
event if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole opinion of such
Bank, violate any law, rule, or regulation or be in any way
disadvantageous to such Bank. Each Bank will furnish the Borrower
with a certificate setting forth the basis and the amount of each
request of such Bank for compensation under this subsection 6.1(a). If
any Bank requests compensation from the Borrower under this subsection
6.1(a), the Borrower may, by notice to such Bank (with a copy to the
Agent) suspend the obligation of such Bank to make Loans subject to
Eurodollar Accounts or Continue Eurodollar Accounts as Eurodollar
Accounts or Convert Base Rate Accounts into Eurodollar Accounts until
the Regulatory Change giving rise to such request ceases to be in
effect (in which case the provisions of Section 6.4 hereof shall be
applicable with respect to such Eurodollar Accounts).
(b) Without limiting the effect of the foregoing
provisions of this Section 6.1, in the event that, by reason of any
Regulatory Change, any Bank either (i) incurs Additional Costs based
on or measured by the excess above a specified level of the amount of
a category of deposits or other liabilities of such Bank which
includes deposits by reference to which the interest rate on the Loans
subject to Eurodollar Accounts is determined as provided in this
Agreement or a category of extensions of credit or other assets of
such Bank which includes Loans subject to Eurodollar Accounts or (ii)
becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so elects
by notice to the Borrower (with a copy to the Agent), the obligation
of such Bank to make Loans subject to Eurodollar Accounts or Continue
Eurodollar Accounts as Eurodollar Accounts or Convert Base Rate
Accounts into Eurodollar Accounts hereunder shall be suspended until
the Regulatory Change giving rise to such request ceases to be in
effect (in which case the provisions of Section 6.4 hereof shall be
applicable).
(c) Determinations and allocations by any Bank for
purposes of this Section 6.1 of the effect of any Regulatory Change on
its costs of maintaining its obligation to make Loans or of making or
maintaining Loans or on amounts receivable by it in respect of the
Loans, and of the additional amounts required to compensate such Bank
in respect of any Additional Costs, shall, absent manifest error, be
conclusive, provided that such determinations and allocations are made
on a reasonable basis.
Section 6.2 Limitation on Eurodollar Accounts. Anything herein
to the contrary notwithstanding, if with respect to any Eurodollar Accounts
under a Loan for any Interest Period therefor:
CREDIT AGREEMENT - PAGE 24
32
(a) The Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" in Section
1.1 hereof are not being provided in the relative amounts or for the
relative maturities for purposes of determining the rate of interest
for the Loans subject to such Eurodollar Accounts as provided in this
Agreement; or
(b) Required Banks determine (which determination shall
be conclusive) and notify the Agent that the relevant rates of
interest referred to in the definition of "Adjusted Eurodollar Rate"
in Section 1.1 hereof on the basis of which the rate of interest for
such Loans for such Interest Period is to be determined do not
accurately reflect the cost to the Banks of making or maintaining such
Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Eurodollar Account and the relevant amounts or periods, and so long as
such condition remains in effect, the Banks shall be under no obligation to
make additional Loans subject to a Eurodollar Account or to Convert Base Rate
Accounts into Eurodollar Accounts and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Accounts,
either prepay the Loans subject to such Eurodollar Accounts or Convert such
Eurodollar Accounts into Base Rate Accounts in accordance with the terms of
this Agreement. Determinations made under this Section 6.2 shall be made on a
reasonable basis.
Section 6.3 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to (a) honor its obligation to make Loans subject to
a Eurodollar Account hereunder or (b) maintain Loans subject to a Eurodollar
Account hereunder, then such Bank shall promptly notify the Borrower (with a
copy to the Agent) thereof and such Bank's obligation to make or maintain Loans
subject to a Eurodollar Account and to Convert Base Rate Accounts into
Eurodollar Accounts hereunder shall be suspended until such time as such Bank
may again make and maintain Loans subject to a Eurodollar Account (in which
case the provisions of Section 6.4 hereof shall be applicable).
Section 6.4 Treatment of Affected Loans. If the Accounts
applicable to a Loan of any Bank (hereinafter called "Affected Accounts") are
to be Converted pursuant to Section 6.1 or 6.3 hereof, the Bank's Affected
Accounts shall be automatically Converted into Base Rate Accounts on the last
day(s) of the then current Interest Period(s) (or, in the case of a Conversion
required by subsection 6.1(b) or Section 6.3 hereof, on such earlier date as
such Bank may specify to the Borrower with a copy to the Agent) and, unless and
until such Bank gives notice as provided below that the circumstances specified
in Section 6.1 or 6.3 hereof which gave rise to such Conversion no longer
exist: (a) to the extent that such Bank's Affected Accounts have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Accounts shall be applied instead to its Base
Rate Accounts; and (b) all Accounts which would otherwise be established or
Continued by such Bank as Eurodollar Accounts shall be made as or Converted
into Base Rate Accounts and all Accounts of such Bank which would otherwise be
Converted into Eurodollar Accounts shall be Converted instead into (or shall
remain as) Base Rate Accounts. If such Bank gives notice to the Borrower (with
a copy to the Agent) that the circumstances specified in Section 6.1 or 6.3
hereof which gave rise to the Conversion of such Bank's Affected Accounts
pursuant to this Section 6.4 no longer exist (which such Bank agrees
CREDIT AGREEMENT - PAGE 25
33
to do promptly upon such circumstances ceasing to exist) at a time when
Eurodollar Accounts are outstanding, such Bank's Base Rate Accounts shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Accounts to the extent necessary so
that, after giving effect thereto, all Accounts held by the Banks holding
Eurodollar Accounts and by such Bank are held pro rata (as to principal
amounts, Types, and Interest Periods) in accordance with their respective
Commitment Percentages.
Section 6.5 Compensation. The Borrower shall pay to the Agent
for the account of each Bank, upon the request of such Bank, such amount or
amounts as shall be sufficient (in the reasonable opinion of such Bank) to
compensate it for any loss, cost, or expense incurred by it as a result of:
(a) Any payment or prepayment of a Loan subject to a
Eurodollar Account or Conversion of a Eurodollar Account for any
reason (including, without limitation, the acceleration of the
outstanding Loans pursuant to subsection 12.2(a)) on a date other than
the last day of an Interest Period for the applicable Eurodollar
Account; or
(b) Any failure by the Borrower for any reason
(including, without limitation, the failure of any conditions
precedent specified in Article 7 to be satisfied) to borrow or prepay
a Loan subject to a Eurodollar Account, or Convert a Base Rate Account
to a Eurodollar Account on the date for such borrowing, Conversion, or
prepayment specified in the relevant notice of borrowing, prepayment,
or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Account (or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Account which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Eurodollar Account
provided for herein over (ii) the interest component of the amount such Bank
would have bid in the European interbank market for Dollar deposits of leading
banks and amounts comparable to such principal amount and with maturities
comparable to such period.
Section 6.6 Capital Adequacy. If after the date hereof, any Bank
shall have determined that any Regulatory Change has or would have the effect
of reducing the rate of return on such Bank's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated
hereby to a level below that which such Bank (or its parent) could have
achieved but for such adoption, implementation, change, or compliance (taking
into consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within ten
(10) Business Days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its parent) for such reduction. A certificate of such
Bank claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive, provided that
the determination thereof is made on a reasonable
CREDIT AGREEMENT - PAGE 26
34
basis. In determining such amount or amounts, such Bank may use any reasonable
averaging and attribution methods.
ARTICLE 7
Conditions Precedent
Section 7.1 Initial Loan. The obligation of each Bank to make
its initial Loan are subject to the condition precedent that the Agent shall
have received on or before the day of any such Loan and on or before December
31, 1997 all of the following, each dated (unless otherwise indicated) the date
hereof, in form and substance satisfactory to the Agent:
(a) Resolutions. Resolutions of the Board of Directors
of the Borrower and each Subsidiary (other than AHG Partnership)
certified by its Secretary or an Assistant Secretary which authorize
its execution, delivery, and performance of the Loan Documents to
which it is or is to be a party.
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of the Borrower
and each Subsidiary (other than AHG Partnership) certifying the name
of each of its officers (i) who are authorized to sign the Loan
Documents to which it is or is to be a party (including the
certificates contemplated herein) together with specimen signatures of
each such officers and (ii) who will, until replaced by other officers
duly authorized for that purpose, act as its representative for the
purposes of signing documentation and giving notices and other
communications in connection with the Loan Documents.
(c) Articles of Incorporation. The articles of
incorporation of the Borrower and each Subsidiary (other than AHG
Partnership) certified by the Secretary of State of the state of its
incorporation (or the other appropriate governmental officials of its
jurisdiction of organization) and dated a current date.
(d) Bylaws. The bylaws of the Borrower and each
Subsidiary (other than AHG Partnership) certified by its Secretary or
an Assistant Secretary.
(e) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation of the
Borrower and each Subsidiary (other than AHG Partnership) as to its
existence and good standing and certificates of the appropriate
government officials of each jurisdiction in which the Borrower and
each Subsidiary (other than AHG Partnership) is required to qualify
to do business and where failure to so qualify could reasonably be
expected to have a Material Adverse Effect, as to the Borrower's and
each Subsidiary's (other than AHG Partnership) qualification to do
business and good standing in such jurisdiction, all dated a current
date.
(f) Notes. The Notes executed by the Borrower.
CREDIT AGREEMENT - PAGE 27
35
(g) Collateral Documents and Collateral. The Collateral
Assignment executed by Texas Commerce, the Borrower Security Agreement
and the Borrower Pledge Agreement executed by the Borrower, the
Subsidiary Security Agreement and the Guaranty executed by the
Subsidiaries (other than AHG Partnership); a Subsidiary Pledge
Agreement executed by Horizon Mental Health Management, Inc.;
certificates representing the capital stock of the Subsidiaries
pledged pursuant to the Borrower Pledge Agreement and the Subsidiary
Pledge Agreement together with undated stock powers duly executed in
blank; UCC, tax and judgment Lien search reports listing all
documentation on file against the Borrower and each Subsidiary (other
than AHG Partnership) in each jurisdiction in which the Borrower, any
such Subsidiary or any Collateral is located or registered; a lien
subordination agreement from the landlord of the Borrower's property
located at 0000 Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxx containing such access
agreements and subordinations as the Agent may require; subject to
Section 9.10, waivers, subordinations or acknowledgments from all
other third parties who have possession or control of any Collateral;
and such other executed documentation as the Agent may deem necessary
to perfect or protect its Liens, including, without limitation,
financing statements under the UCC and other applicable documentation
under the laws of any jurisdiction with respect to the perfection of
Liens but subject to Section 9.10.
(h) Termination or Assignment of Prior Liens. Duly
executed UCC-3 assignments or termination statements, mortgage
releases, and such other documentation as shall be necessary to
terminate, release or assign to the Agent all Liens other than those
permitted by Section 10.2.
(i) Insurance Policies. Certificates of insurance
summarizing the insurance policies of the Borrower and the
Subsidiaries required by this Agreement and reflecting the Agent as
additional insured under such policies and as loss payee with respect
to all policies covering Collateral.
(j) Opinion of Counsel. Favorable opinions of legal
counsel to the Borrower and the Subsidiaries, as to such matters as
the Agent may reasonably request.
