Exhibit 10.1
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GENTIVA HEALTH SERVICES, INC.
GENTIVA HEALTH SERVICES HOLDING CORP.,
AND EACH OF THE SUBSIDIARY BORROWING CORPORATIONS
LISTED ON THE SIGNATURE PAGES HERETO,
as Borrowers,
THE LENDING INSTITUTIONS LISTED IN ANNEX I ATTACHED HERETO,
as Lenders,
and
FLEET CAPITAL CORPORATION,
as Administrative Agent
and
FLEET SECURITIES, INC.
as Arranger
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LOAN AND SECURITY AGREEMENT
Dated: June 13, ▇▇▇▇
▇▇▇▇▇▇: $55,000,000
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT, is made this 13th day of June, 2002, by
and among the lending institutions listed in Annex I attached hereto and
incorporated herein by reference (each a "Lender", and collectively, "Lenders"),
Fleet Capital Corporation, a Rhode Island corporation with an office at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as administrative agent for the
Lenders ("Agent"), and Gentiva Health Services, Inc., a Delaware corporation
with its chief executive office at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (the "Company"), Gentiva Health Services Holding Corp., a Delaware
corporation with its chief executive office at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("GHS"), and each of the Subsidiary Borrowing Corporations
listed on the signature pages hereto, each with a state of incorporation and
chief executive office as listed on the exhibits hereto (each of the Company,
GHS and each Subsidiary Borrowing Corporation, a "Borrower," and collectively,
"Borrowers").
Capitalized terms used in this Loan and Security Agreement ("this
Agreement") have the meanings assigned to them in Appendix A, General
Definitions. Accounting terms not otherwise specifically defined herein shall be
construed in accordance with GAAP, consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Agent and Lenders agree to make a revolving credit facility of up to
Fifty-Five Million Dollars ($55,000,000.00) available upon Borrowing Agent's
request (on behalf of the Borrowers) therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Each Lender agrees, severally, for so long as no
Default or Event of Default exists, and provided that the Control Agreements
with respect to the Lockbox Accounts and Concentration Accounts have been
executed, to make Revolving Credit Loans to Borrowers from time to time until
the Revolving Credit Maturity Date, as requested by Borrowing Agent in the
manner set forth in subsection 3.1.1 hereof, up to a maximum aggregate principal
amount at any time outstanding equal to such Lender's Pro Rata Percentage
multiplied by the sum of (i) the Borrowing Base at such time minus (ii) the sum
of (x) the LC Amount and (y) reserves, if any, established pursuant to this
subsection 1.1.1. No Lender's portion of the Revolving Credit Loans shall at any
time exceed its respective Pro Rata Share. Agent shall have the right to
establish reserves in such amounts and with respect to the following matters, as
Agent shall deem necessary or appropriate against the amount of Revolving Credit
Loans which Borrowers (through Borrowing Agent) may otherwise request under this
subsection 1.1.1: (i) price adjustments, damages, unearned discounts, returned
products or other matters for which credit memoranda are issued in the ordinary
course of Borrowers' business; (ii) sums chargeable against Borrowers' Loan
Account as Revolving Credit Loans under any section of this Agreement; (iii)
amounts owing by Borrowers to any Person to the extent secured by a Lien on, or
trust over, any Collateral of any Borrower (except for amounts secured by Liens
permitted
under subsections 8.2.5(d) and (e)); and (iv) such other matters, events,
conditions or contingencies as to which Agent reasonably determines in
accordance with Agent's customary practices reserves should be established from
time to time hereunder. The Revolving Credit Loans shall be further evidenced by
the Revolving Credit Notes and shall be secured by all of the Collateral.
1.1.2 Excess Availability Block. Notwithstanding anything to the contrary
contained in this Agreement, during the time period beginning on the Closing
Date and continuing until the first Covenant Reporting Date on which Borrowers
both (x) shall have delivered to Agent (either on such Covenant Reporting Date
or on a previous Covenant Reporting Date) the Annual Financial Reports as
required by subsection 8.1.3 for Borrowers' fiscal year 2002 and (y) shall have
delivered Annual or Quarterly Financial Reports reflecting a minimum EBITDA,
measured on a Consolidated basis for the Corresponding Covenant Measurement
Period of at least Fifteen Million Dollars ($15,000,000.00), both (x) the Total
Revolving Credit Facility Amount and (y) the Formula Amount shall be reduced by
an availability blockage reserve of Ten Million Dollars ($10,000,000.00) (any
such availability blockage reserve, the "Excess Availability Blockage").
1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely for
the following purposes: (i) to pay fees and expenses incurred in connection with
this transaction, (ii) the Borrowers' working capital and letter of credit
needs, in a manner consistent with the provisions of this Agreement and all
applicable laws and (iii) Permitted Acquisitions. Notwithstanding anything to
the contrary contained in the following, the Revolving Credit Loans may be used
for acquisitions other than Permitted Acquisitions if such acquisitions are
approved in advance in writing by Majority Lenders.
1.3 Letters of Credit; LC Guaranties. Each Lender agrees, severally, that a
letter of credit subfacility shall be made available to Borrowers as set forth
in this section as part of the Revolving Credit Facility. In order to implement
this letter of credit subfacility, Agent agrees, for so long as no Default or
Event of Default exists, and if requested by Borrowing Agent (on behalf of
Borrowers), to: (i) issue its, or cause to be issued by its Affiliate, standby
Letters of Credit for the account of any Borrower or (ii) execute LC Guaranties
by which Agent or its Affiliate shall guaranty the payment or performance by any
Borrower of its reimbursement obligations with respect to standby Letters of
Credit and standby letters of credit issued for such Borrower's account by other
Persons in support of such Borrower's obligations (other than obligations for
the repayment of Money Borrowed), provided that the LC Amount at any time shall
not exceed the lesser of (i) Forty Million Dollars ($40,000,000.00) and (ii) the
Borrowing Base minus the sum of all outstanding Loans and reserves permitted by
subsection 1.1.1 hereof, if any. No Letter of Credit or LC Guaranty may have an
expiration date that is after the Revolving Credit Maturity Date. Any amounts
paid by Agent or Issuer under any LC Guaranty or in connection with any Letter
of Credit shall be treated as Revolving Credit Loans, shall be secured by all of
the Collateral and shall bear interest and be payable at the same rate and in
the same manner as Revolving Credit Loans. Each Lender shall be directly and
unconditionally obligated to Agent, according to its Pro Rata Percentage, to
reimburse Agent, without setoff or deduction of any kind or nature, for honoring
any drawing under any Letter of Credit or making any payment under any LC
Guaranty (without regard to the occurrence of a Default or an Event
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of Default including, without limitation, following the commencement of any
bankruptcy, reorganization, insolvency, liquidation or dissolution proceeding).
The amount of Agent's payment (and the respective reimbursements of the Lenders
to Agent, as applicable) shall automatically constitute a Revolving Credit Loan
without regard to any borrowing condition herein and without any request,
consent or other action of any Borrower or Borrowing Agent.
1.3.1 Existing Letters of Credit. Simultaneously with the effectiveness of
this Agreement in accordance with Section 9.1, the Existing Letters of Credit
shall be deemed to be Letters of Credit under this Agreement issued as of the
Closing Date. Borrowers shall pay the Letter of Credit Availability Fee required
under Section 2.4 for each such Existing Letter of Credit as though each such
Existing Letter of Credit were a new Letter of Credit issued on the Closing
Date, without any credit given for any similar letter of credit fees paid by
Borrowers under Section 2.4 of the Prior Loan Agreement in respect of such
Existing Letters of Credit.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Revolving Credit Interest:
(a) Rate Options. At the time of the request for each Revolving Credit Loan
under the Revolving Credit Facility, and thereafter from time to time, Borrowers
shall have the right, subject to the terms and conditions of this Agreement, and
provided no Default or Event of Default has occurred and is continuing, to have
Borrowing Agent designate to Agent in writing that all or a portion of the
Revolving Credit Loans shall bear interest at either the (i) Revolving Credit
LIBOR Rate or (ii) Revolving Credit Base Rate. Interest on each portion thereof
shall accrue and be paid at the time and rate applicable to the respective
option designated by Borrowing Agent or otherwise governing under the terms of
this Agreement. If for any reason the Revolving Credit LIBOR Rate option is
unavailable, the Revolving Credit Base Rate shall apply.
(i) Base Rate Option: If Borrowers desire to have the Revolving Credit Base
Rate apply to all or a portion of any Loan being requested under the Revolving
Credit Facility, a request for a Revolving Credit Base Rate Loan may be made by
Borrowing Agent in the manner specified in subsection 3.1.1(a). The rate of
interest on Revolving Credit Base Rate Loans shall increase or decrease by an
amount equal to any increase or decrease in the Base Rate effective as of the
opening of business on the day that any such change in the Base Rate occurs.
There shall be no minimum amount applicable to requests for a Revolving Credit
Base Rate Loan.
(ii) Revolving Credit LIBOR Rate Option:
(A) Requests. Provided no Default or Event of Default has occurred and is
continuing, and subject to the provisions of this subsection 2.1.1(a)(ii), if
Borrowers desire to have the Revolving Credit LIBOR Rate apply to all or a
portion of the Revolving Credit Loans (including without limitation all or a
portion of any Loan being requested under the Revolving
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Credit Facility or all or a portion of an existing Revolving Credit Base Rate
Loan), Borrowing Agent shall give Agent a written irrevocable request no later
than 11:00 A.M. Eastern time on the second (2nd) London Business Day prior to
the requested borrowing date specifying (i) the date the Revolving Credit LIBOR
Rate shall apply (which shall be a London Business Day), (ii) the LIBOR Interest
Period, and (iii) the amount to be subject to the Revolving Credit LIBOR Rate
provided that such amount shall be an integral multiple of One Million Dollars
($1,000,000.00). In no event may Borrowers have outstanding at any time LIBOR
Rate Loans with more than four (4) different LIBOR Interest Periods.
(B) LIBOR Interest Periods. Revolving Credit LIBOR Rate Loans shall be
selected by Borrowers through Borrowing Agent for a LIBOR Interest Period during
which the Revolving Credit LIBOR Rate is applicable. All accrued and unpaid
interest on a Revolving Credit LIBOR Rate Loan shall be paid in accordance with
subsection 3.2.2. No LIBOR Interest Period with respect to the Revolving Credit
LIBOR Rate Loans may end after the Revolving Credit Maturity Date. Subject to
all of the terms and conditions applicable to a request to convert all or a
portion of any Revolving Credit Base Rate Loan to a Revolving Credit LIBOR Rate
Loan, Borrower may extend a Revolving Credit LIBOR Rate Loan as of the last day
of the LIBOR Interest Period to a new Revolving Credit LIBOR Rate Loan. If
Borrowing Agent fails to notify Agent of the LIBOR Interest Period for a
subsequent Revolving Credit LIBOR Rate Loan at least two (2) London Business
Days prior to the last day of the then current LIBOR Interest Period of an
outstanding Revolving Credit LIBOR Rate Loan, or if an Event of Default has
occurred and is outstanding two (2) London Business Days prior to the last day
of the then current LIBOR Interest Period of any Revolving Credit LIBOR Rate
Loan, then such outstanding Revolving Credit LIBOR Rate Loan shall, at the end
of the applicable LIBOR Interest Period, accrue interest as a Revolving Credit
Base Rate Loan as provided in subsection 2.1.1(i) hereof.
(C) Adjustments for Increased Costs. If any law or governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) of a Governmental Authority in or of the United
States adopted after the date of this Agreement and having general applicability
to all banks within the jurisdiction in which any Lender(s) operate (excluding,
for the avoidance of doubt, the effect of and phasing in of capital requirements
or other regulations or guidelines passed prior to the date of this Agreement),
or any interpretation or application thereof by any Governmental Authority
charged with the interpretation or application thereof, or the compliance of
Lender therewith, shall;
(i) subject any Lender to any tax with respect to this Agreement (other
than (a) any tax based on or measured by net income or otherwise in the nature
of a net income tax, including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable basis for measurement and
(b) any tax collected by a withholding on payments and which is not computed by
reference to the net income of the payee and is not in the nature of an advance
collection of a tax based on or measured by the net income of the payee) or (2)
change the basis of taxation of payments to any Lender of principal, fees,
interest or any other amount payable hereunder or under any Loan Documents
(other than in respect of (x) any tax based on or measured by net income or
otherwise in the nature of a net income tax, including, without limitation, any
franchise tax or any similar tax based on capital,
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net worth or comparable basis for measurement and (y) any tax collected by a
withholding on payments and which is not computed by reference to the net income
of the payee and is not in the nature of an advance collection of a tax based on
or measured by the net income of the payee);
(ii) impose, modify or hold applicable any reserve (except any reserve
taken into account in the determination of the applicable Adjusted LIBOR Rate),
special deposit, assessment or similar requirement against assets held by, or
deposits in or for the account of, advances or loans by, or other credit
extended by, any office of any Lender, including (without limitation) pursuant
to Regulation D of the Board of Governors of the Federal Reserve System; or
(iii) impose on any Lender or the London interbank market any other
condition with respect to any Loan Document; and the direct result of any of the
foregoing is to increase the cost to any Lender of making, renewing or
maintaining Loans hereunder or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans, then, in any
such case, Borrowers shall pay to Agent such additional amount(s) as will
compensate the applicable Lender(s)) for such additional cost(s) or such
reduction(s), as the case may be (to the extent such Lender(s) have not
otherwise been compensated, with respect to a particular Loan, for such
increased cost as a result of an increase in the Base Rate or the Adjusted LIBOR
Rate) upon written demand by Agent to Borrowers for such amounts. Agent shall
make such a demand upon receipt by Agent of a request for increased costs under
this subsection 2.1.1(a)(ii)(C) accompanied by a certificate of each such Lender
with respect to such increased costs as set forth in the next sentence, which
such certificate shall be delivered to Borrowers by Agent along with the demand
for payment of such increased costs. An officer of any Lender claiming increased
costs under this subsection 2.1.1(a)(ii)(C) shall determine the amount of such
additional cost(s) or reduced amount(s) using reasonable averaging and
attribution methods and shall certify the amount of such additional cost(s) or
reduced amount(s) to Borrowers, which certification shall include a written
explanation of such additional cost(s) or reduction(s) to Borrowers. Such
certification shall be conclusive absent manifest error. If any Lender claims
any additional cost or reduced amount pursuant to this subsection
2.1.1(a)(ii)(C), then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to designate a different lending office or to
file any certificate or document, or take any other action, reasonably requested
by Borrowers if the making of such designation or filing or taking of such
action would avoid the need for, or reduce the amount of, any such additional
cost(s) or reduced amount(s) and would not, in the sole good faith discretion of
such Lender, be otherwise disadvantageous to Lender.
(D) Inability to Make LIBOR Rate Loans. Notwithstanding any other provision
hereof, if Agent or any Lender shall determine in good faith that any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection 2.1.1(a)(ii)(D), the term "Lender" shall
include the office or branch where any Lender or any corporation or bank then
controlling any Lender makes or maintains any LIBOR Rate Loans) to make or
maintain the LIBOR Rate Loans, or adverse or unusual conditions in, or changes
in applicable law relating to, the London interbank market make it impracticable
to fund therein any of the LIBOR Rate
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Loans, or make the projected Adjusted LIBOR Rate unreflective of the actual
costs of funds therefor to such Lender, the obligation of all Lenders to make
LIBOR Rate Loans hereunder or to convert Revolving Credit Base Rate Loans into
LIBOR Rate Loans shall forthwith be suspended during the pendency of such
circumstances and Borrowers shall, if any affected LIBOR Rate Loans are then
outstanding, promptly upon request from Agent, convert such affected LIBOR Rate
Loans into Base Rate Loans. Upon such a determination by Agent, or receipt by
Agent of written notice from a Lender that it has made such a determination,
Agent shall promptly give notice of such determination to Borrowers. Such a
determination, in good faith, by Agent or a Lender hereunder shall be conclusive
absent manifest error.
2.1.2 Default Rate of Interest. Upon the occurrence and during the
continuation of an Event of Default, (i) the principal amount of all Loans shall
bear interest at a rate per annum equal to two (2) percentage points above the
interest rate otherwise applicable thereto (the "Default Rate") and (ii) the
Letters of Credit Availability Fee shall automatically increase by one percent
(1%) per annum above the rate otherwise applicable.
2.1.3 Maximum Interest. In no event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under any of the other Loan Documents and
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the other Loan Documents exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. If any provisions of this Agreement or any of the other Loan
Documents are in contravention of any such law, such provisions shall be deemed
amended to conform thereto.
2.2 Computation of Interest and Fees. Interest, the Letter of Credit
Availability Fee, the Unused Line Fee, termination charges and collection
charges hereunder shall be calculated daily and shall be computed on the actual
number of days elapsed over a year of 360 days (except for interest accruing on
the Revolving Credit Base Rate Loans, which shall be computed on the basis of a
365 day year). For the purpose of computing interest hereunder, all items of
payment received by Agent shall be deemed applied by Agent on account of the
Obligations (subject to final payment of such items) on the Business Day of
receipt by Agent (determined in accordance with Section 3.4 hereof) of fully
collected funds, including fully collected funds received into the Dominion
Account.
2.3 Commitment Fee. Borrowers shall pay to Agent the commitment fee
provided for in the Fee Letter dated April 19, 2002 among Agent, Fleet
Securities, Inc. and the Company, which commitment fee shall be fully earned and
non-refundable and payable on the Closing Date.
2.4 Letter of Credit and LC Guaranty Fees. Borrowers shall pay to Agent,
for the ratable benefit of Lenders, for standby Letters of Credit and LC
Guaranties, a fee ("Letter of Credit Availability Fee") equal to (z) a rate per
annum equal to the Applicable Margin for the Letter of Credit Availability Fee
multiplied by (y) the LC Amount outstanding from time to time during this
Agreement, which such Letter of Credit Availability Fee shall be deemed fully
earned upon issuance of each such Letter of Credit or LC Guaranty. The Letter of
Credit Availability Fee shall be payable quarterly in arrears on the first (1st)
day of each calendar quarter. In
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addition, Borrowers shall pay to Agent, for the account of Agent, all normal and
customary fees and charges associated with the issuance, amendment, extension,
cancellation and administration thereof (all such fees collectively the "Letter
of Credit Administration Fees"). The Letter of Credit Administration Fees shall
be due and payable, first on the date of issuance of each Letter of Credit or LC
Guaranty and thereafter as required by Agent on demand. The fees and charges
under this Section 2.4 shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
2.5 Unused Line Fee. Borrowers shall pay to Agent, for the ratable benefit
of Lenders, a fee ("Unused Line Fee") equal to a (x) rate per annum equal to the
Applicable Margin for the Unused Line Fee multiplied by (y) the average daily
difference during any calendar quarter between (i) the Total Revolving Credit
Facility Amount as in effect on each day and (ii) the sum of the principal
balance of all outstanding Loans and the LC Amount for each day. The Unused Line
Fee shall be payable quarterly in arrears on the first (1st) day of each
calendar quarter.
2.6 Administrative Agent Fee. Borrowers shall pay Agent the annual
administrative agent fee provided for in the fee letter dated April 19, 2002
among Agent, Fleet Securities, Inc. and the Company, which administrative agent
fee shall be earned and nonrefundable and payable on the Closing Date and on
each anniversary thereof.
2.7 Inspection, Audit, Examination and Appraisal Expenses. Borrowers shall
pay to Agent, upon demand, in connection with all inspections, audits,
examinations and appraisals of Borrowers' books and records and such other
matters as Agent shall deem reasonably appropriate (including matters set forth
under subsection 8.1.1), all fees, costs and expenses reasonably incurred by
Agent in connection with such inspections, audits, examinations and appraisals
based upon standard rates (as determined by Agent and disclosed to Borrowers).
Borrowers' liability for such fees, costs and expenses under this Section 2.7
("Audit Fees") shall not exceed Seventy-Five Thousand Dollars ($75,000.00) in
any calendar year (regardless of the actual number of field inspections, audits,
examinations, etc. conducted); provided that the foregoing limitation on
Borrowers' liability for such Audit Fees shall not apply (x) after the
occurrence and during the continuation of an Event of Default or (y) at any time
following a field audit the results of which were unsatisfactory to Agent in its
reasonable judgment provided further that this exception to the limitation on
Borrowers' liability for such Audit Fees, costs and expenses shall cease to
apply if Agent shall subsequently conduct a field audit and determine, in its
reasonable judgment that the results of such audit are satisfactory. Nothing in
the foregoing sentence or otherwise in this Agreement shall limit the ability of
Agent to conduct such inspections, audits, examinations, etc. at its own expense
in accordance with the terms of subsection 8.1.1.
2.8 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent incurs legal expenses or
any other costs or out-of-pocket expenses in connection with (i) the negotiation
and preparation of this Agreement or any of the other Loan Documents, or any
amendment of or modification of this Agreement or any of the other Loan
Documents or any sale or attempted sale of any interest herein by Agent to a new
Lender, (ii) the administration of this Agreement or any of the other Loan
Documents and the transactions contemplated hereby and thereby; (iii) any
litigation, contest, dispute, suit,
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proceeding or action (whether instituted by Agent, any Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrowers' affairs; (iv) any attempt to enforce any
rights of Agent and/or any Lender against any Obligor or any other Person which
may be obligated to Agent and/or any Lender by virtue of this Agreement or any
of the other Loan Documents, including, without limitation, the Account Debtors;
or (v) any attempt to inspect, verify, protect, preserve, restore, collect,
sell, liquidate or otherwise dispose of or realize upon the Collateral; then all
such reasonable legal and accounting expenses (subject to the provisions of
Section 2.7) and other costs and out of pocket expenses of Agent shall be
charged to Borrowers. All amounts chargeable to Borrowers under this Section 2.8
shall be Obligations secured by all of the Collateral, shall be payable on
demand to Agent and shall bear interest from the date such demand is made until
paid in full at the Revolving Credit Base Rate from time to time. Borrowers
shall also reimburse Agent for expenses incurred by Agent in its administration
of the Collateral to the extent and in the manner provided in Section 6 hereof.
2.9 Bank Charges. Borrowers shall pay to Agent, on demand, any and all
fees, costs or expenses which Agent pays to a bank or other similar institution
arising out of or in connection with (i) the forwarding to Borrowers or any
other Person on behalf of Borrowers or by Agent of proceeds of Loans made by
Agent and/or any Lender to Borrowers pursuant to this Agreement and (ii) the
depositing for collection, by Agent, of any check or item of payment received or
delivered to Agent and/or any Lender on account of the Obligations.
2.10 Indemnity re: LIBOR. Each Borrower hereby indemnifies Agent and each
Lender and holds Agent and each Lender harmless from and against any and all
out-of-pocket losses or expenses that Agent and/or any Lender may sustain or
incur as a consequence of any prepayment or any Default by Borrowers in the
payment of the principal of or interest on any LIBOR Rate Loan or failure by
Borrowers to complete a borrowing of, a prepayment of, or conversion of or to a
LIBOR Rate Loan after notice thereof has been given by Borrowers or such rate
would otherwise be applicable pursuant to Section 2.1 hereof, including (but not
limited to) any interest payable by Agent and/or any Lender to lenders of funds
obtained by Agent and/or such Lenders in order to make or maintain the LIBOR
Rate Loans hereunder, and any other out-of-pocket loss or expense incurred by
Agent and/or any Lender by reason of the liquidation or reemployment of deposits
or other funds acquired by Agent and/or such Lenders to make, continue, convert
into or maintain, a LIBOR Rate Loan. Without limiting the foregoing in the event
of such a prepayment of or failure by Borrower to complete a borrowing or
conversion of or to a LIBOR Rate Loan, Borrowers shall pay to Agent for the
ratable benefit of Lenders a "yield maintenance fee" in an amount computed as
follows: the current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the LIBOR Interest Period chosen pursuant to the LIBOR Rate Loan as
to which the prepayment is made, shall be subtracted from the LIBOR in effect at
the time of prepayment. If the result is zero or a negative number, there shall
be no yield maintenance fee. If the result is a positive number, then the
resulting percentage shall be multiplied by the amount of the principal balance
being prepaid. The resulting amount shall be divided by 360 and multiplied by
the number of days
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remaining in the LIBOR Interest Period chosen pursuant to the LIBOR Rate Loan as
to which the prepayment is made. Said amount shall be reduced to present value
calculated by using the above referenced United States Treasury securities rate
and the number of days remaining in the term chosen pursuant to the LIBOR Rate
Loan as to which prepayment is made. The resulting amount shall be the yield
maintenance fee due to Agent for the ratable benefit of Lenders upon the
prepayment of a LIBOR Rate Loan. If by reason of an Event of Default, the
Obligations are declared to be immediately due and payable, then any yield
maintenance fee with respect to a LIBOR Rate Loan shall become due and payable
in the same manner as though the Borrowers had exercised such right of
prepayment.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the
revolving credit facility established pursuant to Section 1.1 hereof shall be as
follows:
3.1.1 Loan Requests.
(a) A request for a Revolving Credit Loan shall be made, or shall be deemed
to be made, in the following manner: (i) Borrowing Agent may give Agent written
notice of Borrowers' intention to borrow, in which borrowing notice Borrowing
Agent shall specify the amount of the proposed borrowing, the rate option and
the proposed borrowing date, no later than 12:00 noon, Eastern time, on the
proposed borrowing date for all Revolving Credit Base Rate Loans or, for a
Revolving Credit LIBOR Rate Loan, no later than 11:00 A.M. Eastern time on the
second (2nd) London Business Day prior to the requested borrowing date in
accordance with subsection 2.1.1(a)(ii)(A), provided, however, that no such
request may be made at a time when there exists an Event of Default (both prior
to and after giving effect to the proposed borrowing); and (ii) the becoming due
of any amount required to be paid under this Agreement or any of the other Loan
Documents, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the
amount required to pay such interest or other Obligation. Notwithstanding
anything to the contrary contained in this Agreement, as an accommodation to
Borrowers, Agent may permit telephonic requests for Revolving Credit Loans and
electronic transmittal of instructions, authorizations, agreements or reports to
Agent by Borrowing Agent. Unless Borrowing Agent specifically directs Agent in
writing not to accept or act upon telephonic or electronic communications from
Borrowing Agent, Agent shall have no liability to Borrowers for any loss or
damage suffered by Borrowers as a result of Agent's honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on any
reports communicated to it telephonically or electronically and purporting to
have been sent to Agent by a Specified Officer and Agent shall have no duty to
verify the origin of any such communication or the authority of the person
sending it, except to confirm the name of the Specified Officer.
