Exhibit 2.11
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF DECEMBER 20, 1996
AMONG
REGENCY HEALTH SERVICES, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
NATIONSBANC CAPITAL MARKETS, INC.,
as Arranger,
and
NATIONSBANK OF TEXAS, N.A.,
as Agent
REGENCY HEALTH SERVICES, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS................................................ 2
1.1 Certain Defined Terms...................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement............................... 28
1.3 Other Definitional Provisions and Rules of Construction.... 28
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS................. 28
2.1 Commitments; Making of Loans; Notes........................ 28
2.2 Interest on the Loans...................................... 31
2.3 Fees....................................................... 36
2.4 Repayments, Prepayments and Reductions in Commitments; General
Provisions Regarding Payments............................. 38
2.5 Use of Proceeds............................................ 41
2.6 Special Provisions Governing Eurodollar Rate Loans......... 41
2.7 Increased Costs; Taxes; Capital Adequacy................... 43
2.8 Obligation of Lenders and Issuing Lenders to Mitigate...... 48
2.9 Substitution of Lenders.................................... 48
Section 3. LETTERS OF CREDIT.......................................... 49
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein..................................... 49
3.2 Letter of Credit Fees...................................... 51
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of
Credit..................................................... 52
3.4 Obligations Absolute....................................... 54
3.5 Indemnification; Nature of Issuing Lenders' Duties......... 55
3.6 Existing Letters of Credit................................. 57
3.7 Increased Costs and Taxes Relating to Letters of Credit.... 57
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT.................. 58
4.1 Conditions to Initial Extensions of Credit................. 58
4.2 Conditions to Loans........................................ 62
4.3 Conditions to Letters of Credit............................ 64
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES................... 65
5.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries........................................... 65
5.2 Authorization of Borrowing, etc............................ 66
5.3 Financial Condition........................................ 67
5.4 No Material Adverse Change; No Restricted Junior Payments.. 67
5.5 Title to Properties; Liens................................. 67
5.6 Litigation; Adverse Facts.................................. 68
5.7 Payment of Taxes........................................... 68
5.8 Performance of Agreements; Materially Adverse Agreements... 68
5.9 Governmental Regulation.................................... 69
5.10 Securities Activities...................................... 69
5.11 Employee Benefit Plans..................................... 69
5.12 Certain Fees............................................... 70
5.13 Environmental Protection................................... 70
5.14 Employee Matters........................................... 71
5.15 Solvency................................................... 71
5.16 Matters Relating to Collateral............................. 71
5.17 Disclosure................................................. 72
5.18 Regulatory Compliance...................................... 73
5.19 Existing Letters of Credit................................. 74
Section 6. COMPANY'S AFFIRMATIVE COVENANTS............................ 75
6.1 Financial Statements and Other Reports..................... 75
6.2 Corporate Existence, etc................................... 79
6.3 Payment of Taxes and Claims; Tax Consolidation............. 80
6.4 Maintenance of Properties; Insurance....................... 80
6.5 Inspection Rights; Audits of Accounts Receivable........... 81
6.6 Compliance with Laws, etc.................................. 82
6.7 Preservation of Licenses, etc.............................. 82
6.8 Environmental Disclosure................................... 82
6.9 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and Future Subsidiaries......... 83
6.10 Officer's Certificate Regarding Restricted Junior Payments. 84
6.11 Employee Stock Discount Program............................ 84
Section 7. COMPANY'S NEGATIVE COVENANTS............................... 84
7.1 Indebtedness............................................... 84
7.2 Liens and Related Matters.................................. 86
7.3 Investments; Joint Ventures................................ 88
7.4 Contingent Obligations..................................... 89
7.5 Restricted Junior Payments................................. 91
7.6 Financial Covenants........................................ 92
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions............................................... 93
7.8 Consolidated Capital Expenditures.......................... 95
7.9 Fiscal Year................................................ 96
7.10 Sales and Lease-Backs...................................... 96
7.11 Sale or Discount of Receivables............................ 96
7.12 Transactions with Shareholders and Affiliates.............. 97
7.13 Disposal of Subsidiary Stock............................... 97
7.14 Conduct of Business........................................ 97
7.15 Amendments of Documents Relating to Subordinated
Indebtedness............................................... 98
Section 8. EVENTS OF DEFAULT.......................................... 98
8.1 Failure to Make Payments When Due.......................... 98
8.2 Default in Other Agreements................................ 98
8.3 Breach of Certain Covenants................................ 99
8.4 Breach of Warranty......................................... 99
8.5 Other Defaults Under Loan Documents........................ 99
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc....... 99
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.........100
8.8 Judgments and Attachments..................................100
8.9 Dissolution................................................100
8.10 Employee Benefit Plans.....................................101
8.11 Material Adverse Effect....................................101
8.12 Change in Control..........................................101
8.13 Invalidity of Subsidiary Guaranties; Failure of Security;
Repudiation of Obligations.................................101
8.14 Loss of Licenses, etc......................................102
Section 9. AGENT......................................................103
9.1 Appointment................................................103
9.2 Powers and Duties; General Immunity........................103
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness..............................105
9.4 Right to Indemnity.........................................105
9.5 Successor Agent............................................105
9.6 Collateral Documents and Subsidiary Guaranties.............106
Section 10. MISCELLANEOUS..............................................107
10.1 Assignments and Participations in Loans and Letters of
Credit.....................................................107
10.2 Expenses...................................................109
10.3 Indemnity..................................................110
10.4 Set-Off....................................................111
10.5 Ratable Sharing............................................112
10.6 Amendments and Waivers.....................................113
10.7 Independence of Covenants..................................114
10.8 Notices....................................................114
10.9 Survival of Representations, Warranties and Agreements.....114
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative......115
10.11 Marshalling; Payments Set Aside............................115
10.12 Severability...............................................115
10.13 Obligations Several; Independent Nature of Lenders' Rights.115
10.14 Headings...................................................116
10.15 Applicable Law.............................................116
10.16 Successors and Assigns.....................................116
10.17 Consent to Jurisdiction and Service of Process.............116
10.18 Waiver of Jury Trial.......................................117
10.19 Confidentiality............................................118
10.20 Counterparts; Effectiveness................................118
Signature pages S-1
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF NOTE
V FORM OF COMPLIANCE CERTIFICATE
VI-A FORM OF OPINION OF COMPANY'S OUTSIDE COUNSEL
VI-B FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
VII FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇
VIII FORM OF ASSIGNMENT AGREEMENT
IX FORM OF COLLATERAL ACCOUNT AGREEMENT
X FORM OF COMPANY PLEDGE AGREEMENT
XI FORM OF COMPANY SECURITY AGREEMENT
XII FORM OF SUBSIDIARY GUARANTY
XIII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XIV FORM OF SUBSIDIARY SECURITY AGREEMENT
XV FORM OF AMENDMENT AND CONFIRMATION OF COLLATERAL ACCOUNT
AGREEMENT, COMPANY PLEDGE AGREEMENT,
AND COMPANY SECURITY AGREEMENT
XVI FORM OF AMENDMENT AND CONFIRMATION OF SUBSIDIARY GUARANTY,
SUBSIDIARY PLEDGE AGREEMENT AND
SUBSIDIARY SECURITY AGREEMENT
SCHEDULES
1 CERTAIN CMS TRANSACTIONS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF COMPANY
5.6 LITIGATION
5.11 EMPLOYEE BENEFIT PLANS
5.13 HAZARDOUS WASTE
5.19 EXISTING LETTERS OF CREDIT
7.1 EXISTING INDEBTEDNESS
7.2 EXISTING LIENS
7.2A EXISTING LIENS ON COLLATERAL
7.3 EXISTING INVESTMENTS
7.4 CONTINGENT OBLIGATIONS
7.7 PENDING TRANSACTIONS
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of
December 20, 1996 and entered into by and among REGENCY HEALTH SERVICES, INC., a
Delaware corporation ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender" and
collectively as "Lenders"), NATIONSBANC CAPITAL MARKETS, INC. ("NCMI"), as
arranger (in such capacity, "Arranger"), and NATIONSBANK OF TEXAS, N.A.
("NationsBank"), as agent for Lenders (in such capacity, "Agent").
R E C I T A L S
WHEREAS, Company, Arranger, Agent and the financial
institutions party thereto entered into that certain Credit Agreement dated as
of December 28, 1995, as amended by the First Amendment and Waiver to Credit
Agreement dated as of April 22, 1996, and the Second Amendment to Credit
Agreement and Approval dated as of June 20, 1996 (as so amended, the "Existing
Credit Agreement") which extends certain credit facilities to Company for
working capital and other general corporate purposes, including without
limitation to finance Acquisitions;
WHEREAS, all of the Obligations under the Existing Credit
Agreement are secured by a first priority lien on certain of Company's personal
property, including a pledge of all of the capital stock of each of its
subsidiaries and the grant of a security interest in accounts receivable and
certain notes receivable;
WHEREAS, all of the subsidiaries of Company guaranteed the
obligations under the Existing Credit Agreement and secured their guaranties by
granting to Agent, on behalf of Lenders, a first priority lien on certain of
their respective personal property, including a pledge of all of the capital
stock of each of their respective subsidiaries and the grant of a security
interest in accounts receivable and certain notes receivable; and
WHEREAS, Company, Arranger, Agent and the Lenders desire to
amend and restate the Existing Credit Agreement in order to, among other things,
increase the commitments and add additional lenders as set forth herein;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders,
Arranger and Agent agree that effective as of the Closing Date (as defined
below), the Existing Credit Agreement shall be amended and restated in its
entirety as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.1 Certain Defined TermsCertain Defined Terms.
The following terms used in this Agreement shall have the
following meanings:
"Accounts Receivable" means all "accounts" as defined in the
UCC and any other accounts receivable pledged as Collateral.
"Acquisition" means any transaction pursuant to which Company
or any Subsidiary of Company, (i) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (A) acquires an equity interest in any Person
pursuant to a solicitation by Company or such Subsidiary of tenders of equity
securities of such Person, or through one or more negotiated block, market,
private or other transactions not involving a tender offer, or a combination of
any of the foregoing, which in each case has the effect of making such Person a
Subsidiary of Company or such Subsidiary, or (B) purchases securities issued by
a Subsidiary of Company from third-party holders of such securities or (C) makes
any corporation a Subsidiary of Company, or causes any corporation, other than a
Subsidiary of Company, to be merged into Company or any Subsidiary of Company,
or (ii) purchases all or substantially all of the business or assets of any
Person or any operating division, facility or group of facilities of any Person;
provided that any such transaction shall involve a Person or assets primarily
related to or engaged in, as the case may be, the healthcare business.
"Acquisition Consideration" means the consideration given by
Company or any Subsidiary for an Acquisition, including but not limited to the
fair market value of any cash, property, stock or services given, and the amount
of any Indebtedness and Operating Lease Obligation assumed or incurred.
"Adjusted Consolidated Net Worth" means, as at any date of
calculation, the sum of (i) Consolidated Net Worth plus (ii) the Refinancing
Charge, provided that the purchase and issuance of Company Common Stock pursuant
to the Employee Stock Discount Program, including without limitation any
discounts in the purchase price payable by employees, shall not be deemed to
affect Adjusted Consolidated Net Worth (other than through charges to the
Company's net income arising from transactions related to the Employee Stock
Discount Program) for so long as shares purchased in connection with the
Employee Stock Discount Program are issued to employees within 60 days of the
purchase thereof.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum obtained by dividing (i) the offered quotation (rounded
upward to the nearest 1/16 of one percent) to first class banks in the London
interbank market by NationsBank for U.S. dollar deposits of amounts in same day
funds comparable to the principal amount of the Eurodollar Rate Loan of
NationsBank for which the Adjusted Eurodollar Rate is then being determined with
maturities comparable to such Interest Period as of approximately 11:00 A.M.
(London time) on such Interest Rate Determination Date by (ii) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable on such Interest Rate Determination Date to any
member bank of the Federal Reserve System in respect of "Eurocurrency
liabilities" as defined in Regulation D (or any successor category of
liabilities under Regulation D).
"Affected Lender" has the meaning assigned to that term in
subsection 2.6C.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor Agent
appointed pursuant to subsection 9.5.
"Agreement" means this Amended and Restated Credit Agreement
dated as of December 20, 1996, as it may be amended, supplemented or otherwise
modified from time to time.
"Arranger" has the meaning assigned to that term in the
introduction to this Agreement.
"Assignment Agreement" means an Assignment Agreement in
substantially the form of Exhibit VIII annexed hereto.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Level of Cash" means, on any date of calculation, the
greater of (a) $25,000,000 or (b) an amount equal to 5% of net operating revenue
(as it appears on Company's consolidated statements of operations) for the
four-Fiscal Quarter period ending as of the last day of the Fiscal Quarter for
which the related Compliance Certificate is being delivered, determined on a
consolidated basis for Company and its Subsidiaries in conformity with GAAP.
"Base Rate" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"Base Rate Margin" has the meaning assigned to such term in
subsection 2.2A.
"Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
"Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Texas or of the State of
California or is a day on which banking institutions located in such state are
authorized or required by law or other governmental action to close, and (ii)
with respect to all notices, determinations, fundings and payments in connection
with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day that is
a Business Day described in clause (i) above and that is also a day for trading
by and between banks in Dollar deposits in the London interbank market.
"Capital Lease", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means, as at any date of calculation, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Services ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or its Affiliate
or by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary Federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $500,000,000; (v) shares of any money market mutual fund that
(a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's, and (vi) any other similar investments which may be approved in
writing by Agent, which approval shall not be unreasonably withheld.
"Certificate re Non-Bank Status" means a certificate in form
and substance satisfactory to Agent delivered by a Lender to Agent pursuant to
subsection 2.7B(iii) pursuant to which such Lender certifies that it is not a
"bank" as such term is defined in Section 881(c)(3) of the Internal Revenue
Code; (ii) a 10% shareholder of Company within the meaning of Section
871(h)(3)(B) or 881(c)(3)(B) of the Internal Revenue Code; or (iii) a
"controlled" foreign corporation related to Company within the meaning of
Section 864(d)(4) of the Internal Revenue Code.
"Closing Date" means the date on which all of the conditions
precedent set forth in subsection 4.1 have been satisfied or waived by Agent or
Requisite Lenders.
"CMS Transactions" means certain transactions involving
Continental Medical Systems, Inc., a Delaware corporation and its subsidiaries,
as set forth on Schedule 1 annexed hereto.
"Collateral" means, collectively, all of the personal property
(including capital stock) in which Liens are purported to be granted pursuant to
the Collateral Documents as security for the Obligations.
"Collateral Account" has the meaning assigned to that term in
the Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral Account
Agreement executed and delivered by Company and Agent on the Existing Credit
Agreement Closing Date, substantially in the form of Exhibit IX annexed hereto,
as such Collateral Account Agreement will be confirmed and amended on the
Closing Date pursuant to the Company Amendment and Confirmation, and as it may
thereafter be further amended, supplemented or otherwise modified from time to
time.
"Collateral Documents" means the Company Pledge Agreement, the
Company Security Agreement, the Collateral Account Agreement, the Subsidiary
Pledge Agreements, the Subsidiary Security Agreements and all other instruments
or documents delivered by any Loan Party pursuant to the Existing Credit
Agreement and this Agreement, or pursuant to any of the other Loan Documents in
order to grant to Agent, on behalf of Lenders, a Lien on certain personal
property of that Loan Party as security for the Obligations.
"Commitment" means the commitment of a Lender to make Loans to
Company pursuant to subsection 2.1A, and "Commitments" means such commitments of
all Lenders in the aggregate.
"Commitment Fee Percentage" has the meaning assigned to that
term in subsection 2.3A.
"Commitment Termination Date" means the five-year anniversary
of the Closing Date, as such Commitment Termination Date may be extended
pursuant to subsection 2.1E.
"Company" has the meaning assigned to that term in the
introduction to this Agreement.
"Company Amendment and Confirmation" means the Amendment and
Confirmation of Collateral Account
Agreement, Company Pledge Agreement and Company Security Agreement,
substantially in the form of Exhibit XV
annexed hereto.
"Company Common Stock" means the common stock of Company, par
value $.01 per share.
"Company Pledge Agreement" means the Company Pledge Agreement
executed and delivered by Company on the Existing Credit Agreement Closing Date,
substantially in the form of Exhibit X annexed hereto, as such Company Pledge
Agreement will be confirmed and amended on the Closing Date pursuant to the
Company Amendment and Confirmation, and as it may thereafter be further amended,
supplemented or otherwise modified from time to time.
"Company Security Agreement" means the Company Security
Agreement executed and delivered by Company on the Existing Credit Agreement
Closing Date, substantially in the form of Exhibit XI annexed hereto, as such
Company Security Agreement will be confirmed and amended on the Closing Date
pursuant to the Company Amendment and Confirmation, and as it may thereafter be
further amended, supplemented or otherwise modified from time to time.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit V annexed hereto delivered to Agent and Lenders by Company
from time to time pursuant to subsection 6.1(iii).
"Consolidated Adjusted Leverage Ratio" means, on any date of
calculation, the ratio of (i) the Consolidated Total Funded Debt, determined as
of the last day of the Fiscal Quarter for which the related Compliance
Certificate is being delivered, to (ii) Consolidated EBITDAR, for the four
Fiscal Quarters ending as of the last day of the Fiscal Quarter for which the
related Compliance Certificate is being delivered; provided that to the extent
that during such period Company or any Subsidiary of Company has acquired or
disposed of any operations in an amount for any transaction or series of related
transactions exceeding $1,000,000, such calculations shall be made as if such
acquisition or disposition took place on the first day of such period (on a pro
forma basis for the portion of such period prior to the date of such acquisition
or disposition and on an actual basis for the portion of such period after the
date of such acquisition or disposition).
"Consolidated Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries but excluding any such expenditures which constitute Acquisition
Consideration.
"Consolidated EBITDAR" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) Consolidated Rental
Payments, (vii) non-cash charges related to minority interests and (viii) other
non-cash items reducing Consolidated Net Income less non-cash items increasing
Consolidated Net Income and any dividends (other than stock dividends) paid by
non-wholly-owned Subsidiaries to Persons other than Company or its wholly-owned
Subsidiaries, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP; provided that to the
extent that during such period Company or any Subsidiary of Company has acquired
or disposed of any operations in an amount for any transaction or series of
related transactions exceeding $1,000,000, such calculations shall be made as if
such acquisition or disposition took place on the first day of such period (on a
pro forma basis for the portion of such period prior to the date of such
acquisition or disposition and on an actual basis for the portion of such period
after the date of such acquisition or disposition).
"Consolidated Fixed Charges" means, for any period, the sum
(without duplication) of the amounts for such period of (i) Consolidated
Interest Expense, (ii) scheduled principal payments on Consolidated Total Funded
Debt (but specifically excluding principal payments in the amount of $3,400,000
made in connection with Company's acquisition of SCRS & Communicology of Ohio,
Inc., dba Southcoast Rehabilitation Services, which acquisition occurred on or
before July 6, 1996), and (iii) Consolidated Rental Payments; provided that to
the extent that during such period Company or any Subsidiary of Company has
acquired or disposed of any operations in an amount for any transaction or
series of related transactions exceeding $1,000,000, such calculations shall be
made as if such acquisition or disposition took place on the first day of such
period (on a pro forma basis for the portion of such period prior to the date of
such acquisition or disposition and on an actual basis for the portion of such
period after the date of such acquisition or disposition).
"Consolidated Funded Debt" means, for any period, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, as determined on a consolidated basis in accordance with GAAP.
"Consolidated Indebtedness" means, for any period, all
Indebtedness of Company and its
Subsidiaries on a consolidated basis.
"Consolidated Interest Expense" means, for any period, the
excess, if any, of total interest expense (including that portion attributable
to Capital Leases in accordance with GAAP and capitalized interest) of Company
and its Subsidiaries with respect to all outstanding Indebtedness of Company and
its Subsidiaries over the total amount of interest income during such period,
each as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Company or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person's assets are acquired by Company or any of its
Subsidiaries, (iii) the income of any Subsidiary of Company to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary, (iv) any
after-tax gains or losses attributable to sales of assets or returned surplus
assets of any Pension Plan, and (v) (to the extent not included in clauses (i)
through (iv) above) any after-tax net extraordinary or non-recurring gains or
after-tax net extraordinary or non-recurring losses outside the Ordinary Course
of Business as determined by Company and approved in writing by Agent, which
approval shall not be unreasonably withheld.
"Consolidated Net Worth" means, as at any date of calculation,
(i) the sum of the capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficits) of Company and its Subsidiaries minus
(ii) treasury stock of Company and its Subsidiaries, each as determined on a
consolidated basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period, the
aggregate amount of all rents paid or payable by Company and its Subsidiaries on
a consolidated basis during that period under all Operating Leases to which
Company or any of its Subsidiaries is a party as lessee (net of sublease
income); provided that to the extent that during such period Company or any
Subsidiary of Company has acquired or disposed of any operations in an amount
for any transaction or series of related transactions exceeding $1,000,000, such
calculations shall be made as if such acquisition or disposition took place on
the first day of such period (on a pro forma basis for the portion of such
period prior to the date of such acquisition or disposition and on an actual
basis for the portion of such period after the date of such acquisition or
disposition).
"Consolidated Senior Debt" means, as at any date of
calculation, an amount equal to Consolidated Total Funded Debt minus the
aggregate outstanding principal amount of Subordinated Indebtedness; provided
that to the extent that during such period Company or any Subsidiary of Company
has acquired or disposed of any operations in an amount for any transaction or
series of related transactions exceeding $1,000,000, such calculations shall be
made as if such acquisition or disposition took place on the first day of such
period (on a pro forma basis for the portion of such period prior to the date of
such acquisition or disposition and on an actual basis for the portion of such
period after the date of such acquisition or disposition).
"Consolidated Total Funded Debt" means, as at any date of
calculation, the sum of (i) Consolidated Funded Debt plus (ii) Operating Lease
Obligation.
"Contingent Obligation", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) the net nominal unmatured exposure of that Person under Hedge
Agreements on a marked-to-market basis as determined in good faith by the
counterparty of any such Hedge Agreement. Contingent Obligations shall include,
without limitation, (a) the direct or indirect guaranty, endorsement (otherwise
than for collection or deposit in the Ordinary Course of Business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (Y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(X) or (Y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited. Notwithstanding the foregoing, any liability constituting
Indebtedness of a Person shall not be deemed to be a Contingent Obligation of
such Person.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement to which Company or any of its
Subsidiaries is a party.
"Deposit Account" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Eligible Assignee" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies; and (B) any Lender and any Affiliate of any
Lender; provided that no Affiliate of Company shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates.
"Employee Stock Discount Program" means the employee stock
discount program to be implemented by Company prior to October 31, 1997,
pursuant to which Company will purchase shares of its Common Stock to be held as
treasury stock and shall reissue or resell to employees of Company or any of its
Subsidiaries at a discount not exceeding 15% from the lower of the purchase
price or the market price at the time of such reissuance or resale to such
employees.
