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CREDIT AGREEMENT
dated as of July 28, 1997
by and among
MEDCATH INCORPORATED,
as Borrower,
the Lenders referred to herein,
and
NATIONSBANK, N.A.
as Agent
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS......................................1
SECTION 1.1 Definitions.........................................1
SECTION 1.2 General............................................14
SECTION 1.3 Other Definitions and Provisions...................15
ARTICLE II
REVOLVING CREDIT FACILITY.......................15
SECTION 2.1 Commitment.........................................15
SECTION 2.2 Procedure for Advances of Loans....................15
SECTION 2.3 Repayment of Loans.................................16
Section 2.4 Notes..............................................17
SECTION 2.5 Permanent Reduction of the Aggregate Commitment....17
SECTION 2.6 Termination of Credit Facility.....................17
SECTION 2.7 Use of Proceeds....................................17
ARTICLE IIA
LETTER OF CREDIT FACILITY........................18
SECTION 2A.1 Commitment........................................18
SECTION 2A.2 Procedure for Issuance of Letters of Credit.......18
SECTION 2A.3 Commissions and Other Charges.....................19
SECTION 2A.4 L/C Participations................................19
SECTION 2A.5 Reimbursement Obligation of the Borrower..........20
SECTION 2A.6 Obligations Absolute..............................20
SECTION 2A.7 Effect of Application..............................21
ARTICLE III
GENERAL LOAN PROVISIONS.........................21
SECTION 3.1 Interest...........................................21
SECTION 3.2 Notice and Manner of Conversion or
Continuation of Loans.......................................22
SECTION 3.3 Unused Fee.........................................22
SECTION 3.4 Payment............................................23
SECTION 3.5 Right of Set-off; Adjustments......................23
SECTION 3.6 Nature of Obligations of Lenders Regarding
Extensions of Credits; Assumption by the Agent..............24
SECTION 3.7 Indemnity..........................................25
SECTION 3.8 Increased Cost and Reduced Return..................25
SECTION 3.9 Limitation on Types of Loans.......................27
SECTION 3.10 Illegality.........................................27
SECTION 3.11 Treatment of Affected Loans........................28
SECTION 3.12 Compensation.......................................28
SECTION 3.13 Taxes..............................................28
SECTION 3.14 Replacement of Lenders.............................30
ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWINGS............31
SECTION 4.1 Closing............................................31
SECTION 4.2 Conditions to Closing and Initial
Extension of Credit.........................................31
SECTION 4.3 Conditions to All Loans............................34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 5.1 Representations and Warranties.....................34
SECTION 5.2 Survival of Representations and Warranties, Etc....41
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES........................41
SECTION 6.1 Financial Statements and Projections...............41
SECTION 6.2 Officer's Compliance Certificate...................42
SECTION 6.3 Accountants' Certificate...........................42
SECTION 6.4 Other Reports......................................42
SECTION 6.5 Notice of Litigation and Other Matters.............43
SECTION 6.6 Accuracy of Information............................44
ARTICLE VII
AFFIRMATIVE COVENANTS.....................................44
SECTION 7.1 Preservation of Corporate Existence and
Related Matters.............................................44
SECTION 7.2 Maintenance of Property............................44
SECTION 7.3 Insurance..........................................44
SECTION 7.4 Accounting Methods and Financial Records...........44
SECTION 7.5 Payment and Performance of Obligations.............45
SECTION 7.6 Compliance With Laws and Approvals.................45
SECTION 7.7 Environmental Laws.................................45
SECTION 7.8 Compliance with ERISA..............................45
SECTION 7.9 Compliance With Agreements.........................46
SECTION 7.10 Conduce of Business................................46
SECTION 7.11 Visits and Inspections..............................46
SECTION 7.12 Additional Subsidiaries............................46
SECTION 7.13 Further Assurances.................................46
ARTICLE VIII
FINANCIAL COVENANTS.........................................47
SECTION 8.1 Current Ratio......................................47
SECTION 8.2 Debt to Capitalization Ratio.......................47
SECTION 8.3 Leverage Ratio.....................................47
SECTION 8.4 Fixed Charge Ratio.................................47
SECTION 8.5 Consolidated Net Worth.............................47
ARTICLE IX
NEGATIVE COVENANTS.....................................47
SECTION 9.1 Limitations on Debt................................47
SECTION 9.2 Limitations on Contingent Obligations..............48
SECTION 9.3 Limitations on Liens...............................48
SECTION 9.4 Limitations on Loans, Advances and investments.....49
SECTION 9.5 Limitations on Mergers and Liquidation.............50
SECTION 9.6 Limitations on Sale of Assets......................50
SECTION 9.7 Limitations on Dividends and Distributions.........51
SECTION 9.8 Prohibited Transactions............................51
SECTION 9.9 Certain Accounting Changes.........................51
SECTION 9.10 Amendments; Payments and Prepayments of
Subordinated Debt...........................................51
SECTION 9.11 Restrictive Agreements.............................51
SECTION 9.12 Subsidiaries......................................51
ARTICLE X
DEFAULT AND REMEDIES...............................52
SECTION 10.1 Events of Default..................................52
SECTION 10.2 Remedies...........................................54
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc....55
ARTICLE XI
THE AGENT...........................................55
SECTION 11.1 Appointment, Powers, and immunities................55
SECTION 11.2 Reliance by Agent..................................56
SECTION 11.3 Defaults...........................................56
SECTION 11.4 Rights as Lender...................................56
SECTION 11.5 Indemnification....................................57
SECTION 11.6 Non-Reliance on Agent and Other Lenders............57
SECTION 11.7 Resignation of Agent...............................57
ARTICLE XII
MISCELLANEOUS........................................58
SECTION 12.1 Notices............................................58
SECTION 12.2 Expenses; Indemnity................................60
SECTION 12.3 Set-off............................................60
SECTION 12.4 Governing Law......................................61
SECTION 12.5 Consent to Jurisdiction............................61
SECTION 12.6 Waiver of Jury Trial...............................61
SECTION 12.7 Mandatory Arbitration..............................61
SECTION 12.8 Reversal of Payments...............................62
SECTION 12.9 Injunctive Relief; Punitive Damages................63
SECTION 12.10 Accounting Matters.................................63
SECTION 12.11 Assignments and Participations.....................63
SECTION 12.12 Confidentiality....................................65
SECTION 12.13 Amendments and Waivers.............................65
SECTION 12.14 Performance of Duties..............................66
SECTION 12.15 All Powers Coupled with Interest...................66
SECTION 12.16 Survival of Indemnities............................66
SECTION 12.17 Titles and Captions................................66
SECTION 12.18 Severability of Provisions.........................66
SECTION 12.19 Counterparts.......................................66
SECTION 12.20 Term of Agreement..................................66
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Prepayment
Exhibit D - Form of Notice of Conversion/Continuation
Exhibit E - Form of Officer's Compliance Certificate
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Borrowing Base Certificate
Exhibit H - Guaranty Agreement
SCHEDULES
Schedule 1 - Lenders and Commitments
Schedule 5.1(b) - Subsidiaries and Capitalization
Schedule 5.1(i) - ERISA Plans
Schedule 5.1(s) - Debt and Contingent Obligations
Schedule 5.1(t) - Litigation
Schedule 9.3 - Existing Liens
Schedule 9.8 - Prohibited Transactions
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of the 28th day of July, 1997, by and among
MEDCATH INCORPORATED, a corporation organized under the laws of North Carolina
(the "Borrower"), the Lenders who are or may become a party to this Agreement,
and NATIONSBANK, N.A., as administrative and collateral agent for the Lenders
(the "Agent").
STATEMENT OF PURPOSE
The Borrower has requested, and the Lenders have agreed, to extend certain
credit facilities to the Borrower on the terms and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this Agreement
shall have the meanings assigned to them below:
"Account Debtor" means any Person who is or may become obligated to the
Borrower under, with respect to, or on account of, an Account.
"Accounts" means all "accounts" (as defined in the UCC) now or hereafter
owned or acquired by the Borrower or in which the Borrower now or hereafter has
or acquires any right or interest, and, in any event, shall also include,
without limitation, all accounts receivable, contract rights, notes, drafts and
other obligations or indebtedness owing to the Borrower arising from the
performance of services by it, or to be performed, and all of the Borrower's
rights to any goods, services or other property represented by any of the
foregoing and all monies due to or to become due to the Borrower under all
contracts for the sale of goods or other property or the performance of services
by it (whether or not yet earned by performance on the part of the Borrower), in
each case whether now in existence or hereafter arising or acquired, including,
without limitation, the right to receive the proceeds of such contracts and all
collateral security and guarantees of any kind given by any Person with respect
to any of the foregoing.
"Adjusted Eurodollar Rate" means, for any Interest Period, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Agent to be equal to the quotient obtained by dividing (a) the Eurodollar
Rate for such Interest Period by (b) 1 minus the Reserve Requirement for such
Interest Period.
"Affiliate" means, with respect to any Person, any other Person (other than
a Subsidiary) which directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is
under common control with, such first Person or any of its Subsidiaries. The
term "control" means (a) the power to vote fifty percent (50%) or more of the
securities or other equity interests of a Person having ordinary voting power,
or (b) the possession, directly or indirectly, of any other power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise, exclusive in all
events of medical practices or health care facilities managed by the Borrower or
its Subsidiaries.
"Agent" means NationsBank in its capacity as Agent hereunder, and any
successor thereto appointed pursuant to Section 11.7.
"Agent's Office" means the office of the Agent specified in or determined
in accordance with the provisions of Section 12.1.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at any time or
from time to time pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be Twenty Million Dollars ($20,000,000).
"Agreement" means this Credit Agreement, as amended or modified from time
to time.
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, treaties, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Lending Office" means, for each Lender and for each Type of
Loan, the "Lending Office" of such Lender (or of an affiliate of such Lender)
designated for such Type of Loan on the signature pages hereof or such other
office of such Lender (or an affiliate of such Lender) as such Lender may from
time to time specify to the Agent and the Borrower by written notice in
accordance with the terms hereof as the office by which its Loans of such Type
are to be made and maintained.
"Application" means an application, in the form specified by the Issuing
Lender from time to time, requesting the Issuing Lender to issue a Letter of
Credit.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 12.10.
"Available Commitment" means, as to any Lender at any time, an amount equal
to the excess, if any, of (a) such Lender's Commitment over (b) such Lender's
Extensions of Credit.
"Base Rate" means, for any day, the rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus one-half of one percent (.5%) and
(b) the Prime Rate for such day. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon the
Base Rate as provided in Section 3.1(a).
"Borrower" means MedCath Incorporated, in its capacity as borrower
hereunder.
"Borrowing Base" means an amount equal to the sum of (i) 80% of the face
amount of all Eligible Accounts plus (ii) 100% of all Eligible Advances to
Affiliates (provided that the maximum advance against Eligible Advances to
Affiliates shall not exceed 25% of the total Borrowing Base) plus (iii) provided
the Leverage Ratio is less than 3.0 to 1.0, an overadvance (the "Overadvance")
of $5,000,000.
"Borrowing Base Certificate" shall have the meaning assigned thereto in
Section 6.4.
"Business Day" means (a) for all purposes other than as set forth in clause
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in Charlotte, North Carolina and New York, New York, are open for the conduct of
their commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
any Eurodollar Loan, any day that is a Business Day described in clause (a) and
that is also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"Capital Asset" means, with respect to the Borrower and its Subsidiaries,
any asset that should, in accordance with GAAP, be classified and accounted for
as a capital asset on a Consolidated balance sheet of the Borrower and its
Subsidiaries.
"Capital Lease" means, with respect to the Borrower and its Subsidiaries,
any lease of any property that should, in accordance with GAAP, be classified
and accounted for as a capital lease on a Consolidated balance sheet of the
Borrower and its Subsidiaries.
"Change in Control" shall have the meaning assigned thereto in Section
10.1(i).
"Closing Date" means the date of this Agreement or such later Business Day
upon which each condition described in Article IV shall be satisfied or waived
in all respects in a manner acceptable to the Agent, in its sole discretion.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Commitment" means, as to any Lender, the obligation of such Lender to make
Loans to the Borrower hereunder in an aggregate principal or face amount at any
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 1 hereto, as the same may be reduced or modified at any time or from
time to time pursuant to the terms hereof.
"Commitment Percentage" means, as to any Lender at any time, the ratio of
(a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment
of all of the Lenders.
"Consolidated" means, when used with reference to financial statements or
financial statement items of the Borrower and its Subsidiaries, such statements
or items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Consolidated Senior Funded Debt" means, as of any date, all Senior Debt of
the Borrower and its Subsidiaries, determined on a consolidated basis, which
would as of such date, in accordance with GAAP, be classified as "funded
indebtedness" or "long-term indebtedness."
"Consolidated Tangible Net Worth" means, as of any date of determination,
the amount of assets shown on the consolidated balance sheet of the Borrower
(but excluding from such assets, debt discount and expense, goodwill, patents,
trademarks, copyrights, franchises, licenses, amounts due from officers,
directors, stockholders and Affiliates, and any other items which would be
treated as intangibles under GAAP), less all liabilities of the Borrower and its
Subsidiaries, all computed in accordance with GAAP applied on a consistent
basis. For purposes of this definition, assets shall include sums due from (i)
physicians or medical practices managed by the Borrower or any of its
Subsidiaries, (ii) health care facilities owned or managed by the Borrower or
any of its Subsidiaries, or (iii) physicians with whom Borrower is affiliated,
including, without limitation, the Arizona Heart Institute, to the extent that
(A) the repayment of such sums constitutes valid and enforceable obligations of
such Persons and (B) such Persons have not defaulted in the repayment of such
sums.
"Contingent Obligation" means, with respect to the Borrower, without
duplication, any obligation, contingent or otherwise, of the Borrower pursuant
to which Borrower has directly or indirectly guaranteed any Debt or other
obligation of any other Person, provided, the term Contingent Obligation shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Continue", "Continuation", and "Continued" shall refer to the continuation
pursuant to Section 3.2 hereof of a Eurodollar Loan as a Eurodollar Loan from
one Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Sections 3.2 or 3.8 of one Type of Loan into another Type of Loan.
"Credit Facility" means the revolving credit facility established pursuant
to Article II hereof.
"Current Assets" means Consolidated current assets of the Borrower and its
Subsidiaries determined in accordance with GAAP.
"Current Liabilities" means Consolidated current liabilities of the
Borrower and its Subsidiaries determined in accordance with GAAP.