(b) Upon receiving a request for a Revolving Credit Loan in accordance with
subsection 3.1.1(a)(i) above or upon Borrowing Agent being deemed to have made a
request for a Revolving Credit Loan under subsection 3.1.1(a)(ii) above, by
12:00 noon, Eastern time, or as soon as is reasonably practicable thereafter,
Agent shall notify all Lenders of the request. Each Lender shall advance its
applicable Pro Rata Percentage of the requested Revolving Credit Loan to Agent
by remitting immediately available federal funds to Agent pursuant to Agent's
instructions prior to 2:00 P.M. Eastern time on the date of the applicable
Revolving Credit Loan, regardless of any failure by any other Lender to do so.
Subject to the
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satisfaction of the terms and conditions hereof, and receipt by Agent of the
required funds from the other Lenders, Agent shall make the requested Revolving
Credit Loan available to Borrowing Agent, in accordance with subsection 3.1.2,
as soon as is reasonably practicable thereafter on the day the requested
Revolving Credit Loan is to be made. In lieu of the foregoing, Agent may, in its
discretion, fund the Pro Rata Percentage of such Revolving Credit Loan on behalf
of any one or more Lenders (unconditionally and absolutely obligating such
affected Lender to reimburse Agent in full on demand without deduction or
setoffs for its portion of such Revolving Credit Loan, so long as Agent
reasonably believed at the time such Revolving Credit Loan was made that it was
made, in all material respects, in compliance with this Agreement) with a
settlement of the Pro Rata Shares of Lenders on a weekly basis on the first
Business Day of each week (with such settlement being calculated as of the close
of business on the last Business Day of the preceding week) or under such other
settlement procedures as Agent may establish from time to time.
3.1.2 Disbursement. Borrowers hereby irrevocably authorize Agent to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(a)(i) shall be
disbursed by Agent in lawful money of the United States of America in
immediately available funds by wire transfer to such bank account as may be
agreed upon by Borrowing Agent and Agent from time to time or elsewhere if
pursuant to a written direction from Borrowing Agent; and (ii) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(a)(ii) shall be
disbursed by Agent by way of direct payment of the relevant interest or other
Obligation.
3.1.3 Authorization. Borrowers hereby irrevocably authorize Agent, in
Agent's sole discretion, to advance to Borrowers, and to charge to Borrowers'
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrowers to Agent
and/or any Lender hereunder.
3.1.4 Specified Officer. All requests for a Revolving Credit Loan and
elections of interest rate shall be made by Borrowing Agent through a Specified
Officer, and each Borrower agrees that any request so made by a Specified
Officer shall be deemed made by Borrowing Agent and each Borrower.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrowers to Lenders specifically containing payment provisions which
are in conflict with this Section 3.2 (in which event the conflicting provisions
of said notes or other instruments shall govern and control) the Obligations
shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit Loans may
be prepaid at any time without penalty, subject to the requirements of Section
2.10, and shall be payable by Borrowers to Lenders immediately upon the earliest
of (i) except as otherwise provided in this Agreement, during any Dominion
Period, the receipt by Agent, any Lender or any Borrower of any proceeds of any
of the Collateral, to the extent of said proceeds, (ii) the acceleration of the
maturity and payment of the Obligations by Agent and/or Majority Lenders
10
pursuant to Section 10 hereof, or (iii) termination of this Agreement pursuant
to Section 4 hereof; provided, however, that if an Overadvance shall exist at
any time, subject to the provisions of subsection 11.15(f), Borrowers shall, on
demand, repay the Overadvance.
3.2.2 Interest. Interest accrued on the Revolving Credit Loans shall be due
and payable on the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Agent elects to accelerate the maturity and payment of the Obligations or
(iii) termination of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable pursuant to
this Agreement shall be payable by Borrowers as and when provided in Section 2
hereof (or in the Fee Letter dated April 19, 2002 among Agent, Fleet Securities,
Inc. and the Company) to Agent or to any other Person designated by Agent in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrowers to Agent and/or Lenders
as and when provided in this Agreement, the Other Agreements or the Security
Documents, or on demand, whichever is later.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Loss, Destruction or Condemnation of Collateral; Equity
Offerings. If any of the Collateral is lost or destroyed or taken by
condemnation, Borrowers shall pay to Agent, unless otherwise agreed by Agent, as
and when received by any Borrower and as a mandatory prepayment of the Loans, a
sum equal to the Net Available Proceeds (to the extent of any such outstanding
Loans) received by such Borrower from such loss, destruction or condemnation. If
the Company shall conduct any offering or sale (public or private) of its
capital stock (whether common, preferred or otherwise), or any similar equity
offering (except for any such offering or sale pursuant to any employee benefit
or compensation plan for the benefit of the employees of Borrowers and/or their
Subsidiaries), Borrowers shall pay to Agent, unless otherwise agreed by Agent,
as and when received by the Company and as a mandatory prepayment of the Loans,
a sum equal to the Net Available Proceeds (to the extent of any such outstanding
Loans) received by the Company from such equity offering.
3.3.2 Intentionally Omitted.
3.3.3 LIBOR Rate Loans. Notwithstanding any other provision contained
herein, no portion of the LIBOR Rate Loans may be repaid during a LIBOR Interest
Period unless Borrowers first satisfy in full their obligations under Section
2.10 arising from such repayment.
3.4 Application of Payments and Collections. All items of payment received
by Agent by 12:00 noon Eastern time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 12:00 noon,
Eastern time, on any Business Day shall be deemed received on the following
Business Day. All amounts paid in accordance
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with subsections 3.1.1(a)(ii) and 3.1.2(ii) shall be deemed received prior to
12:00 noon, Eastern Time, on the Business Day upon which such funds are
disbursed by the Agent under subsection 3.1.2(ii). Borrowers irrevocably waive
the right to direct the application of any and all payments and collections at
any time or times hereafter received by Agent from or on behalf of Borrowers,
and Borrowers do hereby irrevocably agree that Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
received at any time or times hereafter by Agent or its agent against the
Obligations, in such manner as Agent may deem advisable, notwithstanding any
entry by Agent upon any of its books and records. If as the result of
collections of Accounts as authorized by subsection 6.2.6 hereof a credit
balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrowers, but shall be available to Borrowers at any time
or times for so long as no Default or Event of Default exists. Agent may, at its
option, offset such credit balance against any of the Obligations upon and after
the occurrence of an Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans and LC Guaranties
shall constitute one general joint and several Obligation of Borrowers, and
shall be secured by Agent's Lien, for the ratable benefit of Lenders, upon all
of the Collateral.
3.6 Loan Account. Agent shall enter all Revolving Credit Loans as debits to
the Loan Account and shall also record in the Loan Account all payments made by
Borrowers on any Obligations and all proceeds of Collateral which are finally
paid to Lenders, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.
3.7 Statements of Account. Agent will account to Borrowers monthly with a
statement of Loans, Letters of Credit, LC Guaranties, charges and payments made
pursuant to this Agreement, and such account rendered by Agent shall be deemed
final, binding and conclusive upon Borrowers unless Agent is notified by
Borrowing Agent in writing to the contrary within sixty (60) days of the date
each accounting is mailed to Borrowers. Such notice shall only be deemed an
objection to those items specifically objected to therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lenders' right to cease making Loans to
Borrowers upon or after the occurrence of any Default or Event of Default, this
Agreement shall be in effect for a period beginning on the date hereof and
continuing through and including the fourth (4th) anniversary of the Closing
Date (the "Original Term"), unless terminated as provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Agent. This Agreement shall terminate as of the last
day of the Original Term or as of the date Agent shall terminate this Agreement
upon or after the occurrence of an Event of Default according to the provisions
of Section 10 hereof.
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4.2.2 Termination by Borrowers. Upon at least ten (10) days prior written
notice to Agent (which shall state a termination date), Borrowers through
Borrowing Agent may, at their option, terminate this Agreement; provided,
however, no such termination shall be effective until Borrowers have paid all of
the Obligations in immediately available funds and all Letters of Credit and LC
Guaranties have expired, terminated, cancelled or have been fully cash
collateralized to Agent's reasonable satisfaction. Any notice of termination
given by Borrowing Agent shall be irrevocable unless all Lenders otherwise agree
in writing, and neither Agent nor Lenders shall have any obligation to make any
Loans or issue or procure any Letters of Credit or LC Guaranties on or after the
termination date stated in such notice. Borrowers may elect to terminate this
Agreement in its entirety only. No section of this Agreement or type of Loan
available hereunder may be terminated singly.
4.2.3 Termination Charges. On the effective date of termination of this
Agreement for any reason (other than a termination on the last day of the
Original Term), Borrowers shall pay to Agent, for the ratable benefit of
Lenders, in addition to the then outstanding principal, accrued interest and
other charges and Obligations owing under the terms of this Agreement and any of
the other Loan Documents, as liquidated damages for the loss of the bargain and
not as a penalty, an amount equal to (x) one percent (1.00%) of the Total
Revolving Credit Facility Amount if termination occurs prior to the first
anniversary of the Closing Date; (y) one half of one percent (0.50%) of the
Total Revolving Credit Facility Amount if termination occurs prior to the second
anniversary of the Closing Date; and (z) one-quarter of one percent (0.25%) of
the Total Revolving Credit Facility Amount if termination occurs prior to the
third anniversary of the Closing Date. No amount shall be due under this
subsection if the Total Revolving Credit Facility is terminated for any reason
on or after the third (3rd) anniversary of the Closing Date.
4.2.4 Effect of Termination. All of the Obligations shall be immediately
due and payable, and the obligations and commitments of Lenders and Agent to
make Loans and extentions of credit under this Agreement shall terminate, upon
the date this Agreement terminates under this Section 4.2 and/or is terminated
under subsection 4.2.1 and/or upon the termination date stated in any notice of
termination of this Agreement given by Borrowing Agent under subsection 4.2.2,
as applicable. All undertakings, agreements, covenants, warranties and
representations of Borrowers contained in the Loan Documents shall survive any
such termination and Agent shall retain its Liens, for the ratable benefit of
Lenders, upon the Collateral and Agent and Lenders shall retain all of their
rights and remedies under the Loan Documents notwithstanding such termination
until Borrowers have paid the Obligations in full in immediately available
funds, together with the applicable liquidated damages pursuant to subsection
4.2.3, if any. Notwithstanding the payment in full of the Obligations, Agent
shall not be required to terminate its Liens upon the Collateral unless, with
respect to any loss or damage Agent may incur as a result of dishonored checks
or other items of payment received by Agent and/or any Lender from any Borrower
or any Account Debtor and applied to the Obligations, Agent shall, at its
option, (i) have received a written agreement, executed by Borrowers and by any
Person whose loans or other advances to Borrowers are used in whole or in part
to satisfy the Obligations, indemnifying Agent and Lenders from any such loss or
damage; or (ii) have retained such monetary reserves and Liens upon the
Collateral for such period of time as Agent,
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in its reasonable discretion, may deem necessary to protect Agent and Lenders
from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and Lenders of the Obligations and satisfaction by
Borrowers of all covenants and undertakings contained in the Loan Documents,
each Borrower hereby grants to Agent, for the ratable benefit of Lenders, a
continuing security interest in and Lien upon all of such Borrower's Property
(other than Equipment and Fixtures and any General Intangibles or insurance
proceeds to the extent related to Equipment or Fixtures), whether now owned or
existing or hereafter created, acquired or arising and wherever located,
including without limitation the following:
(i) Accounts (specifically including Health-Care-Insurance Receivables);
(ii) Inventory and other Goods, and all accessions, additions, attachments,
improvements; substitutions and replacements thereto and therefor;
(iii) Chattel Paper;
(iv) Instruments;
(v) Documents;
(vi) General Intangibles (specifically including Payment Intangibles and
Software);
(vii) Deposit Accounts;
(viii) Investment Property (specifically including Certificated Securities,
Security Entitlements and Uncertificated Securities) and Financial Assets
(provided that the pledge of and creation of a security interest in and Lien
upon any capital stock issued by a corporation organized in a jurisdiction
outside the United States shall be limited to sixty-five percent (65%) of such
capital stock);
(ix) Contract Rights;
(x) Intellectual Property;
(xi) Money (of every jurisdiction whatsoever)
(xii) Letter-of-Credit Rights;
(xiii) Payment Intangibles;
(xiv) Supporting Obligations
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(xv) All monies and other Property (other than Equipment and Fixtures and
any General Intangibles or insurance proceeds to the extent related to Equipment
and Fixtures) of any kind now or at any time or times hereafter in the
possession or under the control of Agent or any Lender or a bailee or Affiliate
of Agent or any Lender;
(xvi) All Commercial Lockboxes, all Government Lockboxes, all Concentration
Accounts, all Dominion Accounts and other accounts into which any of the
Collections are deposited, all funds received thereby or deposited therein, and
any checks or instruments from time to time representing or evidencing the same;
(xvii) All accessions to, substitutions for and all replacements, products
and cash and non-cash proceeds of (i) through (xviii) above, including, without
limitation, proceeds of and unearned premiums with respect to insurance policies
insuring any of the Collateral; and
(xviii) To the extent not included in the foregoing, all other personal
property of any kind or description;
together with all Proceeds, products, offspring, rents, issues, profits and
returns of and or from any of the foregoing and all books and records (including
without limitation customer lists, credit files, computer programs, printouts
and other computer records and materials), writings, data bases, information and
other property relating to, used or useful in connection with, or evidencing,
embodying incorporating or referring to any of the foregoing, provided that to
the extent that the provisions of any lease or license of Software or
Intellectual Property expressly prohibit (which prohibition is enforceable under
applicable law) any assignment or grant of a security interest in any Borrower's
interest therein, Agent will not enforce its security interest in such
Borrower's rights under such lease or license (other than in respect of the
Proceeds thereof) for so long as such prohibition continues, it being understood
that upon request of Agent, each Borrower will in good faith use reasonable
efforts to obtain consent for the creation of a security interest in favor of
Agent, for the ratable benefit of Lenders, (and to Agent's enforcement of such
security interest) in such rights of such Borrower under such lease or license.
The security interest in and Lien upon the Collateral granted to Agent, for
the ratable benefit of the Lenders, under this Section 5.1 shall be prior to any
other Lien or security interest in the Collateral, except to the extent any such
Collateral is subject to a Purchase Money Lien, a Capitalized Lease Obligation
or a Lien, as shown on Schedule 8.2.5 hereof, in which case, the security
interest and Lien granted to Agent, for the ratable benefit of the Lenders,
under this Section shall be junior only to such a Lien (and any extension, or
renewal or replacement thereof) and shall be senior to any and all other Liens
on any such Property.
5.2 Other Collateral
5.2.1 Commercial Tort Claims. Borrowers shall promptly notify Agent in
writing upon any Borrower incurring or otherwise obtaining a Commercial Tort
Claim in the minimum amount of Fifty Thousand Dollars ($50,000.00) after the
Closing Date against any third party and, upon request of Agent, promptly enter
into an amendment to this Agreement and
15
do such other acts or things deemed appropriate by Agent to give Agent, for the
ratable benefit of Lenders, a security interest in any such Commercial Tort
Claim.
5.2.2 Other Collateral. Borrowers shall promptly notify Agent in writing
upon any Borrower's acquiring or otherwise obtaining any Collateral after the
date hereof consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights or Electronic Chattel Paper and, upon the request of
Agent, promptly execute such other documents, and do such other acts or things
deemed appropriate by Agent to deliver to Agent, for the ratable benefit of
Lenders, Control with respect to such Collateral; promptly notify Agent in
writing upon any Borrower's acquiring or otherwise obtaining any Collateral
after the date hereof consisting of Documents or Instruments and, upon the
request of Agent, will promptly execute such other documents, and do such other
acts or things deemed appropriate by Agent to deliver to Agent, for the ratable
benefit of Lenders, possession of such Documents which are negotiable and
Instruments, and, with respect to nonnegotiable Documents, to have such
nonnegotiable Documents issued in the name of Agent; and with respect to
Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document, obtain an acknowledgement from the
third party that it is holding the Collateral for the benefit of Agent.
5.3 Lien Perfection; Further Assurances. Borrowers, at Agent's request,
shall execute such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary, desirable or
prudent to perfect Agent's Lien upon any of the Collateral and shall take such
other action permitted by applicable law as may be required to perfect or to
continue the perfection of Lender's Lien upon the Collateral. Unless prohibited
by applicable law, each Borrower hereby irrevocably authorizes Lender at any
time prior to the termination of this Agreement pursuant to Section 4 hereof and
prior to the time Agent is required to terminate its Liens in the Collateral
pursuant to the provisions of Section 12.17 and the other Sections of this
Agreement, to execute and/or file any such financing statements (with or without
the signature of such Borrower), including, without limitation, financing
statements that indicate the Collateral as being of an equal or lesser scope, or
with greater or lesser detail, than as set forth in Section 5.1, on such
Borrower's behalf in any jurisdiction which Agent shall deem necessary, prudent
or desirable in order to perfect the security interest granted to Agent
hereunder. Each Borrower also hereby ratifies its authorization for Agent to
have filed in any jurisdiction any like financing statements or amendments
thereto if filed prior to the date hereof. The parties agree that a photographic
or other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At Agent's
request, Borrowers shall also promptly execute or cause to be executed and shall
deliver to Agent any and all documents, instruments and agreements deemed
necessary, prudent or desirable by Agent to give effect to or carry out the
terms or intent of the Loan Documents including appropriate landlord's waivers
as reasonably requested by Agent.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General.
6.1.1 Location of Inventory. All Inventory, other than Inventory in
transit: (i) will at all times be kept by Borrowers at one or more of the
business locations set forth in
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Exhibit 6.1.1 hereto and at such new locations which Borrowers may hereafter
establish (if and only if Borrowers provide Agent, not less than forty-five (45)
days prior to delivery of any Collateral to such new location, with written
notice thereof and, provided that, prior to delivery of any Collateral to such
new location Borrowers will take all actions relative to such location as Agent
may reasonably require under Section 5.3 hereof), and (ii) shall not, without
the prior written notice required by the preceding clause (i) having been given,
be otherwise moved from any such location set forth on Exhibit 6.1.1 or new
location except, prior to an Event of Default and Agent's acceleration of the
maturity of the Obligations in consequence thereof, for (A) sales or rental of
Inventory in the ordinary course of business, (B) removals in connection with
returns thereof to vendors and (C) movements to other locations listed on
Exhibit 6.1.1. Except as shown on Exhibit 6.1.1, no Inventory is stored with a
bailee, warehouseman or similar party, nor is any Inventory consigned to any
Person. Notwithstanding anything to the contrary contained in this Agreement,
Borrowers may (x) keep Inventory at business locations not listed on Exhibit
6.1.1 and (y) store Inventory or maintain consignment Inventory with a third
person at a site not listed on Exhibit 6.1.1 if and only if the aggregate fair
market value of the Inventory kept stored or maintained at any such individual
business location or site may does exceed Fifty Thousand Dollars ($50,000.00).
6.1.2 Insurance of Collateral. Borrowers shall maintain and pay for
insurance upon all Collateral wherever located and with respect to each
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with insurance companies and such deductibles as would
be maintained by a prudent operator in the same business as such Borrower and as
are reasonably satisfactory to Agent. Borrowers shall deliver certified copies
of such policies to Agent with satisfactory lender's loss payable and/or
additional insured endorsements, naming Agent, for the ratable benefit of
Lenders, as lender's loss payee, assignee and/or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than thirty (30) days prior written
notice to Agent in the event of cancellation of the policy for any reason
whatsoever and a clause specifying that the interests of Agent and the Lenders
shall not be impaired or invalidated by any act or neglect of Borrowers or the
owner of the Collateral or by the occupation of the premises for purposes more
hazardous than are permitted by said policy. If Borrowers fail to provide and
pay for such insurance, Agent may, at its option, but shall not be required to,
procure the same and charge Borrowers therefor. Borrowers agree to deliver to
Agent, promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies.
6.1.3 Protection of Inventory. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Inventory, any and
all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Inventory or in respect of the sale thereof shall
be borne and paid by Borrowers. If Borrowers fails to promptly pay any portion
thereof when due, Agent may, at its option, but shall not be required to, pay
the same and charge Borrowers therefor. Neither Agent nor any Lender shall be
liable or responsible in any way for the safekeeping of any of the Inventory or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Inventory is in Agent's or any Lender's actual possession) or
for any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the
same shall be at Borrowers' sole risk.
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6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Each Borrower shall
keep accurate and complete records of the Accounts of such Borrower and all
payments and collections thereon and shall submit to Agent on such periodic
basis as Agent shall reasonably request a sales and collections report for the
preceding period, in form satisfactory to Agent. On or before the thirtieth
(30th) day of each month from and after the date hereof, Borrowers shall deliver
to Agent, in form reasonably acceptable to Agent, a detailed aged trial balance
of all Accounts of Borrowers existing as of the last day of the preceding month,
specifying the names, addresses and book value for each Account Debtor obligated
on an Account so listed ("Schedule of Accounts"), and, upon Agent's request
therefor, copies of proof of delivery of inventory and the original copy of all
documents, including, without limitation, repayment histories and present status
reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. In addition, if at any time any Account with a book value in
excess of Two Hundred Thousand Dollars ($200,000.00) that was represented as an
Eligible Account on the immediately preceding Borrowing Base Certificate becomes
ineligible because it falls within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts, Borrowers shall
notify Agent of such occurrence no later than the third (3rd) Business Day
following such occurrence and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence. If requested by Agent, each Borrower shall execute and
deliver to Agent, for the ratable benefit of Lenders, formal written assignments
of all of its Accounts weekly or daily, which shall include all Accounts that
have been created since the date of the last assignment, together with copies of
invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If any Borrower grants any
discounts, allowances or credits that are not reflected in the book value for
the Account involved, Borrowers shall report such discounts, allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts. If any amounts under any one or more Account(s) due and owing in
excess of Two Hundred Fifty Thousand Dollars ($250,000.00) becomes disputed
between any Borrower and any Account Debtor (other than refusals to pay based on
technical discrepancies which are curable in the ordinary course of business),
and such Account(s) were represented as Eligible Account(s) on the immediately
preceding Borrowing Base Certificate, Borrowers shall provide Agent with written
notice thereof at the time of submission of the next Schedule of Accounts,
explaining in detail the reason for the dispute, all claims related thereto and
the amount in controversy. Upon and after the occurrence and during the
continuance of an Event of Default, Agent shall have the right to settle or
adjust all disputes and claims (other than claims arising solely on a technical
basis in Borrowers' ordinary course of business) directly with the Account
Debtor and to compromise the amount or extend the time for payment of the
Accounts upon such terms and conditions as Agent may deem advisable, and to
charge the deficiencies, costs and expenses thereof, including attorney's fees,
to Borrowers.
6.2.3 Taxes. If an Account includes a charge for any tax payable to any
governmental taxing authority that remains unpaid, Agent is authorized, in its
sole discretion, to pay the amount thereof to the proper taxing authority for
the account of the applicable Borrower
18
and to charge Borrowers therefor, provided, however, that Agent shall not be
liable for any taxes to any governmental taxing authority that may be due by any
Borrower.
6.2.4 Account Verification. Whether or not an Event of Default has
occurred, any of Agent's officers, employees or agents shall have the right in
the name of Agent, any designee of Agent or any Borrower, to verify the
validity, amount or any other matter relating to any Accounts by mail,
telephone, telegraph or otherwise during normal business hours and consistent
with Agent's customary practices. Borrowers shall cooperate fully with Agent in
an effort to facilitate and promptly conclude any such verification process.
6.2.5 Maintenance of Accounts.
(i) Borrowers shall maintain all of their Lockbox Accounts, Concentration
Accounts and Dominion Accounts with Bank or with another financial institution
reasonably acceptable to Agent (any such financial institution, including, for
this purposes, Bank, a "Depository Bank"). Exhibit 6.2.5 sets forth a complete
listing of all Lockbox Accounts (specifying which are Government Lockboxes and
which are Commercial Lockboxes) and Concentration Accounts (specifying if any
Concentration Accounts are also Lockbox Accounts, and if so, if they are
Government Lockboxes or Commercial Lockboxes). Either (x) within thirty (30)
days of the Closing Date (with respect to any Lockbox Account or Concentration
Account existing on the Closing Date) or (y) prior to the establishment of any
new Lockbox Account or Concentration Account, Borrowers shall enter into a
tri-party account agreement (each a "Control Agreement") to be executed among
the applicable Borrower(s), Agent and the applicable Depository Bank with
respect to each such Lockbox Account and each such Concentration Account. Each
such Control Agreement shall provide that until Agent shall have given written
notice to the applicable Depository Bank according to the provisions of such
Control Agreement that a Dominion Triggering Event has occurred, the applicable
Borrower(s) shall have complete control and authority over the applicable
Lockbox Account or Concentration Account. Each such Control Agreement shall
further provide that upon the occurrence of a Dominion Triggering Event, Agent
shall have the right to give notice to the applicable Depository Bank of the
occurrence of such a Dominion Triggering Event, and that after the giving of
such a notice of a Dominion Triggering Event (a "Dominion Triggering Effective
Notice") by Agent to such Depository Bank, all rights of the applicable
Borrower(s) to have control and/or authority over the applicable Lockbox Account
or Concentration Account and/or to give instructions directing the disposition
or withdrawal of funds in the applicable Lockbox Account or Concentration
Account shall terminate, and that thereafter Agent shall have sole and complete
control and authority over and the sole and complete right to give instructions
directing the disposition or withdrawal of funds in the applicable Lockbox
Account or Concentration Account, all without the further consent of any
Borrower. Each such Control Agreement shall also provide that, after the giving
by Agent of a Dominion Triggering Effective Notice, all funds on deposit in the
applicable Lockbox Account or Concentration Account shall be swept to the
Dominion Account on a daily basis unless Agent shall direct otherwise.