(k) Fees. The fees due on the Closing Date as described
in the commitment letter dated October 8, 1997 from Chase Securities,
Inc. and Texas Commerce to the Borrower and, without duplication, the
upfront fees due each Bank as described in the Summary of Terms and
Conditions set out in that certain Confidential Information Memorandum
dated October 1997 relating to the facility contemplated hereby.
(l) Attorneys' Fees and Expenses. Evidence that the
costs and expenses (including attorneys' fees) referred to in Section
14.1, to the extent incurred, shall have been paid in full by the
Borrower.
Section 7.2 All Loans. The obligation of each Bank to make any
Loan (including the initial Loan) is subject to the following additional
conditions precedent:
CREDIT AGREEMENT - PAGE 28
36
(a) No Default. No Default shall have occurred and be
continuing, or would result from such Loan;
(b) Representations and Warranties. All of the
representations and warranties contained in Article 8 hereof and in
the other Loan Documents shall be true and correct on and as of the
date of such Loan with the same force and effect as if such
representations and warranties had been made on and as of such date
except to the extent that such representations and warranties relate
specifically to another date; and
(c) Additional Documentation. The Agent shall have
received such additional approvals, opinions, or documents as the
Agent may reasonably request.
Each notice of borrowing by the Borrower hereunder, shall constitute a
representation and warranty by the Borrower that the conditions precedent set
forth in subsections 7.2(a) and (b) have been satisfied (both as of the date of
such notice and, unless the Borrower otherwise notifies the Agent prior to the
date of such borrowing, as of the date of such borrowing).
ARTICLE 8
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Banks that:
Section 8.1 Corporate Existence. The Borrower and each
Subsidiary (a) is a corporation or other entity (as reflected on Schedule 8.14)
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority to own its assets and carry on its business as now being or as
proposed to be conducted, and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect. The Borrower and each Subsidiary has the
corporate power and authority to execute, deliver, and perform their respective
obligations under the Loan Documents to which it is or may become a party.
Section 8.2 Financial Statements. The Borrower has delivered to
the Agent and the Banks audited consolidated financial statements of the
Borrower and the Subsidiaries as at and for the Fiscal Year ended August 31,
1997. Such financial statements, have been prepared in accordance with GAAP,
and present fairly, on a consolidated basis, the financial condition of the
Borrower and the Subsidiaries as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein.
Neither the Borrower nor any of the Subsidiaries has any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments,
or unrealized or anticipated losses from any unfavorable commitments except as
referred to or reflected in such financial statements. There has been no
material adverse change in the business, condition (financial or otherwise),
operations, prospects, or properties of
CREDIT AGREEMENT - PAGE 29
37
the Borrower and the Subsidiaries taken as a whole since the effective date of
the most recent financial statements referred to in this Section.
Section 8.3 Corporate Action; No Breach. The execution,
delivery, and performance by the Borrower and each Subsidiary of the Loan
Documents to which each is or may become a party and compliance with the terms
and provisions hereof and thereof have been duly authorized by all requisite
action on the part of the Borrower and each Subsidiary and do not and will not
(a) violate or conflict with, or result in a breach of, or require any consent
under (i) the articles of incorporation, bylaws or other governing documents of
the Borrower or any of the Subsidiaries, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator or (iii) any material agreement or instrument to which
the Borrower or any Subsidiary is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
(except as provided herein) upon any of the revenues or assets of the Borrower
or any Subsidiary.
Section 8.4 Operation of Business. The Borrower and each of the
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted except those that the
failure to so possess could not reasonably be expected to have a Material
Adverse Effect, and the Borrower and each of its Subsidiaries are not in
violation of any valid rights of others with respect to any of the foregoing
except violations that could not reasonably be expected to have a Material
Adverse Effect.
Section 8.5 Litigation and Judgments. There is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary, that would, if adversely determined,
have a Material Adverse Effect. There are no outstanding judgments against the
Borrower or any Subsidiary.
Section 8.6 Rights in Properties; Liens. The Borrower and each
Subsidiary have good title to or valid leasehold interests in their respective
properties and assets, real and personal, including the properties, assets, and
leasehold interests reflected in the financial statements described in Section
8.2, and none of the properties, assets, or leasehold interests of the Borrower
or any Subsidiary is subject to any Lien, except as permitted by Section 10.2.
Section 8.7 Enforceability. The Loan Documents to which the
Borrower or any Subsidiary is a party, when delivered, shall constitute the
legal, valid, and binding obligations of the Borrower or the Subsidiary, as
applicable, enforceable against the Borrower or the applicable Subsidiary in
accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditors' rights and general principles of equity.
Section 8.8 Approvals. All authorizations, approvals, and
consents of, and all filings or registrations with, any Governmental Authority
or third party necessary for the execution,
CREDIT AGREEMENT - PAGE 30
38
delivery, or performance by the Borrower or any Subsidiary of the Loan
Documents to which each is or may become a party or for the validity or
enforceability thereof have been obtained or made.
Section 8.9 Debt. The Borrower and the Subsidiaries have no
Debt, except as permitted by Section 10.1.
Section 8.10 Taxes. The Borrower and each Subsidiary have filed
all material tax returns (federal, state, and local) required to be filed,
including all income, franchise, employment, property, and sales tax returns,
and have paid all of their respective liabilities for taxes, assessments,
governmental charges, and other levies that are due and payable other than
those being contested in good faith by appropriate proceedings diligently
pursued for which adequate reserves have been established. The Borrower knows
of no pending investigation of the Borrower or any Subsidiary by any taxing
authority or of any pending but unassessed tax liability of the Borrower or any
Subsidiary.
Section 8.11 Margin Securities. Neither the Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Loan will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock.
Section 8.12 ERISA. The Borrower and each Subsidiary are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan. No notice of intent to terminate a Plan
has been filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. Neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn from a Multiemployer Plan. The Borrower and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans. The present value of all vested benefits under each
Plan do not exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with ERISA, by an amount that will exceed One Hundred Thousand
Dollars ($100,000). Neither the Borrower nor any ERISA Affiliate has incurred
any liability to the PBGC under ERISA.
Section 8.13 Disclosure. All factual information furnished by or
on behalf of the Borrower in writing to the Agent or any Bank (including,
without limitation, all information contained in the Loan Documents) for
purposes of or in connection with this Agreement, the other Loan Documents or
any transaction contemplated herein or therein is, and all other such factual
information hereafter furnished by or on behalf of the Borrower to the Agent or
any Bank, will be true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information not misleading in any
material respect at such time in light of the circumstances under which such
information was provided.
CREDIT AGREEMENT - PAGE 31
39
Section 8.14 Subsidiaries. As of the Closing Date, the Borrower
has no Subsidiaries other than those listed on Schedule 8.14 hereto. Schedule
8.14 sets forth the type of each Subsidiary listed thereon, the jurisdiction of
incorporation or organization of each such Subsidiary, the percentage of the
Borrower's or a Subsidiary's ownership of the outstanding voting stock (or
other ownership interests) of each such Subsidiary and, the authorized, issued,
and outstanding capital stock (or other equity interests) of each such
Subsidiary. All of the outstanding capital stock (or other equity interests)
of each Subsidiary listed on Schedule 8.14 has been validly issued, is fully
paid, and is nonassessable. There are no outstanding subscriptions, options,
warrants, calls, or rights (including preemptive rights) to acquire, and no
outstanding securities or instruments convertible into, capital stock of any
Subsidiary except as disclosed on Schedule 8.14.
Section 8.15 Agreements. Neither the Borrower nor any Subsidiary
is a party to any indenture, loan, or credit agreement, or to any lease or
other agreement or instrument, or subject to any charter or corporate
restriction that could reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary is in default in any respect
in the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument to which it
is a party other than defaults which will not have a Material Adverse Effect.
Section 8.16 Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.
Section 8.17 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 8.18 Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 8.19 Environmental Matters.
(a) The Borrower, each Subsidiary, and all of their
respective properties, assets, and operations are in full compliance
with all Environmental Laws. The Borrower is not aware of, nor has
the Borrower received written notice of, any past, present, or future
conditions, events, activities, practices, or incidents which may
interfere with or prevent the compliance or continued compliance of
the Borrower and the Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits are in good
standing and the Borrower and its Subsidiaries are in compliance with
all of the terms and conditions of such permits;
CREDIT AGREEMENT - PAGE 32
40
(c) No Hazardous Materials have been used, generated,
stored, transported, disposed of on, or Released from any of the
properties or assets of the Borrower or any Subsidiary, and to the
knowledge of Borrower, no Hazardous Materials are present at such
properties, except in compliance with Environmental Laws. The use
which the Borrower and the Subsidiaries make and intend to make of
their respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or
Release of any Hazardous Material on, in, or from any of their
properties or assets except in compliance with Environmental Laws;
(d) Neither the Borrower nor any of the Subsidiaries nor
any of their respective currently or previously owned or leased
properties or operations is subject to any outstanding or, to the best
of its knowledge, threatened order from or agreement with any
Governmental Authority or other Person or subject to any judicial or
administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release;
(e) Neither the Borrower nor any of the Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., regulations thereunder or any comparable provision of state law.
The Borrower and the Subsidiaries are in compliance with all
applicable financial responsibility requirements of all Environmental
Laws;
(f) Neither the Borrower nor any of the Subsidiaries has
filed or failed to file any notice required under applicable
Environmental Law reporting a Release; and
(g) No Lien arising under any Environmental Law has
attached to any property or revenues of the Borrower or the
Subsidiaries.
Section 8.20 Solvency. Borrower and each Subsidiary, both
individually and on a consolidated basis: (a) owns and will own assets the fair
saleable value of which are (i) greater than the total amount of its
liabilities (including contingent liabilities) and (ii) greater than the amount
that will be required to pay probable liabilities of then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to it; (b) has capital that is not
unreasonably small in relation to its business as presently conducted; and (c)
does not intend to incur and does not believe that it will incur debts beyond
its ability to pay such debts as they become due.
Section 8.21 Benefit Received. Borrower and the Subsidiaries will
receive reasonably equivalent value in exchange for the obligations incurred
under the Loan Documents to which each is a party.