"Environmental Claim" means any investigation, notice, notice
of violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"Environmental Laws" means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents which carry
the weight of law, judgments, Governmental Authorizations, or any other
requirements of governmental authorities relating to (i) environmental matters,
including those relating to any Hazardous Materials Activity, (ii) the
generation, use, storage, transportation or disposal of Hazardous Materials, or
(iii) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner applicable
to Company or any of its Subsidiaries or any Facility, including the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss.
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the
Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act
(7 U.S.C. ss. 136 et seq.), the Occupational Safety and Health Act (29 U.S.C.
ss. 651 et seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et seq) and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et
seq.), each as amended or supplemented, any analogous present or future state or
local statutes or laws, and any regulations promulgated pursuant to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto.
"ERISA Affiliate" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is a
member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member. Any former ERISA Affiliate of Company or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of Company
or such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by Company, any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan with two or more contributing sponsors or
the termination of any such Pension Plan in either case resulting in liability
pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which is reasonably expected to constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability on Company, any of its Subsidiaries or any of
their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA
or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal of Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by Company, any of its Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which is reasonably expected
to give rise to the imposition on Company, any of its Subsidiaries or any of
their respective ERISA Affiliates of fines, penalties, taxes or related charges
under Chapter 43 of the Internal Revenue Code or under Section 409, Section
502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit
Plan; (ix) the assertion of a material claim (other than routine claims for
benefits) against any Employee Benefit Plan other than a Multiemployer Plan or
the assets thereof, or against Company, any of its Subsidiaries or any of their
respective ERISA Affiliates in connection with any Employee Benefit Plan; (x)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"Eurodollar Rate Margin" has the meaning assigned to such term
in subsection 2.2A.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in
Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Excluded Person" means the ▇▇▇▇▇ Management Group, comprised
of Energy Management Corporation,
Woodstead Associates, L.P., The Durian Trust, SEGA Associates, ▇▇▇▇▇ Management
Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇.
"Existing Credit Agreement" shall have the meaning given to it
in the first Recital to this Agreement.
"Existing Credit Agreement Closing Date" means the Closing
Date, as defined in the Existing
Credit Agreement.
"Existing Lenders" shall mean the Lenders, as defined in the
Existing Credit Agreement.
"Existing Letters of Credit" means those certain letters of
credit issued for the benefit of Company or its Subsidiaries under the Existing
Credit Agreement and outstanding as of the Closing Date.
"Existing Notes" shall mean the Notes (as defined in the
Existing Credit Agreement) previously delivered to the Existing Lenders under
the Existing Credit Agreement.
"Facilities" means any and all real property (including,
without limitation, all buildings, fixtures or other improvements located
thereon) now or hereafter owned, leased, operated or used by Company or any of
its Subsidiaries or Joint Ventures or any of their respective predecessors.
"FDA" means the United States Food and Drug Administration.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by Agent from three Federal funds brokers of
recognized standing selected by Agent.
"Financial Plan" has the meaning assigned to that term in
subsection 6.1(xiii).
"First Priority" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that (i) such
Lien has priority over any other Lien on such Collateral and (ii) such Lien is
the only Lien (other than Permitted Encumbrances and Liens permitted pursuant to
subsection 7.2) to which such Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its
Subsidiaries ending on December 31 of each calendar year.
"Funding and Payment Office" means (i) the office of Agent
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or (ii) such other office of
Agent as may from time to time hereafter be designated as such in a written
notice delivered by Agent to Company and each Lender; provided that if such
other office is in a State other than Texas or California, the definition of
"Business Day" shall be deemed amended by adding the name of such State in
clause (i) thereof.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date or period for which the calculation is being made.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any governmental or regulatory
authority, agency or court or any other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, franchise, right, certification, accreditation,
consent order or consent decree of or from, any Governmental Authority.
"Hazardous Materials" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances", or any other term or expression intended
to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws); (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any Persons in the vicinity of
any Facility or to the indoor or outdoor environment.
"Hazardous Materials Activity" means any past, current,
proposed or threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding,
presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.
"HCFA" means the Health Care Financing Administration, a
division of the United States
Department of Health and Human Services.
"Hedge Agreement" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest rates or
currency values, respectively.
"Inactive Subsidiary" means any Subsidiary of Company that
does not engage in any significant business activity and is designated as such
on Schedule 5.1 annexed hereto; provided, however, that no Inactive Subsidiary
shall own assets with a fair market value in excess of $100,000 or generate
annual revenues in excess of $100,000 and that all Inactive Subsidiaries in the
aggregate shall not own assets with an aggregate fair market value in excess of
$500,000 and shall not generate aggregate annual revenues in excess of $500,000;
and provided further that no Inactive Subsidiary shall have any Subsidiary other
than an Inactive Subsidiary.
"Incurrence Date" has the meaning assigned to that term in
subsection 4.2B(vii)(b).
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person; provided, however that the amount of any such
non-recourse indebtedness shall be limited to the lesser of the outstanding
principal amount thereof or the fair market value of the property or asset
securing such indebtedness. Unmatured Obligations under Hedge Agreements
constitute Contingent Obligations and not Indebtedness.
"Indemnitee" has the meaning assigned to that term in
subsection 10.3.
"Interest Payment Date" means (i) with respect to any Base
Rate Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on March 31, 1997, and (ii) with respect to any Eurodollar Rate Loan,
the last day of each Interest Period applicable to such Loan; provided that in
the case of each Interest Period of longer than three months, "Interest Payment
Date" shall also include the date that is three months after the commencement of
such Interest Period.
"Interest Period" has the meaning assigned to that term in
subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement to which Company or any of its Subsidiaries is
a party.
"Interest Rate Determination Date" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter, and any
successor statute.
"Investment" means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than purchases of
securities issued by any such Person from third party holders of securities of
such Person that prior to such purchase or acquisition was, or in an Acquisition
becomes, a Subsidiary of Company), (ii) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the Ordinary Course of Business) or
capital contribution by Company or any of its Subsidiaries to any other Person
(other than a wholly-owned Subsidiary of Company), including all accounts
receivable from that other Person that did not arise from sales or services to
that other Person in the Ordinary Course of Business, and (iii) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements. The amount
of any equity Investment shall be the original cost of such Investment plus the
cost of all additions thereto and the amount of any debt Investment shall be the
outstanding principal amount thereof, in each case without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"Issuing Lender" means, with respect to any Letter of Credit,
the Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any Subsidiary of any Person be considered to be
a Joint Venture to which such Person is a party.
"Knowledge of Company" or words of similar import means the
knowledge of Company's chief executive officer, chief financial officer, senior
vice president - development, general counsel, senior vice president - pharmacy,
senior vice president - professional services, vice president - human resources
and executive vice president - operations, or such other officers, however
designated, as have primary responsibility at the corporate level for the
financial, accounting, treasury, legal, health care regulatory compliance, human
resources, management and operational functions of the Company and its
Subsidiaries.
"Lender" and "Lenders" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1.
"Letter of Credit" or "Letters of Credit" means the Standby
Letters of Credit issued or to be issued by Issuing Lenders for the account of
Company pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of calculation,
the sum of (i) the maximum aggregate amount which is or at any time thereafter
may become available for drawing under all Letters of Credit then outstanding
plus (ii) the aggregate amount of all drawings under Letters of Credit honored
by Issuing Lenders and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Loans pursuant to subsection 3.3B).
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan" or "Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A and any extensions, renewals or replacements
thereof, including extensions pursuant to subsection 2.1E.
"Loan Documents" means this Agreement, the Notes, the Letters
of Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of an Issuing Lender
relating to, the Letters of Credit), the Subsidiary Guaranty and the Collateral
Documents and any amendments and modifications thereto executed in connection
with the Loan or the Loans.
"Loan Exposure" means, with respect to any Lender as of any
date of calculation (i) prior to the termination of the Commitments, that
Lender's Commitment and (ii) after the termination of the Commitments, the sum
of (a) the aggregate outstanding principal amount of the Loans of that Lender
plus (b) in the event that Lender is an Issuing Lender, the aggregate Letter of
Credit Usage in respect of all Letters of Credit issued by that Lender other
than Cash Collateralized Letters of Credit (in each case net of any
participations purchased by other Lenders in such Letters of Credit or any
unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit.
"Loan Party" means each of Company and any of Company's
Subsidiaries from time to time executing a Loan Document, and "Loan Parties"
means all such Persons, collectively.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company and its Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of any Loan Party to perform the Obligations
in any material respect, or (iii) the impairment of the ability of Agent or
Lenders to enforce the Obligations.
"Material Subsidiary" means (i) any Subsidiary of Company that
generates revenues in excess of $5,000,000 annually and (ii) any group of
Subsidiaries of Company that in the aggregate generate revenues in excess of
$5,000,000 annually.
"Minority Interest Dispositions" has the meaning assigned to
that term in subsection 7.7(xii).
"Multiemployer Plan" means any Employee Benefit Plan which is
a "multiemployer plan" as defined in Section 3(37) of ERISA.
"NationsBank" has the meaning assigned to that term in the
introduction to this Agreement.
"NCMI" has the meaning assigned to that term in the
introduction to this Agreement.
"Necessary Authorizations" means any Governmental
Authorizations necessary to enable Company or any Subsidiary to maintain and
operate its business and properties.
"New Subsidiaries" means Regency-North Carolina, Inc. and
Regency-Tennessee, Inc.
"1996 Subordinated Notes" means the $50,000,000 in original
principal amount of Subordinated Notes due 2003, issued by the Company pursuant
to the 1996 Subordinated Notes Indenture, as in effect on the Closing Date and
as amended from time to time to the extent permitted pursuant to subsection 7.15
of this Agreement.
"1996 Subordinated Notes Indenture" means the Indenture, dated
as of June 28, 1996, entered
into by and among the Company, certain of the subsidiaries of the Company and
U.S. Trust Company of California,
N.A., as trustee, pursuant to which the 1996 Subordinated Notes were issued.
"9-7/8% Subordinated Notes" means the $110,000,000 in original
aggregate principal amount of 9-7/8% Senior Subordinated Notes due October 15,
2002 issued by Company under the 9-7/8% Subordinated Note Indenture.
"9-7/8% Subordinated Note Indenture" means the indenture dated
as of October 12, 1995 between Company and U.S. Trust Company of California,
N.A., as in effect on the Existing Credit Agreement Closing Date and as amended
from time to time to the extent permitted pursuant to subsection 7.15 of this
Agreement.
"Non-Guarantor CMS Subsidiaries" means San Bernardino
Rehabilitation Hospital, a California general partnership, and San ▇▇▇▇▇▇▇
Valley Rehabilitation Hospital, a Delaware limited parntership.
"Non-Guarantor Subsidiaries" means the Non-Guarantor CMS
Subsidiaries, Harborview Group Homes, Inc., Hampshire Insurance Company and
Regency High School, Inc., the Inactive Subsidiaries and any other
non-wholly-owned Subsidiaries of Company created or existing after the date
hereof in compliance with subsections 7.1(iv)(c), 7.3(vi), 7.4(iv)(b) and
7.7(xi).
"Non-Guarantor Non-CMS Subsidiary Contingent Obligations" has
the meaning assigned to such term in subsection 7.4(iv)(b).
"Non-Guarantor Non-CMS Subsidiary Investments" has the meaning
assigned to such term in subsection 7.3(vi).
"Non-Guarantor Non-CMS Subsidiary Indebtedness" has the
meaning assigned to such term in subsection 7.1(iv).
"Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1D on the Closing Date and (ii) any promissory notes
issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Commitments and Loans of any Lenders, in each
case, substantially in the form of Exhibit IV annexed hereto, as they may be
amended, supplemented or otherwise modified from time to time.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Agent pursuant to subsection
2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit II annexed hereto delivered by Company to
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit III annexed hereto delivered by Company to
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Obligations" means all obligations of every nature of each
Loan Party from time to time owed to Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents and by its
chief financial officer or its treasurer unless otherwise specifically stated
herein; provided that every Officers' Certificate with respect to the compliance
with a condition precedent to the making of any Loans hereunder shall include
(i) a statement that the officer or officers making or giving such Officers'
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"Operating Lease Obligation" means an amount equal to the
product of annual Consolidated Rental Payments multiplied by eight.
"Ordinary Course of Business" means, in respect of any
transaction involving Company or any of its Subsidiaries, the ordinary course of
such Person's business, as conducted by any such Person in accordance with past
practice (including, without limitation, such Person's past practice of
consultation with legal counsel) and undertaken by such Person in good faith and
not for purposes of evading any covenant or restriction in any Loan Document.
"OSHA" means the United States Occupational Safety and Health
Administration.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA, any such Lien relating to or imposed in
connection with any Environmental Claim, and any such Lien expressly prohibited
by any applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges
or claims the payment of which is
not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks
and rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each case
incurred in the Ordinary Course of Business (a) for amounts not yet overdue or
(b) for amounts that are overdue and that (in the case of any such amounts
overdue for a period in excess of 5 days) are being contested in good faith by
appropriate proceedings, so long as (1) such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall exist for any such
contested amounts, and (2) in the case of a Lien with respect to any portion of
the Collateral, such contest proceedings conclusively operate to stay the sale
of any portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the Ordinary Course
of Business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money), so long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents and not interfering in any
material respect with the ordinary conduct of the business of Company or any of
its Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments,
and other minor defects or irregularities in title, in each case which do not
and will not interfere in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under
leases permitted by this Agreement, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease to any
restriction or encumbrance referred to in the preceding clause (b), so long as
the holder of such restriction or encumbrance agrees to recognize the rights of
such lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;
(x) any zoning or similar law or right reserved to or
vested in any governmental office or
agency to control or regulate the use of any real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating, reciprocal
easement or similar agreements entered into in the Ordinary Course of Business
of Company and its Subsidiaries; and
(xii) licenses of patents, trademarks and other intellectual
property rights granted by Company or any of its Subsidiaries in the Ordinary
Course of Business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"Pledged Collateral" means, collectively, the "Pledged
Collateral" as defined in the Company
Pledge Agreement and the Subsidiary Pledge Agreements.
"Potential Event of Default" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default.
"Prime Rate" means the rate that NationsBank announces from
time to time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. NationsBank or any other Lender may
make commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"Pro Rata Share" means, with respect to each Lender, the
percentage obtained by dividing (x) the Loan Exposure of that Lender by (y) the
aggregate Loan Exposure of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share of
each Lender is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.
"Redemption" means the redemption for cash by the Company of
the 6-1/2% Convertible Debentures not converted into shares of Company Common
Stock with the net proceeds of the 1996 Subordinated Notes (and with such
additional cash as may be necessary to fund such redemption).
"Refinancing Charge" means the extraordinary item in the
amount of $1,193,000 net of tax as set forth in the financial statements of
Company for the fiscal quarter ended September 30, 1996.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the air,
soil, surface water or groundwater.
"Requisite Lenders" means (i) Lenders having or holding more
than 66-2/3% of the aggregate Loan Exposure of all Lenders or (ii) at least
three Lenders having or holding more than 50% of the aggregate Loan Exposure of
all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company or any shares of any class of stock or other equity interests of a
non-wholly-owned Subsidiary of Company (other than on account of stock or other
equity interests owned by Company or another wholly-owned Subsidiary of Company)
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company or any shares of any
class of stock or other equity interests of a non-wholly-owned Subsidiary of
Company (other than on account of stock or other equity interests owned by
Company or another wholly-owned Subsidiary of Company) now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company or any shares of any class of stock or other equity
interests of a non-wholly-owned Subsidiary of Company (other than on account of
stock or other equity interests owned by Company or another wholly-owned
Subsidiary of Company) now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness;
provided, however, that Restricted Junior Payment shall not include the
Redemption.
"Restricted Subsidiary" means Harborview Group Homes, Inc.,
Hampshire Insurance Company and
Regency High School, Inc.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"6-1/2% Convertible Debentures" means the $50,000,000 in
original aggregate principal amount of 6-1/2% Convertible Subordinated
Debentures due July 15, 2003 issued by Company under the 6-1/2% Convertible
Debenture Indenture.
"6-1/2% Convertible Debenture Indenture" means the indenture
dated as of March 23, 1993 between Company and Chemical Trust Company of
California, as in effect on the Existing Credit Agreement Closing Date and as
amended from time to time to the extent permitted pursuant to subsection 7.15 of
the Existing Credit Agreement and of this Agreement.
"Solvent" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the property
of such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and matured considering all financing alternatives
and potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Standby Letter of Credit" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of Company or any of its Subsidiaries, (ii) the
obligations of third party insurers of Company or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third party
insurers, (iii) obligations with respect to Capital Leases or Operating Leases
of Company or any of its Subsidiaries, (iv) performance, payment, deposit or
surety obligations of Company or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry and (v) other obligations of Company and its
Subsidiaries incurred for general corporate purposes; provided that Standby
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code).
"Subordinated Indebtedness" means (i) Company's 9-7/8%
Subordinated Notes, (ii) the 1996 Subordinated Notes and (iii) any other
Indebtedness of Company subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material terms
in form and substance satisfactory to Agent and Requisite Lenders.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association, joint venture
or other business entity (i) of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) of which such Person directly or through one or
more of its Subsidiaries owns at least 50% of the capital stock or other equity
interests and over which such Person or one or more of its Subsidiaries
exercises management control, in each case to the extent that such Subsidiary is
required to be a member of the consolidated group of such Person under GAAP.
"Subsidiary Amendment and Confirmation" means the Amendment
and Confirmation of Subsidiary
Guaranty, Subsidiary Pledge Agreement and Subsidiary Security Agreement,
substantially in the form of Exhibit XVI
annexed hereto.
"Subsidiary Guarantor" means any Subsidiary of Company that
executed and delivered a counterpart of the Subsidiary Guaranty on the Existing
Credit Agreement Closing Date or from time to time thereafter executed and
delivered or executes and delivers such counterpart pursuant to subsection 6.9.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed
and delivered by existing Subsidiaries of Company (other than Harborview Group
Homes, Inc., Hampshire Insurance Company and Regency High School, Inc. and the
Inactive Subsidiaries) on the Existing Credit Agreement Closing Date
substantially in the form of Exhibit XII annexed hereto (as such Subsidiary
Guaranty will be confirmed and amended on the Closing Date pursuant to the
Subsidiary Amendment and Confirmation), and to be executed and delivered by
additional Subsidiaries of Company from time to time thereafter in accordance
with subsection 6.9, and as each such Subsidiary Guaranty may hereafter be
further amended, supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means each Subsidiary Pledge
Agreement executed and delivered by an existing Subsidiary Guarantor on the
Existing Credit Agreement Closing Date substantially in the form of Exhibit XIII
annexed hereto (as such Subsidiary Pledge Agreement will be confirmed and
amended on the Closing Date pursuant to the Subsidiary Amendment and
Confirmation), and to be executed and delivered by any additional Subsidiary
Guarantor from time to time thereafter in accordance with subsection 6.9, and as
each such Subsidiary Pledge Agreement may be further amended, supplemented or
otherwise modified from time to time, and "Subsidiary Pledge Agreements" means
all such Subsidiary Pledge Agreements, collectively.
"Subsidiary Security Agreement" means each Subsidiary Security
Agreement executed and delivered by an existing Subsidiary Guarantor on the
Existing Credit Agreement Closing Date, substantially in the form of Exhibit XIV
annexed hereto (as such Subsidiary Security Agreement will be confirmed and
amended on the Closing Date pursuant to the Subsidiary Amendment and
Confirmation), and to be executed and delivered by any additional Subsidiary
Guarantor from time to time thereafter in accordance with subsection 6.9, and as
each such Subsidiary Pledge Agreement may be further amended, supplemented or
otherwise modified from time to time, and "Subsidiary Security Agreements" means
all such Subsidiary Security Agreements, collectively.
"Target" means the Person to be acquired, or the Person whose
assets are to be acquired, in any
Acquisition.
"Tax" or "Taxes" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided that "Tax on the overall net income" of a Person
shall be construed as a reference to a tax imposed by the jurisdiction in which
that Person is organized or in which that Person's principal office (and/or, in
the case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).
"Total Utilization of Commitments" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Loans plus (ii) the Letter of Credit Usage.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement.2 Accounting
Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii) and
(xiii) of subsection 6.1 shall be prepared in accordance with GAAP as in effect
at the time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(iv)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3.
1.3 Other Definitional Provisions and Rules of Construction.
A. Any of the terms defined herein may, unless the
context otherwise requires, be used in
the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be
to Sections and subsections,
respectively, of this Agreement unless otherwise specifically provided.
C. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.
D. The use herein of "wholly-owned Subsidiaries" shall
include direct and indirect
wholly-owned Subsidiaries.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; Notes.1
A. Commitments. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees to make the Loans described in this
subsection 2.1A. Each Lender severally agrees, subject to the limitations set
forth below with respect to the maximum amount of Loans permitted to be
outstanding from time to time, to lend to Company from time to time during the
period from the Closing Date to but excluding the Commitment Termination Date an
aggregate amount not exceeding its Pro Rata Share of the aggregate amount of the
Commitments to be used for the purposes identified in subsection 2.5A. The
original amount of each Lender's Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate original amount of the Commitments
is $100,000,000; provided that the Commitment of each applicable Lender shall be
adjusted to give effect to any assignments of the Commitments pursuant to
subsection 10.1B; and provided, further that the amount of the Commitments shall
be reduced from time to time by the amount of any reductions thereto made
pursuant to subsections 2.4A and 2.4B. Subject to the provisions of subsection
2.1E, each Lender's Commitment shall expire on the Commitment Termination Date
and all Loans and all other amounts owed hereunder with respect to the Loans and
the Commitments shall be paid in full no later than that date; provided that
each Lender's Commitment shall expire immediately and without further action on
December 31, 1996 if the Closing Date has not occurred on or before that date.
Amounts borrowed under this subsection 2.1A may be repaid and reborrowed to but
excluding the Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Loans and the Commitments shall be subject to the
limitation that in no event shall the Total Utilization of Commitments at any
time exceed the Commitments then in effect.
B. Borrowing Mechanics. Loans made on any Funding Date (other than
Loans made pursuant to subsection 3.3B for the purpose of reimbursing any
Issuing Lender for the amount of a drawing under a Letter of Credit issued by
it) shall be in an aggregate minimum amount of $500,000 and integral multiples
of $100,000 in excess of that amount; provided that Loans made on any Funding
Date as Eurodollar Rate Loans with a particular Interest Period shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in
excess of that amount. Whenever Company desires that Lenders make Loans it shall
deliver to Agent a Notice of Borrowing no later than 11:00 A.M. (Dallas, Texas
time) at least three Business Days in advance of the proposed Funding Date (in
the case of a Eurodollar Rate Loan) or on the proposed Funding Date (in the case
of a Base Rate Loan). The Notice of Borrowing shall specify, (i) the proposed
Funding Date (which shall be a Business Day), (ii) the amount of Loans
requested, (iii) whether such Loans shall be Base Rate Loans or Eurodollar Rate
Loans, and (iv) in the case of any Loans requested to be made as Eurodollar Rate
Loans, the initial Interest Period requested therefor. Loans may be continued as
or converted into Base Rate Loans and Eurodollar Rate Loans in the manner
provided in subsection 2.2D.