Notwithstanding anything to the contrary in any of the foregoing or otherwise in
this Agreement, the Control Agreement with respect to each Government Lockbox
shall provide that upon ten (10) Business Days prior notice to the applicable
Depository Bank and Agent, the applicable Borrower(s) may revoke any Dominion
Triggering Effective Notice given by Agent to such Depository Bank, and
19
that upon such revocation, Agent shall no longer have any rights of control or
authority over or rights to give instructions regarding the disposition or
withdrawal of funds in such Government Lockbox and the applicable Borrower(s)
shall regain and thereafter have the same rights of control and authority over
such Government Lockbox as such applicable Borrowers had prior to the giving of
the Dominion Triggering Effective Notice. The revocation by any Borrower(s) of a
Dominion Triggering Notice sent by Agent with respect to any Government Lockbox
shall be an Event of Default under this Agreement. Any period of time after the
giving by Agent of such Dominion Triggering Effectiveness Notices with respect
to the Lockbox Accounts and Concentration Account and prior to the rescission of
such Dominion Triggering Effectiveness Notices by Agent pursuant to the
provisions of paragraph (ii) below shall be referred to as a "Dominion Period".
A "Dominion Triggering Event" shall mean either (a) a request by Borrowers
through Borrowing Agent pursuant to Section 3.1.1(a)(i) for a Revolving Credit
Loan under the Revolving Credit Loan Facility or (b) the occurrence of an Event
of Default hereunder. All funds deposited in the Dominion Account shall
automatically be applied to the Obligations as of the date good funds are
deposited in the Dominion Account, provided that such good funds are deposited
by 12:00 noon, Eastern time, or, if such funds are deposited after 12:00 noon,
Eastern time, on the following Business Day. All funds deposited in the Dominion
Account shall immediately become the property of Agent, for the ratable benefit
of Lenders. Agent assumes no responsibility for such arrangement, including,
without limitation, any claim of accord and satisfaction or release with respect
to deposits accepted by any bank thereunder. Notwithstanding anything to the
contrary contained in any of the foregoing, if at any time Agent shall
determine, in its reasonable good faith judgment, which determination shall be
reached in consultation with the Company and its counsel, upon the request for
such a determination by Borrowers, that compliance by Borrowers or any one or
more of them with the provisions of this subsection 6.2.5 and/or the exercise by
Agent of its rights under this subsection 6.2.5 would violate any Medicare or
Medicaid regulations, Agent shall, on behalf of itself and the Lenders, agree to
such modifications and amendments of the provisions of this paragraph as Agent,
in its reasonable good faith judgment, shall determine to be necessary to comply
with all Medicare and Medicaid regulations while still protecting and perfecting
as far as possible Agent's Lien in the Proceeds of the Accounts of Borrowers.
(ii) If at any time after the occurrence of a Dominion Triggering Event and
the giving of Dominion Triggering Effectiveness Notices by Agent with respect to
the Lockbox Accounts and Concentration Accounts in consequence thereof, (a)
either Borrowers shall have repaid all of the outstanding Revolving Credit Loans
requested by Borrowing Agent and/or the triggering Event of Default shall have
been waived or cured in accordance with the provisions of this Agreement, (b)
sixty (60) days shall have elapsed since the later of such repayments and/or
waiver or cure and (c) during such sixty (60) day period, no other Revolving
Credit Loans shall have been requested by Borrowing Agent and no other Event of
Default shall have occurred, then Agent shall give a written notice to the
applicable Depository Bank (each a "Dominion Rescission Notice") with respect to
each Lockbox Account and Concentration Account rescinding the Dominion
Triggering Effectiveness Notice given as to each such account. Each Control
Agreement shall provide that, upon the giving of such a Dominion Rescission
Notice, Agent shall no longer have any rights of control or authority over or
rights to give instructions regarding the disposition or withdrawal of funds in
the applicable
20
Lockbox Account or Concentration Account and that the applicable Borrower(s)
shall regain and thereafter have the same rights of control and authority over
such applicable Lockbox Account or Concentration Account as such applicable
Borrower(s) had prior to the giving of the Dominion Triggering Effective Notice.
The giving of Dominion Rescission Notices by Agent in accordance with the terms
of this paragraph (ii) shall not prevent Agent from giving Dominion Triggering
Effectiveness Notices at any time thereafter in accordance with the provisions
of paragraph (i) above. Notwithstanding anything to the contrary contained in
this paragraph (ii) or otherwise in this Agreement, Agent shall not be required
to give Dominion Rescission Notices more than three (3) times in any calendar
year.
(iii) Notwithstanding anything to the contrary contained in paragraph (i)
above or otherwise in this Agreement, Borrowers may, for so long as Borrowers
shall reasonably determine is necessary, continue to maintain the certain
lockbox accounts at The Chase Manhattan Bank referenced on Exhibit 6.2.5 for the
purpose of collecting payments on Accounts directed to such Lockbox Accounts by
the applicable Obligors (provided that Borrowers shall continue to comply with
the provisions of subsection 6.2.6). During any Dominion Period, Borrowers shall
instruct Chase Manhattan Bank to transfer all funds on deposit in such Chase
lockbox accounts to the Dominion Account on a daily basis.
(iv) Borrowers agree that as soon as reasonably practicable, but in any
event within sixty (60) days of the Closing Date, Borrowers shall instruct all
Obligors on any Government Accounts to remit payments to the Government
Lockboxes. Borrowers further agree that they shall use commercially reasonable
efforts to cause such Obligors to comply with such instructions.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, each Borrower shall use commercially reasonable efforts to make
collection of its Accounts. Each Borrower covenants that it shall direct all its
Account Debtors to remit all payments with respect to any and all Accounts to
the Commercial Lockboxes and the Government Lockboxes with the applicable
Depository Bank(s), as applicable, and that any and all remittances received by
such Borrower with respect to any and all Accounts shall immediately be
deposited in kind in the Commercial Lockbox(es) or Government Lockbox(es), as
applicable. Each Borrower covenants that it shall cause all funds in all Lockbox
Accounts to be transferred to an appropriate Concentration Account(s) on a daily
basis, provided that any funds which are deposited into the Lockbox Accounts
after the time of the daily transfer will be transferred into the Concentration
Account as of the next Business Day. At all times during a Dominion Period, and
subject to and to the extent consistent with Medicare and Medicaid regulations,
all remittances received by any Borrower with respect to Accounts, together with
the proceeds of any other Collateral, shall be held as Lenders' property
separate and segregated from such Borrower's other funds by such Borrower as
trustee of an express trust for Lenders' ratable benefit and such Borrower shall
immediately deposit same in kind in the Concentration Account(s). To the extent
consistent with Medicare and Medicaid regulations, Agent retains the right at
all times after the occurrence and during the continuance of an Event of Default
to notify Account Debtors that Accounts have been assigned to Agent, for the
ratable benefit of Lenders, and to collect Accounts directly in its own name and
to charge the collection costs and expenses, including attorneys' fees, to
Borrowers.
21
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrowers shall keep accurate and
complete records of the Inventory of Borrowers. Borrowers shall furnish Agent
with Inventory reports in form and detail reasonably satisfactory to Agent at
such time as Agent may require. Borrowers shall conduct a physical inventory no
less frequently than annually and shall provide to Agent a report based on each
such physical inventory promptly thereafter, together with such supporting
information as Agent shall reasonably request.
6.3.2 Returns of Inventory. If at any time or times hereafter any Account
Debtor returns any Inventory to any Borrower the shipment of which generated an
Account on which such Account Debtor is obligated in excess of One Hundred
Thousand Dollars $100,000.00, Borrowers shall immediately notify Agent of the
same, specifying the reason for such return and the location, condition and
intended disposition of the returned Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrowers shall keep accurate
records itemizing and describing the kind, type, quantity and value of the
Equipment of Borrowers and shall furnish Agent with a current schedule
containing the foregoing information on an annual basis and, after the
occurrence and during the continuance of an Event of Default, more often if
reasonably requested by Agent. Immediately on request therefor by Agent,
Borrowers shall deliver to Agent appropriate evidence of ownership, if any, of
any of the Equipment.
6.4.2 Intentionally Omitted.
6.5 Payment of Charges. All amounts chargeable to Borrowers under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the Revolving Credit Base Rate.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make Loans hereunder, each Borrower warrants,
represents and covenants to Agent and Lenders that:
7.1.1 Organization and Qualification. Except as set forth on Exhibit 7.1.1,
each Borrower and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Borrower and each of its Subsidiaries is duly qualified and
is authorized to do business and is in good standing as a foreign corporation in
each state or jurisdiction listed on Exhibit 7.1.1 hereto and in all other
states and jurisdictions in which the failure of such Borrower or any of its
Subsidiaries to be so qualified would have a Material Adverse Effect.
22
7.1.2 Corporate Power and Authority. Each Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of the shareholders
of such Borrower or any of its Subsidiaries; (ii) contravene such Borrower's or
any of its Subsidiaries' charter, articles or certificate of incorporation or
by-laws; (iii) violate, or cause such Borrower or any of its Subsidiaries to be
in default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to such Borrower or any of its Subsidiaries; (iv) result in a
breach of or constitute a default in any material respect under any indenture or
loan or credit agreement or any other material agreement, lease or instrument to
which such Borrower or any of its Subsidiaries is a party or by which it or its
Properties may be bound or affected; or (v) result in, or require, the creation
or imposition of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by such Borrower or any of
its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding obligation of each Borrower and each of its Subsidiaries,
enforceable against such Borrower and each of its Subsidiaries in accordance
with its respective terms.
7.1.4 Capital Structure. Exhibit 7.1.4 hereto states (i) the correct name
of each Borrower and of each of the Subsidiaries of such Borrower, its
jurisdiction of incorporation and the percentage of its Voting Stock owned by
such Borrower, (ii) the name of each Borrower's corporate or joint venture
Affiliates and the nature of the affiliation, (iii) the number, nature and
holder of all outstanding Securities of each Borrower (provided that the holders
of the Securities of the Company (other than such holders that are Affiliates)
need not be listed) and each Subsidiary and (iv) the number of authorized,
issued and treasury shares of each Borrower and each Subsidiary. Each Borrower
has good title to all of the shares it purports to own of the stock of each of
its Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. Except as set forth in Exhibit 7.1.4, there are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of any Borrower or any of its Subsidiaries. Except as set forth in Exhibit
7.1.4, there are no outstanding agreements or instruments binding upon any of
any Borrower's shareholders relating to the ownership of its shares of capital
stock.
7.1.5 Corporate Names. Neither any Borrower nor any of its Subsidiaries has
been known as or used any corporate, fictitious or trade names since May 1,
1997, except those listed on Exhibit 7.1.5 hereto. Except as otherwise set forth
on Exhibit 7.1.5 since May 1, 1997, neither any Borrower nor any of its
Subsidiaries has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person. Each Borrower's
and each Subsidiary's state(s) of incorporation or organization, Type of
Organization and
23
Organizational I.D. Number is set forth on Exhibit 7.1.5, and the exact legal
name of each Borrower and each Subsidiary is set forth on Exhibit 7.1.5.
7.1.6 Business Locations; Agent for Process. The chief executive office and
other places of business of each Borrower and each of its Subsidiaries are as
listed on Exhibit 7.1.6 hereto. During the preceding one-year period, neither
any Borrower nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on Exhibit 7.1.6(a).
7.1.7 Title to Properties; Priority of Liens. Each Borrower and its
Subsidiaries has good and marketable title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real Property, and good
title to all of the Collateral and all of its personal Property other than
Collateral, including good leasehold title with respect to Property leased from
others, in each case, free and clear of all Liens except Permitted Liens. Each
Borrower has paid or discharged all lawful claims which, if unpaid, might become
a Lien against such Borrower's real and personal Property that is not a
Permitted Lien. The Liens granted to Agent under Section 5 hereof, if properly
perfected, are first priority Liens, subject only to Permitted Liens.
7.1.8 Accounts. Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrowers with respect
to any Account or Accounts. Unless otherwise indicated in writing to Agent, with
respect to all Accounts:
(i) the Accounts are genuine and in all respects what they purport to be,
and are not evidenced by judgments;
(ii) the Accounts arise out of completed, bona fide sales and deliveries of
goods or renditions of services by Borrowers in the ordinary course of
Borrowers' business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and forming a
part of the contract between the respective Borrower and the respective Account
Debtor;
(iii) the Accounts are for liquidated amounts maturing as stated in the
respective invoices covering such sales or renditions of services, copies of
which have been furnished or are available to Agent;
(iv) such Accounts, and Agent's security interest therein, are not, and
will not (by voluntary act or omission of any Borrower) be with the passage of
time, subject to any offset, Lien, deduction, defense, dispute, counterclaim or
any other adverse condition except for (a) disputes resulting in returned goods
where the amount in controversy is deemed by Agent to be immaterial, and (b)
(for Accounts that are not Eligible Accounts) Permitted Liens, and the Accounts
are absolutely owing to Borrowers and are not contingent in any respect or for
any reason;
(v) No Borrower has made any agreement with any Account Debtor thereunder
24
for any extension, compromise, settlement or modification of any such Account or
any deduction therefrom, except (x) discounts or allowances or offsets which are
granted by such Borrower in the ordinary course of its business or consistent
with industry practices for prompt payment and (y) payment arrangements with
respect to Accounts, provided that the aggregate amount of the portions of such
Accounts subject to such payment arrangements at any given time do not exceed
One Million Dollars ($1,000,000.00), and such arrangements are reflected in the
calculation of the net amount of each respective invoice related thereto and are
reflected in the Schedules of Accounts submitted to Agent pursuant to subsection
6.2.1 hereof;
(vi) to Borrowers' knowledge, there are no facts, events or occurrences
which in any way impair the validity or enforceability of any Accounts or (other
than with respect to discounts or allowances granted by Borrowers in the
ordinary course of business) tend to reduce the amount payable thereunder from
the face amount of the invoice and statements delivered to Agent with respect
thereto;
(vii) to Borrowers' knowledge, each Account Debtor thereunder (A) had the
capacity to contract at the time any contract or other document giving rise to
the Account was executed and (B) each such Account Debtor is Solvent; and
(viii) except as set forth on Exhibit 7.1.8, to Borrowers' knowledge, there
are no proceedings or actions which are threatened or pending against any
Account Debtor thereunder which could reasonably be expected to result in any
material adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9 Equipment. To Borrowers' knowledge, the Equipment is in good
operating condition and repair in all material respects, and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted, provided, however, that the foregoing will
not obligate any Borrower or any of its Subsidiaries to repair any Equipment
which in such Borrower's or such Subsidiary's reasonable business judgment is
obsolete or no longer used or useful by such Borrower in the ordinary course of
its business.
7.1.10 Financial Statements; Fiscal Year.
(a) The Consolidated balance sheets of the Company and its Consolidated
Subsidiaries described therein (including the accounts of all Subsidiaries of
the Company for the respective periods during which a Subsidiary relationship
existed) as of December 30, 2001, and the related statements of income, changes
in stockholders' equity, and cash flow for the periods ended on such dates, have
been prepared in accordance with GAAP, and present fairly in all material
respects the financial position(s) of Borrowers and such Persons at such dates
and the results of Borrowers' operations for such periods. Since December 30,
2001 there has been no material adverse change in the condition, financial or
otherwise, of Borrowers and such other Persons as are shown on the financial
statements described in the previous sentence and no change in the aggregate
value of Equipment and real Property owned by Borrowers or such other Persons,
except changes in the ordinary course of business, none of which individually or
in the aggregate has/have been materially adverse, and changes due to the
25
consummation of the SPS Sale. The fiscal year of the Company and its
Subsidiaries ends on the Sunday nearest to December 31 of each year.
(b) The 10-Q for the fiscal quarter ended March 31, 2002 of the Company
filed with the Securities and Exchange Commission and the financial statements
set forth therein has been prepared in accordance with GAAP and fairly presents
in all material respects the assets and liabilities of the Company and its
Consolidated Subsidiaries as of that date. The unaudited pro forma consolidated
financial statements of the Company and its Consolidated Subsidiaries for the
Home Health Care Business on a stand-alone basis as of March 31, 2002 for the
fiscal quarter of the Company and its Consolidated Subsidiaries ending as of
such date, and related balance sheet, profit and loss statement and statement of
cash flows, (the "Pre-Closing Home Health Care Statements"), have been prepared
in accordance with GAAP and present fairly in all material respects the results
of the Home Health Care Business for such period. Since March 31, 2002 there has
been no material adverse change with respect to the Home Health Care Business,
except changes in the ordinary course of business, none of which individually or
in the aggregate has been materially adverse.
7.1.11 Full Disclosure. The Pre-Closing Financial Statements do not, nor
does this Agreement or any other written statement of any Borrower to Agent
and/or any Lender, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading. There is no fact known to Borrowers which Borrowers have failed to
disclose to Agent in writing which materially affects adversely or, so far as
Borrowers can now reasonably foresee, will materially affect adversely the
Properties, business, profits or condition (financial or otherwise) of any
Borrower or the ability of any Borrower or its Subsidiaries to perform their
Obligations as contained in this Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Both before and after giving effect to
the execution of this Agreement and the other Loan Documents and to the making
of each and every Revolving Credit Loan and the issuance of each and every
Letter of Credit and LC Guaranty, each Borrower, considered individually, and
all Borrowers and all Subsidiary Guarantors, taken as a whole, is/are and shall
be Solvent.
7.1.13 Surety Obligations. Except as set forth on Exhibit 7.1.13, neither
any Borrower nor any of its Subsidiaries is obligated as guarantor, surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person, except as would be permitted
under the provisions of subsection 8.2.3.
7.1.14 Taxes. The federal tax identification number of each Borrower and
each of its Subsidiaries is shown on Exhibit 7.1.14 hereto. Each Borrower and
its Subsidiaries has filed all material federal, state and local tax returns and
other reports it is required by law to file and has paid, or made provision for
the payment of, all taxes, assessments, fees, levies and other governmental
charges upon it, its income and Properties as and when such taxes, assessments,
fees, levies and charges that are due and payable, unless and to the extent any
thereof are being actively contested in good faith and by appropriate
proceedings and Borrowers maintains
26
reasonable reserves on their books therefor or would not, individually or in the
aggregate, have a Material Adverse Effect. The provision for taxes on the books
of Borrowers and their Subsidiaries are adequate for all years not closed by
applicable statutes, and for its current fiscal year.
7.1.15 Brokers. There are no claims against any Borrower for brokerage
commissions, finder's fees or investment banking fees in connection with the SPS
Sale or the establishment of the credit facility contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower and its
Subsidiaries own or possess all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary for the present and planned future
conduct of its business without any known conflict with the rights of others.
All such patents, trademarks, service marks, tradenames, copyrights, licenses
and other similar rights are listed on Exhibit 7.1.16 hereto.
7.1.17 Governmental Consents. Each Borrower and its Subsidiaries has, and
is in good standing with respect to, all governmental consents, approvals,
licenses, authorizations, permits, certificates, inspections and franchises
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it, except where the failure to have or be in good standing would not
have a Material Adverse Effect.
7.1.18 Compliance with Laws. Each Borrower and its Subsidiaries and their
respective Properties, business operations and leaseholds are in compliance with
the provisions of all federal, state and local laws, rules and regulations
applicable to it, its Properties or the conduct of its business except where the
failure to be in compliance would not have a Material Adverse Effect, and there
have been no citations, notices or orders of noncompliance issued to any
Borrower or any of its Subsidiaries under any such law, rule or regulation which
have not been remedied except where noncompliance would not have a Material
Adverse Effect. Each Borrower and its Subsidiaries have established and maintain
an adequate monitoring system to insure that they remain in compliance with all
federal, state and local laws, rules and regulations applicable to it. No
Inventory has been produced by any Borrower or any of its Subsidiaries in
violation of the Fair Labor Standards Act (29 U.S.C. ss. 201 et seq.), as
amended, except for any violation which would not have a Material Adverse
Effect.
7.1.19 Restrictions. Neither any Borrower nor or any of its Subsidiaries is
a party or subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business or the use or
ownership of any of its respective Properties. Neither any Borrower nor any of
its Subsidiaries is a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness.
7.1.20 Litigation. Except as set forth on Exhibit 7.1.20 hereto, there are
no actions, suits or proceedings pending, or, to the knowledge of Borrowers,
threatened, nor, to the knowledge of Borrowers, are there any investigations
pending, against any Borrower or any of its Subsidiaries, or the business,
operations or Properties of such Borrower or any of its Subsidiaries which,
either individually or in the aggregate could have a Material Adverse Effect
27
or could materially and adversely affect the rights of Agent and/or Lenders
hereunder. Notwithstanding anything to the contrary contained in the foregoing
or otherwise in this Agreement, Exhibit 7.1.20 lists all such actions, suits,
proceedings or investigations which have been instituted by any Government
Authority in connection with healthcare-related laws, rules or regulations.
Neither any Borrower nor any of its Subsidiaries is in default with respect to
any order, writ, injunction, judgment, decree or rule of any court, governmental
authority or arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or any
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither any Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default in the payment
of any Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Exhibit 7.1.22(a) hereto is a complete listing of all
Capitalized Lease Obligations of each Borrower and its Subsidiaries and Exhibit
7.1.22(b) hereto is a complete listing of all Operating Leases (except for any
Operating Leases with annual payments due under the respective Leases of less
than Twenty-Five Thousand Dollars ($25,000.00)) of each Borrower and its
Subsidiaries. Each Borrower and each Subsidiary is in full compliance in all
material respects with all of the terms of each of its respective Capitalized
Lease Obligations and Operating Leases listed in said exhibits.
7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto, neither
any Borrower nor any of its Subsidiaries has any Plan. Each Borrower and its
Subsidiaries are in compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan, except where the
effect of such noncompliance would not have a Material Adverse Effect. No fact
or situation that could result in a material adverse change in the financial
condition of any Borrower exists in connection with any Plan. Neither any
Borrower nor its Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan.
7.1.24 Trade Relations. There exists no actual or, to Borrowers' knowledge,
threatened termination, cancellation or limitation of, or any modification or
adverse change in, the business relationship between any Borrower or any of its
Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of such Borrower,
and/or with any Material Payor or with any material supplier, and there exists
no present condition or state of facts or circumstances which would materially
affect adversely any Borrower or prevent any Borrower or any of its Subsidiaries
from conducting such business after the consummation of the transaction
contemplated by this Agreement in substantially the same manner in which it has
heretofore been conducted.
7.1.25 Labor Relations. Neither any Borrower nor any of its Subsidiaries is
a party to any collective bargaining agreement. There are no material
grievances, disputes or controversies with any union or any other organization
of any Borrower's or any of its Subsidiaries' employees, or, to Borrowers'
knowledge, threats of strikes, work stoppages or any asserted pending demands
for collective bargaining by any union or organization.
28
7.1.26 Healthcare Representations and Warranties.
(a) Each Borrower owns or leases and operates facilities to provide health
care services and (i) maintains Medicare and Medicaid provider status and is the
holder of the provider identification numbers identified on Exhibit 7.1.26(a)
hereto, all of which are current and valid (except for any provider
identification numbers which may have inadvertently and temporarily ceased to be
current or valid due to technical reasons (and not for cause) and which,
individually or in the aggregate, would not have a Material Adverse Effect or
materially and adversely affect any rights of Agent and/or Lenders hereunder,
provided that Borrowers, promptly upon learning of any such situation with
respect to any provider identification number, shall correct all such technical
problems and have any such provider identification number or similar substitute
number reinstated or issued as current and valid) and, except as set forth on
Exhibit 7.1.26(a) hereto, Borrowers have not allowed, permitted, authorized or
caused any other Person to use any such provider identification number; (ii) has
obtained all material licenses, accreditations and approvals of governmental
authorities and all other Persons necessary for each Borrower to own its assets,
to carry on its business, to execute, deliver and perform the Loan Documents,
and to receive payments from the Obligors; and (iii) is in compliance, except
where the effect of such noncompliance would not result in a Material Adverse
Effect, with all laws, rules, regulations, orders, decrees and directions of any
Government Authority (including, without limitation, the Medicare Act, the rules
and regulations of CMMS under the Medicare Act, and the applicable Medicaid
laws) applicable to the Accounts or any contracts relating thereto, or
applicable to such Borrower's business and properties, a violation of which
would or could materially and adversely affect such Borrower's ability to carry
out its Obligations hereunder with respect to the Accounts. In addition, no
Borrower has not been notified by any such Governmental Authority or other
person during the immediately preceding 24 month period that such party has
rescinded or not renewed, or intends to rescind or not renew, any such license
or approval.
(b) The Medicaid and Medicare cost reports of each facility and of the home
office of each Borrower for all cost reporting periods have been submitted when
and as required to (i) as to Medicaid, the state agency, or other
CMMS-designated agent or agent of such state agency, charged with such
responsibility or (ii) as to Medicare, the Medicare intermediary or other
CMMS-designated agent charged with such responsibility. Each Borrower's cost
reports do not indicate and no audit has resulted in any final determination
that any Borrower was overpaid for Medicaid and Medicare by One Million Dollars
($1,000,000.00) or more in any of the most recent three fiscal years covered by
such audit.
