1
EXHIBIT 10
Credit Agreement by and among
the Company and SunTrust Bank, Nashville, N.A. as agent and lender
dated December 1, 1998
2
CREDIT AGREEMENT
Dated as of December 1, 1998
By and Among
CHILDREN'S COMPREHENSIVE SERVICES, INC.
AND
SUNTRUST BANK, NASHVILLE, N.A.,
AGENT AND AS A LENDER
3
EXHIBITS
--------
Exhibit A: form of Revolving Credit Note
Exhibit B: form of Term Note
Exhibit C form of Assignment and Acceptance Agreement
Exhibit D: form of Subsidiary Guaranty
Exhibit E: form of Notice of Borrowing
Exhibit F: form of Notice of Conversion/Continuation
Exhibit G: Borrower's Certificate
Exhibit H: Opinion of Borrower's Counsel
Exhibit I: form of Compliance Certificate
Exhibit J: form of Subsidiary Guaranty
Exhibit K: form of Subsidiary Security Agreement
SCHEDULES
---------
Schedule 5.1. -
Schedule 5.5. -
Schedule 5.8.(a) -
Schedule 5.8.(b) -
Schedule 5.8.(c) -
Schedule 5.11. -
Schedule 5.13.A -
Schedule 5.13.B -
Schedule 5.15. -
Schedule 5.16. -
Schedule 5.17. -
Schedule 5.18. -
Schedule 5.20. -
Schedule 5.21. -
4
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of this 1st day of
December, 1998 by and between CHILDREN'S COMPREHENSIVE SERVICES, INC., a
Tennessee corporation (the "Borrower"), SUNTRUST BANK, NASHVILLE, N.A.
("SunTrust"), and such other banks and lending institutions identified on the
signature page hereof, all of which are referred to collectively herein as the
"Lenders"), and SUNTRUST BANK, NASHVILLE, N.A., in its capacity as agent for
Lenders and each successive agent for such Lenders as may be appointed from time
to time pursuant to Article 9. herein (the "Agent").
RECITALS:
1. The Borrower desires that the Lenders extend the Borrower credit
pursuant to the terms of this Credit Agreement.
2. The Lenders are willing to extend the Borrower credit pursuant to
the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties agree as follows:
ARTICLE I DEFINITIONS; CONSTRUCTION
SECTION 1.1. DEFINITIONS.
In addition to the other terms defined herein, the following terms used
herein shall have the meanings herein specified (to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquisition" means the acquisition by any Consolidated Company of any
of the following: (a) the controlling interest in any Person, (b) a Consolidated
Company, or (c) substantially all of the Property of any Person.
"Adjusted LIBO Rate" shall mean with respect to each Interest Period
for a Eurodollar Advance, the rate obtained by dividing (A) LIBO for such
Interest Period by (B) a percentage equal to 1 minus the then stated maximum
rate (stated as a decimal) of all reserves requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or against any successor
category of liabilities as defined in Regulation D).
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under the Revolving Loans, which Advances shall be made
or outstanding as Base Rate Advances or Eurodollar Advances, as the case may be.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, whether
through
5
the ownership of voting securities, by contract or otherwise. For purposes of
this definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by", and "under common control with") as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person.
"Agent" shall mean SunTrust, and any successor agent appointed pursuant
to Section 9.9. hereof.
"Agreement" shall mean this Credit Agreement, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"Applicable Commitment Percentage" shall mean, for each Lender, a
fraction, the numerator of which shall be the amount of such Lender's Commitment
and the denominator of which shall be the aggregate amount of the Commitments of
all the Lenders, which Applicable Commitment Percentage for each Lender as of
the Closing Date is as set forth on the signature pages hereof under the caption
"Applicable Commitment Percentage".
"Applicable Margin" shall mean the number of basis points per annum
determined in accordance with the table set forth below based on the fiscal
quarter-end ratio of Borrower's Funded Debt to EBITDA:
--------------------------------------------------------------------------- ------------------------------------
TIER I TIER II TIER III TIER IV
----------------------------------------------------------------------------------------------------------------
Ratio of Funded <1.25 to 1.0 > 1.25 to 1.0 and < > 2.00 to 1.0 and > 2.75 to 1.0
Debt to EBITDA - - -
2.00 to 1.0 < 2.75 to 1.0
----------------------------------------------------------------------------------------------------------------
Applicable 20 basis points 25 basis points per 30 basis points 37.5 basis points
Margin for per annum annum per annum per annum
Facility Fee
----------------------------------------------------------------------------------------------------------------
Applicable 75 basis points 100 basis points 137.5 basis points 175 basis points
Margin for per annum per annum per annum per annum
Eurodollar
Advances
-----------------------------------------------------------------------------------------------------------------
Applicable 0 basis points 0 basis points per 50 basis points 50 basis points
Margin for Base per annum annum per annum per annum
Rate Advances
-----------------------------------------------------------------------------------------------------------------
"Application for Issuance of a Standby Letter of Credit" shall mean any
application or agreement executed by Borrower in connection with the issuance by
Agent of any Letter of Credit.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an Eligible Assignee in accordance with the terms
of this Agreement and substantially in the form of Exhibit C.
2
6
"Available Revolving Credit Commitment" shall mean at any time that
amount equal to (A) Total Commitments less (B) the sum of (i) all outstanding
Revolving Loans, and (ii) the face amount of all outstanding Letters of Credit.
"Bankruptcy Code" shall mean the Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C. ss. 101 et seq.) and any successor
statute.
"Base Rate Advance" shall mean an Advance made or outstanding as a
Revolving Loan, bearing interest based on the Base Rate, plus the Applicable
Margin.
"Base Rate" shall mean (with any change in the Base Rate to be
effective as of the date of change of either of the following rates) the higher
of (i) the rate which the Agent publicly announces from time to time as its
"base" or "prime" lending rate, as the case may be, for Dollar loans in the
United States, as in effect from time to time, and (ii) the Federal Funds Rate,
as in effect from time to time, plus one-half of one percent (0.50%) per annum.
The Agent's "base" or "prime" lending rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to customers; the
Agent may make commercial loans or other loans at rates of interest at, above or
below the Agent's "base" or "prime" lending rate. The Base Rate is determined
daily. Any change in such rates to be effective as of the date of any change in
such rate.
"Borrower" shall mean Children's Comprehensive Services, Inc., a
Tennessee corporation, its successors and permitted assigns.
"Borrowing" shall mean the borrowing by Borrower under the Revolving
Credit Notes as a Base Rate Advance or a Eurodollar Advance, or the continuation
or conversion of an existing Borrowing or Borrowings in whole or in part.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in Nashville,
Tennessee and, if the applicable Business Day relates to Eurodollar Advances,
excluding any day on which commercial banks are closed or required to be closed
for domestic and international business, including dealings in Dollar deposits
on the London Interbank Market.
"Capital Lease" shall mean, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on a balance
sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder which would, in
accordance with GAAP, appear on a balance sheet of such lessee in respect of
such Capital Lease.
"California Acquisition" shall mean the acquisition by Borrower of 100%
of the outstanding common stock of Somerset Educational Services, the
acquisition by Borrower of certain assets of Behavioral Medicine Professional
Services, Inc., the acquisition by Borrower of certain assets of BMB Enterprises
and the acquisition by
3
7
Borrower of certain assets of B & B Leasing, for a total consideration of
$10,500,000, consisting of $8,125,000 in cash and a $2,375,000 note secured by a
first mortgage on certain real estate being acquired by Borrower in the
California Acquisition.
"Closing Date" shall mean December 1, 1998 or such later date on which
the initial Loans are made and the conditions set forth in Section 4.1. and 4.2.
are satisfied or waived.
"Collateral" shall mean all of the presently existing and hereafter
arising tangible and intangible assets of Borrower, Guarantor, or any Subsidiary
Guarantor, including, but not limited to: accounts, accounts receivable,
inventory, furniture, equipment, intellectual property, chattel paper, general
intangibles, leasehold interests (including all rights under capitalized leases
assumed in Acquisitions), contract rights, and licenses, but excluding real
property.
"Commitment" shall mean, for any Lender at any time its Revolving
Credit Commitment.
"Consolidated Companies" shall mean, collectively, Borrower, the
Guarantor, the Subsidiaries, and any Person the financial statements of which
are consolidated with the Borrower or any Subsidiary.
"Consolidated EBITDA" shall mean for any fiscal period of Borrower, an
amount equal to the sum of (A) Consolidated EBIT, plus (B) depreciation and
amortization expenses to the extent deducted in determining such Consolidated
EBIT as determined on a consolidated basis in accordance with GAAP, plus (C) the
historical consolidated EBITDA of any Person adjusted for known and detailed
expense cuts acceptable to Agent for such period which accrued prior to the date
such Person became a Consolidated Company or was merged into and consolidated
with the Borrower or any other Consolidated Company or such Person's assets were
acquired by the Borrower or any other Consolidated Company (and the underlying
records of such Person shall be audited to the extent the Borrower is required
pursuant to Regulation S-X of the SEC to present audited financial information
for such Person in documents filed by it with the SEC). If audited financial
records are not available for acquired companies, pro-forma financial statements
(subject to review and acceptance by the Agent) will be substituted.
"Consolidated EBIT" shall mean for any fiscal period, an amount equal
to (A) the sum of Consolidated Net Income (Loss) for such period, plus, (B) to
the extent deducted in determining Consolidated Net Income (Loss), (i)
Consolidated Interest Expense for such period, and (ii) provisions for taxes
(whether paid or deferred) of the Borrower and the Consolidated Companies for
such period. The calculation of EBIT shall be made without giving effect to any
extraordinary gains or losses, any other non-cash charges or gains or losses
from sales of assets other than inventory sold in the ordinary course of
business, determined for the Borrower and the Consolidated Companies on a
consolidated basis in accordance with GAAP.
4
8
"Consolidated Funded Debt" shall mean the Funded Debt of the
Consolidated Companies, on a consolidated basis.
"Consolidated Funded Debt to Total Capitalization Ratio" shall mean
that ratio determined in accordance with Section 7.1.(c) herein.
"Consolidated Interest Expense" shall mean, for any fiscal period of
Borrower, total interest expense (including without limitation, interest expense
attributable to Capital Leases in accordance with GAAP and any program costs
incurred by the Consolidated Companies in connection with sales of accounts
receivable pursuant to a securitization program) of the Consolidated Companies
on a consolidated basis.
"Consolidated Net Income (Loss)" shall mean for any fiscal period of
Borrower, the net income (or loss) of the Consolidated Companies on a
consolidated basis for such period (taken as a single accounting period)
determined in conformity with GAAP; provided that there shall be excluded
therefrom (i) any items of gain or loss which were included in determining such
consolidated net income and were not realized in the ordinary course of
business; and (ii) the income (or loss) of any Person accrued prior to the date
such becomes a Consolidated Company or is merged into or consolidated with a
Consolidated Company, or such Person's assets are acquired by a Consolidated
Company.
"Consolidated Net Worth" shall mean on a consolidated basis the excess
of (A) total assets over (B) total liabilities of the Consolidated Companies, as
determined in accordance with GAAP.
"Consolidated Rental Expense" shall mean for any fiscal period of
Borrower, the total operating lease expense of the Consolidated Companies on a
consolidated basis.
"Consolidated Tangible Net Worth" shall mean on a consolidated basis
the excess of (A) total assets over (B) total liabilities of the Consolidated
Companies, as determined in accordance with GAAP, less the sum of the
Consolidated Companies' cost in excess of net assets acquired and other
assets/deferred charges.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or under-taking
under which such Person is obligated or by which it or any of the Property owned
by it is bound.
"Corporate Guaranty" shall mean the Guaranty executed by Children's
Comprehensive Services of California, Inc. in favor of Agent for the benefit of
Lenders and executed in connection with this Agreement.
"Credit Documents" shall mean, collectively, this Agreement, the Notes,
the Fee Letter, the Corporate Guaranty, the Subsidiary Guaranties, the Security
Documents, and all other instruments, documents, certificates, agreements and
writings executed in connection herewith.
5
9
"Default" shall mean any event or condition the occurrence of which
constitutes or would, with the lapse of time or the giving of notice, or both,
constitute an Event of Default.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States, or any state thereof, having total assets in
excess of $1,000,000,000 or any commercial finance or asset based lending
Affiliate of any commercial bank and (ii) any Lender or any Affiliate of any
Lender.
"Environmental Laws" shall mean all federal, state, local and foreign
statutes and codes or regulations, rules or ordinances issued, promulgated, or
approved thereunder, now or hereafter in effect (including, without limitation,
those with respect to asbestos or asbestos containing material or exposure to
asbestos or asbestos containing material), relating to pollution or protection
of the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous Substance,
petroleum including crude oil or any fraction thereof, any petroleum product or
other waste, chemicals or substances regulated by any Environmental Law into the
environment (including, without limitation, ambient surface water, ground water,
land surface or subsurface strata), or (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of any Hazardous Substance, petroleum including crude oil or any
fraction thereof, any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law, and (iii) underground storage tanks and
related piping, and emissions, discharges and releases or threatened releases
therefrom. Such Environmental Laws to include, without limitation (i) the Clean
Air Act (42 U.S.C. ss. 7401 et seq.), (ii) the Clean Water Act (33 U.S.C. ss.
1251 et seq.), (iii) the Resource Conservation and Recovery Act (42 U.S.C. ss.
6901 et seq.), (iv) the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.), (v) the Comprehensive Environmental Response Compensation and Liability
Act, as amended by the Superfund Amendments and Reauthorization Act (42 U.S.C.
ss. 9601 et seq.), and (vi) all applicable national and local laws or
regulations with respect to environmental control.
"Equity Proceeds" shall mean the net proceeds obtained by Borrower or
any other Consolidated Company through the public or private placement of shares
of stock of the Borrower or any Consolidated Company or the issuance of
subordinated debt of any Consolidated Company (the form, substance, and terms of
which subordinated debt shall first be determined to be acceptable to Required
Lenders).
"ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
the regulations promulgated under Section 414 of the Tax Code.
6
10
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
"Eurodollar Advance" shall mean an Advance made or outstanding as a
Revolving Loan, bearing interest based on the Adjusted LIBO Rate, plus the
Applicable Margin.
"Event of Default" shall have the meaning provided in Article 8.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute thereto.
"Executive Officer" shall mean with respect to any Person, the Chief
Executive Officer, President, Vice Presidents (if elected by the Board of
Directors of such Person), Chief Financial Officer, Treasurer, Secretary and any
Person holding comparable offices or duties (if elected by the Board of
Directors of such Person).
"Facility Fee" shall have the meaning ascribed to it in Section
3.6.(a).
"Facility" or "Facilities" shall mean the Revolving Credit Commitments
or the Letter of Credit Subcommitment, as the context may indicate.
"Facing Fee" shall mean an amount equal to 0.125% per annum multiplied
by the face amount of any Letter of Credit.
"Federal Funds Rate" shall mean with respect to any Base Rate Advance,
a fluctuating interest rate per annum equal for each day during which such
Advance is outstanding to the weighted average of the rates on overnight Federal
funds transactions with member banks of the Federal Reserve System arranged by
Federal funds brokers, as set forth for each day on Page 4833 of the Telerate at
8:00 a.m. (Nashville, Tennessee time) or if such reporting service is
unavailable, 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 Atlanta, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by the
Agent.
"Fee Letter" means that certain letter agreement dated October 23, 1998
between the Borrower and the Agent relating to certain fees from time to time
payable by the Borrower to the Agent, together with all amendments and
supplements thereto.
"Financial Officer" means with respect to the Borrower, any of the
Chief Financial Officer, Vice President of Finance, and Treasurer.
"Financial Report" means at a specified date, the most recent financial
statements of the Consolidated Companies delivered pursuant to Section 6.7. of
this Agreement.
7
11
"Fiscal Year" means the twelve (12) month accounting period ending on
June 30th of each year and presently used by Borrower as its fiscal year for
accounting purposes.
"Fixed Charge Coverage Ratio" shall mean, as at the end of any fiscal
quarter of Borrower, the ratio set forth in Section 7.1.(b) herein.
"Funded Debt" shall mean, with respect to the Consolidated Companies
without duplication on a consolidated basis, (i) Indebtedness for Borrowed
Money, (ii) debt evidenced by bonds, debentures, promissory notes, or similar
instruments; (iii) Purchase Money Indebtedness, (iv) conditional sales contracts
and similar title retention debt instruments, (v) capitalized leases, (vi) debt
or obligations arising under any application for issuance of a standby letter of
credit, or any other indemnity agreement or reimbursement agreement of Borrower
or a Consolidated Company related to the issuance of a letter of credit or
banker's acceptance on the account of Borrower or any Consolidated Company, and
(vii) all obligations under any direct or indirect Guaranty of any Consolidated
Company.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Guarantor" shall mean Children's Comprehensive Services of California,
Inc.
"Guarantors" shall mean the Guarantor and the Subsidiary Guarantors.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
8
12
"Hazardous Substances" shall have the meaning assigned to that term in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Acts of 1986.
"Hedging Obligations" shall mean all obligations of Borrower to any
Person under an ISDA Master Swap Agreement or under any Interest Rate Contract.
"Income Taxes" shall have the meaning given such term by GAAP.
"Indebtedness" of any Person shall mean, without duplication, (i) all
obligations of such Person which in accordance with GAAP would be shown on the
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of Property
or services, and obligations evidenced by bonds, debentures, notes or other
similar instruments, (ii) all Capital Lease Obligations; (iii) all Guaranties of
such Person (including the stated amount of undrawn letters of credit); (iv)
Indebtedness of others secured by any Lien upon Property owned by such Person,
whether or not assumed; and (v) obligations or other liabilities under currency
contracts, Interest Rate Contracts or similar agreements or combinations
thereof. Notwithstanding the foregoing, in determining the Indebtedness of any
Person, (x) there shall be included all obligations of such Person of the
character referred to in clauses (i) through (v) above deemed to be extinguished
under GAAP but for which such Person remains legally liable and (y) any deferred
obligations of such Person to make payments on any agreement not to compete
which was entered into by such Person in connection with the acquisition of any
business shall be reduced by the effective federal and state corporate tax rate
applicable to such Person in order to recognize the deductibility of such
payments and the resulting reduction of the cash actually expended by the Person
to satisfy such obligation.
"Indebtedness for Borrowed Money" shall mean, with respect to any
Person and without duplication:
(a) Indebtedness for money borrowed, including all revolving and
term Indebtedness and all other lines of credit; and
(b) Indebtedness which:
(i) is represented by a note payable or drafts accepted,
that represent extensions of credit;
(ii) constitutes obligations evidenced by bonds, debentures,
notes or similar instruments; or
(iii) constitutes Purchase Money Indebtedness, conditional
sales contracts, asset securitization vehicles, title retention
debt instruments or other similar instruments upon which interest
charges are customarily paid or that are issued or assumed as
full or partial payment for property;
9
13
(c) In debtedness that constitutes a Capital Lease Obligation;
(d) all indemnity agreements and reimbursement obligations under
any acceptances or any letters of credit (other than commercial
letters of credit) issued in support of Indebtedness of the character
described in clauses (a) through (c) above; and
(e) all Indebtedness of others of the character described in
clauses (a) through (d) above, but only to the extent that such
Indebtedness is subject to a Guaranty of such Person.
"Interest Period" shall mean (i) as to any Eurodollar Advances, the
interest period selected by the Borrower pursuant to Section 3.4.(a) hereof.
"Interest Rate Contract" shall mean all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance and other agreements and arrangements designed to provide protection
against fluctuations in interest rates, in each case as the same may be from
time to time amended, restated, renewed, supplemented or otherwise modified.
"Lender" or "Lenders" shall mean SunTrust, the other banks and lending
institutions listed on the signature pages hereof, including, without
limitation, each assignee thereof, if any, pursuant to Section 10.6.(c),
together with their corporate successors.
"Lending Office" shall mean for each Lender, the office such Lender may
designate in writing from time to time to Borrower and the Agent.
"Letters of Credit" has the same meaning as set forth in Section 2.4.
herein.
"Letter of Credit Fee" shall mean the product of: (a) the face amount
of outstanding Letters of Credit, multiplied by (b) the Applicable Margin then
in effect for Eurodollar Advances.
"Letter of Credit Subcommitment" means the commitment of Agent on
behalf of Lenders to issue Letters of Credit on Borrower's account up to the
aggregate face amount of $7,500,000 pursuant to and in accordance with the
provisions of Section 2.2. herein.
"LIBO" shall mean, for any Interest Period, with respect to Eurodollar
Advances, the offered rate for deposits in U.S. Dollars, for a period comparable
to the Interest Period appearing on the Telerate Screen Page 3750 as of 11:00
a.m. (London, England time) on the day that is two (2) Business Days prior to
the first day of the Interest Period. If at least two such rates appear on
Telerate Screen Page 3750, the rate for that Interest Period will be the
arithmetic mean of such rates, and in either case as such rates may be adjusted
for any applicable reserve requirements. If the foregoing is unavailable for any
reason, then such rate shall be determined by and based on any
10
14
other interest rate reporting service of recognized standing designated in
writing by the Agent to Borrower and the other Lenders in any such case rounded,
if necessary, to the next higher 1/100 of 1.0%, if the rate is not such a
multiple.
"Lien" shall mean any security interest, mortgage, pledge, lien, claim,
charge, encumbrance, title retention agreement, lessor's interest under a
Capital Lease or analogous instrument, in, of or on any Property.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Margin Regulations" shall mean Regulation G, Regulation T, Regulation
U and Regulation X of the Board of Governors of the Federal Reserve System, as
the same may be in effect from time to time.
"Material" (or words derived therefrom) as used in this Agreement,
means an amount equal to $500,000.00.
"Materially Adverse Effect" shall mean any Material adverse change in
(i) the business, operations, financial condition or assets of the Consolidated
Companies, taken as a whole, (ii) the ability of Borrower to perform its
obligations under this Agreement, or (iii) the ability of the Consolidated
Companies (taken as a whole) to perform their respective obligations, if any,
under the Credit Documents.
"Maturity Date" shall mean: (a) for the Revolving Loans, the earlier of
(i) October 31, 2001, and (ii) the date on which all amounts outstanding under
this Agreement have been declared or have automatically become due and payable
pursuant to the provisions of Article 8, and (b) for the Term Loans, the earlier
of (i) October 31, 2005, and (ii) the date on which all amounts outstanding
under this Agreement have been declared or have automatically become due and
payable pursuant to the provisions of Article 8.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Services, Inc. and each of its
successors.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Negative Pledge Agreements" shall mean Negative Pledge Agreements
executed by the Borrower and each Consolidated Company in form and substance
required by Lenders pursuant to which the Borrower and each Consolidated Company
agree not to grant or permit to exist a Lien on the real property owned by the
Borrower and each Consolidated Company (provided that the California Acquisition
shall be excluded from any Negative Pledge Agreement).
"Notes" shall mean the Revolving Credit Notes and the Term Notes,
collectively.
"Notice of Borrowing" shall have the meaning provided in Section
3.1.(a)(i).
11
15
"Notice of Conversion/Continuation" shall have the meaning provided in
Section 3.1.(b).
"Obligations" shall mean all amounts owing to the Agent or any Lender
pursuant to the terms of this Agreement or any other Credit Document, including,
without limitation, all Loans (including all principal and interest payments due
thereunder), fees, expenses, indemnification and reimbursement payments,
indebtedness, liabilities, and obligations of the Consolidated Companies, direct
or indirect, absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising, together with all renewals, extensions, modifications or
refinancings thereof.
"Payment Office" shall mean with respect to payments of principal,
interest, fees or other amounts relating to the Loans and all other Obligations,
the office specified as the "Payment Office" for the Agent, on the signature
page of the Agent, or to such other place as the Agent directs by written notice
delivered to Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Liens" shall mean those liens identified in Section 7.2.
(a) through (i) herein.
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust, limited liability company, limited liability
partnership, or other entity, or any government or political subdivision or
agency, department or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in Section
3(3) of ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits.
"Prepayment Premium" means an amount equal to the product obtained by
multiplying (a) the amount by which 4.21% exceeds the yield rate of the closest
analogous U.S. Treasury Note(s) (as described below), as reported in The Wall
Street Journal or similar publication on the fifth (5th) business day preceding
the prepayment date, and (b) the number of whole and fractional years remaining
between the prepayment date and the Maturity Date of the Term Loans, and (c) the
prepaid principal amount; provided that if the product is a number equal to zero
(-0-) or less, then no Prepayment Premium shall be due.
For purposes of this definition, the closest analogous U.S.
Treasury Note shall be the U.S. Treasury Note with a due date that is
the closest to the Maturity Date of the Term Loans, whether before,
after or on the Maturity Date of the Term Loans; provided, however,
that if the period between the Maturity
12
16
Date of the Term Loans and such due date exceeds six (6) months, the
average of the yield rates of the two U.S. Treasury Notes with due
dates next preceding and following the Maturity Date of the Term Loans
shall be used to compute such difference; and further provided that,
if there are two or more U.S. Treasury Notes with the same due date,
the note with the yield rate closest to the interest rate charged on
the Term Loans shall be used to compute such difference.
"Prior Revolving Credit Debt" means a revolving credit facility
provided to Borrower by First American National Bank, or its
successors-in-interest, in the principal amount of $23,000,000.
"Property" or "Properties" means any interest in any kind of property
or asset, whether real or personal, or mixed, or tangible or intangible.
"Purchase Money Indebtedness" shall mean Indebtedness incurred or
assumed for the purpose of financing all or any part of the acquisition cost of
any Property (excluding trade payables incurred in the ordinary course of
business) and any refinancing thereof, in each case entered into in compliance
with this Agreement.
"Rating Agency" shall mean either Moody's or Standard & Poor's.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean at any time, the Lenders holding at least
66 2/3% of the amount of the Total Commitments, whether or not advanced or,
following the termination of all of the Commitments, the Lenders holding at
least 66 2/3% of the aggregate outstanding Advances at such time.
"Requirement of Law" for any Person shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other governmental
authority, in each case applicable to or binding upon such Person or any of its
Property or to which such Person or any of its Property is subject.
"Revolving Credit Commitment" shall mean, at any time for any Lender,
the amount of such commitment set forth opposite such Lender's name on the
signature pages hereof, as the same may be increased or decreased from time to
time as a result of any reduction thereof pursuant to Section 2.3., any
assignment thereof pursuant to Section 10.6., or any amendment thereof pursuant
to Section 10.2.
"Revolving Credit Notes" shall mean, collectively, the promissory notes
evidencing the Revolving Loans in the form attached hereto as Exhibit A, either
as originally executed or as hereafter amended, modified or supplemented.
"Revolving Loans" shall mean, collectively, the revolving loans made to
the Borrower by the Lenders pursuant to Section 2.1.
13
17
"Security Agreements" means those certain Assignments and Security
Agreements executed by Borrower and Guarantor and any Subsidiary Guarantor
granting Agent on behalf of Lenders a perfected security interest in and to the
property described on Exhibit A thereto.
"Security Documents" shall mean Security Agreements, as such may be
amended, and all financing statements executed in connection with such Security
Agreements.
"Shareholder's Equity" shall mean, with respect to any Person as of any
date of determination, shareholder's equity determined on a consolidated basis
in conformity with GAAP.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of ▇▇▇▇▇▇-▇▇▇▇, Inc. and its successors.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity (including, without limitation, limited liability companies,
partnerships, joint ventures, limited liability companies, and associations)
regardless of its jurisdiction of organization or formation, at least a majority
of the total combined voting power of all classes of Voting Stock or other
ownership interests of which shall, at the time as of which any determination is
being made, be owned by such Person, either directly or indirectly through one
or more other Subsidiaries.
"Subsidiary Guaranty" shall mean a Subsidiary Guaranty substantially in
the form of Exhibit D executed and delivered by each of the Consolidated
Companies (excluding those Subsidiaries listed on Schedule 5.13.B) in favor of
the Agent, for the ratable benefit of the Lenders, together with all amendments
and supplements thereto.
"Subsidiary Guaranties" shall mean more than one Subsidiary Guaranty.
"Subsidiary Guarantor" shall mean a Consolidated Company which will
execute a Subsidiary Guaranty pursuant to Section 6.10.
"SunTrust" means SunTrust Bank, Nashville, N.A., its successors and
assigns.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended and
in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
14
18
"Telerate Screen Page 3750" means the "British Bankers Association
LIBOR Rates" shown on page 3750 of the Telerate System Incorporated Service.
"Term Notes" shall mean, collectively, the promissory notes evidencing
the Term Loans in the form attached hereto as Exhibit B, either as originally
executed or as hereafter amended, modified, or supplemented.
"Term Loans" shall mean the term loans made to Borrower by the Lenders
pursuant to Section 2.5.
"Total Capitalization" shall mean for the Consolidated Companies on a
consolidated basis, the sum of their: (i) Shareholder's Equity, plus (ii)
Consolidated Funded Debt.
"Total Commitments" shall mean the sum of the Revolving Credit
Commitments and the Term Loans of all Lenders.
"Voting Stock" shall mean stock of a corporation of a class or classes
having general voting power under ordinary circumstances to elect a majority of
the board of directors, managers or trustees of such corporation (irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by the reason of the happening of any contingency).
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATION.
Unless otherwise defined or specified herein, all accounting terms
shall be construed herein, all accounting determinations hereunder shall be
made, all financial statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained, in accordance with
GAAP. In the event of a change in GAAP that is applicable to the Consolidated
Companies, compliance with the financial covenants contained herein shall
continue to be determined in accordance with GAAP as in effect prior to such
change; provided, however, that the Borrower and the Required Lenders will
thereafter negotiate in good faith to revise such covenants to the extent
necessary to conform such covenants to GAAP as then in effect.
SECTION 1.3. OTHER DEFINITIONAL TERMS.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Article, Section,
Schedule, Exhibit and like references are to this Agreement unless otherwise
specified.
Section 1.4. Exhibits and Schedules.
Exhibits and Schedules attached hereto are by reference made a part hereof.