Notwithstanding anything contained herein to the contrary,
during the period commencing on (and including) the Closing Date and ending on
the earlier of (i) the two-month anniversary of the Closing Date and (ii) the
date Agent sends a notice to Company indicating that Lenders' primary
syndication has been concluded, (a) Company may only request Base Rate Loans or
Eurodollar Rate Loans with an Interest Period of one month, (b) no Loan may be
converted into a Eurodollar Rate Loan having an Interest Period of longer than
one month and (c) the last day of the Interest Period applicable to any
Eurodollar Rate Loan shall be the one-month anniversary or the two-month
anniversary of the date on which the first Eurodollar Rate Loan is made under
this Agreement.
Company shall notify Agent prior to the funding of any Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for a Eurodollar Rate Loan shall be irrevocable on
and after the related Interest Rate Determination Date, and Company shall be
bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Loans under this Agreement shall be made
by Lenders simultaneously and proportionately to their respective Pro Rata
Shares, it being understood that no Lender shall be responsible for any default
by any other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder. Promptly after receipt by Agent of a Notice of
Borrowing pursuant to subsection 2.1B, Agent shall notify each Lender of the
proposed borrowing. Each Lender shall make the amount of its Loan available to
Agent not later than 12:00 Noon (Dallas, Texas time) on the applicable Funding
Date in same day funds in Dollars at the Funding and Payment Office. Except as
provided in subsection 3.3B with respect to Loans used to reimburse any Issuing
Lender for the amount of a drawing under a Letter of Credit issued by it, upon
satisfaction or waiver of the conditions precedent specified in subsections 4.1
(in the case of Loans made on the Closing Date) and 4.2 (in the case of all
Loans), Agent shall make the proceeds of such Loans available to Company on the
applicable Funding Date by causing an amount of same day funds in Dollars equal
to the proceeds of all such Loans received by Agent from Lenders to be credited
to the account of Company at the Funding and Payment Office.
Unless Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Agent the amount of such Lender's Loan requested on such Funding
Date, Agent may assume that such Lender has made such amount available to Agent
on such Funding Date and Agent may, in its sole discretion, but shall not be
obligated to, make available to Company a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent, at the customary rate
set by Agent for the correction of errors among banks for three Business Days
and thereafter at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Agent's demand therefor, Agent shall promptly notify
Company and Company shall immediately pay such corresponding amount to Agent
together with interest thereon, for each day from such Funding Date until the
date such amount is paid to Agent, at the rate payable under this Agreement for
Base Rate Loans; provided, however, that nothing herein shall obligate Company
to pay to Agent compensation under subsection 2.6D in the event any such amount
represents a Eurodollar Rate Loan. Nothing in this subsection 2.1C shall be
deemed to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Company may have against any Lender as
a result of any default by such Lender hereunder.
D. Notes. Company shall execute and deliver on the Closing Date
to each Lender (or to Agent for
that Lender) a Note substantially in the form of Exhibit IV annexed hereto to
evidence that Lender's Loans, in
the principal amount of that Lender's Commitment and with other appropriate
insertions, and such Notes shall
replace and supersede the Existing Notes held by such Lenders.
E. Extension of Commitments. On or before the date that is ninety (90)
days prior to the second anniversary of the Closing Date, the Company may
request that the Lenders extend the availability of the Commitments for one
additional period of one year. The Agent shall promptly notify the Lenders of
such a request. On or before the date that is sixty (60) days prior to the
second anniversary of the Closing Date, the Lenders shall have the right, in
their sole discretion, to consent to the extension of the Commitments on terms
and conditions satisfactory to the Lenders or to reject such extension request.
If any Lender rejects the extension of the Commitments, the Commitments shall
terminate on the then scheduled Commitment Termination Date and all Loans shall
be repaid in accordance with the terms of this Agreement. If the Agent has not
responded in writing to the Company by the date that is sixty (60) days prior to
the second anniversary of the Closing Date, the Lenders shall be deemed to have
rejected the extension of the Commitments.
If the Lenders consent to the extension of the Commitments for
a one-year period, the Commitment Termination Date and each scheduled commitment
reduction date as set forth in subsection 2.4A of this Agreement shall be
automatically extended by such one-year period without any further action by the
Company, the Agent or the Lenders and the Company shall execute such documents,
agreements and instruments, and perform such acts as the Agent may request, to
effect such extension on the terms and conditions agreed to by the Lenders.
2.2 Interest on the Loans.2 Interest on the LoansInterest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate. The
applicable basis for determining the rate of interest with respect to any Loan
shall be selected by Company initially at the time a Notice of Borrowing is
given with respect to such Loan pursuant to subsection 2.1B, and the basis for
determining the interest rate with respect to any Loan may be changed from time
to time pursuant to subsection 2.2D. If on any day a Loan is outstanding with
respect to which notice has not been delivered to Agent in accordance with the
terms of this Agreement specifying the applicable basis for determining the rate
of interest, then for that day that Loan shall bear interest determined by
reference to the Base Rate.
Subject to the provisions of subsections 2.6 and 2.7, the
Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the
Base Rate plus the applicable
margin set forth for Base Rate Loans (the "Base Rate Margin") in the table below
opposite Company's Consolidated Adjusted Leverage Ratio; or
(b) if a Eurodollar Rate Loan, then at the sum
of the Adjusted Eurodollar Rate
plus the applicable margin set forth for Eurodollar Rate Loans (the "Eurodollar
Rate Margin") in the table below opposite Company's Consolidated Adjusted
Leverage Ratio:
Margin for Margin
Consolidated Adjusted Leverage Eurodollar for Base
Ratio Rate Loans Rate Loans
Less than 3.25:1.00 0.75% 0.00%
Equal to or greater than 3.25:1.00 1.00% 0.00%
but less than 3.75:1.00
Equal to or greater than 3.75:1:00 1.25% 0.00%
but less than 4.25:1.00
Equal to or greater than 4.25:1.00 1.50% 0.00%
but less than 4.75:1.00
Equal to or greater than 4.75:1.00 1.75% 0.25%
but less than 5.25:1.00
Equal to or greater than 5.25:1.00 2.00% 0.50%
The initial Base Rate Margin and the initial
Eurodollar Rate Margin, until adjusted as
hereinafter provided for in this subsection 2.2A, shall be 0.25% per annum and
1.75% per annum, respectively. Commencing with the Compliance Certificate
delivered for the Fiscal Quarter ending December 31, 1996, effective as of the
fifth day following Agent's receipt of each Compliance Certificate and the
accompanying financial statements pursuant to subsection 6.1, the Base Rate
Margin and the Eurodollar Rate Margin shall automatically be adjusted in
accordance with the Consolidated Adjusted Leverage Ratio as of the last day of
the Fiscal Quarter for which the Compliance Certificate is being delivered and
the table set forth above; provided that, in the event that Company fails to
deliver a Compliance Certificate and the accompanying financial statements by
the fifth day following the date required in accordance with the provisions of
subsection 6.1, the Base Rate Margin and the Eurodollar Rate Margin shall
automatically be adjusted to 0.50% per annum and 2.00% per annum, respectively,
effective upon such fifth day until such date as such Compliance Certificate and
the accompanying financial statements are actually delivered; provided that
nothing in this paragraph shall be deemed to be a waiver of Company's
obligations to comply with subsection 6.1.
B. Interest Periods. In connection with each Eurodollar Rate
Loan, Company may, pursuant to the
applicable Notice of Borrowing or Notice of Conversion/Continuation, as the case
may be, select an interest
period (each an "Interest Period") to be applicable to such Loan, which Interest
Period shall be, at Company's
option, either a one, two, three or six month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan converted to
a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall, subject to
clause (v) of this subsection 2.2B, end on the last Business Day of a calendar
month;
(v) no Interest Period with respect to any portion of the
Loans shall extend beyond the
Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the
Loans shall extend beyond the date on which a permanent reduction of the
Commitments is scheduled to occur unless the sum of (a) the aggregate principal
amount of Loans that are Base Rate Loans plus (b) the aggregate principal amount
of Loans that are Eurodollar Rate Loans with Interest Periods expiring on or
before such date plus (c) the excess of the Commitments then in effect over the
Total Utilization of Commitments equals or exceeds the permanent reduction of
the Commitments that is scheduled to occur on such date;
(vii) there shall be no more than ten Interest Periods
outstanding at any time; and
(viii) in the event Company fails to specify an Interest
Period for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection
2.2E, interest on each Loan shall
be payable in arrears on and to each Interest Payment Date applicable to that
Loan, upon any prepayment of that
Loan (to the extent accrued on the amount being prepaid) and at maturity
(including final maturity); provided
that in the event any Loans that are Base Rate Loans are prepaid pursuant to
subsection 2.4B(i), interest accrued
on such Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert all or any part of its
outstanding Loans from Loans bearing interest at a rate determined by reference
to one basis to Loans bearing interest at a rate determined by reference to an
alternative basis or (ii) to continue all or any portion of a Eurodollar Rate
Loan as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan
may only be so converted or continued on the expiration date of the Interest
Period applicable thereto and in amounts equal to $1,000,000 and integral
multiples of $100,000 in excess of that amount.
Company shall deliver a Notice of Conversion/Continuation to
Agent no later than 11:00 A.M. (Dallas, Texas time) on the proposed conversion
date (in the case of a conversion to a Base Rate Loan) and at least three
Business Days in advance of the proposed conversion/continuation date (in the
case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice
of Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
and type of the Loan to be converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case
of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no
Potential Event of Default or Event of Default has occurred and is continuing.
In lieu of delivering the above-described Notice of Conversion/Continuation,
Company may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed
conversion/continuation date. Upon receipt of written or telephonic notice of
any proposed conversion/continuation under this subsection 2.2D, Agent shall
promptly transmit such notice by telefacsimile or telephone to each Lender.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of Company or for otherwise acting in good
faith under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected a conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of,
a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation in accordance
therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed,
(i) in the case of Base Rate Loans, on the basis of a 365-day/366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan, as
the case may be, shall be excluded; provided that if a Loan is repaid on the
same day on which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.3 FeesFees.
A. Commitment Fees. Company agrees to pay to Agent, for distribution to
each Lender in proportion to that Lender's Pro Rata Share, commitment fees for
the period from and including November 13, 1996 to and excluding the Closing
Date equal to the amount of the Commitments multiplied by 0.25%, such commitment
fees to be calculated on the basis of a 360-day year and the actual number of
days elapsed and to be payable on the Closing Date. Company also agrees to pay
to Agent, for distribution to each Lender in proportion to that Lender's Pro
Rata Share, commitment fees for the period from and including the Closing Date
to and excluding the Commitment Termination Date equal to the average of the
daily excess of the Commitments over the Total Utilization of Commitments
multiplied by the applicable Commitment Fee Percentage set forth in the table
below (the "Commitment Fee Percentage"), such commitment fees to be calculated
on the basis of a 360-day year and the actual number of days elapsed and to be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, commencing on March 31, 1997, and on the Commitment Termination
Date.
The applicable Commitment Fee Percentage is set forth in the
table below opposite Company's Consolidated Adjusted Leverage Ratio:
Consolidated Adjusted Leverage Commitment
Ratio Fee Percentage
Less than 3.25:1.00 0.20%
Equal to or greater than 3.25:1.00 0.25%
but less than 3.75:1.00
Equal to or greater than 3.75:1:00 0.25%
but less than 4.25:1.00
Equal to or greater than 4.25:1.00 0.3125%
but less than 4.75:1.00
Equal to or greater than 4.75:1.00 0.375%
but less than 5.25:1.00
Equal to or greater than 5.25:1.00 0.375%
The initial Commitment Fee Percentage, until adjusted
as hereinafter provided for in
this subsection 2.3A, shall be 0.375% per annum. Commencing with the Compliance
Certificate delivered for the Fiscal Quarter ending December 31, 1996, effective
as of the fifth day following Agent's receipt of each Compliance Certificate and
accompanying financial statements pursuant to subsection 6.1, the Commitment Fee
Percentage shall automatically be adjusted in accordance with the Consolidated
Adjusted Leverage Ratio as of the last day of the Fiscal Quarter for which the
Compliance Certificate is being delivered and the table set forth above;
provided that, in the event that Company fails to deliver a Compliance
Certificate and the accompanying financial statements by the fifth day following
the date required in accordance with the provisions of subsection 6.1, the
Commitment Fee Percentage shall automatically be adjusted to 0.375% per annum,
effective upon such fifth day until such date as such Compliance Certificate and
the accompanying financial statements are actually delivered; provided that
nothing in this paragraph shall be deemed to be a waiver of Company's
obligations under subsection 6.1.
B. Annual Administrative Fee. Company agrees to pay to Agent an
annual administrative fee in such
amount and at such times as separately agreed in writing upon between Company
and Agent.
C. Other Fees. Company agrees to pay to Agent for the account of
the Lenders such other fees in
the amounts and at the times separately agreed in writing upon among Company and
Agent.
2.4 Repayments, Prepayments and Reductions in Commitments; General
Provisions Regarding Payments.4
Repayments, Prepayments and Reductions in Commitments; General Provisions
Regarding Payments.
A. Scheduled Reductions of Commitments. Subject to the
provisions of subsection 2.1E, the
aggregate Commitments of the Lenders shall be permanently reduced on the dates
and in the amounts set forth below:
Scheduled Reduction of
Date Commitments
December 20, 1999 $25,000,000
December 20, 2000 $25,000,000
December 20, 2001 $50,000,000
and the Commitment of each Lender shall be reduced by such Lender's Pro
Rata Share of such reduction in the aggregate Commitments; provided that the
scheduled reductions of the Commitments set forth above shall be reduced in
connection with any voluntary reductions of the Commitments in accordance with
subsection 2.4B(iv).
B. Prepayments and Reductions in Commitments.
(i) Voluntary Prepayments. Company may, upon not less than two
Business Day's prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days' prior written or telephonic notice, in the case
of Eurodollar Rate Loans, in each case given to Agent by 12:00 Noon (Dallas,
Texas time) on the date required and, if given by telephone, promptly confirmed
in writing to Agent (which original written or telephonic notice Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay any Loans on any Business Day in whole or in part in an
aggregate minimum amount of $100,000 and integral multiples thereof in excess of
that amount; provided, however, that a Eurodollar Rate Loan may only be prepaid
on the expiration of the Interest Period applicable thereto. Notice of
prepayment having been given as aforesaid, the principal amount of the Loans
specified in such notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be applied as specified
in subsection 2.4B(iv).
(ii) Voluntary Reductions of Commitments. Company may, upon
not less than ten Business Days' prior written or telephonic notice confirmed in
writing to Agent (which original written or telephonic notice Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time and
from time to time terminate in whole or permanently reduce in part, without
premium or penalty, the Commitments in an amount up to the amount by which the
Commitments exceed the Total Utilization of Commitments at the time of such
proposed termination or reduction; provided that any such partial reduction of
the Commitments shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $100,000 in excess of that amount. Company's notice to
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and such
termination or reduction of the Commitments shall be effective on the date
specified in Company's notice and shall reduce the Commitment of each Lender
proportionately to its Pro Rata Share. Any such voluntary reduction of the
Commitments shall be applied as specified in subsection 2.4B(iv).
(iii) Mandatory Prepayments and Reductions in Commitments.
(a) Company shall from time to time prepay the
Loans to the extent necessary so
that the Total Utilization of Commitments shall not at any time exceed the
Commitments then in effect, all such prepayments to be applied as provided in
subsection 2.4B(iv).
(b) The Commitments shall be permanently reduced
and the Company shall prepay the
Loans to the extent required pursuant to subsection 7.7(vii).
(iv) Application of Prepayments and Unscheduled Reductions
of Commitments.
(a) Application of Prepayments to Base Rate
Loans and Eurodollar Rate Loans. Any
prepayment of the Loans shall be applied first to Base Rate Loans to the full
extent thereof before application to Eurodollar Rate Loans, in each case in a
manner which minimizes the amount of any payments required to be made by Company
pursuant to subsection 2.6D.
(b) Application of Unscheduled Reductions of
Commitments. Any voluntary reduction
of the Commitments pursuant to subsection 2.4B(ii) shall be applied to reduce
the scheduled reductions of the Commitments set forth in subsection 2.4A in such
manner as may be selected by Company. Any mandatory reduction of Commitments set
forth in subsection 2.4B(iii)(b) shall be applied to scheduled reductions of the
Commitments set forth in subsection 2.4A pro rata among such scheduled
reductions.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the Notes
shall be made in Dollars in same day funds, without defense, setoff or
counterclaim, free of any restriction or condition, and delivered to Agent not
later than 12:00 Noon (Dallas, Texas time) on the date due at the Funding and
Payment Office for the account of Lenders or Issuing Lender, as the case may be.
Funds received by Agent after that time on such due date shall be deemed to have
been paid by Company on the next succeeding Business Day. Company hereby
authorizes Agent to charge its accounts with Agent in order to cause timely
payment to be made to Agent of all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available in its accounts for that
purpose).
(ii) Application of Payments to Principal and Interest. Except
as provided in subsection 2.2C, all payments in respect of the principal amount
of any Loan shall include payment of accrued interest on the principal amount
being repaid or prepaid, and all such payments shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments in respect of Loans shall be apportioned among all outstanding
Loans to which such payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Agent shall promptly distribute to each Lender, at
its primary address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request, its Pro Rata Share
of all such payments received by Agent and the commitment fees of such Lender
when received by Agent pursuant to subsection 2.3. Notwithstanding the foregoing
provisions of this subsection 2.4C(iii), if, pursuant to the provisions of
subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its
Pro Rata Share of any Eurodollar Rate Loans, Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Except as otherwise provided
in subsection 2.2B(iii), whenever any payment to be made hereunder shall be
stated to be due on a day that is not a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all Loans
evidenced by that Note and all principal payments previously made thereon and of
the date to which interest thereon has been paid; provided that the failure to
make (or any error in the making of) a notation of any Loan made under such Note
shall not limit or otherwise affect the obligations of Company hereunder or
under such Note with respect to any Loan or any payments of principal or
interest on such Note.
Use of Proceeds.Proceeds.5 Use of Proceeds
A. Loans. The proceeds of the Loans shall be applied by Company
first to repay all outstanding
Loans under the Existing Credit Agreement, and all accrued and unpaid interest
thereon and any fees and penalties
in connection therewith, and thereafter for working capital and general
corporate purposes, including, without
limitation, the financing of Acquisitions and making of intercompany loans to
any of Company's Subsidiaries in
accordance with subsection 7.1(iv) for working capital and general corporate
purposes.
B. Margin Regulations. No portion of the proceeds of any
borrowing under this Agreement shall be
used by Company or any of its Subsidiaries in any manner that might cause the
borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
the Exchange Act, in each case as
in effect on the date or dates of such borrowing and such use of proceeds.
Special Provisions Governing Eurodollar Rate Loans.te Loans.6 Special Provisions
Governing Eurodollar Rate Loans
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 11:00 A.M. (Dallas, Texas time) on each Interest Rate Determination Date,
Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) the interest rate that shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Company and each
Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Agent shall have determined (which determination, absent manifest error, shall
be final and conclusive and binding upon all parties hereto), on any Interest
Rate Determination Date with respect to any Eurodollar Rate Loans, that by
reason of circumstances affecting the London interbank market adequate and fair
means do not exist for ascertaining the interest rate applicable to such Loans
on the basis provided for in the definition of Adjusted Eurodollar Rate, Agent
shall on such date give notice (by telefacsimile or by telephone confirmed in
writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, continued as or converted to, Eurodollar Rate Loans until
such time as Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the
event that on any date any Lender shall have determined (which determination,
absent manifest error, shall be final and conclusive and binding upon all
parties hereto but shall be made only after consultation with Company and Agent)
that the making, maintaining or continuation of its Eurodollar Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith with
any law, treaty, governmental rule, regulation, guideline or order having the
force of law (or would conflict with any such treaty, governmental rule,
regulation, guideline or order not having the force of law even though the
failure to comply therewith would not be unlawful) or (ii) has become
impracticable, or would cause such Lender material hardship, as a result of
contingencies occurring after the date of this Agreement which materially and
adversely affect the London interbank market or the position of such Lender in
that market, then, and in any such event, such Lender shall be an "Affected
Lender" and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Agent of such determination (which notice
Agent shall promptly transmit to each other Lender). Thereafter (a) the
obligation of the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by
the Affected Lender, (b) to the extent such determination by the Affected Lender
relates to a Eurodollar Rate Loan then being requested by Company pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, the Affected Lender
shall make such Loan as (or convert such Loan to, as the case may be) a Base
Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans (the "Affected Loans") shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a Eurodollar Rate Loan then being requested
by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Agent of such rescission on the date on
which the Affected Lender gives notice of its determination as described above
(which notice of rescission Agent shall promptly transmit to each other Lender).
Except as provided in the immediately preceding sentence, nothing in this
subsection 2.6C shall affect the obligation of any Lender other than an Affected
Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate
Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth in reasonable detail the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar Rate
Loan does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request for conversion or continuation,
(ii) if any prepayment (including without limitation any prepayment pursuant to
subsection 2.4B(i)) or other principal payment or any conversion of any of its
Eurodollar Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar
Rate Loans is not made on any date specified in a notice of prepayment given by
Company, or (iv) as a consequence of any other default by Company in the
repayment of its Eurodollar Rate Loans when required by the terms of this
Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry
or transfer Eurodollar Rate Loans
at, to, or for the account of any of its branch offices or the office of an
Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy
A. Compensation for Increased Costs and Taxes. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of such Lender)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental, special or
other reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, or advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that are
reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Eurodollar Rate Loans hereunder or to
reduce any amount received or receivable by such Lender (or its applicable
lending office) with respect thereto; then, in any such case, Company shall
promptly pay to such Lender, upon receipt of the statement referred to in the
next sentence, such additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its sole discretion shall determine) as may be necessary to compensate
such Lender for any such increased cost or reduction in amounts received or
receivable hereunder with respect to Eurodollar Rate Loans. Such Lender shall
deliver to Company (with a copy to Agent) a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to such
Lender under this subsection 2.7A, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net income
of any Lender) imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the United States
of America or any other jurisdiction from or to which a payment is made by or on
behalf of Company or by any federation or organization of which the United
States of America or any such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person
is required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Agent or any Lender under any of
the Loan Documents:
(a) Company shall notify Agent of any such
requirement or any change in any such
requirement as soon as Company becomes aware of it;
(b) Company shall pay any such Tax before the
date on which penalties attach
thereto, such payment to be made (if the liability to pay is imposed on Company)
for its own account or (if that liability is imposed on Agent or such Lender, as
the case may be) on behalf of and in the name of Agent or such Lender;
(c) the sum payable by Company in respect of
which the relevant deduction,
withholding or payment is required shall be increased to the extent necessary to
ensure that, after the making of that deduction, withholding or payment, Agent
or such Lender, as the case may be, receives on the due date a net sum equal to
what it would have received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from
which it is required by law to make
any deduction or withholding, and within 30 days after the due date of payment
of any Tax which it is required by clause (b) above to pay, Company shall
deliver to Agent evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages hereof) or
after the date of the Assignment Agreement pursuant to which such Lender became
a Lender (in the case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect at the date of this Agreement or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws
of any jurisdiction other than
the United States or any state or other political subdivision thereof (for
purposes of this subsection 2.7B(iii), a "Non-US Lender") shall deliver to Agent
for transmission to Company, on or prior to the Closing Date (in the case of
each Lender listed on the signature pages hereof) or on or prior to the date of
the Assignment Agreement pursuant to which it becomes a Lender (in the case of
each other Lender), and at such other times as may be necessary in the
determination of Company or Agent (each in the reasonable exercise of its
discretion), two original copies of Internal Revenue Service Form 1001 or 4224
(or any successor forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Loan Documents or (2) if such
Lender is not a "bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code and cannot deliver either Internal Revenue Service Form
1001 or 4224 pursuant to clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to establish that such Lender
is not subject to deduction or withholding of United States federal income tax
with respect to any payments to such Lender of interest payable under any of the
Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to
subsection 2.7B(iii)(a) hereby agrees, from time to time after the initial
delivery by such Lender of such forms, certificates or other evidence, whenever
a lapse in time or change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect, that such Lender
shall promptly (1) deliver to Agent for transmission to Company two new original
copies of Internal Revenue Service Form 1001 or 4224, or a Certificate re
Non-Bank Status and two original copies of Internal Revenue Service Form W-8, as
the case may be, properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to payments to such Lender
under the Loan Documents or (2) notify Agent and Company of its inability to
deliver any such forms, certificates or other evidence.