(c) With respect to all Accounts, as of the date each such Account is
created and included as an Eligible Account by Agent, on behalf of and for the
benefit of Lenders:
(i) All documents and agreements relating to the Accounts requested by
Agent have been delivered to Agent with respect to such Accounts and such
documents are true and correct in all material respects, each Borrower has
timely and properly billed the applicable Obligors of the Accounts (except where
supporting claim documents must be forwarded to any Obligor before a ▇▇▇▇ may be
submitted in which case such Borrower shall
29
promptly complete documentation and billing of such Obligors), and each Borrower
has delivered or caused to be delivered to such Obligors all material Obligor
requested supporting claim documents with respect to such Accounts including all
material documentation required by the applicable Obligors for payment on the
Accounts, and the statutory period for issuing an explanation of benefits
("EOB") in connection with such Accounts have not expired; all information set
forth in the bills and supporting claim documents submitted to Obligors with
respect to the Accounts is true, complete and correct in all material respects,
and, if additional information is requested by any Obligor in connection
therewith, each Borrower will promptly provide the same and, if necessary, will
rebill or, if requested by the primary servicer (if other than such Borrower)
cooperate with such servicer(s) to rebill any such Account;
(ii) The Accounts are exclusively owned by Borrowers, and there is no
security interest in or lien against the Accounts in favor of any third party
other than Agent, nor is there any recording or filing against any Borrower, as
debtor, covering or purporting to cover any interest of any kind in the
Accounts, except as has been or will be released or terminated by each party
holding such adverse interest in the Accounts prior to or concurrently with the
initial Loan made by Agent and Lenders to Borrowers. Borrowers shall defend the
first priority security interest of Agent, on behalf of Lenders, in all Accounts
against the claims of all persons claiming any interest adverse to Agent and
Lenders. With respect to any Government Accounts the rights transferred to Agent
in connection with this Agreement do not include the right to claim payment in
Agent's name from the applicable Obligor or the right to direct such Obligor to
remit payment directly to Agent except as permitted by applicable laws and
regulations governing such Accounts;
(iii) The Accounts (A) are payable in full by the Obligor identified by
Borrowers as being obligated with respect to such Account, (B) are denominated
and payable only in lawful currency of the United States, and (C) are "accounts"
within the meaning of the Uniform Commercial Code of the state in which each
Borrower is incorporated or organized and are not evidenced by an instrument or
chattel paper; and there are no Obligors other than the applicable Obligors
identified by Borrowers in its reports to Agent as the Obligors primarily liable
on the Accounts;
(iv) No Borrower has any guaranty of, letter of credit providing credit
support for, or collateral security for, the Accounts, other than any such
guaranty, letter of creditor or collateral security as has been assigned to
Agent, and any such guaranty, letter of credit or collateral security is not
subject to any Lien in favor of any other person;
(v) To Borrowers' knowledge and belief the goods or services provided and
creating the Accounts were received by the respective Patient or Obligor, as
applicable;
(vi) Where required by applicable law or contract, the fees charged for the
goods or services constituting the basis for the Accounts are (a) consistent
with the usual, customary and reasonable fees charged by other similar medical
service providers or providers of similar goods and services, as applicable, in
the applicable Borrower's community or the community in which the respective
Patient, resides or is located, whichever is less, of the
30
same or similar service by the applicable Borrower or (b) pursuant to negotiated
fee contracts, or imposed fee schedules, with or by the applicable Obligors;
(vii) No action by Borrowers other than the execution and delivery of this
Agreement and the other Loan Documents, the issuance and delivery of any
required Obligor notices (in a form approved by Agent) and the filing of UCC
financing statements in the State in which each applicable Borrower is
incorporated or organized, is required to perfect the first priority security
interest of Agent in the Accounts, and all such actions have been or will be
accomplished no later than the date of the initial Loan advance by Agent, on
behalf of and for the ratable benefit of Lenders;
(viii) The Accounts comply, in all material respects which would affect the
timely collectibility of such Accounts, with all laws and regulations applicable
thereto;
(ix) Any insurance policy, contract or other instrument obligating any
respective Obligor to make payment with respect to the Accounts, except with
respect to Governmental Accounts, does not contain any provision prohibiting the
transfer of such payment obligation from a Patient to the applicable Borrowers;
(x) Fees for services or goods which are subject to limitations imposed by
worker's compensation regulations or by contracts for reimbursement from the
related Obligor do not exceed the limitations imposed thereunder, and the
Accounts for which the fees are so restricted have been clearly identified to
Agent as being subject to such restriction;
(xi) There are no Obligors, other than as designated by Borrowers, that are
primarily liable on the Accounts;
(xii) Except as set forth on Exhibit 7.1.26(c), there are no proceedings or
investigations in which any Borrower is named as party or any other proceedings
or investigation ending or threatened before any Government Authority or any
arbitration or similar proceedings under any contract (a) asserting the
invalidity of any of the Accounts or any contracts related thereto, (b) seeking
the payment of any of the Accounts or any contract related thereto, or (c)
seeking any determination or ruling that might materially and adversely affect
the validity or enforceability of any of the Accounts or any contracts related
thereto which, either individually or in the aggregate could have a Material
Adverse Effect or could materially and adversely affect the rights of Agent
and/or Lenders hereunder. Notwithstanding anything to the contrary contained in
the foregoing, Exhibit 7.1.26(c) lists all such proceedings or investigations
which have been instituted by any Government Authority in connection with
healthcare related laws, rules or regulations;
(xiii) None of the Accounts or contracts related thereto contravene in any
material respect any federal, state or local law, rule or regulation applicable
thereto (including, without limitation, the Medicare Act and the rules and
regulations of CMMS under the Medicare Act and laws, rules and regulations
relating to usury, consumer protection, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt
31
collection practices and privacy), and no party to such related contract, to
Borrowers' knowledge, is in violation of any such law, rule or regulation in any
material respect;
(xiv) All descriptions of the Accounts provided to Agent on behalf of
Borrowers remain true and correct and do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
descriptions of or statements made therein not misleading.
If a breach of any of the representations or warranties contained herein
relating to a Account may, in the reasonable opinion of Agent, have a material
adverse effect upon the validity, legality or collectibility of such Account
then, such Account shall no longer be deemed, an "Eligible Account", as defined
in Appendix A herein.
7.1.27 Operations and Accounts Receivable. No direct or indirect Subsidiary
of the Company conducts any business operations (except for the business of
being a holding company) or owns any Property (except for the capital stock of
another corporation) or generates or owns any Accounts other than those
Subsidiaries which are a party to this Agreement as a Borrower or a Subsidiary
Borrowing Corporation.
7.1.28 Cash Management. All funds and remittances received by each Borrower
with respect to any Accounts are received into or immediately deposited by such
Borrower into an applicable Lockbox Accounts or Concentration Account(s) listed
on Exhibit 6.2.5, and all funds deposited in Borrowers' Lockbox Accounts are
transferred to Borrowers' Concentration Account(s) on a daily basis, provided
that any funds which are deposited into the Lockbox Accounts after the time of
the daily transfer are transferred into the Concentration Account as of the next
Business Day.
7.1.29 Subsidiary Guarantors. As of the Closing Date, none of the
Subsidiary Guarantors owns assets and/or has generated Accounts during the
course of the preceding twelve (12) months in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00).
7.1.30 Inactive Subsidiaries. After giving effect to the SPS Sale, none of
the Inactive Subsidiaries owns any significant assets and/or generates any
Accounts.
7.1.31 SPS Sale Assets. The assets transferred by the Company and certain
of the Borrowers and their Subsidiaries to Accredo under the SPS Sale Documents
include only assets used by such entities prior to the Closing Date in
connection with the SPS Business and do not include any assets used by any of
the Borrowers and/or Subsidiary Guarantors in connection with the Home Health
Care Business.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain in all material
respects accurate, complete and not misleading at all times during the term of
this Agreement, except for changes in the nature of any Borrower's or its
Subsidiaries' business or operations that would render the information in any
exhibit attached hereto either inaccurate, incomplete or misleading, so long as
Agent has consented to such
32
changes or such changes are expressly permitted by this Agreement. Without
limiting the generality of the foregoing, each loan request made pursuant to
subsection 3.1.1 hereof shall constitute each Borrower's reaffirmation, in all
material respects, as of the date of each such loan request, of each
representation, warranty or other statement made or furnished to Lender by or on
behalf of Borrowers or any Subsidiary of Borrowers in this Agreement, any of the
other Loan Documents or any instrument, certificate or financial statement
furnished in compliance with or in reference or relation thereto.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance hereof and
thereof by Agent and the parties hereto and thereto and the closing of the
transactions described herein and therein, and related hereto and thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lenders, each Borrower
covenants that it shall:
8.1.1 Visits and Inspections. Subject to the provisions of subsections
8.1.3(c) and 8.1.3(f), representatives of Agent, from time to time, as often as
may be reasonably requested, but only during normal business hours, to visit and
inspect the Properties of each Borrower and each of its Subsidiaries, inspect,
audit and make extracts from its books and records, at Borrowers' cost as
provided in this Agreement, and discuss with such Borrower's officers, its
employees and its independent accountants, such Borrower's and each of its
Subsidiaries' businesses, assets, liabilities, financial condition, business
prospects and results of operations. Agent shall give notice to the Lenders
prior to conducting any such visits, inspections or audits, and, any Lender may,
upon such Lender's request and at such Lender's expense, have a representative
of such Lender accompany Agent on and participate in any such visits,
inspections or audits.
8.1.2 Notices. Promptly notify Agent in writing of the occurrence of any
event or the existence of any fact which renders any representation or warranty
in this Agreement or any of the other Loan Documents inaccurate, incomplete or
misleading in any material respect or the occurrence of any Event of Default.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions, and cause to be prepared and furnished to Agent the
following (all to be prepared in accordance with GAAP applied on a consistent
basis, unless Borrowers' certified public accountants concur in any change
therein and such change is disclosed to Agent and is consistent with GAAP):
(a) not later than ninety (90) days after the close of each fiscal year of
Borrowers, unqualified audited financial statements of the Company and its
Consolidated Subsidiaries as of the end of such year, on a Consolidated basis,
certified as to such Consolidated
33
financial statements of the Company and its Consolidated Subsidiaries by a firm
of independent certified public accountants of recognized standing selected by
Borrowers but reasonably acceptable to Agent (except for a qualification for a
change in accounting principles with which the accountant concurs);
(b) not later than thirty (30) days after the end of each month hereafter,
or, in the case of each March, June September or December, forty-five (45) days
after the end of each such month, unaudited interim financial statements as of
the end of such month and of the portion of the Borrowers' fiscal year then
elapsed, on a Consolidated basis, including a balance sheet, profit and loss
statement and a statement of cash flows, certified by the principal financial
officer of the Company as prepared in accordance with GAAP and fairly presenting
the Consolidated financial position and results of operations of the Company and
its Consolidated Subsidiaries for such month and period, subject only to changes
from audit and year-end adjustments, and except that such statements need not
contain notes;
(c) promptly upon request, deliver such other information concerning the
Borrowers as Agent may from time to time request, including Medicare and
Medicaid cost reports and audits, annual reports, security law filings and
reports to any security holders. To the extent Borrowers believe that any
information reasonably requested by Agent would require the disclosure of
information subject to (i) any applicable privilege which would prohibit such
disclosure, or which privilege would be destroyed by such disclosure or (ii) any
applicable federal or state laws on patient confidentiality, Borrowers shall
notify Agent of the general nature of the information subject to the claimed
privilege or applicable patient confidentiality laws, and of Borrowers' reasons
for believing that such disclosure would be prohibited, or would destroy the
privilege, or would violate any applicable patient confidentiality laws, and
Agent, in its reasonable discretion, will determine whether to require such
information under the circumstances;
(d) promptly after the sending or filing thereof, as the case may be,
copies of any proxy statements, financial statements or reports filed with any
public agency which any Borrower has made available to its shareholders and
copies of any regular, periodic and special reports or registration statements
which any Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(e) promptly after the filing thereof, copies of any annual report to be
filed in accordance with ERISA in connection with each Plan; and
(f) such other data and information (financial and otherwise) as Agent,
from time to time, may reasonably request, bearing upon or related to the
Collateral or any Borrower's and/or any Subsidiaries' financial condition or
results of operations. To the extent Borrowers believe that any information
reasonably requested by Agent would require the disclosure of information
subject to (i) any applicable privilege which would prohibit such disclosure, or
which privilege would be destroyed by such disclosure or (ii) any applicable
federal or state laws on patient confidentiality, Borrowers shall notify Agent
of the general nature of the information subject to the claimed privilege or
applicable patient confidentiality
34
laws, and of Borrowers' reasons for believing that such disclosure would be
prohibited, or would destroy the privilege, or would violate any applicable
patient confidentiality laws, and Agent, in its reasonable discretion, will
determine whether to require such information under the circumstances.
Concurrently with the delivery of the financial statements described in
clause (a) of this subsection 8.1.3, Borrowers shall forward to Agent a copy of
the accountants' letter to the Company's management that is prepared in
connection with such financial statements and also shall cause to be prepared
and shall furnish to Agent a certificate of the aforesaid certified public
accountants certifying to Agent that, based upon their examination of the
financial statements of the Company and its Consolidated Subsidiaries performed
in connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof. Concurrently with the
delivery of (i) the financial statements described in clause (a) of this
subsection 8.1.3 and (ii) the financial statements described in clause (b) of
the subsection 8.1.3 for each month which is the last month in a fiscal quarter
of the Company and its Consolidated Subsidiaries (and not for any other months),
or more frequently if requested by Agent, Borrowers shall cause to be prepared
and furnished to Agent a Compliance Certificate in the form of Exhibit B hereto
executed by the Chief Financial Officer of the Company, together with a work
sheet reflecting all calculations made in completing the Compliance Certificate.
Each set of financial reporting documents consisting of the audited annual
financial statements described in subsection 8.1.3(a), the accountants' letters
and certificate(s) described in the first sentence of this paragraph and the
corresponding Compliance Certificate required by the second sentence of this
paragraph shall be referred to herein as the "Annual Financial Reports" and each
set of financial statements described in subsection 8.1.3(b) for the last month
in each of the first three (3) fiscal quarters of Borrowers in each fiscal year
and the corresponding Compliance Certificate required by the second sentence of
this paragraph shall be herein referred to as the "Quarterly Financial Reports".
Upon reasonable request by Agent, Borrowers shall provide the financial
statements described in clauses (a) or (b) on a Consolidated and Consolidating
basis.
8.1.4 Landlord and Storage Agreements. Provide Agent with copies of all
agreements between any Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which (x) any Inventory may, from time
to time, be kept, or (y) at which any financial records of any Borrower and/or
books and records relating to any Accounts are kept, as Agent may reasonably
request from time to time. Each Borrower shall, at Agent's request, use
commercially reasonable efforts to obtain a Landlord's Waiver Agreement, in form
and substance reasonably satisfactory to Agent, from any such landlord.
8.1.5 Projections. Prior to the end of each fiscal year of Borrowers,
deliver to Agent Projections of Borrowers for the forthcoming fiscal year, month
by month.
8.1.6 Borrowing Base Certificate. No later than twenty (20) calendar days
after the last day of each calendar month, or more frequently if Agent shall so
request, Borrowers shall deliver to Agent a Borrowing Base Certificate in the
form of Exhibit C hereto executed by the Chief Financial Officer the Company.
35
8.1.7 Healthcare Covenants.
(a) Borrowers will (i) not amend, waive or otherwise permit or agree to any
material deviation from the terms or conditions (other than adjustments in the
ordinary course of business) of the Accounts without the express written consent
of Agent and Lenders; (ii) upon the request of Agent, use all commercially
reasonable efforts to obtain all consents from patients which are required by
law in order for Agent, or any servicing entity retained by Agent, to secure
information needed to obtain payment from the respective Obligors on the
Accounts; and (iii) promptly ▇▇▇▇ for all Accounts on the same basis and using
the same policies and practices that it has used in the past unless Agent has
been advised in writing of a change prior to the making of any Loans.
(b) Agent or its designated agents and representatives from time to time
may verify the Accounts, inspect, check, take copies of or extracts from any
Borrower's books, records and files, (consistent with the state and federal laws
regarding patient confidentiality) and each Borrower will make the same
available to Agent or such representatives at any reasonable time for such
purposes, including records relating to the collection of Accounts, the
application of collections (including misdirected payments) and other matters
related thereto.
(c) If deemed necessary by Agent and upon reasonable notice, each Borrower
agrees that Agent will be permitted to have at least one of its agents or
representatives physically present in such Borrower's administrative offices
during such Borrower's normal business hours to monitor such Borrower in
performing its obligations under this Agreement. Upon request made by Agent,
subject to state and federal laws, including without limitation laws regarding
patient confidentiality, Borrowers shall furnish, or cause to be furnished, to
Agent copies of all relevant records related to the Accounts in written and
electronic form, including any file cabinets, storage containers or computers
within which such records are kept. Borrowers' grant to Agent, on behalf of and
for the benefit of Lenders, of a security interest in such records and goods as
set forth herein is subject to the confidentiality rights under applicable law
and under rights and rules of the JCAHO.
(d) Borrowers shall promptly notify Agent in the event of any action(s),
suit(s), proceeding(s), dispute(s), offset(s), deduction(s), defense(s) or
counterclaim(s) that are or may be asserted by Obligor(s) with respect to any
Account(s), if the aggregate amount of the portions of the Account(s) subject to
such actions, suits, etc. of which Borrowers has gained knowledge since the date
of the last Borrowing Base Certificate shall exceed Five Hundred Thousand
Dollars ($500,000.00) (except for denials of Government Accounts which shall be
disclosed on a monthly basis by Borrowers to Agent). This section does not
require Borrowers to provide a notice of denial to Agent in those cases where
Borrowers reasonably believe that an Obligor's notice of denial will be reversed
upon the submission of supplemental information to the Obligor.
(e) Each Borrower shall comply in all material respects with all of the
terms of each settlement agreement and corporate integrity agreement entered
into by such Borrower with the any Government Authority.
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8.1.8 Special Reporting Covenants as to HFG. For as long as HFG Healthco-4
LLC or HFG Healthco-5 LLC (collectively, "HFG") is a Lender under this
Agreement, Borrowers shall maintain, in the same form, the electronic reporting
interface established among Borrowers and HFG as of the Closing Date, and shall
make available to HFG through such electronic interface reports in the form of
Exhibit I hereto (x) at any time during which no Revolving Credit Loans are
outstanding, no later than twenty (20) calendar days after the last day of each
calendar month or (y) at any time during which Revolving Credit Loans are
outstanding, on the 15th and last calendar day of each month.
8.1.9 Dissolution of Inactive Subsidiaries. Prior to the first anniversary
of the Closing Date, Borrowers shall cause each of the Inactive Subsidiaries to
be legally dissolved.
8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lenders, each Borrower covenants
that it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary to merge or consolidate, with any Person, nor acquire, nor
permit any of its Subsidiaries to acquire, all or any substantial part of the
Properties of any Person; nor change its or any Subsidiary's jurisdiction of
incorporation or organization or Type of Organization or its or any Subsidiary's
legal name without giving Agent at least thirty (30) days prior written notice
of such change. Notwithstanding any of the foregoing:
(i) any Borrower may merge or consolidate with any other Borrower, and any
Subsidiary Guarantor may merge or consolidate with any other Subsidiary
Guarantor or any Borrower;
(ii) any Subsidiary Guarantor may be liquidated or dissolved if the Company
decides in the exercise of its reasonable business judgment that such
liquidation or dissolution is desirable provided that (a) such dissolution shall
not have a Material Adverse Effect and (b) upon such dissolution any and all of
the assets and Property of such Subsidiary Guarantor shall be distributed to the
Borrower(s) or Subsidiary Guarantor(s) which own(s) the capital stock of such
Subsidiary Guarantor;
(iii) any Borrower may acquire a new Subsidiary, or merge or consolidate
with another Person, as part of any Permitted Acquisition transaction provided
that (a) in the case of any Permitted Acquisition transaction which involves the
purchase of the capital stock or equity interests of another Person but does not
involve a merger or consolidation, such Borrower shall pledge the capital stock
or equity interests of such acquired Person to the Agent for the ratable benefit
of the Lenders pursuant to the Pledge Agreement and the acquired Person shall
become a party to this Agreement as a Subsidiary Borrowing Corporation by
executing a Joinder Agreement in form and substance acceptable to Lender or (b)
in the case of any Permitted Acquisition transaction which involves a merger of
the acquired Person with such Borrower, such Borrower shall be the surviving
entity; and
(iv) any Borrower may create a new Subsidiary provided that such Borrower
shall pledge the capital stock or equity interests of such newly-created
Subsidiary
37
to the Agent for the ratable benefit of the Lenders pursuant to the Pledge
Agreement and the newly-created Subsidiary shall become a party to this
Agreement as a Subsidiary Borrowing Corporation by executing a Joinder Agreement
to Lender in form and substance acceptable to Lender.
Borrowers shall give Agent thirty (30) days prior written notice of any
action or event permitted in clauses (i) - (iv) above. Any person which executes
a Joinder Agreement pursuant to this subsection shall be deemed to be a
"Borrower" under this Agreement, and every reference herein to "Borrowers" or
each, any or a "Borrower" shall be deemed to include that Person.
8.2.2 Loans. Make, or permit any Subsidiary of such Borrower to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person, other than (a) loans to employees not to exceed Five
Hundred Thousand Dollars ($500,000.00) at any time outstanding in the aggregate,
(b) loans between or among a Borrower and any other Borrower(s) and/or any
Subsidiary Guarantor(s), provided that the amount of loans (x) owing from any
one or more of the Subsidiary Guarantors (taken together) to any one or more of
the Borrowers (taken together) and/or (y) owing among the Subsidiary Guarantors
(taken together) shall not, in the aggregate, exceed Five Hundred Thousand
Dollars ($500,000.00) at any one time and (c) so long as, at the time any such
loan is made, Borrowers shall have an Aggregate Adjusted Availability of at
least Eighty-Five Million Dollars ($85,000,000.00), loans to BayShore
Healthcare, a Canadian entity, not to exceed One Million Dollars ($1,000,000.00)
at any time outstanding.
8.2.3 Total Indebtedness for Money Borrowed. Create, incur, assume, or
suffer to exist, or permit any Subsidiary of such Borrower to create, incur or
suffer to exist, any Indebtedness for Money Borrowed, except:
(a) Obligations owing to Agent and/or Lenders under or in connection with
the Loan Documents;
(b) Indebtedness of a Borrower or any Subsidiary of any Borrower to a
Borrower as permitted in subsection 8.2.2;
(c) Permitted Purchase Money Indebtedness;
(d) accounts payable to trade creditors and current operating expenses
(other than for Money Borrowed) which are not more than ninety (90) days from
the due date, and which are incurred in the ordinary course of business and paid
within such time period, unless the same are being actively contested in good
faith and by appropriate and lawful proceedings; provided that the applicable
Borrower or Subsidiary shall have set aside such reserves, if any, with respect
thereto as are required by GAAP and deemed adequate by such Borrower or
Subsidiary and its independent accountants;
(e) Obligations to pay Rentals permitted by subsection 8.2.13 and
Capitalized Lease Obligations permitted under subsection 8.2.8;
38
(f) contingent liabilities arising out of endorsements of checks and other
negotiable instruments for deposit or collection in the ordinary course of
business;
(g) guaranties of lease obligations or other similar obligations of
Subsidiaries to the extent that such lease obligations or similar obligation are
otherwise permitted by this Agreement;
(h) bid bonds, performance bonds, surety bonds, letters of credit or
similar obligations made in the ordinary course of business (including to secure
payment of judgments) which do not, in the aggregate, exceed Fifteen Million
Dollars ($15,000,000.00) at any one time (exclusive of the amount of the
▇▇▇▇▇▇▇▇▇▇▇▇ Bond);
(i) Indebtedness under the ▇▇▇▇▇▇▇▇▇▇▇▇ Bond; and
(j) other Indebtedness not to exceed an aggregate amount of Two Million
Five Hundred Thousand Dollars ($2,500,000.00) outstanding at any one time.
8.2.4 Affiliate Transactions. Except as set forth in Exhibit 8.2.4 hereto,
enter into, or be a party to, or permit any Subsidiary of such Borrower to enter
into or be a party to, any transaction with any Affiliate of such Borrower,
except in the ordinary course of and pursuant to the reasonable requirements of
such Borrower's or Subsidiary's business and upon fair and reasonable terms
which are fully disclosed to Agent and are no less favorable to such Borrower or
Subsidiary than would obtain in a comparable arm's length transaction with a
Person not an Affiliate of such Borrower or its Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(a) Liens at any time granted in favor of Agent, for the ratable benefit of
Lenders;
(b) Liens for taxes, assessments or charges imposed by any Government
Authority (excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due, or being contested in the manner described in subsection
7.1.14 hereto, but only if in Agent's reasonable judgment such Lien does not
materially adversely affect Agent's rights or the priority of Agent's Lien, for
the ratable benefit of Lenders, upon the Collateral;
(c) Liens arising in the ordinary course of such Borrower's or Subsidiary's
business by operation of law or regulation, such as carriers; warehousemen's,
landlords' and mechanics' liens, but only if payment in respect of any such
Liens are not at the time required and such Liens do not, in the aggregate,
materially detract from the value of the Property of such Borrower or any of its
Subsidiaries or materially impair the use thereof in the operation of such
Borrower's or any of its Subsidiaries' business;
(d) Purchase Money Liens securing Permitted Purchase Money Indebtedness;
39
(e) such other Liens as appear on Exhibit 8.2.5 hereto;
(f) pledges or deposits to secure workers' compensation, unemployment
insurance and other social security legislation or the deposits securing
obligations to insurance companies insuring such liabilities;
(g) pledges or deposits to secure (x) the performance of bids, trade
contracts (other than for Borrowed Money), statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business (including bonds to secure payment of
judgments), provided that such obligations do not, in the aggregate, exceed
Fifteen Million Dollars ($15,000,000.00) at any one time (exclusive of the
amount of the ▇▇▇▇▇▇▇▇▇▇▇▇ Bond) and (y) the ▇▇▇▇▇▇▇▇▇▇▇▇ Bond;
(h) pledges or deposits to secure lease obligations of such Borrower or any
Subsidiaries to the extent such lease obligations are permitted by this
Agreement;
(i) Liens consisting of judgment or judicial attachment Liens (including
prejudgment attachment) in existence less than forty-five (45) days after the
entry thereof or the enforcement of which is effectively stayed or payment of
which is covered in full (subject to a customary deductible) by insurance or
which do not otherwise result in any Event of Default;
(j) Liens securing obligations in respect of Capitalized Lease Obligations
solely on property subject to such Capitalized Lease Obligations;
(k) leases or subleases granted to third Persons not interfering in any
material respect with Agent's right to the Collateral or the business of such
Borrower or any Subsidiary;
(l) liens arising from UCC financing statements regarding leases permitted
by this Agreement;
(m) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement;
(n) 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 so long as such liens attached only to the imported goods;
(o) Liens existing on the Property of any Person at the time such Person
becomes a Subsidiary of such Borrower or is merged or consolidated into such
Borrower pursuant to a Permitted Acquisition transaction, and, in each case, not
created in contemplation of or in connection with the Permitted Acquisition
transaction, provided however, that such Liens do not extend to any of Property
of any Borrower;
40
(p) other Liens in an amount not to exceed Two Hundred Fifty Thousand
Dollars ($250,000.00), provided that such Liens do not secure any Indebtedness
for Money Borrowed;
(q) any extension, renewal or replacement of the foregoing; provided,
however, that the Liens permitted by this subsection 8.2.5 shall not cover any
additional Indebtedness or Property; and
(r) such other Liens as the Majority Lenders may hereafter approve in
writing.
