EXHIBIT 99.4
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
CASTLE DENTAL CENTERS, INC.
AS BORROWER,
NATIONSBANK, N.A.,
AS AGENT,
AND
THE LENDERS SIGNATORY HERETO
DATED AS OF DECEMBER 18, 1998
$47,500,000 REVOLVING CREDIT FACILITY
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE......................................1
Section 1.02 CERTAIN DEFINED TERMS....................................1
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS.....................18
ARTICLE II
LOANS AND LETTERS OF CREDIT
Section 2.01 LOANS AND LETTERS OF CREDIT.............................19
Section 2.02 BORROWINGS, CONTINUATIONS AND CONVERSIONS, LETTERS
OF CREDIT...............................................19
Section 2.03 CHANGES OF COMMITMENTS..................................21
Section 2.04 FEES....................................................22
Section 2.05 SEVERAL OBLIGATIONS.....................................23
Section 2.06 NOTES...................................................23
Section 2.07 PREPAYMENTS.............................................23
Section 2.08 ASSUMPTION OF RISKS.....................................24
Section 2.09 OBLIGATION TO REIMBURSE AND TO PREPAY...................25
Section 2.10 LENDING OFFICES.........................................27
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 REPAYMENT OF LOANS......................................27
Section 3.02 INTEREST................................................27
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS................................................28
Section 4.02 PRO RATA TREATMENT......................................28
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Section 4.03 COMPUTATIONS............................................29
Section 4.04 NON-RECEIPT OF FUNDS BY THE AGENT.......................29
Section 4.05 SET-OFF, SHARING OF PAYMENTS, ETC.......................29
Section 4.06 TAXES...................................................30
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 CAPITAL ADEQUACY; ADDITIONAL COSTS......................33
Section 5.02 LIMITATION ON EURODOLLAR LOANS..........................34
Section 5.03 ILLEGALITY..............................................35
Section 5.04 BASE RATE LOANS PURSUANT TO SECTIONS 5.01, 5.02 AND
5.03....................................................35
Section 5.05 COMPENSATION............................................35
Section 5.06 REPLACEMENT LENDERS.....................................36
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 INITIAL FUNDING.........................................37
Section 6.02 INITIAL AND SUBSEQUENT LOANS AND LETTERS OF CREDIT......38
Section 6.03 CONDITIONS PRECEDENT FOR THE BENEFIT OF LENDERS.........40
Section 6.04 NO WAIVER...............................................40
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 CORPORATE EXISTENCE.....................................41
Section 7.02 FINANCIAL CONDITION.....................................41
Section 7.03 LITIGATION..............................................41
Section 7.04 NO BREACH...............................................42
Section 7.05 AUTHORITY...............................................42
Section 7.06 APPROVALS...............................................42
Section 7.07 USE OF LOANS............................................42
Section 7.08 ERISA...................................................42
Section 7.09 TAXES...................................................43
Section 7.10 TITLES, ETC.............................................43
Section 7.11 NO MATERIAL MISSTATEMENTS...............................44
Section 7.12 INVESTMENT COMPANY ACT..................................44
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Section 7.13 PUBLIC UTILITY HOLDING COMPANY ACT......................44
Section 7.14 SUBSIDIARIES............................................44
Section 7.15 LOCATION OF BUSINESS AND OFFICES........................44
Section 7.16 DEFAULTS................................................44
Section 7.17 ENVIRONMENTAL MATTERS...................................45
Section 7.18 COMPLIANCE WITH THE LAW.................................45
Section 7.19 INSURANCE...............................................45
Section 7.20 MANAGEMENT SERVICES AGREEMENTS AND ACCOUNTS RECEIVABLE
PURCHASE AGREEMENTS.....................................45
Section 7.21 RESTRICTION ON LIENS....................................46
Section 7.22 MATERIAL AGREEMENTS.....................................46
Section 7.23 HEDGING AGREEMENTS......................................46
Section 7.24 YEAR 2000...............................................46
ARTICLE VIII
AFFIRMATIVE COVENANTS
Section 8.01 REPORTING REQUIREMENTS..................................47
Section 8.02 LITIGATION..............................................49
Section 8.03 MAINTENANCE, ETC........................................49
Section 8.04 ENVIRONMENTAL MATTERS...................................50
Section 8.05 FURTHER ASSURANCES......................................50
Section 8.06 PERFORMANCE OF OBLIGATIONS..............................51
Section 8.07 ERISA INFORMATION AND COMPLIANCE........................51
Section 8.08 MANAGEMENT SERVICES AGREEMENTS AND ACCOUNTS RECEIVABLE
PURCHASE AGREEMENTS.....................................51
Section 8.09 GUARANTEE BY ACQUIRED ENTITIES..........................51
Section 8.10. DISSOLUTION OF JHCDDS, INC.............................52
Section 8.11 COVENANT TO SWAP INTEREST RATES.........................52
Section 8.12 YEAR 2000...............................................52
ARTICLE IX
NEGATIVE COVENANTS
Section 9.01 DEBT....................................................52
Section 9.02 LIENS...................................................53
Section 9.03 INVESTMENTS, LOANS AND ADVANCES.........................53
Section 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS................55
Section 9.05 SALES AND LEASEBACKS....................................55
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Section 9.06 NATURE OF BUSINESS......................................55
Section 9.07 MERGERS, ETC............................................55
Section 9.08 PROCEEDS OF NOTES.......................................55
Section 9.09 ERISA COMPLIANCE........................................56
Section 9.10 SALE OR DISCOUNT OF RECEIVABLES.........................57
Section 9.11 RATIO OF TOTAL FUNDED DEBT TO CAPITALIZATION............57
Section 9.12 NET WORTH...............................................57
Section 9.13 LEVERAGE RATIO..........................................57
Section 9.14 FIXED CHARGE COVERAGE RATIO.............................57
Section 9.15 RATIO OF TOTAL FUNDED DEBT TO EBITDA....................58
Section 9.16 CAPITAL EXPENDITURES....................................58
Section 9.17 ENVIRONMENTAL MATTERS...................................58
Section 9.18 TRANSACTIONS WITH AFFILIATES............................58
Section 9.19 SUBSIDIARIES............................................59
Section 9.20 NEGATIVE PLEDGE AGREEMENTS..............................59
Section 9.21 OTHER AGREEMENTS........................................59
Section 9.22 ACQUIRED ENTITIES.......................................59
Section 9.23 AMENDMENT OF CASTLE WEST LLC AGREEMENT..................59
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT......................................59
Section 10.02 REMEDIES...............................................61
ARTICLE XI
THE AGENT
Section 11.01 APPOINTMENT, POWERS AND IMMUNITIES.....................62
Section 11.02 RELIANCE BY AGENT......................................63