15
19
ARTICLE II. REVOLVING LOANS AND
LETTER OF CREDIT SUBCOMMITMENT AND TERM LOANS
SECTION 2.1. REVOLVING CREDIT COMMITMENT; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees to make to Borrower from time to
time on and after the Closing Date, but prior to the Maturity Date,
Revolving Loans; provided that, immediately after each such Revolving
Loan is made, (i) the aggregate principal amount of all Advances
comprising Revolving Loans made by such Lender shall not exceed such
Lender's Revolving Credit Commitment, and (ii) the aggregate principal
amount of all outstanding Revolving Loans, plus the aggregate face
amount of outstanding Letters of Credit, shall not exceed the Total
Commitments. Absent a Default or Event of Default, Borrower shall be
entitled to reborrow Revolving Loans in accordance with the provisions
hereof.
(b) Each Revolving Loan shall, at the option of Borrower, be
made or continued as, or converted into, part of one or more Borrowings
that shall consist entirely of Base Rate Advances or Eurodollar
Advances. The aggregate principal amount of each Borrowing shall be not
less than $500,000 or a greater integral multiple of $100,000.
(c) The proceeds of Revolving Loans shall be used solely for
refinancing of existing indebtedness, financing Acquisitions, providing
working capital, and other general corporate purposes of the Borrower
and the Consolidated Companies.
SECTION 2.2. REVOLVING CREDIT NOTES; REPAYMENT OF PRINCIPAL.
(a) The Borrower's obligations to pay the principal of, and
interest on, the Revolving Loans to each Lender shall be evidenced by
the records of the Agent and such Lender and by the Revolving Credit
Note payable to such Lender (or the assignor of such Lender) completed
in conformity with this Agreement.
(b) All Borrowings outstanding under the Revolving Credit
Commitments shall be due and payable in full on the Maturity Date.
SECTION 2.3. VOLUNTARY REDUCTION OF REVOLVING CREDIT COMMITMENTS;
MANDATORY PREPAYMENT.
(a) Upon at least five (5) Business Days prior telephonic
notice (promptly confirmed in writing) to the Agent, Borrower shall
have the right, without premium or penalty, to terminate the Revolving
Credit Commitments, in part or in whole, provided that any partial
termination of the Revolving Credit Commitments pursuant to this
Section 2.3. shall be in an amount of at least $5,000,000 and in
integral multiples of $5,000,000.
16
20
(b) Any reduction of Revolving Credit Commitments pursuant to
subsection (a) of this Section 2.3. shall apply to proportionately, and
shall automatically and permanently reduce the Revolving Credit
Commitments of each of the Lenders based upon each Lender's Applicable
Commitment Percentage. Any amounts so reduced may not be reinstated.
(c) If at any time the aggregate outstanding Revolving Loans
plus the aggregate face amount of outstanding Letters of Credit exceed
the Total Commitments, the Borrower shall immediately cause an amount
equal to such excess to be applied to the prepayment of outstanding
Revolving Loans, with such prepayment to be applied to such Revolving
Loans as designated by the Borrower, and in the event the Borrower
fails to designate a Revolving Loan, to such Revolving Loans with the
earliest maturity dates, based upon the remaining terms of their
respective Interest Periods, and with respect to Loans with the same
Interest Period, pro rata to the Lenders extending such Revolving
Loans.
Any prepayment of Revolving Loans pursuant to this Section 2.3., shall
be made, insofar as is possible, in such a way as to avoid any funding losses
pursuant to Section 3.13.
SECTION 2.4. LETTERS OF CREDIT SUBCOMMITMENT.
(a) Availability. Provided no Default or Event of Default
exists, and subject to the terms and conditions of the Credit
Documents, the Lenders have agreed that the Agent on behalf of the
Lenders will issue to third party beneficiaries on the Borrower's
account, standby letters of credit ("Letters of Credit") in the face
amount of up to $7,500,000 in the aggregate. In connection with the
issuance of each Letter of Credit, the Borrower shall complete and
execute an Application for Issuance of Standby Letter of Credit in form
and substance satisfactory to Agent.
(b) Letter of Credit Fee. In connection with the issuance of
any Letter of Credit, and on the first Business Day following the
conclusion of each fiscal quarter, the Borrower shall pay to Agent the
Letter of Credit Fee quarterly in arrears calculated as of the last day
of each Fiscal Quarter, or on the expiration date of the Letter of
Credit, whichever is sooner, calculated on the basis of a year of 360
days for the actual number of days elapsed and to be apportioned and
paid by Agent to each of the Lenders pro-rata, based upon the
Applicable Commitment Percentage. If the term of any Letter of Credit
is less than thirty (30) days, the Letter of Credit Fee shall be
calculated as if the term of the Letter of Credit was equal to thirty
(30) days.
(c) Facing Fee. In connection with the issuance of any Letter
of Credit, and on the first Business Day of each Fiscal Quarter, the
Borrower shall pay to Agent a Facing Fee quarterly in arrears
calculated as of the last day of each fiscal quarter, or on the
expiration date of the Letter of Credit, whichever is
17
21
sooner, calculated on the basis of a year of 360 days for the actual
number of days elapsed and to be retained by Agent. None of the
Lenders, except for the Agent, shall share in the Facing Fee.
(d) Delivery of Letter of Credit. The Agent agrees to use its
best efforts to issue and deliver to the Borrower each requested Letter
of Credit within three (3) Business Days following submission by the
Borrower of a properly completed Application for Issuance of Standby
Letter of Credit and payment of all required fees.
(e) Term. No Letter of Credit shall be issued for a term in
excess of twelve (12) months, and no Letter of Credit shall be issued
for a term that extends beyond the Maturity Date of the Revolving
Loans. The language of each Letter of Credit, including the
requirements for a draw thereunder, shall be subject to the reasonable
approval of the Agent.
(f) Reduction of Advances. The issuance of any Letter of
Credit shall reduce the Borrower's ability to receive Advances under
the Revolving Loans by an amount equal to the outstanding face amount
of the Letter of Credit and for so long as the Letter of Credit is
outstanding. Additionally, any payment by the Agent under a Letter of
Credit shall be treated as an Advance (with interest calculated as a
Base Rate Advance) under the Revolving Loans, and the terms and
provisions of repayment shall be treated as an Advance under the
Revolving Loans.
(g) Participation of Lenders. The Lenders shall participate in
all Letters of Credit requested by the Borrower. Each Lender, upon
issuance of a Letter of Credit by the Agent, shall be promptly notified
by Agent and shall be deemed to have purchased without recourse a risk
participation from the Agent in such Letter of Credit and the
obligations arising thereunder, in each case in an amount equal to its
Applicable Commitment Percentage and shall absolutely, unconditionally,
and irrevocably assume, as primary obligor and not as surety, and be
obligated to pay to the Agent therefor and discharge when due, its
Applicable Commitment Percentage of all obligations arising under such
Letter of Credit. Without limiting the scope and nature of each
Lender's participation in any Letter of Credit, to the extent that the
Agent has not been reimbursed as required hereunder or under any such
Letter of Credit, each such Lender shall pay to the Agent its
Applicable Commitment Percentage of such unreimbursed drawing in same
day funds on the day of notification by the Agent if so notified by
Noon (Nashville, Tennessee time) on such day, otherwise by the next
succeeding Business Day, of an unreimbursed drawing. The obligation of
each Lender to so reimburse the Agent shall be absolute and
unconditional and shall not be affected by the occurrence of a Default
or an Event of Default or any other occurrence or event.
18
22
SECTION 2.5. TERM LOANS; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees to make to the Borrower on the
Closing Date Term Loans in the total aggregate amount of $15,000,000.
(b) The proceeds of the Term Loans shall be used solely for
refinancing the outstanding indebtedness incurred by Borrower to
finance the acquisition of substantially all of the assets of Vendell
Healthcare, Inc. and, to the extent any proceeds remain, solely for
refinancing existing indebtedness, financing Acquisitions, providing
working capital, and other general corporate purposes of the Borrower
and the Consolidated Companies.
(c) Principal payments under the Term Loans shall be made
according to the following schedule:
(i) January 31, 2002: $837,500
(ii) April 30, 2002: $837,500
(iii) July 31, 2002: $837,500
(iv) October 31, 2002: $837,500
(v) January 31, 2003: $900,000
(vi) April 30, 2003: $900,000
(vii) July 31, 2003: $900,000
(viii) October 31, 2003: $900,000
(ix) January 31, 2004: $975,000
(x) April 30, 2004: $975,000
(xi) July 31, 2004: $975,000
(xii) October 31, 2004: $975,000
(xiii) January 31, 2005: $1,037,500
(xiv) April 30, 2005: $1,037,500
(xv) July 31, 2005: $1,037,500
(xvi) October 31, 2005: $1,037,500
SECTION 2.6. PRO RATA PAYMENTS.
Except as otherwise provided herein, (a) each payment on account of the
principal of and interest on the Revolving Loans, the Term Loans, and fees
(other than the fees payable under the Fee Letter, which shall be retained by
the Agent) described in this Agreement shall be made to the Agent for the
account of the Lenders pro rata based on their Applicable Commitment
Percentages, (b) all payments to be made by the Borrower for the account of each
of the Lenders on account of principal, interest and fees, shall be made in
immediately available funds, free and clear of any defenses, setoffs,
counter-claims, or withholdings or deductions for taxes, and (c) the Agent will
promptly distribute payments received by it to the Lenders. If, for any reason,
the Agent makes any distribution to any Lender prior to receiving the
corresponding payment from the Borrower, and the Borrower's payment is not
received by the Agent within three (3) Business Days after payment by the Agent
to the Lender, the Lender
19
23
shall, upon written request from the Agent, return the payment to the Agent with
interest at the interest rate per annum for overnight borrowing by the Agent
from the Federal Reserve Bank for the period commencing on the date the Lender
received such payment and ending on, but excluding, the date of its repayment to
the Agent. If the Agent advises any Lender of any miscalculation of the amount
of such Lender's share that has resulted in an excess payment to such Lender,
promptly upon request by the Agent such Lender shall return the excess amount to
the Agent with interest calculated as set forth above. Similarly, if a Lender
advises the Agent of any miscalculation that has resulted in an insufficient
payment to such Lender, promptly upon written request by such Lender the Agent
shall pay the additional amount to such Lender with interest calculated as set
forth above. In the event the Agent is required to return any amount of
principal, interest or fees or other sums received by the Agent after the Agent
has paid over to any Lender its share of such amount, such Lender shall,
promptly upon demand by the Agent, return to the Agent such share, together with
applicable interest on such share.
ARTICLE III. GENERAL LOAN TERMS
SECTION 3.1. FUNDING NOTICES.
(a) Whenever the Borrower desires to make a Borrowing of
Revolving Loans with respect to the Revolving Credit Commitments (other
than one resulting from a conversion or continuation pursuant to
Section 3.1.(b)), it shall give the Agent prior written notice in
substantially the same form as set forth in Exhibit E (or telephonic
notice promptly confirmed in writing) of such Borrowing (a "Notice of
Borrowing"), such Notice of Borrowing to be given at Agent's Payment
Office (x) prior to 11:00 a.m. (Nashville, Tennessee time) on the
Business Day which is the requested date of such Borrowing in the case
of Base Rate Advances, and (y) prior to 11:00 a.m. (Nashville,
Tennessee time) three (3) Business Days prior to the requested date of
such Borrowing in the case of Eurodollar Advances. Notices received
after 11:00 a.m. (Nashville, Tennessee time) shall be deemed received
on the next Business Day. Each Notice of Borrowing shall be irrevocable
and shall specify the aggregate principal amount of the Borrowing, the
date of Borrowing (which shall be a Business Day), and whether the
Borrowing is to consist of Base Rate Advances or Eurodollar Advances
and (in the case of Eurodollar Advances) the Interest Period to be
applicable thereto.
(b) Whenever Borrower desires to convert all or a portion of
an outstanding Borrowing under the Revolving Credit Commitments
consisting of Base Rate Advances into a Borrowing consisting of
Eurodollar Advances, or to continue outstanding a Borrowing consisting
of Eurodollar Advances for a new Interest Period, it shall give the
Agent at least three (3) Business Days' prior written notice in
substantially the same form as Exhibit F (or telephonic notice promptly
confirmed in writing) of each such Borrowing to be converted into or
continued as Eurodollar Advances. Such notice (a "Notice of
20
24
Conversion/Continuation") shall be given prior to 11:00 a.m.
(Nashville, Tennessee time) on the date specified at the Payment
Office of the Agent. Each such Notice of Conversion/Continuation shall
be irrevocable and shall specify the aggregate principal amount of the
Advances to be converted or continued, the date of such conversion or
continuation and the Interest Period to be applicable thereto. If,
upon the expiration of any Interest Period in respect of any Borrowing
consisting of Eurodollar Advances, Borrower shall have failed to
deliver the Notice of Conversion/Continuation, Borrower shall be
deemed to have elected to convert or continue such Borrowing to a
Borrowing consisting of Base Rate Advances. So long as any Executive
Officer of Borrower has knowledge that any Default or Event of Default
shall have occurred and be continuing, no Borrowing may be converted
into or continued as (upon expiration of the current Interest Period)
Eurodollar Advances unless the Agent and each of the Lenders shall
have otherwise consented in writing. No conversion of any Borrowing of
Eurodollar Advances shall be permitted except on the last day of the
Interest Period in respect thereof.
(c) The Agent shall promptly (and in any event by the same
time on the next succeeding Business Day as such notice is received)
give each Lender notice by telephone (confirmed in writing) or by
telex, telecopy or facsimile transmission of the matters covered by the
notices given to the Agent pursuant to this Section 3.1. with respect
to the Revolving Credit Commitments.
SECTION 3.2. DISBURSEMENT OF FUNDS.
(a) No later than 1:00 p.m. (Nashville, Tennessee time), each
Lender will make available its Applicable Commitment Percentage of the
amount of such Borrowing in immediately available funds at the Payment
Office of the Agent. The Agent will make available to Borrower the
aggregate of the amounts (if any) so made available by the Lenders to
the Agent in a timely manner by crediting such amounts to Borrower's
demand deposit account maintained with the Agent or at Borrower's
option, by effecting a wire transfer of such amounts to Borrower's
account specified by the Borrower, by the close of business on such
Business Day. In the event that the Lenders do not make such amounts
available to the Agent by the time prescribed above, but such amount is
received later that day, such amount may be credited to Borrower in the
manner described in the preceding sentence on the next Business Day
(with interest on such amount to begin accruing hereunder on such next
Business Day).
(b) Unless the Agent shall have been notified by any Lender
prior to the date of a Borrowing that such Lender does not intend to
make available to the Agent such Lender's portion of the Borrowing to
be made on such date, the Agent may assume that such Lender has made
such amount available to the Agent on such date and the Agent may make
available to Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Lender on the
date of Borrowing, the Agent shall
21
25
be entitled to recover such corresponding amount on demand from such
Lender together with interest at the Federal Funds Rate. If such
Lender does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent shall promptly notify Borrower, and
Borrower shall immediately pay such corresponding amount to the Agent
together with interest at the rate specified for the Borrowing which
includes such amount paid and any amounts due under Section 3.13.
hereof. Nothing in this subsection shall be deemed to relieve any
Lender from its obligation to fund its Commitments hereunder or to
prejudice any rights which Borrower may have against any Lender as a
result of any default by such Lender hereunder.
(c) All Borrowings under the Revolving Credit Commitments
shall be loaned by the Lenders on the basis of their Applicable
Commitment Percentage on the date of such Borrowing. No Lender shall be
responsible for any default by any other Lender in its obligations
hereunder, and each Lender shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any
other Lender to fund its Commitment hereunder.
SECTION 3.3. INTEREST ON REVOLVING LOANS.
(a) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Revolving Loans from the respective dates such
principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at rates per annum equal to the
applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from
time to time, plus the Applicable Margin; and
(ii) For Eurodollar Advances--The relevant Adjusted LIBO
Rate plus the Applicable Margin.
(b) Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Revolving Loans,
and all other overdue amounts owing hereunder, shall bear interest from
each date that such amounts are overdue:
(i) in the case of overdue principal and interest with
respect to all Revolving Loans outstanding as Eurodollar
Advances, (A) the rate otherwise applicable for the
then-current Interest Period plus an additional two percent
(2%) per annum, and (B) at the end of the then-current
Interest Period, the rate in effect for Base Rate Advances
plus an additional two percent (2%) per annum; and
(ii) in the case of overdue principal and interest with
respect to all Revolving Loans outstanding as Base Rate
Advances, and all other Obligations hereunder (other than
Revolving Loans), at a rate equal to the
22
26
rate in effect for Base Rate Advances, plus an additional
two percent (2%) per annum.
(c) Interest on each Revolving Loan shall accrue from and
including the date of such Revolving Loan to but excluding the date of
any repayment thereof, provided that, if a Revolving Loan is repaid on
the same day made, one day's interest shall be paid on such Revolving
Loan. Interest on all outstanding Base Rate Advances shall be payable
quarterly in arrears on or before 1:00 p.m. (Nashville, Tennessee time)
at the Payment Office on January 31, 1998, and on each April 30, July
31, October 31, and January 31 thereafter. Interest on all outstanding
Eurodollar Advances shall be payable on or before 1:00 p.m. (Nashville,
Tennessee time) at the Payment Office on the last day of each Interest
Period applicable thereto, and, in the case of Eurodollar Advances
having an Interest Period in excess of three months, on or before 1:00
p.m. (Nashville, Tennessee time) at the Payment Office each three month
anniversary of the initial date of such Interest Period. All interest
payments shall be paid to Agent in immediately available funds, free
and clear of any defenses, set-offs, counterclaims, or withholdings or
deduction for taxes.
(d) The Agent shall promptly notify the Borrower and the other
Lenders by telephone (confirmed in writing) or in writing, upon
determining the Adjusted LIBO Rate for any Interest Period. Any such
determination shall, absent manifest error, be final, conclusive and
binding for all purposes.
(e) Interest shall be calculated based upon a year of 360 days
for actual number of days elapsed.
SECTION 3.4. INTEREST PERIODS; MAXIMUM NUMBER OF BORROWINGS.
(a) In connection with the making or continuation of, or
conversion into, each Borrowing of Eurodollar Advances, Borrower shall
select an Interest Period to be applicable to such Eurodollar Advances,
which Interest Period shall be either a 1, 2, 3 or 6 month period.
(b) Notwithstanding paragraph (a) of this Section 3.4.:
(i) The initial Interest Period for any Borrowing of
Eurodollar Advances or Base Rate Advances, shall commence on
the date of such Borrowing (including, the date of any
conversion from a Borrowing consisting of Base Rate Advances)
and each Interest Period occurring thereafter in respect of
such Borrowing shall commence on the day on which the next
preceding Interest Period expires;
(ii) If any Interest Period would otherwise expire on
a day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, provided that if
any Interest Period in respect of Eurodollar Advances would
otherwise expire on a day that is not a
23
27
Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business Day;
(iii) Any Interest Period in respect of Eurodollar
Advances which begins on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period shall, subject to part (iv) below,
expire on the last Business Day of such calendar month; and
(iv) No Interest Period with respect to the Revolving
Loans shall extend beyond the Maturity Date,
(c) At no time shall there be more than six Eurodollar
Advances outstanding at any one time.
SECTION 3.5 INTEREST ON TERM LOANS.
(a) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Term Loans at a fixed rate of 7.26% per annum
(which equals 305 basis points per annum above the 5 1/4% treasury note
with a maturity of August, 2003 which had a yield of 4.21% as of
October 27, 1998).
(b) Overdue payments of principal and interest under the Term
Loans shall bear interest at the then applicable rate in effect for the
Term Loans, plus an additional two percent (2%) per annum.
(c) Interest on the Term Loans shall be paid to the Agent
quarterly, in arrears, on the last day of each January, April, July,
and October and on the Maturity Date, commencing January 31, 1999. All
interest payments shall be paid to Agent in immediately available
funds, free and clear of any defenses, setoffs, counterclaims, or
withholding or deductions for taxes.
(d) Interest shall be calculated based upon a year of 360 days
for the actual number of days elapsed.
24
28
SECTION 3.6. FEES.
(a) Borrower shall pay to the Agent, for the ratable benefit
of each Lender based upon its respective Applicable Commitment
Percentage of the Total Commitments, a facility fee (the "Facility
Fee") for the period commencing on the Closing Date to and including
the Maturity Date, payable quarterly in arrears on the last day of each
calendar quarter, commencing on December 31, 1998, and on the Maturity
Date, equal to the Applicable Margin multiplied by the average daily
unused amount of the Revolving Credit Commitments Calculations of the
Facility Fee shall be based upon a year of 360 days for the actual
number of days elapsed.
(b) Borrower shall pay to the Agent for the benefit of Lenders
the Letter of Credit Fee as set forth in Section 2.4.(b) herein.
(c) Borrower shall pay to the Agent the Facing Fee as set
forth in Section 2.4.(c) herein.
(d) Borrower shall pay to the Agent the amounts and on the
dates agreed to in the Fee Letter.
SECTION 3.7. EFFECTIVE DATE FOR ADJUSTMENT TO THE APPLICABLE MARGIN.
On the date hereof, the Applicable Margin shall be deemed to be the
Applicable Margin shown on and calculated in accordance with the Compliance
Certificate delivered in the form of Exhibit I hereto. Commencing with fiscal
quarter ending December 31, 1998, the Applicable Margin shall be determined and
adjusted quarterly on the Business Day next following the date on which the
Agent accepts the officer's certificate required to be furnished by the Borrower
in accordance with the provisions of Section 6.7.(d) (each a "Calculation
Date"). Except as set forth above, each Applicable Margin shall be effective
from one Calculation Date until the next Calculation Date. In the event that the
officer's certificate required herein is not provided in accordance with the
provisions of Section 6.7.(c), then until such certificate is provided, the
Applicable Margin shall become the Tier IV Applicable Margin.
SECTION 3.8. VOLUNTARY PREPAYMENTS.
(a) Borrower may, at its option, prepay Borrowings consisting
of Base Rate Advances at any time in whole, or from time to time in
part, in amounts aggregating $500,000 or any greater integral multiple
of $100,000, by paying the principal amount to be prepaid together with
interest accrued and unpaid thereon to the date of prepayment. Upon
three (3) Business Days' prior written notice given by Borrower to
Agent, Borrowings consisting of Eurodollar Advances may be prepaid on
the last day of any applicable Interest Period, in whole, or from time
to time in part, in amounts aggregating $500,000 or an integral
multiple of $100,000 (except that no partial prepayment may be made if
the remaining principal amount outstanding of such Eurodollar Advance
which
25
29
comprises a Revolving Loan would be less than $500,000), by paying the
principal amount to be prepaid, together with interest accrued and
unpaid thereon to the date of prepayment. Prepayment of Eurodollar
Advances shall be subject to all payments required by Section 3.12. and
3.14. herein.
(b) Borrower may prepay Term Loans in whole or in part
provided that (i) prepayments are made in amounts aggregating $500,000
or any greater multiple of $100,000; and (ii) the Borrower pays the
Prepayment Premium.
(c) All voluntary prepayments shall be applied to the payment
of interest then due and owing before application to principal.
SECTION 3.9. MANNER OF PAYMENT, CALCULATION OF INTEREST, TAXES.
(a) Except as otherwise specifically provided herein, all
payments under this Agreement and the other Credit Documents, other
than the payments specified in clause 3.9.(b)(iii) below, shall be made
without defense, set-off, or counterclaim to the Agent not later than
1:00 p.m. (Nashville, Tennessee time) on the date when due and shall be
made in Dollars in immediately available funds at the Agent's Payment
Office.
(b)(i) All such payments shall be made free and clear of and
without deduction or withholding for any Taxes in respect of this
Agreement, the Revolving Credit Notes or other Credit Documents, or any
payments of principal, interest, fees or other amounts payable
hereunder or thereunder (but excluding, except as provided in paragraph
(iii) hereof, in the case of each Lender, taxes imposed on or measured
by its net income, and franchise taxes and branch profit taxes imposed
on it (A) by the jurisdiction under the laws of which such Lender is
organized or any political subdivision thereof, and in the case of each
Lender, taxes imposed on or measured by its net income, and franchise
taxes and branch profit taxes imposed on it, by the jurisdiction of
such Lender's appropriate Lending Office or any political subdivision
thereof, and (B) by a jurisdiction in which any payments are to be made
by any Borrower hereunder, other than the United States of America, or
any political subdivision thereof, and that would not have been imposed
but for the existence of a connection between such Lender and the
jurisdiction imposing such taxes (other than a connection arising as a
result of this Agreement or the transactions contemplated by this
Agreement), except in the case of taxes described in this clause (B),
to the extent such taxes are imposed as a result of a change in the law
or regulations of any jurisdiction or any applicable treaty or
regulations or in the official interpretation of any such law, treaty
or regulations by any government authority charged with the
interpretation or administration thereof after the date of this
Agreement). If any such Taxes are so levied or imposed, Borrower agrees
(A) to pay the full amount of such Taxes, and such additional amounts
as may be necessary so that every net payment of all amounts due
hereunder and under the Revolving Credit Notes and other Credit
Documents, after withholding or deduction for or on account of any such
Taxes (including additional sums payable under this Section
26
30
3.9.), will not be less than the full amount provided for herein had
no such deduction or withholding been required, (B) to make such
withholding or deduction and (C) to pay the full amount deducted to
the relevant authority in accordance with applicable law. Borrower
will furnish to the Agent and each Lender, within 30 days after the
date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by Borrower.
Borrower will indemnify and hold harmless the Agent and each Lender
and reimburse the Agent and each Lender upon written request for the
amount of any such Taxes so levied or imposed and paid by the Agent or
Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes
were correctly or illegally asserted. A certificate as to the amount
of such payment by such Lender or the Agent, absent manifest error,
shall be final, conclusive and binding for all purposes.
(ii) Each Lender that is organized under the laws of any
jurisdiction other than the United States of America or any
State thereof (including the District of Columbia) agrees to
furnish to Borrower and the Agent, prior to the time it
becomes a Lender hereunder, two copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 or any successor forms thereto (wherein
such Lender claims entitlement to complete exemption from
U.S. Federal withholding tax on interest paid by Borrower
hereunder) and to provide to Borrower and the Agent a new
Form 4224 or Form 1001 or any successor forms thereto if any
previously delivered form is found to be incomplete or
incorrect in any Material respect or upon the obsolescence
of any previously delivered form; provided, however, that no
Lender shall be required to furnish a form under this
paragraph (ii) after the date that it becomes a Lender
hereunder if it is not entitled to claim an exemption from
withholding under applicable law.
(iii) Borrower shall also reimburse the Agent and each
Lender, upon written request, for any Taxes imposed
(including, without limitation, Taxes imposed on the overall
net income of the Agent or Lender or its applicable Lending
Office pursuant to the laws of the jurisdiction in which the
principal executive office or the applicable Lending Office
of the Agent or Lender is located) as the Agent or Lender
shall determine are payable by the Agent or Lender in
respect of amounts paid by or on behalf of Borrower to or on
behalf of the Agent or Lender pursuant to paragraph (i)
hereof.
(iv) In addition to the documents to be furnished
pursuant to Section 3.9.(b)(ii), each Lender shall, promptly
upon the reasonable written request of the Borrower to that
effect, deliver to the Borrower such other accurate and
complete forms or similar documentation as such Lender is
legally able to provide and as may be required from time to
time
27
31
by any applicable law, treaty, rule or regulation or any
jurisdiction in order to establish such Lender's tax status
for withholding purposes or as may otherwise be appropriate
to eliminate or minimize any Taxes on payments under this
Agreement or the Notes.
(v) The Borrower shall not be required to pay any amounts
pursuant to Section 3.9.(b)(i), or (iii) to any Lender for
the account of any Lending Officer of such Lender in respect
of any United States withholding taxes payable hereunder
(and the Borrower, if required by law to do so, shall be
entitled to withhold such amounts and pays such amounts to
the United States Government) if the obligation to pay such
additional amounts would not have arisen but for a failure
by such Lender to comply with its obligations under Section
3.9.(b)(ii), and such Lender shall not be entitled to an
exemption from deduction or withholding of United Stated
Federal income tax in respect of the payment of such sum by
the Borrower hereunder for the account of such Lending
Office for, in each case, any reason other than a change in
United States law or regulations by any governmental
authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the
date such Lender became a Lender hereunder.
(vi) Within sixty (60) days of the written request of
the Borrower, each Lender shall execute and deliver such
certificates, forms or other documents, which can be
reasonably furnished consistent with the facts and which are
reasonably necessary to assist in applying for refunds of
Taxes remitted hereunder.
(vii) To the extent that the payment of any Lender's
Taxes by the Borrower gives rise from time to time to a Tax
Benefit (as hereinafter defined) to such Lender in any
jurisdiction other than the jurisdiction which imposed such
Taxes, such Lender shall pay to the Borrower the amount of
each such Tax Benefit so recognized or received. The amount
of each Tax Benefit and, therefore, payment to the Borrower
will be determined from time to time by the relevant Lender
in its sole discretion, which determination shall be binding
and conclusive on all parties hereto. Each such payment will
be due and payable by such Lender to the Borrower within a
reasonable time after the filing of the income tax return in
which such Tax Benefit is recognized or, in the case of any
tax refund, after the refund is received; provided, however
if at any time thereafter such Lender is required to rescind
such Tax Benefit or such Tax Benefit is otherwise disallowed
or nullified, the Borrower shall promptly, after notice
thereof from such Lender, repay to Lender the amount of such
Tax Benefit previously paid to the Borrower and rescinded,
disallowed or nullified. For purposed of this section, "Tax
Benefit" shall mean the amount by which any Lender's income
tax liability for the taxable period in question is reduced
below what would
28
32
have been payable had the Borrower not been required to pay
the Lender's Taxes. In case of any dispute with respect to the
amount of any payment the Borrower shall have no right to any
offset or withholding of payments with respect to future
payments due to any Lender under this Agreement or the Notes.