"Debt" means, with respect to any Person at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including but
not limited to obligations evidenced by bonds, debentures, notes or other
similar instruments of any such Person, (b) all obligations to pay the deferred
purchase price of property or services of any such Person, except trade payables
arising in the ordinary course of business not more than ninety (90) days past
due (c) all obligations of any such Person as lessee under Capital Leases, (d)
all obligations, contingent or otherwise, of any such Person relative to the
face amount of letters of credit, whether or not drawn, and banker's
acceptances issued for the account of any such Person and (e) all obligations
incurred by any such Person pursuant to Hedging Agreements.
"Default" means any of the events specified in Section 10.1 which with the
passage of time, the giving of notice or any other condition, would constitute
an Event of Default.
"Defaulting Lender" shall have the meaning assigned thereto in Section 3.6.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDA" means, with respect to the Borrower and its Subsidiaries for any
period, the sum of, without duplication, (a) Consolidated Net Income of the
Borrower and its Subsidiaries for such period, plus (b) the sum of the following
to the extent deducted in the determination of Consolidated Net Income: (i)
Interest Expense, (ii) income and franchise taxes, and (iii) amortization,
depreciation and other non-cash charges (including amortization of good will and
other intangible assets).
"Eligible Accounts" means all Accounts created by the Borrower or any of
its Subsidiaries in the ordinary course of its business which satisfy and
continue to satisfy the following requirements:
(i) The Accounts are bona fide existing obligations of the named Account
Debtors arising from the rendering of services to such Account Debtor in the
ordinary course of the business of the Borrower or any of its Subsidiaries and
(A) are actually and absolutely owing to the Borrower or such Subsidiary, (B)
are not contingent for any reason and (C) the Borrower or such Subsidiary has
lawful and absolute title to such Accounts;
(ii) The Accounts are valid, legally enforceable obligations of the Account
Debtors and no offset (including, without limitation, discounts other than as
permitted by GAAP, or counterclaims) or other defense on the part of any such
Account Debtor or any claim on the part of any such Account Debtor denying
liability thereunder has been asserted in writing;
(iii) The Accounts are not subject to any lien or security interest
whatsoever, except for any security interests permitted under Section 9.3(g);
(iv) No account has remained unpaid for a period exceeding one hundred
twenty (120) days from the date payment is due thereunder;
(v) Each Account Debtor is solvent and not the subject of any bankruptcy or
insolvency proceeding of any kind;
(vi) The Accounts do not arise out of transactions with an employee,
officer, agent, director or other Affiliate of the Borrower; and
(vii) No Account is due from any Account Debtor more than fifty percent
(50%) of whose Accounts are ineligible for any reason.
"Eligible Advances to Affiliates" means all advances by the Borrower or any
Subsidiary thereof to (i) physician or medical practices managed by the Borrower
or any of its Subsidiaries, (ii) physicians with whom the Borrower is
affiliated, including, without limitation, Arizona Heart Institute or (iii)
health care facilities owned or managed by the Borrower or any of its
Subsidiaries which satisfy and continue to satisfy the following requirements:
(i) (A) the advances are actually and absolutely owing to the Borrower
or any Subsidiary, (B) payment of the advances is not contingent for any
reason and (C) the Borrower or such Subsidiary is the owner and holder of
the promissory note evidencing each such advance;
(ii) the advances are not subject to any Lien or security interest
whatsoever, except for any security interest in favor of the Borrower or
its Subsidiaries;
(iii) the advances are not in default; and
(iv) each obligor with respect to each advance is solvent and not the
subject of any bankruptcy or insolvency proceeding of any kind.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
(iii) a financial institution or other entity that is an "accredited investor"
(as defined in Rule 501 under the Securities Act of 1933, as amended) having (A)
total assets of at least $10,000,000,000 (B) a long-term unsecured debt rating
of at least BBB by S&P (or an equivalent rating by another nationally recognized
statistical ratings organization) and (C) an office in the United States; and
(iv) any other insurance company or other financial institution which in the
ordinary course of business extends credit of the type extended hereunder and
which is approved by the Agent and, unless an Event of Default has occurred and
is continuing at the time any assignment is effected in accordance with Section
12.10, the Borrower, such approval not to be unreasonably withheld or delayed by
the Borrower and such approval to be deemed given by the Borrower if no
objection is received by the assigning Lender and the Agent from the Borrower
within five (5) Business Days after written notice of such proposed assignment
has been provided by the assigning Lender to the Borrower; provided, however,
that neither the Borrower nor an Affiliate of the Borrower shall qualify as an
Eligible Assignee.
"Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of the Borrower
or any ERISA Affiliate or (b) has at any time within the preceding six years
been maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and the
rules and regulations thereunder, each as amended or modified from time to time.
"ERISA Affiliate" means any Person who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate based upon
the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, that if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%).
"Event of Default" means any of the events specified in Section 10.1;
provided, that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Extensions of Credit" means, as to any Lender at any time, an amount equal
to the sum of (a) the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) such Lender's Commitment Percentage of the
Letter of Credit Obligations then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds as quoted by the Agent and confirmed in Federal Reserve Board
Statistical Release H.15 (519) or any successor or substitute publication
selected by Agent. If, for any reason, such rate is not available, then "Federal
Funds Rate" shall mean a daily rate which is determined, in the opinion of the
Agent, to be the rate at which federal funds are being offered for sale in the
national federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends
or holidays shall be the same as the rate for the most immediate preceding
Business Day.
"Fiscal Year" means the fiscal year of the Borrower and its Subsidiaries
ending on September 30.
"Funded Debt" means, with respect to the Borrower and its Subsidiaries at
any date and without duplication, the sum of the following calculated in
accordance with GAAP: (a) all liabilities, obligations and indebtedness for
borrowed money including but not limited to
obligations evidenced by bonds, debentures, notes or other similar instruments
of any such Person, (b) all obligations to pay the deferred purchase price of
property or services of any such Person, except trade payables arising in the
ordinary course of business, (c) all obligations of any such Person as lessee
under Capital Leases, (d) all Debt of any other Person secured by a Lien on any
asset of any such Person, (e) all Contingent Obligations of any such Person, (f)
all obligations, contingent or otherwise, of any such Person relative to the
face amount of letters of credit, whether or not drawn, and banker's acceptances
issued for the account of any such Person and (g) all obligations incurred by
any such Person pursuant to Hedging Agreements.
"GAAP" means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Borrower and its Subsidiaries throughout the period indicated and consistent
with the prior financial practice of the Borrower and its Subsidiaries.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty Agreement" means the agreement pursuant to which each Guarantor
unconditionally guaranties the payment and/or performance of the Obligations,
substantially in the form of Exhibit H hereto, as amended, restated or otherwise
modified.
"Guarantor" means each Wholly-Owned Subsidiary of the Borrower who has
executed the Guaranty Agreement on the Closing Date or becomes a signatory
thereto in accordance with Section 7.12.
"Hazardous Materials" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance, a trespass
or pose a health or safety hazard to persons or neighboring properties, (f)
which are materials consisting of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest rate
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate
risk exposure executed in connection with hedging the interest rate exposure of
the Borrower under this Agreement, and any confirming letter executed pursuant
to such hedging agreement, all as amended, restated or otherwise modified.
"Interest Expense" means, for any period, total interest expense of the
Borrower (including, without limitation, interest expense attributable to the
Loans, Capital Leases and all equipment financing), whether paid or accrued,
and, to the extent not included therein, amortization of fees and other charges
payable with respect to all Debt of the Borrower and its Subsidiaries,
determined for such period in accordance with GAAP.
"Interest Period" means each period of thirty (30) days, hereunder, with
respect to which the Eurodollar Rate shall be determined; provided, that:
(a) each Interest Period shall commence on the date of advance of or
Conversion to any Eurodollar Loan and, in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the date on
which the next preceding Interest Period expires;
(b) if any Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided, that if any Interest Period would otherwise expire on a day that
is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(c) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the relevant calendar month at the end of such Interest period;
(d) no Interest Period shall be permitted to extend beyond the Termination
Date; and
(e) there shall be no more than five (5) Interest Periods outstanding at
any time.
"Issuing Lender" means NationsBank, in its capacity as issuer of any Letter
of Credit, or any successor thereto.
"L/C Commitment" means Five Million Dollars ($5,000,000).
"L/C Participants" means the collective reference to all the Lenders other
than the Issuing Lender.
"Lease Expense" means all obligations of the Borrower and its Subsidiaries
for payments under leases of real or personal property, whether such leases
presently exist or are hereafter entered into by the Borrower or any Subsidiary.
"Lender" means each Person executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 12.10.
"Letter of Credit Obligations" means at any time, an amount equal to the
sum of (a) the aggregate undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit which have not then been reimbursed pursuant to Section 2A.5.
"Letters of Credit" shall have the meaning assigned thereto in Section
2A.1(a).
"Leverage Ratio" means the ratio of (x) Consolidated Senior Funded Debt
less Debt incurred to construct a new hospital (herein, "New Hospital Debt"),
such New Hospital Debt to be excluded for the period commencing with the
incurrence of such New Hospital Debt and ending one year after the issuance of a
certificate of occupancy for such new hospital to (y) EBITDA for the four
previous calendar quarters.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loan" means any revolving loan made to the Borrower pursuant to Section
2.1, and all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, any
Hedging Agreement executed by any Lender, any Guaranty Agreement, any
Application, and each other document, instrument and agreement executed and
delivered by the Borrower, its Subsidiaries or their counsel in connection with
this Agreement or otherwise referred to herein or contemplated hereby, all as
may be amended, restated or otherwise modified.
"Loan Parties" means the Borrower, the Guarantors, and any Person who
becomes a Guarantor pursuant to Section 7.12.
"Material Adverse Effect" means, with respect to the Borrower or any of its
Subsidiaries, a material adverse effect on the properties, business, operations
or condition (financial or otherwise) of any such Person taken as a whole or the
ability of any such Person to perform its obligations under the Loan Documents
or Material Contracts, in each case to which it is a party.
"Material Contract" means (a) any contract or other agreement, written or
oral, of the Borrower or any of its Subsidiaries involving monetary liability of
or to the Borrower or any such Subsidiary in an amount in excess of $1,000,000
with respect to the Borrower and $375,000 with respect to any Subsidiary and
which by its terms may not be cancelled within ninety (90) days, or (b) any
other contract or agreement, written or oral, of the Borrower or any of its
Subsidiaries the failure to comply with which could reasonably be expected to
have a Material Adverse Effect on the Borrower or any of its Subsidiaries.
"Modified Consolidated Senior Funded Debt" means Consolidated Senior Funded
Debt inclusive of the greater of (x) percentage ownership of a Wholly-Owned
Subsidiary in any Person
which owns a hospital facility (herein, a "Hospital Subsidiary") times the Debt
of such Hospital Subsidiary or (y) the portion of the Debt of each such
Subsidiary guaranteed by the Borrower.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"NationsBank" means NationsBank, N.A., a national banking association, and
its successors.
"Net Income" means, for any period, the Consolidated net income (or loss)
of the Borrower and its Subsidiaries for such period determined in accordance
with GAAP; provided, that there shall be excluded from Consolidated net income
(or loss): (a) the income (or loss) of any Person accrued prior to the date it
became a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower and (b) extraordinary items.
"Notes" means the separate revolving credit notes made by the Borrower
payable to the order of each Lender, substantially in the form of Exhibit A
hereto, evidencing the Credit Facility, and any amendments and modifications
thereto, any substitutes therefor, and any replacements, restatements, renewals
or extension thereof, in whole or in part; "Note" means any of such Notes.
"Notice of Borrowing" shall have the meaning assigned thereto in Section
2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned thereto
in Section 3.2.
"Notice of Prepayment" shall have the meaning assigned thereto in Section
2.3(c).
"Obligations" means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar petition) the Loans, (b) the Letter of
Credit Obligations, (c) all payment and other obligations owing by the Borrower
to any Lender or the Agent under any Hedging Agreement to which a Lender is a
party and (d) all other fees and commissions (including attorney's fees),
charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by the Borrower to the Lenders or the
Agent, of every kind, nature and description, direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any note, and whether or not for
the payment of money under or in respect of this Agreement, any Note, or any of
the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned thereto
in Section 6.2.
"Other Taxes" shall have the meaning assigned thereto in Section 3.11(b).
"Overadvance" shall have the meaning assigned thereto in Section 1.1 in the
definition of "Borrowing Base."
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees of the Borrower or any ERISA
Affiliates or (b) has at any time within the preceding six years been maintained
for the employees of the Borrower or any of their current or former ERISA
Affiliates.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Prime Rate" means the per annum rate of interest established from time to
time by NationsBank as its prime rate, which rate may not be the lowest rate of
interest charged by NationsBank to its customers.
"Register" shall have the meaning assigned thereto in Section 12.10(b).
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 2A.5 for amounts drawn under
Letters of Credit.
"Required Lenders" means, at any date, any combination of holders of at
least sixty-six and two-thirds percent (66-2/3%) of the aggregate unpaid
principal amount of the Notes, or if no amounts are outstanding under the Notes,
any combination of Lenders whose Commitment Percentages aggregate at least
sixty-six and two-thirds percent (66-2/3%).
"Replacement Capital Expenditures" means, with respect to the Borrower, all
capital expenditures to replace existing fixed assets.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against, in the case of
Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Senior Debt" means, at any date of determination, all Debt other than
Subordinated Debt, both determined on a consolidated basis.
"Solvent" means, as to the Borrower and its Subsidiaries on a particular
date, that any such Person (a) has capital sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage and is able to pay its debts as they mature, (b) owns
property having a value, both at fair valuation and at present fair saleable
value, greater than the amount required to pay its probable liabilities
(including contingencies as they mature and come due), and (c) does not believe
that it will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature in the ordinary course of business.
"Subordinated Debt" means the collective reference to Debt on Schedule
5.1(t) hereof designated as Subordinated Debt and any other Debt of the Borrower
or any Subsidiary subordinated in right and time of payment to the Obligations
on terms satisfactory to the Required Lenders.
"Subsidiary" means as to any Person, any corporation, partnership or other
entity of which more than fifty percent (50%) of the outstanding capital stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity is at the time, directly or indirectly, owned by or the management
is otherwise controlled by such Person (irrespective of whether, at the time,
capital stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency). Unless
otherwise qualified references to "Subsidiary" or "Subsidiaries" herein shall
refer to those of Borrower. For purposes of financial statement preparation or
determining compliance with the financial covenants in this Agreement,
"Subsidiary" shall have the meaning given to such term under GAAP.
"Taxes" shall have the meaning assigned thereto in Section 3.13(a).
"Termination Date" means the earliest of the dates referred to in Section
2.6.