(c) Company shall not be required to pay any
additional amount to any Non-US
Lender under clause (c) of subsection 2.7B(ii) if such Lender shall have failed
to satisfy the requirements of clause (a) or (b)(1) of this subsection
2.7B(iii); provided that if such Lender shall have satisfied the requirements of
subsection 2.7B(iii)(a) on the Closing Date (in the case of each Lender listed
on the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its obligation to pay
any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the
event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as
described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in the next sentence, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction. Such
Lender shall deliver to Company (with a copy to Agent) a written statement,
setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate
Each Lender and Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the existence
of a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use commercially reasonable efforts (i) to make, issue, fund or
maintain the Commitments of such Lender or the affected Loans or Letters of
Credit of such Lender or Issuing Lender through another lending or letter of
credit office of such Lender or Issuing Lender, or (ii) take such other measures
as such Lender or Issuing Lender may deem commercially reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7
or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Commitments or Loans or Letters of Credit through such other
lending or letter of credit office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect such
Commitments or Loans or Letters of Credit or the interests of such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8 unless Company agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described in clause (i) above. A
certificate as to the amount of any such expenses payable by Company pursuant to
this subsection 2.8 (setting forth in reasonable detail the basis for requesting
such amount) submitted by such Lender or Issuing Lender to Company (with a copy
to Agent) shall be conclusive absent manifest error.
2.9 Substitution of Lenders.9 Substitution of LendersSubstitution of
Lenders.
If any Lender requests compensation from Company under
subsection 2.7, Company shall have the right, with the assistance of Agent, to
seek one or more Eligible Assignees (which may be one or more of the Lenders)
reasonably satisfactory to Agent and Company to purchase the Loans and assume
the Commitment of such Lender, and Company, Agent, such Lender, and such
Eligible Assignees shall execute and deliver an appropriately completed
Assignment Agreement pursuant to subsection 10.1B hereof to effect the
assignment of rights to and the assumption of obligations by such Eligible
Assignees; provided that (i) such requesting Lender shall be entitled to
compensation under subsection 2.7 for any costs incurred by or otherwise due to
it prior to its replacement, (ii) no Event of Default or Potential Event of
Default has occurred and is continuing, (iii) Company has satisfied all of its
obligations under the Loan Documents relating to such Lender, including without
limitation obligations, if any, under subsection 2.7, and (iv) Company shall
have paid Agent a $3,000 processing and recordation fee.
Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein
A. Letters of Credit. In addition to Company requesting that Lenders
make Loans pursuant to subsection 2.1A, Company may request, in accordance with
the provisions of this subsection 3.1, from time to time during the period from
the Closing Date to but excluding the Commitment Termination Date, that one or
more Lenders issue Letters of Credit for the account of Company for the purposes
specified in the definition of Standby Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Lenders may, but (except
as provided in subsection 3.1B(ii)) shall not be obligated to, issue such
Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and no Lender
shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization
of Commitments would exceed the Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit
Usage would exceed $35,000,000;
(iii) any Letter of Credit having an expiration date later
than the earlier of (a) the Commitment Termination Date and (b) the date which
is one year from the date of issuance of such Letter of Credit; provided that
the immediately preceding clause (b) shall not prevent any Issuing Lender from
agreeing that a Letter of Credit will automatically be extended for one or more
successive periods not to exceed one year each unless such Issuing Lender elects
not to extend for any such additional period; provided, further that such
Issuing Lender shall elect not to extend such Letter of Credit if it has
knowledge that an Event of Default has occurred and is continuing (and has not
been waived in accordance with subsection 10.6) at the time such Issuing Lender
must elect whether or not to allow such extension, and in no event will any such
extensions extend beyond the Commitment Termination Date; and
(iv) any Letter of Credit denominated in a currency other
than Dollars.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance
of a Letter of Credit, it shall deliver to Agent a Notice of Issuance of Letter
of Credit substantially in the form of Exhibit III annexed hereto no later than
11:00 A.M. (Dallas, Texas time) at least three Business Days, or such shorter
period as may be agreed to by the Issuing Lender in any particular instance, in
advance of the proposed date of issuance. The Notice of Issuance of Letter of
Credit shall specify (a) the proposed date of issuance (which shall be a
Business Day), (b) the face amount of the Letter of Credit, (c) the expiration
date of the Letter of Credit, (d) the name and address of the beneficiary, and
(e) either the verbatim text of the proposed Letter of Credit or the proposed
terms and conditions thereof, including a precise description of any documents
to be presented by the beneficiary which, if presented by the beneficiary prior
to the expiration date of the Letter of Credit, would require the Issuing Lender
to make payment under the Letter of Credit; provided that the Issuing Lender, in
its reasonable discretion, may require changes in the text of the proposed
Letter of Credit or any such documents; and provided, further that no Letter of
Credit shall require payment against a conforming draft to be made thereunder on
the same business day (under the laws of the jurisdiction in which the office of
the Issuing Lender to which such draft is required to be presented is located)
that such draft is presented if such presentation is made after 10:00 A.M. (in
the time zone of such office of the Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender
(and Agent, if Agent is not such
Issuing Lender) prior to the issuance of any Letter of Credit in the event that
any of the matters to which Company is required to certify in the applicable
Notice of Issuance of Letter of Credit is no longer true and correct as of the
proposed date of issuance of such Letter of Credit, and upon the issuance of any
Letter of Credit Company shall be deemed to have re-certified, as of the date of
such issuance, as to the matters to which Company is required to certify in the
applicable Notice of Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Agent of
a Notice of Issuance of Letter of Credit pursuant to subsection 3.1B(i)
requesting the issuance of a Letter of Credit, in the event Agent elects to
issue such Letter of Credit, Agent shall promptly so notify Company, and Agent
shall be the Issuing Lender with respect thereto. In the event that Agent, in
its sole discretion, elects not to issue such Letter of Credit, Agent shall
promptly so notify Company, whereupon Company may request any other Lender to
issue such Letter of Credit by delivering to such Lender a copy of the
applicable Notice of Issuance of Letter of Credit. Any Lender so requested to
issue such Letter of Credit shall promptly notify Company and Agent whether or
not, in its sole discretion, it has elected to issue such Letter of Credit, and
any such Lender which so elects to issue such Letter of Credit shall be the
Issuing Lender with respect thereto. In the event that all other Lenders shall
have declined to issue such Letter of Credit, notwithstanding the prior election
of Agent not to issue such Letter of Credit, Agent shall be obligated to issue
such Letter of Credit and shall be the Issuing Lender with respect thereto,
notwithstanding the fact that the Letter of Credit Usage with respect to such
Letter of Credit and with respect to all other Letters of Credit issued by
Agent, when aggregated with Agent's outstanding Loans, may exceed Agent's
Commitment then in effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or
waiver (in accordance with subsection 10.6) of the conditions set forth in
subsection 4.3, the Issuing Lender shall issue the requested Letter of Credit on
or before the proposed issuance date in accordance with the Issuing Lender's
standard operating procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter
of Credit the applicable Issuing Lender shall promptly notify Agent (if the
Issuing Lender is not Agent) and each other Lender of such issuance, which
notice shall be accompanied by a copy of such Letter of Credit. Promptly after
receipt of such notice (or, if Agent is the Issuing Lender, together with such
notice), Agent shall notify each Lender of the amount of such Lender's
respective participation in such Letter of Credit, determined in accordance with
subsection 3.1C.
C. Lenders' Purchase of Participations in Letters of Credit.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 Letter of Credit Fees.2 Letter of Credit FeesLetter of Credit Fees.
Company agrees to pay the following amounts with respect to
Letters of Credit issued hereunder:
(i) with respect to each Letter of Credit, (a) a fronting fee,
payable directly to the applicable Issuing Lender for its own account, equal to
0.125% per annum of the face amount of such Letter of Credit payable quarterly
in advance, with the first payment due on the date of issuance and thereafter
with the payment due on every three-month anniversary of such date and (b) a
letter of credit fee, payable to Agent for the account of Lenders, equal to the
then applicable Eurodollar Rate Margin set forth in subsection 2.2A hereof for
Eurodollar Rate Loans multiplied by the daily maximum amount available to be
drawn under such Letter of Credit, payable in arrears on and to (but excluding)
each March 31, June 30, September 30 and December 31 of each year, commencing
December 31, 1996, both such fees to be computed on the basis of a 360-day year
for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clause (i) above), documentary and
processing charges payable directly to the applicable Issuing Lender for its own
account in accordance with such Issuing Lender's standard schedule for such
charges in effect at the time of such issuance, amendment, transfer or payment,
as the case may be.
Promptly upon receipt by Agent of any amount described in clause (i)(b) of this
subsection 3.2, Agent shall distribute to each Lender its Pro Rata Share of such
amount.
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Agent, and Company shall reimburse such Issuing Lender on the Business Day
immediately following the date on which such drawing is honored (the
"Reimbursement Date") in an amount in Dollars and in same day funds equal to the
amount of such honored drawing; provided that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Agent and such Issuing Lender prior to 11:00 A.M. (Dallas, Texas time)
on the date such drawing is honored that Company intends to reimburse such
Issuing Lender for the amount of such honored drawing with funds other than the
proceeds of Loans, Company shall be deemed to have given a timely Notice of
Borrowing to Agent requesting Lenders to make Loans that are Base Rate Loans on
the Reimbursement Date in an amount in Dollars equal to the amount of such
honored drawing and (ii) subject to satisfaction or waiver of the conditions
specified in subsection 4.2B, Lenders shall, on the Reimbursement Date, make
Loans that are Base Rate Loans in the amount of such honored drawing, the
proceeds of which shall be applied directly by Agent to reimburse such Issuing
Lender for the amount of such honored drawing; and provided, further that if for
any reason proceeds of Loans are not received by such Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such honored drawing,
Company shall reimburse such Issuing Lender, on demand, in an amount in same day
funds equal to the excess of the amount of such honored drawing over the
aggregate amount of such Loans, if any, which are so received. Nothing in this
subsection 3.3B shall be deemed to relieve any Lender from its obligation to
make Loans on the terms and conditions set forth in this Agreement, and Company
shall retain any and all rights it may have against any Lender resulting from
the failure of such Lender to make such Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters
of Credit.
(i) Payment by Lenders. In the event that Company shall fail
for any reason to reimburse any Issuing Lender as provided in subsection 3.3B
(including the failure to reimburse such Issuing Lender with the proceeds of
Loans) in an amount equal to the amount of any drawing honored by such Issuing
Lender under a Letter of Credit issued by it, such Issuing Lender shall promptly
notify each other Lender of the unreimbursed amount of such honored drawing and
of such other Lender's respective participation therein based on such Lender's
Pro Rata Share. Each Lender shall make available to such Issuing Lender an
amount equal to its respective participation, in Dollars and in same day funds,
at the office of such Issuing Lender specified in such notice, not later than
12:00 Noon (Dallas, Texas time) on the first business day (under the laws of the
jurisdiction in which such office of such Issuing Lender is located) after the
date notified by such Issuing Lender. In the event that any Lender fails to make
available to such Issuing Lender on such business day the amount of such
Lender's participation in such Letter of Credit as provided in this subsection
3.3C, such Issuing Lender shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the rate customarily used by
such Issuing Lender for the correction of errors among banks for three Business
Days and thereafter at the Base Rate. Nothing in this subsection 3.3C shall be
deemed to prejudice the right of any Lender to recover from any Issuing Lender
any amounts made available by such Lender to such Issuing Lender pursuant to
this subsection 3.3C in the event that it is determined by the final judgment of
a court of competent jurisdiction that the payment with respect to a Letter of
Credit by such Issuing Lender in respect of which payment was made by such
Lender constituted gross negligence or willful misconduct on the part of such
Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by other
Lenders pursuant to subsection 3.3C(i) for all or any portion of any drawing
honored by such Issuing Lender under a Letter of Credit issued by it, such
Issuing Lender shall distribute to each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such honored drawing such
other Lender's Pro Rata Share of all payments subsequently received by such
Issuing Lender from Company in reimbursement of such honored drawing when such
payments are received. Any such distribution shall be made to a Lender at its
primary address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to
each Issuing Lender, with respect to drawings honored under any Letters of
Credit issued by it, interest on the amount paid by such Issuing Lender in
respect of each such honored drawing from the date such drawing is honored to
but excluding the date such amount is reimbursed by Company (including any such
reimbursement out of the proceeds of Loans pursuant to subsection 3.3B) at a
rate equal to (a) for the period from the date such drawing is honored to but
excluding the Reimbursement Date, the rate then in effect under this Agreement
with respect to Loans that are Base Rate Loans and (b) thereafter, a rate which
is 2% per annum in excess of the rate of interest otherwise payable under this
Agreement with respect to Loans that are Base Rate Loans. Interest payable
pursuant to this subsection 3.3D(i) shall be computed on the basis of a 365/366
day year for the actual number of days elapsed in the period during which it
accrues and shall be payable on demand or, if no demand is made, on the date on
which the related drawing under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest pursuant
to subsection 3.3D(i) with respect to a drawing honored under a Letter of Credit
issued by it, (a) such Issuing Lender shall distribute to each other Lender, out
of the interest received by such Issuing Lender in respect of the period from
the date such drawing is honored to but excluding the date on which such Issuing
Lender is reimbursed for the amount of such drawing (including any such
reimbursement out of the proceeds of Loans pursuant to subsection 3.3B), the
amount that such other Lender would have been entitled to receive in respect of
the letter of credit fee that would have been payable in respect of such Letter
of Credit for such period pursuant to subsection 3.2 if no drawing had been
honored under such Letter of Credit, and (b) in the event such Issuing Lender
shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for
all or any portion of such honored drawing, such Issuing Lender shall distribute
to each other Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such honored drawing such other Lender's Pro Rata Share
of any interest received by such Issuing Lender in respect of that portion of
such honored drawing so reimbursed by other Lenders for the period from the date
on which such Issuing Lender was so reimbursed by other Lenders to but excluding
the date on which such portion of such honored drawing is reimbursed by Company.
Any such distribution shall be made to a Lender at its primary address set forth
below its name on the appropriate signature page hereof or at such other address
as such Lender may request.
3.4 Obligations Absolute.4 Obligations AbsoluteObligations Absolute.
The obligation of Company to reimburse each Issuing Lender for
drawings honored under the Letters of Credit issued by it and to repay any Loans
made by Lenders pursuant to subsection 3.3B and the obligations of Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection with
this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of its
Subsidiaries and the beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under any Letter
of Credit against presentation of a draft or other document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition
(financial or otherwise) or prospects of Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the
foregoing; or
(viii) the fact that an Event of Default or a Potential
Event of Default shall have occurred
and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
Indemnification; Nature of Issuing Lenders' Duties.' Duties.5 Indemnification;
Nature of Issuing Lenders' Duties
A. Indemnification. In addition to amounts payable as provided
in subsection 3.6, Company hereby
agrees to protect, indemnify, pay and save harmless each Issuing Lender from
and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable fees, expenses and
disbursements of counsel) which such Issuing Lender may incur or be subject to
as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit by such Issuing Lender,
other than as a result of (a) the
gross negligence or willful misconduct of such Issuing Lender as determined by a
final judgment of a court of
competent jurisdiction or (b) subject to the following clause (ii), the wrongful
dishonor by such Issuing Lender
of a proper demand for payment made under any Letter of Credit issued by it or
(ii) the failure of such Issuing
Lender to honor a drawing under any such Letter of Credit as a result of any act
or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or
omissions herein called "Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including without limitation any Governmental
Acts, and none of the above shall affect or impair, or prevent the vesting of,
any of such Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5B,
any action taken or omitted by any Issuing Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put such Issuing Lender
under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against any
Issuing Lender for any liability arising out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
Existing Letters of Credit.f Credit.6 Existing Letters of Credit
Notwithstanding anything to the contrary herein, as of the
Closing Date, all of the Existing Letters of Credit shall be deemed to be
Letters of Credit issued hereunder and shall be subject to all of the terms and
provisions of this Agreement, including all terms and provisions applicable to
Letters of Credit under this Agreement. Each Lender agrees that its obligations
with respect to Letters of Credit pursuant to subsection 3.3C shall, as of the
Closing Date, include the Existing Letters of Credit.
3.7 Increased Costs and Taxes Relating to Letters of Credit
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Lender with any guideline, request or directive issued or made
after the date hereof by any central bank or other governmental or
quasi-governmental authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than any Tax on
the overall net income of such Issuing Lender or Lender) with respect to the
issuing or maintaining of any Letters of Credit or the purchasing or maintaining
of any participations therein or any other obligations under this Section 3,
whether directly or by such being imposed on or suffered by any particular
Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental, special or
other reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing Lender or
participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter of
Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
This Agreement shall become fully effective pursuant to
subsection 10.20 on the Closing Date upon the satisfaction of, and the
obligations of Lenders to make Loans and the issuance of Letters of Credit
hereunder are subject to, the following conditions.
4.1 Conditions to Initial Extensions of Credit
The obligations of Lenders to make the initial credit
extensions are, in addition to the conditions precedent specified in subsections
4.2 and 4.3, subject to prior or concurrent satisfaction of the following
conditions:
A. Loan Party Documents. On or before the Closing Date, Company
shall, and shall cause each other
Loan Party to, deliver to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where
appropriate, for each Lender and its counsel) the following with respect to
Company or such Loan Party, as the
case may be, each, unless otherwise noted, dated the Closing Date:
(i) (a) In the case of Company and the New Subsidiaries,
certified copies of the Certificate or Articles of Incorporation of such Person,
together with a good standing certificate from the Secretary of State of its
jurisdiction of incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each dated a recent date prior to the Closing Date
and (b) in the case of each other Loan Party, an Officer's Certificate
certifying that each of the documents specified in (a) above with respect to
such Person was delivered on the Existing Credit Agreement Closing Date, and
that since the Existing Credit Agreement Closing Date, there have been no
amendments to such Person's Certificate or Articles of Incorporation, and no
event has occurred that would cause any of the good standing certificates so
delivered to cease to be in full force and effect;
(ii) (a) In the case of Company and the New Subsidiaries,
copies of the Bylaws of such Person, certified as of the Closing Date by such
Person's corporate secretary or an assistant secretary and (b) in the case of
each other Loan Party, an Officer's Certificate certifying that true and correct
Bylaws of such Person were delivered on the Existing Credit Agreement Closing
Date and that there have been no amendments thereto since such date;
(iii) Resolutions of the Board of Directors of such Person
confirming such Person's obligations under the Loan Documents executed and
delivered by it on or before the Existing Credit Agreement Closing Date, and
authorizing the execution, delivery and performance of the Loan Documents to
which it is a party to be executed and delivered on the Closing Date, certified
as of the Closing Date by the corporate secretary or an assistant secretary of
such Person as being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers
of such Person executing the
Loan Documents to be delivered on the Closing Date to which it is a party;
(v) Executed originals of the Loan Documents to be delivered
on the Closing Date to which such Person is a party, including without
limitation execution of this Agreement, the Notes, and the Company Amendment and
Confirmation by Company, execution and delivery by the New Subsidiaries and the
Subsidiary Guarantors of the Subsidiary Amendment and Confirmation; and
(vi) Such other documents as Agent may reasonably request.
B. No Material Adverse Effect. Since June 30, 1996 no Material
Adverse Effect (in the reasonable
opinion of Agent) shall have occurred.
C. Repayment of Obligations Under Existing Credit Agreement. All
outstanding Loans, if any, under the Existing Credit Agreement, together with
all accrued and unpaid interest and any and all fees under the Existing Credit
Agreement, including, without limitation, all commitment fees, letter of credit
fees, and any fees, if any, under Section 2.6D of the Existing Credit Agreement,
accrued and unpaid to the Closing Date shall have been paid and satisfied in
full.
D. Security Interests in Personal Property. Agent shall have received
evidence satisfactory to it that Company and Subsidiary Guarantors shall have
taken or caused to be taken all such actions, executed and delivered or caused
to be executed and delivered all such agreements, consents, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii) and (iv)
below) that may be necessary or, in the opinion of Agent, desirable in order to
create or confirm in favor of Agent, for the benefit of Lenders, a valid and
(upon such filing and recording) perfected First Priority security interest in
the entire personal property Collateral. Such actions shall include, without
limitation, the following:
(i) Schedules to Collateral Documents. Delivery to Agent of
accurate and complete schedules to all of the applicable Collateral Documents,
or an Officer's Certificate certifying that the schedules to all of the
applicable Collateral Documents delivered on the Existing Credit Agreement
Closing Date remain accurate and complete on the Closing Date.