CREDIT AGREEMENT - PAGE 33
41
ARTICLE 9
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants:
Section 9.1 Reporting Requirements. The Borrower will furnish to
the Agent and each Bank:
(a) Annual Financial Statements. As soon as available,
and in any event within ninety (90) days after the end of each Fiscal
Year, beginning with the Fiscal Year ending on August 31, 1998, a copy
of the annual audit report of the Borrower and the Subsidiaries for
such Fiscal Year containing, on a consolidated basis, balance sheets
and statements of income, retained earnings, and cash flow as at the
end of such Fiscal Year and for the Fiscal Year then ended, in each
case setting forth in comparative form the figures for the preceding
Fiscal Year, all in reasonable detail and audited and certified on an
unqualified basis by independent certified public accountants of
recognized standing acceptable to the Agent, to the effect that such
report has been prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as
available, and in any event within forty-five (45) days after the end
of each of the first three (3) Fiscal Quarter of each Fiscal Year and
within ninety (90) days after the last Fiscal Quarter of each Fiscal
Year, a copy of an unaudited financial report of the Borrower and the
Subsidiaries as of the end of such period and for the Fiscal Quarter
then ended containing, on a consolidated basis, a balance sheet and
statements of income, retained earnings, and cash flow, in each case
setting forth in comparative form the figures for the corresponding
Fiscal Quarter of the preceding Fiscal Year, all in reasonable detail
certified by the chief financial officer of the Borrower to have been
prepared in accordance with GAAP and to fairly present (subject to
year-end audit adjustments) the financial condition and results of
operations of the Borrower and the Subsidiaries, on a consolidated
basis, at the date and for the periods indicated therein;
(c) Compliance Certificate. Within forty-five (45) days
after the end of each Fiscal Quarter, or with respect to the last
Fiscal Quarter of each Fiscal Year, within ninety (90) days of the end
of such Fiscal Quarter, a Compliance Certificate;
(d) Annual Projections. As soon as available and in any
event within forty-five (45) days after the beginning of each Fiscal
Year, the Borrower will deliver its consolidated forecasted profit and
loss statement for the current Fiscal Year set forth on a Fiscal
Quarter by Fiscal Quarter basis consistent with Borrower's historical
financial statements, together with appropriate supporting details, a
statement of underlying assumption and a proforma projection of the
Borrower's compliance with the financial covenants in this Agreement
for the same period;
CREDIT AGREEMENT - PAGE 34
42
(e) Management Letters. Promptly upon receipt thereof, a
copy of any management letter or written report submitted to the
Borrower or any Subsidiary by independent certified public accountants
with respect to the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any
Subsidiary;
(f) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, and proceedings
before any Governmental Authority or arbitrator affecting the Borrower
or any Subsidiary which, if determined adversely to the Borrower or
such Subsidiary, could reasonably be expected to have a Material
Adverse Effect;
(g) Notice of Default. As soon as possible and in any
event within five (5) Business Days after an officer of the Borrower
has knowledge of the occurrence of each Default, a written notice
setting forth the details of such Default and the action that the
Borrower has taken and proposes to take with respect thereto;
(h) ERISA Reports. If requested by the Agent, promptly
after the filing or receipt thereof, copies of all reports, including
annual reports, and notices which the Borrower or any Subsidiary files
with or receives from the PBGC or the U.S. Department of Labor under
ERISA; and as soon as possible and in any event within five (5)
Business Days after the Borrower or any Subsidiary knows or has reason
to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower or
any Subsidiary has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, a certificate of the chief
financial officer of the Borrower setting forth the details as to such
Reportable Event or Prohibited Transaction or Plan termination and the
action that the Borrower proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the
furnishing thereof, copies of any statement or report furnished to any
other party pursuant to the terms of any indenture, loan, or credit or
similar agreement and not otherwise required to be furnished to the
Agent and the Banks pursuant to any other clause of this Section;
(j) Notice of Material Adverse Effect. As soon as
possible and in any event within five (5) Business Days after an
officer of the Borrower has knowledge of the occurrence thereof,
written notice of any matter that could reasonably be expected to have
a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one
copy of each financial statement, report, notice or proxy statement
sent by the Borrower or any Subsidiary to its stockholders generally
and one copy of each regular, periodic, or special report,
registration statement, or prospectus filed by the Borrower or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency; and
CREDIT AGREEMENT - PAGE 35
43
(l) General Information. Promptly, such other
information concerning the Borrower or any Subsidiary as the Agent or
any Bank may from time to time reasonably request.
Section 9.2 Maintenance of Existence; Conduct of Business. The
Borrower will, and will cause each Subsidiary to, preserve and maintain (i) its
existence (except as permitted by Section 10.3) and (ii) all of its privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Borrower will, and will
cause each Subsidiary to, conduct its business in an orderly and efficient
manner in accordance with good business practices.
Section 9.3 Maintenance of Properties. The Borrower will, and
will cause each Subsidiary to, maintain, keep, and preserve all of its material
properties necessary in the conduct of its business in good working order and
condition (exclusive of ordinary wear, tear and casualty).
Section 9.4 Taxes and Claims. The Borrower will, and will cause
each Subsidiary to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all valid and
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither the Borrower
nor any Subsidiary shall be required to pay or discharge any tax, levy,
assessment, or governmental charge which is being contested in good faith by
appropriate proceedings diligently pursued, and for which adequate reserves
have been established.
Section 9.5 Insurance. The Borrower will, and will cause each
Subsidiary to, maintain insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as are usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and the Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each
Subsidiary to maintain workmen's compensation insurance (or alternate
comparable coverage as required by law), property insurance, comprehensive
general liability insurance and professional liability insurance reasonably
satisfactory to the Agent. Each general liability insurance policy shall name
the Agent as additional insured, each insurance policy covering Collateral
shall name the Agent as loss payee and shall provide that such policy will not
be canceled or materially changed without fifteen (15) days prior written
notice to the Agent.
Section 9.6 Inspection Rights. Upon two (2) Business Day's prior
notice and from time to time during normal business hours, the Borrower will,
and will cause each Subsidiary to, permit representatives of the Agent to
examine, copy, and make extracts from its books and records, to visit and
inspect its properties, and to discuss its business, operations, and financial
condition with its officers, employees, and independent certified public
accountants. When a Default exists, the prior notice described in the first
sentence of this Section 9.6 shall not be required. The representatives of any
Bank may accompany the Agent during any examination, visit, inspection or
discussions under this Section 9.6.
CREDIT AGREEMENT - PAGE 36
44
Section 9.7 Keeping Books and Records. The Borrower will, and
will cause each Subsidiary to, maintain proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 9.8 Compliance with Laws. The Borrower will, and will
cause each Subsidiary to, comply in all material respects with all applicable
laws (including, without limitation, all Environmental Laws and ERISA), rules,
regulations, orders, and decrees of any Governmental Authority or arbitrator.
Section 9.9 Compliance with Agreements. The Borrower will, and
will cause each Subsidiary to, comply in all material respects with all
agreements, contracts, and instruments binding on it or affecting its
properties or business.
Section 9.10 Further Assurances and Collateral Matters.
(a) Further Assurance and Exceptions to Perfection. The Borrower
will, and will cause each Subsidiary to, execute and deliver such further
documentation and take such further action as may be requested by the Agent to
carry out the provisions and purposes of the Loan Documents and to create,
preserve, and perfect the Liens of the Agent for the benefit of itself and the
Banks in the Collateral provided that prior to the occurrence of a Default,
neither Borrower nor any Subsidiary shall be required to:
(i) execute or have filed any UCC Financing
Statement fixture filings or, except as set forth below in
this subsection (a), execute or have filed any UCC Financing
Statement necessary to perfect the Agent's Lien on property at
a location identified pursuant to the Borrower Security
Agreement or the Subsidiary Security Agreement as a "Contract
Location" (herein a "Contract Location");
(ii) execute or deliver any waivers,
subordinations or acknowledgments from any third parties who
have possession or control of any Collateral;
(iii) except as required by Section 7.1(g), obtain
any landlord or mortgagee waivers or subordinations;
(iv) deliver any certificates of title evidencing
equipment of Borrower or a Subsidiary with the Agent's Lien
noted thereon; or
(v) grant the Agent control over any deposit,
security or commodity account.
If a Default occurs, then Borrower shall, and shall cause each Subsidiary to,
take such action as the Agent may request to perfect and protect the Liens of
the Agent in all the Collateral, including any or all of the actions described
in clauses (i) through (v) of this Section 9.10(a). Notwithstanding the
foregoing, if prior to the occurrence of a Default, the book value of the
equipment (excluding vehicles) and fixtures located at a Contract Location
exceeds Twenty
CREDIT AGREEMENT - PAGE 37
45
Thousand Dollars ($20,000.00), then the Borrower shall, or cause the applicable
Subsidiary to, take all actions as the Agent may request to perfect and protect
the Liens of the Agent in the equipment and fixtures held at such Contract
Location. Borrower shall promptly notify the Agent if the book value of the
equipment (excluding vehicles) and fixtures located at a Contract Location
exceeds Twenty Thousand Dollars ($20,000.00).
(b) Subsidiary Pledge. Upon the creation or acquisition of any
Subsidiary or if a Default occurs and the Agent requests with respect to AHG
Partnership, the Borrower shall cause such Subsidiary to execute and deliver a
Subsidiary Joinder Agreement and such other documentation as the Agent may
request to cause such Subsidiary to evidence, perfect, or otherwise implement
the guaranty and security for repayment of the Obligations contemplated by a
Guaranty, the Subsidiary Security Agreement and, if applicable, a Subsidiary
Pledge Agreement.
(c) Borrower Pledge of Subsidiary Stock. If any Subsidiary is
created or acquired after the Closing Date, the Borrower shall execute and
deliver to the Agent an amendment to the Borrower Pledge Agreement describing
as collateral thereunder the stock of or other ownership interests in the new
Subsidiary and the Borrower shall deliver the certificates representing such
stock or other interests to the Agent together with undated stock or other
powers duly executed in blank.
Section 9.11 ERISA. The Borrower will, and will cause each
Subsidiary to, comply with all minimum funding requirements and all other
requirements of ERISA, if applicable, so as not to give rise to any liability
which will have a Material Adverse Effect.
ARTICLE 10
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants:
Section 10.1 Debt. The Borrower will not, and will not permit any
Subsidiary to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to the Agent and Banks pursuant to the Loan
Documents and existing Debt described on Schedule 10.1 (but excluding
after the Closing Date the Previous Senior Debt);
(b) Intercompany Debt owed by a Subsidiary to Borrower;
provided that (i) the obligations of each obligor of such Debt must be
subordinated in right of payment to any liability such obligor may
have for the Obligations from and after such time as any portion of
the Obligations shall become due and payable (whether at stated
maturity, by acceleration or otherwise, (ii) such Debt must be
incurred in the ordinary course of
CREDIT AGREEMENT - PAGE 38
46
business and on terms customary for intercompany borrowings among
Borrower and the Subsidiary or must be made on such other terms and
provisions as the Agent may reasonably require, and (iii) the Borrower
shall have granted the Agent a Lien on its right, title and interest
in and to such Debt and all Liens securing the payment thereof;
(c) Debt not to exceed Five Hundred Thousand Dollars
($500,000) in the aggregate at any time outstanding secured by
purchase money Liens permitted by Section 10.2;
(d) Debt constituting obligations to reimburse worker's
compensation insurance companies for claims paid by such companies on
Borrower's or a Subsidiary' behalf in accordance with the policies
issued to Borrower and the Subsidiaries;
(e) Guarantees by Borrower of (i) trade accounts payable
owed by a Subsidiary and arising in the ordinary course of business,
(ii) Debt of a Subsidiary or (iii) operating leases of a Subsidiary
entered into in the ordinary course of business; provided that: (A)
the Debt guaranteed is otherwise permitted hereunder; and (B) no
Default exists or would result from such Guarantee;
(f) Guaranties incurred in the ordinary course of
business with respect to surety and appeal bonds, performance and
return-of-money bonds, and other similar obligations not exceeding at
any time outstanding Five Hundred Thousand Dollars ($500,000) in
aggregate liability;
(g) Debt arising in connection with interest rate swap,
cap, collar or similar agreements entered into in the ordinary course
of business to fix or limit Borrower's or any Subsidiary's interest
expense;
(h) Debt of any Person (or any of such Person's
subsidiaries) existing at the time such Person becomes a Subsidiary
(or is merged into or consolidated with the Borrower or any of the
Subsidiaries), but only to the extent that such Debt was not incurred
in connection with, as a result of or in contemplation of such Person
becoming a Subsidiary (or being merged into or consolidated with the
Borrower or any Subsidiary); provided, however, that (i) in no event
shall the aggregate amount of such Debt outstanding at any time exceed
Five Hundred Thousand Dollars ($500,000) and (ii) immediately after
such acquired Person becomes a Subsidiary (or is merged into or
consolidated with the Borrower or any Subsidiary), no Default exists;
and
(i) Debts, other than the Debts specifically described in
clauses (a) through (h) of this Section 10.1, which in the aggregate
do not exceed One Hundred Thousand Dollars ($100,000) at any time
outstanding.