"Termination Event" means: (a) a "Reportable Event" described in Section
4043 of ERISA, or (b) the withdrawal of the Borrower or any ERISA Affiliate from
a Pension Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, or (c) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate, or the appointment of
a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event
or condition which would constitute grounds under Section 4042(a) of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan, or (f) the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan, or (g) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA, or (h) any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Total Capitalization" means Modified Consolidated Senior Funded Debt plus
the Consolidated equity of the Borrower and its Subsidiaries.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or Eurodollar
Loan).
"Uniform Customs" the Uniform Customs and Practice for Documentary Credits
(1994 Revision), International Chamber of Commerce Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the State of North
Carolina.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary all of the
shares of capital stock or other ownership interests of which are, directly or
indirectly, owned or controlled by the Borrower and/or one or more of its
Wholly-Owned Subsidiaries.
SECTION 1.2 General. Unless otherwise specified, a reference in this
Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Any reference herein to "Charlotte time" shall refer to
the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. 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.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Loans to the Borrower from time
to time from the Closing Date through the Termination Date as requested by the
Borrower in accordance with the terms of Section 2.2; provided, that (a) the
aggregate principal amount of all outstanding Loans (after giving effect to any
amount requested) shall not exceed an amount equal to the lesser of (i) the
Aggregate Commitment less the Letter of Credit Obligations and (ii) the
Borrowing Base, and (b) the principal amount of outstanding Loans from any
Lender to the Borrower plus such Lender's Commitment Percentage of the Letter of
Credit Obligations then outstanding shall not at any time exceed such Lender's
Commitment. Each Loan by a Lender shall be in a principal amount equal to such
Lender's Commitment Percentage of the aggregate principal amount of Loans
requested
on such occasion. Subject to the terms and conditions hereof, the Borrower may
borrow, repay and reborrow Loans hereunder until the Termination Date.
SECTION 2.2 Procedure for Advances of Loans.
(a) Requests for Borrowing. The Borrower shall give the Agent irrevocable
prior written notice in the form attached hereto as Exhibit B (a "Notice of
Borrowing") not later than 11:00 a.m. (Charlotte time) (i) at least two (2)
Business Days prior to each Base Rate Loan and (ii) at least three (3) Business
Days prior to each Eurodollar Loan, of its intention to borrow, specifying (A)
the date of such borrowing, which shall be a Business Day, (B) the amount of
such borrowing, which shall be (x) with respect to Base Rate Loans in an
aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof and (y) with respect to Eurodollar Loans in an aggregate principal
amount of $1,000,000 or a whole multiple of $500,000 in excess thereof, and (C)
whether the Loans are to be Eurodollar Loans or Base Rate Loans. Notices
received after 11:00 a.m. (Charlotte time) shall be deemed received on the next
Business Day. The Agent shall promptly notify the Lenders of each Notice of
Borrowing.
(b) Disbursement of Loans. Not later than 2:00 p.m. (Charlotte time) on the
proposed borrowing date, each Lender will make available to the Agent, for the
account of the Borrower, at the office of the Agent in funds immediately
available to the Agent, such Lender's Commitment Percentage of the Loans to be
made on such borrowing date. The Borrower hereby irrevocably authorizes the
Agent to disburse the proceeds of each borrowing requested pursuant to this
Section 2.2 in immediately available funds by crediting such proceeds to a
deposit account of the Borrower maintained with the Agent or by wire transfer to
such account as may be agreed upon by the Borrower and the Agent from time to
time. Unless the Agent shall have received notice from a Lender that such Lender
will not make available to the Agent such Lender's Commitment Percentage of the
requested Loans, the Agent shall disburse such Lender's Commitment Percentage of
the Loans.
SECTION 2.3 Repayment of Loans.
(a) Repayment on Termination Date. The Borrower shall repay the outstanding
principal amount of all Loans in full, together with all accrued but unpaid
interest thereon, on the Termination Date.
(b) Mandatory Repayment of Excess Loans. If at any time the outstanding
principal amount of all Loans exceeds the lesser of (i) the Aggregate Commitment
less the Letter of Credit Obligations or (ii) the Borrowing Base, the Borrower
shall repay immediately upon notice from the Agent, by payment to the Agent for
the account of the Lenders, the Loans in an amount equal to such excess. Each
such repayment shall be accompanied by any amount required to be paid pursuant
to Section 3.12 hereof.
(c) Optional Repayments. The Borrower may at any time and from time to time
repay the Loans, in whole or in part, upon at least three (3) Business Days'
irrevocable notice to the Agent with respect to Eurodollar Loans and one (1)
Business Day irrevocable notice with respect to Base Rate Loans, in the form
attached hereto as Exhibit C (a "Notice of Prepayment") specifying the date and
amount of repayment and whether the repayment is of Eurodollar Loans,
Base Rate Loans, or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of such notice, the Agent shall promptly
notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $500,000 or a whole multiple of
$100,000 in excess thereof with respect to Base Rate Loans and $1,000,000 or a
whole multiple of $500,000 in excess thereof with respect to Eurodollar Loans.
Each such repayment shall be accompanied by any amount required to be paid
pursuant to Section 3.12 hereof.
(d) Limitation on Repayment of Eurodollar Loans. The Borrower may not repay
any Eurodollar Loan on any day other than on the last day of the Interest Period
applicable thereto unless such repayment is accompanied by any amount required
to be paid pursuant to Section 3.12 hereof.
SECTION 2.4 Notes. Each Lender's Loans and the obligation of the Borrower
to repay such Loans shall be evidenced by a Note executed by the Borrower
payable to the order of such Lender representing the Borrower's obligation to
pay such Lender's Commitment or, if less, the aggregate unpaid principal amount
of all Loans made and to be made by such Lender to the Borrower hereunder, plus
interest and all other fees, charges and other amounts due thereon. Each Note
shall be dated the date hereof and shall bear interest on the unpaid principal
amount thereof at the applicable interest rate per annum specified in Section
3.1.
SECTION 2.5 Permanent Reduction of the Aggregate Commitment.
(a) The Borrower shall have the right at any time and from time to time,
upon at least five (5) Business Days prior written notice to the Agent, to
permanently reduce, in whole at any time or in part from time to time, without
premium or penalty, the Aggregate Commitment in an aggregate principal amount
not less than $500,000 or any whole multiple of $100,000 in excess thereof. The
amount of each partial permanent reduction shall be applied pro rata to reduce
the remaining mandatory reduction amounts required under Section 2.5(b).
(b) Each permanent reduction permitted or required pursuant to this Section
2.5 shall be accompanied by a payment of principal sufficient to reduce the
aggregate outstanding Extensions of Credit of the Lenders after such reduction
to the Aggregate Commitment as so reduced. Any reduction of the Aggregate
Commitment to zero shall be accompanied by payment of all outstanding
Obligations and, if such reduction is permanent, termination of the Commitments
and Credit Facility. Such cash collateral shall be applied in accordance with
Section 10.2(b). If the reduction of the Aggregate Commitment requires the
repayment of any Eurodollar Loan, such reduction may be made only on the last
day of the then current Interest Period applicable thereto unless such repayment
is accompanied by any amount required to be paid pursuant to Section 3.12
hereof.
SECTION 2.6 Termination of Credit Facility. The Credit Facility shall
terminate on the earliest of (a) the second anniversary of the Closing Date (b)
the date of termination by the Borrower pursuant to Section 2.5(a), and (c) the
date of termination by the Agent on behalf of the Lenders pursuant to Section
10.2(a).
SECTION 2.7 Use of Proceeds. The Borrower shall use the proceeds of the
Loans (exclusive of the proceeds of the Overadvance) for working capital and
general corporate requirements of the Borrower and its Subsidiaries, including
the funding of acquisitions and the payment of certain fees and expenses
incurred in connection with this transaction. The Borrower shall use the
proceeds of the Overadvance solely to fund the acquisition of physician
practices.
ARTICLE IIA
LETTER OF CREDIT FACILITY
SECTION 2A.1 Commitment. Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 2A.4(a), agrees to issue standby letters of credit ("Letters of Credit")
for the account of the Borrower on any Business Day from the Closing Date
through but not including the date which is sixty (60) days prior to the
Termination Date in such form as may be approved from time to time by the
Issuing Lender; provided, that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (a) the
Letter of Credit Obligations would exceed the L/C Commitment or (b) the sum of
the aggregate principal amount of all outstanding Loans and Letter of Credit
Obligations would exceed the Aggregate Commitment. Each Letter of Credit shall
(i) be denominated in Dollars, (ii) be a standby letter of credit issued to
support obligations of the Borrower, contingent or otherwise, incurred in the
ordinary course of business, (iii) expire on a date not more than one year later
in the case of a standby letter of credit but in no event later than the
Termination Date and (iv) be subject to the Uniform Customs and Practice for
Documentary Credits and, to the extent not inconsistent therewith, the laws of
the State of North Carolina. The Issuing Lender shall not issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by any Applicable
Law. References herein to "issue" and derivations thereof with respect to
Letters of Credit shall also include extensions, modifications or confirmations
of any existing Letters of Credit, unless the context otherwise requires.
SECTION 2A.2 Procedure for Issuance of Letters of Credit. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at the Agent's Office an Application therefor,
completed to the reasonable satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may reasonably request. Upon receipt of any Application, the Issuing Lender
shall process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 2A.1 and Article IV hereof,
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish to the Borrower a copy of such Letter of Credit and furnish
to each Lender a copy of such Letter of Credit and the amount of each
Lender's participation therein in accordance with Section 2A.4(a), all promptly
following the issuance of such Letter of Credit.
SECTION 2A.3 Commissions and Other Charges.
(a) The Borrower shall pay to the Agent, for the account of the Issuing
Lender and the L/C Participants, a letter of credit commission in an amount
equal to 1.00% of the face amount of each Letter of Credit. Such commission
shall be payable quarterly in advance on the first Business Day of each fiscal
quarter of the Borrower and on the Termination Date.
(b) In addition to the foregoing commission, the Borrower shall pay the
Issuing Lender an issuance fee of one-quarter percent (1/4%) per annum on the
face amount of each Letter of Credit, which fees shall be fully earned and be
payable upon the issuance of each Letter of Credit.
(c) The Agent shall, promptly following its receipt thereof, distribute to
the Issuing Lender and the L/C Participants all commissions received by the
Agent in accordance with their respective Commitment Percentages.
SECTION 2A.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by the Borrower in accordance with the terms of
this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand
at the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Commitment Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 2A.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average Federal
Funds Rate as determined by the Agent during the period from and including the
date such payment is due to the date on which such payment is immediately
available to the Issuing Lender, times (iii) a fraction the numerator of which
is the
number of days that elapse during such period and the denominator of which is
360. A certificate of the Issuing Lender with respect to any amounts owing under
this Section shall be conclusive in the absence of manifest error. With respect
to payment to the Issuing Lender of the unreimbursed amounts described in this
Section 2A.4(b), if the L/C Participants receive notice that any such payment is
due (A) prior to 1:00 p.m. (Charlotte time) on any Business Day, such payment
shall be due that Business Day, and (B) after 1:00 p.m. (Charlotte time) on any
Business Day, such payment shall be due on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its Commitment
Percentage of such payment in accordance with this Section 2A.4, the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, or any payment of interest on account thereof,
the Issuing Lender will promptly distribute to such L/C Participant its pro rata
share thereof; provided, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
SECTION 2A.5 Reimbursement Obligation of the Borrower. The Borrower agrees
to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft paid under any Letter of
Credit for the amount of (a) such draft so paid and (b) any taxes, fees, charges
or other costs or expenses incurred by the Issuing Lender in connection with
such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this Article IIA from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrower fails to
timely reimburse the Issuing Lender on the date the Borrower receives the notice
referred to in this Section 2A.5, the Borrower shall be deemed to have timely
given a Notice of Borrowing hereunder to the Agent requesting the Lenders to
make a Base Rate Loan on such date in an amount equal to the amount of such
drawing and, subject to the satisfaction or waiver of the conditions precedent
specified in Article IV, the Lenders shall make Base Rate Loans in such amount,
the proceeds of which shall be applied to reimburse the Issuing Lender for the
amount of the related drawing and costs and expenses.
SECTION 2A.6 Obligations Absolute. The Borrower's obligations under this
Article IIA (including without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrower may have or
have had against the Issuing Lender or any beneficiary of a Letter of Credit.
The Borrower also agrees with the Issuing Lender that the Issuing Lender shall
not be responsible for, and the Borrower's Reimbursement Obligation under
Section 2A.5 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of a Borrower against any beneficiary of such Letter of
Credit or any such transferee. The Issuing Lender shall not be liable for any
error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender's gross negligence or willful misconduct.
The Borrower agrees that any action taken or omitted by the Issuing Lender under
or in connection with any Letter of Credit or the related drafts or documents,
if done in the absence of gross negligence or willful misconduct and in
accordance with the standards of care specified in the Uniform Customs and, to
the extent not inconsistent therewith, the UCC shall be binding on the Borrower
and shall not result in any liability of the Issuing Lender to the Borrower. The
responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.
SECTION 2A.7 Effect of Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Article IIA, the provisions of this Article IIA shall apply.
ARTICLE III
GENERAL LOAN PROVISIONS
SECTION 3.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this Section 3.1,
at the election of the Borrower in accordance with Article II, the unpaid
principal balance of any Loan shall bear interest at (A) the Base Rate or (B)
the Adjusted Eurodollar Rate plus 1.50%. The Borrower shall select the type of
interest rate applicable to any Loan at the time a Notice of Borrowing is given
pursuant to Section 2.2(a) or at the time a Notice of Conversion/Continuation is
given pursuant to Section 3.2. Any Loan as to which the Borrower has not duly
specified an interest rate as provided herein shall be deemed a Base Rate Loan.
(b) Default Rate. Upon the occurrence and during the continuance of an
Event of Default, (i) the Borrower shall no longer have the option to request
Eurodollar Loans, (ii) all outstanding Eurodollar Loans shall bear interest at a
rate per annum two percent (2%) in excess of the rate then applicable to
Eurodollar Loans until the end of the applicable Interest Period and thereafter
at a rate equal to two percent (2%) in excess of the rate then applicable to
Base Rate Loans, and (iii) all outstanding Base Rate Loans shall bear interest
at a rate per annum equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans. Interest shall continue to accrue on the Notes
after the filing by or against the Borrower of any petition seeking any relief
in bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
(c) Interest Payment and Computation. Interest on each Base Rate Loan shall
be payable in arrears on the last Business Day of each month, commencing August
31, 1997; and on the Termination Date. All interest rates, fees and commissions
provided for hereunder shall be computed on the basis of a 360-day year and
assessed for the actual number of days elapsed.