(c) Subject to Section 3.4.(c)(ii), whenever any payment to be
made hereunder or under any Revolving Credit Note or Term Note shall be
stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest thereon shall be payable at
the applicable rate during such extension.
(d) All computations of interest and fees shall be made on the
basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) occurring in the period for
which such interest or fees are payable (to the extent computed on the
basis of days elapsed). Interest on Base Rate Advances shall be
calculated based on the Base Rate from and including the date of such
Revolving Loan to but excluding the date of the repayment or conversion
thereof. Interest on Eurodollar Advances shall be calculated as to each
Interest Period from and including the first day thereof to but
excluding the last day thereof. Each determination by the Agent of an
interest rate or fee hereunder shall be made in good faith and, except
for manifest error, shall be final, conclusive and binding for all
purposes.
(e) Payment by the Borrower to the Agent in accordance with
the terms of this Agreement shall, as to the Borrower, constitute
payment to the Lenders under this Agreement.
SECTION 3.10. INTEREST RATE NOT ASCERTAINABLE, ETC.
In the event that the Agent shall have determined (which determination
shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted LIBO Rate for any Interest Period, by reason of any changes arising
after the date of this Agreement affecting the London interbank market, or the
Agent's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted LIBO Rate, then, and in any such event, the Agent shall
forthwith give notice (by telephone confirmed in writing) to Borrower and to the
Lenders, of such determination and a summary of the basis for such
determination. Until the Agent notifies Borrower that the circumstances giving
rise to the suspension described herein no longer exist, the obligations of the
Lenders to make or permit portions of the Revolving Loans to remain outstanding
past the last day of the then current Interest Periods as Eurodollar Advances
shall be suspended, and such affected Advances shall bear the same interest as
Base Rate Advances.
SECTION 3.11. ILLEGALITY.
29
33
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error,
shall be final, conclusive and binding upon all parties) at any time
that the making or continuance of any Eurodollar Advance has become
unlawful by compliance by such Lender in good faith with any applicable
law, governmental rule, regulation, guideline or order (whether or not
having the force of law and whether or not failure to comply therewith
would be unlawful), then, in any such event, the Lender shall give
prompt notice (by telephone confirmed in writing) to Borrower and to
the Agent of such determination and a summary of the basis for such
determination (which notice the Agent shall promptly transmit to the
other Lenders).
(b) Upon the giving of the notice to Borrower referred to in
subsection (a) above, (i) Borrower's right to request and such Lender's
obligation to make Eurodollar Advances shall be immediately suspended,
and such Lender shall make an Advance as part of the requested
Borrowing of Eurodollar Advances as a Base Rate Advance, which Base
Rate Advance, as the case may be, shall, for all other purposes, be
considered part of such Borrowing, and (ii) if the affected Eurodollar
Advance or Advances are then outstanding, Borrower shall immediately,
or if subject to applicable law, no later than the date permitted by
applicable law, upon at least one Business Day's written notice to the
Agent and the affected Lender, convert each such Advance into a Base
Rate Advance or Advances, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the
same pursuant to this Section 3.9.(b).
SECTION 3.12. INCREASED COSTS.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements) in or
in the interpretation of any law or regulation, or (y) the compliance
with any guideline or request from any central bank or other
governmental authority or quasi-governmental authority exercising
control over banks or financial institutions generally (whether or not
having the force of law):
(i) any Lender (or its applicable Lending Office) shall be
subject to any tax, duty or other charge with respect to its
Eurodollar Advances, or its obligation to make such Advances,
or the basis of taxation of payments to any Lender of the
principal of or interest on its Eurodollar Advances or its
obligation to make Eurodollar Advances shall have changed
(except for changes in the tax on the overall net income of
such Lender or its applicable Lending Office imposed by the
jurisdiction in which such Lender's principal executive
office or applicable Lending Office is located); or
(ii) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve
System), special deposit or
30
34
similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender's
applicable Lending Office shall be imposed or deemed
applicable or any other condition affecting its Eurodollar
Advances or its obligation to make Eurodollar Advances shall
be imposed on any Lender or its applicable Lending Office or
the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Advances
(except to the extent already included in the determination of the applicable
Adjusted LIBO Rate for Eurodollar Advances) or its obligation to make Eurodollar
Advances, or there shall be a reduction in the amount received or receivable by
such Lender or its applicable Lending Office, then Borrower shall from time to
time (subject, in the case of certain Taxes, to the applicable provisions of
Section 3.9.(b)), upon written notice from and demand by such Lender to Borrower
(with a copy of such notice and demand to the Agent), pay to the Agent for the
account of such Lender within ten (10) Business Days after the date of such
notice and demand, additional amounts sufficient to indemnify such Lender
against such increased cost. A certificate as to the amount of such increased
cost, submitted to Borrower and the Agent by such Lender in good faith and
accompanied by a statement prepared by such Lender describing in reasonable
detail the basis for and calculation of such increased cost, shall, except for
manifest error, be final conclusive and binding for all purposes.
(b) If any Lender shall advise the Agent that at any time,
because of the circumstances described in clauses (x) or (y) in Section
3.12.(a) or any other circumstances beyond such Lender's reasonable
control arising after the date of this Agreement affecting such Lender
or the London interbank market or such Lender's position in such
market, the Adjusted LIBO Rate as determined by the Agent will not
adequately and fairly reflect the cost to such Lender of funding its
Eurodollar Advances, then, and in any such event:
(i) the Agent shall forthwith give notice (by telephone
confirmed in writing) to Borrower and to the other Lenders
of such advice;
(ii) Borrower's right to request and such Lender's
obligation to make or permit portions of the Revolving Loans
to remain outstanding past the last day of the then current
Interest Periods as Eurodollar Advances shall be immediately
suspended; and
(iii) in the event the affected Loan is a Revolving Loan,
such Lender shall make a Revolving Loan as part of the
requested Borrowing under the Revolving Loan Commitments of
Eurodollar Advances as a Base Rate Advance, which such Base
Rate Advance shall, for all other purposes, be considered
part of such Borrowing.
SECTION 3.13. LENDING OFFICES.
31
35
(a) Each Lender agrees that, if requested by Borrower, it will
use reasonable efforts (subject to overall policy considerations of
such Lender) to designate an alternate Lending Office with respect to
any of its Eurodollar Advances, as the case may be, affected by the
matters or circumstances described in Sections 3.9.(b), 3.10., 3.11.,
3.12. or 3.18. to reduce the liability of Borrower or avoid the results
provided thereunder, so long as such designation is not disadvantageous
to such Lender as reasonably determined by such Lender, which
determination shall be conclusive and binding on all parties hereto.
Nothing in this Section 3.12. shall affect or postpone any of the
obligations of Borrower or any right of any Lender provided hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State
thereof (including the District of Columbia) issues a public
announcement with respect to the closing of its Lending Offices in the
United States such that any withholdings or deductions and additional
payments with respect to Taxes may be required to be made by Borrower
thereafter pursuant to Section 3.9.(b), such Lender shall use
reasonable efforts to furnish Borrower notice thereof as soon as
practicable thereafter; provided, however, that no delay or failure to
furnish such notice shall in any event release or discharge Borrower
from its obligations to such Lender pursuant to Section 3.9.(b) or
otherwise result in any liability of such Lender.
SECTION 3.14. FUNDING LOSSES.
Borrower shall compensate each Lender, upon its written request to
Borrower (which request shall set forth the basis for requesting such amounts in
reasonable detail and which request shall be made in good faith and, absent
manifest error, shall be final, conclusive and binding upon all of the parties
hereto), for all actual losses, expenses and liabilities (including, without
limitation, any interest paid by such Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Advances, in either case to the extent not
recovered by such Lender in connection with the re-employment of such funds but
excluding loss of anticipated profits), which the Lender may sustain: (i) if for
any reason (other than a default by such Lender) a borrowing of, or conversion
to or continuation of, Eurodollar Advances to Borrower does not occur on the
date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to Section
3.11.(b)) of any Eurodollar Advances to Borrower occurs on a date which is not
the last day of an Interest Period applicable thereto, or (iii), if, for any
reason, Borrower defaults in its obligation to repay its Eurodollar Advances
when required by the terms of this Agreement.
32
36
SECTION 3.15. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR ADVANCES.
Calculation of all amounts payable to a Lender under this Article 3.
shall be made as though that Lender had actually funded its relevant Eurodollar
Advances through the purchase of deposits in the relevant market bearing
interest at the rate applicable to such Eurodollar Advances in an amount equal
to the amount of the Eurodollar Advances and having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar Advances
from an offshore office of that Lender to a domestic office of that Lender in
the United States of America; provided, however that each Lender may fund each
of its Eurodollar Advances in any manner it sees fit and the foregoing
assumption shall be used only for calculation of amounts payable under this
Article 3.
SECTION 3.16. APPORTIONMENT OF PAYMENTS.
Aggregate principal and interest payments in respect of Loans and
payments in respect of Facility Fees shall be apportioned among all outstanding
Commitments and Loans to which such payments relate, proportionately to the
Lenders' respective pro rata portions of such Commitments and outstanding Loans.
The Agent shall promptly distribute to each Lender at its payment office
specified by any Lender its share of any such payments received by the Agent on
the same Business Day as such payment is deemed to be received by the Agent.
SECTION 3.17. SHARING OF PAYMENTS, ETC.
If any Lender shall obtain any payment or reduction (including, without
limitation, any amounts received as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code) of the Obligations (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Applicable Commitment Percentage of payments or
reductions on account of such obligations obtained by all the Lenders, such
Lender shall forthwith (i) notify each of the other Lenders and Agent of such
receipt, and (ii) purchase from the other Lenders such participations in the
affected obligations as shall be necessary to cause such purchasing Lender to
share the excess payment or reduction, net of costs incurred in connection
therewith, ratably with each of them, provided that if all or any portion of
such excess payment or reduction is thereafter recovered from such purchasing
Lender or additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional costs,
but without interest unless the Lender obligated to return such funds is
required to pay interest on such funds. Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 3.16.
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of Borrower in the amount of such
participation. Any payment received by the Agent or any Lender following the
occurrence and during the continuation of an Event of Default shall be
distributed pro rata amongst the Lenders based upon the percentage obtained by
dividing the Obligations owing to each Lender by the total amount of Obligations
on the
33
37
date of receipt of such payment, with such amounts to be applied to the
outstanding Obligations in accordance with the terms of this Agreement.
SECTION 3.18. CAPITAL ADEQUACY.
Without limiting any other provision of this Agreement, in the event
that any Lender shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy not currently in effect or fully applicable as of the Closing Date, or
any change therein or in the interpretation or application thereof after the
Closing Date, or compliance by such Lender with any request or directive
regarding capital adequacy not currently in effect or fully applicable as of the
Closing Date (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from a central bank or governmental
authority or body having jurisdiction, does or shall have the effect of reducing
the rate of return on such Lender's capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such law, treaty, rule, regulation, guideline or order, or such change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be Material, then within
ten (10) Business Days after written notice and demand by such Lender (with
copies thereof to the Agent), Borrower shall from time to time pay to such
Lender additional amounts sufficient to compensate such Lender for such
reduction (but, in the case of outstanding Base Rate Advances, without
duplication of any amounts already recovered by such Lender by reason of an
adjustment in the applicable Base Rate). Each certificate as to the amount
payable under this Section 3.18. (which certificate shall set forth the basis
for requesting such amounts in reasonable detail), submitted to Borrower by any
Lender in good faith, shall, absent manifest error, be final, conclusive and
binding for all purposes.
SECTION 3.19. LIMITATION ON CERTAIN PAYMENT OBLIGATIONS.
(a) Each Lender or the Agent shall make written demand on the
Borrower for indemnification or compensation pursuant to Section
3.9.(b) no later than six months after the earlier of (i) on the date
on which Lender or the Agent makes payment of any such Taxes and (ii)
the date on which the relevant taxing authority or other governmental
authority makes written demand upon such Lender or Agent for the
payment of such Taxes.
(b) Each Lender or Agent shall make written demand on the
Borrower for indemnification or compensation pursuant to Section 3.14.
no later than six months after the event giving rise to the claim for
indemnification or compensation occurs.
(c) Each Lender or the Agent shall make written demand on the
Borrower for identification or compensation pursuant to Section 3.12.
or Section 3.18. no later than six months after such Lender or Agent
receives actual notice or obtains actual knowledge of the promulgation
of a law, rule, order,
34
38
interpretation or occurrence of another event giving rise to a claim
pursuant to such provisions.
(d) In the event that the Lenders or Agent fail to give the
Borrower notice within the time limitations set forth above, the
Borrower shall not have any obligation to pay amounts with respect to
such claims accrued prior to six months preceding any written demand
therefor.
SECTION 3.20. MANDATORY PAYMENTS. Borrower shall pay or cause to be
paid to Agent for application to the Revolving Loans an amount equal to: (a)
100% of the net proceeds received by Borrower or any Consolidated Company from
the sale or other disposition by Borrower or any Consolidated Company of any
assets (excluding inventory sold in the ordinary course of business and
excluding assets disposed of as part of Borrower's standard acquisition
procedures approved by Agent), (b) 100% of the net proceeds received by Borrower
or any Consolidated Company of any offering of debt, senior or subordinated, and
(c) 100% of any Equity Proceeds.
ARTICLE IV. CONDITIONS TO BORROWINGS
The obligation of each Lender to make Advances to Borrower is subject
to the satisfaction of the following conditions:
SECTION 4.1. CONDITIONS PRECEDENT TO INITIAL LOANS.
At the time of the making of the initial Loans hereunder on the Closing
Date, all obligations of Borrower hereunder incurred prior to the initial Loans
(including, without limitation, Borrower's obligations to reimburse the
reasonable fees and expenses of counsel to the Agent and any fees and expenses
payable to the Agent as previously agreed with Borrower), shall have been paid
in full, and the Agent shall have received the following, in form and substance
reasonably satisfactory in all respects to the Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Credit Notes evidencing the
Revolving Credit Commitments;
(c) the duly completed Term Notes evidencing the Term Loans;
(d) the duly completed Security Documents and all other
documents required to perfect a first priority security interest in the
Collateral to secure the Indebtedness, subject only to Permitted Liens;
(e) the duly completed Negative Pledge Agreements;
(f) the duly executed Corporate Guaranty;
35
39
(g) certificates of the Secretary or Assistant Secretary of
the Borrower attaching and certifying copies of the resolutions of the
board of directors of the Borrower, and the Guarantor, authorizing as
applicable the execution, delivery and performance of the Credit
Documents;
(h) certificates of the Secretary or an Assistant Secretary of
the Borrower (i) certifying the name, title and true signature of each
officer of the Borrower executing the Credit Documents, (ii) certifying
and attaching the charter and the bylaws of the Borrower and the
Guarantor; and (iii) attaching certificates of good standing or
existence from the Secretary of State of the jurisdiction of
incorporation or organization of the Borrower and the Guarantor, and
each other jurisdiction where the ownership of Property or the conduct
of its business require the Borrower and the Guarantor to be qualified;
(i) certified copies of the certificate or articles of
incorporation of each of the Subsidiaries certified by the Secretary of
State and by the Secretary or Assistant Secretary of the Subsidiaries,
as appropriate, together with certificates of good standing or
existence, as may be available from the Secretary of State of the
jurisdiction of incorporation or organization of the Subsidiaries, and
each other jurisdiction where the ownership of Property or the conduct
of its business require the Subsidiaries to be qualified, except where
a failure to be so qualified would not have a Materially Adverse
Effect;
(j) certificates of Borrower in substantially the form of
Exhibit G and Exhibit I (with regard to Exhibit I calculations shall be
made as of September 30, 1998) attached hereto and appropriately
completed;
(k) the favorable opinion of corporate counsel to the
Consolidated Companies as to certain matters, substantially in the form
of Exhibit H, in each case addressed to the Agent and each of the
Lenders;
(l) copies of all documents and instruments, including all
consents, authorizations and filings, required under the articles or
certificate of incorporation and bylaws or other organizational or
governing documents, under any Requirement of Law or by any Material
Contractual Obligation of the Consolidated Companies, in connection
with the execution, delivery, performance, validity and enforceability
of the Credit Documents and the other documents to be executed and
delivered hereunder, and such consents, authorizations, filings and
orders shall be in full force and effect;
(m) any other document, opinion or certificate reasonably
requested by the Agent and the Lenders assuring the Agent and the
Lenders that all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and
enforceability of the Credit Documents are in form and substance
satisfactory to the Lenders;
36
40
(n) a certificate from the Chief Financial Officer of the
Borrower certifying that the first Advance under the Term Loans shall
be used to cancel and pay in full all Prior Revolving Credit Debt;
(o) certificates of insurance establishing that all Property
of the Borrower, the Guarantor, and Subsidiaries of Borrower have been
insured in amounts determined adequate by Borrower against risks
customarily insured against by similar businesses in such locations;
(p) certificates of insurance establishing that the Borrower
has obtained all insurance required by the Security Documents;
(q) certification by Borrower's Executive Officer that there
has been no material adverse change in the Borrower's financial
condition and operations from that reflected on its financial
statements dated September 30, 1998;
(r) receipt of lien searches in all jurisdictions in which the
Borrower, the Guarantor, and the Subsidiaries owns Property or has an
office revealing no Liens, excluding Permitted Liens, against any
Property of Borrower, the Guarantor, and the Subsidiaries except for
Liens under the Prior Revolving Credit Debt which Liens are to be
terminated with the proceeds of the Revolving Loans; and
(s) payment of all fees required to be paid by the Fee Letter
and this Agreement prior to the Closing Date.
SECTION 4.2. CONDITIONS TO ALL LOANS.
At the time of the making of all Loans, including the initial Loans
hereunder, (before as well as, after giving effect to such Loans and to the
proposed use of the proceeds thereon, the following conditions shall have been
satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower contained
herein shall be true and correct in all Material respects with the same
effect as though such representations and warranties had been made on
and as of the date of such Loans except to the extent they expressly
relate to an earlier date or have been updated to the extent permitted
herein;
(c) since the date of the most recent financial statements of
the Consolidated Companies described in Section 5.14., there shall have
been no change which has had or is reasonably likely to have a
Materially Adverse Effect (whether or not any notice with respect to
such change has been furnished to the Lenders pursuant to Section
6.7.);
37
41
(d) there shall be no action or proceeding instituted or
pending before any court or other governmental authority or, to the
knowledge of any Executive Officer of Borrower, threatened (i) which is
reasonably likely to have a Materially Adverse Effect, or (ii) seeking
to prohibit or restrict one or more of the Consolidated Companies'
right to own or operate any portion of its business or Properties, or
to compel one or more of the Borrower and its Consolidated Companies to
dispose of or hold separate all or any portion of its businesses or
Properties, where such portion or portions of such business(es) or
Properties, as the case may be, constitute a Material portion of the
total businesses or Properties, of the Consolidated Companies;
(e) the Loans to be made and the use of proceeds thereof shall
not contravene, violate or conflict with, or involve the Agent or any
Lender in a violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental authority
applicable to any Consolidated Company; and
(f) the Agent shall have received such other documents or
legal opinions as the Agent or any Lender may reasonably request, all
in form and substance reasonably satisfactory to the Agent.
Each request for a Borrowing and the acceptance by Borrower of the
proceeds thereof shall constitute a representation and warranty by Borrower, as
of the date of the Loans comprising such Borrowing, that the applicable
conditions specified in Sections 4. 1. and 4.2. have been satisfied.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Borrower (as to itself and all other Consolidated Companies) represents
and warrants as follows:
SECTION 5.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW.
Each of the Consolidated Companies is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Consolidated Companies (i) has the corporate power
and authority and the legal right to own and operate its Property and to conduct
its business, (ii) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership of Property or
the conduct of its business requires such qualification, and (iii) is in
compliance with all Requirements of Law, where the failure to so comply is
reasonably likely to have a Materially Adverse Effect. The jurisdiction of
incorporation or organization, and the ownership of all issued and outstanding
capital stock, for each Subsidiary as of the date of this Agreement is
accurately described on Schedule 5.1. Schedule 5.1. may be updated from time to
time by the Borrower by giving written notice thereof to the Agent.
SECTION 5.2. CORPORATE POWER; AUTHORIZATION.
38
42
Each of the Borrower and the Guarantor has the corporate power and
authority to make, deliver and perform the Credit Documents to which it is a
party and has taken all necessary corporate action to authorize the execution,
delivery and performance of such Credit Documents. No consent or authorization
of, or filing with, any Person (including, without limitation, any governmental
authority), is required in connection with the execution, delivery or
performance by the Borrower or the Guarantors, or the validity or enforceability
against the Borrower or the Guarantors, of the Credit Documents, other than such
consents, authorizations or filings which have been made or obtained.
SECTION 5.3. ENFORCEABLE OBLIGATIONS.
This Agreement has been duly executed and delivered, and each other
Credit Document will be duly executed and delivered, by the respective
Consolidated Companies, as applicable, and this Agreement constitutes, and each
other Credit Document when executed and delivered will constitute, legal, valid
and binding obligations of the Consolidated Companies executing the same,
enforceable against such Consolidated Companies in accordance with their
respective terms.
SECTION 5.4. NO LEGAL BAR.
The execution, delivery and performance by the Consolidated Companies
of the Credit Documents do not violate their respective articles or certificates
of incorporation, bylaws or other organizational or governing documents, or any
Requirement of Law, or any applicable judgment, court order, administrative
agency order, or cause a breach or default under any of their respective
Material Contractual Obligations.
SECTION 5.5. NO MATERIAL LITIGATION.
Except as set forth on Schedule 5.5, no litigation, investigation or
proceeding of or before any court, tribunal, arbitrator or governmental
authority is pending or, to the knowledge of any Executive Officer of the
Borrower, threatened by or against any of the Consolidated Companies, or against
any of their respective Properties or revenues, existing or future (a) with
respect to any Credit Document, or any of the transactions contemplated hereby
or thereby, or (b) which, if adversely determined, is reasonably likely to have
a Materially Adverse Effect.
SECTION 5.6. INVESTMENT COMPANY ACT, ETC.
Neither of the Consolidated Companies is an "investment company" or a
company "controlled" by an "investment company" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended). None of the
Consolidated Companies is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any foreign, federal or local
statute or regulation limiting its ability to incur Indebtedness for Money
Borrowed, guarantee such indebtedness, or pledge its assets to secure such
indebtedness, as contemplated hereby or by any other Credit Document.
39
43
SECTION 5.7. MARGIN REGULATIONS.
No part of the proceeds of any of the Loans will be used for any
purpose which violates, or which would be inconsistent or not in compliance
with, the provisions of the applicable Margin Regulations.
SECTION 5.8. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The Consolidated Companies have received no notices of
claims or potential liability under, and are in compliance with, all
applicable Environmental Laws, where such claims and liabilities under,
and failures to comply with, such statutes, regulations, rules,
ordinances, laws or licenses, is reasonably likely to result in
penalties, fines, claims or other liabilities to the Consolidated
Companies in amounts that would have a Materially Adverse Effect,
either individually or in the aggregate (including any such penalties,
fines, claims, or liabilities relating to the matters set forth on
Schedule 5.8.(a)), except as set forth on Schedule 5.8.(a)).
(b) Except as set forth on Schedule 5.8.(b), none of the
Consolidated Companies has received any notice of violation, or notice
of any action, either judicial or administrative, from any governmental
authority (whether United States or foreign) relating to the actual or
alleged violation of any Environmental Law, including, without
limitation any notice of any actual or alleged spill, leak, or other
release of any Hazardous Substance, waste or hazardous waste by any
Consolidated Company or its employees or agents, or as to the existence
of any continuation on any Properties owned by any Consolidated
Company, where any such violation, spill, leak, release or
contamination is reasonably likely to result in penalties, fines,
claims or other liabilities to the Consolidated Companies in amounts
that would have a Materially Adverse Effect, either individually or in
the aggregate.
(c) Except as set forth on Schedule 5.8.(c), the Consolidated
Companies have obtained all necessary governmental permits, licenses
and approvals for the operations conducted on their respective
Properties, including without limitation, all required Material
permits, licenses and approvals for (i) the emission of air pollutants
or contaminants, (ii) the treatment or pretreatment and discharge of
waste water or storm water, (iii) the treatment, storage, disposal or
generation of hazardous wastes, (iv) the withdrawal and usage of ground
water or surface water, and (v) the disposal of solid wastes, in any
such case where the failure to have such license, permit or approval is
reasonably likely to have a Materially Adverse Effect.
SECTION 5.9. INSURANCE.
The Consolidated Companies currently maintain such insurance with
respect to their Properties and business with financially sound and reputable
insurers, and in
40
44
such amounts and having such coverages against losses and damages in types and
in amounts customary in the industry and locations where the Borrower is located
and which the Borrower in the exercise of its reasonable prudent business
judgment has determined to be necessary to prevent the Consolidated Companies
from experiencing a loss which would cause a Materially Adverse Effect. The
Consolidated Companies have paid all Material amounts of insurance premiums now
due and owing with respect to such insurance policies and coverages, and such
policies and coverages are in full force and effect. The Consolidated Companies
maintain such insurance as required by the Security Documents.
SECTION 5.10. NO DEFAULT.
None of the Consolidated Companies is in default under or with respect
to any Contractual Obligation in any respect which has had or is reasonably
likely to have a Materially Adverse Effect.
SECTION 5.11. NO BURDENSOME RESTRICTIONS.
Except as set forth on Schedule 5.11., none of the Consolidated
Companies is a party to or bound by any Contractual Obligation (including
collective bargaining agreements) or Requirement of Law or any provision of its
respective articles or certificates of incorporation, bylaws, or other
organizational or governing documents which has had or is reasonably likely to
have a Materially Adverse Effect.
SECTION 5.12. TAXES.
The Consolidated Companies have filed all Federal tax returns (or have
obtained permitted extensions) and, to the knowledge of any Executive Officer of
the Borrower, the Consolidated Companies have filed (or have obtained permitted
extensions) all other tax returns which are required to have been filed in any
jurisdiction; the Consolidated Companies have paid all taxes shown to be due and
payable on such Federal returns and other returns and all other taxes,
assessments, fees and other charges payable by them, in each case, to the extent
the same have become due and payable and before they have become delinquent,
except for the filing of any such returns or the payment of any taxes,
assessments, fees and other charges the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which any Consolidated Company has set aside on its books
reserves (segregated to the extent required by GAAP) deemed by it in good faith
to be adequate. The Borrower has not received written notice of any proposed
Material tax assessment with respect to Federal income taxes against any of the
Consolidated Companies nor does any Executive Officer of the Borrower know of
any Material Federal income tax liability on the part of the Consolidated
Companies other than any such assessment or liability which is adequately
reserved for on the books of the Consolidated Companies in accordance with GAAP.
SECTION 5.13. SUBSIDIARIES.
41
45
Except as disclosed on Schedule 5.13.A, neither Borrower nor Guarantor
has any Subsidiaries and neither Borrower nor Guarantor nor any Subsidiary is a
joint venture partner or general partner in any partnership. Schedule 5.13.A may
be updated from time to time by the Borrower by giving written notice thereof to
the Agent. Schedule 5.13.B is a list of all Subsidiaries that are not required
to execute a Subsidiary Guaranty.
SECTION 5.14. FINANCIAL STATEMENTS.
Borrower has furnished to the Agent and the Lenders (i) the audited
consolidated balance sheets as of June 30, 1998 of the Consolidated Companies
and the related consolidated statements of income, shareholders' equity and cash
flows for the fiscal years then ended, including in each case the related notes.
The foregoing financial statements fairly present in all Material respects the
consolidated financial condition of the Consolidated Companies as at the dates
thereof and results of operations for such periods in conformity with GAAP
consistently applied (subject, in the case of the quarterly financial
statements, to normal year-end audit adjustments and the absence of certain
notes). The Consolidated Companies taken as a whole did not have any Material
contingent obligations, contingent liabilities, or Material liabilities for
known taxes, long-term leases or unusual forward or long-term commitments
required to be reflected in the foregoing financial statements or the notes
thereto that are not so reflected. Since June 30, 1998, there have been no
changes with respect to the Consolidated Companies which has had or is
reasonably likely to have a Materially Adverse Effect.
SECTION 5.15. ERISA.
Except as disclosed on Schedule 5.15:
(a) Identification of Plans. None of the Consolidated
Companies nor any of their respective ERISA Affiliates maintains or
contributes to, or has during the past seven years maintained or
contributed to, any Plan that is subject to Title IV of ERISA;
(b) Compliance. Each Plan maintained by the Consolidated
Companies has at all times been maintained, by their terms and in
operation, in compliance with all applicable laws, and the Consolidated
Companies are subject to no tax or penalty with respect to any Plan of
such Consolidated Company or any ERISA Affiliate thereof, including
without limitation, any tax or penalty under Title I or Title IV of
ERISA or under Chapter 43 of the Tax Code, or any tax or penalty
resulting from a loss of deduction under Sections 162, 404, or 419 of
the Tax Code, where the failure to comply with such laws, and such
taxes and penalties, together with all other liabilities referred to in
this Section 5.15. (taken as a whole), would in the aggregate have a
Materially Adverse Effect;
(c) Liabilities. The Consolidated Companies are subject to no
liabilities (including withdrawal liabilities) with respect to any
Plans of such Consolidated
42
46
Companies or any of their ERISA Affiliates, including without
limitation, any liabilities arising from Titles I or IV of ERISA,
other than obligations to fund benefits under an ongoing Plan and to
pay current contributions, expenses and premiums with respect to such
Plans, where such liabilities, together with all other liabilities
referred to in this Section 5.15. (taken as a whole), would in the
aggregate have a Materially Adverse Effect;
(d) Funding. The Consolidated Companies and, with respect to
any Plan which is subject to Title IV of ERISA, each of their
respective ERISA Affiliates, have made full and timely payment of all
amounts (A) required to be contributed under the terms of each Plan and
applicable law, and (B) required to be paid as expenses (including PBGC
or other premiums) of each Plan, where the failure to pay such amounts
(when taken as a whole, including any penalties attributable to such
amounts) would have a Materially Adverse Effect. No Plan subject to
Title IV of ERISA has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA), determined as if such Plan
terminated on any date on which this representation and warranty is
deemed made, in any amount which, together with all other liabilities
referred to in this Section 5.15. (taken as a whole), would have a
Materially Adverse Effect if such amount were then due and payable. The
Consolidated Companies are subject to no liabilities with respect to
post-retirement medical benefits in any amounts which, together with
all other liabilities referred to in this Section 5.15. (taken as a
whole), would have a Materially Adverse Effect if such amounts were
then due and payable.