(ii) Stock Certificates and Instruments. Delivery to Agent of
(a) certificates (which certificates shall be accompanied by irrevocable undated
stock powers, duly endorsed in blank and otherwise satisfactory in form and
substance to Agent) representing all capital stock and (if applicable)
partnership interests of all of Company's Subsidiaries pledged pursuant to the
Company Pledge Agreement and the Subsidiary Pledge Agreements and (b) all
promissory notes or other instruments (duly endorsed in blank and in form and
substance satisfactory to Agent) evidencing any Collateral, or (c) an Officer's
Certificate certifying that the stock certificates, promissory notes and other
instruments delivered to Agent on the Existing Credit Agreement Closing Date or
thereafter constitute all of the capital stock and (if applicable) partnership
interests of all of Company's Subsidiaries pledged pursuant to the Company
Pledge Agreement and the Subsidiary Pledge Agreements and all of the promissory
notes or other instruments evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. To the
extent not delivered on the Existing Credit Agreement Closing Date or required
to be delivered as a result of events occurring after such date, delivery to
Agent of (a) the results of a recent search, by a Person satisfactory to Agent,
of all effective UCC financing statements and fixture filings and all judgment
and tax lien filings which may have been made with respect to any personal
property of any Loan Party, together with copies of all such filings disclosed
by such search, and (b) UCC termination statements duly executed by all
applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements disclosed in such
search (other than any such financing statements in respect of Liens permitted
to remain outstanding pursuant to the terms of the Existing Credit Agreement as
amended and restated by this Agreement); provided that with respect to UCC
financing statements disclosed in such search relating to Indebtedness of the
New Subsidiaries which has been paid in full, Company shall provide evidence
satisfactory to Agent of such payment within 30 days of the Closing Date and
with respect to such UCC financing statements relating to repaid Indebtedness
and all other Liens disclosed in such search not permitted to remain outstanding
pursuant to the terms of this Agreement, Company shall provide evidence
satisfactory to Agent of the termination or release of such UCC financing
statements and Liens within 90 days of the Closing Date; and
(iv) UCC Financing Statements. To the extent not delivered on
the Existing Credit Agreement Closing Date or required to be delivered as a
result of events occurring after such date, delivery to Agent of UCC financing
statements, duly executed by each applicable Loan Party with respect to all
personal property Collateral of such Loan Party, for filing in all jurisdictions
as may be necessary or, in the opinion of Agent, desirable to perfect or
continue the perfected status of the security interests created in such
Collateral pursuant to the Collateral Documents.
E. Evidence of Insurance. Agent shall have received a certificate from
Company's insurance broker or other evidence satisfactory to it that all
insurance required to be maintained pursuant to subsection 6.4 is in full force
and effect and that Agent on behalf of Lenders has been named as additional
insured thereunder to the extent required under subsection 6.4.
F. Opinions of Counsel to Loan Parties. Lenders and their respective
counsel shall have received originally executed copies of one or more favorable
written opinions of ▇▇▇▇▇ ▇. ▇▇▇▇▇, Company's General Counsel, and of Sidley &
Austin, outside counsel for Loan Parties, in form and substance reasonably
satisfactory to Agent and its counsel, dated as of the Closing Date and setting
forth substantially the matters in the opinions designated in Exhibit VI annexed
hereto and as to such other matters as Agent acting on behalf of Lenders may
reasonably request.
G. Opinions of Agent's Counsel. Lenders shall have received
originally executed copies of one or
more favorable written opinions of O'Melveny & ▇▇▇▇▇ LLP, counsel to Agent,
dated as of the Closing Date,
substantially in the form of Exhibit VII annexed hereto.
H. Fees. Company shall have paid to Agent and Arranger the fees
payable on the Closing Date
referred to in subsection 2.3.
I. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Agent an Officers' Certificate, in form and substance
satisfactory to Agent, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Agent and Requisite Lenders.
J. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel shall be satisfactory in form and substance
to Agent and such counsel, and Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as Agent may
reasonably request.
K. Notice of Prepayment. Agent shall have received a Notice of
Prepayment meeting the requirements under Section 2.4B(i) of the Existing Credit
Agreement in respect of the Loans outstanding under the Existing Credit
Agreement on the Closing Date which Loans will be prepaid on the Closing Date
with the proceeds of the Loans made hereunder.
L. Updated Projections and Pro Forma Financial Information. On or
before the Closing Date, Lenders shall have received from Company projections
and pro forma financial information in form and substance satisfactory to
Lenders which updates the October, 1996 projections and pro forma financial
information previously delivered to Lenders.
4.2 Conditions to Loans.2 Conditions to LoansConditions to Loans.
The obligations of Lenders to make Loans on each Funding Date
are subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief financial officer of Company or
by any executive officer of Company designated by the above-described officer on
behalf of Company in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all material respects
on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied in all material respects all conditions
which this Agreement provides shall be performed or satisfied by it on or before
that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date
shall not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System;
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed by
Company in writing pursuant to subsection 5.6 or 6.1(ix) prior to the making of
the last preceding Loans (or, in the case of the initial Loans, prior to the
execution of this Agreement), and there shall have occurred no development not
so disclosed in any such action, suit, proceeding, governmental investigation or
arbitration so disclosed, that, in either event, is reasonably expected to have
a Material Adverse Effect; and
(vii) In the event that after giving effect to the making of
the Loans requested on such Funding Date or the issuance of the Letters of
Credit requested on such issuance date, the aggregate amount of Loans
outstanding plus the Letter of Credit Usage with respect to Letters of Credit
issued for the purposes described in clauses (iii)-(v) of the definition of
"Standby Letter of Credit" exceeds $40,000,000, the following statements shall
be true and correct and the Company shall be deemed to represent and warrant as
of such Funding Date as follows:
(a) such requested Loans or Letters of Credit
are permitted "Indebtedness" (as
such term is defined in the 9-7/8% Subordinated Notes Indenture and the 1996
Subordinated Notes Indenture) under the 9-7/8% Subordinated Note Indenture and
the 1996 Subordinated Note Indenture;
(b) (1) upon the making of each requested Loan
or the issuance of each requested
Letter of Credit (each, an "Incurrence Date"), (A) no Default or Event of
Default (each as defined in the 9-7/8% Subordinated Notes Indenture and the 1996
Subordinated Notes Indenture) shall have occurred and be continuing at the time
of, or would occur after giving effect on a pro forma basis to, such incurrence
of "Indebtedness" and (B) if the aggregate principal amount of all outstanding
Loans plus the Letter of Credit Usage (other than Letter of Credit Usage (i)
with respect to Letters of Credit issued for purposes described in clauses (i)
and (ii) of the definition of "Standby Letter of Credit" and (ii) with respect
to Letters of Credit issued to support "Refinancing Indebtedness" (as defined in
the 9-7/8% Subordinated Notes Indenture and the 1996 Subordinated Notes
Indenture) permitted pursuant to Section 4.11(d) of each of the 9-7/8%
Subordinated Notes Indenture and the 1996 Subordinated Notes Indenture) after
the making of such Loan or issuance of such Letter of Credit would exceed
$40,000,000, the Consolidated Interest Coverage Ratio (as defined in the 9-7/8%
Subordinated Notes Indenture and the 1996 Subordinated Notes Indenture) of
Company for the Reference Period (as defined in the 9-7/8% Subordinated Notes
Indenture and the 1996 Subordinated Notes Indenture) immediately preceding each
Incurrence Date, after giving effect on a pro forma basis to such incurrence of
such "Indebtedness" and, to the extent set forth in the definition of
Consolidated Interest Coverage Ratio in the 9-7/8% Subordinated Notes Indenture
and the 1996 Subordinated Notes Indenture, the use of proceeds thereof shall be
at least (x) 2.0 to 1.0 if the Incurrence Date occurs on or before September 30,
1997, or (y) 2.25 to 1.00 if such Incurrence Date occurs at any time thereafter,
and (2) the Notice of Borrowing or Notice of Issuance of Letter of Credit
presented by Company in respect of such Incurrence Date shall set forth
calculations establishing that requirements set forth in clause (1)(B) will be
satisfied;
(c) all Loans and Letters of Credit under this
Agreement are "Senior Debt" as
defined in the 9-7/8% Subordinated Notes Indenture and the 1996 Subordinated
Notes Indenture; and
(d) (1) at least $40,000,000 of the Obligations
under this Agreement are entitled
to the benefits of being "Senior Debt" as defined under clause (i) of the
definition of "Senior Debt" in the 9-7/8% Subordinated Notes Indenture and (2)
at least $50,000,000 of the Obligations under this Agreement are entitled to the
benefits of being "Senior Debt" as defined under clause (ii) of the definition
of "Senior Debt" in the 1996 Subordinated Notes Indenture.
4.3 Conditions to Letters of Credit.3 Conditions to Letters of Credit
Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder (whether or not
the applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of such Letter of Credit, Agent
shall have received, in accordance with the provisions of subsection 3.1B(i), an
originally executed Notice of Issuance of Letter of Credit, in each case signed
by the chief financial officer of Company or by any executive officer of Company
designated by the above-described officer on behalf of Company in a writing
delivered to Agent, together with all other information specified in subsection
3.1B(i) and such other documents or information as the applicable Issuing Lender
may reasonably require in connection with the issuance of such Letter of Credit.
B. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the following statements
are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries
A. Organization and Powers. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto. Each
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents to which it is a party and to carry
out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries are engaged only
in the business of providing health care services consisting of skilled, acute,
subacute and intermediate nursing care, rehabilitative services, outpatient
clinics, home health services and other specialized health care services, and
pharmaceutical products and services.
D. Subsidiaries. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xvi). The capital stock of
each of the corporate Subsidiaries of Company identified in Schedule 5.1 annexed
hereto (as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. The
partnership interests of each of the partnership Subsidiaries of Company
identified in Schedule 5.1 annexed hereto (as so supplemented) are duly
authorized and validly issued. Each of the Subsidiaries of Company identified in
Schedule 5.1 annexed hereto (as so supplemented) is a corporation or partnership
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization set forth therein, has all requisite
corporate or partnership power and authority to own and operate its properties
and to carry on its business as now conducted and as proposed to be conducted,
and is qualified to do business and in good standing in every jurisdiction where
its assets are located and wherever necessary to carry out its business and
operations, in each case except where failure to be so qualified or in good
standing or a lack of such corporate power and authority has not had and will
not have a Material Adverse Effect. Schedule 5.1 annexed hereto (as so
supplemented) correctly sets forth the ownership interest of Company and each of
its Subsidiaries in each of the Subsidiaries of Company identified therein.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and
performance of the Loan Documents have
been duly authorized by all necessary corporate action on the part of each Loan
Party that is a party thereto.
B. No Conflict. The execution, delivery and performance by Loan
Parties of the Loan Documents and
the consummation of the transactions contemplated by the Loan Documents do not
and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to
Company or any of its Subsidiaries,
including without limitation any Necessary Authorizations, the Certificate or
Articles of Incorporation or Bylaws
of Company or any of its Subsidiaries or any order, judgment or decree of any
court or other agency of government
binding on Company or any of its Subsidiaries, (ii) conflict with, result in a
breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Company or any of its
Subsidiaries, (iii) result in or require the creation or imposition of any Lien
upon any of the properties or
assets of Company or any of its Subsidiaries (other than any Liens created under
any of the Loan Documents in
favor of Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of
any Person under any Contractual Obligation of Company or any of its
Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to Lenders.
C. Governmental Consents. The execution, delivery and
performance by Loan Parties of the Loan
Documents and the consummation of the transactions contemplated by the
Loan Documents do not and will not require
any registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state
or other governmental authority or regulatory body.
D. Binding Obligation. Each of the Loan Documents has been duly
executed and delivered by each
Loan Party that is a party thereto and is the legally valid and binding
obligation of such Loan Party,
enforceable against such Loan Party in accordance with its respective terms,
except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights
generally or by equitable principles relating to enforceability.
E. Valid Issuance of Company Common Stock. All issued and
outstanding shares of Company Common
Stock have been duly and validly issued, and are fully paid and nonassessable.
5.3 Financial Condition.3 Financial ConditionFinancial Condition.
Company has heretofore delivered to Lenders, at Lenders'
request, the following financial statements and information: (i) the audited
consolidated balance sheet of Company and its Subsidiaries as at December 31,
1995, and the related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for the Fiscal Year then ended
and (ii) the unaudited consolidated balance sheet of Company and its
Subsidiaries as at June 30, 1996 and the related unaudited consolidated
statements of income, stockholders' equity and cash flows of Company and its
Subsidiaries for the six months then ended. All such statements were prepared in
conformity with GAAP and fairly present, in all material respects, the financial
position on a consolidated basis of the entities described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows on a consolidated basis of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
5.4 No Material Adverse Change; No Restricted Junior Payments.4 No Material
Adverse Change; No Restricted Junior PaymentsNo Material Adverse Change; No
Restricted Junior Payments.
Since June 30, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Since June 30, 1996, neither Company nor any of its Subsidiaries has
directly or indirectly declared, ordered, paid or made, or set apart any sum or
property for, any Restricted Junior Payment or agreed to do so except as
permitted by subsection 7.5.
5.5 Title to Properties; Liens
To the extent necessary to operate their business in the
manner heretofore conducted, Company and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in real property),
(ii) valid leasehold interests in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all other personal
property), all of their respective properties and assets reflected in the
financial statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in each case except
for assets disposed of since the date of such financial statements in the
Ordinary Course of Business or as otherwise permitted under subsection 7.7.
Except as permitted by this Agreement, all such properties and assets are free
and clear of Liens.
5.6 Litigation; Adverse Facts
Except as set forth in Schedule 5.6 annexed hereto, which may
be amended from time to time with the consent of Requisite Lenders, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries and that,
individually or in the aggregate, is reasonably expected to result in a Material
Adverse Effect. Neither Company nor any of its Subsidiaries (i) is in violation
of any applicable laws (including Environmental Laws), or (ii) is subject to or
in default with respect to any final judgments, writs, injunctions, decrees,
rules or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that in the case of the foregoing clauses (i) and (ii),
individually or in the aggregate, is reasonably expected to result in a Material
Adverse Effect.
5.7 Payment of Taxes.7 Payment of TaxesPayment of Taxes.
Except to the extent permitted by subsection 6.3, all tax
returns and reports of Company and its Subsidiaries required to be filed by any
of them have been timely filed or timely extensions for filing secured, and all
taxes shown on such tax returns to be due and payable and all assessments, fees
and other governmental charges upon Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Company knows of no proposed
tax assessment against Company or any of its Subsidiaries which is not being
actively contested by Company or such Subsidiary in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements
A. Neither Company nor any of its Subsidiaries is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, would not have a Material Adverse
Effect.
B. Neither Company nor any of its Subsidiaries is a
party to or is otherwise subject to
any agreements or instruments or any charter or other internal restrictions
which, individually or in the
aggregate, is reasonably expected to result in a Material Adverse Effect.
5.9 Governmental Regulation.9 Governmental RegulationGovernmental
Regulation.
Neither Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 Securities Activities.10 Securities ActivitiesSecurities Activities.
A. Neither Company nor any of its Subsidiaries is
engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin
Stock.
B. Following application of the proceeds of each Loan, not
more than 25% of the value of the assets (either of Company only or of Company
and its Subsidiaries on a consolidated basis) subject to the provisions of
subsection 7.2 or 7.7 or subject to any restriction contained in any agreement
or instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.11 Employee Benefit PlansEmployee Benefit
Plans.
A. Company, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their obligations under each Employee Benefit Plan. Each Employee Benefit Plan
which is intended to qualify under Section 401(a) of the Internal Revenue Code
is so qualified.
B. No ERISA Event has occurred or is reasonably expected
to occur.
C. Except to the extent required under Section 4980B of the
Internal Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no
Employee Benefit Plan provides health or welfare benefits (through the purchase
of insurance or otherwise) for any retired or former employee of Company, any of
its Subsidiaries or any of their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan,
the amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $500,000.
E. As of the most recent valuation date for each Multiemployer
Plan for which the actuarial report is available, the potential liability of
Company, its Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA), when aggregated with such potential liability for a complete withdrawal
from all Multiemployer Plans, based on information available pursuant to Section
4221(e) of ERISA, does not exceed $500,000.
5.12 Certain Fees.12 Certain FeesCertain Fees.
No broker's or finder's fee or commission will be payable with
respect to this Agreement or any of the transactions contemplated hereby (other
than fees due to Agent or Arranger under the terms hereof), and Company hereby
indemnifies Lenders against, and agrees that it will hold Lenders harmless from,
any claim, demand or liability for any such broker's or finder's fees alleged to
have been incurred in connection herewith or therewith and any expenses
(including reasonable fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.
5.13 Environmental Protection
(i) neither Company nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any outstanding written
order, consent decree or settlement agreement with any Person relating to (a)
any Environmental Law, (b) any Environmental Claim, or (c) any Hazardous
Materials Activity that, individually or in the aggregate, is reasonably
expected to have a Material Adverse Effect;
(ii) neither Company nor any of its Subsidiaries has received
any letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or
any comparable state law relating to any conditions, occurrences, events or
other matters that, individually or in the aggregate, are reasonably expected to
have a Material Adverse Effect;
(iii) to Company's knowledge there are and have been no
conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim against
Company or any of its Subsidiaries that, individually or in the aggregate, is
reasonably expected to have a Material Adverse Effect;
(iv) neither Company nor any of its Subsidiaries nor, to
Company's knowledge, any predecessor of Company or any of its Subsidiaries has
filed any notice under any Environmental Law indicating past or present
treatment of Hazardous Materials at any Facility relating to any conditions,
occurrences, events or other matters that, individually or in the aggregate, are
reasonably expected to have a Material Adverse Effect, and except as set forth
in Schedule 5.13 annexed hereto, none of Company's or any of its Subsidiaries'
operations involves the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any
state equivalent;
(v) compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of giving rise
to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the
contrary, no event or condition has occurred or is occurring with respect to
Company or any of its Subsidiaries relating to any Environmental Law, any
Release of Hazardous Materials, or any Hazardous Materials Activity which
individually or in the aggregate has had or is reasonably expected to have a
Material Adverse Effect.
5.14 Employee Matters.14 Employee MattersEmployee Matters.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that is reasonably expected to have
a Material Adverse Effect.
5.15 Solvency.15 SolvencySolvency.
Each Loan Party is and, upon the incurrence of any Obligations
by such Loan Party on any date on which this representation is made, will be,
Solvent.
5.16 Matters Relating to Collateral
A. Creation, Perfection and Priority of Liens. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1D, and
6.9 and (ii) the delivery to Agent of any Pledged Collateral not delivered to
Agent at the time of execution and delivery of the applicable Collateral
Document (all of which Pledged Collateral has been so delivered) are effective
to create in favor of Agent for the benefit of Lenders, as security for the
respective Secured Obligations (as defined in the applicable Collateral Document
in respect of any Collateral), a valid and perfected First Priority Lien on all
of the Collateral, and all filings and other actions necessary or desirable to
perfect and maintain the perfection and First Priority status of such Liens have
been duly made or taken and remain in full force and effect, other than the
filing of any UCC financing statements delivered to Agent on the Closing Date
for filing (but not yet filed) and the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of
Agent.
B. Absence of Third-Party Filings. Except for those filed in
favor of Agent as contemplated by
subsection 5.16A, no effective UCC financing statement, fixture filing or other
instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office.
C. Margin Regulations. The pledge of the Pledged Collateral
pursuant to the Collateral Documents
does not violate Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
D. Information Regarding Collateral. All information supplied to
Agent by or on behalf of any
Loan Party with respect to any of the Collateral (in each case taken as a whole
with respect to any particular
Collateral) is accurate and complete in all material respects.
E. Accounts Receivable Collateral. The Accounts Receivable and
any related reimbursement
contracts with the payor of such Accounts Receivable have not been satisfied,
subordinated or rescinded in any
manner (other than settlements in the Ordinary Course of Business with payors of
such Accounts Receivable reached
to facilitate collection); such Accounts Receivable were created through the
provision of services or merchandise
supplied by either (a) Company and its Subsidiaries and the related charges were
usual, customary and reasonable,
or (b) a Target of an Acquisition prior to such Acquisition and Company
believes, after due investigation, that
the related charges were usual, customary and reasonable; such Accounts
Receivable are owned by Company and its
Subsidiaries free and clear of any adverse claim other than reimbursement and
recoupment claims resulting from
audits of the cost reports or other claims for reimbursement submitted by
Company and its Subsidiaries, and
Company and its Subsidiaries have the right to assign and transfer such Accounts
Receivable, subject, however, to
such limits as may be imposed by state or federal law on the right of Lenders to
exercise their rights with
respect to said assignment and transfer upon the occurrence of an Event of
Default; and there are no procedures
or investigations pending or threatened before any Governmental Authority
seeking a determination or ruling that
might affect the validity or enforceability of a material portion of such
Accounts Receivable subject to the
review or jurisdiction of such Governmental Authority.
5.17 Disclosure.17 DisclosureDisclosure.
No representation or warranty of Company or any of its
Subsidiaries contained in any Loan Document or in any other document,
certificate or written statement furnished to Lenders by or on behalf of Company
or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to Company, in the case of any document
not furnished by it) necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which the same were
made. The August, 1996 projections and pro forma financial information (as
updated by the October, 1996 projections and pro forma financial information)
contained in such materials delivered by Company to Agent are based upon good
faith estimates and assumptions believed by Company to be reasonable at the time
made, it being recognized by Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results,
and that Company has no obligation to update said projections as a condition to
any funding under this Agreement. There are no facts known (or which should upon
the reasonable exercise of diligence be known) to Company (other than matters of
a general economic nature) that, individually or in the aggregate, are
reasonably expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
5.18 Regulatory Compliance.18 Regulatory ComplianceRegulatory Compliance.
A. All Necessary Authorizations, which if not obtained are
reasonably expected to have a Material Adverse Effect, have been duly obtained,
and are in full force and effect without any known conflict with the rights of
others and free from any unduly burdensome restrictions. Company and its
Subsidiaries are and will continue to be in compliance in all material respects
with all provisions thereof. No circumstance exists which might impair the
utility of the Necessary Authorizations or the right to renew such Necessary
Authorizations, the effect of which is reasonably expected to have a Material
Adverse Effect. No Necessary Authorizations, which if suspended, canceled or
revoked are reasonably expected to have a Material Adverse Effect, are the
subject of any pending or, to the best of Company's knowledge, threatened
challenge, suspension, cancellation or revocation.