(d) Maximum Rate. In no contingency or event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under any of the Notes charged or
collected pursuant to the terms of this Agreement or pursuant to any of the
Notes exceed the highest rate permissible under any Applicable Law which a court
of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that such a court determines that the Lenders have charged
or received interest hereunder in excess of the highest applicable rate, the
rate in effect hereunder shall automatically be reduced to the maximum rate
permitted by Applicable Law and the Lenders shall at the Agent's option promptly
refund to the Borrower any interest received by Lenders in excess of the maximum
lawful rate or shall apply such excess to the principal balance of the
Obligations. It is the intent hereof that the Borrower not pay or contract to
pay, and that neither the Agent nor any Lender receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by the Borrower under Applicable Law.
SECTION 3.2 Notice and Manner of Conversion or Continuation of Loans.
Provided that no Event of Default has occurred and is then continuing, the
Borrower shall have the option to (a) convert at any time all or any portion of
its outstanding Base Rate Loans in a principal amount equal to $1,000,000 or any
whole multiple of $500,000 in excess thereof into one or more Eurodollar Loans,
or (b) upon the expiration of any Interest Period, (i) convert all or any part
of its outstanding Eurodollar Loans in a principal amount equal to $500,000 or a
whole multiple of $100,000 in excess thereof into Base Rate Loans or (ii)
continue such Eurodollar Loans as Eurodollar Loans. Whenever the Borrower
desires to convert or continue Loans as provided above, the Borrower shall give
the Agent irrevocable prior written notice in the form attached as Exhibit D (a
"Notice of Conversion/ Continuation") not later than 11:00 a.m. (Charlotte time)
three (3) Business Days before the day on which a proposed conversion or
continuation of such Loan is to be effective specifying (A) the Loans to be
converted or continued, and, in the case of any Eurodollar Loan to be converted
or continued, the last day of the Interest Period thereof, (B) the effective
date of such conversion or continuation (which shall be a Business Day), and (C)
the principal amount of such Loans to be converted or continued. The Agent shall
promptly notify the Lenders of such Notice of Conversion/Continuation.
SECTION 3.3 Unused Fee. Commencing on the Closing Date, the Borrower shall
pay to the Agent, for the account of the Lenders, a non-refundable fee at a rate
per annum equal to .25% on the average daily unused portion of the Aggregate
Commitment less the Letter of Credit Obligations. The fee shall be payable in
arrears on the last day of each quarter during the term of this Agreement,
commencing September 30, 1997, and on the Termination Date. Such commitment fee
shall be distributed by the Agent to the Lenders pro rata in accordance with the
Lenders' respective Commitment Percentages.
SECTION 3.4 Payment.
(a) Manner of Payment. Each payment by the Borrower on account of the
principal of
or interest on the Loans or of any fee, commission or other amounts payable to
the Lenders under this Agreement or any Note shall be made not later than 2:00
p.m. (Charlotte time) on the date specified for payment under this Agreement to
the Agent at the Agent's Office for the account of the Lenders (other than as
set forth below) pro rata in accordance with their respective Commitment
Percentages, in Dollars, in immediately available funds and shall be made
without any set-off, counterclaim or deduction whatsoever. Any payment received
after such time but before 2:00 p.m. (Charlotte time) on such day shall be
deemed a payment on such date for the purposes of Section 10.1, but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day. Any payment received after 2:00 p.m. (Charlotte time) shall be deemed to
have been made on the next succeeding Business Day for all purposes. Upon
receipt by the Agent of each such payment, the Agent shall distribute to each
Lender at its address for notices set forth herein its pro rata share of such
payment in accordance with such Lender's Commitment Percentage and shall wire
advice of the amount of such credit to each Lender. Each payment to the Agent of
Agent's fees or expenses shall be made for the account of the Agent. Each
payment to the Agent of the Issuing Lender's fees or L/C Participants'
commissions shall be made in like manner, but for the account of the Issuing
Lender or the L/C Participants, as the case may be. Any amount payable to any
Lender under Sections 3.7, 3.8, 3.12 or 12.2 shall be paid to the Agent for the
account of the applicable Lender.
(b) Crediting of Payments and Proceeds. In the event that the Borrower
shall fail to pay any of the Obligations when due and the Obligations have been
accelerated pursuant to Section 10.2, all payments received by the Lenders upon
the Notes and the other Obligations and all net proceeds from the enforcement of
the Obligations shall be applied first to all expenses then due and payable by
the Borrower hereunder, then to all indemnity obligations then due and payable
by the Borrower hereunder, then to all fees of the Agent or Issuing Lender then
due and payable, then to all commitment and other fees and commissions then due
and payable, then to accrued and unpaid interest on the Notes and any
termination payments due in respect of a Hedging Agreement with any Lender (pro
rata in accordance with all such amounts due), and then to the principal amount
of the Notes.
SECTION 3.5 Right of Set-off; Adjustments.
(a) Upon the occurrence and during the continuance of any Event of Default,
and upon the exercise by the Agent of the remedy provided for in Section
10.2(a), each Lender (and each of its affiliates) is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender (or any of its affiliates) to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note held by such Lender, irrespective of
whether such Lender shall have made any demand under this Agreement or such Note
and although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender;
provided, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
(b) If any Lender (a "Benefitted Lender") shall at any time receive any
payment of all or part of the Loans owing to it, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such Benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; provided, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from a Lender pursuant to this Section 3.5 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Person were the direct creditor of the Borrower in the amount of such
participation.
SECTION 3.6 Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by the Agent. The obligations of the Lenders under this
Agreement to make the Loans and issue or participate in Letters of Credit are
several and are not joint or joint and several. Unless the Agent shall have
received notice from a Lender prior to a proposed borrowing date that such
Lender will not make available to the Agent such Lender's ratable portion of the
amount to be borrowed on such date (which notice shall not release such Lender
of its obligations hereunder), the Agent may assume that such Lender has made
such portion available to the Agent on the proposed borrowing date in accordance
with Section 2.2(b) and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If such amount is
made available to the Agent on a date after such borrowing date, such Lender
shall pay to the Agent on demand an amount, until paid, equal to the product of
(a) the amount of such Lender's Commitment Percentage of such borrowing, times
(b) the daily average Federal Funds Rate during such period as determined by the
Agent, times (c) a fraction, the numerator of which is the number of days that
elapse from and including such borrowing date to the date on which such Lender's
Commitment Percentage of such borrowing shall have become immediately available
to the Agent, and the denominator of which is 360. A certificate of the Agent
with respect to any amounts owing under this Section shall be conclusive, absent
manifest error. If such Lender's Commitment Percentage of such borrowing is not
made available to the Agent by such Lender within three (3) Business Days of
such borrowing date, the Agent shall be entitled to recover such amount made
available by the Agent with interest thereon at the rate per annum applicable to
Base Rate Loans hereunder, on demand, from the Borrower. The failure of any
Lender (a "Defaulting Lender") to make its Commitment Percentage of any Loan
available shall not relieve it or any other Lender of its obligation, if any,
hereunder to make its Commitment Percentage of such Loan available on such
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make its Commitment Percentage of such Loan available on the borrowing
date.
SECTION 3.7 Indemnity. The Borrower hereby indemnifies each of the Lenders
against any loss or expense which may arise or be attributable to each Lender's
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund or maintain any Loan (a) as a
consequence of any failure by the Borrower to make any payment when due of any
amount due hereunder in connection with a Loan, (b) due to any failure of the
Borrower to borrow on a date specified therefor in a Notice of Borrowing or (c)
due to any payment or prepayment of any Loan on a date other than the date
specified for such payment in the applicable Notice of Prepayment. The amount of
such loss or expense shall be determined, in the applicable Lender's sole
discretion, based upon the assumption that such Lender funded its Commitment
Percentage of the Loans in the London interbank market and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical. A certificate of such Lender setting forth the basis for determining
such amount or amounts necessary to compensate such Lender shall be forwarded to
the Borrower through the Agent and shall be conclusively presumed to be correct
save for manifest error. (Amounts payable under this Section 3.7 shall be
without duplication of amounts payable under Section 3.8 or 3.12.)
SECTION 3.8 Increased Cost and Reduced Return. The Borrower hereby
indemnifies each of the Lenders against any loss or expense which may arise or
be attributable to each Lender's obtaining, liquidating or employing deposits or
other funds acquired to effect, fund or maintain any Loan (a) as a consequence
of any failure by the Borrower to make any payment when due of any amount due
hereunder in connection with a Eurodollar Loan, (b) due to any failure of the
Borrower to borrow on a date specified therefor in a Notice of Borrowing or
Notice of Continuation/Conversion or (c) due to any payment, prepayment or
conversion of any Eurodollar Loan on a date other than the last day of the
Interest Period therefor. The amount of such loss or expense shall be
determined, in the applicable Lender's sole discretion, based upon the
assumption that such Lender funded its Commitment Percentage of the Eurodollar
Loans in the London interbank market and using any reasonable attribution or
averaging methods which such Lender deems appropriate and practical. A
certificate of such Lender setting forth the basis for determining such amount
or amounts necessary to compensate such Lender shall be forwarded to the
Borrower through the Agent and shall be conclusively presumed to be correct save
for manifest error.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, central bank, or comparable agency charged
with the interpretation or administration thereof, or compliance by any
Lender (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such governmental
authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office)
to any tax, duty, or other charge with respect to any Eurodollar
Loans, Letter of Credit or Application, its Note, or its obligation to
make Eurodollar Loans, or change the basis of taxation of any amounts
payable to such Lender (or its Applicable Lending Office) under this
Agreement or its Note in respect of any Eurodollar Loans (other than
taxes imposed on the overall net income of such Lender by the
jurisdiction in which such Lender has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment or similar requirement (other than the
Reserve Requirement
utilized in the determination of the Adjusted Eurodollar Rate)
relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Lender (or
its Applicable Lending Office), including the Commitment of such
Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the United States market for certificates of deposit or
the London interbank market any other condition affecting this
Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or Letter of Credit or Application or to reduce
any sum received or receivable by such Lender (or its Applicable Lending Office)
under this Agreement or its Note with respect to any Eurodollar Loans, then the
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any Lender
requests compensation by the Borrower under this Section 3.8, the Borrower may,
by notice to such Lender (with a copy to the Agent), suspend the obligation of
such Lender to make or Continue Eurodollar Loans or to Convert Base Rate Loans
into Eurodollar Loans until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 3.11 shall be
applicable); provided, that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have reasonably determined
that the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section shall furnish to the Borrower and the Agent a
statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
(d) Amounts payable under this Section 3.8 shall be without duplication of
amounts payable under Sections 3.7 and 3.12.
SECTION 3.9 Limitation on Types of Loans. If on or prior to the first day
of any Interest Period for any Eurodollar Loan:
(a) the Agent reasonably determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Eurodollar Loans and the relevant amounts or periods, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, Continue Eurodollar Loans or to Convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans either
prepay such Loans or Convert such Loans into Base Rate Loans in accordance with
the terms of this Agreement.
SECTION 3.10 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans hereunder,
then such Lender shall promptly notify the Borrower thereof and such Lender's
obligation to make or Continue Eurodollar Loans and to Convert Base Rate Loans
into Eurodollar Loans shall be suspended until such time as such Lender may
again make, maintain, and fund Eurodollar Loans (in which case the provisions of
Section 3.11 shall be applicable).
SECTION 3.11 Treatment of Affected Loans. If the obligation of any Lender
to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 3.9 or 3.10 hereof,
unless and until such Lender gives notice as provided below that the
circumstances specified in Section 3.9 or 3.10 hereof no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted into Base Rate Loans, all payments and prepayments of principal
that would otherwise be applied to the Eurodollar Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
and all Loans of such Lender that would otherwise be Converted into
Eurodollar Loans shall instead remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.9 or 3.10 hereof no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist),
such Lender's Base Rate Loans may be Converted to Eurodollar Loans.
SECTION 3.12 Compensation. Upon the request of any Lender, the Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration
of the Loans pursuant to Section 10.2) on a date other than the last
day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified
in Article IV to be satisfied) to borrow, Convert, Continue, or
prepay a Eurodollar Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant Notice of
Borrowing, prepayment, Continuation, or Conversion under this
Agreement.
Amounts payable under this Section 3.12 shall be without duplication of amounts
payable under Sections 3.7 or 3.8.
SECTION 3.13 Taxes.
(a) Any and all payments by the Borrower to or for the account of any
Lender or the Agent hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement or any other Loan Document
to any Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.13) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 12.1, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution
or delivery of, or otherwise with respect to, this Agreement or any other Loan
Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 3.13) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide the
Borrower and the Agent with the appropriate form pursuant to Section 3.13(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 3.13(a) or
3.13(b) with respect to Taxes imposed by the United States; provided, that
should a Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 3.13, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 3.13 shall survive the termination of the Commitments and the
payment in full of the Notes.
SECTION 3.14 Replacement of Lenders. If deposits in eurodollars shall not
be available to any Lender, or it shall be unlawful or impossible for any Lender
to make or maintain any Eurodollar Loan or the cost to any Lender of making or
maintaining Eurodollar Loans is increased by reason of any circumstance
specified in Section 3.8(a) and (b) or if any Lender asserts the right to
indemnity under Section 3.13 or the Borrower is required to pay additional
amounts to or for the account of any Lender pursuant to Section 3.13, or with
respect to any Defaulting Lender, the Borrower shall have the right, if no
Default exists or will exist immediately after giving effect to the respective
replacement, to replace such affected Lender or Defaulting Lender (the "Replaced
Lender"), upon ten (10) days' written notice to the Agent, with one or more
other Eligible Assignee or Assignees (collectively, the "Replacement Lender");
provided, that no assignment shall be required if the consummation of such
assignment conflicts with any Applicable Law. Neither the Agent nor any Lender
shall be obligated to assist the Borrower in identifying any Eligible Assignees
that are willing to become a Replacement Lender. At the time of any replacement
pursuant to this Section 3.14, the Replacement Lender shall enter into an
Assignment and Acceptance (with all fees payable pursuant to Section 12.10 to be
paid by the Replacement Lender) pursuant to which the Replacement Lender shall
acquire all of the Commitment and outstanding Extensions of Credit of the
Replaced Lender and in connection therewith, shall pay on the effective date of
the corresponding Assignment and Acceptance to the Replaced Lender an amount
equal to the sum of (i) the principal of, and all accrued interest on, all
outstanding Loans of the Replaced Lender and (ii) all accrued but unpaid fees
owing to the Replaced Lender pursuant to Section 3.3 and (iii) all other
obligations of the Borrower owing to the Replaced Lender. Upon the execution of
such Assignment and Acceptance, the payment of amounts referred to in clauses
(i), (ii) and (iii) above and delivery to the Replacement Lender of a new Note
executed by the Borrower, the Replacement Lender shall become a Lender hereunder
and the Replaced Lender shall cease to constitute a Lender hereunder, except
with respect to the indemnification provisions under this Agreement, which shall
survive as to such Replaced Lender and in the case of a replacement of a
Replaced Lender with an existing Lender, the Commitment Percentage of such
Lender shall be automatically adjusted at such time to give effect to such
replacement.
ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 4.1 Closing. The closing shall take place at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on July 28, 1997.
SECTION 4.2 Conditions to Closing and Initial Extensions of Credit. The
obligation of the Lenders to close this Agreement and to make the initial Loan
or issue the Letters of Credit is subject to the satisfaction of each of the
following conditions:
(a) Executed Loan Documents. This Agreement, the Notes and the
Guaranty Agreement shall have been duly authorized, executed and delivered
to the Agent by the
parties thereto, shall be in full force and effect and no default shall
exist thereunder, and the Borrower shall have delivered original
counterparts thereof to the Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate of the Borrower. The Agent shall have
received a certificate from the chief executive officer or chief
financial officer of the Borrower, in form and substance satisfactory
to the Agent, to the effect that, to the best of his or her knowledge:
all representations and warranties of the Borrower and its
Subsidiaries contained in this Agreement and the other Loan Documents
are true, correct and complete; the Borrower and its Subsidiaries are
not in violation of any of the covenants contained in this Agreement
and the other Loan Documents; and after giving effect to the
transactions contemplated by this Agreement, no Default or Event of
Default has occurred and is continuing.
(ii) Certificate of Secretary of the Borrower and the Guarantors.
The Agent shall have received a certificate of the secretary or
assistant secretary of the Borrower and each Guarantor certifying that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Person authorizing the
borrowings contemplated hereunder and the execution, delivery and
performance of this Agreement and the other Loan Documents to which it
is a party; and as to the incumbency and genuineness of the signature
of each officer of such Person executing Loan Documents to which it is
a party. The certificate to be delivered on behalf of the Borrower
shall also certify that attached thereto is a true and complete copy
of the articles of incorporation (or other applicable organizational
document) of the Borrower and all amendments thereto, certified as of
a recent date by the appropriate Governmental Authority in its
jurisdiction of incorporation, together with a true and complete copy
of the bylaws (or other applicable document) of the Borrower as in
effect on the date of such certification.
(iii) Certificates of Good Standing. The Agent shall have
received long-form certificates as of a recent date of the good
standing of the Borrower and each of the Guarantors as are reasonably
requested by the Agent.
(iv) Opinions of Counsel. The Agent shall have received favorable
opinions of counsel to the Borrower addressed to the Agent and the
Lenders with respect to the Borrower and the Guarantors, the Loan
Documents and such other matters as the Lenders shall request.
(v) Payoff Letter. The Agent shall have received a payoff letter
in form and substance satisfactory to the Agent from First Union
National Bank.
(vi) Tax Forms. The Agent shall have received copies of the
United States Internal Revenue Service forms required by Section
3.13(e) hereof.
(vii) Borrowing Base Certificate. The Agent shall have received a
Borrowing Base Certificate properly completed and executed by the
Borrower.
(c) Consents; Defaults.
(i) Governmental and Third Party Approvals. All necessary
approvals, authorizations and consents, if any be required, of any
Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained.
(ii) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any Governmental Authority to enjoin, restrain, or
prohibit, or to obtain substantial damages in respect of, or which is
related to or arises out of this Agreement or the other Loan Documents
or the consummation of the transactions contemplated hereby or
thereby, or which, in the Agent's discretion, would make it
inadvisable to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(iii) No Event of Default. No Default or Event of Default shall
have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Agent shall have received the most
recent audited Consolidated financial statements of the Borrower and
its Subsidiaries, all in form and substance satisfactory to the Agent
and prepared in accordance with GAAP. Without limitation of the
foregoing, the Agent and each Lender shall have received audited
financial statements for the Fiscal Year ended September 30, 1996, and
unaudited financial statements for the six month period ending March
31, 1997.
(ii) Financial Condition Certificate. The Borrower shall have
delivered to the Agent a certificate, in form and substance
satisfactory to the Agent, and certified as accurate to the best of
his knowledge by the chief executive officer or chief financial
officer of the Borrower, that the Borrower and each of its
Wholly-Owned Subsidiaries are Solvent and evidencing compliance by the
Borrower on a pro forma basis with the covenants contained in Articles
VIII and IX hereof.
(iii) Payment at Closing; Fee Letters. All legal fees and
expenses of Agent's counsel, which shall not exceed $17,500, shall
have been paid. The Agent shall have received duly authorized and
executed copies of the fee letter agreement referred to in Section
3.3(b).
(e) Miscellaneous.
(i) Notice of Borrowing. The Agent shall have received a Notice
of Borrowing from the Borrower in accordance with Section 2.2(a), and
written
notice specifying the account or accounts to which the proceeds of any
Loans made after the Closing Date are to be disbursed.
(ii) Proceedings and Documents. All opinions, certificates and
other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Lenders. The Lenders shall have received
copies of all other instruments and other evidence as the Lenders may
reasonably request, in form and substance satisfactory to the Lenders,
with respect to the transactions contemplated by this Agreement and
the taking of all actions in connection therewith.
(iii) Due Diligence and Other Documents. The Borrower shall have
delivered to the Agent such other documents, certificates and opinions
as the Agent reasonably requests, including without limitation copies
of each document evidencing or governing the Subordinated Debt,
certified by a secretary or assistant secretary of the Borrower as a
true and correct copy thereof.
SECTION 4.3 Conditions to All Loans. The obligation of the Lenders to make
any Loan or of the Issuing Lender to issue any Letter of Credit is subject to
the satisfaction of the following conditions precedent on the relevant borrowing
date, as applicable:
(a) Continuation of Representations and Warranties. The
representations and warranties made by the Borrower contained in Article V
shall be true and correct in all material respects as of the date made;
provided, however, that the Borrower shall notify the Agent (and the Agent
shall notify each Lender) of any material adverse change in the
representations and warranties made in this Agreement at the time of or
prior to any future Extension of Credit, such notice to be given promptly
following such material adverse change. Absent any such notice from the
Borrower, each Notice of Borrowing shall be deemed a certification of the
foregoing representations and warranties, after giving effect to any
notices of material subsequent changes, both before and after giving effect
to the requested Extension of Credit.
(b) No Existing Default. No Default or Event of Default shall have
occurred and be continuing hereunder (i) on the borrowing date with respect
to such Loan or after giving effect to the Loans to be made on such date or
(ii) on the issue date with respect to any Letter of Credit or after giving
effect to such Letter of Credit on such date.
(c) Officer's Compliance Certificate. The Agent shall have received
the current Officer's Compliance Certificate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 5.1 Representations and Warranties. To induce the Agent to enter
into this
Agreement and the Lenders to make the Loans or issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the Agent and
Lenders that:
(a) Organization; Power; Qualification. Each of the Borrower and its
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation, (ii) has the
power and authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted and (iii) is duly qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization, except, in each case where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
(b) Ownership. Each Subsidiary of the Borrower is listed on Schedule
5.1(b). All outstanding shares have been duly authorized and validly issued and
are fully paid and nonassessable. There are no outstanding stock purchase
warrants, subscriptions, options, securities, instruments or other rights of any
type or nature whatsoever, which are convertible into, exchangeable for or
otherwise provide for or permit the issuance of capital stock of the Borrower or
its Subsidiaries, except those granted in the ordinary course of business.
(c) Authorization of Agreement, Loan Documents and Borrowing. Each of the
Borrower and its Subsidiaries has the right, power and authority and has taken
all necessary corporate and other action to authorize the execution, delivery
and performance of this Agreement and each of the other Loan Documents to which
it is a party in accordance with their respective terms. This Agreement and each
of the other Loan Documents have been duly executed and delivered by the duly
authorized officers of the Borrower and each of its Subsidiaries party thereto,
and each such document constitutes the legal, valid and binding obligation of
the Borrower or its Subsidiary party thereto, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar state or federal debtor relief laws from
time to time in effect which affect the enforcement of creditors' rights in
general and the availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc.
The execution, delivery and performance by the Borrower and its Subsidiaries of
the Loan Documents to which each such Person is a party, in accordance with
their respective terms, the borrowings hereunder and the transactions
contemplated hereby do not and will not, by the passage of time, the giving of
notice or otherwise, (i) to the best knowledge of the Borrower, require any
Governmental Approval or violate any Applicable Law relating to the Borrower or
any of its Subsidiaries; (ii) conflict with, result in a breach of or constitute
a default under the articles of incorporation, bylaws or other organizational
documents of the Borrower or any of its Subsidiaries or any indenture, agreement
or other instrument to which such Person is a party or by which any of its
properties may be bound or, to the best knowledge of the Borrower, any
Governmental Approval relating to such Person; or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by such Person other than Liens arising under the
Loan Documents.
(e) Compliance with Law; Governmental Approvals. Each of the Borrower and
its Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and effect,
is final and not subject to review on appeal and is not the subject of any
pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating to it
or any of its respective properties, except in each case where failure to have
or comply with such Governmental Approval could not reasonably be expected to
result in a Material Adverse Effect.
(f) Tax Returns and Payments. To the best of its knowledge, each of the
Borrower and its Subsidiaries has duly filed or caused to be filed all federal,
state, local and other tax returns required by Applicable Law to be filed, and
has paid, or made adequate provision for the payment of, all federal, state,
local and other taxes, assessments and governmental charges or levies upon it
and its property, income, profits and assets which are due and payable. No
Governmental Authority has asserted any Lien or other claim against the Borrower
or Subsidiary thereof with respect to unpaid taxes which has not been discharged
or resolved. The charges, accruals and reserves on the books of the Borrower and
any of its Subsidiaries in respect of federal, state, local and other taxes for
all Fiscal Years and portions thereof since the organization of the Borrower and
any of its Subsidiaries are in the judgment of the Borrower adequate, and the
Borrower does not anticipate any additional taxes or assessments for any of such
years.
(g) Intellectual Property Matters. Each of the Borrower and its
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business, except where failure to own or possess such rights could
not reasonably be expected to result in a Material Adverse Effect. No event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such rights, and neither the Borrower nor
any Subsidiary thereof is liable to any Person for infringement under Applicable
Law with respect to any such rights as a result of its business operations,
except where the existence of such event or liability could not reasonably be
expected to result in a Material Adverse Effect.
(h) Environmental Matters.
(i) The properties of the Borrower and its Subsidiaries do not
contain, and to their knowledge have not previously contained, any
Hazardous Materials in amounts or concentrations which (A) constitute or
constituted a violation of, or (B) could give rise to liability under,
applicable Environmental Laws;
(ii) Such properties of the Borrower and its Subsidiaries and all
operations conducted in connection therewith while owned by the Borrower
and its Subsidiaries are in compliance, and have been in compliance, with
all applicable Environmental Laws, except where failure to so comply could
not reasonably be
expected to result in a Material Adverse Effect, and to the best of the
Borrower's knowledge there is no contamination at, under or about such
properties or such operations which could interfere with the continued
operation of such properties or impair the fair saleable value thereof;
(iii) Neither the Borrower nor any Subsidiary thereof has received any
notice of violation, alleged violation, noncompliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of their properties or the operations
conducted in connection therewith, nor does the Borrower or any Subsidiary
thereof have knowledge or reason to believe that any such notice will be
received or is being threatened;
(iv) Hazardous Materials have not been transported or disposed of from
the properties of the Borrower and its Subsidiaries in violation of, or in
a manner or to a location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been generated,
treated, stored or disposed of at, on or under any of such properties in
violation of any applicable Environmental Laws;
(v) No judicial proceedings or governmental or administrative action
is pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary thereof is or
will be named as a party with respect to such properties or operations
conducted in connection therewith, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law with respect to such properties or such operations; and
(vi) There has been no release by Borrower or any of its Subsidiaries,
or to the best of the Borrower's knowledge, the threat of release, of
Hazardous Materials at or from such properties, in violation of or in
amounts or in a manner that could give rise to liability under
Environmental Laws.
(i) ERISA.
(i) Neither the Borrower nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans
other than those identified on Schedule 5.1(i);
(ii) the Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans
except for any required amendments for which the remedial amendment period
as defined in Section 401(b) of the Code has not yet expired and except
where failure to comply could not reasonably be expected to result in a
Material Adverse Effect. Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and each trust related to such
plan has been determined to be exempt under Section 501(a) of the
Code, except where the failure to so qualify or so determine could not
reasonably be expected to result in a Material Adverse Effect. No liability
has been incurred by the Borrower or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee Benefit
Plan or any Multiemployer Plan, except where the existence of such
liability could not reasonably be expected to result in a Material Adverse
Effect;
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor
has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the Borrower or any
ERISA Affiliate failed to make any contributions or to pay any amounts due
and owing as required by Section 412 of the Code, Section 302 of ERISA or
the terms of any Pension Plan prior to the due dates of such contributions
under Section 412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a)
of ERISA with respect to any Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate has: (A) engaged in
a nonexempt prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Code, (B) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid, (C) failed to make a required
contribution or payment to a Multiemployer Plan, or (D) failed to make a
required installment or other required payment under Section 412 of the
Code;
(v) No Termination Event has occurred or is reasonably expected to
occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is existing
or, to the best knowledge of the Borrower after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined
in Section 3 (1) of ERISA) currently maintained or contributed to by the
Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer
Plan.
(j) Margin Stock. Neither the Borrower nor any Subsidiary thereof is
engaged principally or as one of its activities in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" (as each such term is defined or used in Regulations G and U of the
Board of Governors of the Federal Reserve System). No part of the proceeds
of any of the Loans or Letters of Credit will be used for purchasing or
carrying margin stock or for any purpose which violates, or which would be
inconsistent with, the provisions of Regulation G, T, U or X of such Board
of Governors.
(k) Government Regulation. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an
"investment company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and neither the Borrower nor
any Subsidiary thereof is, or after giving effect to any Loan
will be, subject to regulation under the Public Utility Holding Company Act
of 1935 or the Interstate Commerce Act, each as amended, or any other
Applicable Law which limits its ability to incur or consummate the
transactions contemplated hereby.
(l) Material Contracts. Each Material Contract is, and after giving
effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the terms
thereof.
(m) Employee Relations. Each of the Borrower and its Subsidiaries has
a stable work force in place and is not party to any collective bargaining
agreement nor has any labor union been recognized as the representative of
its employees. The Borrower knows of no pending, threatened or contemplated
strikes, work stoppage or other collective labor disputes involving its
employees or those of its Subsidiaries.