Section 10.2 Limitation on Liens and Restrictions on Subsidiaries.
The Borrower will not, and will not permit any Subsidiary to, incur, create,
assume, or permit to exist any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except the
CREDIT AGREEMENT - PAGE 39
47
following, none of which shall encumber the Collateral other than those Liens
described in clauses (a), (b), (d), (e), (g) and (h):
(a) Existing Liens disclosed on Schedule 10.2 hereto,
provided any Liens securing the Previous Senior Debt will not be
permitted after the Closing Date unless they have been assigned to the
Agent as contemplated hereby;
(b) Liens in favor of the Agent for the benefit of itself
and the Banks pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that
do not (individually or in the aggregate) materially affect the value
of the assets encumbered thereby or materially impair the ability of
the Borrower or the Subsidiaries to use such assets in their
respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(d) Liens (other than Liens relating to Environmental
Liabilities or ERISA) for taxes, assessments, or other governmental
charges that are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen,
carriers, landlords, or other similar statutory Liens securing
obligations that are not yet due and are incurred in the ordinary
course of business or which are being contested in good faith and for
which adequate reserves have been established;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs
or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, and contracts (other than for payment of
Debt);
(g) Liens for purchase money obligations and Capital
Lease Obligations; provided that: (i) the Debt secured by any such
Lien is permitted under Section 10.1; and (ii) any such Lien encumbers
only the asset so purchased;
(h) Liens related to any attachment or judgment not
constituting an Event of Default;
(i) Liens arising from filing UCC financing statements
regarding leases permitted by this Agreement; and
(j) Liens on fixed assets of a Person existing at the
time such Person becomes a Subsidiary (or such Person is merged into
or consolidated with the Borrower or any Subsidiary) in accordance
with the provisions of Section 10.3 hereof; provided, however, that
such Liens (i) only secure the Debt permitted by subsection 10.1(h)
above, (ii) were in existence prior to such acquired Person becoming a
Subsidiary (or prior to the
CREDIT AGREEMENT - PAGE 40
48
contemplation of such merger or consolidation), (iii) do not cover any
property other than the property of such acquired Person which is
subject to such Liens prior to such acquired Person becoming a
Subsidiary (or prior to the contemplation of such merger or
consolidation) and (iv) do not cover any accounts receivables,
inventory or general intangibles.
Neither the Borrower nor any Subsidiary shall enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired; provided that, in connection with the creation of purchase
money Liens, the Borrower or the Subsidiary may agree that it will not permit
any other Liens to encumber the asset subject to such purchase money Lien.
Except as provided herein, the Borrower will not and will not permit any
Subsidiaries directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock (or other equity
interests) owned by the Borrower or any Subsidiary; (2) subject to
subordination provisions, pay any Debt owed to the Borrower or any other
Subsidiary; (3) make loans or advances to the Borrower or any other Subsidiary;
or (4) transfer any of its property or assets to the Borrower or any other
Subsidiary.
Section 10.3 Mergers, Etc. The Borrower will not, and will not
permit any Subsidiary to, become a party to a merger or consolidation, or
purchase or otherwise acquire all or a substantial part of the business or
assets of any Person or any shares or other evidence of beneficial ownership of
any Person, or wind-up, dissolve, or liquidate itself; provided that, (i) the
Borrower and the Subsidiaries may acquire assets or shares or other evidence of
beneficial ownership of a Person in accordance with the restrictions set forth
in subsection 10.5; (ii) if no Default exists or would result, any Subsidiary
may merge into or consolidate with Borrower, any other Subsidiary or a Target
if the surviving Person is or becomes a wholly owned Subsidiary directly owned
by Borrower, assumes the obligations of the applicable Subsidiary under the
Loan Documents and is solvent as contemplated under Section 8.20 hereunder
after giving effect to such merger or consolidation, and (iii) the Borrower or
any wholly owned Subsidiary directly owned by Borrower (the "Acquiring
Company") may acquire all or substantially all of the assets of any Subsidiary
(a "Transferring Subsidiary") if the Acquiring Company assumes all the
Transferring Subsidiary's liabilities (including without limitation, all
liabilities of the Transferring Subsidiary under the Loan Documents to which it
is a party) and, following such assignment and assumption, such Transferring
Subsidiary may wind up, dissolve and liquidate.
Section 10.4 Restrictions on Dividends and other Distributions.
The Borrower will not and will not permit any Subsidiary to directly or
indirectly declare, order, pay, make or set apart any sum for (a) any dividend
or other distribution, direct or indirect, on account of any shares of any
class of stock (or other equity interest) of the Borrower or any Subsidiary now
or hereafter outstanding; (b) any redemption, conversion, exchange, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock (or other equity
interest) of the Borrower or any Subsidiary now or hereafter outstanding; or
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options, or other rights to acquire shares of any class of stock (or
other equity interest) of the Borrower or any Subsidiary now or hereafter
outstanding; except that (i) Subsidiaries (other than
CREDIT AGREEMENT - PAGE 41
49
Borrower) may make, declare and pay dividends and make other distributions with
respect to their capital stock (or other equity interest) to Borrower or the
other Subsidiaries, (ii) the Borrower may redeem or repurchase shares of its
stock issued to employees and directors in connection with the exercise by such
Person of stock options granted to such Person under the Borrower's stock
option plans; provided that no Default exists or would result therefrom and the
Dollar amount of such repurchases in any individual case shall not exceed an
amount equal to the exercise price pay by such Person to exercise the option in
question plus all United States federal withholding taxes arising as a result
of such exercise, and (iii) this Section 10.4 shall not prohibit the
transactions permitted by clauses (a), (j) or (m) of Section 10.5.
Section 10.5 Investments. The Borrower will not, and will not
permit any Subsidiary to, make or permit to remain outstanding any advance,
loan, other extension of credit, or capital contribution to or investment in
any Person, or purchase or own any stock, bonds, notes, debentures, or other
securities of any Person, or be or become a joint venturer with or partner of
any Person, except:
(a) Borrower or any wholly owned Subsidiary directly
owned by Borrower may acquire shares, other equity securities or other
evidence of beneficial ownership of a Person or, for purposes of
Section 10.3, all or substantially all of a Persons's assets or the
assets of a division or branch of such Person, if, with respect to
each such acquisition:
(i) Default. No Default exists or would result
therefrom;
(ii) Bank Approval. If the Purchase Price for the
acquisition is greater than Ten Million Dollars ($10,000,000)
or if the after giving effect to such acquisition, the
aggregate Purchase Price of all Permitted Acquisitions that
have occurred during the twelve (12) month period then most
recently ending (excluding however, acquisitions consummated
prior to November 30, 1997) is greater than Twenty Million
Dollars ($20,000,000), Borrower shall have obtained the prior
written consent of the Required Banks. As used above, the
phrase "Purchase Price" means, as of any date of determination
and with respect to a proposed acquisition, the purchase price
to be paid for the Target or its assets, including all cash
consideration paid (whether classified as purchase price,
noncompete, consulting or postclosing performance based
payments or otherwise) or to be paid (based on the estimated
amount thereof), the value of all other assets to be
transferred by the purchaser in connection with such
acquisition to the seller (but specifically excluding any
stock of Borrower issued to the seller which shall not be part
of the Purchase Price for purposes of this clause (ii)) all
valued in accordance with the applicable purchase agreement
and the outstanding principal amount of all Debt of the Target
or the seller assumed or acquired in connection with such
acquisition.
(iii) Delivery and Notice Requirements. Borrower
shall provide the Agent fifteen (15) days prior to the
consummation of the acquisition the following: (A) notice of
the acquisition, (B) the most recent financial statements of
the Target that Borrower has available, (C) such other
documentation and information relating
CREDIT AGREEMENT - PAGE 42
50
to the Target and the acquisition as the Agent may reasonably
request, and (D) evidence certified by the chief executive or
chief financial officer of Borrower that Borrower shall be in
compliance with the covenants contained in Article 11 on a pro
forma basis for the four (4) Fiscal Quarter period then most
recently ending (assuming (1) the consummation of the
acquisition in question; (2) that the incurrence or assumption
of any Debt in connection therewith occurred on the first day
of such period; (3) to the extent such Debt bears interest at
a floating rate, the rate in effect for the entire period of
calculation was the rate in effect at the time of calculation;
and (4) any sale of Subsidiaries or lines of business which
occurred during such period occurred on the first day of such
period). Within sixty (60) days of such acquisition the
obligations under subsections 9.10(b) and (c) shall be
fulfilled.
(iv) Diligence. Borrower has completed due
diligence on the Target or the assets to be acquired;
(v) U.S. Acquisitions. The Target is organized
under the laws of a state in the United States of America and
is involved in the same general type of business activities as
the Subsidiaries; and
(vi) Structure. If the proposed acquisition is an
acquisition of the stock of a Target, the acquisition will be
structured so that the Target will become a wholly owned
Subsidiary directly owned by Borrower. If the proposed
acquisition is an acquisition of assets, the acquisition will
be structured so that Borrower or a whole owned Subsidiary
directly owned by Borrower shall acquire the assets; and
(b) readily marketable direct obligations of the United
States of America or any agency thereof with maturities of one year or
less from the date of acquisition;
(c) fully insured certificates of deposit with maturities
of one year or less from the date of acquisition issued by any
commercial bank operating in the United States of America having
capital and surplus in excess of $250,000,000;
(d) commercial paper or bonds of a domestic issuer if at
the time of purchase such paper or bonds are rated in one of the two
highest rating categories of Standard and Poor's Corporation or
Xxxxx'x Investors Service, Inc.;
(e) current trade and customer accounts receivable for
services rendered in the ordinary course of business;
(f) shares of any mutual fund registered under the
Investment Company Act of 1940, as amended, which invests solely in
investment of the type described in clauses (b) through (d) of this
Section 10.5;
(g) loans to physicians; provided that (i) at the time of
such loan no Default shall exist or result therefrom; (ii) the
aggregate amount of such loans made by Borrower
CREDIT AGREEMENT - PAGE 43
51
and the Subsidiaries and outstanding at any one time shall not exceed
Two Hundred Fifty Thousand Dollars ($250,000), calculated net of any
bad debt reserves;
(h) advances to employees for business expenses incurred
in the ordinary course of business including, without limitation,
loans in connection with employee relocations and changes in the
Borrower's and the Subsidiaries' payroll payment dates;
(i) existing investments described on Schedule 10.5
hereto;
(j) the purchase by Horizon Mental Health Management,
Inc. of shares of capital stock of Florida Professional Psychological
Services, Inc. not owned by Horizon Mental Health Management, Inc. on
the Closing Date;
(k) loans, advances and other extensions of credit to
Subsidiaries made in accordance with the restrictions set forth in
subsection 10.1 (b); provided that, at the time any such loan, advance
or other extension of credit is made, no Default exists or would
result therefrom;
(l) Guarantees permitted by Section 10.1; and
(m) if no Default exists, Borrower and the Subsidiaries
may make additional capital contributions to and or investments in or
purchase any stocks, bonds, or other equity securities authorized to
be issued under Section 10.6 of a wholly owned Subsidiary or a newly
created Person organized by Borrower or a Subsidiary that, immediately
after such investment or purchase, will be a wholly owned Subsidiary
if the obligations under Section 9.10 shall be fulfilled and the
aggregate amount of such contributions and investments made under the
permissions of this clause (m) does not exceed One Hundred Thousand
Dollars ($100,000) during the entire term of this Agreement.