SECTION 5.16. PATENTS, TRADEMARKS, LICENSES, ETC.
Except as set forth on Schedule 5.16., (i) the Consolidated Companies
have obtained and hold in full force and effect all Material governmental
authorizations, consents, approvals, patents, trademarks, service marks,
franchises, trade names, copyrights, licenses and other such rights, free from
burdensome restrictions, which are necessary for the operation of their
respective businesses as presently conducted, and (ii) to the best of Borrower's
knowledge, no product, process, method, service or other item presently sold by
or employed by any Consolidated Company in connection with such business
infringes any patents, trademark, service ▇▇▇▇, franchise, trade name,
copyright, license or other right owned by any other Person and there is not
presently pending, or to the knowledge of Borrower, threatened, any claim or
litigation against or affecting any Consolidated Company contesting such
Person's right to sell or use any such product, process, method, substance or
other item where the result of such failure to obtain and hold such benefits or
such infringement would have a Materially Adverse Effect.
SECTION 5.17. OWNERSHIP OF PROPERTY; LIENS.
(a) Except as set forth on Schedule 5.17., (i) each
Consolidated Company has good and marketable fee simple title to or a
valid leasehold interest in all of its real property and good title to
all of its other Property, as such Properties are reflected in the
consolidated balance sheet of the
43
47
Consolidated Companies as of June 30, 1998, except where the failure
to hold such title, leasehold interest, or possession would not have a
Materially Adverse Effect, other than Properties disposed of in the
ordinary course of business since such date or as otherwise permitted
by the terms of this Agreement, subject to no known Lien or title
defect of any kind, except Liens permitted by Section 7.2. and (ii)
the Consolidated Companies enjoy peaceful and undisturbed possession
under all of their respective leases except where the failure to enjoy
peaceful and undisturbed possession would not have a Materially
Adverse Effect.
(b) As of the date of this Agreement, the Property owned by
each Consolidated Company is not subject to any Lien, excluding
Permitted Liens, securing any Indebtedness or other obligation of such
Consolidated Company, other than as described on Schedule 5.17. hereof.
SECTION 5.18. INDEBTEDNESS.
Other than as described on Schedule 5.18. herein, and as of the date
hereof, the Consolidated Companies, on a consolidated basis, are not obligors
(singularly or in the aggregate) in respect of any Indebtedness for Borrowed
Money in excess of $750,000 or any commitment to create or incur any
Indebtedness for Borrowed Money in excess of $250,000.
SECTION 5.19. FINANCIAL CONDITION.
On the Closing Date and after giving effect to the transactions
contemplated by this Agreement and the other Credit Documents, the Property of
each Consolidated Company at fair valuation and based on their present fair
saleable value will exceed such Consolidated Company's debts (excluding
obligations to affiliated companies), including contingent liabilities, (ii) the
remaining capital of such Consolidated Company will not be unreasonably small to
conduct such Consolidated Company's business, and (iii) such Consolidated
Company will not have incurred debts, or have intended to incur debts, beyond
the Consolidated Company's ability to pay such debts as they mature. For
purposes of this Section 5.19., "debt" means any liability on a claim, and
"claim" means (a) the right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, or (b) the right
to an equitable remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
SECTION 5.20. LABOR MATTERS.
Except as set forth in Schedule 5.20., the Consolidated Companies have
experienced no strikes, labor disputes, slow downs or work stoppages due to
labor disagreements which is reasonably likely to have, a Materially Adverse
Effect, and, to the best knowledge of the Executive Officers of the Borrower,
there are no such strikes, disputes, slow downs or work stoppages threatened
against any Consolidated Company
44
48
except as disclosed in writing to the Agent. The hours worked and payment made
to employees of the Consolidated Companies have not been in violation in any
Material respect of the Fair Labor Standards Act or any other applicable law
dealing with such matters, and all payments due from the Consolidated Companies,
or for which any claim may be made against the Consolidated Companies, on
account of wages and employee health and welfare insurance and other benefits
have been paid or accrued as liabilities on the books of the Consolidated
Companies, in each case where the failure to comply with such laws or to pay or
accrue such liabilities is reasonably likely to have a Materially Adverse
Effect.
SECTION 5.21. PAYMENT OF DIVIDEND RESTRICTIONS.
Except as described on Schedule 5.21., none of the Consolidated
Companies is party to or subject to any agreement or understanding restricting
or limiting the payment of any dividends or other distributions by any such
Consolidated Company.
SECTION 5.22. DISCLOSURE.
(a) Neither this Agreement nor any financial statements
delivered to the Lenders nor in the most recent version of any other
document, certificate or written statement furnished to the Lenders by
or on behalf of any Consolidated Company in connection with the
transactions contemplated hereby contains any untrue statement of a
Material fact or omits to state a Material fact necessary in order to
make the statements contained therein or herein not misleading, it
being understood that the representation set forth in this Section
5.22.(a) shall not apply to any financial projections or other pro
forma financial information.
(b) The financial projections and other pro forma financial
information contained in the information referred to in subsection (a)
above were based on good faith estimates and assumptions believed by
the applicable Consolidated Companies to be reasonable at the time made
and at the time furnished to the Agent and/or any Lender, it being
recognized by the Lenders that such projections and other pro forma
financial information as to future events such projections and other
pro forma financial information may differ from the projected results
for such period or periods.
SECTION 5.23. NOTICE OF VIOLATIONS.
The Borrower has not received notice, and no Consolidated Company has
received notice, that it is in violation of any Requirement of Law, judgment,
court order, rule, or regulation that would be expected to have a Materially
Adverse Effect.
SECTION 5.24. FILINGS.
The Borrower has filed all reports and statements required to be filed
with the Securities and Exchange Commission. As of their respective dates, the
reports and statements referred to above complied in all Material respects with
all rules and
45
49
regulations promulgated by the Securities and Exchange Commission and did not
contain any untrue statement of a Material fact or omit to state a Material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5.25. INVESTMENTS.
The Borrower has not provided equity, provided subordinated debt, or
made long-term investments in any Person other than the Guarantor and
wholly-owned Subsidiaries, except for the promissory note issued by Borrower to
Helicon, Inc., which has been subordinated to the repayment of certain
obligations.
ARTICLE VI. AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any Note or
other Obligations shall remain unpaid, Borrower will:
SECTION 6.1. CORPORATE EXISTENCE, ETC.
Preserve and maintain, and cause each of the Consolidated Companies to
preserve and maintain, its corporate existence (except as otherwise permitted
pursuant to Section 7.3.), its Material rights, franchises, and licenses, and
its Material patents and copyrights (for the scheduled duration thereof),
trademarks, trade names, service marks, and other intellectual property rights,
necessary or desirable in the normal conduct of its business, and its
qualification to do business as a foreign corporation in all jurisdictions where
it conducts business or other activities making such qualification necessary,
where the failure to be so qualified is reasonably likely to have a Materially
Adverse Effect.
SECTION 6.2. COMPLIANCE WITH LAWS, ETC.
Comply, and cause each Consolidated Company to comply, with all
Requirements of Law (including, without limitation, the Environmental Laws) and
all Contractual Obligations applicable to or binding on any of them where the
failure to comply with such Requirements of Law and Contractual Obligations is
reasonably likely to have a Materially Adverse Effect.
SECTION 6.3. PAYMENT OF TAXES AND CLAIMS, ETC.
File and cause each Consolidated Company to file all Federal, state,
local and foreign tax returns that are required to be filed by each of them and
pay all taxes that have become due pursuant to such returns or pursuant to any
assessment in respect thereof received by any Consolidated Company; and each
Consolidated Company will pay or cause to be paid all other taxes, assessments,
fees and other governmental charges and levies which, to the knowledge of any of
the Executive Officers of any Consolidated Company, are due and payable before
the same become delinquent, except any such taxes and assessments as are being
contested in good faith by appropriate and
46
50
timely proceedings and as to which adequate reserves have been established in
accordance with GAAP.
SECTION 6.4. KEEPING OF BOOKS.
Keep, and cause each Consolidated Company to keep, proper books of
record and account, containing complete and accurate entries of all their
respective financial and business transactions.
SECTION 6.5. VISITATION, INSPECTION, ETC.
Permit, and cause each Consolidated Company to permit, any
representative of the Agent or any Lender, at the Agent's or such Lender's
expense, to visit and inspect any of its Property, to examine its books and
records and to make copies and take extracts therefrom, and to discuss its
affairs, finances and accounts with its officers, all at such reasonable times
and as often as the Agent or such Lender may reasonably request after reasonable
prior notice to Borrower; provided, however, that at any time following the
occurrence and during the continuance of a Default or an Event of Default, no
prior notice to Borrower shall be required.
SECTION 6.6. INSURANCE; MAINTENANCE OF PROPERTIES.
(a) Maintain or cause to be maintained with financially sound
and reputable insurers, such insurance with respect to its Properties
and business in such amounts as the Borrower has determined in the
exercise of its reasonable prudent business judgment is necessary to
prevent the Consolidated Companies, singularly or in the aggregate from
experiencing a loss which would cause a Materially Adverse Effect.
(b) Cause, and cause each of the Consolidated Companies to
cause, all Properties used or useful in the conduct of its business to
be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and cause to be made all
necessary repairs, renewals, replacements, settlements and improvements
thereof, all as in the reasonable judgment of Borrower may be necessary
so that the business carried on in connection therewith may be properly
and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent Borrower from discontinuing the
operation or maintenance of any such Properties if such discontinuance
is, in the reasonable judgment of Borrower, desirable in the conduct of
its business or the business of any Consolidated Company.
(c) Cause a summary, set forth in format and detail reasonably
acceptable to the Agent, of the types and amounts of insurance
(property and liability) maintained by the Consolidated Companies to be
delivered to the Agent on or before thirty (30) days after the Closing
Date.
47
51
(d) Maintain and cause to be maintained all insurance required
to be maintained by the Security Documents.
SECTION 6.7. FINANCIAL REPORTS.
The Borrower will furnish to the Agent and each Lender:
(a) Within sixty (60) days after the end of each of the first
three quarter-annual periods of each Fiscal Year, the quarterly
Financial Report of the Borrower as of the end of that period, prepared
on a consolidated basis and accompanied by a certificate, dated the
date of furnishing, signed by a Financial Officer of the Borrower to
the effect that such Financial Report accurately presents in all
Material respects the consolidated financial condition of the
Consolidated Companies and that such Financial Report has been prepared
in accordance with GAAP consistently applied (subject to year end
adjustments), except that such Financial Report need not be accompanied
by notes.
(b) Within one hundred and twenty (120) days after the end of
each Fiscal Year, the annual Financial Report of the Borrower (with
accompanying notes) for that Fiscal Year prepared on a consolidated
basis (which Financial Report shall be reported on by the Borrower's
independent certified public accountants, such report to state that
such Financial Report fairly presents in all Material respects the
consolidated financial condition and results of operation of the
Consolidated Companies in accordance with GAAP and to be without any
Material qualifications or exceptions). The audit opinion in respect of
the consolidated Financial Report shall be the unqualified opinion of
one of the nationally recognized "Big Six" firms of independent
certified public accountants acceptable to Agent and shall be
accompanied by a statement of the independent certified public
accountants regarding whether a Default or Event of Default has
occurred.
(c) Within sixty (60) days after the end of each of its first
three quarterly accounting periods and within one hundred and twenty
(120) days after the end of each Fiscal Year, a statement certified as
true and correct by a Financial Officer of the Borrower, substantially
in the form of Exhibit I hereto, with back-up material setting forth in
reasonable detail such calculations attached thereto and stating
whether any Default or Event of Default has occurred and is continuing,
and if a Default or Event of Default has occurred and is continuing,
stating the Borrower's intentions with respect thereto.
(d) Within thirty (30) days after the end of each calendar
month, the unaudited monthly Financial Report (excluding statements of
cash flows) of Borrower and the Consolidated Companies;
(e) Within ninety (90) days after the end of each Fiscal Year
the annual financial projections of Borrower and the Consolidated
Companies in a format acceptable to Lender (which shall not be prepared
in accordance with
48
52
GAAP) (including projected balance sheets, income statements, and
statements of cash flows);
(f) Promptly upon the filing thereof or otherwise becoming
available, copies of all financial statements, annual, quarterly and
special reports (including, without limitation, Borrower's 8-K, 10-K,
and 10-Q reports), proxy statements and notices sent or made available
generally by Borrower to its public security holders, of all regular
and periodic reports and all registration statements and prospectuses,
if any, filed by any of them with any securities exchange or with the
Securities and Exchange Commission, and of all press releases and other
statements made available generally to the public containing Material
developments in the business or financial condition of Borrower and the
other Consolidated Companies.
(g) Promptly upon receipt thereof, copies of all financial
statements of, and all reports submitted by, independent public
accountants to Borrower in connection with each annual, interim, or
special audit of Borrower's financial statements, including without
limitation, the comment letter submitted by such accountants to
management in connection with their annual audit.
(h) As soon as possible and in any event within thirty (30)
days after the Borrower or any Consolidated Company knows or has reason
to know that any "Reportable Event" (as defined in Section 4043(b) of
ERISA) with respect to any Plan has occurred (other than such a
Reportable Event for which the PBGC has waived the 30-day notice
requirement under Section 4043(a) of ERISA) and such Reportable Event
involves a matter that has had, or is reasonably likely to have, a
Materially Adverse Effect, a statement of a Financial Officer of the
applicable Consolidated Company setting forth details as to such
Reportable Event and the action which the applicable Consolidated
Company proposes to take with respect thereto, together with a copy of
the notice of such Reportable Event given to the PBGC if a copy of such
notice is available to the applicable Consolidated Company.
(i) With reasonable promptness, such other information
relating to the Borrower's performance of this Agreement or its
financial condition as may reasonably be requested from time to time by
the Agent.
(j) Concurrently with the furnishing of the annual
consolidated Financial Report required pursuant to Section 6.7.(b)
hereof, furnish or cause to be furnished to Agent and each Lender a
certificate of compliance in a form reasonably satisfactory to Agent
prepared by one of the nationally recognized "Big Six" accounting firms
stating that in making the examination necessary for their audit, they
have obtained no knowledge of any Default or Event of Default, or if
they have obtained such knowledge, disclosing the nature, details, and
period of existence of such event.
49
53
SECTION 6.8. NOTICES UNDER CERTAIN OTHER INDEBTEDNESS.
Immediately upon its receipt thereof, Borrower shall furnish the Agent
a copy of any notice received by it or any other Consolidated Company from the
holder(s) of Indebtedness (or from any trustee, agent, attorney, or other party
acting on behalf of such holder(s)) in an amount which, in the aggregate,
exceeds $500,000 where such notice states or claims (i) the existence or
occurrence of any default or event of default with respect to such Indebtedness
under the terms of any indenture, loan or credit agreement, debenture, note, or
other document evidencing or governing such Indebtedness, or (ii) the existence
or occurrence of any event or condition which requires or permits holder(s) of
any Indebtedness of the Consolidated Companies to exercise rights under any
Change in Control Provision.
SECTION 6.9. NOTICE OF LITIGATION.
The Borrower shall notify the Agent of any actions, suits or
proceedings instituted by any Person against the Consolidated Companies where
the uninsured portion of the money damages sought (which shall include any
deductible amount to be paid by the Borrower or any Consolidated Company) is
singularly in an amount in excess of $500,000 or where unreserved amounts in the
aggregate are in excess of $1,000,000. Said notice is to be given along with the
quarterly and annual reports required by Section 6.7. hereof, and is to specify
the amount of damages being claimed or other relief being sought, the nature of
the claim, the Person instituting the action, suit or proceeding, and any other
significant features of the claim.
SECTION 6.10. SUBSIDIARY GUARANTIES, ETC.
(a) Subject to subsection (c) below, the Borrower shall cause
each of the Consolidated Companies existing as of the Closing Date to
execute and deliver on or before the Closing Date a Subsidiary Guaranty
in substantially the same form as set forth in Exhibit J and to execute
a Security Agreement in the form of Exhibit K and such other documents
required by Agent to obtain a security interest in the Property
described therein. The delivery of such documents shall be accompanied
by such other documents as the Agent may reasonably request (e.g.,
certificates of incorporation, articles of incorporation and bylaws,
opinion letters and appropriate resolutions of the Board of Directors
of any such Subsidiary Guarantor). The Borrower shall pay all costs
incurred by Agent in obtaining the Subsidiary Guaranty and the Security
Agreement, and perfecting a Lien in the Collateral.
(b) Subject to subsection (c) below, the Borrower shall cause
each Consolidated Company not existing as of the Closing Date to
execute and deliver a Subsidiary Guaranty in substantially the same
form as set forth in Exhibit J and to execute a Security Agreement in
the form of Exhibit K, simultaneously with the creation or acquisition
of any such Consolidated Company by the Borrower or any other such
Consolidated Company. The delivery of such documents shall be
accompanied by such other documents as the Agent may
50
54
reasonably request (e.g., certificates of incorporation, articles of
incorporation and bylaws, opinion letters and appropriate resolutions
of the Board of Directors of any such Subsidiary Guarantor). The
Borrower shall pay all costs incurred by Agent in obtaining the
Subsidiary Guaranty and the Security Agreement, and perfecting a Lien
in the Collateral.
(c) Notwithstanding the foregoing subsections (a) and (b), the
Borrower shall not be required to cause any Consolidated Company to
deliver a Subsidiary Guaranty or Security Agreement if the delivery of
such documents would cause such Consolidated Company to violate any
Requirement of Law.
SECTION 6.11. EXISTING BUSINESS.
Remain and cause each Consolidated Company to remain engaged in
business of the same general nature and type as conducted on the Closing Date.
SECTION 6.12. ERISA INFORMATION AND COMPLIANCE.
Comply and cause each Consolidated Company to comply with ERISA and all
other applicable laws governing any pension or profit sharing plan or
arrangement to which any Consolidated Company is a party. The Borrower shall
provide and shall cause each Consolidated Company to provide Agent with notice
of any "reportable event" or "prohibited transaction" or the imposition of a
"withdrawal liability" within the meaning of ERISA.
SECTION 6.13. INTEREST RATE CONTRACTS.
The Borrower, at its expense, agrees to grant any Lender a lien and
security interest in all Collateral to secure the repayment of any Interest Rate
Contracts entered into with regard to the Obligations, all pursuant to such
documentation and filings as required by such Lender.
ARTICLE VII. NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any Revolving
Credit Note shall remain unpaid:
SECTION 7.1. FINANCIAL REQUIREMENTS.
The Borrower shall not:
(a) Funded Debt to EBITDA. Suffer or permit, as of the last
day of any fiscal quarter, the ratio of (A) Consolidated Funded Debt to
(B) the sum of (i) Consolidated EBITDA minus (ii) dividends paid to
exceed 3.5 to 1.0, as calculated for the most recently concluded fiscal
quarter and the immediately three (3) preceding fiscal quarters.
51
55
(b) Fixed Charge Coverage Ratio. (i) from the date hereof
until the fiscal quarter ending December 31, 2001, suffer or permit, as
of the last day of any fiscal quarter, the ratio of (A) the sum of: (i)
Consolidated EBIT, plus (ii) Consolidated Rental Expense, minus (iii)
dividends paid to (B) the sum of (i) Consolidated Interest Expense,
plus (ii) Consolidated Rental Expense to be less than 3.0 to 1.0; and
(ii) commencing with the fiscal quarter ending March 31, 2002 and
throughout the term of this Agreement, suffer or permit, as of the last
day of any fiscal quarter, the ratio of (A) the sum of: (i)
Consolidated EBIT, plus (ii) Consolidated Rental Expense, minus (ii)
dividends paid to (B) the sum of (i) Consolidated Interest Expense,
plus Consolidated Rental Expense plus (iii) principal payments paid on
the Term Loans to be less than 2.0 to 1.0.
(c) Consolidated Funded Debt to Total Capitalization Ratio.
Permit, as of the last day of any fiscal quarter, the ratio of
Consolidated Funded Debt to Total Capitalization to be greater than .50
to 1.0.
(d) Minimum Tangible Net Worth. Permit the Consolidated
Tangible Net Worth to be less than a minimum amount equal to: (i)
$38,000,000, plus (ii) on a fiscal quarter basis beginning with the
quarter ending December 31, 1998, a cumulative amount equal to 75% of
Consolidated Net Income, or minus 100% of Consolidated Net Losses, plus
100% of the net proceeds of any Equity Proceeds raised subsequent to
the Closing Date.
SECTION 7.2. LIENS.
The Borrower will not, and will not permit any Consolidated Company to,
create, assume or suffer to exist any Lien upon any of their respective
Properties whether now owned or hereafter acquired; provided, however, that this
Section 7.2. shall not apply to the following:
(a) any Lien for taxes not yet due or taxes or assessments or
other governmental charges which are being actively contested in good
faith by appropriate proceedings and as to which adequate reserves have
been established in accordance with GAAP;
(b) any customary Liens, pledges or deposits in connection
with worker's compensation, unemployment insurance, or social security,
or deposits incidental to the conduct of the business of any
Consolidated Company or the ownership of any of their Properties which
were not incurred in connection with the borrowing of money or the
obtaining of advances or credit and which do not in the aggregate
Materially detract from the value of their Properties or Materially
impair the use thereof in the operation of their businesses;
(c) any customary Liens to secure the performance of tenders,
statutory obligations, surety and appeal bonds, and similar obligations
and as to which adequate reserves have been established in accordance
with GAAP;
52
56
(d) statutory Liens of carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings and as to which adequate
reserves have been established in accordance with GAAP;
(e) Liens consisting of encumbrances in the nature of zoning
restrictions, easements, rights and restrictions of record on the use
of real property on the date of the acquisition thereof and statutory
Liens of landlords and lessors which in any case do not Materially
detract from the value of such real property or impair the use thereof;
(f) any Lien in favor of the United States of America or any
department or agency thereof, or in favor of any state government or
political subdivision thereof, or in favor of a prime contractor under
a government contract of the United States, or of any state government
or any political subdivision thereof, and, in each case, resulting from
acceptance of partial, progress, advance or other payments in the
ordinary course of business under government contracts of the United
States, or of any state government or any political subdivision
thereof, or subcontracts thereunder;
(g) statutory Liens arising under ERISA created in the
ordinary course of business for amounts not yet due and as to which
adequate reserves have been established in accordance with GAAP;
(h) any Lien incurred in connection with: (i) Purchase Money
Indebtedness and placed upon any Property at the time of its
acquisition (or within 60 days thereafter) by any Consolidated Company
to secure all or a portion of the purchase price therefor, and (ii) any
Lien securing Purchase Money Indebtedness of a Person acquired in an
Acquisition, provided that the aggregate cumulative amount of
Indebtedness secured by such purchase money Liens identified in
subparts (i) and (ii) must never exceed an amount equal to $500,000;
and
(i) the Lien granted on the real property acquired in the
California Acquisition to secure an amount not to exceed $2,375,000.00.
SECTION 7.3. MERGER AND SALE OF ASSETS.
Except as permitted by Section 7.12. herein, the Borrower will not,
without the prior written consent of the Required Lenders, merge or consolidate
with any other corporation or sell, lease or transfer or otherwise dispose of
all or, during any twelve-month period, a Material part of its Property to any
Person, nor shall the Borrower permit any Consolidated Company to take any of
the above actions; provided that notwithstanding any of the foregoing
limitations, if no Default or Event of Default shall then exist or immediately
thereafter will exist, Consolidated Companies may take the following actions:
53
57
(a) Any Consolidated Company may merge with (i) the Borrower
(provided that the Borrower shall be the continuing or surviving
corporation) or (ii) any one or more other Subsidiaries provided that
either the continuing or surviving corporation shall remain a
Consolidated Company; and
(b) Any Consolidated Company may sell, lease, transfer or
otherwise dispose of any of its assets to (i) the Borrower, or (ii) any
other Consolidated Company.
SECTION 7.4. TRANSACTIONS WITH AFFILIATES.
The Borrower will not, and will not permit any Consolidated Company to,
enter into or be a party to any transaction or arrangement with any Affiliate
(including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliates),
except in the ordinary course of and pursuant to the reasonable requirements of
such Consolidated Company's business and upon fair and reasonable terms no less
favorable to such Consolidated Company than such party would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
SECTION 7.5. NATURE OF BUSINESS.
The Borrower will not, and will not permit any Consolidated Company to,
engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by any
Consolidated Company would be fundamentally changed from the general nature of
the business engaged in by the Consolidated Companies on the date of this
Agreement.
SECTION 7.6. REGULATIONS G, T, U AND X.
The Borrower will not nor will it permit any Consolidated Company to
take any action that would result in any non-compliance of the Advances made
hereunder with Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System.
SECTION 7.7. ERISA COMPLIANCE.
The Borrower will not, and will not permit any Consolidated Company to,
incur any Material "accumulated funding deficiency" within the meaning of
Section 302(a)(2) of ERISA, or any Material liability under Section 4062 of
ERISA to the Pension Benefit Guaranty Corporation ("PBGC") established
thereunder in connection with any Plan.
SECTION 7.8. INVESTMENTS, LOANS, AND ADVANCES.
The Borrower will not, and will not permit any Consolidated Company to,
make or permit to remain outstanding any loans or advances to or investments in
any Person, except that, subject to all other provisions of this Section 7.8.,
the foregoing restriction shall not apply to:
54
58
(a) investments in direct obligations of the United States of
America or any agency thereof having maturities of one year or less;
(b) investments in commercial paper maturing one year or less
from the date of creation thereof of the highest credit rating of a
Rating Agency;
(c) investments in bankers' acceptances and certificates of
deposit having maturities of one year or less issued by commercial
banks in the United States of America having capital and surplus in
excess of $50,000,000;
(d) loans or advances to any Person made in the ordinary
course of business not to exceed $500,000 in the aggregate outstanding
at any time;
(e) the endorsement of negotiable or similar instruments in
the ordinary course of business; and
(f) investments in stock of any Consolidated Companies.
SECTION 7.9. SALES AND LEASEBACKS.
The Borrower will not, and will not permit any Consolidated Company to,
enter into any arrangement, directly or indirectly, with any Person by which any
Consolidated Entity shall sell or transfer any Property, and by which any
Consolidated Entity shall then or thereafter rent or lease as lessee such
Property or any part thereof or other Property that such Consolidated Entity
intends to use for substantially the same purpose or purposes as the Property
sold or transferred.
SECTION 7.10. GUARANTIES.
The Borrower shall not, and will not permit any Consolidated Company
to, enter into any Guaranty, except that, subject to all other provisions of
this Article, the foregoing restriction shall not apply to:
(a) the Corporate Guaranty and any Subsidiary Guaranties;
(b) endorsements of instruments for deposit or collection in
the ordinary course of business; and
(c) the Guaranty of Borrower related to Debt of Helicon, Inc.
provided that the principal amount of the Debt of Helicon, Inc.
guaranteed by Borrower shall not be permitted to increase above
$1,500,000 without the prior written consent of the Required Lenders.
SECTION 7.11. LIMITATION ON FUNDED DEBT.
The Borrower will not permit any Consolidated Company and the
Consolidated Companies in the aggregate to incur or suffer to exist Funded Debt
other than:
55
59
(a) Funded Debt to Lenders described in this Agreement;
(b) Purchase Money Indebtedness permitted by Section 7.2.(h)
herein; and
(c) Funded Debt incurred in connection with the California
Acquisition not to exceed $2,375,000.00 or any Funded Debt incurred in
connection with an Acquisition for which the Required Lenders give
express written consent.
SECTION 7.12. ACQUISITIONS.
(a) Without the prior written consent of the Required Lenders,
the Borrower will not, and will not permit any Consolidated Company, to
make, Acquisitions where the total aggregate consideration paid in such
Acquisitions exceeds during any four (4) consecutive fiscal quarters an
amount equal to $30,000,000. For the purpose hereof, the consideration
paid shall include the sum of: (A) all cash paid and/or Debt assumed,
plus (B) the principal amount of any promissory notes given, plus (C)
the value of any stock given, and (D) the value of any other Property
given or transferred in respect of such Acquisition.
(b) The Borrower will not, and will not permit any
Consolidated Company, to make Acquisitions where the consideration paid
to the seller is in excess of (i) $10,000,000 in cash or the assumption
of Debt, or (ii) $20,000,000 in cash, the assumption of Debt, and
issuance of stock; provided that this provision may be waived by the
Required Lenders at the request of Borrower and in the sole discretion
of Required Lenders, and provided that in connection with any request
by the Borrower that the Required Lenders waive this provision, the
Borrower provides to the Agent and the Lenders an information package
to include, but not be limited to, historical financial statements on
the Person being acquired showing the impact of the acquisition on the
Borrower's historical operating performance and existing balance sheet,
projections detailing the expected performance of the Consolidated
Companies going forward, a detailed listing of the assets being
purchased in the transaction, a certificate executed by Borrower's
chief financial officer showing the effect on a pro forma basis of any
Acquisition on the financial covenants set forth in Section 7.1.
herein, any other information requested by Agent, and a statement that
the proposed acquisition will not create a Default or Event of Default.
SECTION 7.13. LOANS AMONG CONSOLIDATED COMPANIES.
The Borrower shall not, and shall not permit any Consolidated Company,
to modify or cancel existing loans from any Consolidated Company to another
Consolidated Company.
56
60
SECTION 7.14. DIVIDENDS PAID BY BORROWER.
The Borrower shall not, and shall not permit any Consolidated Company,
to pay dividends in excess of 25% of its Consolidated Net Income.