(n) Financial Statements. The (i) Consolidated balance sheets of the
Borrower and its Subsidiaries as of September 30, 1996 and the related
statements of income and retained earnings and cash flows for the Fiscal
Years then ended and (ii) unaudited Consolidated balance sheet of the
Borrower and its Subsidiaries as of March 31, 1997 and related unaudited
interim statements of revenue and retained earnings, copies of which have
been furnished to the Agent and each Lender, are complete and correct and
fairly present, in all material respects, the assets, liabilities and
financial position of the Borrower and its Subsidiaries taken as a whole as
at such dates, and the results of the operations and changes of financial
position for the periods then ended. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP. The Borrower and its Subsidiaries have no Debt or
obligation which is not fairly reflected in the foregoing financial
statements or in the notes thereto, to the extent required by GAAP.
(o) No Material Adverse Change. Since September 30, 1996, there has
been no material adverse change in the properties, business, operations or
condition (financial or otherwise) of the Borrower and its Subsidiaries and
no event has occurred or condition arisen that could reasonably be expected
to have a Material Adverse Effect.
(p) Solvency. As of the Closing Date and after giving effect to each
Loan made hereunder, the Borrower and each of its Subsidiaries will be
Solvent.
(q) Titles to Properties. Each of the Borrower and its Subsidiaries
has such title to the real property owned by it as is necessary or
desirable to the conduct of its business and valid and legal title to all
of its personal property and assets, including, but not limited to, those
reflected on the balance sheets of the Borrower and its Subsidiaries
delivered pursuant to Section 5.1(o), except those which have been disposed
of by the Borrower or its Subsidiaries subsequent to such date which
dispositions have been in the ordinary course of business or as otherwise
expressly permitted hereunder, and except where the failure to have such
title could not reasonably be expected to result in a Material Adverse
Effect.
(r) Liens. None of the properties and assets of the Borrower or any
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant
to Section 9.3, except where the existence of such a Lien could not
reasonably be expected to result in a Material Adverse Effect. No financing
statement under the Uniform Commercial Code of any state which names the
Borrower or any Subsidiary thereof or any of their respective trade names
or divisions as debtor and which has not been terminated, has been filed in
any state or other jurisdiction and neither the Borrower nor any Subsidiary
thereof has signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens permitted by Section 9.3 hereof.
(s) Debt and Contingent Obligations. Schedule 5.1(s) is a complete and
correct listing of all Debt and Contingent Obligations of the Borrower and
its Subsidiaries in excess of $500,000. The Borrower and its Subsidiaries
have performed and are in material compliance with all of the terms of such
Debt and Contingent Obligations and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which
with notice or lapse of time or both would constitute such a default or
event of default on the part of the Borrower or its Subsidiaries exists
with respect to any such Debt or Contingent Obligation.
(t) Litigation. Except as set forth on Schedule 5.1(t), there are no
actions, suits or proceedings pending nor, to the knowledge of the
Borrower, threatened against or in any other way relating adversely to or
affecting the Borrower or any Subsidiary thereof or any of their respective
properties in any court or before any arbitrator of any kind or before or
by any Governmental Authority, except where such an action, suit or
proceeding, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect.
(u) Absence of Defaults. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or
which with the passage of time or giving of notice or both would
constitute, a material default or event of default by the Borrower or any
Subsidiary thereof under any Material Contract or judgment, decree or order
to which the Borrower or its Subsidiaries is a party or by which the
Borrower or its Subsidiaries or any of their respective properties may be
bound or which would require the Borrower or its Subsidiaries to make any
payment thereunder prior to the scheduled maturity date therefor.
(v) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of the Borrower
or any Subsidiary thereof and furnished to the Lenders were, at the time
the same were so furnished, complete and correct in all material respects
to the extent necessary to give the recipient a true and accurate knowledge
of the subject matter. No document furnished or written statement made to
the Agent or the Lenders by the Borrower or any Subsidiary thereof in
connection with the negotiation, preparation or execution of this Agreement
or any of the Loan Documents contains or will contain any untrue statement
of a fact material to the creditworthiness of the Borrower or its
Subsidiaries or omits or will omit to state a fact necessary in order to
make the statements contained therein not materially misleading.
The Borrower is not aware of any facts which it has not disclosed in
writing to the Agent having a Material Adverse Effect.
SECTION 5.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article V and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
made under this Agreement shall be made or deemed to be made at and as of the
Closing Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder.
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.11 hereof, the Borrower will
furnish or cause to be furnished to the Agent at the Agent's Office at the
address set forth in Section 12.1 hereof, or such other office as may be
designated by the Agent from time to time:
SECTION 6.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in any event
within forty-five (45) days after the end of each fiscal quarter, an unaudited
Consolidated balance sheet of the Borrower and its Subsidiaries as of the close
of such fiscal quarter and unaudited Consolidated statements of income, retained
earnings and cash flows for the fiscal quarter then ended and that portion of
the Fiscal Year then ended, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year and
prepared by the Borrower in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operations of
any change in the application of accounting principles and practices during the
period, and certified, to the best of his knowledge, by the chief financial
officer of the Borrower to present fairly in all material respects the financial
condition of the Borrower and its Subsidiaries as of their respective dates and
the results of operations of the Borrower and its Subsidiaries for the
respective periods then ended, subject to normal year end adjustments. (Delivery
by the Borrower to each Lender of the Borrower's quarterly report on Form 10Q
with respect to any fiscal quarter within forty-five (45) days after the end of
such fiscal quarter shall be deemed to be compliance by the Borrower with this
Section 6.1(a).)
(b) Annual Financial Statements. As soon as practicable and in any event
within one hundred twenty (120) days after the end of each Fiscal Year,
commencing with Fiscal Year ending September 30, 1997, an audited consolidated
balance sheet of the Borrower and its Subsidiaries as of the close of such
Fiscal Year and audited consolidated statements of income and expenses, retained
earnings and cash flows for the Fiscal Year then ended, including the notes
thereto, all in
reasonable detail and prepared in accordance with GAAP and
accompanied by a report thereon prepared by Ernst & Young LLP, or another
independent certified public accounting firm reasonably acceptable to the Agent
that such financial statements not qualified with respect to scope limitations
imposed by the Borrower and its Subsidiaries or with respect to accounting
principles followed by the Borrower and its Subsidiaries not in accordance with
GAAP. (Delivery by the Borrower to each Lender of the Borrower's annual report
on Form 10K with respect to any fiscal year within one hundred twenty (120) days
after the end of each such fiscal year shall be deemed to be compliance by the
Borrower with this Section 6.1(b).)
SECTION 6.2 Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 6.1(a) or (b) and at such other
times as the Agent shall reasonably request, a certificate of the chief
financial officer or the treasurer of the Borrower in the form of Exhibit E
attached hereto (an "Officer's Compliance Certificate").
SECTION 6.3 Accountants' Certificate. At each time financial statements are
delivered pursuant to Section 6.1(b), a certificate of the independent public
accountants certifying such financial statements addressed to the Agent for the
benefit of the Lenders stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of any
Default or Event of Default that has occurred and is continuing as a result of
non-compliance with the financial covenants contained in Article VIII hereof or,
if such is not the case, specifying such Default or Event of Default and its
nature and period of existence.
SECTION 6.4 Other Reports.
(a) A Borrowing Base Certificate in the form of Exhibit G attached hereto
(a "Borrowing Base Certificate"). Such Borrowing Base Certificate shall be
provided, during any period when the aggregate principal amount outstanding
hereunder is (i) less than or equal to $7,500,000, as soon as practicable and in
any event within thirty (30) days after the end of each quarter, or (ii) greater
than $7,500,000, as soon as practicable and in any event within thirty (30) days
after the end of each calendar month.
(b) As soon as practicable, and in any event (i) within forty-five (45)
days after the end of each quarter, the most recent 10Q report as filed with the
Securities and Exchange Commission ("SEC") and (ii) within one hundred and
twenty (120) days after the end of each Fiscal Year, the most recent 10K report
as filed with the SEC.
(c) Such other information regarding the operations, business affairs and
financial condition of the Borrower or any of its Subsidiaries as the Agent or
any Lender may reasonably request.
(d) The form of monthly, quarterly and annual financial statements
previously furnished by Parent to Agent are acceptable to Agent.
SECTION 6.5 Notice of Litigation and Other Matters. Prompt (but in no event
later than ten (10) days after an officer of the Borrower obtains knowledge
thereof telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or before any
Governmental Authority and all actions and proceedings in any court or before
any arbitrator against or involving the Borrower or any Subsidiary thereof or
any of their respective properties, assets or businesses, except where such
proceedings and investigations, if adversely determined, could not reasonably be
expected to have a Material Adverse Effect;
(b) any written notice of any violation received by the Borrower or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any written notice of violation of Environmental Laws which in any
such case could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result in,
a strike or other work action against the Borrower or any Subsidiary thereof
which could reasonably be expected to result in a Material Adverse Effect;
(d) any attachment, judgment, lien or levy exceeding $500,000 is assessed
against or threatened in writing against the Borrower or any Subsidiary thereof;
(e) any Default or Event of Default, or any material event which
constitutes or which with the passage of time or giving of notice or both would
constitute a default or event of default under any Material Contract to which
the Borrower or any of its Subsidiaries is a party or by which the Borrower or
any Subsidiary thereof or any of their respective properties may be bound;
(f) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy thereof), (ii) all notices received by the
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan, (iii) all
notices received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or intends to
file a notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA; and
(g) any event which makes any of the representations set forth in Section
5.1 inaccurate in any material respect.
SECTION 6.6 Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of the Borrower
to the Agent or any Lender (other than financial forecasts) whether pursuant to
this Article VI or any other provision of this Agreement, or any of the Guaranty
Agreements, shall be, at the time the same is so furnished, complete and correct
in all material respects to the extent necessary to give the Agent or any Lender
complete, true and accurate knowledge of the subject matter based on the
Borrower's knowledge thereof.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 12.11, the Borrower will, and
will cause each of its Subsidiaries to:
SECTION 7.1 Preservation of Corporate Existence and Related Matters. Except
as permitted by Section 9.5, preserve and maintain its separate corporate
existence and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in which the
failure to so qualify would have a Material Adverse Effect.
SECTION 7.2 Maintenance of Property. Protect and preserve all properties
useful in and material to its business, including copyrights, patents, trade
names and trademarks; maintain in good working order and condition all
buildings, equipment and other tangible real and personal property; and from
time to time make or cause to be made all renewals, replacements and additions
to such property necessary for the conduct of its business, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, except in each case where failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 7.3 Insurance. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law, and on the Closing Date and from time to time thereafter deliver
to the Agent upon its request a detailed list of the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
SECTION 7.4 Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete in all material respects) as may be required or as may be necessary to
permit the preparation of financial statements in accordance with GAAP and in
material compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 7.5 Payment and Performance of Obligations. Pay and perform all
Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that the Borrower or such Subsidiary may contest any item
described in
this Section 7.5 in good faith so long as adequate reserves are maintained with
respect thereto in accordance with GAAP.
SECTION 7.6 Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business,
except where failure to so observe or comply could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 7.7 Environmental Laws. In addition to and without limiting the
generality of Section 7.6, (a) comply with, and ensure such compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws, (b)
obtain, comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, in each case where the failure to so obtain or comply with could
reasonably be expected to have a Material Adverse Effect upon the Borrower and
its Subsidiaries, (c) conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws, (d) promptly comply with all lawful orders and directives of
any Governmental Authority regarding Environmental Laws, where the failure to so
could reasonably be expected to have a Material Adverse Effect upon the Borrower
and its Subsidiaries, and (e) defend, indemnify and hold harmless the Agent and
the Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
agents, officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the operations of the Borrower or such
Subsidiary, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
directly result from the gross negligence or willful misconduct of the party
seeking indemnification therefor.
SECTION 7.8 Compliance with ERISA. In addition to and without limiting the
generality of Section 7.6, (a) comply with all applicable provisions of ERISA
and the regulations and published interpretations thereunder with respect to all
Employee Benefit Plans where the failure to so comply could reasonably be
expected to have a Material Adverse Effect upon the Borrower and its
Subsidiaries, (b) not take any action or fail to take action the result of which
could be a liability to the PBGC or to a Multiemployer Plan, (c) not participate
in any prohibited transaction that could result in any civil penalty under ERISA
or tax under the Code, (d) operate each Employee Benefit Plan in such a manner
that will not incur any tax liability under Section 4980B of the Code or any
liability to any qualified beneficiary as defined in Section 4980B of the Code
and (e) furnish to the Agent upon the Agent's request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Agent.
SECTION 7.9 Compliance With Agreements. Comply in all respects with each
term, condition and provision of all leases, agreements and other instruments
entered into in the conduct of its business including, without limitation, any
Material Contract, except where the failure to so comply could not reasonably be
expected to result in a Material Adverse Effect; provided, that the Borrower or
such Subsidiary may contest any such lease, agreement or other instrument in
good
faith through applicable proceedings so long as adequate reserves are
maintained in accordance with GAAP.
SECTION 7.10 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date
and in lines of business reasonably related thereto.
SECTION 7.11 Visits and Inspections. Permit representatives of the Agent or
any Lender, from time to time and upon reasonable notice, to visit and inspect
its properties; inspect, audit and make extracts from its books, records and
files, including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results of
operations and business prospects.
SECTION 7.12 Additional Subsidiaries. The Borrower will within fifteen (15)
Business Days of the capitalization of any newly formed or acquired Wholly-Owned
Subsidiary execute and deliver or cause to be executed and delivered by such
newly formed or acquired Wholly-Owned Subsidiary to the Agent (i) a Guaranty
Agreement supplement, (ii) the closing documents and certificates required to be
delivered by each Guarantor on the Closing Date pursuant to Sections 4.2(b)(ii),
(iii) and (iv) and (iii) such other documents reasonably requested by the Agent
in order that such Wholly-Owned Subsidiary shall become bound by all of the
terms, covenants and agreements contained any Loan Document and applicable to
any other Guarantor as if signatory thereto on the Closing Date.
SECTION 7.13 Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Agent or any
Lender may reasonably require to document and consummate the transactions
contemplated hereby and to vest completely in and insure the Agent and the
Lenders their respective rights under this Agreement, the Notes, the Letters of
Credit and the other Loan Documents.
ARTICLE VIII
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.11 hereof, the Borrower and its
Subsidiaries on a Consolidated basis will not:
SECTION 8.1 Current Ratio. As of the end of any quarter, permit the ratio
of its (a) Current Assets to (b) Current Liabilities to be less than 1.35 to
1.00.
SECTION 8.2 Debt to Capitalization Ratio. As of the end of any quarter,
permit the ratio of its (a) Modified Consolidated Funded Senior Debt to (b)
Total Capitalization to exceed .65 to 1.00.