B. Company and its Subsidiaries, and, to the knowledge of
Company and its Subsidiaries after reasonable inquiry, their respective officers
and directors, have been and are in material compliance with federal Medicare
and Medicaid statutes, 42 U.S.C. ▇▇.▇▇. 1320a-7, 1320a-7(a), 1320a-7b and
1395nn, as amended, and the regulations promulgated thereunder or related state
and local statutes and regulations, and have not at anytime:
(i) knowingly and willfully made or caused to be made a
false statement or representation
of a material fact in any application for any benefit or payment;
(ii) knowingly and willfully made or caused to be made any
false statement or
representation of a material fact for use in determining rights to any benefit
or payment;
(iii) presented or caused to be presented a claim for
reimbursement for services under Medicare or Medicaid, or other state health
care programs that is for an item or service that is known or should be known to
be (a) not provided as claimed, or (b) false or fraudulent;
(iv) failed to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent fraudulently
to secure such benefit or payment;
(v) knowingly and willfully illegally offered, paid, solicited
or received any remuneration (including any kickback, bribe, or rebate),
directly or indirectly, overtly or covertly, in cash or in kind (a) in return
for referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or other state health care programs, or (b) in
return for purchasing, leasing or ordering or arranging for or recommending
purchasing, leasing or ordering any good, facility, service, or item for which
payment may be made in whole or in part by Medicare or Medicaid or other state
health care programs;
(vi) knowingly and willfully made or caused to be made or
induced or sought to induce the making of any false statement or representation
(or omitted to state a fact required to be stated therein or necessary to make
the statements contained therein not misleading) of a material fact with respect
to (a) the conditions or operations of a facility in order that the facility may
qualify for Medicare or Medicaid or other state health care program
certification, or (b) information required to be provided under ss. 1124A of the
Social Security Act (42 U.S.C. ss. 1320a-3); or
(vii) knowingly and willfully (a) charged for any Medicaid
service, money or other consideration at a rate in excess of the rates
established by the state, or (b) for services covered (in whole or in part) by
Medicaid, charged, solicited, accepted or received, in addition to amounts paid
by Medicaid, any gift, money, donation or other consideration (other than a
charitable, religious or philanthropic contribution from an organization or from
a person unrelated to the patient) (y) as a precondition of treating the
patient, or (z) as a requirement for the patient's continued treatment;
such that the actions or inactions in the foregoing clauses (i) through (vii),
individually or in the aggregate, are reasonably expected to have a Material
Adverse Effect.
5.19 Existing Letters of Credit.19 Existing Letters of CreditExisting
Letters of Credit.
All Existing Letters of Credit are described on Schedule 5.19 annexed
hereto.
Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Agent and Lenders:
(i) Quarterly Financials: as soon as available and in any
event within 50 days after the end of each Fiscal Quarter, the consolidated
balance sheet of Company and its Subsidiaries as of the end of such Fiscal
Quarter and the related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries (which statements in any event
shall include (x) such information on a regional basis as Company customarily
reports in the Ordinary Course of Business and (y) a report on the aging of
Accounts Receivable) for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding figures
from the Financial Plan for the current Fiscal Year, all in reasonable detail
and certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and its
Subsidiaries as of the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments;
(ii) Year-End Financials: as soon as available and in any
event within 95 days after the end of each Fiscal Year, (a) the consolidated
balance sheet of Company and its Subsidiaries as of the end of such Fiscal Year
and the related consolidated statements of income, stockholders' equity and cash
flows of Company and its Subsidiaries for such Fiscal Year, setting forth in
each case in comparative form the corresponding figures for the previous Fiscal
Year and the corresponding figures from the Financial Plan for the Fiscal Year
covered by such financial statements, all in reasonable detail and certified by
the chief financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as of the
dates indicated and the results of their operations and their cash flows for the
periods indicated and (b) in the case of such consolidated financial statements,
a report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent certified public
accountants of recognized national standing selected by Company and satisfactory
to Agent, which report shall be unqualified, shall express no doubts about the
ability of Company and its Subsidiaries to continue as a going concern, and
shall state that such consolidated financial statements fairly present, in all
material respects, the consolidated financial position of Company and its
Subsidiaries as of the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(iii) Compliance Certificate: together with each delivery of
financial statements of Company and its Subsidiaries pursuant to subdivisions
(i) and (ii) above, a Compliance Certificate, which shall be duly executed by
the chief financial officer or chief accounting officer of Company,
demonstrating in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in Section 7, in
each case to the extent compliance with such restrictions is required to be
tested at the end of the applicable accounting period;
(iv) Reconciliation Statements: if, as a result of any change
in accounting principles and policies from those used in the preparation of the
audited financial statements referred to in subsection 5.3, the consolidated
financial statements of Company and its Subsidiaries delivered pursuant to
subdivisions (i), (ii) or (xiii) of this subsection 6.1 will differ in any
material respect from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first delivery of
financial statements pursuant to subdivision (i), (ii) or (xiii) of this
subsection 6.1 following such change, consolidated financial statements of
Company and its Subsidiaries for (y) the current Fiscal Year to the effective
date of such change and (z) the two full Fiscal Years immediately preceding the
Fiscal Year in which such change is made, in each case prepared on a pro forma
basis as if such change had been in effect during such periods, and (b) together
with each delivery of financial statements pursuant to subdivision (i), (ii) or
(xiii) of this subsection 6.1 following such change, a written statement of the
chief accounting officer or chief financial officer of Company setting forth the
differences (including without limitation any differences that would affect any
calculations relating to the financial covenants set forth in subsection 7.6)
which would have resulted if such financial statements had been prepared without
giving effect to such change;
(v) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant to
subdivision (ii) above, a letter from Company's public accountants certifying
that, although no special procedures were performed with respect to such
matters, during the course of performing their customary procedures in
connection with their examination and report on Company's financial statements,
no Event of Default was detected during such examination of Company and its
Subsidiaries, and authorizing Company to deliver such financial statements and
opinion thereon to Agent and Lenders pursuant to this Agreement;
(vi) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in connection
with each annual, interim or special audit of the financial statements of
Company and its Subsidiaries made by such accountants, including, without
limitation, any comment letter submitted by such accountants to management in
connection with their annual audit;
(vii) SEC Filings and Press Releases: promptly upon their
becoming publicly available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders other
than Company or another Subsidiary of Company, (b) all regular and periodic
reports and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by Company or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press releases and
other statements made available generally by Company or any of its Subsidiaries
to the public concerning material developments in the business of Company or any
of its Subsidiaries;
(viii) Events of Default, etc.: promptly upon any officer of
Company obtaining knowledge (a) of any condition or event that constitutes an
Event of Default or Potential Event of Default, or becoming aware that any
Lender has given any notice (other than to Agent) or taken any other action with
respect to a claimed Event of Default or Potential Event of Default, (b) that
any Person has given any notice to Company or any of its Subsidiaries or taken
any other action with respect to a claimed default or event or condition of the
type referred to in subsection 8.2, (c) of any condition or event that would be
required to be disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such
Form as in effect on the date hereof) if Company were required to file such
reports under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice given or
action taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action Company
has taken, is taking and proposes to take with respect thereto;
(ix) Litigation or Other Proceedings: promptly upon any
officer of Company obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or any
of its Subsidiaries (collectively, "Proceedings") not previously disclosed in
writing by Company to Lenders or (Y) any material development in any Proceeding
that, in the case of either clause (X) or (Y):
(1) if adversely determined, has a reasonable
possibility of giving rise to a
Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company and may be disclosed by Company without losing
any attorney-client protection to enable Lenders and their counsel to evaluate
such matters;
(x) Health Care Compliance: promptly upon any officer of
Company obtaining knowledge of any material claim, complaint, notice or request
for information received by Company or any of its Subsidiaries with respect to
compliance with health care regulatory requirements relating to the delivery of
health care services of the type provided by Company and payment therefor
(excluding malpractice claims and routine license and certification surveys
unless such surveys include a recommendation that the Medicare or Medicaid
certification or license of a Facility should be terminated, revoked or
suspended), including, but not limited to, any violation or alleged violation of
any federal, state or local statute, regulation, or ordinance relating to the
delivery of medical services and payment therefor, including, but not limited
to, the requirements set forth under federal Medicare and Medicaid statutes, 42
U.S.C. ▇▇.▇▇. 1320a-7, 1320a-7a, 1320a-7b and 1395nn, and the regulations
promulgated thereunder and related state or local statutes or regulations;
(xi) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written notice
specifying the nature thereof, what action Company, any of its Subsidiaries or
any of their respective ERISA Affiliates has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto;
(xii) ERISA Notices: with reasonable promptness, upon the
reasonable request of Agent, copies of (a) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan; (b) all notices received by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (c) copies of
such other documents or governmental reports or filings relating to any Employee
Benefit Plan as Agent shall request;
(xiii) Financial Plans: as soon as practicable and in any
event no later than 30 days after the beginning of each Fiscal Year commencing
with Fiscal Year 1998, a consolidated and consolidating plan and financial
forecast for such Fiscal Year (the "Financial Plan" for such Fiscal Year),
including without limitation a forecasted consolidated balance sheet and
forecasted consolidated statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Year;
(xiv) Insurance: as soon as practicable and in any event by
the last day of each Fiscal Year, a report in form and substance reasonably
satisfactory to Agent outlining all material insurance coverage maintained as of
the date of such report by Company and its Subsidiaries and all material
insurance coverage planned to be maintained by Company and its Subsidiaries in
the immediately succeeding Fiscal Year;
(xv) Board of Directors: with reasonable promptness,
written notice of any change in the
Board of Directors of Company;
(xvi) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and (b)
all of the data required to be set forth in Schedule 5.1 annexed hereto with
respect to all Subsidiaries of Company (it being understood that such written
notice shall be deemed to supplement Schedule 5.1 annexed hereto for all
purposes of this Agreement); and
(xvii) Other Information: with reasonable promptness, such
other information and data with
respect to Company or any of its Subsidiaries as from time to time may be
reasonably requested by Agent.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, Company will, and
will cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its corporate (or in respect to Subsidiaries that are
partnerships, its partnership) existence and all rights and franchises material
to its business, including without limitation, all Necessary Authorizations;
provided, however that neither Company nor any of its Subsidiaries shall be
required to preserve any such right or franchise if the Board of Directors of
Company or such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Company or such Subsidiary,
as the case may be, and that the loss thereof is not disadvantageous in any
material respect to Company, such Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax Consolidation
A. Company will, and will cause each of its Subsidiaries to,
pay all taxes, assessments and other governmental charges imposed upon it or any
of its properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as (1) such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor and (2) in the case of a charge or claim
which has or may become a Lien against any of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its
Subsidiaries to, file or consent to
the filing of any consolidated income tax return with any Person (other than
Company or any of its Subsidiaries).
Maintenance of Properties; Insurance.nsurance
A. Maintenance of Properties. Company will, and will cause
each of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used in the business of Company and its Subsidiaries and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.
B. Insurance. Company will maintain or cause to be maintained,
with financially sound and reputable insurers, such medical malpractice
insurance, public liability insurance, third party property damage insurance,
business interruption insurance and casualty insurance and any other insurance
with respect to liabilities, losses or damage in respect of the assets,
properties and businesses of Company and its Subsidiaries as may customarily be
carried or maintained under similar circumstances by corporations of established
reputation and of similar size engaged in similar businesses, in each case in
such amounts (giving effect to self-insurance), with such deductibles, covering
such risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. If so required by Requisite
Lenders, each such policy of insurance with respect to Collateral shall (a) name
Agent for the benefit of Lenders as an additional insured thereunder as its
interests may appear and (b) provide for at least 30 days prior written notice
to Agent of any modification or cancellation of such policy.
Inspection Rights; Audits of Accounts Receivable
A. Inspection Rights. Company shall, and shall cause
each of its Subsidiaries to, permit
any authorized representatives designated by Agent to visit and inspect any of
the properties of Company or of
any of its Subsidiaries, to inspect and copy from its and their financial and
accounting records, and to discuss
its and their affairs, finances and accounts with its and their officers and
independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion and provided
further that all such inspections and duplicating shall be subject to applicable
laws governing the rights of
patients served by Company or its Subsidiaries), all upon reasonable notice and
at such reasonable times and for
such reasonable purpose as may be specified by Agent during normal business
hours and as often as may reasonably
be requested.
B. Accounts Receivable; Audits of Accounts Receivable.
(i) Company and its Subsidiaries will submit all
necessary documentation and
supply all necessary information for payment of all Accounts Receivable (other
than settlements in the Ordinary Course of Business with payors of such Accounts
Receivable reached to facilitate collection to the payor for each of such
Accounts Receivable); will not, except as otherwise expressly permitted herein,
subordinate or rescind any of the Accounts Receivable; and will notify Agent
promptly if any procedures or investigations are pending or threatened before
any Governmental Authority seeking a determination or ruling that might
materially and adversely affect the validity or enforceability of a material
portion of such Accounts Receivable subject to the review or jurisdiction of
such Governmental Authority.
(ii) Upon the request of Agent, Company shall,
and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by Agent to
conduct an audit of all Accounts Receivable annually, each such audit to be in
scope and substance satisfactory to Agent, all upon reasonable notice and at
reasonable times during normal business hours; provided that Agent shall in any
event be entitled to conduct one or more audits upon and any time after the
occurrence of an Event of Default; and provided further that all such audits
shall be at the sole expense of Company, which expense shall be reasonably
agreed upon by Company and Agent.
6.6 Compliance with Laws, etc..6 Compliance with Laws, etc.Compliance
with Laws, etc.
Company shall, and shall cause each of its Subsidiaries to,
comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or foreign
(including all Environmental Laws), in respect of (a) the conduct of its
business, including, without limitation, the statutes, regulations and orders
referred to in subsection 5.13 herein, and (b) the ownership of its property,
except with respect to each of the foregoing such noncompliances as are not
reasonably expected, in the aggregate, to have a Material Adverse Effect.
Preservation of Licenses, ▇▇▇.▇▇▇, etc.7 Preservation of Licenses, etc
Company shall, and shall cause each of its Subsidiaries to,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
their respective Necessary Authorizations, the loss of which is reasonably
expected to have a Material Adverse Effect.
Environmental Disclosure.sclosure.8 Environmental Disclosure
A. Company shall, and shall cause each of its Subsidiaries to,
and shall use its reasonable efforts to cause (i) their respective employees,
agents, contractors and subcontractors, (ii) all tenants under any leases or
occupancy agreements affecting any portion of the Facilities and (iii) all other
Persons on or occupying such property, to comply with all Environmental Laws,
where the failure to do so, individually or in the aggregate, is reasonably
expected to have a Material Adverse Effect.
B. Company shall promptly advise Agent in writing and in
reasonable detail of (i) any Release of any Hazardous Materials required to be
reported to any federal, state or local governmental or regulatory agency under
any applicable Environmental Laws that is reasonably expected to have a Material
Adverse Effect, (ii) any remedial action taken by Company or, to the extent
Company or any of its Subsidiaries has any knowledge, any other Person in
response to (x) any Hazardous Materials on, under or about any Facility, the
existence of which is reasonably expected to result in a Material Adverse Effect
or (y) any Environmental Claim that is reasonably expected to result in a
Material Adverse Effect, and (iii) any request for information from any
governmental agency that suggests such agency is investigating whether Company
or any of its Subsidiaries may be potentially responsible for a Release of
Hazardous Materials which is reasonably expected to have a Material Adverse
Effect.
C. Company shall, at its own expense, provide copies to
Agent of such documents or
information in the possession of Company or any of its Subsidiaries as Agent or
Requisite Lenders may reasonably
request in relation to any matters disclosed pursuant to this subsection 6.8.
6.9 Execution of Subsidiary Guaranty and Personal Property Collateral Documents
by Certain Subsidiaries and Future Subsidiaries.9 Execution of Subsidiary
Guaranty and Personal Property Collateral Documents by Certain Execution of
Subsidiary Guaranty and Personal Property Collateral Documents by Certain
Subsidiaries and Future Subsidiaries.
A. Execution of Subsidiary Guaranty and Personal Property
Collateral Documents. In the event that any Person becomes a Subsidiary of
Company after the date hereof, Company will promptly notify Agent of that fact
and will no later than five Business Days after such Person becomes a Subsidiary
(i) deliver to Agent the instruments and documents comparable to those described
in subsection 4.1D as may be necessary or, in the opinion of Agent, desirable to
create in favor of Agent, for the benefit of Lenders, a valid and perfected
First Priority Lien in Company's ownership interest in such Subsidiary; and (ii)
cause such Subsidiary to execute and deliver to Agent a counterpart of the
Subsidiary Guaranty, a Subsidiary Security Agreement and, if applicable, a
Subsidiary Pledge Agreement and to take all such further actions and execute all
such further documents and instruments (including without limitation actions,
documents and instruments comparable to those described in subsection 4.1D) as
may be necessary or, in the opinion of Agent, desirable to create in favor of
Agent, for the benefit of Lenders, a valid and perfected First Priority Lien on
all of the personal property assets of such Subsidiary described in the
applicable forms of Collateral Documents; provided that the provisions of this
subsection 6.9A(ii) shall not apply to the Non-Subsidiary Guarantors.
B. Subsidiary Charter Documents, Legal Opinions, Etc. Company
shall deliver to Agent, together with such Loan Documents (if applicable), (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation
or partnership agreement, together with a good standing certificate from the
Secretary of State of the jurisdiction of its incorporation or formation and
each other state in which such Person is qualified as a foreign corporation or
partnership to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to Agent,
(ii) a copy of such Subsidiary's Bylaws (if such Subsidiary is a corporation),
certified by its corporate secretary or an assistant secretary as of a recent
date prior to their delivery to Agent, (iii) a certificate executed by the
secretary or an assistant secretary of such Subsidiary as to (a) the fact that
the attached resolutions of the Board of Directors (or similar body) of such
Subsidiary approving and authorizing the execution, delivery and performance of
such Loan Documents are in full force and effect and have not been modified or
amended and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Agent and its counsel, as to
(a) the due incorporation or formation, valid existence and good standing of
such Subsidiary, (b) the due authorization, execution and delivery by such
Subsidiary of such Loan Documents, (c) the enforceability of such Loan Documents
against such Subsidiary, (d) such other matters (including without limitation
matters relating to the creation and perfection of Liens in any Collateral
pursuant to such Loan Documents) as Agent may reasonably request, all of the
foregoing to be satisfactory in form and substance to Agent and its counsel;
provided that the provisions of clauses (iii) and (iv) of this subsection 6.9B
shall not apply to the Non-Guarantor CMS Subsidiaries.
6.10 Officer's Certificate Regarding Restricted Junior Payments.10 Officer's
Certificate Regarding Restricted
Junior PaymentsOfficer's Certificate Regarding Restricted Junior Payments.
Company shall deliver to Agent the Officer's Certificates
required pursuant to subsection 7.5(ii) prior to making any permitted Restricted
Junior Payment thereunder.
6.11 Employee Stock Discount Program
Company shall deliver to Agent a certified copy of the
Employee Stock Discount Program within 3 Business Days after the date of its
effectiveness.
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.
7.1 Indebtedness.1 IndebtednessIndebtedness.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company may become and remain liable with respect to
the Obligations;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Indebtedness arising from the maturity of Contingent Obligations
permitted by subsection 7.4 in an amount not to exceed the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases (other than
Acquisition Consideration characterized as Capital Leases under GAAP) in an
aggregate amount not to exceed $7,000,000 at any one time outstanding;
(iv) (a) Company may become and remain liable with respect to
Indebtedness to any of its Subsidiary Guarantors, (b) any wholly-owned
Subsidiary Guarantors may become and remain liable with respect to Indebtedness
to Company or any other wholly-owned Subsidiary Guarantors, and (c) any
non-wholly-owned Subsidiary Guarantor and any Non-Guarantor Subsidiary may
become and remain liable with respect to Indebtedness to Company or any
wholly-owned Subsidiary Guarantors; provided that (w) all such intercompany
Indebtedness shall be evidenced by promissory notes, (x) all such intercompany
Indebtedness owed by Company to any of its Subsidiary Guarantors shall be
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the applicable promissory notes or an intercompany
subordination agreement, it being understood that nothing contained herein shall
prohibit Company from making any payments under the applicable promissory notes
prior to the occurrence of any Event of Default or a Potential Event of Default,
(y) any payment by any Subsidiary Guarantor of Company under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any
intercompany Indebtedness owed by such Subsidiary Guarantor to Company or to any
of its Subsidiary Guarantors for whose benefit such payment is made, and (z) in
the case of (c), the aggregate amount of Indebtedness owed by non-wholly-owned
Subsidiary Guarantors and Non-Guarantor Subsidiaries (other than Indebtedness
referred to in clause (xii) below) to Company or to its wholly-owned Subsidiary
Guarantors, together with (without duplication) the amount of Investments and
Contingent Obligations made under subsections 7.3(vi) and 7.4(iv)(b),
respectively, shall not exceed $15,000,000 in the aggregate outstanding at any
time; provided that at no time shall the portion of such Indebtedness consisting
of Indebtedness of Non-Guarantor Subsidiaries (other than the CMS Non-Guarantor
Subsidiaries) to Company or its wholly-owned Subsidiary Guarantors
(collectively, the "Non-Guarantor Non-CMS Subsidiary Indebtedness"), together
with (without duplication) the Non-Guarantor Non-CMS Subsidiary Investments, the
Non-Guarantor Non-CMS Subsidiary Contingent Obligations and the Minority
Interest Dispositions made under subsections 7.3(vi), 7.4(iv)(b) and 7.7(xii),
respectively, exceed $5,000,000 in the aggregate at any time.
(v) Company may remain liable with respect to the 9-7/8%
Subordinated Notes;
(vi) Company may become and remain liable with respect to
the 1996 Subordinated Notes;
(vii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness incurred in connection with Acquisitions
occurring after the Closing Date; provided that (x) the Acquisition is permitted
under subsection 7.3(iv) and subsection 7.7(viii), (y) such Indebtedness existed
immediately prior to the time of such Acquisition (and was not incurred in
contemplation of such acquisition), constitutes Indebtedness owed to the seller
or sellers of the stock or assets acquired in such Acquisition or constitutes
Indebtedness secured by real property acquired in such Acquisition and (z) the
aggregate principal amount of all such Indebtedness (excluding Indebtedness
related to Capital Leases otherwise permitted under clauses (iii), (iv) and (ix)
of this Section 7.1) does not exceed $5,000,000 for each such transaction or
$15,000,000 in the aggregate at any time outstanding;
(viii) Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 7.1 annexed hereto and
any renewals, replacements or refinancings thereof; provided that any renewal,
replacement or refinancing of any such Indebtedness shall be for an amount not
exceeding the principal amount of such Indebtedness and with a maturity no
earlier than such Indebtedness and if such original Indebtedness was secured,
such renewal, refinancing or replacement Indebtedness is secured only by the
property theretofore securing such Indebtedness;
(ix) Company and its Subsidiaries may become and remain liable
with respect to accounts payable incurred in the Ordinary Course of Business
even after such accounts payable become Indebtedness under the terms hereof;
(x) Company may become and remain liable with respect to
subordinated Indebtedness incurred after the date hereof, including without
limitation for the purpose of the replacement or refinancing of subordinated
Indebtedness referred to in subsections 7.1(v) and (vi); provided that such
proposed subordinated Indebtedness does not have any scheduled or mandatory
principal or sinking fund payments due and payable prior to one year after the
Commitment Termination Date, the terms and conditions of such proposed
subordinated Indebtedness shall have been approved by Agent and Requisite
Lenders, which approval shall not be unreasonably withheld, and no Event of
Default or Potential Event of Default shall exist prior to or as a result of the
incurrence of such subordinated Indebtedness;
(xi) Company and its Subsidiaries may become and remain liable
with respect to other Indebtedness in an aggregate principal amount at any time
outstanding not to exceed an amount equal to 2% of the total assets of Company
and its Subsidiaries as of the last day of the Fiscal Quarter immediately
preceding the date of the incurrence of such Indebtedness, determined on a
consolidated basis in accordance with GAAP; and
(xii) Company and its Subsidiaries (including any CMS
Non-Guarantor Subsidiaries) may become and remain liable with respect to
Indebtedness described in Schedule 1 annexed hereto incurred in connection with
the CMS Transactions.