SECTION 7.15. DIVIDENDS PAID TO BORROWER.
The Borrower shall not enter into any agreement that limits the payment
to Borrower of any dividends or loan repayments.
ARTICLE VIII. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "Event of Default"):
SECTION 8.1. PAYMENTS.
Borrower shall fail to make promptly when due (including, without
limitation, by mandatory prepayment) any principal payment with respect to the
Loans, or Borrower shall fail to make any payment of interest, fee or other
amount payable hereunder within two (2) Business Days of the due date thereof.
SECTION 8.2. COVENANTS WITHOUT NOTICE.
Borrower shall fail to observe or perform any covenant or agreement
contained in Sections 6.5., 6.7., 6.8., 6.9., 6.10., 6.11., or in Article 7.
herein.
SECTION 8.3. OTHER COVENANTS.
Borrower shall fail to observe or perform any covenant or agreement
contained in this Agreement, other than those referred to in Sections 8.1. and
8.2., and such failure shall remain unremedied for 30 days after the earlier of
(i) an Executive Officer of the Borrower obtaining knowledge thereof, or (ii)
written notice thereof shall have been given to Borrower by Agent or any Lender;
SECTION 8.4. REPRESENTATIONS.
Any representation or warranty made or deemed to be made by Borrower or
any other Consolidated Company or by any of its officers under this Agreement or
any other Credit Document (including the Schedules attached thereto), or any
certificate or other document submitted to the Agent or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit Document,
shall be incorrect in any Material respect when made or deemed to be made or
submitted;
SECTION 8.5. NON-PAYMENTS OF OTHER INDEBTEDNESS.
Any Consolidated Company shall fail to make when due (whether at stated
maturity, by acceleration, on demand or otherwise, and after giving effect to
any
57
61
applicable grace period) any payment of principal of or interest on any
Indebtedness (other than the Obligations) exceeding $500,000 individually or in
the aggregate;
SECTION 8.6. DEFAULTS UNDER OTHER AGREEMENTS.
Any Consolidated Company shall fail to observe or perform within any
applicable grace period any covenants or agreements contained in any agreements
or instruments relating to any of its Indebtedness exceeding $500,000
individually or in the aggregate, or any other event shall occur if the effect
of such failure or other event is to accelerate, or to permit the holder of such
Indebtedness or any other Person to accelerate, the maturity of such
Indebtedness; or any such Indebtedness shall be required to be prepaid (other
than by a regularly scheduled required prepayment) in whole or in part prior to
its stated maturity;
SECTION 8.7. BANKRUPTCY.
Any Consolidated Company shall commence a voluntary case concerning
itself under the Bankruptcy Code or applicable foreign bankruptcy laws; or an
involuntary case for bankruptcy is commenced against any Consolidated Company
and the petition is not controverted within 10 days, or is not dismissed within
60 days, after commencement of the case, or a custodian (as defined in the
Bankruptcy Code) or similar official under applicable foreign bankruptcy laws is
appointed for, or takes charge of, all or any substantial part of the Property
of any Consolidated Company; or any Consolidated Company commences proceedings
of its own bankruptcy or to be granted a suspension of payments or any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction, whether now or hereafter in effect, relating to any Consolidated
Company or there is commenced against any Consolidated Company any such
proceeding which remains undismissed for a period of 60 days; or any
Consolidated Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or any
Consolidated Company suffers any appointment of any custodian or the like for it
or any substantial part of its Property to continue undischarged or unstayed for
a period of 60 days; or any Consolidated Company makes a general assignment for
the benefit of creditors; or any Consolidated Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or any Consolidated Company shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts; or any Consolidated Company shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate action is taken by any Consolidated Company for the purpose of
effecting any of the foregoing;
SECTION 8.8. ERISA.
A Plan of a Consolidated Company or a Plan subject to Title IV of ERISA
of any of its ERISA Affiliates:
58
62
(iii) shall fail to be funded in accordance with the
minimum funding standard required by applicable law, the terms
of such Plan, Section 412 of the Tax Code or Section 302 of
ERISA for any plan year or a waiver of such standard is sought
or granted with respect to such Plan under applicable law, the
terms of such Plan or Section 412 of the Tax Code or Section
303 of ERISA; or
(iv) is being, or has been, terminated or the subject
of termination proceedings under applicable law or the terms
of such Plan; or
(v) shall require a Consolidated Company to provide
security under applicable law, the terms of such Plan, Section
401 or 412 of the Tax Code or Section 306 or 307 of ERISA; or
(vi) results in a liability to a Consolidated Company
under applicable law, the terms of such Plan, or Title IV of
ERISA;
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC or a Plan that would have a Materially Adverse Effect.
SECTION 8.9. MONEY JUDGMENT.
A final judgments or final order for the payment of money in excess of
$500,000 individually or in the aggregate or otherwise having a Materially
Adverse Effect shall be rendered against Borrower or any other Consolidated
Company and such judgment or order shall continue unsatisfied (in the case of a
money judgment) and in effect for a period of 60 days during which execution
shall not be effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
SECTION 8.10. MANAGEMENT GROUP.
If any event occurs that removes from the active management of Borrower
two of the following persons: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, H. ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SECTION 8.11. CHANGE IN CONTROL OF BORROWER.
Any "person" or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act) shall become the "beneficial owner(s)" (as defined
in Rule 13d-3) of more than forty percent (40%) of the shares of the outstanding
common stock of Borrower entitled to vote for members of Borrower's board of
directors, or (b) any event or condition shall occur or exist which, pursuant to
the terms of any change of control provision, requires or permits the holder(s)
of Indebtedness of any Consolidated Company which individually or in the
aggregate is equal to or exceeds $500,000 to require that such Indebtedness be
redeemed, repurchased, defeased, prepaid, or repaid,
59
63
in whole or in part, or the maturity of such Indebtedness to be accelerated in
any respect.
SECTION 8.12. DEFAULT UNDER OTHER CREDIT DOCUMENTS.
There shall exist or occur any "Event of Default" as provided under the
terms of any Credit Document, or any Credit Document ceases to be in full force
and effect or the validity or enforceability thereof is disaffirmed by or on
behalf of Borrower or any other Consolidated Company, or at any time it is or
becomes unlawful for Borrower or any other Consolidated Company to perform or
comply with its obligations under any Credit Document, or the obligations of
Borrower or any other Consolidated Company, any Credit Document are not or cease
to be legal, valid and binding on Borrower or any such Consolidated Company.
Then, and in any such event, and at any time thereafter if any Event of
Default shall then be continuing, the Agent may, and upon the written or telex
request of the Required Lenders, shall, by written notice to Borrower, take any
or all of the following actions, without prejudice to the rights of the Agent,
any Lender or the holder of any Note to enforce its claims against Borrower,
Guarantor, or any Subsidiary Guarantor: (i) declare all Commitments terminated,
whereupon the Commitments of each Lender shall terminate immediately and any
Facility Fee shall forthwith become due and payable without any other notice of
any kind; (ii) declare the principal of and any accrued interest on the Loans,
and all other Obligations owing hereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; provided,
that, if an Event of Default specified in Section 8.7. shall occur, no notice
shall be required before those matters set forth herein and in subpart (i) above
shall be effective; (iii) may exercise all remedies under the Corporate Guaranty
or any Subsidiary Guaranty; and (iv) may exercise any other rights or remedies
available under the Credit Documents, at law or in equity.
ARTICLE IX. THE AGENT
SECTION 9.1. APPOINTMENT OF AGENT.
Each Lender hereby designates SunTrust as Agent to administer all
matters concerning the Loans, to hold the Collateral for the benefit of the
Lenders, and to act as herein specified. Each Lender hereby irrevocably
authorizes, and each holder of any Revolving Credit Note or Term Note by the
acceptance of a Revolving Credit Note or Term Note shall be deemed irrevocably
to authorize, the Agent to take such actions on its behalf under the provisions
of this Agreement, the other Credit Documents, and all other instruments and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Agent may perform any of its duties
hereunder by or through its agents or employees. The provisions of this Section
9.1. are
60
64
solely for the benefit of Agent and Lenders, and the Borrower shall not have
rights as a third party beneficiary of any provisions hereof.
SECTION 9.2. NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Credit Documents. Neither
the Agent nor any of its respective officers, directors, employees or agents
shall be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be ministerial and administrative in
nature; the Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, express or
implied is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or the other Credit Documents except as
expressly set forth herein.
SECTION 9.3. LACK OF RELIANCE ON THE AGENT.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial
condition and affairs of the Consolidated Companies in connection with
the taking or not taking of any action in connection herewith, and (ii)
its own appraisal of the creditworthiness of the Consolidated
Companies, and, except as expressly provided in this Agreement, the
Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Agreement, the Revolving Credit Notes, the Term Notes, the
Corporate Guaranty, the Subsidiary Guaranties, or any other documents
contemplated hereby or thereby, or the financial condition of the
Consolidated Companies, or be required to make any inquiry concurring
either the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Notes, the Corporate Guaranty, the
Subsidiary Guaranties, or the other documents contemplated hereby or
thereby, or the financial condition of the Consolidated Companies, or
the existence or possible existence of any Default or Event of Default.
SECTION 9.4. CERTAIN RIGHTS OF THE AGENT.
If the Agent shall request instructions from the Required Lenders with
respect to any action or actions (including the failure to act) in connection
with this Agreement,
61
65
the Agent shall be entitled to refrain from such act or taking such act, unless
and until the Agent shall have received instructions from the Required Lenders;
and the Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent's acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders.
SECTION 9.5. RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cable gram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person. The
Agent may consult with legal counsel (including counsel for any Consolidated
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
SECTION 9.6. INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Consolidated Companies, each Lender will reimburse and indemnify the Agent,
ratably according to the Applicable Commitment Percentage for and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, including counsel fees and disbursements) or disbursements of any
suits, costs, expenses (in kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder, in
any way relating to or arising out of this Agreement or the other Credit
Documents; provided that no Lender shall be liable to the Agent for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
SECTION 9.7. THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Agreement, the Loans
made by it and the Revolving Credit Notes and Term Notes issued to it, the Agent
shall have the same rights and powers hereunder as any other Lender or holder of
a Revolving Credit Note and Term Note and may exercise the same as though it
were not performing the duties specified herein; and the terms "Lenders",
"Required Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include the Agent in its individual capacity. The Agent may
accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial, advisory, or other business with the Consolidated
Companies or any Affiliate of the Consolidated Companies as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Consolidated Companies for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
62
66
SECTION 9.8. HOLDERS OF NOTES.
The Agent may deem and treat the payee of any of the Notes as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any of the Notes
shall be conclusive and binding on any subsequent holder, transferee or assignee
of such Note or of any promissory note or notes issued in exchange therefor.
SECTION 9.9. SUCCESSOR AGENT.
(a) The Agent may resign at any time by giving written notice
thereof to the Lenders and Borrower and may be removed at any time with
or without cause by the Required Lenders; provided, however, the Agent
may not resign or be removed until a successor Agent has been appointed
and shall have accepted such appointment. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a
successor Agent subject to Borrower's prior written approval. If no
successor Agent shall have been so appointed by the Required Lenders,
and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent subject to Borrower's
prior written approval, which shall be a bank which maintains an office
in the United States, or a commercial bank organized under the laws of
the United States of America or any State thereof, or any Affiliate of
such bank, having a combined capital and surplus of at least
$100,000,000. In the event that the Agent is no longer a Lender
hereunder, the Agent shall promptly resign as Agent.
(b) Upon the acceptance of any appointment as the Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article 9. shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under
this Agreement.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. NOTICES.
All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telex, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
applicable teletransmission number set forth on the signature pages hereof, or
such other address or applicable teletransmission number as such party may
hereafter specify by notice to the Agent
63
67
and Borrower. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answerback is received,
(ii) if given by mall, three (3) Business Days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid,
(iii) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section and the appropriate confirmation is received,
or (iv) if given by any other means (including, without limitation, by air
courier), when delivered or received at the address specified in this Section
provided that notices to the Agent shall not be effective until received.
Any notice given to Borrower of a Default or Event of Default shall
also be delivered to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, at Bass, ▇▇▇▇▇ & ▇▇▇▇, Suite 2700,
First American Center, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 10.2. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement or the other
Credit Documents, nor consent to any departure by any Consolidated Company
therefrom, shall in any event be effective under the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that no amendment, waiver or consent shall, unless in writing
and signed by all the Lenders, do any of the following: (i) waive any of the
conditions specified in Section 4.1. or 4.2., (ii) increase the Commitments or
other contractual obligations to Borrower under this Agreement, (iii) reduce the
principal of, or interest on, the Notes or any fees hereunder, (iv) postpone any
date fixed for the payment in respect of principal of, or interest on, the Notes
or any fees hereunder, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number or identity of
Lenders which shall be required for the Lenders or any of them to take any
action hereunder, (vi) modify the definition of "Required Lenders," (vii) reduce
any obligation owed under or release the Corporate Guaranty and any Subsidiary
Guaranty (except as required under Section 6.10.(d). or (viii) modify this
Section 10.2. Notwithstanding the foregoing, no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Lenders
required hereinabove to take such action, affect the rights or duties of the
Agent under this Agreement or under any other Credit Document.
SECTION 10.3. NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent, any Lender or any holder
of a Note in exercising any right or remedy hereunder or under any other Credit
Document, and no course of dealing between any Consolidated Company and the
Agent, any Lender or the holder of any Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any right or remedy hereunder or
under any other Credit Document preclude any other or further exercise thereof
or the exercise of any other right or remedy hereunder or thereunder. The rights
and remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Agent, any Lender, or the holder of any Note would
otherwise have. No notice to or demand on any
64
68
Consolidated Company not required hereunder or under any other Credit Document
in any case shall entitle any Consolidated Company to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Agent, the Lenders, or the holder of any Note to any other or
further action in any circumstances without notice or demand.
SECTION 10.4. PAYMENT OF EXPENSES, ETC.
Borrower shall:
(i) whether or not the transactions hereby contemplated
are consummated, pay all reasonable, out-of-pocket costs and
expenses of the Agent in connection with the preparation,
execution and delivery of, preservation of rights under,
enforcement of, and, after a Default or Event of Default or,
upon the request of the Borrower, refinancing, renegotiation
or restructuring of, this Agreement and the other Credit
Documents and the documents and instruments referred to
therein, and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel for the
Agent), and in the case of enforcement of this Agreement or
any Credit Document after an Event of Default, all such
reasonable, out-of-pocket costs and expenses (including,
without limitation, the reasonable fees actually incurred
and reasonable disbursements and charges of counsel), for
any of the Lenders;
(ii) subject, in the case of certain Taxes, to the
applicable provisions of Section 3.9.(b), pay and hold each of
the Lenders harmless from and against any and all present and
future stamp, documentary, and other similar Taxes with
respect to this Agreement, the Notes and any other Credit
Documents, any collateral described therein, or any payments
due thereunder, and hold each Lender harmless from and against
any and all liabilities with respect to or resulting from any
delay or omission to pay such Taxes; and
(iii) indemnify the Agent and each Lender, and their
respective officers, directors, employees, representatives and
agents from, and hold each of them harmless against, any and
all costs, losses, liabilities, claims, damages or expenses
incurred by any of them (whether or not any of them is
designated a party thereto) (an "Indemnitee") arising out of
or by reason of any investigation, litigation or other
proceeding related to any actual or proposed use of the
proceeds of any of the Loans or any Consolidated Company
entering into and performing of the Agreement, the Notes, or
the other Credit Documents, including, without limitation, the
reasonable fees actually incurred and disbursements of counsel
incurred in connection with any such investigation, litigation
or other proceeding, provided, however, Borrower shall not be
obligated to
65
69
indemnify, any Indemnitee for any of the foregoing arising out
of such Indemnitee's gross negligence or willful misconduct;
(iv) without limiting the Indemnities set forth in
subsection (iii) above, indemnify each Indemnitee for any and
all expenses and costs (including without limitation,
remedial, removal, response, abatement, cleanup,
investigative, closure and monitoring costs), losses, claims
(including claims for contribution or indemnity and including
the cost of investigating or defending any claim and whether
or not such claim is ultimately defeated, and whether such
claim arose before, during or after any Consolidated Company's
ownership, operation, possession or control of its business,
Property or facilities or before, on, or after the date
hereof, and including also any amounts paid incidental to any
compromise or settlement by the Indemnitee or Indemnitees to
the holders of any such claim), lawsuits, liabilities,
obligations, actions, judgments, suits, disbursements,
encumbrances, liens, damages (including without limitation
damages for contamination or destruction of natural
resources), penalties and fines of any kind or nature
whatsoever (including without limitation in all cases the
reasonable fees actually incurred, other charges and
disbursements of counsel in connection therewith) incurred,
suffered or sustained by that Indemnitee based upon, arising
under or relating to Environmental Laws based on, arising out
of or relating to in whole or in part, the existence or
exercise of any rights or remedies by any Indemnitee under
this Agreement, any other Credit Document or any related
documents.
If and to the extent that the obligations of Borrower under this Section 10.4.
are unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
SECTION 10.5. RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender or other holder of a Note may have under applicable law, each Lender or
other holder of a Note shall, upon the occurrence and during the continuation of
any Event of Default and whether or not such Lender or such holder has made any
demand or any obligations under the Credit Documents have matured, have the
right to appropriate and apply to the payment of any obligations hereunder and
under the other Credit Documents, all deposits of any Consolidated Company
(general or special, time or demand, provisional or final) then or thereafter
held by and other indebtedness or Property then or thereafter owing by such
Lender or other holder to any Consolidated Company, whether or not related to
this Agreement or any transaction hereunder.
66
70
SECTION 10.6. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns
of the parties hereto, provided that Borrower may not assign or
transfer any of its interest hereunder without the prior written
consent of the Lenders.
(b) Any Lender may make, carry or transfer loans at, to or for
the account of, any of its branch offices or the office of an Affiliate
of such Lender.
(c) Each Lender may assign all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it and the
Revolving Credit Notes and Term Notes held by it) to any Eligible
Assignee; provided, however, that (i) the Agent and, except during the
continuance of a Default or Event of Default, the Borrower must give
their prior written consent to such assignment (which consent shall not
be unreasonably withheld or delayed) unless such assignment is to an
Affiliate of the assigning Lender, (ii) the amount of the Commitments
of the assigning Lender subject to each assignment (determined as of
the date the assignment and acceptance with respect to such assignment
is delivered to the Agent) shall not be less than an amount equal to
$5,000,000 or greater integral multiplies thereof, and (iii) the
parties to each such assignment shall execute and deliver to the Agent
an Assignment and Acceptance, together with the Revolving Credit Note
or Revolving Credit Notes and Term Note or Term Notes subject to such
assignment and, unless such assignment is to an Affiliate of such
Lender, a processing and recordation fee of $3,000. Borrower shall not
be responsible for such processing and recordation fee or any costs or
expenses incurred by any Lender or the Agent in connection with such
assignment. From and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, the assignee thereunder
shall be a party hereto and to the extent of the interest assigned by
such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement. Within five (5) Business Days after
receipt of the notice and the Assignment and Acceptance, Borrower, at
its own expense, shall execute and deliver to the Agent, in exchange
for the surrendered Note or Notes, a new Note or Notes to the order of
such assignee in a principal amount equal to the applicable Commitments
or Loans assumed by it pursuant to such Assignment and Acceptance and
new Note or Notes to the assigning Lender in the amount of its retained
Commitment or Commitments or amount of its retained Loans. Such new
Note or Notes shall be in aggregate and a principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be
dated the date of the surrendered Note or Notes which they replace, and
shall otherwise be in substantially the form attached hereto.
(d) Each Lender may, without the consent of the Borrower, sell
participations to one or more banks or other entities in all or a
portion of its
67
71
rights and obligations under this Agreement (including all or a
portion of its Commitments in the Loans owing to it and the Notes held
by it), provided, however, that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating bank or other entity shall
not be entitled to the benefit (except through its selling Lender) of
the cost protection provisions contained in Article 4. of this
Agreement, and (iv) Borrower and the Agent and other Lenders shall
continue to deal solely and directly with each Lender in connection
with such Lender's rights and obligations under this Agreement and the
other Credit Documents, and such Lender shall retain the sole right to
enforce the obligations of Borrower relating to the Loans and to
approve any amendment, modification or waiver of any provisions of
this Agreement. Any Lender selling a participation hereunder shall
provide prompt written notice to Agent of the name of such
participant.
(e) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation,
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant any information relating to Borrower
or the other Consolidated Companies furnished to such Lender by or on
behalf of Borrower or any other Consolidated Company. With respect to
any disclosure of confidential, non-public, proprietary information,
such proposed assignee or participant shall agree to use the
information only for the purpose of making any necessary credit
judgments with respect to this credit facility and not to use the
information in any manner prohibited by any law, including without
limitation, the securities laws of the United States. The proposed
participant or assignee shall agree not to disclose any of such
information except as permitted by Section 10.15. hereof. The proposed
participant or assignee shall further agree to return all documents or
other written material and copies thereof received from any Lender, the
Agent or Borrower relating to such confidential information unless
otherwise properly disposed of by such entity.
(f) Any Lender may at any time assign all or any portion of
its rights under this Agreement and the Notes issued to it to a Federal
Reserve Bank; provided that no such assignment shall release the Lender
from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 3.9.(b) have been
levied or imposed so as to require withholdings and reductions by the
Borrower and payment by the Borrower of additional amounts to any
Lender as a result thereof, (ii) or any Lender shall make demand for
payment of any material additional amounts as compensation for
increased costs pursuant to Section 3.11., or for its reduced rate of
return pursuant to Section 4.16., or (iii) any Lender shall decline to
consent to a modification or waiver of the terms of this Agreement or
the other Credit Documents requested by Borrower, then and in such
event, upon request from the Borrower delivered to such Lender and the
68
72
Agent, such Lender shall assign, in accordance with the provisions of
Section 10.6.(c), all of its rights and obligations under this
Agreement and the other Credit Documents to another Lender or an
Eligible Assignee selected by the Borrower and consented to by the
Agent in consideration for the payment by such assignee to the Lender
of the principal of and interest on the outstanding Loans accrued to
the date of such assignment and the assumption of such Lender's Total
Commitment, together with any and all other amounts owing to such
Lender under any provisions of this Agreement or the other Credit
Documents accrued to the date of such assignment.
SECTION 10.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF TENNESSEE.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTES OR ANY OTHER COURT DOCUMENT, MAY BE BROUGHT IN ANY
FEDERAL OR STATE COURT LOCATED IN DAVIDSON COUNTY, TENNESSEE, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS.
(c) THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR RIGHT TO
A TRIAL BY JURY, AND BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(d) Nothing herein shall affect the right of the Agent, any
Lender, any holder of a Note or any Consolidated Company to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Borrower in any other
jurisdiction.
SECTION 10.8. INDEPENDENT NATURE OF LENDERS' RIGHTS.
The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights pursuant to this Agreement and its Notes, and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
69
73
SECTION 10.9. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
SECTION 10.10. EFFECTIVENESS; SURVIVAL.
(a) This Agreement shall become effective on the date (the
"Effective Date") on which all of the parties hereto shall have signed
a copy hereof (whether the same or different copies) and shall have
delivered the same to the Agent pursuant to Section 10.1. or, in the
case of the Lenders, shall have given to the Agent written (which may
be delivered by facsimile) or telex notice (actually received) that the
same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 3.9.(b), 3.11.,
3.13., 3.14., 3.17. and 10.4. hereof shall survive the payment in full
of the Notes after the Maturity Date. All representations and
warranties made herein, in the certificates, reports, notices, and
other documents delivered pursuant to this Agreement shall survive the
execution and delivery of this Agreement, the other Credit Documents,
and such other agreements and documents, the making of the Loans
hereunder, and the execution and delivery of the Notes.
SECTION 10.11. SEVERABILITY.
In case any provision in or obligation under this Agreement or any
other Credit Documents shall be invalid, illegal or unenforceable, in whole or
in part, in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any
other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 10.12. INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.
SECTION 10.13. CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR OR TAX
LAWS.
If (i) any preparation of the financial statements referred to in
Section 6.7. hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accounts (or successors
thereto or agencies with similar
70
74
functions) result in a Material change in the method of calculation of financial
covenants, standards or terms found in this Agreement, (ii) there is any change
in Borrower's fiscal quarter or fiscal year, or (iii) there is a Material change
in federal tax laws which Materially affects any of the Consolidated Companies'
ability to comply with the financial covenants, standards or terms found in this
Agreement, Borrower and the Required Lenders agree to enter into negotiations in
order to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating any of the Consolidated
Companies' financial condition shall be the same after such changes as if such
changes had not been made. Unless and until such provisions have been so
amended, the provisions of this Agreement shall govern.
SECTION 10.14. HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT.
The headings of the several sections and subsections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement. This Agreement, the other
Credit Documents, and the agreements and documents required to be delivered
pursuant to the terms of this Agreement constitute the entire agreement among
the parties hereto and thereto regarding the subject matters hereof and thereof
and supersede all prior agreements, representations and understandings related
to such subject matters.
SECTION 10.15. DISCLOSURE OF CONFIDENTIAL INFORMATION.
The Agent and the Lenders agree to use their best efforts to hold in
confidence and not disclose any confidential information (other than information
(i) which was publicly known from a source other than the Borrower or a
Consolidated Company, at the time of disclosure (except pursuant to disclosure
in connection with this Agreement), (ii) which subsequently becomes publicly
known through no act or omission by them, or (iii) which otherwise becomes known
to them, other than through disclosure by the Borrower or a Consolidated Company
or by any other Person whom the Agent or such Lender has reason to believe
disclosed such information in violation of or contrary to the confidentiality
requirements or policies of the Borrower or a Consolidated Company) delivered or
made available by or on behalf of the Borrower or any Consolidated Company to
them (including without limitation any non-public information obtained pursuant
to Section 6.5. or 7.7.) in connection with or pursuant to this Agreement which
is proprietary in nature and clearly marked or labeled as being confidential
information, provided that nothing herein shall prevent the Agent or any Lender
from delivery of copies of any financial statements and other documents
delivered to the Agent or such Lender, and disclosing any other information
disclosed to the Agent or such Lender, by or on behalf of the Borrower or any
Consolidated Company in connection with or pursuant to this Agreement to (i) the
Agent's or such Lender's directors, officers, employees, agents and professional
consultants, (ii) any other Lender, (iii) any Person to which such Lender offers
to assign its Revolving Credit Notes or Commitments or any part thereof (which
person agrees to be bound by the provisions of this Section 10.15), (iv) any
Person to which such Lender sells or offers to sell a participation in all or
any part of its Revolving Credit Notes or Commitments
71
75
(which Person agrees to be bound by the provisions of this Section 10.15), (v)
any federal or state regulatory authority having jurisdiction over the Agent or
such Lender, and (vi) any other person to which such delivery or disclosure may
be necessary (a) to effect compliance with any law, rule, regulation or order
applicable to the Agent or such Lender, (b) in response to any subpoena or other
local process, (c) in connection with any litigation to which the Agent or such
Lender is a party or (d) in order to protect such Lender's investment in its
Revolving Credit Notes.
SECTION 10.16. USURY.
The parties to this Agreement intend to conform strictly to applicable
usury laws as presently in effect. Accordingly, if the transactions contemplated
hereby would be usurious under applicable law (including the laws of the United
States of America and the State of Tennessee), then, in that event,
notwithstanding anything to the contrary in any Credit Document or agreement
executed in connection with the indebtedness described herein, Borrower, Agent,
and Lenders agree as follows: (i) the aggregate of all consideration that
constitutes interest under applicable law which is contracted for, charged, or
received under any of the Credit Documents or agreements, or otherwise in
connection with the indebtedness described herein, shall under no circumstance
exceed the maximum lawful rate of interest permitted by applicable law, and any
excess shall be credited on the indebtedness by the holder thereof (or, if the
indebtedness described herein shall have been paid in full, refunded to the
Borrower); and (ii) in the event that the maturity of the indebtedness described
herein is accelerated as a result of any Event of Default or otherwise, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount of interest
permitted by applicable law, and excess interest, if any, for which this
Agreement provides, or otherwise, shall be canceled automatically as of the date
of such acceleration or prepayment and, if previously paid, shall be credited on
the indebtedness described herein (or, if the indebtedness shall have been paid
in full, refunded to the Borrower).
SECTION 10.17. TIME IS OF THE ESSENCE.
Time is of the essence is interpreting and performing this Agreement
and all other Credit Documents.
SECTION 10.18. CONSTRUCTION.
Should any provision of this Agreement require judicial interpretation,
the parties hereto agree that the Court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against one party by reason of the rule of construction that a
document is to be more strictly construed against the party who itself or its
agents prepared the same, it being agreed that Borrower, Agent, and Lenders and
their respective agents have participated in the preparation hereof.
72
76
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Nashville, Tennessee by their duly authorized
officers as of the day and year first above written.
BORROWER:
CHILDREN'S COMPREHENSIVE SERVICES,
INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Vice President/CFO
-----------------------------
Address for notice:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
[Signatures Continued on Next Page]
73
77
AGENT:
SUNTRUST BANK, NASHVILLE, N.A.,
as Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: Vice President
---------------------------
Address for notice:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[Signatures Continued on Next Page]
74
78
LENDERS:
SUNTRUST BANK, NASHVILLE, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
----------------------------------
Address for notice:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Payment Office:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Revolving Credit Commitment: $15,625,000
Term Loan: $9,375,000
Applicable Commitment Percentage: 62 1/2%
[Signatures Continued on Next Page]
75
79
LENDERS:
FIRST AMERICAN NATIONAL BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Senior Vice President
----------------------------------
Address for notice:
First American Center
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Payment Office:
First American Center
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Revolving Credit Commitment: $9,375,000
Term Loan: $5,625,000
Applicable Commitment Percentage: 37 1/2%
76
80
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
U.S. $_____________ ___________ __, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned CHILDREN'S COMPREHENSIVE SERVICES,
INC., a Tennessee corporation (herein called the "Borrower"), hereby promises to
pay to the order of_____________, a _______________ (herein together with any
subsequent holder hereof, called the "Lender"), for the account of its
applicable Lending Office, the lesser of (i) the principal sum of ___________
AND NO/100 UNITED STATES DOLLARS ($________) and (ii) the outstanding principal
amount of the Advances made by the Lender to the Borrower as Revolving Loans
pursuant to the terms of the Credit Agreement, referred to below, on the
Maturity Date (as defined in the Credit Agreement). The Borrower likewise
promises to pay interest on the outstanding principal amount of each such
Advance, at such interest rates, payable at such times, and computed in such
manner, as are specified for such Advance in the Credit Agreement in strict
accordance with the terms thereof.