8.2.6 [INTENTIONALLY OMITTED].
8.2.7 Distributions. Declare or make, or permit any Subsidiary of such
Borrower to declare or make, any Distributions; provided that any Borrower or
any Subsidiary Guarantor may declare and/or make Distributions to any Borrower.
Notwithstanding anything to the contrary contained in any of the foregoing or
otherwise in this Agreement, the Company may make Distributions to its
shareholders in connection with the consummation of the SPS Sale consisting of
the capital stock of Accredo and cash received by Borrowers and/or the
Subsidiary Guarantors as part of the SPS Sale Consideration as provided for in
the SPS Documents.
8.2.8 Capital Expenditures. Make Capital Expenditures (including, without
limitation, by way of capitalized leases) which, in the aggregate, as to
Borrowers and their Subsidiaries, exceed (x) Twelve Million Five Hundred
Thousand Dollars ($12,500,000.00) during each of Borrowers' fiscal years 2002
and 2003, (y) Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00)
during Borrowers' fiscal year 2004 and (z) Fourteen Million Five Hundred
Thousand Dollars ($14,500,000.00) during Borrowers' fiscal year 2005 and each of
Borrowers' fiscal years thereafter.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any of, or
permit any Subsidiary of such Borrower to sell, lease or otherwise dispose any
of, its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except: (i) sales of
Inventory in the ordinary course of business, (ii) a transfer of Property by any
Borrower or Subsidiary Guarantor to any Borrower, (iii) dispositions of Property
(including dispositions of used, worn-out or surplus Property) by Borrower or
any Subsidiary in the ordinary course of business with fair market value of less
than Five Hundred Thousand Dollars ($500,000.00) in the aggregate, in any given
fiscal year [which disposition may include a disposition, whether or not in the
ordinary course of Business, of all or substantially all of the assets of a
Borrower or a Subsidiary Guarantor, or all of the stock of any Borrower or
Subsidiary Guarantor, provided such disposition is within the Five Hundred
Thousand Dollars ($500,000.00) limitation, (iv) leases or subleases of Property
which shall not have a Material Adverse Effect, and (v) dispositions expressly
authorized by this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to issue any
additional shares of its capital stock except director's qualifying shares and
shares. Notwithstanding anything to the contrary contained in this Agreement,
the Company may issue additional shares of its capital stock.
41
8.2.11 ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any customer on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis, except for consignment sales
which, in the aggregate, do not exceed Five Hundred Thousand Dollars
($500,000.00).
8.2.12 Restricted Investment. Make or have, or permit any Subsidiary of
such Borrower to make or have, any Restricted Investment.
8.2.13 Leases. Become, or permit any Subsidiary of such Borrower to become,
a lessee under any Operating Lease (other than a lease under which any Borrower
or any of its Subsidiaries is lessor which lease is otherwise permitted by the
terms of this Agreement) of Property if the aggregate Rentals payable during any
current or future period of twelve (12) consecutive months under such lease and
all other leases under which Borrowers or any of their Subsidiaries is then
lessee would exceed Thirty Million Dollars ($30,000,000.00) in the aggregate.
The term "Rentals" means, as of the date of determination, all payments which
the lessee is required to make by the terms of any such lease.
8.2.14 Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than a Subsidiary of the Company.
8.2.15 Subsidiary Guarantors. Permit any Subsidiary Guarantor to own assets
and/or generate Accounts during the any fiscal year of Borrowers in excess of
Two Hundred Fifty Thousand Dollars ($250,000.00), provided that, Borrowers may
permit any entity that was a Subsidiary Guarantor either to own assets and/or
generate Accounts in excess of the foregoing limitations if the applicable
Borrower(s) shall first cause any such entity to become a party to this
Agreement as a Subsidiary Borrowing Corporation by executing a Joinder Agreement
in form and substance acceptable to Agent. Any former Subsidiary Guarantor which
executes a Joinder Agreement pursuant to this subsection shall be deemed to be a
"Borrower" under this Agreement, and every reference herein to "Borrowers" or
each, any or a "Borrower" shall be deemed to include that Person.
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lenders, each
Borrower covenants that, the Company and its Consolidated Subsidiaries shall, on
a consolidated basis, maintain the financial covenants set forth on Schedule 8.3
hereto.
SECTION 9. CONDITIONS PRECEDENT
9.1 Conditions Precedent to Effectiveness of Agreement.
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Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Agent and/or
Lenders under the other sections of this Agreement, the effectiveness of this
Agreement is subject to the satisfaction of each of the following conditions:
9.1.1 Documentation. Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, a duly executed copy of this
Agreement, the Revolving Credit Notes and the other Loan Documents, together
with such additional documents, instruments and certificates as Agent and its
counsel shall require in connection therewith from time to time, all in form and
substance reasonably satisfactory to Agent and its counsel, including, without
limitation the following:
(a) Current insurance certificates for Borrowers' casualty and liability
insurance policies naming Lender as lender loss payee and/or as additional
insured, as applicable;
(b) Certified copies of (i) resolutions of each Borrower's and each
Subsidiary Guarantor's board of directors authorizing the execution and delivery
of this Agreement and/or the Loan Documents to which each such entity is a party
and the performance of all transactions contemplated hereby and/or thereby, as
applicable, (ii) each Borrower's and each Subsidiary Guarantor's by-laws and any
amendments thereto, and (iii) an incumbency certificate of each Borrower and
each Subsidiary Guarantor;
(c) A copy of the Articles or Certificate of Incorporation of each Borrower
and each Subsidiary Guarantor, and all amendments thereto;
(d) Good standing certificates for each Borrower and each Subsidiary
Guarantor, issued by the Secretary of State or other appropriate official of its
jurisdiction of incorporation;
(e) A closing certificate signed by the Chief Financial Officer of the
Company dated as of the date hereof, stating that (i) the representations and
warranties set forth in Section 7 hereof are true and correct in all material
respects on and as of such date, (ii) Borrowers are on such date in compliance
in all material respects with all the terms and provisions set forth in this
Agreement and (iii) on such date no Default or Event of Default has occurred or
is continuing;
(f) The Security Documents duly executed, accepted and acknowledged by or
on behalf of each of the signatories thereto;
(g) The favorable, written opinion of Borrowers' counsel as to the
transactions contemplated by this Agreement and any of the other Loan Documents;
(h) The Subsidiary Guaranty duly executed and delivered by each Subsidiary
Guarantor;
43
(i) Such other documents, instruments and agreements as Agent and/or
Lenders shall reasonably request in connection with the foregoing matters; and
(j) the Pre-Closing Financial Statements (specifically including the
Pre-Closing Home Health Care Statements).
9.1.2 No Default. No Default or Event of Default shall exist;
9.1.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.1.4 Availability. Agent shall have determined that immediately after
Lenders have made the initial Loans and issued the initial Letters of Credit and
LC Guaranties requested by Borrowers as of the Closing Date (if any), and
Borrowers have paid all closing costs incurred in connection with the
transactions contemplated hereby, Aggregate Adjusted Availability on the Closing
Date shall not be less than Sixty-Five Million Dollars ($65,000,000.00)
(provided that, to the extent any payments or expenses identified on the
financial budget and projections for the Company and its Consolidated
Subsidiaries previously delivered to Agent as payments to be made prior to or on
the Closing Date in connection with stock option tender offer made by the
Company have not been made by the Closing Date, the amount of such required
Aggregate Adjusted Availability on the Closing Date shall be increased by an
equal amount); and Borrowers shall have delivered any applicable Availability
Expense Adjustment Certificate.
9.1.5 Borrowing Base Certificate and Disbursement Instructions. Borrowers
shall have delivered to Agent an initial Borrowing Base Certificate dated as of
the Closing Date.
9.1.6 [INTENTIONALLY OMITTED].
9.1.7 Compilation of Due Diligence. Agent shall have completed all
business, financial, environmental and Collateral due diligence concerning
Borrowers and their Subsidiaries that Agent shall require, in its sole
discretion, and the results of such due diligence shall be satisfactory to Agent
in its sole discretion.
9.1.8 Reorganization. Agent and Agent's counsel shall have determined that
the capital and corporate structure of the Company and its Subsidiaries on the
Closing date, after giving effect to the SPS Sale are satisfactory, in the sole
discretion of Agent and its counsel.
9.1.9 Truth and Accuracy of Representations and Warranties. All of the
representations and warranties set forth in Section 7 hereof shall be true and
correct in all material respects on and as of the Closing Date and all such
representations and warranties (including as supplemented by the disclosure on
the Exhibits hereto referred to in such representations and warranties) shall be
satisfactory to Agent in its sole discretion.
9.1.10 Approvals and Consents. All approvals and/or consents of any
Government Authority or any other third party that shall be required in
connection with the execution and delivery of this Agreement and the other Loan
Documents by Borrowers and the
44
Subsidiary Guarantors and the performance by them of their obligations hereunder
and/or thereunder, as applicable, shall have been obtained.
9.1.11 No Material Adverse Change. No material adverse change in the
business, assets, financial condition, income or prospects of the Company and
its Subsidiaries as a whole and no development reasonably likely to have a
Material Adverse Effect shall have occurred since December 30, 2001, and nothing
shall have occurred since December 30, 2001 which is reasonably likely to have a
material adverse effect on the rights and remedies of Agent and/or Lenders under
or on the ability of Borrowers and the Subsidiary Guarantors to perform their
obligations under this Agreement and/or the other Loan Documents, as applicable.
9.1.12 Payment of Fees. Borrowers shall have paid all fees and expenses
owing hereunder.
9.1.13 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.1.14 SPS Sale. Agent shall have received and reviewed the final executed
SPS Sale Documents, which shall be in form and substance reasonably satisfactory
to Agent and its counsel. The shareholders of the Company shall have approved
the SPS Sale, and the SPS Sale shall have been closed and consummated in
accordance with terms on the SPS Sale Documents. In addition, the Company shall
have obtained any and all federal, states and local regulatory approvals and/or
licenses, if any, and have completed any and all federal, state and local
regulatory notifications, if any, which may be required in connection with or
necessitated because of the SPS Sale.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrowers shall fail to pay any of the
Obligations on the due date thereof (whether at scheduled due date, at stated
maturity, on demand, upon acceleration, upon termination of this Agreement or
otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other statement
made or furnished to Agent or any Lender by or on behalf of any Borrower or any
Subsidiary of any Borrower in this Agreement, any of the other Loan Documents or
any instrument, certificate or financial statement furnished in compliance with
or in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.3 Breach of Specific Covenants. Any Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 6.1.1, 6.2,
8.1.1, 8.1.2, 8.1.7,
45
8.2 or 8.3 of this Agreement on the date that such Borrower is required to
perform, keep or observe such covenant.
10.1.4 Breach of Other Covenants. Any Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in this Section 10.1) and
the breach of such other covenant is not cured to Agent's satisfaction within
twenty (20) days after the sooner to occur of Borrowing Agent's receipt of
notice of such breach from Agent or the date on which such failure or neglect
first becomes known to any officer of any Borrower, except that, in the case of
any such failure or neglect with respect to subsection 8.1.3 hereof, such grace
period shall be ten (10) days.
10.1.5 Default Under Security Documents/Other Agreements. Any event of
default shall occur under, or any Borrower shall default in any material respect
in the performance or observance of any material term, covenant, condition or
agreement contained in, any of the Security Documents or the Other Agreements
and such default shall continue beyond any applicable grace period.
10.1.6 Other Defaults. There shall occur any default or event of default on
the part of any Borrower under any agreement, document or instrument to which
any Borrower is a party or by which any Borrower or any of its Property is
bound, creating or relating to any Indebtedness (other than the Obligations)
which singly or in the aggregate with any other such Indebtedness equals or
exceeds One Million Dollars ($1,000,000.00) if the holder of such Indebtedness
would be entitled to accelerate such Indebtedness as a consequence of such
default or event of default.
10.1.7 Uninsured Losses. Any loss, theft, damage or destruction of any
material portion of the Collateral not fully covered (subject to such
deductibles as Agent shall have permitted) by insurance.
10.1.8 Adverse Changes. There shall occur any event or condition which
results in a material adverse change in the financial condition or business
operations of any Borrower which impairs such Borrower's ability to perform its
Obligations or brings into question the validity or enforceability of any of the
Loan Documents.
10.1.9 Breach of HFG Reporting Covenant. Borrowers shall fail to provide
any report required under subsection 8.1.8 to HFG by the date required under
such subsection and such failure is not cured within ten (10) days after written
notice of such failure is sent by HFG and received by Agent and Agent's counsel
and Borrowers and Borrowers' counsel.
10.1.10 Insolvency and Related Proceedings. Any Borrower shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against any Borrower
under the Bankruptcy Code (and, if filed against a Borrower, the continuation of
such proceeding for more than sixty (60) days, provided that neither Agent nor
Lenders are obligated to make any Loans or arrange for the issuance of Letters
of Credit or
46
LC Guarantees during any such proceeding and may seek any relief that Agent or
Lenders deem appropriate in such proceedings) or any Borrower shall make any
offer of settlement, extension or composition to their respective unsecured
creditors generally.
10.1.11 Business Disruption; Condemnation. There shall occur a cessation of
a substantial part of the business of any Borrower or any of its Subsidiaries
for a period which would have a Material Adverse Effect; any Borrower or any of
its Subsidiaries shall suffer the loss or revocation of any license or permit
now held or hereafter acquired by such Borrower or such Subsidiary which is
necessary to the continued or lawful operation of its business and which loss or
revocation has a Material Adverse Effect; or any Borrower or any of its
Subsidiaries shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
its business affairs; and such enjoining, restraint or prevention has a Material
Adverse Effect; or any material lease or agreement pursuant to which any
Borrower or any of its Subsidiaries leases, uses or occupies any Property shall
be canceled or terminated prior to the expiration of its stated term and which
cancellation or termination has a Material Adverse Effect.
10.1.12 Change of Control. The occurrence of a Change of Control.
10.1.13 ERISA. A Reportable Event shall occur which Agent, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Borrower or any of its Subsidiaries is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's or Subsidiary's complete or partial
withdrawal from such Plan.
10.1.14 Challenge to Agreement. Any Borrower or any of its Subsidiaries, or
any Affiliate of any of them, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement, or any of the other
Loan Documents, the legality or enforceability of any of the Obligations or the
perfection or priority of any Lien granted to Agent, for the ratable benefit of
Lenders.
10.1.15 Repudiation of or Default Under Guaranty Agreement. Any Guarantor
shall revoke or attempt to revoke any guaranty and surety agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.16 Criminal Forfeiture. Any Borrower or any of its Subsidiaries shall
be criminally indicted or convicted or any judicial or administrative proceeding
results in a forfeiture of any material Property of any Borrower or any of its
Subsidiaries.
10.1.17 Judgments. Any Borrower or any of its Subsidiaries shall suffer any
final judgment or judgments for the payment of money (in excess of insurance
coverage) in excess of One Million Dollars ($1,000,000.00) in the aggregate and
the same shall not be
47
discharged, satisfied or stayed within a period of forty-five (45) days.
Notwithstanding the foregoing, for the purposes of this subsection only, no
judgment amount shall be included in the calculation of the aggregate amount of
judgments to the extent that such Borrower or Subsidiary shall have obtained a
bond covering the liability.
10.1.18 Loss of Material Payor. Any Material Payor shall cancel or fail to
renew its contract with any Borrower and shall cease to recognize any Borrower
as an approved provider of healthcare services.
10.1.19 Revocation Regarding Government Lockbox. Any Borrower(s) shall give
a notice to any applicable Depository Bank with respect to any Government
Lockbox revoking a Dominion Triggering Effectiveness Notice given by Agent with
respect to such Government Lockbox.
10.2 Acceleration of the Obligations. Without in any way limiting the right
of Agent to demand payment of any portion of the Obligations payable on demand
in accordance with Section 3.2 hereof, upon or at any time after the occurrence
of an Event of Default, all or any portion of the Obligations shall, at the
option of Agent (or by Agent at the written direction of the Majority Lenders)
and without presentment, demand, protest or further notice by Agent, become at
once due and payable and Borrowers shall forthwith pay to Lenders, the full
amount of such Obligations, provided that, upon the occurrence of an Event of
Default specified in subsection 10.1.9 or subsection 10.1.18 hereof (other than
an Event of Default based solely on a Borrower's ceasing to be Solvent), all of
the Obligations shall become automatically due and payable without declaration,
notice or demand by Agent.
10.3 Other Remedies. Upon the occurrence and during the continuance of an
Event of Default, Agent may (or, at the written direction of Majority Lenders,
shall) exercise from time to time the following rights and remedies to the
extent permitted by applicable law:
10.3.1 The right to cease making Loans.
10.3.2 Subject to all applicable laws and regulations governing payment of
Medicare and Medicaid receivables, the right to "take possession" of the
Collateral, and notify all Obligors of the Agent's security interest, on behalf
of and for the benefit of Lenders, in the Collateral and require payment under
the Accounts to be made directly to Agent, on behalf of Lenders, and Agent may,
in its own name or in the name of any Borrower, exercise all rights of a secured
party with respect to the Collateral and collect, ▇▇▇ for and receive payment on
all Accounts, and settle, compromise and adjust the same on any terms as may be
satisfactory to Agent and Lenders in their sole and absolute discretion for any
reason or without reason and Agent and Lenders may do all of the foregoing with
or without judicial process (including without limitation notifying the United
States postal authorities to redirect mail addressed to Borrowers, or any of
them, to an address designated by Agent). With respect to any Government
Accounts, the rights transferred to Agent in connection with this Agreement do
not include the right to claim payment in Agent's name from the applicable
Obligor or the right to direct such Obligor to remit payment directly to Agent,
expect as permitted by applicable laws and regulations governing such Accounts.
48
10.3.3 All of the rights and remedies of a secured party under the Code or
under other applicable law, and all other legal and equitable rights to which
Agent or any Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.4 The right to take immediate possession of the Collateral, and to (i)
require Borrowers to assemble the Collateral, at Borrowers' expense, and make it
available to Agent at a place designated by Agent which is reasonably convenient
to both parties, and (ii) enter any premises where any of the Collateral shall
be located and to keep and store the Collateral on said premises until sold (and
if said premises be the Property of any Borrower, such Borrower agrees not to
charge Agent or any Lender for storage thereof).
10.3.5 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Agent, in
its sole discretion, may deem advisable. Borrowers agree that ten (10) days
written notice to Borrowing Agent of any public or private sale or other
disposition of Collateral shall be reasonable notice thereof, and such sale
shall be at such locations as Agent may designate in said notice. Agent shall
have the right to conduct such sales on any Borrower's premises, without charge
therefor, and such sales may be adjourned from time to time in accordance with
applicable law. Agent may, at its option, disclaim any and all warranties
regarding the Collateral in connection with any such sale. Agent shall have the
right to sell, lease or otherwise dispose of the Collateral, or any part
thereof, for cash, credit or any combination thereof, and Agent or any Lender
may purchase all or any part of the Collateral at public or, if permitted by
law, private sale and, in lieu of actual payment of such purchase price, may set
off the amount of such price against the Obligations. The proceeds realized from
the sale of any Collateral may be applied, after allowing two (2) Business Days
for collection, first to the costs, expenses and attorneys' fees incurred by
Agent or any Lender in collecting the Obligations, in enforcing the rights of
Agent or any Lender under the Loan Documents and in collecting, retaking,
completing, protecting, removing, storing, advertising for sale, selling and
delivering any Collateral, second to the interest due upon any of the
Obligations; and third, to the principal of the Obligations. If any deficiency
shall arise, Borrowers shall remain jointly and severally liable to Agent and
Lenders therefor.
10.3.6 Agent is hereby granted by each Borrower a license or other right to
use, without charge, each Borrower's labels, patents, copyrights, rights of use
of any name, trade secrets, tradenames, trademarks and advertising matter, or
any Property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral, and each Borrower's rights
under all licenses and all franchise agreements shall inure to Agent's benefit
to the extent permitted under such agreements.
10.3.7 Agent may, at its option, require Borrowers to deposit with Agent
funds equal to the LC Amount and, if Borrowers fail to promptly make such
deposit, Agent may advance such amount as a Revolving Credit Loan (whether or
not an Overadvance is created thereby). Any such deposit or advance shall be
held by Agent, for the ratable benefit of Lenders,
49
as a reserve to fund future payments on such LC Guaranties and future drawings
against such Letters of Credit. At such time as all LC Guaranties have been paid
or terminated and all Letters of Credit have been drawn upon or expired, any
amounts remaining in such reserve shall be applied against any outstanding
Obligations, or, if all Obligations have been indefeasibly paid in full,
returned to Borrowers.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrowers
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any guaranty and surety agreement given to Agent and/or any
Lender or contained in any other agreement among Agent, or any Lender and any
Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrowers herein contained. The failure
or delay of Agent or any Lender to require strict performance by Borrowers of
any provision of this Agreement or to exercise or enforce any rights, Liens,
powers, or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from
Borrowers to Agent and Lenders shall have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrowers
contained in this Agreement or any of the other Loan Documents and no Event of
Default under this Agreement or any other Loan Documents shall be deemed to have
been suspended or waived by Agent or any Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by a duly authorized representative of Agent and directed to Borrowing
Agent.
SECTION 11. AGENT
As between Agent and Lenders, Agent and each Lender, who are now or shall
become parties to this Agreement, agree as follows (and the each Borrower hereby
consents to, and approves, such agreement):
11.1 Appointment and Authorization. Each Lender (and each subsequent holder
of any of the Notes by its acceptance thereof) hereby irrevocably appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement as are delegated to Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. Subject to the provisions
of this Agreement, Agent will handle all transactions relating to the Loans and
all other Obligations, including, without limitation, all transactions with
respect to Letters of Credit, LC Guaranties, this Agreement, the other Loan
Documents and all related documents in accordance with its usual practices. The
rights, privileges and remedies accorded to the Agent hereunder shall be
exercised by Agent on behalf of and for the ratable benefit of all Lenders.
11.2 General Immunity. In performing its duties as Agent hereunder, Agent
will take the same care as it takes in connection with loans in which it alone
is interested. However,
50
neither Agent nor any of its directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them hereunder or in
connection herewith except as such action or omission is caused solely from its
or their own gross negligence or willful misconduct unless such action was taken
or omitted by Agent at the direction of Majority Lenders, so long as Agent acted
or omitted to act in full compliance with such direction.
11.3 Consultation with Counsel. Agent may consult with legal counsel and
any other professional advisors or consultants deemed necessary or appropriate
and selected by Agent and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel or advisors.
11.4 Documents. Agent shall not be under a duty to examine into or pass
upon the effectiveness, genuineness or validity of this Agreement or any of the
Notes or any other Loan Document furnished pursuant hereto or in connection
herewith, and Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be. In addition, Agent shall not
be liable for failing to make any inquiry concerning the accuracy, performance
or observance of any of the terms, provisions or conditions of such instrument
or document.
11.5 Rights as a Lender. With respect to its applicable Pro Rata Shares in
each of the Loans, Agent shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include
Agent in its individual capacity. Subject to the provisions of this Agreement,
Agent may lend money to and generally engage in any kind of business with each
Borrower and its Subsidiaries and Affiliates as if it were not Agent. Upon the
occurrence and during the continuation of an Event of Default, Agent shall, upon
written request of any Lender, disclose to Lenders any business transaction or
arrangement then existing between Agent and any Borrower (but only to the extent
that such disclosure would not violate the terms of any confidentiality
agreement between Agent and any Borrower).
11.6 Responsibility of Agent. It is expressly understood and agreed that
the obligations of Agent hereunder are only those expressly set forth in this
Agreement and that Agent shall be entitled to assume that no Default or Event of
Default has occurred and is continuing, unless Agent has actual knowledge of
such fact. Except to the extent Agent is required by Lenders pursuant to the
express terms hereof to take a specific action, Agent shall be entitled to use
its discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions that it may be able to take under or in
respect of, this Agreement and the Loan Documents. Agent shall incur no
liability under or in respect of this Agreement and the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or instrument
believed by it to be genuine or authentic or to be signed by the proper party or
parties, or with respect to anything that it may do or refrain from doing in the
reasonable exercise of its judgment, or that may seem to it to be necessary or
desirable under the circumstances. Agent shall have no responsibility to carry
out audits or otherwise examine the books and records or properties of
Borrowers, except as Agent in its reasonable discretion deems appropriate. The
relationship between Agent and each Lender is and shall be limited to that of
agent and principal and nothing herein shall be construed to constitute Agent a
joint venturer with any Lender, a
51
trustee or fiduciary for any Lender or for the holder of a participation, nor
impose upon Agent duties and obligations other than those set forth herein.
11.7 Collections and Disbursements.
11.7.1 Agent will have the right to collect and receive all payments of the
Obligations, and to collect and receive all reimbursements for draws or payments
made under the Letters of Credit or LC Guaranties respectively, together with
all fees, charges or other amounts due under this Agreement and the other Loan
Documents, and Agent will remit to each Lender, according to its applicable Pro
Rata Percentage, all such payments actually received by Agent (subject to any
required clearance procedures) in accordance with the settlement procedures
established from time to time. Settlements (including adjustments of the
proportionate shares among the Lenders) shall occur on such dates as Agent may
elect in its sole discretion but which shall be no less frequently than weekly.
Between settlement dates, all collections and payments shall be applied at
Agent's discretion.
11.7.2 If any such payment received by Agent or Issuer is rescinded or
otherwise required to be returned for any reason at any time, whether before or
after termination of this Agreement and the other Loan Documents (unless such
rescission or return occurs before the amount of such payment has been applied
to the Obligations or otherwise reflected in a settlement as provided for in
subsection 11.7.1 above), each Lender will, upon written notice from Agent,
promptly pay over to Agent its Pro Rata Percentage of the amount so rescinded or
returned (together with interest and other fees thereon if also required to be
rescinded or returned).