7.2 Liens and Related Matters
A. Prohibition on Liens. Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents,
including Liens granted to Lenders to secure Company's obligations in respect of
Lender Interest Rate Agreements (as defined in the Company Pledge Agreement) up
to a maximum notional amount of $150,000,000;
(iii) Liens described in Schedule 7.2 annexed hereto on assets
other than the Collateral securing the Indebtedness permitted pursuant to
subsection 7.1(viii);
(iv) Liens securing Indebtedness permitted by subsections
7.1(iii) and (vii); provided that
such Liens shall not extend to any of the Collateral;
(v) Liens on assets other than Collateral created by lease
agreements to secure the payment of rental amounts and other sums (x) not yet
due thereunder or (y) due thereunder; provided that the aggregate amount of such
rental amounts and other sums due thereunder shall not exceed $2,000,000 at any
one time;
(vi) Other Liens on assets other than the Collateral
securing Indebtedness permitted
pursuant to subsection 7.1(xi);
(vii) Liens on the Collateral described in Schedule 7.2A
provided the value of the Collateral subject to such Liens shall not exceed
$5,000,000 at any time.
B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific
property encumbered to secure
payment of particular Indebtedness or as may be provided for in the 9-7/8%
Subordinated Note Indenture or the
1996 Subordinated Notes Indenture or any refinancing thereof permitted by
subsection 7.1(x), neither Company nor
any of its Subsidiaries (other than the Non-Guarantor Subsidiaries) shall enter
into any agreement prohibiting
the creation or assumption of any Lien upon any of its properties or assets,
whether now owned or hereafter
acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein or as may be provided for in the 9-7/8%
Subordinated Note Indenture or the 1996 Subordinated Notes Indenture or any
refinancing thereof permitted by subsection 7.1(x), Company will not, and will
not permit any of its Subsidiaries (other than the Non-Guarantor Subsidiaries)
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 such
Subsidiary to (i) pay dividends or make any other distributions on any of such
Subsidiary's capital stock or other equity interests owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 Investments; Joint Ventures
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of
the Existing Credit Agreement Closing Date in any Subsidiaries of Company;
(iii) Company and its Subsidiaries may make intercompany
loans to the extent permitted under
subsection 7.1(iv);
(iv) Company and its Subsidiaries may create or acquire
new Subsidiaries to the extent
permitted under subsection 7.7(viii);
(v) Company and its Subsidiaries may continue to own the
Investments owned by them and
described in Schedule 7.3 annexed hereto;
(vi) Company and its Subsidiaries may make and own Investments
in non-wholly-owned Subsidiary Guarantors and Non-Guarantor Subsidiaries;
provided that the aggregate amount of such Investments (other than those
referred to in clause (ix) below), together with (without duplication) the
amount of Indebtedness and Contingent Obligations made under subsection
7.1(iv)(c) and 7.4(iv)(b), respectively, shall not exceed $15,000,000 in the
aggregate outstanding at any time; provided further that at no time shall the
portion of such Investments consisting of Investments made by Company in
Non-Guarantor Subsidiaries (other than the CMS Non-Guarantor Subsidiaries)
(collectively, the "Non-Guarantor Non-CMS Subsidiary Investments"), together
with (without duplication) the Non-Guarantor Non-CMS Subsidiary Indebtedness,
the Non-Guarantor Non-CMS Subsidiary Contingent Obligations and the Minority
Interest Dispositions permitted under subsections 7.1(iv)(c), 7.4(iv)(b) and
7.7(xii), respectively, exceed $5,000,000 in the aggregate at any time.
(vii) Accounts receivable that originally arose in the
Ordinary Course of Business which have been converted to a note receivable or
other long term receivable, provided that any such note receivable has been
delivered to Agent under the Company Pledge Agreement or the Subsidiary Pledge
Agreement, as the case may be;
(viii) Company and its Subsidiaries may make and own other
Investments in Persons which operate primarily in the healthcare business which
are not Subsidiaries of Company in an aggregate amount not to exceed at any time
$10,000,000; and
(ix) Company and its Subsidiaries may make and own Investments
described in Schedule 1 annexed hereto in connection with the CMS Transactions.
7.4 Contingent Obligations.4 Contingent ObligationsContingent
Obligations.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable
with respect to Contingent
Obligations in respect of the Subsidiary Guaranty;
(ii) Company may become and remain liable with respect to
Contingent Obligations in respect of Letters of Credit in an aggregate amount
not to exceed at any time $35,000,000;
(iii) Subsidiaries of Company may become and remain liable
with respect to Contingent Obligations in respect of Indebtedness of Company
permitted pursuant to subsections 7.1(v) and 7.1(vi) pursuant to guarantees
entered into by any Subsidiary of Company; provided that any such guarantee
entered into after the Closing Date shall be in the form of such guarantee as in
effect on the Closing Date and any such Subsidiary is also a Subsidiary
Guarantor under this Agreement;
(iv) (a) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of any Indebtedness of
Company or any of its wholly-owned Subsidiary Guarantors permitted by subsection
7.1; and (b) Company and its wholly-owned Subsidiary Guarantors may become and
remain liable with respect to Contingent Obligations in respect of any
Indebtedness of any of Company's non-wholly-owned Subsidiary Guarantors and
Non-Guarantor Subsidiaries permitted by subsection 7.1 provided that the
aggregate amount of liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations (other than those
referred to in clause (xi) below), together with (without duplication) the
amount of Indebtedness and Investments made under subsections 7.1(iv)(c) and
7.3(vi), respectively, shall not exceed $15,000,000 in the aggregate at any time
outstanding; provided further that at no time shall such Contingent Obligations
consisting of Contingent Obligations of the Non-Guarantor Subsidiaries (other
than the CMS Non-Subsidiary Guarantors) (collectively, the "Non-Guarantor
Non-CMS Subsidiary Contingent Obligations"), together with (without duplication)
the Non-Guarantor Non-CMS Subsidiary Indebtedness, the Non-Guarantor Non-CMS
Subsidiary Investments and the Minority Interest Dispositions made under
subsections 7.1(iv)(c), 7.3(vi) and 7.7(xii), respectively, exceed in the
aggregate $5,000,000 at any time.
(v) Company and its Subsidiaries, as applicable, may
become and remain liable with respect
to Contingent Obligations described in Schedule 7.4 annexed hereto;
(vi) Company and its Subsidiaries, as applicable, may become
and remain liable with respect to Contingent Obligations arising from
transactions constituting asset sales permitted under Section 7.7, in addition
to those listed on Schedule 7.4, in an aggregate amount not to exceed at any
time $5,000,000;
(vii) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of rental obligations
under leases of Subsidiaries permitted by the terms hereof;
(viii) Company may become and remain liable with respect to
Contingent Obligations under Interest Rate Agreements entered into with one or
more Lenders with respect to Indebtedness, which Interest Rate Agreements are in
form and substance reasonably satisfactory to Agent;
(ix) Company and its Subsidiaries may become and remain
liable with respect to endorsements
in the Ordinary Course of Business of negotiable instruments for deposit or
collection;
(x) Company and its Subsidiaries may become and remain liable
with respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its Subsidiaries in
respect of all such other Contingent Obligations shall at no time exceed
$5,000,000; and
(xi) Company and its wholly-owned Subsidiary Guarantors may
become and remain liable with respect to Contingent Obligations described in
Schedule 1 annexed hereto incurred in connection with the CMS Transactions.
7.5 Restricted Junior Payments.5 Restricted Junior PaymentsRestricted
Junior Payments.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that so long as no Event of
Default or Potential Event of Default shall have occurred and be continuing or
occurs as a result thereof, (i) Company may make payments of regularly scheduled
interest in respect of the 9-7/8% Subordinated Notes and the 1996 Subordinated
Notes or any refinancing thereof permitted by subsection 7.1(x), in each case in
accordance with the terms of, and to the extent required by, and subject to the
subordination provisions contained in, the 9-7/8% Subordinated Note Indenture
and the 1996 Subordinated Notes Indenture respectively or any refinancing
thereof permitted by subsection 7.1(x), (ii) Company's non-wholly-owned
Subsidiaries may pay dividends and distributions in respect of any fiscal year
to Persons other than Company and its wholly-owned Subsidiaries to the extent of
such Person's pro-rata share of cash of any non-wholly-owned Subsidiary to the
extent of such Subsidiary's positive cash flow as of such fiscal year end if (x)
all Indebtedness of such Subsidiary (including Indebtedness owing to banks,
joint venture partners or Company and its Subsidiaries) has been paid, (y) such
Subsidiary has sufficient cash to pay all income taxes, all non-recurring
expenditures and all repayments to Medicare estimated to be due, in each case in
respect of such fiscal year and (z) such Subsidiary has a working capital
reserve of $300,000, (iii) Company may purchase Company Common Stock, options or
warrants held by officers or employees (including former officers and employees)
of Company in an aggregate amount not to exceed $2,000,000, (iv) Company may
repurchase its Common Stock pursuant to a stock repurchase plan approved by its
Board of Directors in an aggregate amount for all such repurchases not to exceed
$10,000,000 from and after the Existing Credit Agreement Closing Date, and (v)
Company may purchase shares of its Common Stock and, within 60 days after such
purchase, reissue or resell such Common Stock to employees of Company or its
Subsidiaries in accordance with the terms and provisions of the Employee Stock
Discount Program.
7.6 Financial Covenants.6 Financial CovenantsFinancial Covenants.
A. Minimum Fixed Charge Coverage Ratio. Company shall not permit
the ratio of (i) Consolidated
EBITDAR to (ii) Consolidated Fixed Charges for any four-Fiscal Quarter period
ending during any of the periods
set forth below to be less than the correlative ratio indicated:
Minimum Fixed
Period Charge Coverage Ratio
Closing Date through and including
December 31, 1999 1.50:1.00
Fiscal Year 2000 1.75:1.00
Fiscal Year 2001 and thereafter 2.00:1.00
B. Maximum Adjusted Leverage Ratio. Company shall not permit the
Consolidated Adjusted Leverage
Ratio during any of the periods set forth below to exceed the correlative ratio
indicated:
Maximum Adjusted
Period Leverage Ratio
Closing Date through and including
December 31, 1997 5.75:1.00
Fiscal Year 1998 5.50:1.00
Fiscal Year 1999 5.25:1.00
Fiscal Year 2000 and thereafter 5.00:1.00
C. Maximum Adjusted Senior Debt Ratio. Company shall not permit
the ratio of (i) Consolidated
Senior Debt as of the last day of any Fiscal Quarter occurring during any of the
periods set forth below to
(ii) Consolidated EBITDAR for the four-Fiscal Quarter period ending on such date
to exceed the correlative ratio
indicated:
Maximum Adjusted
Period Senior Debt Ratio
Closing Date through and including
December 31, 1997 4.00:1.00
Fiscal Year 1998 3.75:1.00
Fiscal Year 1999 3.50:1.00
Fiscal Year 2000 3.25:1.00
Fiscal Year 2001 and thereafter 3.00:1.00
D. Minimum Adjusted Consolidated Net Worth. Company shall not permit
Adjusted Consolidated Net Worth at any time to be less than the sum of (i)
$76,702,000 plus (ii) on a cumulative basis for each Fiscal Quarter, commencing
with the Fiscal Quarter ending September 30, 1996, an amount equal to 75% of
positive GAAP consolidated net income, if any, for such Fiscal Quarter, plus
(iii) 100% of the net proceeds from the issuance of any common equity Securities
of Company after June 30, 1996; provided that (y) for purposes of clause (iii)
above, there shall not be included in the net proceeds from the issuance of
common equity securities of Company any net proceeds from the reissue or resale
of shares of Common Stock to employees pursuant to the Employee Stock Discount
Program to the extent that the price at which such shares of Common Stock are
resold is lower than the price at which Company purchased such shares.
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions
Company shall not, and shall not permit any of its
Subsidiaries to, alter the corporate, capital or legal structure of Company or
any of its Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all of the business, property or fixed assets of, or any operating
division or facility of, or stock or other evidence of beneficial ownership of,
any Person, except:
(i) any Subsidiary of Company may be merged with or into
Company or any wholly-owned Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to Company or any wholly-owned Subsidiary
Guarantor; provided that, in the case of such a merger, Company or such
wholly-owned Subsidiary Guarantor shall be the continuing or surviving
corporation;
(ii) Company and its Subsidiaries may dispose of obsolete,
worn out or surplus property in
the Ordinary Course of Business;
(iii) Company and its Subsidiaries may sell or otherwise
dispose of inventory in the
Ordinary Course of Business;
(iv) Company and its Subsidiaries may consummate the
transactions described in Schedule
7.7(iv) annexed hereto;
(v) in addition to the sale and other dispositions permitted
under clause (vii) of this subsection 7.7, Company and its Subsidiaries may sell
or otherwise dispose of assets; provided that the aggregate fair market value of
all such assets does not exceed $5,000,000 in any Fiscal Year;
(vi) Company may liquidate, wind-up or dissolve the
Inactive Subsidiaries;
(vii) Company and its Subsidiaries may make asset sales, or
assign or sublet leased properties; provided that the aggregate book value of
all such assets, leasehold interests and leasehold improvements sold, assigned
or sublet pursuant to this clause (vii) after the date hereof does not exceed 5%
of the total assets of Company and its Subsidiaries as of the last day of the
most recently ended Fiscal Quarter, determined on a consolidated basis in
accordance with GAAP; provided further that the book value of leasehold
interests for the purposes of the immediately preceding proviso shall be equal
to the annual rents paid or payable by Company or its Subsidiary under the
related lease multiplied by eight; and provided further that (x) the
consideration received for such assets or leasehold interests shall be in an
amount at least equal to the fair market value thereof; (y) the consideration
received shall be cash, secured promissory notes, properties similar to the
assets or properties sold, assigned or subleased, or any combination thereof and
(z) the cash received in connection with such sale, assignment or sublease (net
of expenses in connection therewith) shall (except to the extent the assets so
sold, assigned or subleased secure specific Indebtedness, or such Indebtedness
is secured by a letter of credit, and the terms of such Indebtedness require
that such cash be applied to repay such Indebtedness) within 180 days of receipt
thereof (A) be applied to the permanent reduction of the Commitments (and the
prepayment of the Loans to the extent that the Total Utilization of the
Commitments would exceed the Commitments as so reduced), or (B) be invested in
assets or properties (other than bonds, notes, obligations and securities) used
in the operation of the businesses permitted pursuant to subsection 7.14;
(viii) Company and its Subsidiaries may make Acquisitions;
provided that no Event of Default or Potential Event of Default shall have
occurred and be continuing or shall occur as a result thereof and, (x) if the
Acquisition Consideration therefor equals or exceeds $20,000,000, Company shall
deliver to Agent (1) a Compliance Certificate, setting forth on a pro-forma
basis, taking into account the proposed Acquisition for the four-Fiscal Quarters
immediately preceding the date of calculation, the financial covenant
calculations in subsection 7.6, which calculations shall reflect compliance with
such covenants and be certified by the chief financial officer of the Company
not less than 10 Business Days before the consummation of such proposed
Acquisition, and (2) within 10 Business Days following the consummation of such
Acquisition, the documents required by subsection 6.9, and (y) if the
Acquisition Consideration therefor equals or exceeds $30,000,000, Company shall
obtain the consent of Requisite Lenders prior to the consummation of such
transaction, which consent shall not be unreasonably withheld, and shall deliver
to Agent the documents and information referred to in (x) above in the manner
provided therein; provided further that in the case of an acquisition of stock,
the acquired Person shall be a Subsidiary of Company; and provided further that
the aggregate amount of Acquisition Consideration in connection with such
Acquisitions (other than the Acquisition set forth on Schedule 7.7 (viii)
annexed hereto shall not exceed $55,000,000 in any Fiscal Year;
(ix) Company and its Subsidiaries may engage in
sale/leaseback transactions permitted under
subsection 7.10;
(x) Company and its Subsidiaries may make the
Acquisitions which are part of the CMS
Transactions;
(xi) Company may make the purchases, reissuances and resales
of shares of its Common Stock to the extent permitted under subsection 7.5(v)
and the definition of Employee Stock Discount Program; and
(xii) Company and its wholly-owned Subsidiary Guarantors may
sell or otherwise transfer minority ownership interests in wholly-owned
Subsidiary Guarantors to any Person other than Company and its Subsidiaries
(collectively, the "Minority Interest Dispositions") and such wholly-owned
Subsidiary Guarantors shall be released from the Subsidiary Guaranty and cease
to be Subsidiary Guarantors upon the closing of such sale or transfer and shall
thereupon become a Non-Guarantor Subsidiary; provided that, (w) Agent shall
continue to have a valid and perfected first priority security interest in the
portion of the ownership interests in such Non-Guarantor Subsidiary not sold or
transferred, (x) all such sales or transfers shall be at arms-length and for
fair consideration, (y) the aggregate book value of gross assets represented by
the pro rata share therein of such transferred ownership interests in respect of
all such sales or transfers after the date hereof, together with (without
duplication) the Non-Guarantor Non-CMS Subsidiary Indebtedness, the
Non-Guarantor Non-CMS Subsidiary Contingent Obligations and Non-Guarantor
Non-CMS Subsidiary Investments permitted under subsections 7.1(iv)(c),
7.4(iv)(b) and 7.3(vi), respectively, shall not exceed $5,000,000 in the
aggregate at any time, and (z) ownership interests in no more than five
Subsidiaries shall be sold or transferred pursuant to this subsection 7.7(xii).
Consolidated Capital Expenditures.nditures.8Consolidated Capital Expenditures
Company shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated
below, in an aggregate amount in excess of the corresponding amount set forth
below opposite such Fiscal Year:
Maximum Consolidated
Fiscal Year Capital Expenditures
Fiscal Year 1996 $15,000,000
Fiscal Year 1997 $19,000,000
Fiscal Year 1998 $21,000,000
Fiscal Years 1999, 2000 and 2001 and
each Fiscal Year thereafter $22,000,000
7.9 Fiscal Year.9 Fiscal YearFiscal Year
Company shall not change its Fiscal Year-end from December 31.
7.10 Sales and Lease-Backs.10 Sales and Lease-BacksSales and Lease-Backs.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or as
a guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which Company or any of its
Subsidiaries has, substantially contemporaneously with becoming liable with
respect to such lease or as part of the same transaction, sold or transferred or
is to sell or transfer to any other Person (other than Company or any of its
Subsidiaries) or (ii) which Company or any of its Subsidiaries intends to use
for substantially the same purpose as any other property which has been or is to
be sold or transferred by Company or any of its Subsidiaries to any Person
(other than Company or any of its Subsidiaries) in connection with such lease;
provided that notwithstanding the foregoing prohibitions, Company and its
Subsidiaries may become and remain liable with respect to such lease or leases
involving assets with an aggregate fair market value not exceeding $5,000,000
annually; provided, further that the aggregate fair market value of all assets
which are the subject of all such leases shall not exceed $15,000,000; and
provided further that with respect to each proposed lease, Company shall deliver
to Agent a Compliance Certificate, setting forth on a pro forma basis, taking
into account such lease for the four-Fiscal Quarters immediately preceding the
date of calculation, the financial covenant calculations in subsection 7.6,
which calculations shall reflect compliance with such covenants and be certified
by the chief financial officer of Company not less than 10 Business Days before
the consummation of such lease transaction.
7.11 Sale or Discount of Receivables
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, any of its notes receivable
or Accounts Receivable, where the aggregate principal amount thereof exceeds
$1,000,000 in any Fiscal Year; provided that nothing contained in this
subsection 7.11 shall be construed as prohibiting Company or any of its
Subsidiaries from writing off such notes receivable or accounts receivable to
the extent determined to be bad debts under GAAP and thereafter compromising,
selling or discounting such receivables.
7.12 Transactions with Shareholders and Affiliates
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any holder of 5%
or more of any class of equity Securities of Company or with any Affiliate of
Company or of any such holder, on terms that are less favorable to Company or
that Subsidiary, as the case may be, than those that might be obtained at the
time from Persons who are not such a holder or Affiliate; provided that the
foregoing restriction shall not apply to (i) any transaction between Company and
any of its Subsidiaries or between any of its Subsidiaries, (ii) reasonable and
customary fees paid to members of the Boards of Directors of Company and its
Subsidiaries or (iii) any transaction described in Schedule 7.12 annexed hereto.
7.13 Disposal of Subsidiary Stock
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity Securities of
any of its Subsidiaries, except to qualify directors if required by applicable
law or in connection with a transaction permitted under subsection 7.7(iv) -
(vii); or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity interests of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to qualify
directors if required by applicable law or in connection with a transaction
permitted under subsection 7.7(iv) - (vii); provided that, (y) Company may make
the purchases, reissuances and resales of shares of its Common Stock to the
extent permitted under subsection 7.5(v) and the definition of Employee Stock
Discount Program and (z) Company and its wholly-owned Subsidiary Guarantors may
make the sales or transfers of their ownership interests in wholly-owned
Subsidiary Guarantors to the extent permitted by subsection 7.7(xii).
7.14 Conduct of Business.14 Conduct of BusinessConduct of Business.
From and after the Closing Date, Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (i) the
businesses referred to in subsection 5.1C and (ii) such other lines of business
as may be consented to by Requisite Lenders, which consent shall not be
unreasonably withheld.
7.15 Amendments of Documents Relating to Subordinated Indebtedness
Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any Subordinated
Indebtedness, or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such Subordinated Indebtedness, change (to earlier dates) any dates upon
which payments of principal or interest are due thereon, change any event of
default or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to Company or Lenders.