The Lender shall record all Advances made pursuant to its Revolving
Credit Commitment under the Credit Agreement and all payments of principal of
such Advances and, prior to any transfer hereof, shall endorse such Advances and
payments on the schedule annexed hereto and made a part hereof, or on any
continuation thereof which shall be attached hereto and made a part hereof or on
the books and records of the Lender, which endorsement shall constitute prima
facie evidence of the accuracy of the information so endorsed; provided,
however, that delay or failure of the Lender to make any such endorsement or
recordation shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement with respect to the Advances evidenced hereby.
Any principal or, to the extent not prohibited by applicable law,
interest due under this Revolving Credit Note that is not paid on the due date
therefor, whether on the Maturity Date, whether or not resulting from the
acceleration of maturity upon the occurrence of an Event of Default, shall bear
interest from the date due to payment in full at the rate as provided in Section
3.3.(b) of the Credit Agreement.
All payments of principal and interest shall be made in lawful money of
the United States of America in immediately available funds at the Payment
Office of the Agent specified in the Credit Agreement.
This Revolving Credit Note is issued pursuant to, and is one of the
Revolving Credit Notes referred to in, the Credit Agreement dated as of December
________, 1998 among the Borrower, SunTrust Bank, Nashville, N.A., individually
and as Agent, and the other lenders set forth on the signature pages thereof (as
the same may hereafter be amended, modified or supplemented from time to time,
the "Credit Agreement") and
A-1
81
each assignee thereof becoming a "Lender" as provided therein, and the Lender is
and shall be entitled to all benefits thereof and all Credit Documents executed
and delivered to the Lenders or the Agent in connection therewith. Terms defined
in the Credit Agreement are used herein with the same meanings. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.
The Borrower agrees to make payments of principal on the Advances
outstanding hereunder as Revolving Loans on the dates and in the amounts
specified in the Credit Agreement for such Advances in strict accordance with
the terms thereof.
This Revolving Credit Note may be prepaid in whole or in part strictly
in accordance with the terms and conditions of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and all accrued interest on this Revolving Credit Note may
automatically become, or be declared, due and payable in the manner and with the
effect provided in the Credit Agreement. The Borrower agrees to pay, and save
the Lender harmless against any liability for the payment of, all reasonable
out-of-pocket costs and expenses, including reasonable attorneys' fees actually
incurred, arising in connection with the enforcement by the Lender of any of its
rights under this Revolving Credit Note or the Credit Agreement.
THIS REVOLVING CREDIT NOTE HAS BEEN EXECUTED AND DELIVERED IN TENNESSEE
AND THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF TENNESSEE.
The Borrower expressly waives any presentment, demand, protest or
notice in connection with this Revolving Credit Note, now or hereafter required
by applicable law. TIME IS OF THE ESSENCE OF THIS REVOLVING CREDIT NOTE.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note
to be executed and delivered under seal by its duly authorized officers as of
the date first above written.
CHILDREN'S COMPREHENSIVE
SERVICES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A-2
82
REVOLVING CREDIT NOTE (CONT'D)
ADVANCES AND PAYMENTS OF PRINCIPAL
Last Day of
Amount Amount of Applicable
Of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
---- ------- ---- ------- ------ -------
A-3
83
EXHIBIT B
FORM OF TERM NOTE
$ , 1998
----------------- -------- ----
Nashville, Tennessee
FOR VALUE RECEIVED, the undersigned, CHILDREN'S COMPREHENSIVE SERVICES,
INC., a Tennessee corporation ("Borrower"), promises to pay to the order of
___________________________________________________, a _______________________
_________________ ("herein together with any subsequent holder hereof, called
the "Lender") , for the account of its applicable Lending Office, the principal
sum of _______________________________________ ($____________), together with
interest at the fixed rate of interest equal to 7.26% per annum.
This Term Note shall be payable as follows: (a) commencing on the last
day of January, 1999 and on the last day of each consecutive April, July,
October, and January through and including July 31, 2005, the Borrower shall pay
to the Lender an amount equal to all accrued interest, (b) commencing January
31, 2002 and on the last day of each consecutive April, July, October, and
January, through and including July 31, 2005, the Borrower shall pay to the
Lender the principal payments depicted on Schedule A attached hereto, and (c) on
October 31, 2005 (the "Maturity Date") this Note shall mature, and the Borrower
shall pay to the Lender an amount equal to all outstanding principal, plus all
then accrued interest.
Any principal or, to the extent not prohibited by applicable law,
interest due under this Term Note that is not paid on the due date thereof,
whether on the Maturity Date, whether or not resulting from the acceleration of
maturity upon the occurrence of an Event of Default, shall bear interest from
the due date to payment in full at the rate as provided in Section 3.5.(b) of
the Credit Agreement.
All payments of principal and interest shall be made in lawful money of
the United States of America in immediately available funds at the Payment
Office of the Agent specified in the Credit Agreement.
This Term Note is issued pursuant to, and is one of the Term Notes
referred to in, the Credit Agreement dated as of _________________, 1998, among
the Borrower, SunTrust Bank, Nashville, N.A., individually and as Agent, and the
other lenders set forth on the signature pages thereof (as the same may
hereafter be amended, modified or supplemented from time to time, the "Credit
Agreement") and each assignee thereof becoming a "Lender" as provided therein,
and the Lender is and shall be entitled to all benefits thereof and all Credit
Documents executed and delivered to the Lenders or the Agent in connection
therewith. Terms defined in the Credit Agreement are used herein with the same
meanings. The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events.
B-1
84
This Term Note may not be prepaid in whole or in part except in
accordance with the terms and conditions of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and all accrued interest on this Term Note may automatically
become, or be declared, due and payable in the manner and with the effect
provided in the Credit Agreement. The Borrower agrees to pay, and save the
Lender harmless against any liability for the payment of, all reasonable
out-of-pocket costs and expenses, including reasonable attorneys, fees actually
incurred, arising in connection with the enforcement by the Lender of any of its
rights under Term Note or the Credit Agreement.
THIS TERM NOTE HAS BEEN EXECUTED AND DELIVERED IN TENNESSEE AND THE
RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF TENNESSEE.
The Borrower expressly waives any presentment, demand, protest or
notice in connection with this Term Note, now or hereafter required by
applicable law. TIME IS OF THE ESSENCE OF THIS TERM NOTE.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be
executed and delivered under seal by its duly authorized officers as of the date
first above written.
CHILDREN'S COMPREHENSIVE
SERVICES, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
B-2
85
SCHEDULE A TO TERM NOTE
DATE AMOUNT OF PRINCIPAL PAYMENT
---- ---------------------------
January 31, 2002
April 30, 2002
July 31, 2002
October 31, 2002
January 31, 2003
April 30, 2003
July 31, 2003
October 31, 2003
January 31, 2004
April 30, 2004
July 31, 2004
October 31, 2004
January 31, 2005
April 30, 2005
July 31, 2005
October 31, 2005
B-3
86
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment Agreement")
is dated as of the _____ day of _____________, 1998 (the "Effective Date"),
between______________________________("Assignor")and___________________________
("Assignee"). The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
(which, as amended, modified and/or restated from time to time, is herein called
the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto
("Schedule 1"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases, accepts and assumes from the
Assignor, all interest in and to the Assignor's rights and obligations under the
Credit Agreement such that after giving effect to such assignment the Assignee
shall have purchased pursuant to this Assignment Agreement the Applicable
Commitment Percentage specified in Item 3 of Schedule 1 relating to the
facilities listed in Item 3 of Schedule 1 and the other Loan Documents (as such
term is defined in the Credit Agreement) (herein, the "Loan Documents").
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the date set forth in the preamble. As of the
Effective Date, (i) the Assignee shall have the rights and obligations of a
Lender under the Credit Agreement and related Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder and (ii) the Assignor
shall relinquish its rights and be released from its corresponding obligations
under the Loan Documents with respect to the rights and obligations assigned to
the Assignee hereunder.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal, interest
and fees with respect to the interest assigned hereby. The Assignee shall
advance funds directly to the Agent with respect to its Revolving Credit
Commitment and Loans and reimbursement payments made on or after the Effective
Date with respect to the interest assigned hereby. In the event that either
party hereto receives any payment to which the other party hereto is entitled
under this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.
5. REPRESENTATIONS OF THE ASSIGNOR. The Assignor represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim created by or against the Assignor.
C-1
87
6. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, (iii) represents that it is acquiring its
interest in the Revolving Credit Commitment and Loans (including the Revolving
Loans and the Term Loans) in connection therewith for its own account for
investment purposes and not with a view to further distribution thereof, (iv)
agrees that it shall require any proposed assignee to furnish similar
representations to the Agent; (v) represents that it has total assets in excess
of $1,000,000,000; (vi) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, (vii) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement and the other Loan Documents are required to be performed by it as a
Lender, (viii) agrees that its payment instructions and notice instructions are
as set forth in the attachment to Schedule 1; and (ix) attaches two duly
completed copies of the United States Internal Revenue Service Form 1001 or
4224, as applicable, or successor applicable form, as the case may be,
certifying that Assignee is entitled to receive payments under the Credit
Agreement, and the other Loan Documents without deduction or withholding of any
United States federal income taxes, and of Internal Revenue Service Form W-8 or
W-9, as applicable, or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax.
7. ENTIRE AGREEMENT, ETC. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof. The Agent and the Borrower
are third-party beneficiaries of this Assignment Agreement.
8. GOVERNING LAW. This Assignment Agreement shall be governed by the
laws of the State of Tennessee.
9. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
C-2
88
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
ASSIGNEE: ASSIGNOR:
By: By:
--------------------------------- -----------------------------------
Title: Title:
----------------------------- --------------------------------
C-3
89
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement:
Credit Agreement dated as of _____________ ______, 1998 by and among
Children's Comprehensive Services, Inc., the Lenders party thereto, and
SunTrust Bank, Nashville, N.A., as Agent
2. Date of Assignment Agreement: ____________, 19____
3. Amounts (As of Date of Item 2 above):
a. Total Commitments (Loans)
under Credit Agreement: $40,000,000
b. Assignee's Applicable Commitment
Percentage purchased under the
Assignment Agreement _________%
4. Assignee's Applicable Commitment and Loan
Amount Purchased Hereunder: $____________
5. Effective Date: __________, 19_____
Accepted and Agreed:
ASSIGNEE: ASSIGNOR:
By: By:
--------------------------------- -----------------------------------
Title: Title:
----------------------------- --------------------------------
C-4
90
ATTACHMENT TO SCHEDULE 1
TO ASSIGNMENT AGREEMENT
Assignee Notice Information
Notice: Institution Name:
-----------------------------------
Address: -----------------------------------
-----------------------------------
-----------------------------------
Payment Instructions: Wire payment to ___________________
___________________ for the account
of________________________________,
Account No. _____________
Lending Office:
-----------------------------------
-----------------------------------
Address of Agent: SunTrust Bank, Nashville, N.A.,
Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ____________________________
Wiring Instructions Wire payment to ___________________
from Assignee to for the account of SunTrust Bank,
Nashville, N.A., Agent,
Agent: account no.________________________
C-5
91
ATTACHMENT 1
TO ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT
_______________, 19____
To: Children's Comprehensive Services, Inc.
__________________________________________
__________________________________________
__________________________________________
Attn: _____________________
and
SunTrust Bank, Nashville, N.A., Agent
P.O. Box 305110
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ______________________
From: ______________________________ (the "Assignor")
______________________________ (the "Assignee")
(1) We refer to that certain Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein or in such consent shall have
the meanings attributed to them in the Credit Agreement.
(2) The Assignor and the Assignee have entered into an Assignment and
Acceptance, dated as of __________, 19_____ (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the Applicable Commitment Percentage specified in Item
3 of Schedule 1 relating to the facilities listed in Item 3 of Schedule 1,
including, without limitation, all of Assignor's interest in the Loans and
Commitments related thereto (including without limitation the Revolving Loans
and Term Loans).
(3) The Assignee, by signing below, represents to SunTrust Bank,
Nashville, N.A., as Agent ("Agent") and to the Borrower that Assignee is an
"Eligible Assignee" as such term is defined in the Credit Agreement, that the
Assignment complies with all provisions of Section 10.6. of the Credit
Agreement, and that Assignee is a commercial bank organized under the laws of
the United States and has total assets in excess of $1,000,000,000.
C-6
92
(4) Assignee represents to Agent and Borrower that Assignee is
acquiring its interest in the Revolving Credit Commitment and Loans in
connection therewith for its own account for investment purposes and not with a
view to further distribution thereof, and agrees that it shall require any
proposed assignee to furnish similar representations to the Agent and the
Borrower. By executing this Notice below, Assignee agrees that it shall be
deemed to make all representations of a Lender contained in, and shall be bound
by all duties and obligations of a Lender contained in the Credit Agreement.
(5) The Assignor and the Assignee hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The Assignor
will confer with the Agent before the date specified in Item 5 of Schedule 1 to
determine if the Assignment Agreement will become effective on such date
pursuant to Section 2 hereof, and will confer with the Agent to determine the
Effective Date pursuant to Section 3 hereof if it occurs thereafter. The
Assignor shall notify the Agent if the Assignment Agreement does not become
effective on any proposed Effective Date as a result of the failure to satisfy
the conditions precedent agreed to by the Assignor and the Assignee. At the
request of the Agent, the Assignor will give the Agent written confirmation of
the satisfaction of the conditions precedent.
(6) If Revolving Credit Notes and/or Term Notes are outstanding on the
Effective Date, the Assignor and the Assignee request and direct that the Agent
prepare and cause the Borrower to execute and deliver new Revolving Credit Notes
or, as appropriate, replacement notes, to the Assignee. The Assignor and, if
applicable, the Assignee each agree to deliver to the Agent the original
Revolving Credit Notes and Term Notes received by it from the Borrower upon its
receipt of new Revolving Credit Notes and Term Notes in the appropriate amount.
(7) The Assignee advises the Agent that notice and payment instructions
are set forth in the Attachment to Schedule 1.
(8) Each party consenting to the Assignment in the space indicated
below hereby releases the Assignor from any obligations to it which have been
assigned to the Assignee.
ASSIGNOR: ASSIGNEE:
------------------------------------ ---------------------------------------
By: By:
--------------------------------- -----------------------------------
Title: Title:
----------------------------- --------------------------------
C-7
93
ACKNOWLEDGED BY AND ACKNOWLEDGED BY AND
CONSENTED TO CONSENTED TO
SUNTRUST BANK, NASHVILLE, N.A., CHILDREN'S COMPREHENSIVE
AGENT SERVICES, INC.
By: By:
--------------------------------- -----------------------------------
Title: Title:
----------------------------- --------------------------------
C-8
94
EXHIBIT D
[FORM OF] SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the ____ day
of __________________, 1998 by CHILDREN'S COMPREHENSIVE SERVICES OF CALIFORNIA,
INC. d/b/a Advocate Schools, a California corporation (the "Guarantor") in favor
of SUNTRUST BANK, NASHVILLE, N.A., Agent for the ratable benefit of the Lenders,
under the Credit Agreement referred to below;
WITNESSETH:
WHEREAS, Children's Comprehensive Services, Inc., a Tennessee
corporation (the "Borrower"), the lenders listed therein (the "Lenders"), and
SunTrust Bank, Nashville, N.A. as Agent (the "Agent"), have entered into that
certain Credit Agreement dated as of __________ ___, 1998 (as the same may have
been or may hereafter be amended or supplemented from time to time, the "Credit
Agreement") providing, subject to the terms and conditions thereof, for
extensions of credit to be made by the Lenders to the Borrower;
WHEREAS, it is a requirement of Section 6.10. of the Credit Agreement
that each Subsidiary Guarantor shall execute and deliver this Guaranty whereby
each Subsidiary Guarantor shall guarantee the payment when due of principal,
interest and other amounts that shall be at any time payable by the Borrower
under the Credit Agreement, the Notes and the other Credit Documents; and
WHEREAS, in consideration of the financial and other support that the
Borrower provided, and such financial and other support as the Borrower may in
the future provide, to the Guarantor, the Guarantor is willing to guarantee the
obligations of the principal under the Credit Agreement, the Notes, and the
other Credit Documents.
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein the respective meanings provided
for therein.
SECTION 2. Representations and Warranties. Guarantor represents and
warrants (which representations and warranties shall be deemed to have been
renewed upon each Borrowing under the Credit Agreement) that:
(a) It (i) is a corporation duly organized or formed, validly existing
and in good standing under the laws of its jurisdiction of organization or
formation; (ii) has all requisite power, and has all Material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted, and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Materially Adverse Effect.
95
(b) It has all necessary power and authority to execute, deliver and
perform its obligations under this Guaranty; the execution, delivery and
performance of this Guaranty have been duly authorized by all necessary
organizational action; and this Guaranty has been duly and validly executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms.
(c) Neither the execution and delivery by it of this Guaranty nor
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, organizational documents or any
Material applicable law or regulation or any order, writ, injunction or decree
of any court or governmental authority or agency, or any Material Contractual
Obligation to which it is a party or by which it is bound or to which it is
subject, or constitute a default under any such Material Contractual Obligation,
or result in the creation or imposition of any Lien upon any of its revenues or
assets pursuant to the terms of any such Material Contractual Obligation.
SECTION 2.02 Covenants. Guarantor covenants that so long as any amount
is due and owing under the Term Notes and so long as any Lender has any
Commitment outstanding under the Credit Agreement or any amount payable under
the Credit Agreement or any of the Notes shall remain unpaid, that it will, and,
if necessary, will enable the Borrower to fully comply with those covenants and
agreements set forth in the Credit Agreement (including, without limitation,
Articles 6 and 7 thereof).
SECTION 3. The Guaranty. Guarantor hereby unconditionally guarantees,
the full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on each of the Notes issued by the
Borrower pursuant to the Credit Agreement, and the full and punctual payment of
all other amounts payable by the Borrower under the Credit Agreement and the
other Credit Documents including, without limitation, the Obligations (all of
the foregoing, including without limitation, interest accruing or what would
have accrued after the filing of a petition in bankruptcy or other insolvency
proceeding, being referred to collectively as the "Guaranteed Obligations").
Upon failure by the Borrower to pay punctually any such amount, Guarantor agrees
that it shall forthwith on demand pay the amount not so paid at the place and in
the manner specified in the Credit Agreement, the Notes or the relevant Credit
Document, as the case may be. Guarantor acknowledges and agrees that this is a
guarantee of payment when due, and not of collection, and that this Guaranty may
be enforced up to the full amount of the Guaranteed Obligations without
proceeding against the Borrower, any other Subsidiary Guarantor, any security
for the Guaranteed Obligations, or against any other Person that may have
liability on all or any portion of the Guaranteed Obligations. The Guarantor's
obligations under this Guaranty and the obligations of any other Subsidiary
Guarantor under a Subsidiary Guaranty, are joint and several.
SECTION 4. Guaranty Unconditional. The obligations of Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under the Credit
Agreement, any of the Notes, or any other Credit Document, by operation
of law or otherwise or any obligation of any other guarantor of any of
the Obligations;
96
(ii) any modification or amendment of or supplement to the
Credit Agreement, any of the Notes, or any other Credit Document;
(iii) any release, nonperfection or invalidity of any direct
or indirect Collateral and security for any obligation of the Borrower
under the Credit Agreement, any of the Notes, any Credit Document, or
any obligations of any other guarantor of any of the Obligations;
(iv) any change in the existence, structures or ownership of
the Borrower or any other guarantor of any of the Obligations, or any
insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Borrower, or any other guarantor of the Obligations, or
its assets or any resulting release or discharge of any obligation of
the Borrower, or any other guarantor of any of the Obligations;
(v) the existence of any claim, setoff, or other rights which
any Subsidiary Guarantor may have at any time against the Borrower, any
other guarantor of any of the Obligations, the Agent, any Lender or any
other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower, or any other guarantor of any of the Obligations, for any
reason related to the Credit Agreement, any other Credit Document, or
any provision of applicable law or regulation purporting to prohibit
the payment by the Borrower or any other guarantor of the Obligations,
of the principal of or interest on any of the Notes or any other amount
payable by the Borrower under the Credit Agreement, the Notes, or any
other Credit Document; or
(vii) any other act or omission to act or delay of any kind by
the Borrower, any other guarantor of the Obligations, the Agent, any
Lender, or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or
equitable, discharge of any Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full, Reinstatement In
Certain Circumstances. Guarantor's obligations hereunder shall remain in full
force and effect until all Guaranteed Obligations shall have been paid in full
and the Commitments under the Credit Agreement shall have terminated or expired.
If at any time any payment of the principal of or interest on any of the Notes
or any other amount payable by the Borrower or any other party under the Credit
Agreement or any other Credit Document is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not made at
such time.
SECTION 6. Waiver of Notice. Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by
law, any notice not provided for herein as well as any requirement that at any
time any action be taken by any Person against the Borrower, any other guarantor
of the Obligations, or any other Person.
97
SECTION 7. Judgment Currency.
(a) Guarantor shall pay all amounts due hereunder in U.S. Dollars, and
such obligations hereunder to make payments in U.S. Dollars shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than U.S. Dollars, except to
the extent that such tender or recovery results in the effective receipt by the
Lenders and the Agent of the full amount of U.S. Dollars expressed to be payable
under this Guaranty or the Credit Agreement. If for the purpose of obtaining or
enforcing against Guarantor in any court or in any jurisdiction, it becomes
necessary to convert into or from any currency other than U.S. Dollars (such
other currency being hereinafter referred to as the "Judgment Currency") an
amount due in U.S. Dollars, the conversion shall be made, and the currency
equivalent determined, in each case, as on the Business Day immediately
preceding the day on which the judgment is given (such Business Day being
hereinafter referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange between the Judgment
Currency Conversion Date and the date of actual payment of the amounts due, the
Guarantor covenants and agrees to pay, or cause to be paid, such additional
amounts, if any (but in any event not a lesser amount), as may be necessary to
insure that the amount paid in the Judgment Currency, when converted at the rate
of exchange prevailing on the date of payment, will produce the amount of U.S.
Dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing
on the Judgment Currency Conversion Date.
(c) For purposes of determining the currency equivalent for this
Section, such amounts shall include any premium and costs payable in connection
with the purchase of U.S. Dollars.
(d) The currency equivalent of U.S. Dollars shall mean, with respect to
any monetary amount in a currency other than U.S. Dollars, at any time for the
determination thereof, the amount of U.S. Dollars obtained by converting such
foreign currency involved in such computation into U.S. Dollars at the spot rate
for the purchase of U.S. Dollars with the applicable foreign currency as quoted
by the Agent at approximately 11:00 a.m. (Nashville, Tennessee time) on the date
of determination thereof specified herein or, if the date of determination
thereof is not otherwise specified herein, on the date two (2) Business Days
prior to such determination.
SECTION 8. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under the Credit Agreement, any of
the Notes or any other Credit Document is stayed upon the insolvency, bankruptcy
or reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any of the Notes or any
other Credit Document shall nonetheless be payable by Guarantor hereunder
forthwith on demand by the Agent made at the request of the Required Lenders.
SECTION 9. Notices. All notices, requests and other communications to
any party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier set forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify for such purpose by notice
to the Agent in accordance with the provisions of Section 10.1. of the Credit
Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice sent
98
by certified mail return receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such in each case given or addressed as
aforesaid.
SECTION 10. No Waivers. No failure or delay by the Agent or any Lenders
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Credit Agreement, the
Notes, and the other Credit Documents shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 11. Successors and Assigns. This Guaranty is for the benefit of
the Agent and the Lenders and their respective successors and permitted assigns
and in the event of an assignment of any amounts payable under the Credit
Agreement, the Notes, or the other Credit Documents, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Guaranty shall be binding upon Guarantor and its
successors and permitted assigns.
SECTION 12. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by Guarantor and the Agent with the consent of the Required
Lenders.
SECTION 13. GOVERNING LAW; SUBMISSION TO JURISDICTION WAIVER OF JURY
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TENNESSEE. GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF
TENNESSEE AND OF ANY TENNESSEE STATE COURT SITTING IN NASHVILLE, TENNESSEE AND
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER CREDIT DOCUMENTS) OR
THE TRANSACTIONS CONTEMPLATED HEREBY. GUARANTOR IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. GUARANTOR, AND THE AGENT AND THE LENDERS ACCEPTING
THIS GUARANTY, HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14. Taxes, etc. All payments required to be made by Guarantor
hereunder shall be made without setoff or counterclaim and free and clear of and
without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority thereof, provided, however,
that if Guarantor is required by law to make such deduction or withholding, such
Guarantor shall forthwith pay to the Agent or any Lender, as applicable, such
additional amount as results in the net amount received by the Agent or any
Lender as applicable, equaling the full amount which would
99
have been received by the Agent or any Lender, as applicable, had no such
deduction or withholding been made.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed by its authorized officers as of the day and year first above written.
GUARANTOR:
CHILDREN'S COMPREHENSIVE SERVICES OF
CALIFORNIA, INC. d/b/a Advocate Schools
By:
-----------------------------------
Title:
---------------------------------
ADDRESS FOR NOTICES:
----------------------------------------
----------------------------------------
Telecopier No.:
-------------------------
ACCEPTED BY:
SUNTRUST BANK, NASHVILLE, N.A.,
AGENT for Lenders
By:
-----------------------------------
Title:
---------------------------------
100
EXHIBIT E TO CREDIT AGREEMENT
NOTICE OF BORROWING
VIA FAX (615)
ATTN:_______________________________
SunTrust Bank, Nashville, N.A., Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Date: __________, ____
Re: Credit Agreement dated ___________________ _______, 1998 by and among
CHILDREN'S COMPREHENSIVE SERVICES, INC. (the "Borrower"), the Lenders
listed therein, and SunTrust Bank, Nashville, N.A., as Agent (as may be
amended from time to time, the "Credit Agreement")
This Borrowing Request is made by the Borrower pursuant to Section
3.1.(a)(i) of the Credit Agreement. Capitalized terms not otherwise defined in
this Notice of Borrowing have the same meaning as in the Credit Agreement. The
individual signing this request certifies that (i) he or she is an individual
authorized by the Borrower to submit this Notice of Borrowing to the Agent
pursuant to the Credit Agreement, (ii) the undersigned hereby irrevocably gives
notice of and requests, pursuant to Section 3.1.(a)(i) of the Credit Agreement,
a Borrowing under the Revolving Loans (the "Proposed Borrowing"), and (iii) the
amount of the Proposed Borrowing is available to the Borrower pursuant to the
Credit Agreement. The information below is true and correct as of the date of
this Notice of Borrowing and relates to the Revolving Loans described in the
Credit Agreement and the Proposed Borrowing:
a. Current principal amount outstanding under the Revolving Loans: $
-----------------
b. Current/aggregate face amount of outstanding Letters of Credit: $
-----------------
c. Available Amount [$25,000,000 minus (a) and (b)]: $
-----------------
1. AMOUNT OF PROPOSED BORROWING: $
-----------------
2. DATE OF PROPOSED BORROWING:
3. WILL THE PROPOSED BORROWING BE A BASE RATE ADVANCE?:
▇-▇
▇▇▇
▇. WILL THE PROPOSED BORROWING BE A EURODOLLAR ADVANCE?:_________
5. IF PROPOSED BORROWING IS A EURODOLLAR ADVANCE, THE APPLICABLE
INTEREST PERIOD IS _________ MONTH/MONTHS WITH A MATURITY DATE
OF ____________.
Borrowing Requests for Eurodollar Advances must be given three (3)
Business Days prior to the Proposed Borrowing. All Borrowing Requests received
after 11:00 A.M. shall be deemed received on the next Business Day.
6.(a) DEPOSIT PROCEEDS OF BORROWING INTO THE BORROWER'S ACCOUNT
MAINTAINED WITH AGENT:
(CHECK IF APPLICABLE)
OR
(b) WIRE TRANSFER PROCEEDS OF BORROWING ACCORDING TO THE FOLLOWING
INSTRUCTIONS:
ABA No.
-------------------------------------------------------
Account No.
--------------------------------------------------
Name of Bank:
------------------------------------------------
Customer Reference:
-------------------------------------------
Other Information:
--------------------------------------------
--------------------------------------------------------------
In connection with the Proposed Borrowing, the undersigned represents
on the date hereof and on the date of the Proposed Borrowing (a) it has not
obtained knowledge that there exists any Default or Event of Default and (b) all
representations and warranties by the Borrower contained in the Credit Agreement
are true and correct in all Material respects.
Very truly yours,
CHILDREN'S COMPREHENSIVE SERVICES, INC.
By:
-----------------------------------
Title:
---------------------------------
▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇ NOTICE
VIA FAX
ATTN: __________________________________
SunTrust Bank, Nashville, N.A., as Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Date: __________, ____
Re: Credit Agreement dated _________________ ___, 1998 by and
among CHILDREN'S COMPREHENSIVE SERVICES, INC., (the
"Borrower"), the Lenders recited therein, and SunTrust Bank,
Nashville, N.A., as Agent (as may be amended from time to
time, the "Credit Agreement")
Capitalized terms not otherwise defined in this Continuation/Conversion
Notice have the same meaning as in the Credit Agreement. The individual signing
this request certifies that (i) he or she is an individual authorized by the
Borrower to submit Continuation/Conversion Notices to the Agent pursuant to the
Credit Agreement and (ii) the undersigned hereby irrevocably gives notice of and
requests, pursuant to Section 3.1.(b) of the Credit Agreement, the continuation
or conversion of a Borrowing under the Credit Agreement (the
"Continued/Converted Borrowing").