SECTION 8.3 Leverage Ratio. As of the end of any quarter, permit the
Leverage Ratio to exceed 3.50 to 1.0.
SECTION 8.4 Fixed Charge Ratio. As of the end of any quarter, permit the
ratio of (a) EBITDA plus Lease Expense for the period of four consecutive
quarters ending on such quarter-end date to (b) the sum of (x) for such
four-quarter period (A) Interest Expense, (B) Lease Expense and (C) Replacement
Capital Expenditures plus (y) as of such quarter end, current maturities of
long-term Debt (excluding all balloon payments with respect to any loan to any
Subsidiary of the Borrower, the proceeds of which are or have been used to
construct a hospital facility (collectively, the "Hospital Loans")) and the
current portion due under Capital Leases to be less than 1.35 to 1.0.
SECTION 8.5 Consolidated Net Worth. As of the end of any quarter, permit
Consolidated Tangible Net Worth to be less than the sum of (a) $50,000,000 plus
(b) fifty percent (50%) of cumulative Consolidated Net Income (if positive)
after the Closing Date.
ARTICLE IX
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 12.11 hereof, the Borrower will not:
SECTION 9.1 Limitations on Debt. Create, incur, assume or suffer to exist
any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with a Hedging Agreement with a
counterparty and upon terms and conditions reasonably satisfactory to the Agent;
(c) Subordinated Debt;
(d) Debt existing on the Closing Date and not otherwise permitted under
this Section 9.1, as set forth on Schedule 5.1(s) and the renewal and
refinancing (but not the increase) thereof;
(e) Debt incurred in connection with Capital Leases and purchase money Debt
incurred in connection with the purchase of equipment, provided that the
aggregate amount of such Debt under this Section 9.1(e) shall not exceed an
aggregate of $10,000,000, cumulatively; and
(f) (i) Debt consisting of Contingent Obligations permitted by Section 9.2;
(ii) Debt secured by Liens permitted by Section 9.3(h); and (iii) Debt secured
by Liens permitted by Section 9.3(i).
SECTION 9.2 Limitations on Contingent Obligations. Create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create, incur, assume or
suffer to exist, any Contingent Obligations except Contingent Obligations in
favor of the Agent for the benefit of the Agent and the Lenders except as set
forth on Schedule 5.1(s).
SECTION 9.3 Limitations on Liens. Create, incur, assume or suffer to exist,
any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of
ERISA or Environmental Laws) not yet due or as to which the period of grace
(not to exceed thirty (30) days) , if any, related thereto has not expired
or which are being contested in good faith and by appropriate proceedings
if adequate reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred
in the ordinary course of business, (i) which are not overdue for a period
of more than thirty (30) days or (ii) which are being contested in good
faith and by appropriate proceedings or which have been bonded off;
(c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of
real property, which in the aggregate are not substantial in amount and
which do not, in any case, detract from the value of such property or
impair the use thereof in the ordinary conduct of business;
(e) Liens not otherwise permitted by this Section 9.3 and in existence
on the Closing Date and described on Schedule 9.3;
(f) Liens securing Debt permitted under Section 9.1(e); provided, that
(i) such Liens shall be created substantially simultaneously with the
acquisition of the related asset, (ii) such Liens do not at any time
encumber any property other than the property financed by such Debt, (iii)
the amount of Debt secured thereby is not increased and (iv) the principal
amount of Debt secured by any such Lien shall at no time exceed the
original purchase price of such property at the time it was acquired;
(g) Liens on the Accounts of any Subsidiary of the Borrower in
favor of the Borrower securing Subordinated Debt owed to the Borrower
by such Subsidiary;
(h) Liens on the Accounts of the Subsidiaries of the Borrower as
described on Schedule 9.3;
(i) Liens securing Debt incurred to purchase Equipment to be
leased by the Borrower to other Persons, provided that such Liens do
not at any time encumber any property other than the property whose
purchase is financed by such Debt and provided further that the
aggregate principal amount of such Debt at any time outstanding shall
not exceed $5,000,000; and
(j) Liens not otherwise permitted under this Section 9.3,
provided that the Debt secured thereby shall not exceed an aggregate
of $10,000,000 outstanding at any time.
SECTION 9.4 Limitations on Loans, Advances and Investments. Make or permit
to exist, directly or indirectly, any loans, advances or extensions of credit
to, or any investment in cash or by delivery of property in, any Person, or
enter into, directly or indirectly, any commitment in respect of the foregoing
except for the following:
(a) Loans and advances to Subsidiaries;
(b) Loans to physician groups in an aggregate amount not to
exceed $10,000,000; and
(c) Investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any
agency thereof maturing within 120 days from the date of acquisition
thereof, (ii) commercial paper maturing no more than 120 days from the
date of creation thereof and currently having the highest rating
obtainable from either S&P or ▇▇▇▇▇'▇, (iii) certificates of deposit
maturing no more than 120 days from the date of creation thereof
issued by commercial banks incorporated under the laws of the United
States of America, each having combined capital, surplus and undivided
profits of not less than $500,000,000 and having a rating of "A" or
better by a nationally recognized rating agency, or (iv) time deposits
maturing no more than 30 days from the date of creation thereof with
commercial banks or savings banks or savings and loan associations
each having membership either in the FDIC or the deposits of which are
insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder; and repurchase agreements issued by any
Lender having a maturity of less than one year.
SECTION 9.5 Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other
Person or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or permit any Subsidiary to take any of
such actions, except:
(a) any Wholly-Owned Subsidiary of the Borrower may merge into
the Borrower or with any other Wholly-Owned Subsidiary of the
Borrower; and
(b) any Wholly-Owned Subsidiary of the Borrower may wind-up into the
Borrower or any other Wholly-Owned Subsidiary of the Borrower.
(c) any other merger; provided, that the Borrower shall be the
surviving entity and after giving effect to such merger no Default or Event
of Default exists and is continuing.
SECTION 9.6 Limitations on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired, or permit any Subsidiary to take any of such actions with
respect to the property, business or assets of such Subsidiary, except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of the Borrower or any of its Subsidiaries;
(c) the transfer of assets to the Borrower or any Wholly-Owned
Subsidiary of the Borrower pursuant to Section 9.5(b);
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(e) the lease of cardiac catheterization laboratories in the ordinary
course of business; and
(f) the sale of other assets, the fair market value of which shall not
exceed $500,000 with respect to any transaction and $5,000,000 in the
aggregate for all such transactions during the term of this Agreement.
SECTION 9.7 Limitations on Dividends and Distributions. Declare or pay any
dividends upon any of its capital stock; purchase, redeem, retire or otherwise
acquire, directly or indirectly, any shares of its capital stock, or make any
distribution of cash, property or assets among the holders of shares of its
capital stock, or make any change in its capital structure that could reasonably
be expected to have a Material Adverse Effect; provided, that the Borrower may
pay dividends in shares of its own capital stock.
SECTION 9.8 Prohibited Transactions. Except as disclosed on Schedule 9.8
attached hereto, directly or indirectly (a) make any loan or advance to, or
purchase or assume any note or other obligation to or from, any of its officers,
directors, shareholders, or other Affiliates, or to or from any member of the
immediate family of any of its officers, directors, shareholders, or other
Affiliates, or subcontract any operations to any of its Affiliates, other than
in the ordinary course of business, or (b) enter into, or be a party to, any
transaction with any of its Affiliates, in each case other than in the ordinary
course of business. (This Section shall also be applicable to each Subsidiary of
the Borrower.)
SECTION 9.9 Certain Accounting Changes. Change its Fiscal Year end, or make
any change in its accounting treatment and reporting practices except as
required by GAAP or the Securities and Exchange Commission.
SECTION 9.10 Amendments; Payments and Prepayments of Subordinated Debt.
Amend or modify (or permit the modification or amendment of) any of the terms or
provisions of any Subordinated Debt in any manner adverse to any Lender, or
cancel or forgive, make any voluntary or optional payment or prepayment on, or
redeem or acquire for value (including without limitation by way of depositing
with any trustee with respect thereto money or securities before due for the
purpose of paying when due) any Subordinated Debt. (This Section shall also be
applicable to each Subsidiary of the Borrower.)
SECTION 9.11 Restrictive Agreements. Enter into any Debt which contains any
negative pledge on assets or any covenants more restrictive than the provisions
of Articles VIII and IX hereof, or which restricts, limits or otherwise
encumbers its ability to incur Liens on or with respect to any of its assets or
properties other than the assets or properties securing such Debt. (This Section
shall also be applicable to each Subsidiary of the Borrower.)
SECTION 9.12 Subsidiaries. Create or acquire any new Subsidiary owned
directly by the Borrower which is not a Wholly-Owned Subsidiary without the
prior written consent of the Required Lenders; provided, that nothing herein
shall prevent a Wholly-Owned Subsidiary from creating a Person and having the
percentage ownership therein which such Wholly-Owned Subsidiary deems
appropriate.
ARTICLE X
DEFAULT AND REMEDIES
SECTION 10.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans. The Borrower shall
default in any payment of principal of any Loan or Note when and as due
(whether at maturity, by reason of acceleration or otherwise) and such
Default shall continue unremedied for two (2) Business Days.
(b) Other Payment Default. The Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on any Loan, Note or the payment of any other
Obligation, and such default shall continue unremedied for five (5)
Business Days.
(c) Misrepresentation. Any representation or warranty made or deemed
to be made by the Borrower or any of its Subsidiaries under this Agreement,
any Loan Document or any amendment hereto or thereto, shall at any time
prove to have been incorrect or misleading in any material respect when
made or deemed made.
(d) Default in Performance of Certain Covenants. The Borrower shall
default in the performance or observance of any covenant or agreement
contained in Articles VIII or IX of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. The
Borrower or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this
Section 10.1) or any other Loan Document and such default shall continue
for a period of thirty (30) days after written notice thereof has been
given to the Borrower by the Agent.
(f) Hedging Agreement. Any termination payment shall be due by the
Borrower under any Hedging Agreement and such amount is not paid within ten
(10) Business Days of the due date thereof.
(g) Debt Cross-Default. The Borrower or any of its Subsidiaries shall
(i) default in the payment of any Debt (other than the Notes or any
inter-company Debt), the aggregate outstanding amount of which Debt is in
excess of $250,000, beyond the period of grace, if any, provided in the
instrument or agreement under which such Debt was created, or (ii) default
in the observance or performance of any other agreement or condition
relating to any Debt (other than the Notes) the aggregate outstanding
amount of which Debt is in excess of $500,000 with respect to the Borrower
and in excess of $250,000 with respect to any Subsidiary or contained in
any instrument or agreement evidencing, securing or relating thereto or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Debt (or a trustee or agent on behalf of such holder or holders) to
cause, with the giving of notice if required, any such Debt to become due
prior to its stated maturity (any applicable grace period having expired).
(h) Other Cross-Defaults. The Borrower or any of its Subsidiaries
shall default in the payment when due, or in the performance or observance,
of any obligation or condition of any Material Contract and such default
shall continue beyond the period of grace, if any, provided in such
Material Contract unless, but only as long as, the existence of any such
default is being contested by the Borrower or such Subsidiary in good faith
by appropriate proceedings and adequate reserves in respect thereof have
been established on the books of the Borrower or such Subsidiary to the
extent required by GAAP.
(i) Change in Control. Any person or group of persons (within the
meaning of Section 13 (d) of the Securities Exchange Act of 1934, as
amended) other than the existing management as of the Closing Date, shall
as of the Closing Date obtain ownership or control in one or more series of
transactions of more than fifty percent (50%) of the common stock or more
than fifty percent (50%) of the voting power of the Borrower
entitled to vote in the election of members of the board of directors of
the Borrower (any such event, a "Change in Control").
(j) Voluntary Bankruptcy Proceeding. The Borrower or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy
laws (as now or hereafter in effect), (ii) file a petition seeking to take
advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of
debts, (iii) consent to or fail to contest in a timely and appropriate
manner any petition filed against it in an involuntary case under such
bankruptcy laws or other laws, (iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, or liquidator of
itself or of a substantial part of its property, domestic or foreign, (v)
admit in writing its inability to pay its debts as they become due, (vi)
make a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against the Borrower or any Subsidiary thereof in any
court of competent jurisdiction seeking (i) relief under the federal
bankruptcy laws (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for the Borrower or any
Subsidiary thereof or for all or any substantial part of their respective
assets, domestic or foreign, and such case or proceeding shall continue
without dismissal or stay for a period of sixty (60) consecutive days, or
an order granting the relief requested in such case or proceeding
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
(l) Failure of Agreements. Any provision of this Agreement or of any
other Loan Document shall for any reason cease to be valid and binding on
the Borrower or any Guarantor or any such Person shall so state in writing.
(m) Termination Event. The occurrence of any of the following events:
(i) the Borrower or any ERISA Affiliate fails to make full payment when due
of all amounts which, under the provisions of any Pension Plan or Section
412 of the Code, the Borrower or any ERISA Affiliate is required to pay as
contributions thereto, (ii) an accumulated funding deficiency in excess of
$250,000 occurs or exists, whether or not waived, with respect to any
Pension Plan, (iii) a Termination Event or (iv) the Borrower or any ERISA
Affiliate as employers under one or more Multiemployer Plan makes a
complete or partial withdrawal from any such Multiemployer Plan and the
plan sponsor of such Multiemployer Plans notifies such withdrawing employer
that such employer has incurred a withdrawal liability requiring payments
in an amount exceeding $250,000.
(n) Judgment. A judgment or order for the payment of money which
causes the aggregate amount of all such judgments entered against the
Borrower by any court in any Fiscal Year to exceed $1,000,000 or against
the Subsidiaries to exceed $500,000 and such judgments or orders shall
continue without discharge or stay for a period of sixty (60) days.
SECTION 10.2 Remedies. Upon the occurrence of an Event of Default, with the
consent of the Required Lenders, the Agent may, or upon the request of the
Required Lenders, the Agent shall, by notice to the Borrower:
(a) Acceleration; Termination of Facility. Declare the principal of
and interest on the Loans and the Notes at the time outstanding, and all
other amounts owed to the Lenders and to the Agent under this Agreement or
any of the other Loan Documents (including, without limitation, all Letter
of Credit Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) and all other Obligations, to be forthwith due and payable,
whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other Loan Documents to
the contrary notwithstanding, and terminate the Credit Facility and any
right of the Borrower to request borrowings or the issuance of Letters of
Credit hereunder; provided, that upon the occurrence of an Event of Default
specified in Section 10.1(j) or (k), the Credit Facility and the L/C
Commitment shall be automatically terminated and all Obligations shall
automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time
of an acceleration pursuant to the preceding paragraph, require the
Borrower at such time to deposit in a cash collateral account opened by the
Agent an amount equal to the aggregate then undrawn and unexpired amount of
such Letters of Credit. Amounts held in such cash collateral account shall
be applied by the Agent to the payment of drafts drawn under such Letters
of Credit, and the unused portion thereof after all such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to
repay the other Obligations. After all such Letters of Credit shall have
expired or been fully drawn upon, the Reimbursement Obligation shall have
been satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower.