Section 10.6 Limitation on Issuance of Capital Stock. Except as
permitted by Section 10.4 and except for issuances, sales, assignments or other
disposition to Borrower, or to a Subsidiary which is the parent of the issuer,
the Borrower will not permit any Subsidiary to, at any time issue, sell,
assign, or otherwise dispose of (a) any of its capital stock (or other equity
interests), (b) any securities exchangeable for or convertible into or carrying
any rights to acquire any of its capital stock (or other equity interests), or
(c) any option, warrant, or other right to acquire any of its capital stock (or
other equity interests).
Section 10.7 Transactions With Affiliates. The Borrower will not,
and will not permit any Subsidiary to, enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would be obtained in a comparable arms-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary.
CREDIT AGREEMENT - PAGE 44
52
Section 10.8 Disposition of Assets. The Borrower will not, and
will not permit any Subsidiary to, sell, lease, assign, transfer, or otherwise
dispose of any of its assets, except (a) dispositions of inventory in the
ordinary course of business; (b) dispositions of unnecessary, obsolete or worn
out equipment; (c) the sale, discount or transfer of delinquent notes or
accounts receivable in the ordinary course of business for purposes of
collection in accordance with past practices; and (d) if no Default exists or
would result therefrom, other dispositions of assets if the aggregate book
value of the assets disposed of does not exceed Three Hundred Thousand Dollars
($300,000) in the aggregate during any twelve (12) month period and the
obligations under Subsection 5.4(a)(ii) are fulfilled.
Section 10.9 Lines of Business. The Borrower will not, and will
not permit any Subsidiary to, engage in any line or lines of business activity
other than the businesses in which they are engaged on the date hereof and any
businesses which are similar or related to those currently engaged in by the
Borrower and the Subsidiaries.
Section 10.10 Sale and Leaseback. The Borrower will not, and will
not permit any Subsidiary to, enter into any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 10.11 Prepayment of Debt. Borrower will not, and will not
permit any Subsidiary to prepay or optionally redeem any Debt other than the
Obligations.
ARTICLE 11
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants:
Section 11.1 Consolidated Net Worth. The Borrower will at all
times maintain a Consolidated Net Worth in an amount not less than the sum of
(a) Thirty-Two Million Dollars ($32,000,000); plus (b) fifty percent (50%) of
the Borrower's net income determined on a consolidated basis in accordance with
GAAP for each Fiscal Quarter to have completely elapsed since August 31, 1997;
plus (c) one hundred percent (100%) of the net cash proceeds of any sale of
equity securities or other contributions to the capital of the Borrower
received by Borrower since August 31, 1997, calculated without duplication. If
Borrower's consolidated net income for a Fiscal Quarter is zero or less, no
adjustment to the requisite level of Consolidated Net Worth shall be made.
"Consolidated Net Worth" means, at any particular time, all amounts which, in
conformity with GAAP, would be included as stockholders' equity on a
consolidated balance sheet of the Borrower and the Subsidiaries.
CREDIT AGREEMENT - PAGE 45
53
Section 11.2 Indebtedness to Capitalization. The Borrower will
not at any time permit the ratio of Indebtedness to Capitalization to exceed
.50 to 1.00. As used in this Section 11.2, the following terms have the
following meanings:
"Capitalization" for means, at any particular time, the sum of
Consolidated Net Worth (as defined in Section 11.1) plus Indebtedness.
"Indebtedness" means, at the time of determination, the sum of
the following determined for Borrower and the Subsidiaries on a
consolidated basis (without duplication): (a) all obligations for
borrowed money; (b) all obligations of such Person evidenced by bonds,
notes, debentures, or other similar instruments; (c) all Capital Lease
Obligations; and (d) the outstanding principal amount of the loans
extended to North Central Development Company which are secured by a
Lien on the facility located at 0000 Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxx
leased by the Borrower.
Section 11.3 Fixed Charge Coverage. As of the end of each Fiscal
Quarter, the Borrower shall not permit the ratio of Cash Flow for the four (4)
Fiscal Quarters then ending to Fixed Charges as of such Fiscal Quarter end to
be less than 1.2 to 1.00. For purposes of this Section 11.3 the following terms
shall have the following meanings:
"Cash Flow" means, for any period, the total of the following
for the Borrower and the Subsidiaries calculated on a consolidated
basis without duplication for such period: (A) EBITDA of Borrower;
minus (B) any provision for (or plus any benefit from) cash income or
franchise taxes included in determine Consolidated Net Income.
"Consolidated Net Income" means, for any period and any Person
(a "Subject Person"), such Subject Person's consolidated net income
(or loss) determined in conformity with GAAP, but excluding:
(a) any extraordinary gains or losses or
nonrecurring revenue or expense;
(b) any gains or losses realized upon the sale or
other disposition of any capital stock or debt security of any
Person;
(c) any gains or losses in respect of the
write-up of any asset at greater than original cost or
write-down at less than original cost;
(d) any gains or losses realized upon the sale or
other disposition of property, plant, equipment or intangible
assets of the Subject Person or any of its subsidiaries which
is not sold or otherwise disposed of in the ordinary course of
business;
CREDIT AGREEMENT - PAGE 46
54
(e) any gains or losses from the disposal of a
discontinued business;
(f) any net gains or losses arising from the
extinguishment of any debt of the Subject Person or its
subsidiaries;
(g) any restoration to income of any contingency
reserve relating to any long term assets or long term
liability, except to the extent that provision for such
reserve was made out of income accrued during such period;
(h) the cumulative effect of any change in an
accounting principle on income of prior periods;
(i) any deferred credit representing the excess
of equity in any acquired company or assets at the date of
acquisition over the cost of the investment in such company or
asset;
(j) the income from any sale of assets in which
the book value of such assets prior to their sale had been the
book value inherited by the Subject Person from a transfer of
such assets;
(k) the income (or loss) of any Person (other
than a subsidiary) in which the Subject Person or a subsidiary
has an ownership interest; provided, however, that (i)
Consolidated Net Income shall include amounts in respect of
the income of such Person when actually received in cash by
the Subject Person or such subsidiary in the form of dividends
or similar distributions and (ii) Consolidated Net Income
shall be reduced by the aggregate amount of all investments,
regardless of the form thereof, made by the Subject Person or
any of its subsidiaries in such Person for the purpose of
funding any deficit or loss of such Person;
(l) the income of any subsidiaries to the extent
the payment of such income in the form of a distribution or
repayment of any Debt to the Subject Person or a Subsidiary is
not permitted, whether on account of any restriction in
by-laws, articles of incorporation or similar governing
document, any agreement or any law, statute, judgment, decree
or governmental order, rule or regulation applicable to such
Subsidiary;
(m) any reduction in or addition to income tax
expense resulting from an increase or decrease in a deferred
income tax asset due to the anticipation of future income tax
benefits;
(n) any reduction in or addition to income tax
expense due to the change in a statutory tax rate resulting in
an increase or decrease in a deferred income tax asset or in a
deferred income tax liability;
CREDIT AGREEMENT - PAGE 47
55
(o) any gains or losses attributable to returned
surplus assets of any pension- benefit plan or any pension
credit attributable to the excess of (i) the return on
pension-plan assets over (ii) the pension obligation's service
cost and interest cost;
(p) the income or loss of any Person acquired by
the Subject Person or a subsidiary for any period prior to the
date of such acquisition; and
(q) the income from any sale of assets in which
the accounting basis of such assets had been the book value of
any Person acquired by the Subject Person or a subsidiary
prior to the date such Person became a subsidiary or was
merged into or consolidated with the Subject Person or a
subsidiary.
"EBITDA" means, for any period and any Person, the total of
the following each calculated without duplication on a consolidated
basis for such period: (a) Consolidated Net Income; plus (b) any
provision for (or less any benefit from) income or franchise taxes
included in determining Consolidated Net Income; plus (c) interest
expense (including the interest portion of Capital Lease Obligations)
deducted in determining Consolidated Net Income; plus (d) amortization
and depreciation expense deducted in determining Consolidated Net
Income plus (e) the merger related expenses incurred in the Fiscal
Quarter of the Borrower ending August 31, 1997 in the amount of Three
Million Five Hundred Twenty-Seven Thousand Six Hundred Seventy-One
Dollars ($3,527,671) but only to the extent deducted in determining
Consolidated Net Income for the period in question.
"Fixed Charges" means, as of any date of determination, the
total of the following for the Borrower and the Subsidiaries
calculated on a consolidated basis without duplication but excluding
any of the forgoing of any Prior Target for any period prior to the
date of such acquisition: (a) cash interest expense (including the
interest portion of Capital Lease Obligations) for the four (4) Fiscal
Quarter period then ending; plus (b) the current maturities of the
Borrower's and the Subsidiaries' long term debt as reflected in the
consolidated balance sheet of the Borrower as of the date of
determination (excluding, however, to the extent included, the
outstanding balance of the Revolving Loans and, if calculated at any
time prior to the Fiscal Quarter ending November 30, 1999, any current
maturities of the Term Loans); plus (c) Capital Expenditures made
during the four (4) Fiscal Quarter period then ending; plus (d), if
calculated at any time prior to the Fiscal Quarter ending November 30,
1999, an amount equal, as of the end of a Fiscal Quarter, to the
product obtained by multiplying by four (4) the quotient obtained by
dividing the principal balance of the Term Loans outstanding as of
such Fiscal Quarter end by twenty (20).
"Prior Target" means all Targets acquired or whose assets have
been acquired in a transaction permitted by subsection 10.5(a).
CREDIT AGREEMENT - PAGE 48
56
Section 11.4 Indebtedness to Adjusted EBITDA. As of the last day
of each Fiscal Quarter, the Borrower shall not permit the ratio of Indebtedness
outstanding as of such day to the Adjusted EBITDA for the four (4) Fiscal
Quarters then ended to exceed 2.50 to 1.00. As used in this Section 11.4,
"Adjusted EBITDA" means, for any period (the "Subject Period"), the total of
the following calculated without duplication for such period: (a) Borrower's
EBITDA (as defined in Section 11.3); plus (b), on a pro forma basis, the pro
forma EBITDA of each Prior Target or, as applicable, the EBITDA of a Prior
Target attributable to the assets acquired from such Prior Target, for any
portion of such Subject Period occurring prior to the date of the acquisition
of such Prior Target or the related assets but only to the extent such EBITDA
for such Prior Target can be established in a manner satisfactory to the Agent
based on financial statements of the Prior Target prepared in accordance with
GAAP.