11.7.3 All payments by Agent and Lenders to each other hereunder shall be
in immediately available funds. Agent will at all times maintain proper books of
account and records reflecting the interest of each Lender in the Loans, in a
manner customary to Agent's keeping of such records, which books and records
shall be available for inspection by each Lender at reasonable times during
normal business hours, at such Lender's sole expense. Agent may treat the payees
of any Note as the holder thereof until written notice of the transfer thereof
shall have been received by Agent in accordance with Section 11.16. In the event
that any Lender shall receive any payments in reduction of the Loans in an
amount greater than its applicable Pro Rata Percentage in respect of Obligations
to Lenders evidenced hereby (including, without limitation amounts obtained by
reason of setoffs), such Lender shall hold such excess in trust for Agent (on
behalf of all other Lenders) and shall promptly remit to Agent such excess
amount so that the amounts received by each Lender hereunder shall at all times
be in accordance with its applicable Pro Rata Percentage. To the extent
necessary for each Lender's actual percentage of all outstanding Loans to equal
its applicable Pro Rata Percentage, the Lender having a greater share of any
payment(s) than its applicable Pro Rata Percentage shall acquire a participation
in the applicable Pro Rata Share of the other Lenders as determined by Agent.
11.8 Indemnification. To the extent not indemnified by Borrowers, Lenders
hereby each indemnify Agent and Issuer ratably according to the respective
amounts of each Lender's Pro Rata Percentage, from and against any and all
52
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against Agent (or its Affiliate, as the case
may be) in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by Agent (or its Affiliate, as the
case may be) under or related to this Agreement or the Loans, 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 solely from Agent's (or its Affiliate's, as the case may be) gross
negligence or willful misconduct unless such action was taken or omitted by
Agent (or its Affiliate, as the case may be) at the direction of Majority
Lenders, so long as Agent acted or omitted to act in full compliance with such
directions. Agent shall have the right to deduct, from any amounts to be paid by
Agent to any Lender hereunder, any amounts owing to Agent (or its Affiliate, as
the case may be) by such Lender by virtue of this Section.
11.9 Expenses.
(a) All out-of-pocket costs and out-of-pocket expenses incurred by Agent
and not reimbursed on demand by Borrowers, in connection with the analysis,
negotiation, preparation, consummation, creation, amendment, administration,
termination, work-out, forbearance and enforcement of the Loans (including,
without limitation, audit expenses, counsel, consultant and expert fees and
expenditures to protect, preserve and defend Agent's and each Lender's rights
and interest under this Agreement and under the other Loan Documents) shall be
shared and paid on demand by Lenders pro rata based on their applicable Pro Rata
Percentage.
(b) Agent shall have the right to deduct, from amounts to be paid by Agent
to any Lender hereunder, any amount owing to Agent by such Lender by virtue of
this Section.
11.10 No Reliance. By execution of or joining in this Agreement, each
Lender acknowledges that it has entered into this Agreement and the other Loan
Documents solely upon its own independent investigation and is not relying upon
any information supplied by or any representations made by Agent. Each Lender
shall continue to make its own analysis and evaluation of Borrowers. Agent makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of Borrowers, or any Account Debtor of Borrowers; the
accuracy, sufficiency or currency of any information concerning the financial
condition, prospects or results of operations of Borrowers; or the sufficiency,
authenticity, legal effect, validity or enforceability of this Agreement or the
other Loan Documents. Agent assumes no responsibility or liability with respect
to the collectability of the Obligations or the performance by Borrowers of any
obligation under this Agreement or the Loan Documents.
11.11 Reporting. During the term of this Agreement, Agent will (to the
extent received by Agent) promptly furnish each Lender with (i) copies of all
notices, financial statements, borrowing base certificates and supporting
documentation of Borrowers required to be delivered or obtained hereunder and
such other financial statements and reports and (ii) other information in
Agent's possession as any Lender may reasonably request; provided however, that
Agent will not be liable to any Lender for Agent's failure to do so unless such
failure constitutes gross
53
negligence or willful misconduct or repeated failure to comply with this
provision after repeated requests by Lender. Agent will immediately notify
Lenders when it receives actual knowledge of any Event of Default under the Loan
Documents.
11.12 Removal of Agent. Agent may resign at any time upon giving thirty
(30) days prior written notice thereof to Lenders and Borrowing Agent. Agent may
be removed as Agent hereunder upon the written consent of all Lenders exclusive
of Agent upon the following: (i) willful misconduct in the performance of
Agent's duties or responsibilities under this Agreement as finally determined by
a court of competent jurisdiction; or (ii) if a receiver, trustee or conservator
is appointed for Agent or any state or federal regulatory authority assumes
management or control of Agent or if, under applicable law, the administrative
or discretionary duties and responsibilities of Agent hereunder become
controlled by or subject to the approval of any state or federal regulatory
authority. Upon any resignation or permitted removal of Agent, Lenders shall
have the right to appoint a successor Agent by majority vote of the Lenders
(based upon the Pro Rata Percentages of the Lenders). Upon the acceptance of the
appointment as a successor Agent hereunder by such successor Agent, such
successor Agent shall thereupon succeed to and become vested with all rights,
powers, obligations and duties of the retiring Agent and the retiring Agent
shall be discharged from its duties and obligations hereunder.
11.13 Action on Instructions of Lenders. With respect to any provision of
this Agreement, or any issue arising thereunder, concerning which Agent is
authorized to act or withhold action by direction of Lenders (or, if applicable,
Majority Lenders), Agent shall in all cases be fully protected in so acting, or
in so refraining from acting, hereunder in accordance with written instructions
signed by Lenders (or, if applicable, Majority Lenders). Such instructions and
any action taken or failure to act pursuant thereto shall be binding on all
Lenders and on all holders of the Notes.
11.14 Several Obligations. The obligation of each Lender is several, and
neither Agent nor any other Lender shall be responsible for the obligation and
commitment of any other Lender.
11.15 Consent of Lenders.
(a) Except as expressly provided herein, Agent shall have the sole and
exclusive right to service, administer and monitor the Loans and the Loan
Documents, including, without limitation, the right to exercise all rights,
remedies, privileges and options under this Agreement and under the other Loan
Documents, including, without limitation, the credit judgment with respect to
the making of Loans and the determination as to the basis on which and extent to
which Loans may be made and, upon consultation with Issuer or its Affiliate (as
applicable), the determination as to whether draws should be honored for Letters
of Credit. To the extent reasonably practicable under the circumstances, without
impairing (in Agent's judgment) the Lenders' rights and interests concerning the
Borrowers or the Collateral, Agent shall give notice to and shall consult with
Lenders prior to enforcing, or taking any action to collect, any and all of the
Obligations of Borrowers or any other Person under the Loan Documents or
acquiring any or all of the Collateral (title to any such Collateral being held
for the
54
benefit of the Lenders according to this Agreement). Agent may exercise such
rights directly or by employing others to operate, manage, preserve, protect and
dispose of such Collateral.
(b) Notwithstanding anything to the contrary contained in subsection
11.15(a) above, Agent shall not without the prior written consent of all
Lenders: (i) extend any payment date under the Notes or this Agreement or the
Revolving Credit Maturity Date, (ii) reduce any interest rate applicable to any
of the Loans, any fee payable to Lenders hereunder or any fee for any Letter of
Credit or LC Guaranty, (iii) increase the Total Revolving Credit Facility, (iv)
waive any Event of Default under subsection 10.1.1, (v) compromise or settle all
or a portion of the Obligations, (vi) release any Borrower or Subsidiary
Guarantor or any other Person liable in any way on account of the Obligations
except in connection with termination of the Revolving Credit Facility, and full
payment and satisfaction of all Obligations (including, without limitation,
obligations of Borrower under the Revolving Credit Note), except that (x) Agent
may release any Subsidiary Guarantor from its liabilities under the Subsidiary
Guaranty and/or any Subsidiary Guarantor Pledge Agreement if such release is
required under the provision thereof, and (y) if all of the stock of any
Borrower or Subsidiary Guarantor is sold in a transaction permitted by
subsection 8.2.9(iii), Agent shall release such Borrower or Subsidiary Guarantor
from its obligations hereunder and under any of the other Loan Documents upon
request of Borrowers, (vii) amend the definition of Borrowing Base, Eligible
Accounts or Majority Lenders, (viii) amend subsection 7.1.26, subsection
8.3.4(i) of Schedule 8.3 or this subsection 11.15(b), or (ix) modify the
permitted use of proceeds, provided that, Agent may, in its sole discretion and
without the consent of any Lenders, release insurance proceeds collected under
subsection 6.1.2 to Borrowers to permit the repair, reconstruction or
replacement of the loss or damage to Collateral. To the extent applicable, upon
receipt of written consent of all Lenders with respect to any of the foregoing,
Agent shall act in accordance therewith.
(c) Notwithstanding anything to the contrary contained in subsection
11.15(a) above, and subject to any applicable limitation set forth in subsection
11.15(b) above, Agent shall not, without the prior written consent of Majority
Lenders: (i) waive any Event of Default (other than an Event of Default under
subsection 10.1.1 which is subject to clause (iv) of subsection 11.15(b) above),
provided that, Agent may, in its discretion at any time, and without the consent
of any other Lender, extend the time for delivery of (x) any financial
statements or other financial reporting or projections under subsections 8.1.8
or 8.1.5 for up to an additional thirty (30) days and (y) any Borrowing Base
Certificate under subsection 8.1.6 for up to an additional ten (10) days; (ii)
consent to any Borrower's taking any action which, if taken, would constitute an
Event of Default under this Agreement or under any of the other Loan Documents;
(iii) amend or modify or agree to an amendment or modification of any provision
of this Agreement; or (iv) release Collateral in excess of Five Hundred Thousand
Dollars ($500,000.00) in the aggregate in any fiscal year. To the extent
applicable, upon receipt of written consent of Majority Lenders with respect to
any of the foregoing, Agent shall act in accordance therewith.
(d) After an acceleration of the Obligations, Agent shall have the sole and
exclusive right, after consultation (to the extent reasonably practicable under
the circumstances) with all Lenders and, unless otherwise directed by Majority
Lenders, to exercise or refrain from exercising any and all right, remedies,
privileges and options under this Agreement or the other Loan Documents and
available at law or in equity to protect the rights of
55
Agent and Lenders and collect the Obligations, including, without limitation,
instituting and pursuing all legal actions against Borrowers or to collect the
Obligations, or defending any and all actions brought by Borrowers or other
Person; or incurring expenses or otherwise making expenditures to protect the
Collateral, the Loans or Agent's or any Lenders' rights or remedies.
(e) To the extent Agent is required to obtain or otherwise elects to seek
the consent of Lenders to an action Agent desires to take, if any Lender fails
to notify Agent, in writing, of its consent or dissent to any request of Agent
hereunder within ten (10) Business Days of such Lender's receipt of such
request, such Lender shall be deemed to have given its consent thereto.
(f) Notwithstanding any other provision of this Section 11.15 and without
impairing Agent's discretionary rights under Section 10, Agent shall have the
right (in its sole discretion) to permit to exist Overadvances to be outstanding
as of any date up to an aggregate amount equal to the difference between
eighty-five percent (85%) of the net Eligible Accounts outstanding at such date
and eighty percent (80%) of the net Eligible Accounts outstanding at such date
without right of disapproval by or consent of any Lenders, and be entitled in
its sole discretion to permit Borrowers a period not to exceed ninety (90) days
to repay or remove such Fleet Capital Corporation Overadvance; provided that,
notwithstanding anything to the contrary contained in the foregoing or otherwise
in this ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Agreement, Overadvances may not be outstanding
on more than ninety (90) days in the aggregate (regardless of whether ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ such days are consecutive or not) during any one (1) fiscal year of
Borrowers . Notwithstanding the foregoing, Attention: Loan Administration
Manager Agent shall not grant any request for an Overadvance to the extent that
the aggregate amount of all Loans (after Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ giving
effect to such requested Overadvance) would exceed the Total Revolving Credit
Facility.
11.16 Participations and Assignments. Each Borrower hereby acknowledges and
agrees that any Lender may at any time subject to the prior written consent of
Majority Lenders: (a) grant participations in up to forty-nine percent (49%) of
its Pro Rata Share of the Loans and of its right, title and interest therein or
in or to this Agreement (collectively, "Participations") to any other lending
office of such Lender or to any Participating Lender; provided, however, that:
(i) all amounts payable by Borrowers to each Lender hereunder shall be
determined as if such Lender had not granted such Participation; and (ii) any
agreement pursuant to which any Lender may grant a Participation: (A) shall
provide that such Lender shall retain the sole right and responsibility to
enforce the obligations of Borrowers hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provisions of
this Agreement; (B) such participation agreement may provide that such Lender
will not agree to any modification, amendment or waiver of this Agreement
without the consent of the Participating Lender if such amendment, modification
or waiver would reduce the principal of or rate of interest on the Loans,
increase the amount of the Total Revolving Credit Facility, or postpone the date
fixed for any scheduled payment of principal of or interest on the Loans; and
(C) shall not relieve such Lender from its obligations, which shall remain
absolute, to (subject to the terms and conditions hereof) make Loans hereunder;
and (b) assign, pursuant to a written assignment and acceptance in form and
substance satisfactory to Agent (the "Assignment") all or any percent of its Pro
Rata Share of the Loans, or any right, title and interest therein or in and to
this Agreement to any financial institution so long as (i) after any such
assignment occurs, the Pro Rata Share of each Lender under this Agreement equals
at least Five Million Dollars
56
($5,000,000.00), (ii) Agent and (if no Event of Default is outstanding)
Borrowers consent to such assignment in writing, which consent shall not be
unreasonably withheld or delayed, and (iii) Agent receives an assignment fee
from the assigning Lender (not reimbursable by or chargeable to Borrowers) of
Three Hundred Five Hundred Dollars ($3,500.00). Upon the execution by the
assignor and assignee of the Assignment, and delivery to Agent of the Assignment
for acceptance, the assigning Lender shall, to the extent provided in the
Assignment, be released from its obligations under this Agreement and the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment have the rights and obligations of a Lender hereunder. All
Participations and assignments hereunder shall be of all of the Loans in the
same proportion as is the Pro Rata Percentage of all Loans of the Lender making
the assignment or granting the Participation. Each Borrower agrees that it will
use its best efforts to assist and cooperate with Agent in any manner reasonably
requested by Agent to effect the sale of participations in or assignments
pursuant to this Section 11.16, including, without limitation, assisting in the
preparation of appropriate disclosure documents. Each Borrower further agrees
that Agent may disclose credit information regarding such Borrower to any
potential participant or assignee. Notwithstanding anything to the contrary
contained in this Agreement, each Lender shall have the right, without the
consent of Borrowers or Agent, to (x) assign as security all or part of its
rights under this Agreement and/or in the Loans to any Federal Reserve Bank and
(y) assign all or any part of its rights and obligations under this Agreement
and/or in the Loans to any of its Affiliates.
11.17 Borrowers' Consent. Any amendment to Section 11 (other than Section
11.16) of this Agreement shall not require Borrowers' consent.
11.18 Security Interest of Lender. To the extent any Lender obtains a Lien
upon or security interest in any of the Collateral in support of any Obligation
of Borrowers, or any of them, that does not arise under this Agreement or any of
the Loan Documents (other than a purchase money security interest or a
Capitalized Lease Obligation, the incurrence and existence of which is otherwise
permitted under this Agreement), such Lien and security interest shall be
subordinate in priority to the Lien upon and security interest in the Collateral
of Agent, held for the ratable benefit of Lenders.
SECTION 12. MISCELLANEOUS
12.1 Power of Attorney. Subject to and consistent with Medicare and
Medicaid regulations, each Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such
Borrower's true and lawful attorney (and agent-in-fact) for the purposes of this
Agreement and Agent, or Agent's agent, may, without notice to such Borrower, and
in either such Borrower's or Agent's name, but at the cost and expense of
Borrowers:
12.1.1 Agent or Agent's agent, in its sole discretion, may for the purpose
of deposit, endorse such Borrower's name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Agent or any Lender or under
Agent's or any Lender's control.
57
12.1.2 At such time or times upon the occurrence and during the continuance
of an Event of Default as Agent, or Agent's agent, in its sole discretion, may
determine: (i) demand payment of the Accounts from the Account Debtors, enforce
payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of such Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release the Accounts or other Collateral or any legal proceedings brought to
collect any of the Accounts or other Collateral; (iii) sell or assign any of the
Accounts and other Collateral upon such terms, for such amounts and at such time
or times as Agent deems advisable; (iv) take control, in any manner, of any item
of payment or proceeds relating to any Collateral; (v) prepare, file and sign
such Borrower's name to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or satisfaction
of lien or similar document in connection with any of the Collateral; (vi)
subject to any applicable confidentiality restrictions, receive, open and
dispose of all mail addressed to such Borrower and to notify postal authorities
to change the address for delivery thereof to such address as Agent may
designate; (vii) endorse the name of such Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of such
Borrower upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use such Borrower's stationery and sign
the name of such Borrower to verifications of the Accounts and notices thereof
to Account Debtors; (x) subject to any applicable confidentiality restrictions,
use the information recorded on or contained in any data processing equipment
and computer hardware and software relating to the Accounts, Inventory,
Equipment and any other Collateral; (xi) make and adjust claims under policies
of insurance; and (xii) do all other acts and things necessary, in Agent's
determination, to fulfill such Borrower's obligations under this Agreement.
12.2 Indemnity. Borrowers hereby agrees to indemnify Agent and each Lender
and each of their Affiliates, and the officers, directors, employees, agents and
advisors of each of the foregoing (each an "Indemnified Party") and hold each
Indemnified Party harmless from and against any claims, expenses, liability,
loss, damage, suit, action or proceeding ever suffered or incurred by or
asserted or awarded against any Indemnified Party (including reasonable
attorneys fees and legal expenses) as the result of any Borrower's failure to
observe, perform or discharge such Borrower's duties hereunder except to the
extent resulting from or relating to Agent's or any Lender's gross negligence or
willful misconduct. In addition, Borrowers shall defend Agent and each Lender
against and hold Agent and each Lender harmless from all claims of any Person
with respect to the Collateral except to the extent resulting from or relating
to Agent's or any Lender's gross negligence or willful misconduct. Without
limiting the generality of the foregoing, these indemnities shall extend to any
claims asserted against Agent and any Lender by any Person under any
Environmental Laws or similar laws by reason of any Borrower's or any other
Person's failure to comply with laws applicable to solid or hazardous waste
materials or other toxic substances. Notwithstanding any contrary provision in
this Agreement, the obligation of Borrowers under this Section 12.2 shall
survive the payment in full of the Obligations and the termination of this
Agreement.
12.3 Modification of Agreement; Sale of Interest. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Borrowers, Agent
58
and the Lenders required hereunder. No Borrower may sell, assign or transfer any
interest in this Agreement, any of the other Loan Documents, or any of the
Obligations, or any portion thereof, including, without limitation, such
Borrower's rights, title, interests, remedies, powers, and duties hereunder or
thereunder.
12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrowers, Agent and each Lender permitted under
Section 11.16 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
12.7 Execution in Counterparts. This Agreement 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 to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately when delivered against
receipt, one (1) Business Day after deposit with an overnight courier or, in the
case of facsimile notice, when sent, provided that a copy is sent by overnight
courier or personal delivery immediately thereafter, addressed as follows:
If to Agent or any Lender:
With a copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, Esquire
Facsimile No.: 215-569-5522
If to Borrowers: Gentiva Health Services, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ Long & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No: 404-527-4198
If to Lenders: To the address for each Lender set forth on
Annex I hereto.
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Agent. Any notice provided hereunder to
Borrowing Agent shall be deemed to have been provided to, and shall bind and be
effective against, Borrowers.
12.9 Agent's and Lender's Consent. Whenever Agent's or any Lender's consent
is required to be obtained under this Agreement, any of the Other Agreements or
any of the Security Documents as a condition to any action, inaction, condition
or event, Agent or any Lender shall be authorized to give or withhold such
consent in its sole and absolute discretion (except to the extent expressly
provided otherwise in this Agreement) and to condition its consent upon the
giving of additional collateral security for the Obligations, the payment of
money or any other matter.
12.10 Credit Inquiries. Each Borrower hereby authorizes and permits Agent
and each Lender to respond to usual and customary credit inquiries from third
parties concerning such Borrower or any of its Subsidiaries.
12.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
12.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written,
including the prior Loan Agreement.
12.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW
60
YORK; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY
JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE
METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH
COLLATERAL AND THE ENFORCEMENT OF AGENT'S OR ANY LENDER'S OTHER REMEDIES IN
RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. REGARDLESS OF ANY
PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER, AGENT
OR ANY LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT
OF NEW YORK, SITTING IN NEW YORK COUNTY, OR, AT AGENT'S OPTION, THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN SUCH BORROWER
AND AGENT AND/OR ANY LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND SUCH BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY THE METHODS AND IN THE MANNER SET FORTH IN SECTION 12.8 HEREOF FOR THE GIVING
OF NOTICE. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY
JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION TO ENFORCE
SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.15 WAIVERS. EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH
EACH LENDER AND AGENT HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY AGENT AND/OR ANY LENDER ON WHICH SUCH BORROWER MAY IN ANY
WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT AND/OR ANY LENDER
MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR
61
CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY
COURT PRIOR TO ALLOWING AGENT AND/OR ANY LENDER TO EXERCISE ANY OF AGENT'S
AND/OR ANY LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT
AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF AND (vi) EXCEPT AS
PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN OR IN ADDITION TO
ACTUAL DAMAGES (WHICH EACH LENDER AND AGENT HEREBY ALSO WAIVES). EACH BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND
EACH LENDER'S ENTERING INTO THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. EACH
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.16 Joint and Several Liability. The liability of each of the Borrowers
hereunder shall be joint and several.
12.17 Release Upon Termination. Upon the termination of this Agreement
pursuant to Section 4.2 hereof and the full, final and indefeasible payment in
cash of all the Obligations hereunder, or any sale or transfer (but not
including any lease transfer) of Collateral by any Borrower or any Subsidiary
permitted by the terms of this Agreement, the Agent shall, upon the request and
at the sole cost and expense of Borrowers, forthwith assign, transfer and
deliver to Borrowers, against receipt and without recourse or warranty by Agent,
(i) all of the Collateral (or in the case of a sale or transfer, such of the
Collateral as is subject to such sale or transfer) that may be in possession of
the Agent and shall not have been sold by Agent in accordance with or otherwise
applied to the Obligations pursuant to the terms hereof, and (ii) with respect
to such Collateral as is not in possession of Agent, proper documents and
instruments (including UCC-3 termination statements or releases) acknowledging
the termination hereof or the release of such Collateral (or, in the case of a
sale or transfer such of the Collateral, as is subject to such sale or
transfer), as the case may be. Notwithstanding anything else herein, Agent shall
retain any Collateral provided to Agent under Section 1.3 for the purpose of
securing any Letter(s) of Credit or LC Guaranties with expiration dates beyond
the last day of the Original Term until such time as such Letter(s) of Credit
and/or LC Guarant(ies) shall have expired.
12.18 Borrowing Agent. Each Borrower hereby irrevocably designates and
appoints Borrowing Agent, in such capacity, to be its attorney and agent-in-fact
with respect to all matters under and pertaining to this Agreement, including
without limitation, in connection with the loan and interest rate request and
designation procedures set forth in this Agreement, and in connection with all
procedures regarding the giving of notice to Borrowers, or any one or more of
them, set forth in this Agreement and to borrow, request Revolving Credit Loans,
sign and endorse notes, and execute and deliver all instruments, documents,
writings and further assurance now or hereafter required hereunder, on behalf of
each such Borrower in connection
62
with this Agreement or any other Loan Document, whether in respect of the
requesting of Revolving Credit Loans and/or Letters of Credit, in respect of the
designations of Revolving Credit Loans as Revolving Credit Base Rate Loans or
LIBOR Rate Loans or the designation of LIBOR Interest Periods for LIBOR Rate
Loans or otherwise, and hereby authorizes Agent to pay over and credit all
proceeds of any Loans hereunder in accordance with the requests and instructions
of Borrowing Agent (including without limitation, instructions to pay such
proceeds to Borrowing Agent or an account maintained and/or controlled by
Borrowing Agent). Agent and Lenders may rely on all communications and
instructions of any kind received from Borrowing Agent as though identical
communications or instructions had been received from each and every Loan Party.
12.19 Payment Dates as Business Days. If any date specified for the payment
of any Obligation (whether principal, interest or otherwise) falls on a date
that is not a Business Day, then such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of interest and fees due hereunder.
12.20 Prior Loan Agreement. For the avoidance of doubt, each Lender, Agent
and each Borrower acknowledges and agrees that the Prior Loan Agreement has been
and shall be deemed to have been terminated immediately prior to the
effectiveness of this Agreement pursuant to Section 9.1, and that this Agreement
shall replace and supercede the Prior Loan Agreement. Notwithstanding anything
to the contrary contained in any of the foregoing or otherwise in this
Agreement, Borrowers, Agent and Lenders agree that all UCC-1 financing
statements filed by Agent against Borrowers in connection or the Prior Loan
Agreement shall be deemed to have been filed also in connection with this
Agreement and shall continue in effect without interruption and that the
priority of Agent's security interest in the Collateral shall continue and
remain unaffected and unchanged.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
[SIGNATURES ON FOLLOWING PAGES]
63
IN WITNESS WHEREOF, this Agreement has been duly executed on the day
and year specified at the beginning of this Agreement.
BORROWERS:
GENTIVA HEALTH SERVICES, INC.
By:______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President of Finance
GENTIVA HEALTH SERVICES HOLDING CORP.
By:______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
BORROWING SUBSIDIARY CORPORATIONS:
---------------------------------
Gentiva CareCentrix, INC.
Gentiva CareCentrix (Area One) Corp.
Gentiva CareCentrix (Area Two) Corp.
Gentiva CareCentrix (Area Three) Corp.
Gentiva Certified HealthCare Corp.
Gentiva Health Services (Certified), Inc.
Gentiva Health Services (USA), Inc.
Gentiva Services of New York, Inc.
New York Healthcare Services, Inc.
OHS Service Corp.
QC-Medi New York, Inc.
Quality Care - USA, Inc.
Quality Managed Care, Inc.