Section 11.03 DEFAULTS...............................................63
Section 11.04 RIGHTS AS A LENDER.....................................63
Section 11.05 INDEMNIFICATION........................................63
Section 11.06 NON-RELIANCE ON AGENT AND OTHER LENDERS................64
Section 11.07 ACTION BY AGENT........................................64
Section 11.08 RESIGNATION OR REMOVAL OF AGENT........................65
ARTICLE XII
MISCELLANEOUS
Section 12.01 WAIVER.................................................65
Section 12.02 NOTICES................................................65
Section 12.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC..................66
Section 12.04 AMENDMENTS, ETC........................................68
Section 12.05 SUCCESSORS AND ASSIGNS.................................68
Section 12.06 ASSIGNMENTS AND PARTICIPATIONS.........................68
Section 12.07 INVALIDITY.............................................70
Section 12.08 COUNTERPARTS...........................................70
Section 12.09 REFERENCES.............................................70
Section 12.10 SURVIVAL...............................................70
Section 12.11 CAPTIONS...............................................71
Section 12.12 NO ORAL AGREEMENTS.....................................71
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION..............71
Section 12.14 INTEREST...............................................72
Section 12.15 CONFIDENTIALITY........................................73
Section 12.16 EFFECTIVENESS..........................................73
Section 12.17 BINDING ARBITRATION....................................73
Section 12.18 EXCULPATION PROVISIONS.................................75
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ANNEXES, EXHIBITS AND SCHEDULES
Annex I - List of Maximum Credit Amounts
Exhibit A - Form of Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - List of Security Instruments
Exhibit E - Form of Borrowing Base Report
Exhibit F - Form of Officer's Certificate
Exhibit G - Due Diligence Items
Exhibit H - Form of Subordination Agreement
Schedule 1.1 - Acquired Entities and Existing PC's
Schedule 7.02 - Liabilities
Schedule 7.14 - Subsidiaries
Schedule 7.19 - Insurance
Schedule 7.20 - Management Services Agreements and Accounts Receivable Purchase
Agreements
Schedule 7.22 - Material Agreements
Schedule 7.23 - Hedging Agreements
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
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THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 18,
1998 is among CASTLE DENTAL CENTERS, INC., a corporation formed under the laws
of the State of Delaware (the "BORROWER"); each of the lenders that is a
signatory hereto or which becomes a signatory hereto as provided in Section
12.06 (individually, together with its successors and assigns, a "LENDER" and,
collectively, the "LENDERS"); and NATIONSBANK, N.A., a national banking
association (in its individual capacity, "NATIONSBANK"), as agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"AGENT").
R E C I T A L S
A. The Borrower has requested that the Lenders amend, increase and
rearrange all of the Prior Debt (as defined in Section 1.02) and provide certain
loans to the Borrower; and
B. The Lenders have agreed to amend, increase and rearrange the Prior Debt
and make such loans subject to the terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree to amend and restate the Prior Credit
Agreement (as defined in Section 1.02) as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE. As used in this Agreement, the
terms "AGENT," "BORROWER," "LENDER," "LENDERS," and "NATIONSBANK" shall have the
meanings indicated above.
Section 1.02 CERTAIN DEFINED TERMS. As used herein, the following
terms shall have the following meanings (all terms defined in this Article I or
in other provisions of this Agreement in the singular to have the same meanings
when used in the plural and VICE VERSA):
"ACCOUNTS RECEIVABLE PURCHASE AGREEMENTS" shall mean the Accounts
Receivable Purchase Agreements either previously or hereafter entered into
between an Acquired Entity, as seller, and Borrower or any Subsidiary, as buyer,
in form and substance satisfactory to Agent.
"ACQUIRED ENTITY" shall mean the entities identified on SCHEDULE 1.1
hereto and all entities (of whatever form) whose assets are acquired by the
Borrower or any Subsidiary in connection with New Acquisitions, and all new
professional corporations, professional associations or other Persons which
become a party to future Management Services Agreements and Accounts Receivable
Purchase Agreements with Borrower or any Subsidiary pursuant to New
Acquisitions.
"ADDITIONAL COSTS" shall have the meaning assigned such term in Section
5.01(a).
"ADJUSTED AGGREGATE CASTLE WEST EBITDA" shall mean Aggregate Castle West
EBITDA plus the Pro Forma MSO Fees of the Castle West Acquired Clinics;
PROVIDED, HOWEVER, that the
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Adjusted Aggregate Castle West EBITDA shall not include the results of
operations, cost of capital and Castle West Debt arising from any CDC Approved
Expansion.
"AFFECTED LOANS" shall have the meaning assigned such term in Section
5.04.
"AFFILIATE" of any Person shall mean (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person, (ii)
any director or officer of such first Person or of any Person referred to in
clause (i) above and (iii) if any Person in clause (i) above is an individual,
any member of the immediate family (including parents, spouse and children) of
such individual and any trust whose principal beneficiary is such individual or
one or more members of such immediate family and any Person who is controlled by
any such member or trust. For purposes of this definition, any Person which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
10% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
"CONTROL" (including, with its correlative meanings, "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") such corporation or other Person.
"AGGREGATE CASTLE WEST EBITDA" shall be equal to (a) the pro forma
aggregate earnings of DCS and the Existing PCs for the year ended December 31,
1997, adjusted to reverse charges thereto made for interest, federal and state
income and franchise taxes, depreciation and amortization (such amounts to be
determined based upon actual 1997 performance as if any portion of any Existing
PC not owned by DCS on January 1, 1997, were acquired by DCS on January 1,
1997), PLUS (b) an amount equal to the unusual and non-recurring expenses
incurred during 1997 in connection with the transactions contemplated by the
Master Contribution Agreement, and an adjustment for (c) any difference between
the 1997 operations of DCS and anticipated Castle West employees or increased
expenses related to additional staffing necessary to operate the Castle West
Acquired Clinics (with any increase in 1998 levels to reduce Aggregate Castle
West EBITDA and any decrease in 1998 levels to increase Aggregate Castle West
EBITDA) as agreed upon by the Borrower and DCS; PROVIDED, HOWEVER, that for
purposes of calculating Aggregate Castle West EBITDA, the 1997 pro forma EBITDA
for Burbank shall be deemed to be $300,000, regardless of Burbank's actual
results of operations.
"AGREEMENT" shall mean this Amended and Restated Credit Agreement, as the
same may from time to time be amended or supplemented.
"AGGREGATE COMMITMENTS" at any time shall equal the amount calculated in
accordance with Section 2.03.
"AGGREGATE MAXIMUM CREDIT AMOUNTS" at any time shall equal the sum of the
Maximum Credit Amounts of the Lenders ($47,500,000.00), as the same may be
reduced pursuant to Section 2.03(b) or increased pursuant to 2.03(d).