ARTICLE 12
Default
Section 12.1 Events of Default. Each of the following shall be
deemed an "Event of Default":
(a) The Borrower shall fail to pay when due any
principal, interest, fees or other Obligations payable under any Loan
Document or any part thereof.
(b) Any representation, warranty, or certification made
or deemed made by the Borrower or any Obligated Party (or any of their
respective officers) in any Loan Document or in any certificate,
report, notice, or financial statement furnished at any time in
connection with any Loan Document shall be false, misleading, or
erroneous in any material respect when made or deemed to have been
made.
(c) Borrower or any Obligated Party shall fail to
perform, observe or comply with (i) any covenant, agreement, or term
contained in clause (i) of Section 9.2, Sections 9.5 or 9.6, Article
10 or Article 11 of this Agreement or (ii) any covenant, agreement, or
term contained in any Loan Document relating to the creation,
perfection or protection of the Liens required to be granted to secure
the obligation of any Obligated Party under the Loan Documents.
(d) The Borrower or any Obligated Party shall fail to
perform, observe, or comply with any covenant, agreement, or term
contained in any Loan Document (other than covenants to pay the
Obligations and the covenants described in subsection 12.1(c)) and
such failure shall continue for a period of twenty (20) days after the
earlier of (i) the date the Agent or any Bank provides the Borrower
with notice thereof or (ii) the date the Borrower should have, with
the exercise of reasonable diligence, notified the Agent thereof in
accordance with subsection 9.1(g).
(e) The Borrower, any Obligated Party or any other
Subsidiary shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian,
CREDIT AGREEMENT - PAGE 49
57
trustee, examiner, liquidator, or the like of itself or of all or a
substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under
the United States Bankruptcy Code (as now or hereafter in effect, the
"Bankruptcy Code"), (iv) institute any proceeding or file a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, winding-up, or
composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy
Code, (vi) admit in writing its inability to, or be generally unable
to pay its debts as such debts become due, or (vii) take any corporate
action for the purpose of effecting any of the foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval, or consent of the Borrower, any Obligated Party
or any other Subsidiary, in any court of competent jurisdiction,
seeking (i) its reorganization, liquidation, dissolution, arrangement,
or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a receiver, custodian, trustee, examiner,
liquidator, or the like of the Borrower, any such Obligated Party or
any such other Subsidiary or of all or any substantial part of its
property, or (iii) similar relief in respect of the Borrower, any such
Obligated Party or any such other Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of thirty (30) or more days, or an order for relief
against the Borrower, any Obligated Party or any other Subsidiary
shall be entered in an involuntary case under the Bankruptcy Code.
(g) The Borrower, any Obligated Party or any other
Subsidiary shall fail to discharge within a period of thirty (30) days
after the commencement thereof any attachment, sequestration,
forfeiture, or similar proceeding or proceedings involving an
aggregate amount in excess of One Hundred Thousand Dollars ($100,000)
against any of its assets or properties.
(h) A final judgment or judgments for the payment of
money in excess of One Hundred Thousand Dollars ($100,000) in the
aggregate shall be rendered by a court or courts against the Borrower,
any Subsidiaries, or any Obligated Party and the same shall not be
discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within thirty (30)
days from the date of entry thereof, and the Borrower or the relevant
Subsidiary or Obligated Party shall not, within said period of thirty
(30) days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal.
(i) The Borrower, any Obligated Party or any other
Subsidiary shall fail to pay when due any principal of or interest on
any Debt if the aggregate principal amount of the affected Debt equals
or exceeds One Hundred Thousand Dollars ($100,000) (other than the
Obligations), or the maturity of any such Debt shall have been
accelerated, or any such
CREDIT AGREEMENT - PAGE 50
58
Debt shall have been required to be prepaid prior to the stated
maturity thereof or any event shall have occurred with respect to any
Debt in the aggregate principal amount equal to or in excess of One
Hundred Thousand Dollars ($100,000) that permits (or, with the giving
of notice or lapse of time or both, would permit) any holder or
holders of such Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof or require any such
prepayment.
(j) This Agreement shall cease to be in full force and
effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the
Borrower, any Obligated Party or any other Subsidiary or the Borrower
or any Obligated Party shall deny that it has any further liability or
obligation under any of the Loan Documents, or any lien or security
interest created by the Loan Documents shall for any reason (other
than the negligence of the Agent or the release thereof in accordance
with the Loan Documents) cease to be a valid, first priority perfected
security interest in and lien upon any of the Collateral purported to
be covered thereby.
(k) Any of the following events shall occur or exist with
respect to the Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such
event or condition, together with all other events or conditions, if
any, have subjected or could in the reasonable opinion of Required
Banks subject the Borrower to any tax, penalty, or other liability to
a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably
be expected to exceed One Hundred Thousand Dollars ($100,000).
(l) Ninety (90) days shall have elapsed after the
Management Change Date and Xxxxx Xxx Xxxxxx and Xxxxx X. XxXxxx shall
not have been replaced in their respective capacities as officers of
the Borrower with individuals possessing substantially the same
qualifications as the qualifications of the officer replaced. As used
in this clause (l), the term "Management Change Date" means the first
date when both Xxx Xxxxxx and Xxxxx X. XxXxxx (i) cease to hold the
titles and responsibilities of Chief Executive Officer and Chief
Financial Officer of the Borrower, respectively or (ii) otherwise
fails to be active in the management of the day to day operations of
the Borrower.
(m) Any Person or group (as defined in Section 13(d)(3)
or 14(d)(2) of the Exchange Act) shall become the direct or indirect
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
more than 20% of the total voting power of all classes of capital
stock then outstanding of the Borrower entitled (without regard to the
occurrence of any contingency) to vote in elections of directors of
the Borrower.
CREDIT AGREEMENT - PAGE 51
59
Section 12.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by Required Banks, shall) do any one
or more of the following:
(a) Acceleration. By notice to the Borrower, declare all
outstanding principal of and accrued and unpaid interest on the Notes
and all other amounts payable by the Borrower under the Loan Documents
immediately due and payable, and the same shall thereupon become
immediately due and payable, without further notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all
of which are hereby expressly waived by the Borrower.
(b) Termination of Commitments. Terminate the
Commitments without notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to the Agent for the benefit of itself and the Banks to secure
payment and performance of the Obligations in accordance with the
terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies
afforded by the laws of the State of Texas or any other jurisdiction,
by any of the Loan Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
subsection 12.1(e) or (f), the Commitments of all of the Banks shall
automatically terminate, and the outstanding principal of and accrued and
unpaid interest on the Notes and all other amounts payable by the Borrower
under the Loan Documents shall thereupon become immediately due and payable
without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
Section 12.3 Performance by the Agent. If the Borrower shall fail
to perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or
attempt to perform such covenant or agreement on behalf of the Borrower. In
such event, the Borrower shall, at the request of the Agent, promptly pay any
amount expended by the Agent or the Banks in connection with such performance
or attempted performance to the Agent at the Principal Office, together with
interest thereon at the applicable Default Rate from and including the date of
such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent
nor any Bank shall have any liability or responsibility for the performance of
any obligation of the Borrower under any Loan Document.
Section 12.4 Setoff. If an Event of Default shall have occurred
and be continuing, each Bank is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being hereby expressly
waived by the Borrower), to set off and apply any and all
CREDIT AGREEMENT - PAGE 52
60
deposits (general, time, demand, provisional, or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of the Borrower against any and all of the Obligations, irrespective of
whether or not the Agent or such Bank shall have made any demand under such
Loan Documents and although such Obligations may be unmatured. Each Bank
agrees promptly to notify the Borrower (with a copy to the Agent) after any
such setoff and application; provided, that the failure to give such notice
shall not affect the validity of such setoff and application. The rights and
remedies of each Bank hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Bank may
have.
Section 12.5 Continuance of Default. For purposes of all Loan
Documents, a Default shall be deemed to have continued and exist until the
Agent shall have actually received evidence satisfactory to the Agent that such
Default shall have been remedied.
ARTICLE 13
The Agent
Section 13.1 Appointment, Powers and Immunities. Each Bank hereby
appoints and authorizes Texas Commerce to act as its agent hereunder and under
the other Loan Documents with such powers as are specifically delegated to the
Agent by the terms of the Loan Documents, together with such other powers as
are reasonably incidental thereto. Neither the Agent nor any of its
Affiliates, officers, directors, employees, attorneys, or agents shall be
liable for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with any Loan Document or any of the other Loan
Documents except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the preceding sentence, the Agent (i) may
treat the payee of any Note as the holder thereof until it receives written
notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (ii) shall have no duties or responsibilities except
those expressly set forth in the Loan Documents, and shall not by reason of any
Loan Document be a trustee or fiduciary for any Bank; (iii) shall not be
required to initiate any litigation or collection proceedings under any Loan
Document except to the extent requested by Required Banks; (iv) shall not be
responsible to the Banks for any recitals, statements, representations, or
warranties contained in any Loan Document, or any certificate or other
documentation referred to or provided for in, or received by any of them under,
any Loan Document, or for the value, validity, effectiveness, enforceability,
or sufficiency of any Loan Document or any other documentation referred to or
provided for therein or for any failure by any Person to perform any of its
obligations thereunder; (v) may consult with legal counsel (including counsel
for the Borrower), independent public accountants, and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants, or
experts; and (vi) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate, or other instrument
or writing believed by it to be genuine and signed or sent by the proper party
or parties. As to any matters not expressly provided for by any Loan Document,
the Agent shall in all cases be fully protected in acting, or in refraining
from acting, hereunder in accordance with instructions signed by Required
Banks, and such instructions of Required Banks and any action taken or failure
to act
CREDIT AGREEMENT - PAGE 53
61
pursuant thereto shall be binding on all of the Banks; provided, however, that
the Agent shall not be required to take any action which exposes it to personal
liability or which is contrary to any Loan Document or applicable law.
Section 13.2 Rights of Agent as a Bank. With respect to its
Commitment, the Loans made by it and the Note issued to it, Texas Commerce (and
any successor acting as the Agent) in its capacity as a Bank hereunder shall
have the same rights and powers hereunder as any other Bank and may exercise
the same as though it were not acting as the Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may (without having to
account therefor to any Bank) accept deposits from, lend money to (as disclosed
pursuant to Section 13.9 or otherwise), act as trustee under indentures of,
provide merchant banking services to, and generally engage in any kind of
banking, trust, or other business with the Borrower, any Obligated Party or any
other Subsidiary, and any other Person who may do business with or own
securities of the Borrower, any Obligated Party or any other Subsidiary, all as
if it were not acting as the Agent and without any duty to account therefor to
the Banks.
Section 13.3 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on the Loans or of commitment fees) unless the
Agent has received notice from a Bank or the Borrower specifying such Default
and stating that such notice is a "Notice of Default." In the event that the
Agent receives such a notice of the occurrence of a Default, the Agent shall
give prompt notice thereof to the Banks (and shall give each Bank prompt notice
of each such non-payment). The Agent shall (subject to Section 13.1) take such
action with respect to such Default as shall be directed by Required Banks,
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable and
in the best interest of the Banks.