6. IDENTIFICATION OF EXISTING LOAN TO BE CONTINUED/CONVERTED:
Amount
Base Rate Advance $
-----------------
Eurodollar Advance - expiring $
-------------- -----------------
7. DATE A CONTINUED/CONVERTED ADVANCE IS TO
BECOME EFFECTIVE: -----------------
8. (a) INTEREST PERIOD for EURODOLLAR ADVANCE CONTINUED/CONVERTED
BORROWING (indicate one):
[ ] one (1) month period
[ ] two (2) month period
[ ] three (3) month period
[ ] six (6) month period
F-1
103
(b) MATURITY DATE: ___________________
In connection with the Continued/Converted Borrowing the undersigned
represents on the date hereof and on the date of the Continued/Converted
Borrowing (a) there exist no Default or Event of Default and (b) all
representations and warranties by the Borrower contained in the Credit Agreement
are true and correct in all Material respects.
Very truly yours,
BORROWER:
CHILDREN'S COMPREHENSIVE SERVICES, INC.
By:
-----------------------------------
Title:
---------------------------------
F-2
104
EXHIBIT G
CLOSING CERTIFICATE
The undersigned, being the __________________ of CHILDREN'S
COMPREHENSIVE SERVICES, INC., a Tennessee corporation (the "Borrower"), hereby
gives this certificate to induce SUNTRUST BANK, NASHVILLE, N.A., as agent for
itself and the other Lenders (in such capacity, the "Agent") and each of the
other Lenders, to consummate certain financial accommodations with the Borrower
pursuant to the terms of the Credit Agreement dated as of even date herewith
(the "Credit Agreement"). Capitalized terms used herein and not defined herein
have the same meanings assigned to them in the Credit Agreement.
The undersigned hereby certifies to the Agent and the Lenders that:
1. In his/her aforesaid capacity as the ____________________ of the
Borrower, [he/she] has knowledge of the business and financial affairs of the
Borrower sufficient to issue this certificate and is authorized and empowered to
issue this certificate for and on behalf of the Borrower.
2. All representations and warranties contained in the Credit Agreement
are true and correct in all Material respects on and as of the date hereof.
3. After giving effect to the Loans to be made to the Borrower pursuant
to the Credit Agreement on the date hereof, no Default or Event of Default has
occurred and is continuing.
4. Since the date of the audited financial statements of the
Consolidated Companies described in Section 5.14. of the Credit Agreement, there
has been no change which has had or is reasonably likely to have a Materially
Adverse Effect.
5. Except as may be described on Schedule 5.5. of the Credit Agreement,
no action or proceeding has been instituted or is pending before any court or
other governmental authority, or, to the knowledge of any of the Consolidated
Companies, threatened (i) which is reasonably likely to have a Materially
Adverse Effect, or (ii) seeking to prohibit or restrict one or more Consolidated
Companies' ownership or operation of any portion of its businesses or assets,
where such portion or portions of such businesses or assets, as the case may be,
constitute a Material portion of the total businesses or assets of the
Consolidated Companies.
6. The Advances to be made on the date hereof are being used solely for
the purposes provided in the Credit Agreement, and such Advances and use of
proceeds thereof will not contravene, violate or conflict with, or involve the
Agent or any Lender in a violation of, any law, rule, injunction, or regulation,
or determination of any court of law or other governmental authority, applicable
to the Borrower or any of the Consolidated Companies.
G-1
105
7. The conditions precedent set forth in Sections 4.1. and 4.2. of the
Credit Agreement have been of will be satisfied (or have been pursuant to the
terms of the Credit Agreement) prior to or concurrently with the making of the
Loam under the Credit Agreement on the date hereof.
8. The execution, delivery and performance by any of the Consolidated
Companies of the Credit Documents will not violate any Requirement of Law or
cause a breach or default under any of their respective Contractual Obligations.
9. The Borrower has the corporate power and authority to make, deliver
and perform the Credit Documents to which it is party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of such Credit Documents. No consents or authorization of, or filing with, any
Person (including, without limitation, any governmental authority), is required
in connection with the execution, delivery, or performance by the Borrower, or
the validity or enforceability against any Borrower, of the Credit Documents,
other than such consents, authorizations or filings which have been made or
obtained.
IN WITNESS WHEREOF, the undersigned has executed this certificate in
his/her aforesaid capacity as of this ___ day of _____________________, 1998.
By:
-----------------------------------
Title:
---------------------------------
▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇
________________ ______, 1998
SunTrust Bank, Nashville, N.A.,
as Agent and Lender
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We are counsel to Children's Comprehensive Services, Inc. (the
"Borrower") and its subsidiaries (collectively, the "Consolidated Companies"),
and have acted as counsel to the Consolidated Companies in connection with a
Credit Agreement dated as of ____, 1998, by and among Children's Comprehensive
Services, Inc. and SunTrust Bank, Nashville, N.A., as Agent and Lender (the
"Agreement"). This Opinion Letter is provided to you pursuant to Section 4.1.(k)
of the Agreement. Unless separately defined, all terms used in this Opinion
Letter which are defined in the Agreement shall have the meaning ascribed to
them therein.
In so acting, we have considered such matters of law and of fact, and
relied upon such certificates and other information furnished to us, as we have
deemed appropriate as a basis for our opinion set forth below.
For the purpose of giving this opinion, we have examined executed
copies of each of the following documents delivered by the Borrower and the
Consolidated Companies to the Agent and the Lenders pursuant to the requirements
of the Credit Agreement (collectively, the "Credit Documents").
(1) the Credit Agreement; and
(2) the Credit Documents.
Based on the foregoing, we are of the opinion that:
(1) The Consolidated Companies have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
jurisdictions of incorporation; the Consolidated Companies are duly qualified to
do business as foreign corporations and are in good standing in all other
jurisdictions where the ownership or leasing of properties or the conduct of
their business requires such qualification, except for jurisdictions in which
the failure to so qualify would not have a Material Adverse Effect on the
Consolidated Companies taken as a whole;
107
SunTrust Bank, Nashville, N.A.
_____________ ____, 1998
Page 2
(2) The Consolidated Companies have full right, power and authority to
enter into the Credit Documents to which they are a party; and the Credit
Documents have been duly and validly authorized by all necessary corporate
action by the Consolidated Companies. The execution and performance of the
Credit Documents and the consummation of the transactions contemplated therein
will not conflict with, result in the breach of, or constitute, either by itself
or upon notice or the passage of time or both, a default under any agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument known to us to which the Consolidated Companies or any of their
property may be bound or affected, or violate any of the provisions of the
Articles of Incorporation or Bylaws of the Consolidated Companies or, so far as
is known to us, violate any statute, judgment, decree, order, rule or regulation
of any court or government body having jurisdiction over the Consolidated
Companies;
(3) The Consolidated Companies are not in violation of their Articles
of Incorporation or Bylaws and to the best of our knowledge, the Consolidated
Companies are not in breach of or default with respect to any provision of any
agreement, mortgage, deed of trust, lease, loan agreement, security agreement,
license, indenture, permit or other instrument known to us to which the
Consolidated Companies are a party or by which it or any of their properties may
be bound or affected, except where such default would not have a Materially
Adversely Effect on the Consolidated Companies; and, to the best of our
knowledge, the Consolidated Companies, are in compliance with all laws, rules,
regulations, judgments, decrees, orders and statutes of any court or
jurisdiction to which they are subject, except where noncompliance would not
have a Materially Adversely Effect on the Consolidated Companies taken as a
whole;
(4) To the best of our knowledge and except as reflected on Schedule
5.5. to the Agreement, there are no legal actions, suits or governmental
proceedings pending or threatened before any court or governmental agency,
authority or body which, if determined adversely to the Consolidated Companies
would individually or in the aggregate have a Material Adverse Effect on the
financial position of the Consolidated Companies, taken as a whole (other than
legal actions, suits or claims pending or threatened and fully covered by the
Consolidated Companies' insurance as to which we do not express any opinion);
(5) No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental authority or third
party is required in connection with the execution, delivery or performance of
the Credit Documents; and,
(6) The Credit Documents have been duly executed and delivered, as
applicable, by the Consolidated Companies and constitute legal, valid and
binding
108
SunTrust Bank, Nashville, N.A.
_____________ ____, 1998
Page 3
obligations of the Consolidated Companies enforceable in accordance with their
respective terms, except as may be limited by bankruptcy or insolvency laws or
similar laws affecting creditors' rights generally.
This Opinion Letter is furnished solely for your benefit. The
information set forth herein is as of the date of this letter, except as
otherwise noted, and we disclaim any undertaking to advise you of changes which
thereafter may be brought to our attention. The Consolidated Companies do not
intend for this letter to waive the attorney-client privilege or the
attorney-work product privilege with respect to any of its files.
This Opinion Letter may be relied upon by the Agent and any approved
Lenders from time to time, only in connection with the Agreement and the
consummation of the transactions contemplated thereby, and may not be used or
relied upon by any other person for any purpose whatsoever, other than in
connection with regulatory requirements or in response to a court order,
without, in each instance, our prior written consent.
[INSERT CUSTOMARY QUALIFICATIONS
AND ASSUMPTIONS]
Respectfully,
[NAME OF BORROWER'S COUNSEL]
109
EXHIBIT I
[FORM OF] COMPLIANCE CERTIFICATE
[Date]
SunTrust Bank, Nashville, N.A., Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, CHILDREN'S COMPREHENSIVE SERVICES, INC. (the
"Borrower"), refers to the Credit Agreement dated as of December 1, 1998 (as
amended, modified, extended or restated from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions party thereto as
Lenders, and SunTrust Bank, Nashville, N.A., as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meaning's assigned to
such terms in the Credit Agreement.
Pursuant to Section 6.7.(c) of the Credit Agreement, the Borrower
hereby certifies that the computations set forth in the Attachment to Compliance
Certificate attached hereto are true and accurate computations of the ratios and
other items required to be so computed pursuant to the Credit Agreement.
The Borrower further certifies that (i) the Borrower is in compliance
with such covenants, (ii) that no Default or Event of Default has occurred and
is continuing, (iii) the representations and warranties set forth in Article 5
of the Credit Agreement are true and correct in all Material respects as of the
date hereof and (iv) no change has occurred in the financial condition of the
Borrower and the Consolidated Companies, taken as a whole, since the Closing
Date which has had or is reasonably likely to have a Materially Adverse Effect.
CHILDREN'S COMPREHENSIVE
SERVICES, INC.
By:
-----------------------------------
Title:
---------------------------------
I-1
110
ATTACHMENT TO COMPLIANCE CERTIFICATE
A. Section 7.1.(a)/Funded Debt to EBITDA. The following amounts shall
be determined as of the end of the Borrower's most recently concluded fiscal
quarter and the immediately three (3) preceding fiscal quarters:
(1) Indebtedness for Borrowed Money of Consolidated
Companies $_________
(2) Debt evidenced by bonds, debentures, promissory notes
or similar instruments of Consolidated
Companies not included in subpart (1) $_________
(3) Purchase Money Indebtedness of Consolidated
Companies not included in subpart (1) $_________
(4) Conditional Sales Contracts and similar title
retention instruments of Consolidated Companies $_________
(5) Capital Lease Obligations of Consolidated Companies $_________
(6) Debt or obligations of Consolidated Companies
Arising Under Applications for Letters of Credit and
Other Indemnity or Reimbursement Agreements
Related to Letters of Credit and Banker's Acceptances $_________
(7) Obligations of Consolidated Companies Arising Under
Direct or Indirect Guaranties: $_________
(8) Consolidated Funded Debt (the sum of items (1)
through (7)): $_________
(9) Consolidated Net Income (Loss): $_________
(10) to the extent deducted in determining Consolidated
Net Income (Loss), Consolidated
Interest Expense: $_________
(11) to the extent deducted in determining Consolidated
Net Income (Loss), Provisions for taxes (whether
current or deferred) of the
Borrower and the Consolidated Companies: $_________
(12) Consolidated EBIT (the sum of items (9) through
(11)): $_________
I-2
111
(13) depreciation and amortization expenses to the extent
such were deducted in determining
Consolidated EBIT: $_________
(14) the historical consolidated EBITDA of any Person, as
adjusted for known and detailed expense cuts
acceptable to Agent, for such period which accrued
prior to the date such Person became a Consolidated
Company or was merged with or consolidated into
Borrower or any Consolidated Company: $________
(15) Consolidated EBITDA (the sum of items (12)
through (14)): $________
(16) Dividends Paid by Consolidated Companies: $________
(17) Sum of Item (15) minus Item (16): $________
(18) Funded Debt to EBITDA Ratio (item (8)
divided by item (17)): ________
(19) Maximum Funded Debt to EBITDA Ratio
pursuant to Section 7.1(a): 3.5 to 1.0
B. Section 7.1(b)/Fixed Charge Coverage Ratio. The following amounts
shall be determined as of the end of the Borrower's fiscal quarter.
(1) Consolidated Net Income (Loss): $________
(2) to the extent deducted in determining Consolidated
Net Income (Loss), Consolidated
Interest Expense: $________
(3) to the extent deducted in determining Consolidated
Net Income (Loss), Provisions for taxes (whether
current or deferred) of the Borrower
and the Consolidated Companies: $________
(4) Consolidated EBIT (the sum of items (1) through
(3)): $________
(5) Consolidated Rental Expense: $________
(6) dividends paid by Consolidated Companies: $________
(7) Sum of items (4) and (5) minus item (6): $________
I-3
112
(8) Consolidated Interest Expenses: $________
(9) Consolidated Rental Expense (same as item (5)
above): $________
(10) Principal payments made on Term Loans: $________
(11) Sum of items (8) through (10): $________
(12) Fixed Charge Coverage Ratio (item (7) divided
by item (11)): ________
(13) Minimum Fixed Charge Coverage Ratio pursuant
to Section 7.1.(b): 3.0 to 1.0
until Fiscal Quarter
ending March 31, 2002,
at which time the ratio
becomes 2.0 to 1.0
(C) Section 7.1.(c)/Consolidated Funded Debt to Total Capitalization
Ratio. The following amounts shall be determined as of the end of the Borrower's
fiscal quarter:
(1) Shareholder's Equity: $_________
(2) Consolidated Funded Debt (same as item (8),
Section A): $_________
(3) Total Capitalization (sum of items (1) and (2)): $_________
(4) Funded Debt to Total Capitalization Ratio (item (2)
divided by item (3)): _________
(5) Maximum Consolidated Debt to Total Capitalization
Ratio pursuant to Section 7.1(c): .50 to 1.0
(D) Section 7.1.(d)/Minimum Tangible Net Worth. The following amounts
shall be determined as of the end of the Borrower's most recently concluded
Fiscal Quarter:
(1) Shareholder's Equity: $_________
(2) Cost in Excess of Net Assets Acquired: $_________
(3) Other Assets and Deferred Charges $_________
I-4
113
(4) Consolidated Tangible Net Worth
(Item (1) minus Item (2) minus Item (3)): $_________
(5) $38,000,000
(6) 75% of Consolidated Net Income, cumulative
since September 30, 1998: $_________
(7) 100% of Consolidated Net Losses, cumulative since
September 30, 1998: $_________
(8) 100% of Net Equity Proceeds Raised Subsequent to
December 1, 1998 $________
(9) Sum of Items (5), plus Item (6), minus Item (7),
plus Item (8): $________
(Item 4 should exceed Item 9)
I-5
114
EXHIBIT J
[FORM OF] SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the ___ day of
______________ , by _________________ (the "Guarantor") in favor of SUNTRUST
BANK, NASHVILLE, N.A., Agent for the ratable benefit of the Lenders, under the
Credit Agreement referred to below;
WITNESSETH:
WHEREAS, Children's Comprehensive Services, Inc., a Tennessee
corporation (the "Borrower"), the lenders listed therein (the "Lenders"), and
SunTrust Bank, Nashville, N.A. as Agent (the "Agent"), have entered into that
certain Credit Agreement dated as of ______________ __, 1998 (as the same may
have been or may hereafter be amended or supplemented from time to time, the
"Credit Agreement") providing, subject to the terms and conditions thereof, for
extensions of credit to be made by the Lenders to the Borrower;
WHEREAS, it is a requirement of Section 6.10. of the Credit Agreement
that each Subsidiary Guarantor shall execute and deliver this Guaranty whereby
each Subsidiary Guarantor shall guarantee the payment when due of principal,
interest and other amounts that shall be at any time payable by the Borrower
under the Credit Agreement, the Notes and the other Credit Documents; and
WHEREAS, in consideration of the financial and other support that the
Borrower provided, and such financial and other support as the Borrower may in
the future provide, to the Guarantor, the Guarantor is willing to guarantee the
obligations of the principal under the Credit Agreement, the Notes, and the
other Credit Documents.
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein the respective meanings provided
for therein.
SECTION 2. Representations and Warranties. Guarantor represents and
warrants (which representations and warranties shall be deemed to have been
renewed upon each Borrowing under the Credit Agreement) that:
(a) It (i) is a corporation duly organized or formed, validly existing
and in good standing under the laws of its jurisdiction of organization or
formation; (ii) has all requisite power, and has all Material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted, and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Materially Adverse Effect.
J-1
115
(b) It has all necessary power and authority to execute, deliver and
perform its obligations under this Guaranty; the execution, delivery and
performance of this Guaranty have been duly authorized by all necessary
organizational action; and this Guaranty has been duly and validly executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms.
(c) Neither the execution and delivery by it of this Guaranty nor
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, organizational documents or any
Material applicable law or regulation or any order, writ, injunction or decree
of any court or governmental authority or agency, or any Material Contractual
Obligation to which it is a party or by which it is bound or to which it is
subject, or constitute a default under any such Material Contractual Obligation,
or result in the creation or imposition of any Lien upon any of its revenues or
assets pursuant to the terms of any such Material Contractual Obligation.
SECTION 2.02 Covenants. Guarantor covenants that so long as any amount
is due and owing under the Term Notes and so long as any Lender has any
Commitment outstanding under the Credit Agreement or any amount payable under
the Credit Agreement or any of the Notes shall remain unpaid, that it will, and,
if necessary, will enable the Borrower to fully comply with those covenants and
agreements set forth in the Credit Agreement (including, without limitation,
Articles 6 and 7 thereof).
SECTION 3. The Guaranty. Guarantor hereby unconditionally guarantees,
the full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on each of the Notes issued by the
Borrower pursuant to the Credit Agreement, and the full and punctual payment of
all other amounts payable by the Borrower under the Credit Agreement and the
other Credit Documents including, without limitation, the Obligations (all of
the foregoing, including without limitation, interest accruing or what would
have accrued after the filing of a petition in bankruptcy or other insolvency
proceeding, being referred to collectively as the "Guaranteed Obligations").
Upon failure by the Borrower to pay punctually any such amount, Guarantor agrees
that it shall forthwith on demand pay the amount not so paid at the place and in
the manner specified in the Credit Agreement, the Notes or the relevant Credit
Document, as the case may be. Guarantor acknowledges and agrees that this is a
guarantee of payment when due, and not of collection, and that this Guaranty may
be enforced up to the full amount of the Guaranteed Obligations without
proceeding against the Borrower, any other Subsidiary Guarantor, any security
for the Guaranteed Obligations, or against any other Person that may have
liability on all or any portion of the Guaranteed Obligations. The Guarantor's
obligations under this Guaranty and the obligations of any other Subsidiary
Guarantor under a Subsidiary Guaranty, are joint and several.
SECTION 4. Guaranty Unconditional. The obligations of Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under the Credit
Agreement, any of the Notes, or any other Credit Document, by operation
of law or otherwise or any obligation of any other guarantor of any of
the Obligations;
J-2
116
(ii) any modification or amendment of or supplement to the
Credit Agreement, any of the Notes, or any other Credit Document;
(iii) any release, nonperfection or invalidity of any direct
or indirect Collateral and security for any obligation of the Borrower
under the Credit Agreement, any of the Notes, any Credit Document, or
any obligations of any other guarantor of any of the Obligations;
(iv) any change in the existence, structures or ownership of
the Borrower or any other guarantor of any of the Obligations, or any
insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Borrower, or any other guarantor of the Obligations, or
its assets or any resulting release or discharge of any obligation of
the Borrower, or any other guarantor of any of the Obligations;
(v) the existence of any claim, setoff, or other rights which
any Subsidiary Guarantor may have at any time against the Borrower, any
other guarantor of any of the Obligations, the Agent, any Lender or any
other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower, or any other guarantor of any of the Obligations, for any
reason related to the Credit Agreement, any other Credit Document, or
any provision of applicable law or regulation purporting to prohibit
the payment by the Borrower or any other guarantor of the Obligations,
of the principal of or interest on any of the Notes or any other amount
payable by the Borrower under the Credit Agreement, the Notes, or any
other Credit Document; or
(vii) any other act or omission to act or delay of any kind by
the Borrower, any other guarantor of the Obligations, the Agent, any
Lender, or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or
equitable, discharge of any Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full, Reinstatement In
Certain Circumstances. Guarantor's obligations hereunder shall remain in full
force and effect until all Guaranteed Obligations shall have been paid in full
and the Commitments under the Credit Agreement shall have terminated or expired.
If at any time any payment of the principal of or interest on any of the Notes
or any other amount payable by the Borrower or any other party under the Credit
Agreement or any other Credit Document is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not made at
such time.
SECTION 6. Waiver of Notice. Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by
law, any notice not provided for herein as well as any requirement that at any
time any action be taken by any Person against the Borrower, any other guarantor
of the Obligations, or any other Person.
J-3
117
SECTION 7. Judgment Currency.
(a) Guarantor shall pay all amounts due hereunder in U.S. Dollars, and
such obligations hereunder to make payments in U.S. Dollars shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than U.S. Dollars, except to
the extent that such tender or recovery results in the effective receipt by the
Lenders and the Agent of the full amount of U.S. Dollars expressed to be payable
under this Guaranty or the Credit Agreement. If for the purpose of obtaining or
enforcing against Guarantor in any court or in any jurisdiction, it becomes
necessary to convert into or from any currency other than U.S. Dollars (such
other currency being hereinafter referred to as the "Judgment Currency") an
amount due in U.S. Dollars, the conversion shall be made, and the currency
equivalent determined, in each case, as on the Business Day immediately
preceding the day on which the judgment is given (such Business Day being
hereinafter referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange between the Judgment
Currency Conversion Date and the date of actual payment of the amounts due, the
Guarantor covenants and agrees to pay, or cause to be paid, such additional
amounts, if any (but in any event not a lesser amount), as may be necessary to
insure that the amount paid in the Judgment Currency, when converted at the rate
of exchange prevailing on the date of payment, will produce the amount of U.S.
Dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing
on the Judgment Currency Conversion Date.
(c) For purposes of determining the currency equivalent for this
Section, such amounts shall include any premium and costs payable in connection
with the purchase of U.S. Dollars.
(d) The currency equivalent of U.S. Dollars shall mean, with respect to
any monetary amount in a currency other than U.S. Dollars, at any time for the
determination thereof, the amount of U.S. Dollars obtained by converting such
foreign currency involved in such computation into U.S. Dollars at the spot rate
for the purchase of U.S. Dollars with the applicable foreign currency as quoted
by the Agent at approximately 11:00 a.m. (Nashville, Tennessee time) on the date
of determination thereof specified herein or, if the date of determination
thereof is not otherwise specified herein, on the date two (2) Business Days
prior to such determination.
SECTION 8. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under the Credit Agreement, any of
the Notes or any other Credit Document is stayed upon the insolvency, bankruptcy
or reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any of the Notes or any
other Credit Document shall nonetheless be payable by Guarantor hereunder
forthwith on demand by the Agent made at the request of the Required Lenders.
SECTION 9. Notices. All notices, requests and other communications to
any party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier set forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify for such purpose by notice
to the Agent in accordance with the provisions of Section 10.1. of the Credit
Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice sent
J-4
118
by certified mail return receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such in each case given or addressed as
aforesaid.
SECTION 10. No Waivers. No failure or delay by the Agent or any Lenders
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Credit Agreement, the
Notes, and the other Credit Documents shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 11. Successors and Assigns. This Guaranty is for the benefit of
the Agent and the Lenders and their respective successors and permitted assigns
and in the event of an assignment of any amounts payable under the Credit
Agreement, the Notes, or the other Credit Documents, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Guaranty shall be binding upon Guarantor and its
successors and permitted assigns.
SECTION 12. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by Guarantor and the Agent with the consent of the Required
Lenders.
SECTION 13. GOVERNING LAW; SUBMISSION TO JURISDICTION WAIVER OF JURY
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TENNESSEE. GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF
TENNESSEE AND OF ANY TENNESSEE STATE COURT SITTING IN NASHVILLE, TENNESSEE AND
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER CREDIT DOCUMENTS) OR
THE TRANSACTIONS CONTEMPLATED HEREBY. GUARANTOR IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. GUARANTOR, AND THE AGENT AND THE LENDERS ACCEPTING
THIS GUARANTY, HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14. Taxes, etc. All payments required to be made by Guarantor
hereunder shall be made without setoff or counterclaim and free and clear of and
without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority thereof, provided, however,
that if Guarantor is required by law to make such deduction or withholding, such
Guarantor shall forthwith pay to the Agent or any Lender, as applicable, such
additional amount as results in the net amount received by the Agent or any
Lender as applicable, equaling the full amount which would
J-5
119
have been received by the Agent or any Lender, as applicable, had no such
deduction or withholding been made.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed by its authorized officers as of the day and year first above written.
GUARANTOR
By:
-----------------------------------
Title:
---------------------------------
ADDRESS FOR NOTICES:
Telecopier No.:
ACCEPTED BY:
SUNTRUST BANK, NASHVILLE, N.A.,
AGENT for Lenders
By:
----------------------------------
Title:
------------------------------
J-6
120
EXHIBIT K
[FORM OF] ASSIGNMENT, PLEDGE, AND SECURITY AGREEMENT
Debtor: Secured Party:
------- --------------
--------------------------------- SUNTRUST BANK, NASHVILLE, N.A.,
--------------------------------- AGENT
--------------------------------- ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
THIS ASSIGNMENT, PLEDGE AND SECURITY AGREEMENT (as amended and/or
restated from time to time, this "Agreement") is made this __ day of _____, 1998
(the "Effective Date") between ____________________________, a
__________________________ corporation having its principal place of business at
the address shown above (the "Debtor"), and SUNTRUST BANK, NASHVILLE, N.A.,
AGENT for SUNTRUST BANK, NASHVILLE, N.A., FIRST AMERICAN NATIONAL BANK, and all
other financial institutions identified as Lenders in the Credit Agreement
referred to below (herein collectively the "Lenders") (herein SunTrust Bank,
Nashville, N.A., Agent for Lenders shall be referred to herein as "Secured
Party").
W I T N E S SE T H
WHEREAS, for and in consideration of the execution of this Agreement by
Debtor, Secured Party and Lenders concurrently herewith entering into that
certain Credit Agreement dated as of ___________________ , 1998, by and between
________________________ (the "Borrower"), Secured Party, and Lenders (as such
Credit Agreement may be amended and/or restated from time to time, the "Credit
Agreement"); and
WHEREAS, Debtor will receive a direct and indirect benefit from the
extension of credit to Borrower; and
WHEREAS, as a condition precedent to the Secured Party's and Lender's
willingness to extend credit to Borrower, Debtor must execute this Agreement;
and
WHEREAS, Secured Party desires to obtain for the benefit of Lenders,
and Debtor desires to grant, a security interest in certain property of Debtor,
now owned or hereafter acquired, and the proceeds thereof, to secure repayment
of all indebtedness described in Section 2.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
K-1
121
1. Security Interest. As security for the repayment of the Indebtedness
(as defined in Section 2), Debtor hereby assigns and grants to Secured Party for
the benefit of the Lenders a security interest in and to all of Debtor's rights
in and to the property described on Exhibit A attached hereto and incorporated
herein by this reference, including, without limitation all such property or
type of property presently existing and hereafter acquired or arising and all
proceeds (including insurance proceeds) or products attributable to or arising
from any of such property (collectively, the "Collateral").
2. Indebtedness. The security interest granted herein by Debtor secures
and shall secure:
(a) Prompt and full payment of all indebtedness and
obligations of Borrower to Secured Party and the Lenders, pursuant to
the Credit Agreement, as further evidenced by the Credit Documents
defined therein, including without limitation, the Term Notes and
Revolving Notes, executed by Borrower in favor of Secured Party and/or
the Lenders, as any of the foregoing may subsequently be amended,
restated, or modified from time to time;
(b) Prompt and full payment of all indebtedness and
obligations of Debtor to Secured Party under that certain Guaranty
dated _____________________, 1998 executed by Debtor in favor of
Secured Party for the benefit of Lenders with respect to the
obligations of Borrower under the Credit Agreement and the Credit
Documents;
(c) Payment of all other obligations, liabilities and
indebtedness owed by Borrower or Debtor to Secured Party and/or to
Lenders, both now existing or hereafter contracted or arising, joint or
several, due or to become due, absolute or contingent, direct or
indirect, liquidated and unliquidated, and all renewals, extensions or
modifications thereof and whether incurred or given as maker, endorser,
guarantor, customer or otherwise;
(d) Payment of all money or property heretofore or in the
future advanced to or for the account of, or on behalf of, Debtor or
Borrower;
(e) Payment of all costs and expenses incurred by Secured
Party and Lenders in enforcing or protecting their respective rights
with respect to the Collateral or the indebtedness secured by the
Collateral, including, but not limited to, attorneys' fees; and
(f) Payment of all future advances made by Secured Party for
taxes, levies, insurance and/or repairs to or maintenance of the
Collateral.
For purposes of this Agreement, all such obligations secured by the
Collateral shall be referred to as "Indebtedness."