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for each Type
of Loan, the lending office of such Lender (or an Affiliate of such Lender)
designated for such Type of Loan on
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the signature pages hereof or such other offices of such Lender (or of an
Affiliate of such Lender) as such Lender may from time to time specify to the
Agent and the Borrower as the office by which its Loans of such Type are to be
made and maintained.
"APPLICABLE MARGIN" the applicable per annum percentage set forth at the
appropriate intersection in the table shown below, based on the ratio of Total
Funded Debt to EBITDA, determined as of the end of the most recent fiscal
quarter of the Borrower:
APPLICABLE MARGIN
TOTAL FUNDED DEBT TO EBITDA EURODOLLAR BASE RATE
Greater than or equal to 2.5 3.50% 1.0%
Greater than or equal to 2.0,
but less than 2.5 3.00% 0.5%
Greater than or equal to 1.5,
but less than 2.0 2.75% 0.25%
Greater than or equal to 1.0,
but less than 1.5 2.50% 0.25%
Less than 1.0 2.25% 0.0%
Each change in the Applicable Margin resulting from a change in the ratio of
Total Funded Debt to EBITDA shall take effect as of the date of determination of
the ratio of Total Funded Debt to EBITDA.
"ASSET PURCHASE" shall mean the acquisition of all or substantially all of
the assets of any Acquired Entity by Borrower or any Subsidiary pursuant to an
Asset Purchase Agreement.
"ASSET PURCHASE AGREEMENTS" shall mean Asset Purchase Agreements entered
into by Borrower or any Subsidiary in form and substance satisfactory to Agent
in connection with New Acquisitions.
"ASSIGNMENT" shall have the meaning assigned such term in Section
12.06(b).
"BASE RATE" shall mean, with respect to any Base Rate Loan, for any day,
the higher of (i) the Federal Funds Rate for any such day plus 1/2 of 1% or (ii)
the Prime Rate for such day. Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate shall
take effect at the time of such change in the Base Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates based upon
the Base Rate.
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"BORROWING BASE" shall mean at any time the amount equal to three (3)
times EBITDA as of the end of the most recent fiscal quarter of Borrower
(calculated on a rolling four quarters basis). For any calculation period which
would include one or more quarters prior to any Stock Purchase or any Asset
Purchase or any other future acquisition of an entity, the "rolling four
quarters" shall include the "pro forma" EBITDA of the applicable Acquired Entity
for such prior periods adjusted to reflect costs and expenses which such
Acquired Entity would have incurred had the Management Services Agreements
between Borrower and/or any Subsidiary and such Acquired Entity been in effect
(adding back appropriate executive salaries and non-cash charge offs relating to
this transaction).
"BURBANK" shall mean ▇.▇. ▇▇▇▇▇▇▇▇▇, DMD, Inc., a California professional
corporation d.b.a. Burbank Dental.
"BURBANK ADJUSTMENT"shall have the definition ascribed thereto in the
Master Contribution Agreement.
"BUSINESS DAY" shall mean any day other than a day on which commercial
banks are authorized or required to close in Houston, Texas and, where such term
is used in the definition of "Quarterly Date" or if such day relates to a
borrowing or continuation of, a payment or prepayment of principal of or
interest on, or a conversion of or into, or the Interest Period for, a
Eurodollar Loan or a notice by the Borrower with respect to any such borrowing
or continuation, payment, prepayment, conversion or Interest Period, any day
which is also a day on which dealings in Dollar deposits are carried out in the
London interbank market.
"CAPITAL COST RATE" shall mean, with respect to any Loan, (i) if such Loan
is a Base Rate Loan, the Base Rate PLUS the Applicable Margin PLUS .25%, or (ii)
if such Loan is a Eurodollar Loan, the Eurodollar Rate PLUS the Applicable
Margin PLUS .25%.
"CAPITALIZATION" shall mean shareholder's equity plus Total Funded Debt.
"CASTLE FLORIDA" shall mean Castle Dental Centers of Florida, Inc., a
Florida corporation and a wholly owned Subsidiary of the Borrower.
"CASTLE TENNESSEE" shall mean Castle Dental Centers of Tennessee, Inc., a
Tennessee corporation and a wholly owned Subsidiary of the Borrower.
"CASTLE TEXAS" shall mean Castle Dental Centers of Texas, Inc., a Texas
corporation and a wholly owned Subsidiary of the Borrower.
"CASTLE WEST" shall mean Castle Dental Centers of California, L.L.C., a
Delaware limited liability company and a Subsidiary of the Borrower.
"CASTLE WEST ACQUIRED CLINICS" shall mean each business (or allocated
portion thereof) with which Castle West enters into an MSO agreement during the
12-month period following the
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Closing Date (as defined in the Master Contribution Agreement) and with respect
to which an Acquisition Purchase Price Adjustment (as defined in the Master
Contribution Agreement) is required to be made.
"CASTLE WEST DEBT" shall mean the debt of the Borrower and Castle West
that is directly related to Castle West's business and operations (excluding
debt related to the acquisition of DCS, the Existing PCs, the Castle West
Acquired Clinics and any CDC Approved Expansion).
"CASTLE WEST EBITDA" shall only be used in calculating the Put/Call
Reserve Amount, and shall, for any period, be equal to Castle West's earnings
for such period, determined in accordance with GAAP adjusted to reverse charges
thereto made for interest, federal and state income and franchise taxes,
depreciation and amortization, to the extent included in the calculation of
earnings; PROVIDED, HOWEVER, that Castle West EBITDA shall be determined prior
to any deduction of the Incentive Payment from earnings and without any
deduction for overhead, management, or similar fees paid by Castle West to any
Affiliate of the Borrower or otherwise allocated to Castle West.
"CASTLE WEST INCREMENTAL EBITDA" shall be equal to the amount by which the
Castle West EBITDA for the prior four fiscal quarters ending immediately prior
to delivery of a C Merger Notice or the CDC Call Notice exceeds the Adjusted
Aggregate Castle West EBITDA; PROVIDED, HOWEVER, that the Projected Castle West
Incremental EBITDA shall exclude the Castle West EBITDA, Castle West Debt, and
Common Stock capital costs relating to any acquisitions completed in the
three-month period immediately preceding the delivery of either the C Merger
Notice or the CDC Call Notice.
"C MERGER CONSIDERATION" shall be equal to the aggregate Pro Rata Share of
the Corporate C Members of the Holdings Old Value PLUS the aggregate Pro Rata
Share of the Corporate C Members of the Holdings New Value LESS the aggregate
Pro Rata Share of the Corporate C Members of the Holdings Indebtedness.
"C MERGER NOTICE" shall mean the notice given by the Corporate C Members
to the CDC California of their respective intent to exercise the Corporate C
Member's Merger Option.