Section 13.4 Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY
THE AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT
REIMBURSED UNDER SECTIONS 14.1 AND 14.2, BUT WITHOUT LIMITING THE OBLIGATIONS
OF THE BORROWER UNDER SECTIONS 14.1 AND 14.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY
KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENT UNDER OR IN
RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, THAT NO BANK SHALL BE LIABLE
FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS
THE EXPRESS INTENTION OF THE BANKS THAT THE AGENT SHALL BE INDEMNIFIED
HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
CREDIT AGREEMENT - PAGE 54
62
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES),
AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT. WITHOUT
LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES TO REIMBURSE THE
AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF
THE COMMITMENTS PERCENTAGES) OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING
ATTORNEYS' FEES AND EXPENSES) INCURRED BY THE AGENT IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN
DOCUMENTS, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY
THE BORROWER.
Section 13.5 Independent Credit Decisions. Each Bank agrees that
it has independently and without reliance on the Agent or any other Bank, and
based on such documentation and information as it has deemed appropriate, made
its own credit analysis of the Borrower and decision to enter into any Loan
Document and that it will, independently and without reliance upon the Agent or
any other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under any Loan Document. Except as otherwise
specifically set forth herein, the Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower or any Obligated
Party of any Loan Document or to inspect the properties or books of the
Borrower or any Obligated Party. Except for notices, reports, and other
documents and information expressly required to be furnished to the Banks by
the Agent hereunder or under the other Loan Documents, the Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
financial information concerning the affairs, financial condition, or business
of the Borrower or any Obligated Party (or any of their Affiliates) which may
come into the possession of the Agent or any of its Affiliates.
Section 13.6 Several Commitments. The Commitments and other
obligations of the Banks under any Loan Document are several. The default by
any Bank in making a Loan in accordance with its Commitment shall not relieve
the other Banks of their obligations under any Loan Document. In the event of
any default by any Bank in making any Loan, each nondefaulting bank shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Bank was required to advance hereunder. No Bank shall be
responsible for any act or omission of any other Bank.
Section 13.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower, and the Agent may
be removed at any time by Required Banks if it has breached its obligations
under the Loan Documents. Upon any such resignation or removal, Required Banks
will have the right to appoint a successor Agent with the Borrower's consent,
which shall not be unreasonably withheld. If no successor Agent shall have
been so appointed by Required Banks and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then
CREDIT AGREEMENT - PAGE 55
63
the retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized under the laws of the United States
of America or any State thereof and having combined capital and surplus of at
least One Hundred Million Dollars ($100,000,000). Upon the acceptance of its
appointment as successor Agent, such successor Agent shall thereupon succeed to
and become vested with all rights, powers, privileges, immunities, contractual
obligations, and duties of the resigning or removed Agent, and the resigning or
removed Agent shall be discharged from its duties and obligations under the
Loan Documents. After any Agent's resignation or removal as Agent, the
provisions of this Article 13 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was the
Agent.
Section 13.8 Agent Fee. The Borrower agrees to pay to the Agent,
on each anniversary of the Closing Date, the administrative fee set forth in
the letter dated October 8, 1997 from Chase Securities, Inc. and Texas Commerce
to the Borrower.
Section 13.9 Intercreditor Provisions. The Banks acknowledge that
the Obligated Parties are indebted to Texas Commerce pursuant to the
Guarantees described on Schedule 10.1 and have granted Liens to Texas Commerce
to secure obligations arising in connection therewith as reflected on Schedule
10.2 (such Liens granted pursuant to the documents described in item 2 on
Schedule 10.2 herein the "Lease Liens" and the property in which the Lease
Liens has been granted which is specifically described on Annex A to Schedule
10.2, herein the "Lease Collateral"). In order to induce the Banks to enter
into this Agreement, Texas Commerce subordinates the Lease Liens and makes them
junior, second and inferior to the security interest of the Agent held for the
benefit of the Banks under the Loan Documents in the Lease Collateral. The
foregoing subordination shall not impair the rights Texas Commerce has as a
Bank hereunder.
ARTICLE 14
Miscellaneous
Section 14.1 Expenses. The Borrower hereby agrees to pay on
demand: (a) all costs and expenses of the Agent arising in connection with the
preparation, negotiation, execution, and delivery of the Loan Documents
executed and delivered on the Closing Date, including, without limitation, the
reasonable fees and expenses of legal counsel for the Agent; (b) all costs and
expenses of the Agent arising in connection with (i) the preparation,
negotiation, execution, and delivery of any of the Loan Documents executed and
delivered after the Closing Date and any and all amendments or other
modifications to the Loan Documents and (ii) the syndication of the Loans,
including in all instances, without limitation, the fees and expenses of legal
counsel for the Agent; (b) all costs and expenses of the Agent and the Banks in
connection with any Default and the enforcement of any Loan Document,
including, without limitation, the fees and expenses of legal counsel for the
Agent and each of the Banks (including the allocated costs of in house
counsel); (c) all transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority in respect of any
Loan Document; (d) all costs, expenses, assessments, and other charges incurred
in connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by any Loan Document; and (f) all other
costs and expenses incurred by the Agent in connection with any Loan Document,
including,
CREDIT AGREEMENT - PAGE 56
64
without limitation, all costs, expenses, and other charges incurred in
connection with obtaining any audit or appraisal in respect of the Collateral.
Section 14.2 Indemnification. THE BORROWER SHALL INDEMNIFY THE
AGENT AND EACH BANK AND EACH AFFILIATE (INCLUDING WITHOUT LIMITATION, CHASE
SECURITIES, INC.) THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES) TO WHICH ANY OF
THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO
(A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR ANY
OBLIGATED PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED
RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON,
ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR
ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING; PROVIDED THAT THE PERSON
ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION SHALL NOT BE INDEMNIFIED FROM OR
HELD HARMLESS AGAINST ANY LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS, OR EXPENSES ARISING OUT OF OR RESULTING FROM
ITS GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF ITS OBLIGATIONS UNDER THE
LOAN DOCUMENTS. WITHOUT LIMITING ANY PROVISION OF ANY LOAN DOCUMENT, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND
ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 14.3 Limitation of Liability. None of the Agent, any
Bank, or any Affiliate, officer, director, employee, attorney, or agent thereof
shall have any liability with respect to, and the Borrower and, by the
execution of the Loan Documents to which it is a party each Obligated Party,
hereby waives, releases, and agrees not to xxx any of them upon, any claim for
any special, indirect, incidental, consequential, or punitive damages suffered
or incurred by the Borrower or any Obligated Party in connection with, arising
out of, or in any way related to any of the Loan Documents, or any of the
transactions contemplated by any of the Loan Documents.
Section 14.4 No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Agent or any Bank
shall have the right to act exclusively in the interest of the Agent and the
Banks and shall have no duty of disclosure, duty of loyalty,
CREDIT AGREEMENT - PAGE 57
65
duty of care, or other duty or obligation of any type or nature whatsoever to
the Borrower or any of the Borrower's shareholders or any other Person.
Section 14.5 No Fiduciary Relationship. The relationship between
the Borrower and the Obligated Parties on the one hand and the Agent and each
Bank on the other is solely that of debtor and creditor, and neither the Agent
nor any Bank has any fiduciary or other special relationship with the Borrower
or any Obligated Parties, and no term or condition of any of the Loan Documents
shall be construed so as to deem the relationship between the Borrower and the
Obligated Parties on the one hand and the Agent and each Bank on the other and
any Bank to be other than that of debtor and creditor.
Section 14.6 Equitable Relief. The Borrower recognizes that in the
event the Borrower or any Obligated Party fails to pay, perform, observe, or
discharge any or all of the obligations under the Loan Documents, any remedy at
law may prove to be inadequate relief to the Agent and the Banks. The Borrower
therefore agrees that the Agent and the Banks, if the Agent or the Required
Banks so request, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
Section 14.7 No Waiver; Cumulative Remedies. No failure on the
part of the Agent or any Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under any
Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, or privilege under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights and remedies provided for in the Loan
Documents are cumulative and not exclusive of any rights and remedies provided
by law.
Section 14.8 Successors and Assigns.
(a) Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. The Borrower may not assign or transfer any
of its rights or obligations hereunder without the prior written
consent of the Agent and all of the Banks.
(b) Participations. Any Bank may sell participations to
one or more banks or other institutions in or to all or a portion of
its rights and obligations under the Loan Documents (including,
without limitation, all or a portion of its Commitments and the Loans
owing to it); provided, however, that (i) such Bank's obligations
under the Loan Documents (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the Borrower for the performance of such
obligations, (iii) such Bank shall remain the holder of its Notes and
owner of its participation or other interests for all purposes of any
Loan Document, (iv) the Borrower shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under the Loan Documents, and (v) such Bank shall not sell
a participation that conveys to the participant the right to vote or
give or withhold consents under any Loan Document, other than the
right to vote upon or consent to (1) any increase of such Bank's
Commitments, (2) any reduction of the principal amount of, or interest
to be paid on, the Loans or other Obligations of such Bank, (3) any
reduction of any
CREDIT AGREEMENT - PAGE 58
66
commitment fee, or other amount payable to such Bank under any Loan
Document, (4) any postponement of any date for the payment of any
amount payable in respect of the Loans or other Obligations of such
Bank, or (5) the release of Borrower, any Obligated Party or any
Collateral.
(c) Assignments. The Borrower and each of the Banks
agree that any Bank (the "Assigning Bank") may at any time assign to
an Eligible Assignee all, or a proportionate part of all, of its
rights and obligations under the Loan Documents (including, without
limitation, its Commitments and Loans) (each an "Assignee"); provided,
however, that (i) each such assignment shall be of a consistent, and
not a varying, percentage of all of the assigning Bank's rights and
obligations under the Loan Documents, (ii) except in the case of an
assignment of all of a Bank's rights and obligations under the Loan
Documents, the amount of the Commitments of the assigning Bank being
assigned or if any Commitment has terminated or otherwise been
fulfilled, the outstanding principal amount of the related Loans,
pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than Five Million Dollars ($5,000,000), (iii) the
parties to each such assignment shall execute and deliver to the Agent
for its acceptance and recording in the Register (as defined below),
an Assignment and Acceptance, together with the Notes subject to such
assignment, and a processing and recordation fee of Three Thousand
Dollars ($3,000) payable by the assignor or assignee (and not the
Borrower); provided that such fee shall not be payable to Agent if the
Assigning Bank is making an assignment to one of its Affiliates; and
(iv) the Borrower and the Agent must consent to such assignment, which
consent shall not be unreasonably withheld, with such consents to be
evidenced by the Borrower's and the Agent's execution of the
Assignment and Acceptance; provided that Borrower's consent will not
be necessary if the Assigning Bank is making an assignment to one of
its Affiliates. Upon such execution, delivery, acceptance, and
recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, or, if so specified in
such Assignment and Acceptance, the date of acceptance thereof by the
Agent, (x) the assignee thereunder shall be a party hereto as a "Bank"
and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Bank hereunder and under the Loan
Documents, and (y) the Bank that is an assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Loan Documents (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of a Bank's rights and obligations under the Loan Documents,
such Bank shall cease to be a party thereto). The Agent shall
maintain at its Principal Office a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Banks and the
Commitments of, and principal amount of the Loans owing to each Bank
from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and
the Borrower, the Agent, and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes
under the Loan Documents. The Register shall be available for
inspection by the Borrower or any Bank at any reasonable time and from
time to time upon reasonable prior notice. Upon its receipt of an
Assignment and Acceptance
CREDIT AGREEMENT - PAGE 59
67
executed by an Assigning Bank and Assignee representing that it is an
Eligible Assignee, together with any Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit "I" hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five (5) Business Days after its receipt of
such notice the Borrower, at its expense, shall execute and deliver to
the Agent in exchange for the surrendered Notes new Notes to the order
of such Eligible Assignee in an amount equal to the Commitments or
Loans assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Bank has retained Commitments or Loans, Notes to the
order of the assigning Bank in an amount equal to the Commitments and
Loans retained by it hereunder (each such promissory note shall
constitute a "Note" for purposes of the Loan Documents). Such new
Notes shall be in an aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such Assignment and
Acceptance, and shall otherwise be in substantially the form of the
applicable Exhibit hereto.