By:______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
itle: Assistant Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
[Borrowers Signature Page to June 2002 Loan Agreement]
AGENT:
-----
FLEET CAPITAL CORPORATION,
as Agent
By:______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
LENDERS:
-------
FLEET CAPITAL CORPORATION,
By:______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
Siemens Financial Services, Inc.
By:______________________________
Name:
Title:
HFG HEALTHCO-4 LLC
By:______________________________
Name:
Title:
[Agent and Lenders Signature Page to June 2002 Loan Agreement]
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of June 13, 2002 by
and among Fleet Capital Corporation, as agent, the financial institutions
identified as "Lenders" on Annex I attached thereto, Gentiva Health Services,
Inc., Gentiva Health Services Holding Corp. and each of the Subsidiary Borrowing
Corporations listed on the signature pages hereto (each a "Borrower," and
collectively "Borrowers"), (a) the terms Certificated Security, Chattel Paper,
Commercial Tort Claims, Control, Deposit Accounts, Document, Equipment,
Electronic Chattel Paper, Financial Asset, Fixture, General Intangible, Goods,
Instrument, Inventory, Investment Property, Health-Care-Insurance Receivables,
Letter-Of-Credit Rights, Payment Intangibles, Proceeds, Security, Security
Entitlement, Software, Supporting Obligation, Tangible Chattel Paper, and
Unidentified Security shall have the respective meanings assigned thereto in the
Code, (b) all terms indicating Collateral having meanings assigned thereto under
the Code shall be deemed to mean such Property whether now owned or hereafter
created or acquired by any Borrower or in which any Borrower now has or
hereafter acquires any interest, and (c) the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of any Account, Chattel Paper, Contract Right or General Intangible,
including without limitation any Obligor.
Accounts - as defined in the Code, provided that, the term "Account" shall
be deemed to specifically include all rights of Borrowers to payment and/or
reimbursement under the federal Medicare program or any state Medicaid program
and all Health-Care-Insurance Receivables.
Accredo - Accredo Health, Incorporated
Adjusted LIBOR Rate - as applicable to any LIBOR Rate Loan, the rate per
annum (rounded upward, if necessary, to the nearest 1/16th of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to such LIBOR Rate Loan which appears on the Telerate
page 3750 as of 11:00 a.m. (London time) on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Rate Loan; provided, however,
if the rate described above does not appear on the Telerate System on any
applicable interest determination date, the Adjusted LIBOR rate shall be the
rate (rounded upwards as described above, if necessary) for deposits in U.S.
dollars for a period substantially equal to the interest period on the Reuters
Page "LIBO" (or such other page as may replace the LIBO Page on that service for
the purpose of displaying such rates), as of 11:00 a.m. (London Time), on the
day that is two (2) London Banking Days prior to the beginning of such interest
period. If both the Telerate and Reuters systems are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such LIBOR Rate Loan which
are offered by four (4) major banks in the London interbank market at
approximately 11:00 a.m. (London time), on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Rate Loan as selected by
Lender. The principal London office of each of the major London Banks so
selected will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two (2) such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to such LIBOR Rate Loan offered by major
banks in New York City at approximately 11:00 a.m. Eastern time, on the day that
is two (2) London Banking Days preceding the first day of such LIBOR Rate Loan.
In the event that Lender is unable to obtain any such quotation as provided
above, it will be determined that the Adjusted LIBOR Rate pursuant to a LIBOR
Rate Loan cannot be determined. In the event that the Board of Governors of the
Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of Bank then for any period during which such Reserve Percentage shall
apply, LIBOR shall be equal to the amount determined above divided by an amount
equal to 1 minus the Reserve Percentage.
Adjusted Net Earnings from Operations - with respect to any fiscal period,
means the net earnings (or net loss) as reflected on the financial statements of
Borrowers supplied to Lender pursuant to subsection 8.1.3 of the Agreement, with
those items listed on Exhibit J added back thereto (to the extent initially
deducted therefrom), but excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of any Borrower accrued prior to the date
it became a Subsidiary;
(iv) earnings of any corporation, substantially all of the assets of which
have been acquired in any manner by any Borrower, realized by such corporation
prior to the date of such acquisition;
(v) net earnings of any business entity (other than a Subsidiary of any
Borrower) in which any Borrower has an ownership interest unless such net
earnings shall actually have been received by such Borrower in the form of cash
distributions;
(vi) any portion of the net earnings of any Subsidiary of any Borrower
which for any reason is unavailable for payment of dividends to any Borrower;
(vii) the earnings of any Person to which any assets of any Borrower have
been sold, transferred or disposed of, or into which any Borrower shall have
been merged, or been a party to any consolidation or other form of
reorganization, prior to the date of such transaction;
(viii) any gain arising from the acquisition of any Securities of any
Borrower; and
(ix) any gain arising from extraordinary or non-recurring items.
ii
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds
25% (or, when used in the definition of Eligible Account, 5%) or more of any
class of the Voting Stock of a Person; or (iii) 25% (or, when used in the
definition of Eligible Account, 5%) or more of the Voting Stock (or in the case
of a Person which is not a corporation, 25% (or, when used in the definition of
Eligible Account, 5%) or more of the equity interest)) of which is beneficially
owned or held by a Person or a Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits and Schedules thereto and this
Appendix A, all as amended, restated, replaced or supplemented from time to
time.
Aggregate Adjusted Availability - an amount equal to the sum of (A) the
Borrowing Base plus (B) Borrowers' unrestricted cash on hand, plus (C) any
Availability Expense Adjustments, less (D) the sum of (i) the amount of all
Loans and the LC Amount as of the Closing Date plus (ii) all sums due and owing
to trade creditors which remain outstanding beyond normal trade terms, or
special terms granted by trade creditors, plus (iii) any reserves against the
Borrowing Base permitted by subsection 1.1.1 hereof, plus (iv) closing payments
and expenses.
Annual Financial Reports - as defined in the last paragraph of subsection
8.1.3 of the Agreement.
Applicable Margin - a percentage equal to, initially, with respect to (i)
the interest rate on any Revolving Credit Base Rate Loan, one and one-quarter
percent (1.25%); per annum and (ii) the interest rate on any Revolving Credit
LIBOR Rate Loan, three and one-quarter percent (3.25%) per annum; (iii) the
amount of the Unused Line Fee, one-half of one percent (0.50%) per annum; and
(iv) the amount of the Letter of Credit Availability Fee, two and one-half
percent (2.50%) per annum provided that such percentage shall be reviewed (and
if applicable adjusted) quarterly on the Pricing Adjustment Date following each
Covenant Reporting Date, beginning with the Covenant Reporting Date on which
Borrowers shall deliver the Annual Financial Reports for Borrowers' fiscal year
2002 and continuing each quarter thereafter on each successive Pricing
Adjustment Date, with such adjustment being based on the Consolidated EBITDA
reported by Borrowers on the respective Annual Financial Reports or Quarterly
Financial Reports as follows:
EBITDA for Relevant Covenant Revolving Credit Revolving Credit LIBOR Unused Line Fee Letter of Credit
Measurement Period Base Rate Loans Rate Loans Availability Fee
------------------------------------------------------------------------------------------------------------------
Greater than $20,000,000.00 1.00% 3.00% 0.375% 2.25%
------------------------------------------------------------------------------------------------------------------
$20,000,000.00 or less 1.25% 3.25% 0.50% 2.50%
------------------------------------------------------------------------------------------------------------------
iii
Such adjustment, if any, shall be effective as of each such Pricing
Adjustment Date until (but not including) the next following Pricing Adjustment
Date (each such period being a "Pricing Adjustment Period"). The Applicable
Margin as determined on each Covenant Reporting Date shall apply to all
Revolving Credit LIBOR Rate Loans for which the LIBOR Interest Period commences
during the corresponding Pricing Adjustment Period, but shall not apply to any
Revolving Credit LIBOR Rate Loan for which the LIBOR Interest Period commenced
prior to such corresponding Pricing Adjustment Period. If Borrowers fail to
deliver any Annual or Quarterly Financial Reports within the time required by
subsection 8.1.3, the Applicable Margin shall be adjusted as of the Pricing
Adjustment Date following the Covenant Reporting Date on which such Annual or
Quarterly Financial Reports were due as though the Consolidated EBITDA of the
Company and its Consolidated Subsidiaries for the relevant Covenant Measurement
Period was less than Twenty Million Dollars ($20,000,000.00), and such
Applicable Margin shall remain in effect until the next following Pricing
Adjustment Date, at which time the Applicable Margin shall be adjusted according
to the provisions hereof.
Availability - the amount of money which Borrowers are entitled to borrow
from time to time as Revolving Credit Loans, such amount being the difference
derived when the sum of (A) (i) the principal amount of all Loans then
outstanding (including any amounts which Agent and/or any Lender may have paid
for the account of Borrowers pursuant to any of the Loan Documents and which
have not been reimbursed by Borrowers), (ii) the LC Amount and (iii) any
reserves established by Agent under subsection 1.1.1, is subtracted from the (B)
Borrowing Base. If the amount outstanding is equal to or greater than the
Borrowing Base, Availability is zero.
Availability Expense Adjustments - any cash payments identified on the
financial budget and projections for the Company and its Consolidated
Subsidiaries previously delivered to Agent and set forth in Exhibit H hereto as
payments to be made subsequent to the Closing Date which were actually made
during the period beginning on the dates of the Commitment Letter among the
Company, Agent and Fleet Securities, Inc. and ending on the Closing Date, as
certified by Borrowing Agent in an Availability Expense Adjustment Certificate.
Availability Expense Adjustment Certificate - A certificate signed by the
Chief Financial Officer of the Company identifying any Availability Expense
Adjustment payments to be included in the calculation of Aggregate Adjustment
Availability, which certificate shall be accompanied by an audit trail for each
such payment satisfactory to Agent in its sole discretion.
Audit Fees - as defined in Section 2.7 hereof.
Bank - Fleet National Bank, N.A., or its successor, or such other bank as
Agent may hereafter designate with the consent of Borrowers, which consent shall
not unreasonably be withheld.
Base Rate - on any day the higher of (a) the rate of interest most recently
announced or quoted by Bank as its prime rate for commercial loans, whether or
not such rate is the lowest rate charged by Bank to its most preferred
borrowers; and, if such prime rate for commercial loans is discontinued by Bank
as a standard, a comparable reference rate designated by Bank as a
iv
substitute therefor shall be the Base Rate and (b) the rate of interest equal to
the Federal Funds Rate plus one-half of one percent (0.50%).
Borrowing Agent - Gentiva Health Services, Inc.
Borrowing Base - as at any date of determination thereof, an amount equal
to the lesser of:
(i) an amount equal to Total Revolving Credit Facility Amount; or
(ii) an amount equal to 80% of the net amount of Eligible Accounts
outstanding at such date; provided, however, that (x) loans against Government
Accounts shall at no time exceed in the aggregate Twenty-Five Million Dollars
($25,000,000.00) and (y) loans against Direct Patient Accounts shall at no time
exceed in the aggregate Five Million Dollars ($5,000,000.00) (such amount
calculated under this clause (ii), as of any date of determination, the "Formula
Amount").For the purposes hereof, the net amount of Eligible Accounts at any
time shall be the face amount of such Eligible Accounts less any and all
returns, rebates, discounts (which may, at Agent's option, be calculated on
shortest terms), credits, allowances or excise taxes of any nature at any time
issued, owing, claimed by Account Debtors, granted, outstanding or payable in
connection with such Accounts at such time.
Borrowing Base Certificate - a certificate by a responsible officer of
Borrowing Agent, substantially in the form of Exhibit C (or another form
acceptable to Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be satisfactory to Agent. All calculations of the Borrowing Base in connection
with the preparation of any Borrowing Base Certificate shall originally be made
by Borrowers and certified to Agent; provided, that Agent shall have the right
to review and adjust, in the exercise of its reasonable credit judgment, any
such calculation after giving notice thereof to the Borrowers, (1) to reflect
its reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance with
this Agreement.
Business Day - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are closed.
Capital Expenditures - expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations, all as determined in
accordance with GAAP, provided that no portion of the consideration paid by any
Borrower in connection with any Permitted Acquisition shall be deemed to be a
Capital Expenditure.
Capitalized Lease Obligation - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
v
CHAMPUS means the Civilian Health and Medical Program of the Uniformed
Service, a part of TRICARE, a medical benefits program supervised by the U.S.
Department of Defense.
Change of Control - if at any time (i) with respect to the Company, any
person (as such term is used in Section 13(d) and Section 14(d)(2) of the
Securities Exchange Act of 1934 as in effect at the date of the Closing) or
related persons constituting a group (as such term is used Rule 13d-5 under the
Securities Exchange Act of 1934 as in effect as of the date of the Closing)
become the "beneficial owners" (as such term is used in Rule 13d-3 of the
Securities Exchange Act of 1934 as in effect on the date of Closing), directly
or indirectly, of more than fifty percent (50%) of the total voting power of the
then outstanding Capital Stock of the Company, or (ii) with respect to any
Borrower or Subsidiary Guarantor other than the Company, such Borrower or
Subsidiary Guarantor shall cease to be a wholly-owned direct or indirect
subsidiary of the Company (except in connection with a disposition of all of the
stock of any such Borrower or Subsidiary Guarantor in accordance with the terms
of subsection 8.2.9(iii)).
Closing Date - the date on which all of the conditions precedent in Section
9 of the Agreement are satisfied.
CMMS- the Center for Medicare and Medicaid Services.
Code - the Uniform Commercial Code as adopted and in force in the State of
New York, as from time to time in effect; provided, however, that if by reason
of mandatory provisions of law, the perfection or effect of perfection or
non-perfection of the security interest in any item or portion of the Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York "Code" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction as from time to time in effect, for the
purposes of provisions hereof relating to such perfection or effect of
perfection or non-perfection.
Collateral - all of the Property and interests in Property granted to
Agent, for the ratable benefit of Lenders, pursuant to Section 5 of the
Agreement, and all other Property and interests in Property in which a security
interest or Lien is now or hereafter is granted to Agent, for the ratable
benefit of Lenders, specifically including pursuant to any Security Documents,
to secure the payment and performance of any of the Obligations.
Collections - means with respect to any Account, all cash collections on
such Account.
Commercial Lockbox - any lockbox and/or deposit account in the name of any
Borrower maintained at the Depository Bank(s) to which collections are sent that
is not a Government Lockbox.
Company - as defined in the Recitals to the Agreement.
Concentration Account(s) - Borrowers' centralized cash management deposit
account(s) maintained at the Depository Bank(s) into which Borrowers' funds and
Proceeds of all Accounts are deposited and/or transferred from the applicable
Lockbox Account(s) and from which, during any Dominion Period, all of Borrowers'
funds on deposit therein will be swept on a daily basis
vi
according to the provisions of subsection 6.2.5. Concentration Account(s) may
also be Lockbox Account(s).
Consolidated - the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.
Consolidated and Consolidating - the consolidation and consolidating in
accordance with GAAP of the accounts or other items as to which such term
applies.
Contract Right - any right of Borrowers to payment under a contract for the
sale or lease of goods or the rendering of services, which right is at the time,
not yet earned by performance.
Control Agreement - as defined in subsection 6.2.5 of the Agreement.
Covenant Measurement Period - as of any Covenant Testing Date, the four (4)
consecutive fiscal quarters then ended.
Covenant Reporting Date - as to each Covenant Measurement Period, the
earlier of (x) the date on which the corresponding set of Borrowers' Annual or
Quarterly Financial Reports are required to be delivered under the provisions of
subsection 8.1.3 or (y) the date each such set of Annual or Quarterly Financial
Reports is actually delivered to Agent by Borrowers.
Covenant Testing Date - the last day of each fiscal quarter (specifically
including the fourth fiscal quarter) of each fiscal year of Borrowers.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Depository Bank - as defined in subsection 6.2.5(i).
Direct Patient Accounts - Accounts on which the Obligor is the Patient.
Direct Patient Accounts shall not include any Account which is a Government
Account or any Account on which the Obligor is an Insurer.
Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Dominion Account - a special account of Agent, for the benefit of Lenders,
established by Borrowers pursuant to the Agreement at Bank, and over which Agent
shall have sole and exclusive access and control for withdrawal purposes at all
times (regardless of whether a Dominion Triggering Event shall have occurred).
Dominion Period - as defined in subsection 6.2.5(i) hereof.
vii
Dominion Triggering Event - as defined in subsection 6.2.5(i) hereof.
Dominion Triggering Notice - as defined in subsection 6.2.5(i) hereof.
EBITDA - for any Covenant Measurement Period, the sum of (i) Adjusted Net
Earnings From Operations for such Covenant Measurement Period plus (ii) the sum
of depreciation, amortization, income tax and Interest Expense for such Covenant
Measurement Period plus (iii) to the extent deducted from the calculation of
Adjusted Net Earnings, an amount equal to any payments made during such Covenant
Measurement Period in relation to the stock option tender offer concerning the
common stock of the Company consummated in connection with the SPS Sale and the
execution of this Agreement plus (iv) for any Covenant Measurement Period which
includes any portion of Borrowers' fiscal year 2002, the sum of (A) up to Two
Hundred Seventeen Million Three Hundred Thousand Dollars ($217,300,000.00) in
FASB goodwill impairment charges actually charged during such Covenant
Measurement Period, (B) up to Fourteen Million Dollars ($14,000,000.00) in cash
transaction expenses related to the SPS Sale and the entering into of this
Agreement (all as more specifically set forth on Exhibit D hereto) actually
charged during such Covenant Measurement Period, (C) up to Ten Million Dollars
($10,000,000.00) in cash restructuring expenses relating to the Restructuring
(all as more specifically set forth on Exhibit E hereto) actually charged during
such Covenant Measurement Period, and (D) up to Eleven Million Dollars
($11,000,000.00) in non-cash restructuring expenses relating to the
Restructuring (all as more specifically set forth on Exhibit F hereto) actually
charged during such Covenant Measurement Period, all determined on a
Consolidated basis for the Company and its Consolidated Subsidiaries in
accordance with GAAP.
Eligible Account - an Account arising in the ordinary course of any
Borrower's business from the sale of goods or rendition of services, and for
which an invoice has been mailed or transmitted to the respective Account Debtor
(or prepared for mailing or transmission to the respective Account Debtor,
provided that such invoice is actually mailed or transmitted within three (3)
Business Days), which Agent, in its sole credit judgment, deems to be an
Eligible Account. Without limiting the generality of the foregoing, no Account
shall be an Eligible Account if:
(i) it is outstanding (a) more than one hundred eighty days (180) past the
date of the invoice for the goods and/or services was issued or (b) more than
one hundred ninety-five (195) days past the date the corresponding goods and/or
services were provided;
(ii) it arises out of a sale made by such Borrower to an Account Debtor who
is an Affiliate of any Borrower or to an Account Debtor controlled by an
Affiliate of any Borrower; or
(iii) fifty percent (50%) or more of the Accounts from the Account Debtor
to all Borrowers are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor to all Borrowers
exceed twenty percent (20%) of the net amount of all Eligible Accounts, to the
extent of such excess; or
viii
(v) the Account is subject to any terms pursuant to which (i) payment by
the Account Debtor is conditional or (ii) the repayment of the Account by the
Account Debtor is subject to any payment arrangement entered into after payment
default by the Account Debtor;
(vi) any covenant, representation or warranty contained in the Agreement
with respect to such Account has been breached; or
(vii) the Account Debtor is also any Borrower's creditor or supplier, but
only to the extent of such Borrower's liabilities or obligations to such
creditor or supplier, or the Account Debtor has disputed liability with respect
to such Account, or the Account Debtor has made any claim with respect to any
other Account due from such Account Debtor to any Borrower, or the Account
otherwise is or may become subject to any right of setoff by the Account Debtor,
but only to the extent of any actual dispute or claim or actual or potential
right of setoff; or
(viii) the Account Debtor has commenced a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or made an assignment
for the benefit of creditors, or a decree or order for relief has been entered
by a court having jurisdiction in the premises in respect of the Account Debtor
in an involuntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other petition or other application for relief under
the federal bankruptcy laws has been filed against the Account Debtor, or if the
Account Debtor has failed, suspended business, ceased to be Solvent, or
consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs;
or
(ix) the Account Debtor is not located in the United States or Canada,
unless the Account is supported by a letter of credit, guaranty or acceptance
terms, in each case acceptable to Agent in its sole discretion; or
(x) it arises from a sale to the Account Debtor on a ▇▇▇▇-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis, provided that, at such time as such sale becomes
final, such Account shall no longer be excluded from Eligible Accounts under
this clause; or
(xi) the Account is not at all times subject to Agent's duly perfected,
first priority Lien and security interest (for the ratable benefit of Lenders)
and no other Lien; or
(xii) the goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such Account have
not been performed by such Borrower and accepted by the Account Debtor or the
Account otherwise does not represent a final sale; or
(xiii) the Account is evidenced by chattel paper or an instrument of any
kind, or has been reduced to judgment; or
(xiv) such Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made in the
ordinary course
ix
of business for prompt payment and which discounts or allowances are reflected
in the calculation of the face value of each invoice related to such Account; or
(xv) it represents finance charges, to such extent.
Environmental Laws - all federal, state and local laws, rules, regulations,
ordinances, programs, permits, guidelines, orders and consent decrees relating
to health, safety and environmental matters.
EOB - as defined in subsection 7.1.26(c)(i) of the Agreement.
ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Existing Letters of Credit - those certain standby letters of credit issued
for the account of one or more of the Borrowers by Bank pursuant to the Prior
Loan Agreement which are listed on Exhibit G hereto.
Federal Funds Rate shall mean, on any day, an interest rate per annum equal
to the weighted average of the rates on overnight Federal Funds transactions
with members of the Federal Reserve System arranged by Federal Funds brokers, 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 that 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 it.
Fixed Charge Coverage Ratio - for any Covenant Testing Period, the ratio of
(i) the sum of (A) EBITDA for such Covenant Measurement Period, minus (B) all
Capital Expenditures made during such Covenant Measurement Period minus (C) all
income taxes paid or due during such Covenant Measurement Period minus (D) all
Distributions paid and accrued during such Covenant Measurement Period divided
by (ii) the sum of (x) the current portion of long term Indebtedness (including
indebtedness under this Agreement) paid or scheduled to be paid during such
Covenant Measurement Period plus (y) the Interest Expense for such Covenant
Measurement Period, all determined on a Consolidated basis for the Company and
its Consolidated Subsidiaries in accordance with GAAP.
▇▇▇▇▇▇▇▇▇▇▇▇ Bond - that certain supersedeas bond executed in connection
with the lawsuit captioned ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ vs. ▇▇▇▇▇▇ Corporation and Olsten
Health Services Corp.
Formula Amount - as defined in the definition of "Borrowing Base".
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
GHS - as defined in the Recitals to the Agreement.
x
Government Accounts - Accounts on which any federal or state governmental
unit or any intermediary for federal or state governmental unit is the Obligor,
including without limitation all Accounts due to any Borrower under the Federal
Medicare program or any state Medicaid program.
Government Authority - any nation or government, government agency or
instrumentality, any state or other political subdivision thereof and any entity
exercising executive legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Government Lockbox - a lockbox and/or deposit account in the name of
Borrower(s) maintained at the Depository Bank(s) to which Collections on all
Government Accounts are sent.
Guarantor - any Person who may now or hereafter guarantee or become surety
for payment or performance of the whole or any part of the Obligations.
HFG - as defined in subsection 8.1.8 hereof.
Home Health Care Business - the home health care services business operated
by Borrowers and their Subsidiaries, including Borrowers' Nursing operating
units, through which Borrowers operate nursing agencies which provide skilled
nursing and therapy services, paraprofessional nursing services and homemaker
services, CareCentrix operating units, through which Borrowers provide
outsourcing services and other nursing services, acute and clinical infusion
therapies and durable medical equipment, Rehab without Walls operating units,
through which Borrowers provide rehabilitation services and the Gentiva Business
Services units, through which Borrowers provide software, billing, management
and consulting services to other home health agencies.
Inactive Subsidiary - each of Chronic Health Management of California;
Quantum Disease Management, Inc.; QHR Southwest Business Trust; QHR Southwest
Holdings Corp.; Skilled Nursing Services, Inc., Care One Health Alternatives,
Inc.; and CCI-ASDS, Inc.
Indebtedness - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person as at the date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has guaranteed,
(iii) all reimbursement obligations in connection with letters of credit or
letter of credit guaranties issued for the account of such Person, and
(iv) in the case of any Borrower (without duplication), the Obligations.
xi
Insurer - any Person which in the ordinary course of its business or
activities agrees to pay for healthcare goods and services received by
individuals, including a commercial insurance company, a non-profit insurance
company (such as a Blue Cross/Blue Shield entity), an employer or union which
self insures for employees or member health insurance and a health maintenance
organization. "Insurer" includes, without limitation, insurance companies
issuing health, personal injury, worker's compensation or other types of
insurance, corporations, hospitals and third party intermediaries but does not
include any individual guarantors or employee benefit plans.
Intellectual Property - all now owned or hereafter acquired: trade secrets,
know-how and other proprietary information; trademarks, internet domain names,
service marks, trade dress, trade names, business names, designs, logos, slogans
(and all translations, adaptations, derivations and combinations of the
foregoing) indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including copyrights for computer programs)
and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible
property embodying the copyrights, unpatented inventions (whether or not
patentable); patent applications and patents; industrial design applications and
registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right
to ▇▇▇ for all past, present and future infringements of any of the foregoing;
all other intellectual property; and all common law and other rights throughout
the world in and to all of the foregoing.
Interest Expense - for any Covenant Measuring Period, all amounts which, in
conformity with GAAP, should be included as interest expense on a Consolidated
statement of operations of the Company and its Consolidated Subsidiaries for
such Covenant Measurement Period, including in any event, without limitation,
interest accrued on all Loans, that portion of any Capitalized Lease Obligations
attributable to interest expense in accordance with GAAP, debt issuance costs
(excluding any debt issuance costs incurred on or prior to the date hereof with
respect to the Loans) and capitalized interest accrued during such period, all
commissions, discounts and other fees and charges accrued with respect to
letters of credit (including Letters of Credit and LC Guaranties) and bankers'
acceptance financing and net costs under interest rate protection agreements
(including amortization of such costs), all as determined on a Consolidated
basis for the Company and its Consolidated Subsidiaries for such Covenant
Measurement Period in accordance with GAAP.