"CDC APPROVED EXPANSION" shall mean any expansion, acquisition, or other
opportunity that is approved by the Board of Directors of Castle West if none of
the Class C Interest Directors affirmatively voted to approve such expansion,
acquisition, or other opportunity.
"CDC CALIFORNIA" shall mean CDC of California, Inc., a Delaware
corporation and a wholly-owned Subsidiary of the Borrower.
"CDC CALL NOTICE" shall mean the notice given by CDC California to the
Corporate C Members of its intent to exercise the CDC Call Option.
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"CDC CALL OPTION" shall mean the option of CDC California to cause each of
the Corporate C Members to merge with and into CDC California pursuant to
Section 8.2 of the Master Contribution Agreement.
"CHANGE OF CONTROL" shall mean at any time, as a result of one or more
transactions after the date of this Agreement, any "person" or "group" of
persons acting in concert (other than persons owning common stock of the
Borrower on the Closing Date) shall have "beneficial ownership" of more than 51%
of the outstanding common stock of the Borrower (within the meaning of Section
13(d) or 14 (d) of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder), PROVIDED that the relationships
among the respective shareholders of the Borrower on the date of this Agreement
shall not be deemed to constitute all or any combination of them as a "group".
"CLASS C INTEREST DIRECTORS" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
"CLASS III INTEREST" shall mean the Class III Interest in Holdings in the
Holdings Limited Agreement.
"CLASS III REPURCHASE OBLIGATION" shall mean the amount of any outstanding
obligation, if any, of Holdings to the former holder of the Class III Interest
in Holdings (as defined in the Holdings Limited Agreement) arising out of the
previous exercise of Holding's option to purchase the Class III Interest
pursuant to Section 5.5(c) of the Holdings Limited Agreement.
"CLOSING DATE" shall mean December 18, 1998.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time and any successor statute.
"COMMITMENT" shall mean, for any Lender, its obligation to make Loans and
participate in the issuance of Letters of Credit as provided in Section 2.01(b)
up to the lesser of (i) such Lender's Maximum Credit Amount and (ii) the
Lender's Percentage Share of the then effective Borrowing Base.
"COMMON STOCK" the common stock, $.001 par value, of the Borrower.
"COMMON STOCK MARKET MULTIPLE" shall be determined by multiplying the
average closing price of the Common Stock on the principal exchange or quotation
system therefor over the 30-day period ending on the date immediately prior to
delivery of a C Merger Notice or the CDC Call Notice by the weighted average
fully diluted number of shares of Common Stock outstanding over the one-year
period ending on such date, and dividing the product by EBITDA for the prior
four fiscal quarters preceding such date.
"CONSOLIDATED NET INCOME" shall mean with respect to the Borrower and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and its Consolidated Subsidiaries after allowances for
taxes for such period, determined on a consolidated
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basis in accordance with GAAP; PROVIDED that there shall be excluded from such
net income (to the extent otherwise included therein) the following: (i) the net
income of any Person in which the Borrower or any Consolidated Subsidiary has an
interest (which interest does not cause the net income of such other Person to
be consolidated with the net income of the Borrower and its Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (ii) the net
income (but not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise
restricted or prohibited in each case determined in accordance with GAAP; (iii)
the net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (iv) any
nonrecurring gains or losses acceptable to the Majority Lenders and any
extraordinary gains or losses, including gains or losses attributable to
Property sales not in the ordinary course of business; and (v) the cumulative
effect of a change in accounting principles and any gains or losses attributable
to writeups or write downs of assets.
"CONSOLIDATED SUBSIDIARIES" shall mean each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP.
"CORPORATE C MEMBERS" shall have the definition ascribed thereto in the
Master Contribution Agreement.
"CORPORATE C MEMBER'S MERGER OPTION" shall mean the option of each of the
Corporate C Members to cause such Corporate C Member to merge with and into CDC
California pursuant to Section 8.1 of the Master Contribution Agreement.
"DCS" shall mean Dental Consulting Services, L.L.C., a California limited
liability company.
"DEBT" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person (whether
contingent or otherwise) in respect of bankers' acceptances, letters of credit,
surety or other bonds and similar instruments; (iii) all obligations of such
Person to pay the deferred purchase price of Property or services (other than
for borrowed money); (iv) all obligations under leases which shall have been, or
should have been, in accordance with GAAP, recorded as capital leases in respect
of which such Person is liable (whether contingent or otherwise); (v) all
obligations under leases which require such Person or its Affiliate to make
payments over the term of such lease, including payments at termination, which
are substantially equal to at least eighty percent (80%) of the purchase price
of the Property subject to such lease plus interest as an imputed rate of
interest; (vi) all Debt (as described in the other clauses of this definition)
and other obligations of others
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secured by a Lien on any asset of such Person, whether or not such Debt is
assumed by such Person; (vii) all Debt (as described in the other clauses of
this definition) and other obligations of others guaranteed by such Person or in
which such Person otherwise assures a creditor against loss of the debtor or
obligations of others; (viii) all obligations or undertakings of such Person to
maintain or cause to be maintained the financial position or covenants of others
or to purchase the Debt or Property of others; (ix) obligations to deliver goods
or services in consideration of advance payments; and (x) all obligations of
such Person under Hedging Agreements.
"DEFAULT" shall mean an Event of Default or an event which with notice or
lapse of time or both would become an Event of Default.
"DOLLARS" and "$" shall mean lawful money of the United States of America.
"EBITDA" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent deducted
from Consolidated Net Income in such period: interest, taxes, depreciation,
depletion and amortization.
"ENVIRONMENTAL LAWS" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all jurisdictions
in which the Borrower or any Subsidiary is conducting or at any time has
conducted business, or where any Property of the Borrower or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. The term "oil" shall
have the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; PROVIDED, HOWEVER, that (i) in the event either OPA, CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (ii)
to the extent the laws of the state in which any Property of the Borrower or any
Subsidiary is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA AFFILIATE" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
- 8 -
"ERISA EVENT" shall mean (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal of the
Borrower, any Subsidiary or any ERISA Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (iii) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA, (iv)
the institution of proceedings to terminate a Plan by the PBGC or (v) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"EURODOLLAR LOANS" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Eurodollar
Rate".
"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 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, HOWEVER, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.
"EVENT OF DEFAULT" shall have the meaning assigned such term in Section
10.01.