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of
Default") shall occur:
8.1 Failure to Make Payments When Due
---------------------------------
Failure by Company to pay any installment of principal of or
interest on any Loan when due, whether at stated maturity, by acceleration, by
notice of voluntary prepayment, by mandatory prepayment or otherwise and such
failure, in the case of interest payments, is not cured within one (1) Business
Day (it being understood that there shall be no cure period for the failure to
pay any installment of principal when due); failure by Company to pay (including
payment with the proceeds of a Loan made pursuant to subsection 3.3B) when due
any amount payable to an Issuing Lender in reimbursement of any drawing under a
Letter of Credit; or failure by Company to pay any fee or any other amount due
under this Agreement within five days after the date due; or
8.2 Default in Other Agreements
(i) Failure of Company or any of its Subsidiaries to pay when
due any principal of or interest on or any other amount payable in respect of
one or more items of Indebtedness (other than Indebtedness referred to in
subsection 8.1), Operating Leases or Capital Leases or Contingent Obligations
(or any combination of the foregoing) having, in the case of Indebtedness,
Capital Leases and Contingent Obligations, an aggregate principal amount of
$2,000,000 or more and having, in the case of Operating Leases, annual
Consolidated Rental Payments of $2,000,000 or more, in each case beyond the end
of any grace period provided therefor; or (ii) breach or default by Company or
any of its Subsidiaries with respect to any other material term of (a) one or
more items of Indebtedness or Contingent Obligations in the aggregate principal
amounts referred to in clause (i) above or (b) any loan agreement, mortgage,
indenture or other agreement relating to such item(s) of Indebtedness or
Contingent Obligation(s), if the effect of such breach or default is to cause,
or to permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice, lapse of
time, both, or otherwise); or
8.3 Breach of Certain Covenants
Failure of Company to perform or comply with any term or
condition contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty
Any representation, warranty, certification or other statement
made by Company or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Company or any of its Subsidiaries
in writing pursuant hereto or thereto or in connection herewith or therewith
shall be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents
Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) Knowledge of Company of such default or (ii)
receipt by Company and such Loan Party of notice from Agent or any Lender of
such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Company or any of its Material
Subsidiaries in an involuntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against Company or any of its Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Company or any of its Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of Company or any
of its Subsidiaries for all or a substantial part of its property; or a warrant
of attachment, execution or similar process shall have been issued against any
substantial part of the property of Company or any of its Subsidiaries, and any
such event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its Material Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Company or any of its
Subsidiaries shall make any assignment for the benefit of creditors; or (ii)
Company or any of its Subsidiaries shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the Board of Directors of Company or any of its Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment or similar
process involving in any individual case an amount in excess of $2,000,000 or in
the aggregate an amount in excess of $5,000,000 (excluding amounts covered by
insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Company or any of its
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 60 days (or in any event later
than five days prior to the date of any proposed sale thereunder); or
8.9 Dissolution
Any order, judgment or decree shall be entered against Company
or any of its Material Subsidiaries decreeing the dissolution or split up of
Company or that Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of, in the case of Company or any of its Material
Subsidiaries, 30 days, or in the case of all other Subsidiaries, 60 days; or
8.10 Employee Benefit Plans
There shall occur one or more ERISA Events which individually
or in the aggregate results in or is reasonably expected to result in liability
of Company, any of its Subsidiaries or any of their respective ERISA Affiliates
in excess of $500,000 during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $500,000; or
8.11 Material Adverse Effect
Any event or change shall occur that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect; or
8.12 Change in Control
(i) Any sale, merger or consolidation with or into any Person
or any transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of Company, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction, any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) other than an Excluded Person is or becomes the "beneficial owner,"
directly or indirectly, of more than 50% of the total voting power in the
aggregate normally entitled to vote in the election of directors, managers, or
trustees, as applicable, of the transferee or surviving entity, (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) other than an Excluded
Person is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate of all classes of capital
stock of Company then outstanding normally entitled to vote in elections of
directors, or (iii) during any period of 12 consecutive months after the Closing
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of Company (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitutes a majority of the Board of Directors of Company then in
office; or
8.13 Invalidity of Subsidiary Guaranties; Failure of Security; Repudiation
of Obligations
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Agent shall not have or shall cease to have
a valid and perfected First Priority Lien in any Collateral purported to be
covered thereby having a fair market value individually or in the aggregate
exceeding $1,000,000, in each case for any reason other than the failure of
Agent or any Lender to take any legally permitted action within its control, or
(iii) any Loan Party shall contest the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability,
including without limitation with respect to future advances by Lenders, under
any Loan Document to which it is a party: or
Loss of Licenses, etc.
Any Governmental Authority shall finally revoke or fail to
renew any material Necessary Authorizations of Company or any of its
Subsidiaries; or any proceedings shall in any way be brought challenging the
validity or enforceability of any material Necessary Authorizations or seeking
the revocation, suspension or cancellation of any material Necessary
Authorizations and such proceeding is not contested in good faith by appropriate
proceedings; or Company or any of its Subsidiaries shall for any reason lose any
material Necessary Authorizations; or Company or any of its Subsidiaries shall
suffer the imposition of any restraining order, escrow, suspension or impound of
funds in connection with any proceeding (judicial or administrative) with
respect to any material Necessary Authorizations; or Company or any of its
Subsidiaries shall be in material default of any material Necessary
Authorizations beyond any applicable grace period, which event is reasonably
expected to have a Material Adverse Effect on the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
and its Subsidiaries taken as a whole:
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Agent to issue any Letter of Credit and the right of any Lender to
issue any Letter of Credit hereunder shall thereupon terminate, and (ii) upon
the occurrence and during the continuation of any other Event of Default, Agent
shall, upon the written request or with the written consent of Requisite
Lenders, by written notice to Company, declare all or any portion of the amounts
described in clauses (a) through (c) above to be, and the same shall forthwith
become, immediately due and payable, and the obligation of each Lender to make
any Loan, the obligation of Agent to issue any Letter of Credit and the right of
any Lender to issue any Letter of Credit hereunder shall thereupon terminate;
provided that the foregoing shall not affect in any way the obligations of
Lenders under subsection 3.3C(i).
Any amounts described in clause (b) above, when received by
Agent, shall be held by Agent pursuant to the terms of the Collateral Account
Agreement and shall be applied as therein provided.
Section 9. AGENT
9.1 Appointment.1 AppointmentAppointment. NationsBank is hereby appointed Agent
hereunder and under the other Loan Documents and each Lender hereby authorizes
Agent to act as its agent in accordance with the terms of this Agreement and the
other Loan Documents. Agent agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as applicable. The provisions of
this Section 9 are solely for the benefit of Agent and Lenders and Company shall
have no rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
Company or any of its Subsidiaries. NCMI as Arranger shall have no duties or
responsibilities under this Agreement or any other Loan Document.
9.2 Powers and Duties; General Immunity
▇. ▇▇▇▇▇▇; Duties Specified. Each Lender irrevocably authorizes Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto. Agent
shall have only those duties and responsibilities that are expressly specified
in this Agreement and the other Loan Documents. Agent may exercise such powers,
rights and remedies and perform such duties by or through its agents or
employees. Agent shall not have, by reason of this Agreement or any of the other
Loan Documents, a fiduciary relationship in respect of any Lender; and nothing
in this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon Agent any obligations in
respect of this Agreement or any of the other Loan Documents except as expressly
set forth herein or therein.
B. No Responsibility for Certain Matters. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Agent to Lenders or by or on behalf of
Company to Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding, Agent
shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts
thereof.
C. Exculpatory Provisions. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents except
to the extent caused by Agent's gross negligence or willful misconduct. Agent
shall be entitled to refrain from any act or the taking of any action (including
the failure to take an action) in connection with this Agreement or any of the
other Loan Documents or from the exercise of any power, discretion or authority
vested in it hereunder or thereunder unless and until Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under subsection 10.6) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. Without prejudice to the generality of the
foregoing, (i) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
D. Agent Entitled to Act as Lender. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Agent in its individual capacity as a Lender hereunder. With
respect to its participation in the Loans and the Letters of Credit, Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and functions delegated to
it hereunder, and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and Agent shall not have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4 Right to Indemnity
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Agent, to the extent that Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as Agent in any way relating to or arising out of this Agreement
or the other Loan Documents; provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. If any indemnity furnished to Agent for any
purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
9.5 Successor Agent
Agent may resign at any time by giving 30 days' prior written
notice thereof to Lenders and Company, and Agent may be removed at any time with
or without cause by an instrument or concurrent instruments in writing delivered
to Company and Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to, and with the approval of, Company (which approval
shall not be unreasonably withheld) to appoint a successor Agent. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent and the
retiring or removed Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Agent's resignation or
removal hereunder as Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
9.6 Collateral Documents and Subsidiary Guaranties
Each Lender hereby further authorizes Agent, on behalf of and
for the benefit of Lenders, to enter into each Collateral Document as secured
party and to be the agent for and representative of Lenders under the Subsidiary
Guaranty, and each Lender agrees to be bound by the terms of each Collateral
Document and the Subsidiary Guaranty; provided that Agent shall not (i) enter
into or consent to any material amendment, modification, termination or waiver
of any provision contained in any Collateral Document or the Subsidiary Guaranty
or (ii) release any Collateral (except as otherwise expressly permitted or
required pursuant to the terms of this Agreement or the applicable Collateral
Document), in each case without the prior consent of Requisite Lenders (or, if
required pursuant to subsection 10.6, all Lenders); provided further, however,
that, without further written consent or authorization from Lenders, Agent may
execute any documents or instruments necessary to (a) release any Lien
encumbering any item of Collateral that is the subject of a sale or other
disposition of assets permitted by this Agreement or to which Requisite Lenders
have otherwise consented or (b) release any Subsidiary Guarantor from the
Subsidiary Guaranty if all of the capital stock of such Subsidiary Guarantor is
sold to any Person (other than an Affiliate of Company) pursuant to a sale or
other disposition permitted hereunder or to which Requisite Lenders have
otherwise consented. Anything contained in any of the Loan Documents to the
contrary notwithstanding, Company, Agent and each Lender hereby agree that (X)
no Lender shall have any right individually to realize upon any of the
Collateral under any Collateral Document or to enforce the Subsidiary Guaranty,
it being understood and agreed that all rights and remedies under the Collateral
Documents and the Subsidiary Guaranty may be exercised solely by Agent for the
benefit of Lenders in accordance with the terms thereof, and (Y) in the event of
a foreclosure by Agent on any of the Collateral pursuant to a public or private
sale, Agent or any Lender may be the purchaser of any or all of such Collateral
at any such sale and Agent, as agent for and representative of Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Obligations as a credit on account of the purchase price for
any collateral payable by Agent at such sale.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit
A. General. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its Letters of Credit or participations therein
or any other interest herein or in any other Obligations owed to it; provided
that no such sale, assignment, transfer or participation shall, without the
consent of Company, require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state; provided,
further that no such sale, assignment, transfer or participation of any Letter
of Credit or any participation therein may be made separately from a sale,
assignment, transfer or participation of a corresponding interest in the
Commitment and the Loans of the Lender effecting such sale, assignment, transfer
or participation. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations therein, or the other Obligations owed
to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan,
Letter of Credit or participation therein, or other Obligation may (a) be
assigned in any amount to another Lender, or to an Affiliate of the assigning
Lender or another Lender, with the giving of notice to Company and Agent or (b)
be assigned in an aggregate amount of not less than $10,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments, Loans,
Letters of Credit and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of Company and
Agent (which consent of Company and Agent shall not be unreasonably withheld or
delayed); provided that any such assignment in accordance with either clause (a)
or (b) above shall effect a pro rata assignment (based on the respective
principal amounts thereof then outstanding or in effect) of both the Commitment
and the Loans of the assigning Lender. To the extent of any such assignment in
accordance with either clause (a) or (b) above, the assigning Lender shall be
relieved of its obligations with respect to its Commitments, Loans, Letters of
Credit or participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Agent, for its acceptance, an Assignment Agreement, together with a processing
and recordation fee of $3,000 and such forms, certificates or other evidence, if
any, with respect to United States federal income tax withholding matters as the
assignee under such Assignment Agreement may be required to deliver to Agent
pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery acceptance
and recordation, from and after the effective date specified in such Assignment
Agreement, (y) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and (z) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment Agreement, relinquish its rights (other than any rights which survive
the termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto; provided that, anything contained in any of the Loan Documents to the
contrary notwithstanding, if such Lender is the Issuing Lender with respect to
any outstanding Letters of Credit such Lender shall continue to have all rights
and obligations of an Issuing Lender with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder). The Commitments hereunder shall
be modified to reflect the Commitment of such assignee and any remaining
Commitment of such assigning Lender and, if any such assignment occurs after the
issuance of the Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as practicable,
surrender its Notes to Agent for cancellation, and thereupon new Notes shall be
issued to the assignee and/or to the assigning Lender, substantially in the form
of Exhibit IV annexed hereto, with appropriate insertions, to reflect the new
Commitments of the assignee and/or the assigning Lender.
(ii) Acceptance by Agent. Upon its receipt of an Assignment
Agreement executed by an assigning Lender and an assignee representing that it
is an Eligible Assignee, together with the processing and recordation fee
referred to in subsection 10.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters that such
assignee may be required to deliver to Agent pursuant to subsection
2.7B(iii)(a), Agent and Company shall, if Agent and Company have consented to
the assignment evidenced thereby (in each case to the extent such consent is
required pursuant to subsection 10.1B(i)), accept such Assignment Agreement by
executing a counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Agent and Company to such assignment). Agent
shall maintain a copy of each Assignment Agreement delivered to and accepted by
it as provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the Commitment Termination Date or (ii)
a reduction of the principal amount of or the rate of interest payable on any
Loan allocated to such participation, and all amounts payable by Company
hereunder (including without limitation amounts payable to such Lender pursuant
to subsections 2.6D, 2.7 and 3.6) shall be determined as if such Lender had not
sold such participation. Company and each Lender hereby acknowledge and agree
that, solely for purposes of subsections 10.4 and 10.5, (a) any participation
will give rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Information. Each Lender may furnish any information
concerning Company and its Subsidiaries
in the possession of that Lender from time to time to assignees and participants
(including prospective assignees
and participants), subject to subsection 10.19.
F. Representations of Lenders. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 Expenses
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including without limitation any
opinions requested by Lenders as to any legal matters arising hereunder) and of
Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including, without limitation, with respect to confirming
compliance with environmental, insurance and solvency requirements; (iii) the
reasonable fees, expenses and disbursements of counsel to Agent and Arranger in
connection with the negotiation, preparation, execution and administration of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by Company; (iv) all the
actual costs and reasonable expenses of creating and perfecting Liens in favor
of Agent on behalf of Lenders pursuant to any Collateral Document, including
without limitation filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums (if applicable),
reasonable fees, expenses and disbursements of counsel to Agent and of counsel
providing any opinions that Agent or Requisite Lenders may request in respect of
the Collateral Documents or the Liens created pursuant thereto; (v) all the
actual costs and reasonable expenses (including without limitation the
reasonable fees, expenses and disbursements of any auditors, accountants or
appraisers and any environmental or other consultants, advisors and agents
employed or retained by Agent and Arranger or their counsel) of obtaining and
reviewing any audits or reports provided for under subsection 6.5B with respect
to Accounts Receivable; (vi) the custody or preservation of any of the
Collateral; (vii) all other actual and reasonable costs and expenses incurred by
Agent and Arranger in connection with the negotiation, preparation and execution
of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (viii)
after the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including the allocated costs of in-house counsel)
and costs of settlement, incurred by Agent, Arranger and Lenders in enforcing
any Obligations of or in collecting any payments due from any Loan Party
hereunder or under the other Loan Documents by reason of such Event of Default
(including, without limitation, in connection with the sale of, collection from,
or other realization upon any of the Collateral or the enforcement of the
Subsidiary Guaranty) or in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement in the nature of a
"work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity
In addition to the payment of expenses pursuant to subsection
10.2, whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel with the
approval of Company, which approval shall not be unreasonably withheld),
indemnify, pay and hold harmless Agent, Arranger and Lenders, and the officers,
directors, employees, agents and affiliates of Agent, Arranger and Lenders
(collectively called the "Indemnitees"), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that Company shall
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise from
the gross negligence or willful misconduct of that Indemnitee as determined by a
final judgment of a court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively,
any and all liabilities, obligations, losses, damages (including natural
resource damages), penalties, actions, judgments, suits, claims (including
Environmental Claims), costs (including the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of the Subsidiary Guaranty, (ii) the statements contained in the
commitment letter delivered by any Lender to Company with respect thereto, or
(iii) any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of Company or any of its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in this subsection 10.3 may be unenforceable in
whole or in part because they are violative of any law or public policy, Company
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.
10.4 Set-Off
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default each Lender is hereby authorized by Company
at any time or from time to time, without notice to Company or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or for the credit or
the account of Company against and on account of the obligations and liabilities
of Company to that Lender under this Agreement, the Letters of Credit and
participations therein and the other Loan Documents, including, but not limited
to, all claims of any nature or description arising out of or connected with
this Agreement, the Letters of Credit and participations therein or any other
Loan Document, irrespective of whether or not (i) that Lender shall have made
any demand hereunder or (ii) the principal of or the interest on the Loans or
any amounts in respect of the Letters of Credit or any other amounts due
hereunder shall have become due and payable pursuant to Section 8 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured.
10.5 Ratable Sharing
Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment (other than a voluntary prepayment of Loans
made and applied in accordance with the terms of this Agreement), by realization
upon security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
10.6 Amendments and Waivers
No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, and no consent to any departure by
Company therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: increases the amount of any
of the Commitments or reduces the principal amount of any of the Loans;
increases the maximum amount of Letters of Credit; changes in any manner the
definition of "Pro Rata Share" or the definition of "Requisite Lenders"; changes
in any manner any provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of all Lenders; postpones the scheduled
final maturity date of any of the Loans; postpones the date or reduces the
amount of any scheduled reduction of the Commitments; postpones the date on
which any interest or any fees are payable; decreases the interest rate borne by
any of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any
fees payable hereunder; increases the maximum duration of Interest Periods
permitted hereunder; reduces the amount or postpones the due date of any amount
payable in respect of, or extends the required expiration date of, any Letter of
Credit; changes in any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit; releases any Lien granted in
favor of Agent with respect to all or substantially all of the Collateral;
releases any Subsidiary Guarantor from its obligations under the Subsidiary
Guaranty, in each case other than in accordance with the terms of the Loan
Documents; or changes in any manner the provisions contained in subsection 8.1
or this subsection 10.6 shall be effective only if evidenced by a writing signed
by or on behalf of all Lenders. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in Section 4 shall be
effective only if evidenced by a writing signed by or on behalf of Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, and (iii) no amendment, modification,
termination or waiver of any provision of Section 9 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of Agent shall be effective without the written concurrence of
Agent. Agent may, but shall have no obligation to, with the concurrence of any
Lender, execute amendments, modifications, waivers or consents on behalf of that
Lender. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand on
Company in any case shall entitle Company to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 10.6
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by Company, on Company.
10.7 Independence of Covenants
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
10.8 Notices
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Agent shall not be effective
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Agent.
10.9 Survival of Representations, Warranties and Agreements
A. All representations, warranties and agreements made
herein shall survive the execution
and delivery of this Agreement and the making of the Loans and the issuance of
the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of Company set forth in subsections 2.6D,
2.7, 3.5A, 3.7, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement; provided that
with respect to the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A and 3.7 only, the survival period for unasserted claims thereunder shall be
limited to 18 months after the termination of this Agreement and payment of all
Obligations.
C. Notwithstanding the existence of any contingent liabilities
under subsection 10.9B, Agent, upon payment of the Loans and all other
Obligations of the Loan Parties not referred to in subsection 10.9B, shall
return or release the Collateral.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside
Neither Agent nor any Lender shall be under any obligation to
marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Agent or Lenders (or to Agent for the benefit of
Lenders), or Agent or Lenders enforce any security interests or exercise their
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, any other state
or federal law, common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be revived
and continued in full force and effect as if such payment or payments had not
been made or such enforcement or setoff had not occurred.
10.12 Severability
In case any provision in or obligation under this Agreement or
the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.13 Obligations
Several; Independent Nature of Lenders' RightsObligations Several; Independent
Nature of Lenders' Rights.
The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no action
taken by Lenders pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.
10.14 Headings
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING WITHOUT
LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.16 Successors and Assigns
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders (it being understood
that Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 Consent to Jurisdiction and Service of Process
ALL JUDICIAL PROCEEDINGS BROUGHT BY OR AGAINST COMPANY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF LOS
ANGELES. BY EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, AGENT AND EACH OF THE LENDERS IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH
COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY
LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
410.40 OR OTHERWISE.
10.18 Waiver of Jury Trial.18 Waiver of Jury TrialWaiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR
THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto acknowledges
that this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future dealings.
Each party hereto further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives its
jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 Confidentiality
Each Lender, participant and assignee shall hold all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as confidential by Company in accordance with such
Lender's customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices, it being
understood and agreed by Company that in any event a Lender may make (i)
disclosures to Affiliates of such Lender in connection with the transactions
which are the subject of this Agreement, (ii) disclosures reasonably required by
any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any Loans or any
participations therein or (iii) disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; provided, further that (i) in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries; and (ii) any Lender may make disclosures to its Affiliates
authorized to purchase securities with the prior consent of Company, which
consent shall not be unreasonably withheld. Each participant shall agree in
writing to be bound by the provisions of this Section 10.19.
10.20 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Agreement shall be deemed executed and delivered upon
the execution of a counterpart hereof by each of the parties hereto and receipt
by Company and Agent of written or telephonic notification of such execution and
authorization of delivery thereof. This Agreement (except for the provisions of
Sections 9 and 10 hereof and related definitions) shall not become effective and
the Existing Credit Agreement shall remain in place until the time at which the
conditions set forth in Section 4.1 have been satisfied or otherwise waived on
the Closing Date, at which time this Agreement shall become fully effective and
replace the Existing Credit Agreement, which shall be deemed to be completely
amended and restated hereby at such time. At such time this Agreement (including
the Schedules and Exhibits attached hereto) shall constitute the entire
agreement among the parties hereto and with respect to the subject matter hereof
and supersede all prior agreements, understandings and negotiations, both
written and oral, among the parties with respect to such subject matter,
including, but not limited to, the Existing Credit Agreement. If the Closing
Date has not occurred by December 31, 1996, then this Agreement shall terminate
on such date and the Existing Credit Agreement shall remain in place in
accordance with its terms.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY:
REGENCY HEALTH SERVICES, INC.
By:
Title:
Notice Address:
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Attn: Chief Financial Officer
AGENT, ARRANGER AND LENDERS:
NATIONSBANK OF TEXAS, N.A.,
individually and as Agent
By:
Title:
Notice Address for Letters of Credit and Funding Requests:
NationsBank of Texas, N.A.
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Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Notice Address for All Other Purposes:
NationsBank of Texas, N.A.
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Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
NATIONSBANC CAPITAL MARKETS, INC.,
as Arranger
By:
Title:
Notice Address:
NationsBanc Capital Markets, Inc.
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Attn: ▇▇▇▇ ▇▇▇▇
CREDIT LYONNAIS NEW YORK BRANCH
By:
Title:
Notice Address:
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Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
BANQUE PARIBAS
By:
Title:
Notice Address:
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Attn: ▇▇▇▇ ▇▇▇▇▇▇
THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY
By:
Title:
Notice Address:
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Attn: Takaomi Tomioka
THE SUMITOMO BANK, LIMITED
By:
Title:
Notice Address:
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Attn: ▇▇ ▇▇▇▇▇▇▇▇
SCHEDULE 2.1
LENDERS' COMMITMENTS AND PRO RATA SHARES
Lender Loan Commitment Pro Rata Share
------------------------------------------ ----------------- ------------------
NationsBank of Texas, N.A. $30,000,000 30.0%
Credit Lyonnais 25,000,000 25.0
Banque Paribas 15,000,000 15.0
The Long-Term Credit Bank of Japan, Ltd. 15,000,000 15.0
The Sumitomo Bank, Limited 15,000,000 15.0
TOTAL $100,000,000 100%