Issuer - Fleet National Bank, N.A., in its capacity as issuer of letters of
credit hereunder.
JCAHO - the Joint Commission for Accreditation of Healthcare Organizations,
a nationally recognized organization providing accreditations to hospitals and
other healthcare facilities, or any successor entity charged with performing its
functions.
xii
LC Amount - at any time, the aggregate undrawn face amount of all Letters
of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Issuer shall guaranty the
payment or performance by any Borrower of its reimbursement obligation under any
letter of credit.
Lenders - as defined in the Recitals hereto.
Letter of Credit - any letter of credit issued by Issuer for the account of
Borrowers.
Letter of Credit Administration Fees - as defined in Section 2.4 hereof.
Letter of Credit Availability Fee - as defined in Section 2.4 hereof.
LIBOR Interest Period - as applicable to any LIBOR Rate Loan, a period
commencing on the date a LIBOR Rate Loan is made, and ending on the date which
is one (1) month, two (2) months, three (3) months, or six (6) months later, as
may then be requested by Borrowing Agent; provided that (i) any LIBOR Interest
Period which would otherwise end on a day which is not a Business Day shall end
in the next preceding or succeeding Business Day as is Agent's custom in the
market to which such LIBOR Rate Loan relates; (ii) there remains a minimum of
one (1) month, two (2) months, three (3) months or six (6) months (depending
upon which LIBOR Interest Period Borrowing Agent selects) in the Original Term;
and (iii) all LIBOR Interest Periods of the same duration which commence on the
same date shall end on the same date.
LIBOR Rate Loans - collectively, all Revolving Credit LIBOR Rate Loans.
Lien - any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on
common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, any Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
Loan Account - the loan account established on the books of Agent pursuant
to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Subsidiary Guaranty and the Security
Documents and any and all other instruments or documents executed and/or
delivered in connection therewith.
Loans - collectively, all loans and advances of any kind made by Agent or
any Lender pursuant to the Agreement, including all Revolving Credit Loans.
Lockbox Accounts - all Commercial Lockboxes and Government Lockboxes.
xiii
London Business Day - any Business Day on which commercial banks in London,
England are open for business.
Majority Lenders - as of any date, Lenders holding Pro Rata Percentages
aggregating at least fifty-one percent (51%), provided that if any one Lender
has a Pro Rata Percentage of fifty-one percent (51%) or more, "Required Lenders"
shall mean such Lender and at least one other Lender (unless such Lender holds a
Pro Rata Percentage of one hundred percent (100%)).
Material Adverse Effect - any specified event, condition or occurrence as
to any Borrower or any of its Subsidiaries which, individually or in the
aggregate with any other such event, condition or occurrence, and whether
through an effect on such Borrower's or Subsidiary's business, Property, profits
or condition (financial or otherwise) or otherwise, that could reasonably be
expected to materially and adversely effect (i) the financial condition,
business or Properties of the Company and its Subsidiaries taken as a whole,(ii)
the ability of Borrowers and Subsidiary Guarantors taken as a whole to perform
under the Loan Documents, or (iii) the rights of Agent and Lenders under the
Loan Agreement or the value of the Collateral taken as a whole or the perfection
or priority of Agent's security interest with respect to any material portion of
the Collateral.
Material Payor - as of any date, an Obligor whose Accounts with Borrowers
constitute more than twenty-five percent (25%) of all Accounts of all Borrowers
combined over the preceding twelve (12) month period.
Medicare Act - Subchapter XVIII of the Social Security Act (42 USC Ch. 7).
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to any Borrower; (ii) Indebtedness, whether or not in any such
case arising from the lending by any Person of money to any Borrower, (A) which
is represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of any Borrower under any
guaranty of obligations of another Person that would constitute Indebtedness for
Money Borrowed under clauses (i) through (iii) hereof, if owed directly by such
Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.
Net Available Proceeds - means the (x) aggregate amount of insurance,
condemnation awards and other compensation received by Borrowers in the event
that any of the Collateral is lost or destroyed or taken by condemnation or (y)
aggregate amount of cash proceeds received by the Company in connection with any
equity offering (as applicable) net of (i) fees and expenses incurred by
Borrowers in connection with recovery or sale (as applicable) thereof, (ii) in
cases under clause (x), repayment of Indebtedness (other than Indebtedness
hereunder) to the extent secured by a Lien that is permitted hereunder and (iii)
in cases under clause (x), any taxes
xiv
(including income, transfer, stamp, duty, customs, withholding, and any other
taxes) paid or payable by Borrowers in respect of amounts recovered (after
application of all creditors and other offsets).
Net Income - The net income of a Person as such would appear on such
Person's statement of income, prepared in accordance with GAAP.
Notes - any and all promissory notes executed by Borrowers, as of the date
hereof and at any time hereafter, in connection with this Agreement or any of
the Loan Documents.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, including reimbursement obligations for
Letters of Credit and LC Guaranties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from Borrowers to Agent or any
Lender of any kind or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether arising under this Agreement or any
of the other Loan Documents or otherwise, whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or secondary, due
or to become due, now existing or hereafter arising and however acquired.
Obligor - means the party primarily obligated to pay on any Account,
including without limitation, any Insurer and any Government Authority that is
responsible for payment for all or any portion of any Account.
Operating Lease - any lease of real or personal Property (other than leases
the lessee's obligations under which are Capitalized Lease Obligations).
Organizational I.D. Number - with respect to any Borrower, the
organizational identification number, if any, assigned to such Borrower by the
applicable governmental unit or agency of the jurisdiction of incorporation or
organization of such Borrower
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and documents (other
than the Agreement and the Security Documents), heretofore, now or hereafter
executed by any Borrower, any Subsidiary of any Borrower or any other third
party and delivered to Agent or any Lender in respect of the transactions
contemplated by the Agreement.
Overadvance - the amount, if any, by which (A) the sum of the outstanding
principal amount of all Loans plus the LC Amount plus the reserves, if any,
established by Agent pursuant to subsection 1.1.1 exceeds (B) the Borrowing
Base.
Participations - shall have the meaning set forth in Section 11.16 herein.
Participating Lender - each Person who shall be granted the right by any
Lender, pursuant to the terms of this Agreement, to participate in any of the
Loans described in the Agreement and who shall have entered into a participation
agreement in form and substance satisfactory to Agent.
xv
Patient - when used in connection with any Account, the actual party who
received the medical or healthcare related goods and services from any Borrower
which resulted in the creation of the Account, regardless of whether such party
is the Obligor on such Account.
Permitted Acquisition - any acquisition transaction whereby any Borrower
shall acquire all or substantially all of the assets of another Person or shall
acquire all of the capital stock or other equity interests of another Person
and/or merge or consolidate with another Person, provided that (i) the value of
each such acquisition shall not exceed One Million Dollars ($1,000,000.00) (ii)
the aggregate value of all such acquisition transactions which have occurred
since the Closing Date shall not exceed Five Million Dollars ($5,000,000.00) and
(iii) both prior and after giving effect to any such acquisition transaction, no
Default or Event of Default shall exist. For the purposes of this definition,
the value of an acquisition shall be deemed to be an amount equal to the sum of
all cash and the fair market value of all non-cash consideration paid by the
respective Borrower in connection with the acquisition, including cash paid,
indebtedness assumed and the value of any stock of the Company issued in
connection with the acquisition based on the market value of such stock as of
the date of the acquisition. Furthermore, in the case of any acquisition
transaction which involves the acquisition of all of the capital stock or other
equity interests of another Person and/or the merger or consolidation with
another Person, such acquisition transaction will only be deemed to be a
"Permitted Acquisition" if (i) such other Person shall engage solely in the home
health care line(s) or type(s) of business that are substantially similar to the
lines and types of business engaged in by Borrowers on the Closing Date, (ii) in
the case of any transaction involving a merger or consolidation, such Borrower
shall be the surviving entity, and (iii) in the case of any transaction not
involving a merger or consolidation, the acquired Person shall become a party to
this Agreement as a Subsidiary Borrowing Corporation by executing a Joinder
Agreement in form and substance acceptable to Agent and the appropriate Borrower
shall pledge the stock or other equity interests of the acquired Person pursuant
to a Pledge Agreement.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of any
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of any Borrower that is covered by Title IV of ERISA.
Pledge Agreement(s) - those certain Pledge Agreement(s) of even date
herewith executed and delivered by each Borrower which is the owner of the
capital stock or other equity interests of any other Person, pledging such
capital stock or equity interests to Agent, for the ratable benefit of Lenders
to secure the Obligations hereunder.
Pre-Closing Home HealthCare Statements - as defined in subsection 7.1.10(b)
hereof.
xvi
Pre-Closing Financial Statements - the Financial Statements of the Company
and its Consolidated Subsidiaries described in Subsection 7.1.10(a).
Pricing Adjustment Date - as to each Covenant Reporting Date, the first day
of the next calendar month.
Prior Loan Agreement - that certain Loan and Security Agreement dated as of
March 13, 2000 among the Company, GHS, the subsidiary borrowing corporations
named as Borrowers therein, the lending institutions names therein, Agent and
Fleet Boston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc., as it may have been modified and amended.
Projections - Borrowers' forecasted Consolidated (a) balance sheets, (b)
profit and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrowers' historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Pro Rata Percentage - With respect to a Lender, the percentage set forth
next to such Lender's name on Annex I to the Agreement.
Pro Rata Share - With respect to a Lender, the share of the Total Revolving
Credit Facility set forth next to such Lender's name on Annex I to the
Agreement.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within ten (10) days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancing thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.
Quarterly Financial Reports - as defined in the last paragraph of
subsection 8.1.3 of the Agreement.
Regulation D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations, as
amended, and any successor thereto.
Rentals - as defined in subsection 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of ERISA.
xvii
Reserve Percentage - the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against "Euro-currency Liabilities" as
defined in Regulation D.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of any Borrower to the extent
existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in the
ordinary course of business of any Borrower and its Subsidiaries;
(iv) investments in direct obligations of the United States of America, or
any agency thereof or obligations guaranteed by the United States of America,
provided that such obligations mature within one year from the date of
acquisition thereof;
(v) investments in certificates of deposit, time deposits, bankers'
acceptances, eurodollar deposits and repurchase agreements, each maturing within
one year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof having
capital surplus and undivided profits aggregating at least One Hundred Million
Dollars ($100,000,000.00);
(vi) investments in commercial paper given the highest rating by a national
credit rating agency and maturing not more than 270 days from the date of
creation thereof; and
(vii) investments made in connection with any Permitted Acquisition.
Restructuring - the corporate and business operations restructuring of the
Borrowers in connection with and as a result of the SPS Sale.
Revolving Credit Base Rate - a per annum rate equal to the sum of the Base
Rate plus the Applicable Margin.
xviii
Revolving Credit Base Rate Loan - that portion of the Revolving Credit
Loans that bears interest at the Revolving Credit Base Rate.
Revolving Credit Facility - the revolving credit facility established
pursuant to Section 1.1 of the Agreement.
Revolving Credit LIBOR Rate - a per annum rate equal to the sum of the
Adjusted LIBOR Rate plus the Applicable Margin.
Revolving Credit LIBOR Rate Loan - that portion of the Revolving Credit
Loans on which interest accrues at the Revolving Credit LIBOR Rate.
Revolving Credit Loan - a revolving credit Loan made by Lenders to
Borrowers as provided in Section 1.1 of the Agreement.
Revolving Credit Maturity Date - the last day of the Original Term.
Revolving Credit Notes - the secured promissory notes to be executed by
Borrowers on or about the Closing Date in favor of each Lender, each in the
amount of such Lender's Pro Rata Share of the Total Revolving Credit Facility,
to evidence the Revolving Credit Loans, which shall be in form of Exhibit A to
the Agreement, as amended, restated, supplemented or replaced from time to time.
Schedule of Accounts - as defined in subsection 6.2.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
Security Documents - the Trademark Security Agreement(s), the Pledge
Agreement(s), the Subsidiary Guarantor Pledge Agreement(s), the Control
Agreements and all instruments and agreements now or at any time hereafter
securing the whole or any part of the Obligations.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Special Charges - unusual or non-recurring expenses which are reflected in
the Consolidated statements of operations and which are required to be
separately disclosed under GAAP in notes to the Consolidated Financial
Statements of the Company and its Consolidated Subsidiaries.
Specified Officer - ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who will be, upon the consummation of
the SPS Sale, Chief Executive Officer and Chairman of the Board of the Company,
or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, who will be, upon the consummation of the SPS Sale, Chief
Financial Officer and Secretary, the Company or such other officer of the
Company as the Company may hereafter specify in writing to Agent.
SPS Business - the specialty pharmaceutical services business operated by
Borrowers and its Subsidiaries through its network of pharmacies, including the
distribution of drugs and other biological and pharmaceutical products and
professional support, provision of services for individuals with chronic
diseases, administering of medications to patients, marketing and distribution
services for pharmaceutical, biotechnology and medical service firms and
clinical support services for pharmaceutical and biotechnology firms.
xix
SPS Sale - the sale by the Company and its subsidiaries of the business and
assets of the SPS Business to Accredo, which sale shall include the sale of the
stock of two Subsidiaries of the Company, Gentiva Health Services (Infusion),
Inc. and Gentiva Health Services/Quantum Corp. (which is the owner of Quantum
Hotel Resources, Inc. which will also be included in the sale).
SPS Sale Documents - the Asset Purchase Agreement dated January 2, 2002
among Accredo, the Company and certain Subsidiaries of Company and any other
agreements, documents and instruments executed or delivered in connection
therewith.
SPS Sale Consideration - all of the purchase price and other consideration,
whether consisting of cash, stock in Accredo or other received by Borrowers and
their subsidiaries as consideration for the sale of the SPS Business.
Subsidiary - any corporation of which a Person owns, directly or indirectly
through one or more intermediaries, more than fifty percent (50%) of the Voting
Stock at the time of determination; provided however, that for the purpose of
Section 7 only, the term "Subsidiary" shall not include any Inactive Subsidiary.
Subsidiary Borrowing Corporation - any Subsidiary of Gentiva Health
Services Holding Corp. or Gentiva Health Services, Inc. which is a party to this
Agreement as a Borrower.
Subsidiary Guarantor Pledge Agreement(s) - those certain Subsidiary
Guarantor Pledge Agreement(s) of even date herewith executed and delivered by
each Subsidiary Guarantor which is the owner of the capital stock or equity
interests of any other Person, pledging such capital stock or equity interests
to Agent, for the ratable benefit of the Lenders to secure the obligations of
each such Subsidiary Guarantor under the Subsidiary Guaranty.
Subsidiary Guarantors - all of the direct and indirect Subsidiaries of the
Company, but not including any Subsidiary which is a party to this Agreement as
a Borrower or any Inactive Subsidiary.
Subsidiary Guaranty - that certain Subsidiary Guaranty of even date
herewith executed and delivered by each Subsidiary Guarantor guaranteeing the
Obligations of Borrowers under this Agreement.
Tangible Net Worth - at any time, the amount by which the total assets of
the Company and its Consolidated Subsidiaries as determined on a Consolidated
basis and as would be shown on a Consolidated balance sheet for the Company and
its Consolidated Subsidiaries, prepared in accordance with GAAP (excluding
trademarks, copyrights, goodwill, covenants not to compete, deferred closing
costs, leasehold improvements and all other assets which would be determined to
be intangible assets under GAAP) exceed all of the liabilities of the Company
and its Consolidated Subsidiaries as determined on a Consolidated basis as would
be shown on a Consolidated balance sheet for the Company and its Consolidated
Subsidiaries, prepared in accordance with GAAP.
Total Revolving Credit Facility Amount - means, as of any date, Fifty-Five
Million Dollars ($55,000,000.00) minus the amount of any Excess Availability
Blockage then in effect.
xx
Trademark Security Agreement(s) - those certain Trademark Security
Agreement(s) of even date herewith executed and delivered by each Borrower which
is the owner of any trademark Collateral granting a security interest in such
trademark Collateral to Agent, for the ratable benefit of the Lenders, to secure
the Obligations hereunder.
TRICARE - means the medical program for active duty members, qualified
family members, CHAMPUS eligible retirees and their family members and
survivors, of all uniformed services.
Type of Organization - with respect to each Borrower, the kind or type of
entity as which such Borrower is organized, such as a corporation, limited
liability company, etc.
Unused Line Fee - as defined in Section 2.5 of this Agreement.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
xxi
LIST OF EXHIBITS
Exhibit A Revolving Credit Notes
Exhibit B Compliance Certificate
Exhibit C Borrowing Base Certificate
Exhibit D Cash Transaction Expenses
Exhibit E Cash Restructuring Charges
Exhibit F Non-Cash Restructuring Charges
Exhibit G Existing Letters of Credit
Exhibit H Pre-Closing Budget and Projections
Exhibit I Form of HFG Reporting
Exhibit J Adjusted Net Earnings From Operations Add Back
Exhibit 6.1.1 Inventory Locations
Exhibit 6.2.5 Listing of Lockbox Accounts and Concentration Accounts
Exhibit 7.1.1 Jurisdictions in which Authorized to Do Business
Exhibit 7.1.4 Capital Structure of Borrowers
Exhibit 7.1.5 Corporate Names
Exhibit 7.1.6 Each Borrower's and each Subsidiary's Business Locations
Exhibit 7.1.6(a) Prior Business Locations
Exhibit 7.1.8 Account Debtor Proceedings
Exhibit 7.1.13 Surety Obligations
Exhibit 7.1.14 Tax Identification Numbers of Borrowers and Subsidiaries
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.20 Litigation
Exhibit 7.1.22(a) Capitalized Leases
1
Exhibit 7.1.22(b) Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.26(a) Provider Identification Numbers
Exhibit 8.2.4 Affiliate Transactions
Exhibit 8.2.5 Permitted Liens
LIST OF ANNEXES
Annex I Lenders' Pro Rata Shares/Percentages
2
ANNEX I
SCHEDULE OF LENDERS
Lender Percentage Pro Rate Share Pro Rate
1
SCHEDULE 8.3
Financial Covenants
Pursuant to Section 8.3 of this Agreement, each Borrower covenants that,
unless otherwise consented to by Agent and the Majority Lenders in writing, the
Company and its Consolidated Subsidiaries shall maintain on a Consolidated basis
the following financial covenants during the term of the Agreement, and
thereafter for so long as any Obligations are outstanding, provided that, in
calculating each of the following financial covenants for any Covenant
Measurement Period which includes any portion of the time period beginning on
July 1, 2001 and ending of the date of the consummation of the SPS Sale, any
financial results attributable to the SPS Business shall be excluded:
8.3.1 Minimum EBITDA Covenant. The Company and its Consolidated
Subsidiaries shall maintain on a Consolidated basis a minimum EBITDA measured as
of each Covenant Testing Date for the preceding Covenant Measurement Period as
follows:
----------------------- ---------------------------------------------------
Minimum EBITDA Covenant Testing Date
----------------------- ---------------------------------------------------
$2,000,000.00 June 30, 2002
----------------------- ---------------------------------------------------
$7,000,000.00 September 30, 2002
----------------------- ---------------------------------------------------
$15,000,000.00 Each Covenant Testing Date from
December 31, 2002 through September 30, 2003
----------------------- ---------------------------------------------------
$18,000,000.00 Each Covenant Testing Date from December 31, 2003
through September 30, 2004
----------------------- ---------------------------------------------------
$20,000,000.00 December 31, 2004 and each covenant testing Date
thereafter
----------------------- ---------------------------------------------------
provided that, for the purposes of computing the EBITDA of Company and its
Consolidated Subsidiaries for the purposes of this subsection 8.3.1, (x) the
Covenant Measurement Period corresponding to the Covenant Testing Date of June
30, 2002 shall consist of the six (6) months ended as of such date and (y) the
Covenant Measurement Period corresponding to the Covenant Testing Date of
September 30, 2002 shall consist of the nine (9) months ended as of such date.
8.3.2 Minimum Tangible Net Worth. The Company and its Consolidated
Subsidiaries shall maintain at all times on a Consolidated basis a minimum
Tangible Net Worth measured as of each Covenant Testing Date of not less than
One Hundred One Million Six Hundred Thousand Dollars ($101,600,000.00).
8.3.3 Minimum Fixed Charge Coverage Ratio. The Company and its Consolidated
Subsidiaries shall maintain a minimum Fixed Charge Coverage Ratio measured as of
each Covenant Testing Date for the preceding Covenant Measurement Period of not
less than 1.00:1.00. Notwithstanding anything to the contrary contained in the
preceding sentence, (x) the first Covenant Testing Date for the Fixed Charge
Coverage Ratio shall be September 30, 2002
and (y) the required minimum Fixed Charge Coverage Ratio on September 30, 2002
shall be -0.25:1.00, provided that, for the purposes of computing the Fixed
Change Coverage Ratio of Company and its Consolidated Subsidiaries on such date,
the Covenant Measurement Period corresponding to such date shall consist of the
nine (9) months ended as of such date.
8.3.4 Minimum Restricted Cash.
(i) Until such time as the lawsuit captioned ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ vs. Olsten
Health Services Corp. and Olsten Corp. is either reduced to a final and
unappealable judgment and/or the parties to such lawsuit have reached a final
and legally binding settlement agreement, and any and all amounts under any such
judgment and/or settlement have been paid, the Company and its Consolidated
Subsidiaries shall maintain restricted cash in an amount equal to Thirty-Five
Million Dollars ($35,000,000.00).
(ii) Until such time as the Company and its Consolidated Subsidiaries shall
have reached a final and legally binding settlement with CMMS regarding the
interest-free loan provided by CMMS to the Company and/or its Consolidated
Subsidiaries in connection with the transition from the IPS system of payments
under Medicare to the PPS system of payments under Medicare, and any and all
such amounts under such settlement have been paid, the Company and its
Consolidated Subsidiaries shall maintain restricted cash in an amount equal to
Twenty-One Million Dollars ($21,000,000.00).
2
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY.....................................1
1.1 Revolving Credit Loans.......................................1
1.2 Use of Proceeds..............................................2
1.3 Letters of Credit; LC Guaranties.............................2
SECTION 2. INTEREST, FEES AND CHARGES..........................3
2.1 Interest.....................................................3
2.2 Computation of Interest and Fees.............................6
2.3 Commitment Fee...............................................6
2.4 Letter of Credit and LC Guaranty Fees........................6
2.5 Unused Line Fee..............................................7
2.6 Administrative Agent Fee.....................................7
2.7 Inspection, Audit, Examination and Appraisal Expenses........7
2.8 Reimbursement of Expenses....................................7
2.9 Bank Charges.................................................8
2.10 Indemnity re: LIBOR..........................................8
SECTION 3. LOAN ADMINISTRATION.................................9
3.1 Manner of Borrowing Revolving Credit Loans...................9
3.2 Payments....................................................10
3.3 Mandatory Prepayments.......................................11
3.4 Application of Payments and Collections.....................11
i
3.5 All Loans to Constitute One Obligation......................12
3.6 Loan Account................................................12
3.7 Statements of Account.......................................12
SECTION 4. TERM AND TERMINATION...............................12
4.1 Term of Agreement...........................................12
4.2 Termination.................................................12
SECTION 5. SECURITY INTERESTS.................................14
5.1 Security Interest in Collateral.............................14
5.2 Other Collateral............................................15
5.3 Lien Perfection; Further Assurances.........................16
SECTION 6. COLLATERAL ADMINISTRATION..........................16
6.1 General.....................................................16
6.2 Administration of Accounts..................................18
6.3 Administration of Inventory.................................22
6.4 Administration of Equipment.................................22
6.5 Payment of Charges..........................................22
SECTION 7. REPRESENTATIONS AND WARRANTIES.....................22
7.1 General Representations and Warranties......................22
7.2 Continuous Nature of Representations and Warranties.........32
7.3 Survival of Representations and Warranties..................33
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS................33
8.1 Affirmative Covenants.......................................33
ii
8.2 Negative Covenants..........................................37
8.3 Specific Financial Covenants................................42
SECTION 9. CONDITIONS PRECEDENT...............................42
9.1 Conditions Precedent to Effectiveness of Agreement..........42
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT..45
10.1 Events of Default...........................................45
10.2 Acceleration of the Obligations.............................48
10.3 Other Remedies..............................................48
10.4 Remedies Cumulative; No Waiver..............................50
SECTION 11. AGENT..............................................50
11.1 Appointment and Authorization...............................50
11.2 General Immunity............................................50
11.3 Consultation with Counsel...................................51
11.4 Documents...................................................51
11.5 Rights as a Lender..........................................51
11.6 Responsibility of Agent.....................................51
11.7 Collections and Disbursements...............................52
11.8 Indemnification.............................................52
11.9 Expenses....................................................53
11.10 No Reliance.................................................53
11.11 Reporting...................................................53
11.12 Removal of Agent............................................54
11.13 Action on Instructions of Lenders...........................54
iii
11.14 Several Obligations.........................................54
11.15 Consent of Lenders..........................................54
11.16 Participations and Assignments..............................56
11.17 Borrowers' Consent..........................................57
11.18 Security Interest of Lender.................................57
SECTION 12. MISCELLANEOUS......................................57
12.1 Power of Attorney...........................................57
12.2 Indemnity...................................................58
12.3 Modification of Agreement; Sale of Interest.................58
12.4 Severability................................................59
12.5 Successors and Assigns......................................59
12.6 Cumulative Effect; Conflict of Terms........................59
12.7 Execution in Counterparts...................................59
12.8 Notice......................................................59
12.9 Agent's and Lender's Consent................................60
12.10 Credit Inquiries............................................60
12.11 Time of Essence.............................................60
12.12 Entire Agreement............................................60
12.13 Interpretation..............................................60
12.14 GOVERNING LAW; CONSENT TO FORUM.............................60
12.15 WAIVERS 61
12.16 Joint and Several Liability.................................62
12.17 Release Upon Termination....................................62
12.18 Borrowing Agent.............................................62
iv
12.19 Payment Dates as Business Days..............................63
12.20 Prior Loan Agreement........................................63
APPENDIX A.....................................................................i
GENERAL DEFINITIONS............................................................i
v