(c) Exercise of Rights of Collection. Exercise on behalf of the
Lenders all of its other rights and remedies under this Agreement, the
other Loan Documents and Applicable Law, in order to satisfy all of the
Borrower's Obligations.
SECTION 10.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Agent and the Lenders set forth in
this Agreement is not intended to be exhaustive and the exercise by the Agent
and the Lenders of any right or remedy shall not preclude the exercise of any
other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder or under the Loan
Documents or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower, the Agent and the
Lenders or their respective agents or
0
employees shall be effective to change, modify or discharge any provision of
this Agreement or any of the other Loan Documents or to constitute a waiver of
any Event of Default.
ARTICLE XI
THE AGENT
SECTION 11.1 Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 11.5 and
the first sentence of Section 11.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to the Lenders for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document referred to or provided for therein or for any failure by
any Loan Party or any other Person to perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by any Loan
Party or the satisfaction of any condition or to inspect the property (including
the books and records) of any Loan Party or any of its Subsidiaries or
affiliates; (d) shall not be required to initiate or conduct any litigation or
collection proceedings under any Loan Document; and (e) shall not be responsible
for any action taken or omitted to be taken by it under or in connection with
any Loan Document, except for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 11.2 Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Loan Party), independent accountants, and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until the Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 12.10 hereof. As to any matters not expressly provided for by this
Agreement, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to any Loan Document
or applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.
SECTION 11.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 11.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
SECTION 11.4 Rights as Lender. With respect to its Commitment and the Loans
made by it, NationsBank (and any successor acting as Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. NationsBank (and any successor
acting as Agent) and its affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, make investments in, provide
services to, and generally engage in any kind of lending, trust, or other
business with any Loan Party or any of its Subsidiaries or affiliates as if it
were not acting as Agent, and NationsBank (and any successor acting as Agent)
and its affiliates may accept fees and other consideration from any Loan Party
or any of its Subsidiaries or affiliates for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
SECTION 11.5 Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 3.7 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys' fees), or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Agent (including by any Lender)
in any way relating to or arising out of any Loan Document or the transactions
contemplated thereby or any action taken or omitted by the Agent under any Loan
Document; provided, that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Agent promptly upon demand for its ratable share of any
costs or expenses payable by the Borrower under Section 12.2, to the extent that
the Agent is not promptly reimbursed for such costs and expenses by the
Borrower. The agreements contained in this Section shall survive payment in full
of the Loans and all other amounts payable under this Agreement.
SECTION 11.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Loan Parties and their
Subsidiaries and decision to issue or participate in Letters of Credit
hereunder and enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under the Loan
Documents. Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition, or
business of any Loan Party or any of its Subsidiaries or affiliates that may
come into the possession of the Agent or any of its affiliates.
SECTION 11.7 Resignation of Agent. Agent may resign at any time by giving
prior written notice thereof to Lenders and Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor Agent, which
successor Agent shall, so long as no Default shall have occurred, be subject to
the approval of MedCath, which approval shall not be unreasonably withheld. If
no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of Lenders, appoint a successor Agent which shall be an Eligible Assignee having
total assets of at least $25,000,000,000. Upon the acceptance of any appointment
as Agent under this Agreement by a successor, such successor shall thereupon
succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent upon written notice thereof to
Borrower, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement excepting with respect to its willful
misconduct or gross negligence occurring prior to its discharge. After any
retiring Agent's resignation under this Agreement as Agent, the provisions of
this Article 10 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address as to which all the other parties are
notified in writing.
If to the Borrower: MedCath Incorporated
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Post
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Guarantors: c/o MedCath Incorporated
at above address
With copies to: AHH Management, Inc.
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC
47th Floor
NationsBank Corporate Center
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: 704/▇▇▇-▇▇▇▇
Telecopy No.: 704/331-1159
If to NationsBank as
Agent: NationsBank Plaza, NC1-002-03-10
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
NationsBank Corporate Center, Suite 4200
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: 704/▇▇▇-▇▇▇▇
Telecopy No.: 704/331-7598
If to any Lender: To the Address set forth on Schedule 1 hereto
(c) Agent's Office. The Agent hereby designates its office
located at the address set forth above, or any subsequent office
which shall have been specified for such
purpose by written notice to the Borrower and Lenders, as the Agent's
Office referred to herein, to which payments due are to be made and at
which Loans will be disbursed and Letters of Credit issued.
SECTION 12.2 Expenses; Indemnity.
(a) The Borrower agrees to pay on demand all costs and expenses of the
Agent in connection with the syndication, preparation, execution, delivery,
administration, modification, and amendment of this Agreement, the other Loan
Documents, and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of counsel for the Agent with
respect thereto (such fees not to exceed $17,500 in connection with the
negotiation, preparation and execution of this Agreement and the other Loan
Documents) and with respect to advising the Agent as to its rights and
responsibilities under the Loan Documents. The Borrower further agrees to pay on
demand all costs and expenses of the Agent and the Lenders, if any (including,
without limitation, reasonable attorneys' fees and expenses and the cost of
internal counsel), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Loan Documents and the
other documents to be delivered hereunder.
(b) The Borrower agrees to indemnify and hold harmless the Agent and each
Lender and each of their affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Loan Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the Loans
except to the extent such claim, damage, loss, liability, cost, or expense is
found in a final, non-appealable judgment by a court of competent jurisdiction
to have resulted from such Indemnified Party's gross negligence or willful
misconduct. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 12.2 applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by the Borrower, its directors, shareholders or creditors or an Indemnified
Party or any other Person or any Indemnified Party is otherwise a party thereto
and whether or not the transactions contemplated hereby are consummated. The
Borrower agrees not to assert any claim against the Agent, any Lender, any of
their affiliates, or any of their respective directors, officers, employees,
attorneys, agents, and advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to the Loan Documents, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 12.2 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
SECTION 12.3 Set-off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon and
after the occurrence of any Event of Default and during the continuance thereof,
the Lenders and any assignee or
participant of a Lender in accordance with Section 12.10 are hereby authorized
by the Borrower at any time or from time to time, without notice to the Borrower
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all deposits (general or special,
time or demand, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by the Lenders, or any such assignee or
participant to or for the credit or the account of the Borrower against and on
account of the Obligations irrespective of whether or not (a) the Lenders shall
have made any demand under this Agreement or any of the other Loan Documents or
(b) the Agent shall have declared any or all of the Obligations to be due and
payable as permitted by Section 10.2 and although such Obligations shall be
contingent or unmatured.
SECTION 12.4 Governing Law. This Agreement, the Notes and the other Loan
Documents, unless otherwise expressly set forth therein, shall be governed by,
construed and enforced in accordance with the laws of the State of North
Carolina, without reference to the conflicts or choice of law principles
thereof.
SECTION 12.5 Consent to Jurisdiction. The Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Agent or any Lender in connection
with this Agreement, the Notes or the other Loan Documents, any rights or
obligations hereunder or thereunder, or the performance of such rights and
obligations, on behalf of itself or its property, in the manner specified in
Section 12.1. Nothing in this Section 12.5 shall affect the right of the Agent
or any Lender to serve legal process in any other manner permitted by Applicable
Law or affect the right of the Agent or any Lender to bring any action or
proceeding against the Borrower or its properties in the courts of any other
jurisdictions.
SECTION 12.6 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE
AGENT, EACH LENDER, THE BORROWER AND EACH OF THE BORROWER'S SUBSIDIARIES HEREBY
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 12.7 Mandatory Arbitration. Any controversy or claim between or
among the parties hereto including but not limited to those arising out of or
relating to this Agreement or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Endispute, Inc., doing business as
J.A.M.S./Endispute ("J.A.M.S."), and the "Special Rules" set forth below. In the
event of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be
entered in any court having jurisdiction. Any party to this Agreement may bring
an action, including a summary or expedited proceeding, to compel arbitration of
any controversy or claim to which this Agreement applies in any court having
jurisdiction over such action.
(a) Special Rules. The arbitration shall be conducted in the city of
Borrower's domicile at the time of this Agreement's execution and
administered by J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is
unable or legally precluded from administering the arbitration, then the
American Arbitration Association will serve. All arbitration hearings will
be commenced within 90 days of the demand for arbitration; further, the
arbitrator shall only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional 60 days.
(b) Reservations of Rights. Nothing in this Agreement shall be deemed
to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii)
be a waiver by Lenders of the protection afforded to it by 12 U.S.C. Sec.
91 or any substantially equivalent state law; or (iii) limit the right of
Lenders (A) to exercise self help remedies such as (but not limited to)
setoff, or (B) to foreclose against any real or personal property
collateral, or (C) to obtain from a court provisional or ancillary remedies
such as (but not limited to) injunctive relief or the appointment of a
receiver. Lenders may exercise such self help rights, foreclose upon such
property, or obtain such provisional or ancillary remedies before, during
or after the pendency of any arbitration proceeding brought pursuant to
this Agreement. At Lenders' option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure. Neither
the exercise of self help remedies nor the institution or maintenance of an
action for foreclosure or provisional or ancillary remedies shall
constitute a waiver of the right of any party, including the claimant in
any such action, to arbitrate the merits of the controversy or claim
occasioning resort to such remedies.
No provision in the Loan Documents regarding submission to jurisdiction and/or
venue in any court is intended or shall be construed to be in derogation of the
provisions in any Loan Document for arbitration of any controversy or claim.
SECTION 12.8 Reversal of Payments. To the extent the Borrower makes a
payment or payments to the Agent for the ratable benefit of the Lenders or the
Agent receives any payment or proceeds of the collateral which payments or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
repaid, the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if such payment or proceeds
had not been received by the Agent.
SECTION 12.9 Injunctive Relief; Punitive Damages.
(a) The Borrower recognizes that, in the event the Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may
prove to be inadequate relief to the Lenders. Therefore, the Borrower agrees
that the Lenders, at the Lenders' option, may be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
(b) The Agent, Lenders and Borrower (on behalf of itself and its
Subsidiaries) hereby agree that no such Person shall have a remedy of punitive
or exemplary damages against any other party to a Loan Document and each such
Person hereby waives any right or claim to punitive or exemplary damages that
they may now have or may arise in the future in connection with any dispute,
whether such dispute is resolved through arbitration or judicially.
(c) The parties agree that they shall not have a remedy of punitive or
exemplary damages against any other party in any dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may arise
in the future in connection with any dispute whether the dispute is resolved by
arbitration or judicially.
SECTION 12.10 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Agent to the contrary agreed
to by the Borrower, be performed in accordance with GAAP as in effect on the
Closing Date. In the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrower and the
Lenders shall have amended this Agreement to the extent necessary to reflect any
such changes in the financial covenants and other terms and conditions of this
Agreement.
SECTION 12.11 Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Loans, its Note, and its Commitment);
provided, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least equal
to $5,000,000 and in increments of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant, and not
varying, percentage of all of its rights and obligations under this
Agreement and the Note; and
(iv) the parties to such assignment shall execute and deliver to the
Agent for its acceptance an Assignment and Acceptance in the form of
Exhibit F hereto, together with any Note subject to such assignment and a
processing fee of $2,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 3.12.
(b) The Agent shall maintain at its address referred to in Section 12.1 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit F hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its Loans); provided, 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 participant shall be entitled to the benefit of the
yield protection provisions contained in Article III and the right of set-off
contained in Section 3.5, and (iv) the Borrower shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to its Loans and its Note and
to approve any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Loans or
Note, extending any scheduled principal payment date or date fixed for the
payment of interest on such Loans or Note, or extending its Commitment).
(e) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Loans and its
Note to any Federal Reserve Bank as collateral security pursuant to Regulation A
and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
(f) Any Lender may furnish any information concerning the Borrower or any
of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 12.11 hereof.
SECTION 12.12 Confidentiality. The Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Agreement that is marked confidential;
provided that nothing herein shall prevent any Lending Party from disclosing
such information (a) to any other Lending Party or any affiliate of any Lending
Party, or any officer, director, employee, agent, or advisor of any Lending
Party or affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided herein, (c) as
required by any law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
SECTION 12.13 Amendments and Waivers. Any provision of this Agreement or
any other Loan Document may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Lenders
(and, if Article XI or the rights or duties of the Agent are affected thereby,
by the Agent); provided that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase the Commitments of the Lenders, (ii) extend the
time of the obligation of the Lenders to make Loans or to issue or participate
in Letters of Credit, (iii) reduce the principal of or rate of interest on any
Loan or any fees or other amounts payable hereunder, (iv) postpone any date
fixed for the payment of any scheduled installment of principal of or interest
on any Loan or Reimbursement Obligation or any fees or other amounts payable
hereunder or for termination of any Commitment, (v) amend the definition of
"Borrowing Base" so as to increase any percentage amount therein, (vi) change
the percentage of the Commitments or of the unpaid principal amount of the
Notes, or the number of Lenders, which shall be required for the Lenders or any
of them to take any action under this Section or any other provision of this
Agreement or (vii) release any Guarantor. In addition, no amendment, waiver or
consent to the provisions of Article IIA shall be made without the written
consent of the Issuing Lender.
SECTION 12.14 Performance of Duties. The Borrower's obligations under this
Agreement and each of the Loan Documents shall be performed by the Borrower at
its sole cost and expense.
SECTION 12.15 All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Lenders, the Agent and any Persons
designated by the Agent or any
Lender pursuant to any provisions of this Agreement or any of the other Loan
Documents shall be deemed coupled with an interest and shall be irrevocable so
long as any of the Obligations remain unpaid or unsatisfied or the Credit
Facility has not been terminated.
SECTION 12.16 Survival of Indemnities. Notwithstanding any termination of
this Agreement, the indemnities to which the Agent and the Lenders are entitled
under the provisions of this Article XII and any other provision of this
Agreement and the Loan Documents shall continue in full force and effect and
shall protect the Agent and the Lenders against events arising after such
termination as well as before.
SECTION 12.17 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 12.18 Severability of Provisions. Any provision of this Agreement
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 12.19 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
SECTION 12.20 Term of Agreement. This Agreement shall remain in effect from
the Closing Date through and including the date upon which all Obligations shall
have been indefeasibly and irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
[CORPORATE SEAL] MEDCATH INCORPORATED
By: /s/ Richard ▇.▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. Post
Title: Chief Financial Officer
NATIONSBANK, N.A., as Agent and Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
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