K-2
122
3. Debtor's Representations and Warranties to Secured Party. Debtor
hereby represents and warrants to Secured Party that the following facts are
true and correct as of the Effective Date:
(a) Debtor is the true and lawful owner of the Collateral;
(b) Debtor has a good right to grant a security interest in
the Collateral;
(c) There are no advances, liens, security interests or
encumbrances against the Collateral other than as disclosed in the
Credit Agreement.
(d) Debtor's chief executive offices and principal place(s) of
business are located that addresses designated as such on Exhibit B
hereto. All of Debtor's other offices and places of business are
located at the addresses designated as such on Exhibit B hereto, and
Debtor's records regarding the Collateral are located at the address
designated as such on Exhibit B hereto. Except as specified on Exhibit
B hereto, none of the Collateral has been located at any other places,
and Debtor's chief executive offices have not been located at any other
addresses, within five years preceding the date of this Agreement.
(e) Debtor's true, correct and legal name is (and has been for
at least the five years preceding the date of this Agreement) the name
set forth in the first paragraph of this Agreement, and Debtor does not
transact, and has not transacted, business under any trade names except
as set forth on Exhibit C hereto.
4. Debtor's Covenants to Secured Party. Debtor hereby covenants and
agrees that until the Indebtedness shall have been paid in full or unless Debtor
shall have received the prior written consent of Secured Party:
(a) Protection and Use of Collateral. Except for Permitted
Encumbrances as defined in the Credit Agreement, Debtor will keep the
Collateral free from any adverse lien, security interest or
encumbrance; and Debtor will not waste or destroy the Collateral or any
material part thereof.
(b) Sale, Assignment or Impairment of Collateral. Debtor will
not sell or offer to sell or otherwise transfer, dispose of or encumber
the Collateral, or any interest therein, except as permitted by the
Credit Agreement.
(c) Maintain Insurance.
(i) Debtor will maintain insurance in form, amounts
and with companies in all respects satisfactory to Secured
Party insuring all of the Collateral against loss from fire,
theft, and any other risks determined by Secured Party.
Secured Party on behalf of Lenders shall be designated as a
loss payee under a mortgagee loss payment clause satisfactory
to
K-3
123
Secured Party under the terms of the policies evidencing such
insurance (collectively, the "Policies") and shall receive a
minimum of thirty (30) days' written notice from the company
or insurer issuing such Policies prior to the cancellation or
modification of any such Policies. Upon Secured Party's
Request, Debtor shall furnish Secured Party with a summary of
such coverage, in form and substance satisfactory to Secured
Party; provided, however Secured Party shall be under no duty
to verify the accuracy or existence of such Policies. If
Debtor fails to furnish said insurance or fails to pay the
premiums therefor, Secured Party may do so or may obtain
insurance of its interest only, adding the amount of any such
premium thereof to the Indebtedness, provided, however,
Secured Party is under no obligation or duty to pay such
premiums or obtain or maintain such insurance.
(ii) Debtor hereby assigns to Secured Party on behalf
of Lenders any insurance proceeds payable under any of the
Policies and returned or unearned premiums that may be due
upon cancellation of any of the Policies for any reason
whatsoever, and directs all insurers to pay Secured Party on
behalf of Lenders any amount so due unless the Indebtedness
has been previously fully satisfied. In order to collect such
returned or unearned premiums or the benefits of such
insurance, Secured Party acting through any officer, agent or
employee is hereby IRREVOCABLY appointed Debtor's
attorney-in-fact, which appointment is hereby coupled with an
interest, to endorse any draft or check that may be payable to
Debtor. All insurers are directed by Debtor to make insurance
proceeds, returned or unearned premiums payable solely to
Secured Party on behalf of Lenders and not to Secured Party
and Debtor jointly. Any balance of insurance proceeds
remaining after payment in full of all amounts owing to
Secured Party on behalf of Lenders shall be paid to Debtor.
Such returned or unearned insurance premium or the benefits of
such insurance, may, at Secured Party's option, be used to
repair, restore or replace the Collateral or may be applied to
any Indebtedness, and if the Indebtedness is payable in
installments, then to the installments in inverse order,
satisfying the final maturing installments first.
(d) Indemnification. Debtor will and does hereby agree to
indemnify and hold Secured Party and Lenders harmless against all
claims, liabilities, and costs (including attorney's fees) arising out
of or in connection with Debtor's ownership and/or use of the
Collateral.
(e) Removal of Collateral. Debtor warrants and represents that
(i): except for the Permitted Encumbrances as defined in the Credit
Agreement the security interest granted to Secured Party for the
benefit of Lenders is now and at all times hereafter shall be perfected
and have a first priority; and (ii) Debtor shall not remove the
Collateral from the addresses noted on Exhibit B without the consent of
the Secured Party.
K-4
124
(f) Inspect Collateral. Secured Party (by any of its officers,
employees and/or agents) shall have the right at any time or times
during Debtor's usual business hours to inspect the Collateral and all
related records (and the premises upon which it is located) and all
financial records and to verify the amount and condition of the
Collateral or any other matter whether or not relating to the
Collateral. After an Event of Default (as defined in Section 8), all
cost, fees and expenses incurred by Secured Party, or for which Secured
Party has become obligated, in connection with such inspection and/or
verification shall be payable immediately by Debtor to Secured Party.
(g) Tax Liens, Etc. Debtor shall pay all taxes or other liens
taking priority over the security interest created in this Agreement
and, should default be made in the payment of same, Debtor shall give
Secured Party prompt notice of such default, and Secured Party, at its
option, may pay the same, which shall then become part of the
Indebtedness.
(h) Execute Additional Documents. Debtor will sign and execute
alone or with Secured Party and/or Lenders any financing statement or
other document or procure any document and pay all necessary costs to
protect the security interest under this Agreement against the interest
of third persons. Debtor will pay the cost of filing the same in all
public offices wherever filing is deemed by Secured Party to be
necessary or desirable. Secured Party is hereby IRREVOCABLY appointed
Debtor's attorney-in-fact, which appointment is coupled with an
interest, to do all acts and things that Secured Party may deem
necessary to perfect and/or continue the perfection of the security
interest created by this Agreement and to protect the Collateral.
Debtor further agrees to pay all costs and fees for filing any
termination statements.
5. Special Representations, Warranties and Agreements with respect to
Accounts. With respect to Accounts (as defined on Exhibit A), Debtor represents,
warrants and agrees with Secured Party as follows:
(a) As of the time any Account becomes subject to Secured
Party's security interest hereunder, including, without limitation, as
of each time any specific assignment or transfer or identification is
made to Secured Party (or the Lenders) of any Account, Debtor shall be
deemed to have warranted as to each and all of such Accounts that each
Account and all papers and documents relating thereto are genuine and
in all respects what they purport to be; that each Account is valid and
subsisting and arises out of a bona fide sale of goods sold and
delivered, or in the process of being delivered, or out of and for
services theretofore actually rendered, to the account debtor named in
the Account (each an "Account Debtor"); that the amount of the Account
represented as owing is the correct amount actually and unconditionally
owing except for normal cash discounts, is not disputed, and except for
such normal cash discount is not subject to any setoffs, credits,
deductions or counter-charges; that Debtor is the owner thereof free
and clear of all liens, encumbrances and security interests of
K-5
125
any nature whatsoever (except for the security interest of Secured
Party hereunder and Permitted Encumbrances as defined in the Credit
Agreement); and that no surety bond was required or given in connection
with such Account or the contracts or purchase orders out of which the
same arose; and that Debtor has no notice of or reason to believe that
the Account Debtor is subject to any pending bankruptcy proceeding,
insolvency proceeding or operations of any creditors committee.
(b) Debtor will hold in Debtor's principal place of business,
or other location approved by Secured Party, and make available to
Secured Party as requested so long as any Indebtedness remains unpaid
all of Debtor's records containing any entries as to Accounts,
including details of sale, shipment, delivery, payment and other
material information; and, at Secured Party's request, such records
will be segregated and marked by Debtor in a manner satisfactory to
Secured Party; and Secured Party shall at all reasonable times have
full access to and the right to examine and audit Debtor's books and
records, and to make copies of pertinent portions thereof at Debtor's
expense.
(c) Following the occurrence of an Event of Default, all
checks and other forms of remittances received by Debtor on Accounts
shall not be commingled with Debtor's other property but shall be
segregated, held by Debtor in trust for Secured Party and Lenders as
Secured Party's and Lenders' exclusive property and immediately
delivered by Debtor to Secured Party in the identical form as that in
which received, together with proper endorsements. Debtor will
accompany each such transmission of proceeds to Secured Party with a
report in such form as Secured Party may require to identify the
Accounts to which such proceeds apply. In the event any Account Debtor
shall also be indebted to Debtor in any other respect and such Account
Debtor shall make payment without designating the particular
indebtedness against which it is to apply, such payment shall be
conclusively presumed to be payment on the Account of such Account
Debtor. In administering the collection of proceeds as herein provided,
Secured Party or the bank designated by it may accept checks or drafts
in any amount and bearing any notation without incurring liability to
Debtor for so doing.
(d) Returned or repossessed goods arising from or relating to
any Accounts, if requested by Secured Party, shall be held separate and
apart from any other property, and, in any event, will be subject to
the security interest of Secured Party hereunder. Debtor shall promptly
report to Secured Party the appropriate identifying information with
respect to such goods and the Accounts out of which or to which such
goods relate.
(e) Debtor shall, for Secured Party's and Lenders' benefit and
at Debtor's expense, enforce, collect and receive all amounts owing on
Accounts. Upon Secured Party's request, Debtor will notify its Account
Debtors to make payment of any or all Accounts directly to Secured
Party or to a bank designated
K-6
126
by Secured Party (if the bank's deposits are insured by the Federal
Deposit Insurance Corporation), pursuant to an arrangement providing
for the bank to receive payments on Accounts and apply them in payment
of the Indebtedness of Debtor. Any proceeds of Accounts transmitted to
Secured Party or to such bank may be deposited in an account in the
name of Secured Party and under its dominion and control pending their
application to the Indebtedness. Debtor acknowledges that the
maintenance of such account is solely for convenience in administering
the procedures established by this Agreement and that Debtor has not
and shall not have any right, title or interest in said account or in
the amounts at any time to the credit thereof. All proceeds so received
by Secured Party and or said bank shall be applied on the Indebtedness,
whether or not such Indebtedness shall by its terms then be due, with
each such application to be made to such portions of the Indebtedness,
and in such order, as Secured Party may determine in its sole
discretion.
6. Special Representations, Warranties and Agreements with Respect to
Inventory. With respect to Inventory (as defined on Exhibit A), Debtor
represents, warrants and agrees with Secured Party as follows:
(a) Debtor will continue to maintain books and records
pertaining to the Inventory in the detail, form and scope as Debtor is
maintaining such books and records at the execution of this Agreement
and agrees that Secured Party or its agents may enter upon Debtor's
premises at any time and from time to time for the purpose of
inspecting Inventory and any and all records pertaining thereto; and
Debtor will notify Secured Party promptly of any change in Debtor's
name, mailing address or principal place of business or any change in
the location of Inventory; and Debtor will promptly advise Secured
Party in sufficient detail of any substantial change relating to the
type, quantity or quality of the Inventory, or any event that would
have a material effect on the value of the Inventory or on the lien and
security interest granted to Secured Party herein.
(b) Secured Party may require Debtor from time to time to
deliver to Secured Party such lists, descriptions and designations of
Inventory as Secured Party may require to identify the quantities,
nature, extent, location and value of the Inventory, subject to the
security interest of Secured Party. Debtor warrants that all Inventory
at any time and from time to time included in any such lists,
descriptions or designations will at all times be owned by Debtor free
and clear of all claims, liens and encumbrances or security interest of
any kind whatsoever, excepting only the security interest of Secured
Party pursuant hereto, and is in fact existing and in the condition and
amount represented to Secured Party.
7. Debtor's Use of the Collateral. Prior to the occurrence of an Event
of Default, Debtor may use the Collateral in the ordinary course of Debtor's
business; provided, upon the occurrence of an Event of Default Debtor's right to
so use the Collateral shall terminate until further written notice from Secured
Party.
K-7
127
8. Events of Default. The term "Event of Default," whenever used in
this Agreement, shall mean any one or more of the following events or
conditions:
(a) the occurrence of an Event of Default as defined in the
Credit Agreement; and
(b) subject to any applicable notice and cure periods provided
in the Credit Agreement, breach of any covenant, warranty, agreement or
representation contained in this Agreement.
9. Remedies.
(a) Acceleration and Foreclosure, Etc. Upon the happening of
any Event of Default, and at any time thereafter, at the option of
Secured Party, any and all Indebtedness shall become immediately due
and payable without presentment or demand or any notice to Debtor or
any other person obligated thereon, and Secured Party shall have and
may exercise any or all of the rights and remedies of a secured party
under the Uniform Commercial Code as adopted in the State of Tennessee
(the "Code"), and as otherwise contractually granted herein or under
any other applicable law or under any other agreement executed by
Debtor in favor of Secured Party, including, without limitation, the
right and power to sell, at public or private sale or sales, or
otherwise dispose of or utilize such portion of the Collateral and any
part or parts thereof in any manner authorized or permitted under the
Code after the occurrence of an Event of Default by Debtor, and to
apply the proceeds thereof toward payment of any costs and expenses and
attorneys' fees and legal expenses thereby incurred by Secured Party
and toward payment of the Indebtedness in such order or manner as
Secured Party may elect in its sole discretion. Additionally, and as an
essential part of the bargained-for consideration running to Secured
Party, Debtor hereby expressly grants to Secured Party and Lenders the
contractual right to purchase any or all of the Collateral at private
sale any time after ten (10) days' notice of such sale shall have been
sent to Debtor by Secured Party.
(b) Waiver of Notice. Debtor agrees that if such notice of the
occurrence of an Event of Default is mailed, postage prepaid, or sent
by telegram, charges prepaid, to Debtor at the address stated at the
beginning of this Agreement at least ten (10) days before the time of
the proposed sale or disposition, such notice shall be deemed
reasonable and shall fully satisfy any requirement of giving of notice,
and the proposed sale may take place any time after such ten (10) day
period without the necessity of sending another notice to Debtor.
Secured Party may postpone and reschedule any proposed sale at its
option without the necessity of giving Debtor further notice of such
fact as long as the rescheduled sale occurs within sixty (60) days of
the originally scheduled sale.
(c) Method of Sale of Collateral Approved. All recitals in any
instrument of assignment or any other document or paper executed by
Secured
K-8
128
Party incident to sale, transfer, assignment or other disposition or
utilization of the Collateral or any part thereof hereunder shall be
sufficient to establish full legal propriety of the sale or other
action taken by Secured Party or of any fact, condition or thing
incident thereto, and all prerequisites of such sale or other action
shall be presumed conclusively to have been performed or to have
occurred.
(d) Preservation of Collateral and Proceeds. In addition to
the foregoing provisions, following the occurrence of an Event of
Default, and upon Secured Party's demand, Debtor agrees to assemble the
Collateral at its usual place of business and make same available to
Secured Party immediately.
(e) Additional Remedies. In addition to the remedies set forth
herein, following an Event of Default, and subject to any applicable
cure periods, the Secured Party may elect to exercise the rights of
Debtor to collect from any of the Accounts and to apply such monies to
the Indebtedness.
The Secured Party shall have such other rights and remedies as
available by contract, by law, or in equity.
10. Secured Party's Powers and Duties with Respect to the Collateral.
(a) Secured Party shall be under no duty to collect any amount
that may be or become due on any of the Collateral now or hereafter
pledged hereunder, to realize on Collateral, to collect principal,
interest or dividends, to keep the same insured, to make any
presentments, demands or notices of protest, in connection with any of
the Collateral, or to do anything for the enforcement and collection of
Collateral or the protection thereof.
(b) Not limiting the generality of any of the foregoing, but
in amplification of the same, Secured Party shall be in no way liable
to or responsible for any diminution in the value of the Collateral
from any cause whatsoever.
(c) Debtor agrees to pay all taxes, charges, transfer fees and
assessments against the Collateral and to do all things necessary to
preserve and maintain the value and collectibility thereof, and on the
failure of Debtor to so do, Secured Party may, after giving Debtor
written notice of its intention to do so, make such payments and
advance such sums on account thereof as Secured Party, in Secured
Party's discretion, deems desirable. Debtor agrees to reimburse Secured
Party immediately upon demand for all such payments and advances plus
interest thereon at the maximum rate allowed by applicable law,
repayment of all of which is secured by this Agreement and the
Collateral.
(d) Secured Party or any of its agents shall have the right to
call at reasonable times at Debtor's place or places of business at
intervals to be determined by Secured Party, and without hindrance or
delay, to inspect, audit,
K-9
129
check and make extracts from the books, records, journals, orders,
receipts, correspondence and other data relating to Debtor's
operations.
11. General Authority. Effective immediately but exercisable by Secured
Party (or by any person designated by Secured Party) only upon the occurrence of
an Event of Default, Debtor hereby IRREVOCABLY appoints Secured Party (or any
person designated by Secured Party) as Debtor's true and lawful
attorney-in-fact, which appointment is hereby coupled with an interest, with
full power of substitution, in Secured Party's name or Debtor's name or
otherwise, for Secured Party's sole use and benefit, but at Debtor's cost and
expense, to exercise at any time and from time to time all or any of the
following powers with respect to all or any of the Collateral:
(a) To receive, take, endorse, assign and/or deliver in
Secured Party's name or Debtor's name any and all checks, notes, drafts
and other instruments relating to the Collateral;
(b) To transmit to Account Debtors notice of Secured Party's
interest in Accounts and to request from Account Debtors at any time,
in Debtor's name or in Secured Party's name or the name of Secured
Party's designee, information concerning the Accounts and the amounts
owing thereon;
(c) To receive and open all mail addressed to Debtor and to
retain all mail pertaining to the Collateral;
(d) To notify Account Debtors to make payment directly to
Secured Party or to any bank designated by Secured Party;
(e) To take or bring, in Debtor's name or Secured Party's
name, all steps, actions, suits or proceedings deemed by Secured Party
necessary or desirable to effect collection of the Accounts, to
compromise with any Account Debtor and give acquittance for any and all
Accounts;
(f) To sign Debtor's name on any invoice or ▇▇▇▇ of lading
relating to any Collateral, drafts against Debtor's customers, notices
of assignment, financing statements, other public records and notices
to Debtor's customers; and
(g) In general, to do all things necessary to perform the
terms of this Agreement, including, without limitation, to take any
action or proceedings that Secured Party deems necessary or appropriate
to protect and preserve the security interest of Secured Party in the
Collateral;
provided however, the exercise by Secured Party of or failure to so exercise any
such authority shall in no manner affect Debtor's liability to Secured Party
hereunder or in connection with the Indebtedness; and provided further, that
Secured Party shall be under no obligation or duty to exercise any of the powers
hereby conferred upon Secured Party and Secured Party shall have no liability
for any act or failure to act in
K-10
130
connection with any of the Collateral. Secured Party shall not be bound to take
any steps necessary to preserve rights in any instrument, contract or lease
against third parties. Not limiting the generality of any of the foregoing, but
in amplification of the same, Secured Party shall be in no way liable to or
responsible for any diminution in the value of, or reduction in the proceeds
realized from, the Collateral from any cause whatsoever.
12. Continuing Security Interest. This Security Agreement shall create
a continuing security interest in the Collateral, and shall remain in full force
and effect until the indefeasible payment in full of all Indebtedness and/or
performance of all obligations under the Credit Agreement, shall be binding upon
the Debtor, its successors and assigns (provided that the Debtor may not assign
any of its obligations hereunder without the prior written consent of the
Secured Party), and shall inure to the benefit of the Secured Party, and its
respective successors, transferees, and assigns.
13. Survival of Agreements, Representations and Warranties. All
agreements, representations and warranties contained herein or made in writing
by or on behalf of Debtor in connection with the transactions contemplated
hereby shall survive the execution and delivery of this Security Agreement, any
investigation at any time made by Secured Party or on its behalf, and the
acquisition and disposition of the Indebtedness. All statements contained in any
certificate or other instrument delivered by or on behalf of Debtor pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties by Debtor hereunder.
14. Execution of Agreement. Each party to this Agreement has been
represented by legal counsel of their choice who has advised them in all matters
relative to this Agreement. Each party to this Agreement stipulates that it has
read this Agreement, fully understands the content and consequences of entering
into this Agreement, intends to be bound by the terms of this Agreement and is
not under any duress, economic or otherwise, to execute this Agreement.
15. Invalid Provisions. If any one or more of the provisions of this
Agreement, or the applicability of any such provision to a specific situation,
shall be held invalid, illegal or unenforceable in any respect, such provision
shall be modified to the minimum extent necessary to make it or its application
valid and enforceable, and the validity and enforceability of all other
provisions of this Agreement and all other applications of any such provision
shall not be affected thereby.
16. Dealings With Debtor. It is expressly understood and agreed that,
notwithstanding anything else contained in this Agreement, Secured Party may,
for all purposes hereof deal solely with Debtor in connection therewith, and
nothing herein or in any other Credit Document shall be construed so as to
require dealings with, consent of or notice to any other parties or persons.
17. Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that in the event the
provisions of this
K-11
131
Agreement require judicial interpretation, it is agreed that the court
interpreting or construing this Agreement shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be construed more strictly against
the party who itself or through its agent prepared the same, it being agreed
that all parties to this Agreement participated in the preparation of this
Agreement.
18. Number and Gender. As used in this Agreement, the singular number
shall include the plural and the plural shall include the singular, and the use
of any gender shall be applicable to all genders, unless the context would
clearly not admit such construction. The words "herein," "hereof," "hereunder"
and other similar compounds of the word "here" when used in this Agreement shall
refer to the entire Agreement and not to any particular provision or section.
19. Governing Law. This Agreement constitutes a contract made under and
shall be construed and interpreted in accordance with the laws of the State of
Tennessee.
20. Successors and Assigns. Debtor may not assign its rights or
delegate its duties under this Agreement or any other Credit Document. All terms
and provisions of this Agreement applicable to Debtor shall bind Debtor and
Debtor's permitted successors and assigns and shall inure to the benefit of
Secured Party and Lenders and their respective successors and assigns.
21. Entire Agreement. This Agreement, including Exhibits, constitutes
the entire agreement between the parties hereto with respect to the matters
addressed herein and supersedes all prior agreements and understandings relating
to the subject matter hereof, either written or oral, that may have existed
between them with respect to the matters addressed herein except as may be
contained in the other Credit Documents. No representation, promise, condition,
warranty or understanding, either express or implied, other than as set forth
herein, shall be binding upon any of the parties to this Agreement.
22. Notices. All communications under or in connection with this
Agreement shall be in writing (including bankwire, telex, telecopy or similar
teletransmission or wiring) and shall be given to the party at its address on
the first page hereof, or at such other address which may be given to the other
party in writing in conformity herewith. Each such notice, request or other
communication shall be effective: (i) if given by telex, when such telex is
transmitted to the telex number specified in this Agreement and the appropriate
confirmation is received; (ii) if given by mail, three (3) Business Days after
such communication is deposited in the mail with first class, postage prepaid,
addressed as aforesaid; (iii) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this section, and the
appropriate confirmation is received, or (iv) if given by any other means
(including, without limitation, by air courier) when delivered or received at
the address specified in this section; provided, however, that any notice given
to Debtor of an Event of Default hereunder shall also be
K-12
132
delivered to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III at Bass, ▇▇▇▇▇ & ▇▇▇▇, Suite 2700, First
American center, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
23. Renewal, Extension or Rearrangement. All provisions of this
Agreement relating to Indebtedness shall apply with equal force and effect to
each and all promissory notes executed hereafter that in whole or in part
represent a renewal, extension for any period, increase or rearrangement of any
part of the Indebtedness originally represented by any part of such other
Indebtedness.
24. Waivers. Pursuant to Tennessee Code Annotated ss.▇▇-▇▇-▇▇▇, no
action or course of dealing on the part of Secured Party, its officers,
employees, consultants or agents, nor any failure or delay by Secured Party with
respect to exercising any right, power or privilege of Secured Party under the
Indebtedness, this Agreement or any other Credit Document shall operate as a
waiver thereof, except as otherwise provided in this Agreement. No waiver of any
terms or provisions of this Agreement or any other Credit Document shall be
valid unless such waiver is in writing.
25. Titles of Sections and Subsections. All titles or headings to
sections, subsections or other divisions of this Agreement or the exhibits to
this Agreement are only for the convenience of the parties and shall not be
construed to have any effect or meaning with respect to the other content of
such sections, subsections or other divisions, such other content being
controlling with respect to the agreement between the parties.
26. Time of Essence. Time is of the essence with regard to each and
every provision of this Agreement.
27. Costs, Expenses and Taxes. Debtor agrees to pay on demand all
out-of-pocket costs and expenses of Secured Party (excluding employee's salaries
but including the fees and out-of-pocket expenses of counsel for Secured Party
and of local counsel, if any, whom Secured Party's counsel may retain) in
connection with the administration, enforcement or protection of the Secured
Party's rights under the Credit Documents. In addition, Debtor agrees to pay,
and to hold Secured Party harmless from all liability for, any taxes (including
taxes under Tennessee Code Annotated ss.67-4-409 due upon the recordation of
deeds of trust and financing statements) or recording costs that may be payable
in connection with the execution or delivery of this Agreement or the Collateral
or any Credit Documents delivered or to be delivered under or in connection with
this Agreement. Debtor, upon request, promptly will reimburse Secured Party for
all amounts expended, advanced or incurred by Secured Party to satisfy any
obligation of Debtor under this Agreement or any other Credit Documents, or to
perfect a lien in favor of Secured Party, or to protect the properties or
business of Debtor or to collect the Indebtedness, or to enforce the rights of
Secured Party under this Agreement or any Credit Document, which amounts will
include all court costs, attorneys' fees, fees of auditors and accountants, and
investigation expenses incurred by Secured Party in connection with any such
matters, together with interest thereon at the rate applicable to past due
principal and interest as set forth in the Credit Documents but in no event in
excess of the maximum lawful
K-13
133
rate of interest permitted by applicable law on each such amount. All
obligations for which this Section 27 provides shall survive any termination of
this Agreement.
28. Modification. This Agreement or any of the terms hereof cannot
under any circumstance be modified orally, and no agreement shall be effective
to waive, alter, change, modify, amend or discharge this Agreement in whole or
in part unless such agreement is in writing and is signed by both Debtor and
Secured Party.
29. Severability. The invalidity or unenforceability of any of the
rights or remedies herein provided in any jurisdiction shall not in any way
affect the right to the enforcement in such jurisdiction or elsewhere of any of
the other rights or remedies herein provided.
35. Definitions. Terms not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered on
the Effective Date.
DEBTOR: SECURED PARTY:
SUNTRUST BANK, NASHVILLE, N.A.
AGENT
By: By:
--------------------------------- -----------------------------------
Title: Title:
----------------------------- --------------------------------
K-14
134
EXHIBIT A
The Collateral includes, and Debtor hereby grants to Secured Party for
the benefit of Lenders a security interest in and to, all of Debtor's right,
title and interest in the following described property (and types of property)
both presently existing and hereafter acquired or arising:
1. Inventory, including without limitation, all of Debtor's inventory,
raw materials, work in process, finished goods, parts, goods held on
consignment, returned goods or inventory, goods held for sale or lease or
furnished or to be furnished under contracts of service in which the Debtor now
has or hereafter acquires any right and all additions, substitutions and
replacements thereof wherever located (collectively, the "Inventory"); and
2. Accounts, including without limitation, all accounts, accounts
receivable, notes, chattel paper, drafts, acceptances, instruments and any right
to payment for goods sold or leased or for services rendered, whether or not
evidenced by an instrument or chattel paper, and whether or not earned by
performance, merchandise represented by Accounts, all of Debtor's rights as an
unpaid vendor or lienor including stoppage in transit, replevin or reclamation,
and any other of Debtor's property held by Secured Party or by others for
Secured Party's account, including balances standing to Debtor's credit on
Secured Party's books, including all claims for tax refunds, whether now
existing or hereafter arising, of Debtor against any city, county, state or
federal government, or any agency, authority or subdivision thereof
(collectively, the "Accounts"); and
3. General Intangibles, including, without limitation, all of
Borrower's general intangibles, documents, contract rights, corporate or other
business records, deposit accounts, trade names, trade secrets, good will,
intellectual property and rights arising or derived from intellectual property
(whether or not registered), licenses, franchises, customer lists, tax refund
claims, computer programs, software, intellectual property owned by or licensed
to Borrower, all leasehold rights, all claims under guaranties, security
interests or other security granted to or held by Borrower to secure payment of
any Accounts or other Intangibles, all rights to indemnification, and all other
intangible property of every kind and nature (collectively, "General
Intangibles").
4. Equipment, including, without limitation, all of Borrower's
equipment, furniture, machinery, vehicles, parts, accessories and improvements,
and all replacements and substitutions for, and accessions to, any of the
foregoing (collectively, the "Equipment").
5. All deposit accounts, instruments, documents, securities, monies,
Intangibles and items of value of Borrower now or hereafter placed in Lender's
possession or owed by Lender to Borrower.
6. All property presently or hereafter pledged and delivered to Lender
to secure any Indebtedness.
K-15
135
7. The products and proceeds (including insurance proceeds) of any and
all of the foregoing, including cash and non-cash proceeds in the form of cash,
monies, General Intangibles, Accounts, Inventory, Equipment, securities or
otherwise, and also including any award in condemnation of any of the foregoing,
any insurance policies covering (and any payment resulting from defect in, loss
of, damage to or destruction of) such collateral, and any revenues derived or
arising from the foregoing collateral in any way (collectively, "Proceeds").
8. All payments, monies, interest and dividends arising from any of the
Collateral; and
9. The proceeds (including insurance proceeds) of any and all of the
Collateral; and
10. All ledgers, books of account and records of Debtor relating to any
and all of the Collateral.
K-16
136
EXHIBIT B
Location of Collateral
and All Books and Records
Relating to the Collateral
K-17