"EXCEPTED LIENS" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or
statutory landlord's liens, each of which is in respect of obligations that have
not been outstanding more than 90 days or which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
maintained in accordance with GAAP; (iv) any Liens reserved in leases for rent
and for compliance with the terms of leases in the case of leasehold estates, to
the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (v) encumbrances (other than to secure
the payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property of the
Borrower or any Subsidiary for the purpose of roads, pipelines, transmission
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber,
- 9 -
and other like purposes, or for the joint or common use of real estate, rights
of way, facilities and equipment, and defects, irregularities, zoning
restrictions and deficiencies in title of any rights of way or other Property
which in the aggregate do not materially impair the use of such rights of way or
other Property for the purposes of which such rights of way and other Property
are held by the Borrower or any Subsidiary or materially impair the value of
such Property subject thereto; (vi) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(vii) Liens permitted by the Security Instruments.
"EXISTING PCS" means the affiliated dental practices identified on
Schedule 7.14 hereto.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with a member of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the date for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Agent on such day on such transactions as determined by the
Agent.
"FINAL MATURITY DATE" shall mean the earlier to occur of (i) November 7,
2002 and (ii) the date that the Notes are accelerated pursuant to Section 10.02.
"FINANCIAL STATEMENTS" shall mean the financial statement or statements of
the Borrower and its Consolidated Subsidiaries described or referred to in
Section 7.02.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Borrower, its Subsidiaries or any of their Property or the Agent or any Lender
or any Applicable Lending Office.
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
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"GUARANTORS" shall mean each Subsidiary which may execute a Guaranty
Agreement pursuant to Section 9.19.
"GUARANTY AGREEMENT" shall mean an agreement executed by the Guarantors in
form and substance satisfactory to the Agent guarantying, unconditionally,
payment of the Indebtedness, as the same may be amended, modified or
supplemented from time to time.
"HEDGING AGREEMENTS" shall mean any interest rate swap, cap, floor,
collar, forward agreement or other protection agreements or any option with
respect to any such transaction.
"HIGHEST LAWFUL RATE" shall mean, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"HOLDINGS" shall mean Castle West Holdings, L.L.C., a California limited
liability company.
"HOLDINGS INDEBTEDNESS" shall mean, at the time of determination, all
outstanding indebtedness of Holdings to any person, including, without
limitation, the Class III Repurchase Obligation.
"HOLDINGS NEW VALUE" shall be equal to 20% of (A) the Castle West
Incremental EBITDA PLUS the Projected Castle West Incremental EBITDA, (B)
multiplied by the Common Stock Market Multiple (C) multiplied by 90%; PROVIDED,
HOWEVER, that the Holdings New Value shall be calculated subject to the
following:
1. The Holdings New Value shall be reduced, without duplication, by
(i) the aggregate capital costs related to Common Stock invested in
Castle West acquisitions or expansions (excluding DCS, the Existing
PCs and the Castle West Acquired Clinics), and (ii) a percentage of
20% of the Castle West Debt, determined as follows:
Castle West Annual Growth Rate Percentage of 20% of Castle West Debt
from January 1, 1999 Allocated to the Holdings New Value
------------------------------ -------------------------------------
Less than 26% 100%
26% or more but less than 27% 90%
27% or more but less than 28% 80%
28% or more but less than 29% 70%
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29% or more but less than 30% 60%
30% or more but less than 31% 50%
31% or more but less than 32% 40%
32% or more but less than 33% 30%
33% or more but less than 34% 20%
34% or more but less than 35% 10%
More than 35% 0%
2. The aggregate capital costs related to Common Stock invested in
Castle West acquisitions or expansions shall be based upon the
valuation given to such Common Stock pursuant to the agreements
pursuant to which such acquisitions or expansions were consummated
multiplied by the Capital Cost Rate; and
3. The outstanding Castle West Debt used to determine the Holdings
New Value shall exclude the Castle West EBITDA, Castle West Debt,
and Common Stock capital costs relating to any acquisitions
completed in the three-month period immediately preceding the
delivery of either the C Merger Notice or the CDC Call Notice.
"HOLDINGS OLD VALUE" shall be equal to (i) 20% of the Adjusted Aggregate
Castle West EBITDA multiplied by 6.5, LESS (ii) 20% of the purchase price of the
Castle West Acquired Clinics, LESS (iii) 25% of the Burbank Adjustment:
"INDEBTEDNESS" shall mean any and all amounts owing or to be owing by the
Borrower or any Subsidiary to the Agent, the Issuing Bank and/or the Lenders in
connection with the Loan Documents, the Letter of Credit Agreements, and any
Hedging Agreements now or hereafter entered into between the Borrower and the
Lenders or any Affiliate of a Lender, and all renewals, extensions and/or
rearrangements of any of the above.
"INDEMNIFIED PARTIES" shall have the meaning assigned such term in Section
12.03(a)(ii).
"INDEMNITY MATTERS" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands and
causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent
negligence of such Person seeking indemnification.
"INITIAL FUNDING" shall mean the initial funding of the Loans or issuance
of the initial Letters of Credit upon satisfaction of the conditions set forth
in Sections 6.01 and 6.02.
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"INTEREST PERIOD" shall mean, with respect to any Eurodollar Loan, the
period commencing on the date such Eurodollar Loan is made and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Borrower may select as provided in Section 2.02 (or
such longer period as may be requested by the Borrower and agreed to by the
Majority Lenders), except that each Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may end after the
Final Maturity Date; (ii) no Interest Period may end after the due date of any
installment, if any, provided for in Section 3.01 to the extent that such
Eurodollar Loan would need to be prepaid prior to the end of such Interest
Period in order for such installment to be paid when due; (iii) each Interest
Period which would otherwise end on a day which is not a Business Day shall end
on the next succeeding Business Day (or, if such next succeeding Business Day
falls in the next succeeding calendar month, on the next preceding Business
Day); and (iv) no Interest Period shall have a duration of less than one month
and, if the Interest Period for any Eurodollar Loans would otherwise be for a
shorter period, such Loans shall not be available hereunder.
"ISSUING BANK" shall mean NationsBank or any other Lender agreed to among
the Borrower and the Agent to issue Letters of Credit.
"LC COMMITMENT" at any time shall mean $2,000,000.
"LC EXPOSURE" at any time shall mean the difference between (i) aggregate
face amount of all undrawn and uncancelled Letters of Credit and the aggregate
of all amounts drawn under all Letters of Credit and not yet reimbursed, minus
(ii) the aggregate amount of all cash securing outstanding Letters of Credit
pursuant to Section 2.10(b).
"LETTER OF CREDIT AGREEMENTS" shall mean the written agreements with the
Issuing Bank, as issuing lender for any Letter of Credit, executed in connection
with the issuance by the Issuing Bank of the Letters of Credit, such agreements
to be on the Issuing Bank's customary form for letters of credit of comparable
amount and purpose as from time to time in effect or as otherwise agreed to by
the Borrower and the Issuing Bank
"LETTERS OF CREDIT" shall mean the letters of credit issued pursuant to
Section 2.01(b) and all reimbursement obligations pertaining to any such letters
of credit, and "Letter of Credit" shall mean any one of the Letters of Credit
and the reimbursement obligations pertaining thereto.