(d) Information. Any Bank may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrower or its Subsidiaries furnished to such Bank by or on behalf of
the Borrower or its Subsidiaries.
(e) Pledge to Federal Reserve. Notwithstanding anything
in this Section 14.8 to the contrary, any Bank may, in the ordinary
course of its business, pledge its Notes to any United States Federal
Reserve Bank to secure advances made by such Federal Reserve Bank to
such Bank.
Section 14.9 Survival. All representations and warranties made in
any Loan Document or in any document, statement, or certificate furnished in
connection with any Loan Document shall survive the execution and delivery of
the Loan Documents and no investigation by the Agent or any Bank or any closing
shall affect the representations and warranties or the right of the Agent or
any Bank to rely upon them. Without prejudice to the survival of any other
obligation of the Borrower hereunder, the obligations of the Borrower under
Article 6 and Sections 14.1 and 14.2 shall survive repayment of the Notes and
termination of the Commitments.
Section 14.10 Entire Agreement. THIS AGREEMENT, THE NOTES, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF (PROVIDED THAT THE INDEMNITY, EXPENSE
REIMBURSEMENT AND FEE PROVISIONS OF THE COMMITMENT LETTER DATED OCTOBER 8,
1997, FROM CHASE SECURITIES, INC. AND TEXAS COMMERCE TO THE BORROWER ARE NOT
REPLACED BY THE LOAN DOCUMENTS) AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES HERETO.
CREDIT AGREEMENT - PAGE 60
68
Section 14.11 Amendments. No amendment or waiver of any provision
of any Loan Document to which the Borrower is a party, nor any consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be agreed or consented to by Required Banks and the Borrower, and
each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that no amendment,
waiver, or consent shall, unless in writing and signed by all of the Banks and
the Borrower, do any of the following: (a) increase Commitments of the Banks;
(b) reduce the principal of, or interest on, the Notes, or any fees or other
amounts payable hereunder; (c) postpone any date fixed for any payment of
principal of, or interest on, the Notes, or any fees or other amounts payable
hereunder; (d) waive or amend any of the conditions specified in Article 7; (e)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes or the number of Banks which shall be required for the
Banks or any of them to take any action under any Loan Document; (f) change any
provision contained in this Section 14.11; or (g) release any Collateral or
release the Borrower or any Obligated Party from liability. Notwithstanding
anything to the contrary contained in this Section, no amendment waiver, or
consent shall be made with respect to Article 13 hereof without the prior
written consent of the Agent.
Section 14.12 Maximum Interest Rate.
(a) No interest rate specified in any Loan Document shall
at any time exceed the Maximum Rate. If at any time the interest rate
(the "Contract Rate") for any Obligation shall exceed the Maximum
Rate, thereby causing the interest accruing on such Obligation to be
limited to the Maximum Rate, then any subsequent reduction in the
Contract Rate for such Obligation shall not reduce the rate of
interest on such Obligation below the Maximum Rate until the aggregate
amount of interest accrued on such Obligation equals the aggregate
amount of interest which would have accrued on such Obligation if the
Contract Rate for such Obligation had at all times been in effect.
(b) No provision of any Loan Document shall require the
payment or the collection of interest in excess of the maximum amount
permitted by applicable law. If any excess of interest in such
respect is hereby provided for, or shall be adjudicated to be so
provided, in any Loan Document or otherwise in connection with this
loan transaction, the provisions of this Section shall govern and
prevail and neither the Borrower nor the sureties, guarantors,
successors, or assigns of the Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the
use, forbearance, or detention of sums loaned pursuant hereto. In the
event any Bank ever receives, collects, or applies as interest any
such sum, such amount which would be in excess of the maximum amount
permitted by applicable law shall be applied as a payment and
reduction of the principal of the Obligations, and, if the principal
of the Obligations has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the
interest paid or payable exceeds the Maximum Rate, the Borrower and
each Bank shall, to the extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee, or premium
rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations so that interest for the
entire term does not exceed the Maximum Rate.
CREDIT AGREEMENT - PAGE 61
69
Section 14.13 Notices. All notices and other communications
provided for in any Loan Document to which the Borrower or any Obligated Party
is a party shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof and, if to an Obligated Party, at the address for notices for the
Borrower, or, as to any party, at such other address as shall be designated by
such party in a notice to each other party given in accordance with this
Section. Except as otherwise provided in any Loan Document, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, three (3) Business Days after
being duly deposited in the mails, in each case given or addressed as
aforesaid; provided, however, notices to the Agent pursuant to Section 5.3
shall not be effective until received by the Agent.
Section 14.14 Governing Law; Venue of Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. ANY
ACTION OR PROCEEDING AGAINST BORROWER UNDER OR IN CONNECTION WITH ANY LOAN
DOCUMENT MAY BE BROUGHT IN ANY STATE COURT LOCATED IN DALLAS, TEXAS OR ANY
FEDERAL COURT IN THE NORTHERN DISTRICT OF TEXAS. BORROWER HEREBY IRREVOCABLY
(a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (b) WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
BORROWER AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 14.13 OF THIS
AGREEMENT. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT
THE RIGHT OF THE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE AGENT OR ANY BANK TO BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN
COURTS IN OTHER JURISDICTION. ANY ACTION OR PROCEEDING BY BORROWER AGAINST THE
AGENT OR ANY BANK SHALL BE BROUGHT ONLY IN A COURT LOCATED IN DALLAS, TEXAS.
Section 14.15 Counterparts. This Agreement may be executed in one
or more counterparts and on telecopy counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
agreement.
Section 14.16 Severability. Any provision of any Loan Document
held by a court of competent jurisdiction to be invalid or unenforceable shall
not impair or invalidate the remainder of any Loan Document and the effect
thereof shall be confined to the provision held to be invalid or illegal.
CREDIT AGREEMENT - PAGE 62
70
Section 14.17 Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 14.18 Non-Application of Chapter 346 of The Finance Code of
Texas. The provisions of Chapter 346 of The Finance Code of Texas are
specifically declared by the parties hereto not to be applicable to any Loan
Documents or to the transactions contemplated thereby.
Section 14.19 Construction. The Borrower, each Obligated Party (by
its execution of the Loan Documents to which its is a party), the Agent, and
each Bank acknowledges that each of them has had the benefit of legal counsel
of its own choice and has been afforded an opportunity to review the Loan
Documents with its legal counsel and that the Loan Documents shall be construed
as if jointly drafted by the parties thereto.
Section 14.20 Independence of Covenants. All covenants under the
Loan Documents 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 be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default if such action is
taken or such condition exists.
Section 14.21 Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF
OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
HORIZON HEALTH CORPORATION
By: /s/ XXXXX X. XxXXXX
------------------------------------
Xxxxx X. XxXxxx, Executive Vice
President and Secretary
Address for Notices:
0000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Chief Financial Officer
CREDIT AGREEMENT - PAGE 63
71
AGENT:
Revolving Commitment: TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually as a Bank and
as the Agent
$3,000,000
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------
Term Commitment: Xxxxx X. Xxxxxxxx, Vice President
$12,000,000
----------------------------- Address for Notices:
1111 Fannin, 9th Floor, MS46
Xxxxxxx, Xxxxx 00000
$15,000,000 Total Telephone No.: 000 000-0000
Facsimile: No.: 000 000-0000
Attention: Loan Syndication Services
re: Horizon Health Corporation
With a copy to:
P.O. Box 660197
00000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
CREDIT AGREEMENT - PAGE 64
72
Revolving Commitment: Banks:
$2,000,000 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
Term Commitment:
$8,000,000
----------------------------- By: /s/ J. XXXXXXX XXXXXX
-----------------------------------
Name: J. Xxxxxxx Xxxxxx
Title: Vice President
$10,000,000 Total
Address for Notices:
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 213/000-0000
Facsimile: 213/228-2756
Attn: J. Xxxxxxx Xxxxxx
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
CREDIT AGREEMENT - PAGE 65
73
Revolving Commitment:
$2,000,000 COMERICA BANK-TEXAS
Term Commitment:
By: /s/ XXXXX X. XXXXXXX
-----------------------------------
$8,000,000 Xxxxx X. Xxxxxxx
Vice President
$10,000,000 Total Address for Notices:
Comerica Bank
0000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Telephone: 214/000-0000
Facsimile: 214/965-8980
Attn: Xxxxx X. Xxxxxxx
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
Comerica Bank
0000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
CREDIT AGREEMENT - PAGE 66
74
Revolving Commitment: COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
$1,500,000 NEDERLAND," NEW YORK BRANCH
Term Commitment:
By: /s/ XXXX X. XXXXXXXX
-----------------------------------
$6,000,000 Name: Xxxx X. Xxxxxxxx
Title: Vice President
$7,500,000 Total By: /s/ W. XXXXXXX XXXXXXX
-----------------------------------
Name: W. Xxxxxxx Xxxxxxx
Title: Senior Vice President
Address for Notices:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telex No.: 424-377
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Corporate Services
With a copy to:
Xxxxxxxx Xxxxxxxxx
00000 Xxxx Road
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: J. Xxxxx Xxxxxx
Lending office for Base Rate
Accounts and Eurodollar Accounts:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
CREDIT AGREEMENT - PAGE 67
75
Revolving Commitment: BANQUE PARIBAS, HOUSTON AGENCY
$1,500,000
By: /s/ XXXXX X. XXXXXX
-----------------------------------
Term Commitment: Name: Xxxxx X. Xxxxxx
Title: Director
$6,000,000
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
$7,500,000 Total Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
Address for Notices:
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxx
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
CREDIT AGREEMENT - PAGE 68
76
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
"A" Revolving Note
"B" Term Note
"C" Guaranty
"D" Borrower Security Agreement
"E" Borrower Pledge Agreement
"F" Subsidiary Security Agreement
"G" Subsidiary Pledge Agreement
"H" Subsidiary Joinder Agreement
"I" Assignment and Acceptance
"J" Compliance Certificate
"K" Collateral Assignment
INDEX TO SCHEDULES
Schedule Description of Schedule
-------- -----------------------
1.1(a) Previous Senior Debt
8.14 List of Subsidiaries
10.1 Debt
10.2 Existing Liens
10.5 Existing Investments
CREDIT AGREEMENT - PAGE 69