"LIEN" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "LIEN" shall include reservations, exceptions,
encroachments, easements, rights of way,
- 13 -
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement, or leases
under a financing lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person in a transaction
intended to create a financing.
"LOANS" shall mean the Loans made pursuant to Section 2.01(a).
"LOAN DOCUMENTS" shall mean this Agreement, the Notes and the Security
Instruments.
"MAJORITY LENDERS" shall mean Lenders holding at least sixty-six and
two-thirds percent (66- 2/3%) of the outstanding aggregate principal amount of
the Loans (without regard to any sale by a Lender of a participation in any Loan
under Section 12.06(c)).
"MANAGEMENT SERVICES AGREEMENTS" shall mean Management Service Agreements
previously or hereafter entered into between an Acquired Entity and Borrower or
any Subsidiary, in form and substance satisfactory to Lenders.
"MASTER CONTRIBUTION AGREEMENT" shall mean the Master Contribution and
Combination Agreement, dated as of January 30, 1998, by and among, the Borrower,
CDC California, Dental Consulting Services, L.L.C., Castle Dental Centers of
California, L.L.C., Castle West Holdings, L.L.C., each of the DCS Members listed
on Schedule A attached thereto, each of the Holding Members (as defined
therein), each of the Corporate B Members (as defined therein) and each of the
Corporate C Members.
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Borrower and its Subsidiaries taken as a whole different from
those reflected in the Financial Statements or from the facts represented or
warranted in any Loan Document, or (ii) the ability of the Borrower and its
Subsidiaries taken as a whole to carry out their business as at the Closing Date
or as proposed as of the Closing Date to be conducted or meet their obligations
under the Loan Documents on a timely basis.
"MAXIMUM CREDIT AMOUNT" shall mean, as to each Lender, the amount set
forth opposite such Lender's name on ANNEX I under the caption "Maximum Credit
Amounts" (as the same may be reduced pursuant to Section 2.03(b) pro rata to
each Lender based on its Percentage Share), as modified from time to time to
reflect any assignments permitted by Section 12.06(b).
"MSO" means a management services organization agreement between Castle
West and professional corporations.
"MULTIEMPLOYER PLAN" shall mean a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.
- 14 -
"NET WORTH" shall mean, as at any date, the sum of the following for the
Borrower and its Consolidated Subsidiaries determined (without duplication) in
accordance with GAAP:
(i) the amount of preferred stock and common stock at par plus the amount
of surplus of the Borrower, PLUS
(ii) the retained earnings (or, in the case of retained earnings deficit,
MINUS the amount of such deficit).
"NEW ACQUISITION" shall mean the acquisition of dental practices and/or
management service organizations using proceeds of the Loans as permitted by the
Agreement.
"NOTES" shall mean the Notes provided for by Section 2.06, together with
any and all renewals, extensions for any period, increases, rearrangements,
substitutions or modifications thereof.
"OTHER TAXES" shall have the meaning assigned such term in Section
4.06(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.
"PERCENTAGE SHARE" shall mean the percentage of the Aggregate Commitments
to be provided by a Lender under this Agreement as indicated on ANNEX I hereto,
as modified from time to time to reflect any assignments permitted by Section
12.06(b).
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or
any other form of entity.
"PLAN" shall mean any employee pension benefit plan, as defined in Section
3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Borrower, any Subsidiary or an ERISA Affiliate.
"POST-DEFAULT RATE" shall mean, in respect of any principal of any Loan or
any other amount payable by the Borrower under this Agreement or any other Loan
Document, a rate per annum during the period commencing on the date of
occurrence of an Event of Default until such amount is paid in full or all
Events of Default are cured or waived equal to 2% per annum above the Base Rate
as in effect from time to time plus the Applicable Margin (if any), but in no
event to exceed the Highest Lawful Rate; provided however, for a Eurodollar
Loan, the "POST-DEFAULT RATE" for such principal shall be, for the period
commencing on the date of occurrence of an Event of Default and ending on the
earlier to occur of the last day of the Interest Period therefor or the date all
Events of Default are cured or waived, 2% per annum above the interest rate for
such Loan as provided in Section 3.02(a), but in no event to exceed the Highest
Lawful Rate.
- 15 -
"PRIME RATE" shall mean the rate of interest from time to time announced
publicly by the Agent at the Principal Office as its prime commercial lending
rate. Such rate is set by the Agent as a general reference rate of interest,
taking into account such factors as the Agent may deem appropriate, it being
understood that many of the Agent's commercial or other loans are priced in
relation to such rate, that it is not necessarily the lowest or best rate
actually charged to any customer and that the Agent may make various commercial
or other loans at rates of interest having no relationship to such rate.
"PRINCIPAL OFFICE" shall mean the principal office of the Agent, presently
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"PRIOR CREDIT AGREEMENT" shall mean that certain Credit Agreement dated as
of November 7, 1997 among the Borrower, the Agent, and the lenders party
thereto, as amended and supplemented.
"PRIOR DEBT" shall mean the outstanding Debt under the Prior Credit
Agreement.
"PRO FORMA MSO FEES" shall mean, with respect to any Castle West Acquired
Clinic, the MSO fees (determined upon actual operating results) that would have
been paid to Castle West (over the 12-month period ending prior to the
acquisition with respect to which the Castle West Acquired Clinic was valued by
Castle West and the Castle West Acquired Clinic for purposes of Castle West's
acquisition thereof) if the MSO Agreement with respect to such Castle West
Acquired Clinic had been in effect at the beginning of such period.
"PROJECTED CASTLE WEST INCREMENTAL EBITDA" shall be equal to (A) the
Castle West Incremental EBITDA plus the Adjusted Aggregate Castle West EBITDA,
ADJUSTED to take into consideration a 25% compounded growth rate for the period
from the date of determination to the later to occur of (i) the first date on
which either a Corporate C Member's Merger Option or the CDC Call Option could
be exercised or (ii) the date that is 365 days from the date of determination,
LESS (B) the Adjusted Aggregate Castle West EBITDA plus the Castle West
Incremental EBITDA.
"PRO RATA SHARE" shall have the definition ascribed thereto in the Master
Contribution Agreement.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"PUT/CALL RESERVE AMOUNT" shall be equal to the greater of $2,698,000 or
25% of the C Merger Consideration.
"QUARTERLY DATES" shall mean the fifteenth day of each March, June,
September, and December, in each year, the first of which shall be December 15,
1997; PROVIDED, HOWEVER, that if any such day is not a Business Day, such
Quarterly Date shall be the next succeeding Business Day.
- 16 -
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including Regulation D)
or the adoption or making after such date of any interpretations, directives or
requests applying to a class of lenders (including such Lender or its Applicable
Lending Office) of or under any Governmental Requirement (whether or not having
the force of law) by any Governmental Authority charged with the interpretation
or administration thereof.
"REQUIRED PAYMENT" shall have the meaning assigned such term in Section
4.04.
"RESPONSIBLE OFFICER" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with respect to
financial matters, the term "Responsible Officer" shall include the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Borrower.
"REVOLVING CREDIT PERIOD" shall mean the period from the Closing Date to
and ending on the Revolving Credit Termination Date.
"REVOLVING CREDIT TERMINATION DATE" shall mean the earlier to occur of (i)
the second anniversary of the Closing Date and (ii) the date that the
Commitments are sooner terminated pursuant to Sections 2.03(b) or 10.02.
"SEC" shall mean the Securities and Exchange Commission or any successor
Governmental Authority.
"SECURITY INSTRUMENTS" shall mean the Letters of Credit, the Letter of
Credit Agreements, the agreements or instruments described or referred to in
EXHIBIT D, and any and all other agreements or instruments now or hereafter
executed and delivered by the Borrower or any other Person (other than
participation or similar agreements between any Lender and any other lender or
creditor with respect to any Indebtedness pursuant to this Agreement) in
connection with, or as security for the payment or performance of the Notes or
this Agreement, or reimbursement obligations under the Letters of Credit, as
such agreements may be amended, supplemented or restated from time to time.
"SENIOR FUNDED DEBT" shall mean, at any date and with respect to the
Borrower and its Subsidiaries, all Debt for borrowed money (excluding Debt
expressly subordinated to the Indebtedness in form and substance satisfactory to
the Lenders), any capital lease obligations and any guaranty with respect to
Senior Funded Debt of another person.
"SPECIAL ENTITY" shall mean any joint venture, limited liability company
or partnership, general or limited partnership or any other type of partnership
or company other than a corporation in which the Borrower or one or more of its
other Subsidiaries is a member, owner, partner or joint venturer and owns,
directly or indirectly, at least a majority of the equity of such entity or
controls
- 17 -
such entity, but excluding any tax partnerships that are not classified as
partnerships under state law. For purposes of this definition, any Person which
owns directly or indirectly an equity investment in another Person which allows
the first Person to manage or elect managers who manage the normal activities of
such second Person will be deemed to "control" such second Person (E.G. a sole
general partner controls a limited partnership).
"STOCK PURCHASE" shall mean any acquisition of all capital stock of any
Acquired Entity by Borrower or a Subsidiary pursuant to a Stock Purchase
Agreement
"STOCK PURCHASE AGREEMENTS" shall mean that certain Stock Purchase
Agreement dated as of December 19, 1995, between the Borrower and ▇▇▇▇ ▇.
▇▇▇▇▇▇, D.D.S., and such future stock purchase agreements (including stock
option agreements) entered into by Borrower or any Subsidiary, in form and
substance satisfactory to Agent, in connection with New Acquisitions.
"SUBORDINATED DEBT" shall mean Debt of the Borrower or any Subsidiary that
is subordinated to the Indebtedness pursuant to a subordination agreement
substantially in the form of Exhibit H.
"SUBSIDIARY" shall mean (i) any corporation of which at least a majority
of the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time 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) is at the time directly or indirectly owned or
controlled by the Borrower or one or more of its Subsidiaries or by the Borrower
and one or more of its Subsidiaries and (ii) any Special Entity. Unless
otherwise indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Borrower.
"TAXES" shall have the meaning assigned such term in Section 4.06(a).
"TOTAL FUNDED DEBT" shall mean Senior Funded Debt plus all debt expressly
subordinated to the Indebtedness, including without limitation, any contingent
Debt resulting from the guaranty of a future stock price of capital stock issued
by the Borrower or an Affiliate of the Borrower to a seller in consideration for
an acquisition, all in form and substance satisfactory to the Lenders.
"TYPE" shall mean, with respect to any Loan, a Base Rate Loan or a
Eurodollar Loan.
"WHOLLY-OWNED SUBSIDIARY" shall mean, as to the Borrower, any Subsidiary
of which all of the outstanding shares of capital stock or other equity
interests, on a fully-diluted basis, are owned by the Borrower or one or more of
the Wholly-Owned Subsidiaries or by the Borrower and one or more of the
Wholly-Owned Subsidiaries.
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Lenders hereunder shall be
prepared,
- 18 -
in accordance with GAAP, applied on a basis consistent with the audited
financial statements of the Borrower referred to in Section 7.02 (except for
changes concurred with by the Borrower's independent public accountants).
ARTICLE II
LOANS AND LETTERS OF CREDIT
Section 2.01 LOANS AND LETTERS OF CREDIT.
(a) LOANS. Each Lender severally agrees, on the terms and conditions of
this Agreement, to make loans to the Borrower during the Revolving Credit Period
in an aggregate principal amount at any one time outstanding up to, but not
exceeding, the amount of such Lender's Commitment as then in effect; PROVIDED,
HOWEVER, that the aggregate principal amount of all such Loans by all Lenders
hereunder at any one time outstanding, PLUS the LC Exposure, shall not exceed
the Aggregate Commitments. Subject to the terms of this Agreement, during the
Revolving Credit Period, the Borrower may borrow, repay and reborrow the amount
described in this Section 2.01(a).
(b) LETTERS OF CREDIT. The Issuing Bank, as issuing bank for the Lenders,
agrees to extend credit for the account of the Borrower and its Subsidiaries at
any time and from time to time by issuing, renewing, increasing, extending or
reissuing Letters of Credit; PROVIDED HOWEVER, the LC Exposure at any one time
outstanding shall not exceed the lesser of (i) the LC Commitment and (ii) the
Aggregate Commitments, as then in effect, minus the aggregate principal amount
of all Loans then outstanding. The Lenders shall participate in such Letters of
Credit according to their respective Percentage Shares. Each of the Letters of
Credit shall (i) be issued by the Issuing Bank, (ii) contain such terms and
provisions as are reasonably required by the Issuing Bank, (iii) be for the
account of the Borrower and its Subsidiaries and (iv) expire not later than two
(2) days before the Final Maturity Date.
(c) LIMITATION ON TYPES OF LOANS. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Loans may be
Base Rate Loans or Eurodollar Loans; provided that, without the prior written
consent of the Majority Lenders, no more than ten (10) Eurodollar Loans may be
outstanding at any time.
Section 2.02 BORROWINGS, CONTINUATIONS AND CONVERSIONS, LETTERS OF CREDIT.
(a) BORROWINGS. The Borrower shall give the Agent (which shall promptly
notify the Lenders) advance notice as hereinafter provided of each borrowing
hereunder, which shall specify (i) the aggregate amount of such borrowing, (ii)
the Type and (iii) the date (which shall be a Business Day) of the Loans to be
borrowed, and (iv) (in the case of Eurodollar Loans) the duration of the
Interest Period therefor.
(b) MINIMUM AMOUNTS. All Base Rate Loan borrowings shall be in amounts of
at least $100,000 or the remaining balance of the Aggregate Commitments, if
less, or any whole multiple
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of $100,000 in excess thereof, and all Eurodollar Loans shall be in amounts of
at least $100,000 or any whole multiple of $100,000 in excess thereof.
(c) NOTICES. All borrowings, continuations and conversions shall require
advance written notice to the Agent (which shall promptly notify the Lenders) in
the form of EXHIBIT B (or telephonic notice promptly confirmed by such a written
notice), which in each case shall be irrevocable, from the Borrower to be
received by the Agent not later than 11:00 a.m. Houston time at least one
Business Day prior to the date of each Base Rate Loan borrowing and three
Business Days prior to the date of each Eurodollar Loan borrowing, continuation
or conversion. Without in any way limiting the Borrower's obligation to confirm
in writing any telephonic notice, the Agent may act without liability upon the
basis of telephonic notice believed by the Agent in good faith to be from the
Borrower prior to receipt of written confirmation. In each such case, the
Borrower hereby waives the right to dispute the Agent's record of the terms of
such telephonic notice except in the case of gross negligence or willful
misconduct by the Agent.
(d) CONTINUATION OPTIONS. Subject to the provisions made in this Section
2.02(d), the Borrower may elect to continue all or any part of any Eurodollar
Loan beyond the expiration of the then current Interest Period relating thereto
by giving advance notice as provided in Section 2.02(c) to the Agent (which
shall promptly notify the Lenders) of such election, specifying the amount of
such Loan to be continued and the Interest Period therefor. In the absence of
such a timely and proper election, the Borrower shall be deemed to have elected
to convert such Eurodollar Loan to a Base Rate Loan pursuant to Section 2.02(e).
All or any part of any Eurodollar Loan may be continued as provided herein,
provided that (i) any continuation of any such Loan shall be (as to each Loan as
continued for an applicable Interest Period) in amounts of at least $100,000 or
any whole multiple of $100,000 in excess thereof and (ii) no Default shall have
occurred and be continuing. If a Default shall have occurred and be continuing,
each Eurodollar Loan shall be converted to a Base Rate Loan on the last day of
the Interest Period applicable thereto.
(e) CONVERSION OPTIONS. The Borrower may elect to convert all or any part
of any Eurodollar Loan on the last day of the then current Interest Period
relating thereto to a Base Rate Loan by giving advance notice to the Agent
(which shall promptly notify the Lenders) of such election. Subject to the
provisions made in this Section 2.02(e), the Borrower may elect to convert all
or any part of any Base Rate Loan at any time and from time to time to a
Eurodollar Loan by giving advance notice as provided in Section 2.02(c) to the
Agent (which shall promptly notify the Lenders) of such election. All or any
part of any outstanding Loan may be converted as provided herein, provided that
(i) any conversion of any Base Rate Loan into a Eurodollar Loan shall be (as to
each such Loan into which there is a conversion for an applicable Interest
Period) in amounts of at least $100,000 or any whole multiple of $100,000 in
excess thereof and (ii) no Default shall have occurred and be continuing. If a
Default shall have occurred and be continuing, no Base Rate Loan may be
converted into a Eurodollar Loan.
(f) ADVANCES. Not later than 11:00 a.m. Houston time on the date specified
for each borrowing hereunder, each Lender shall make available the amount of the
Loans to be made by it on such date to the Agent, to an account which the Agent
shall specify, in immediately available funds, for the account of the Borrower.
The amounts so received by the Agent shall, subject to the terms
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and conditions of this Agreement, be made available to the Borrower by
depositing the same, in immediately available funds, in an account of the
Borrower, designated by the Borrower and maintained at the Principal Office.
(g ) LETTERS OF CREDIT. The Borrower shall give the Issuing Bank (which
shall promptly notify the Lenders of such request and their Percentage Share of
such Letter of Credit) advance notice to be received by the Issuing Bank not
later than 11:00 a.m. Houston time not less than three (3) Business Days prior
thereto of each request for the issuance, and at least five (5) Business Days
prior to the date of the renewal, increase or extension, of a Letter of Credit
hereunder which request shall specify (i) the amount of such Letter of Credit,
(ii) the date (which shall be a Business Day) such Letter of Credit is to be
issued, increase, renewed or extended, (iii) the duration thereof, (iv) the name
and address of the beneficiary thereof, (v) the form of the Letter of Credit and
(vi) such other information as the Agent may reasonably request, all of which
shall be reasonably satisfactory to the Agent. Subject to the terms and
conditions of this Agreement, on the date specified for the issuance, increase,
renewal or extension of a Letter of Credit, the Agent shall issue, increase,
renew or extend such Letter of Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the Borrower,
shall execute a Letter of Credit Agreement. In the event of any conflict between
any provision of a Letter of Credit Agreement and this Agreement, the Borrower,
the Issuing Bank, the Agent and the Lenders hereby agree that the provisions of
this Agreement shall govern.
The Issuing Bank will send to the Borrower and each Lender, immediately
upon issuance of any Letter of Credit, or an amendment thereto, a true and
complete copy of such Letter of Credit, or such amendment thereto.
Section 2.03 CHANGES OF COMMITMENTS.
(a) The Aggregate Commitments shall at all times be equal to the lesser of
(i) the Aggregate Maximum Credit Amounts (less the Put/Call Reserve Amount,
unless either the Corporate C Merger Option or the CDC Call Option has been
exercised) after adjustments resulting from reductions pursuant to Section
2.03(b) or increases pursuant to Section 2.03(d) or (ii) the Borrowing Base as
determined from time to time.
(b) The Borrower shall have the right to terminate or to reduce the amount
of the Aggregate Maximum Credit Amounts at any time, or from time to time, upon
not less than three (3) Business Days' prior notice to the Agent (which shall
promptly notify the Lenders) of each such termination or reduction, which notice
shall specify the effective date thereof and the amount of any such reduction
(which shall not be less than $100,000 or any whole multiple of $100,000 in
excess thereof) and shall be irrevocable and effective only upon receipt by the
Agent.
(c) The Aggregate Maximum Credit Amounts once terminated or reduced may
not be reinstated.
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(d) The Agent, on a good faith basis, will seek to find additional
financial institutions that will agree to become Lenders under this Agreement
with an additional aggregate Commitment of $7,500,000. If such additional
Lenders become parties to this Agreement (which may only be done prior to the
Revolving Credit Termination Date), the Aggregate Maximum Credit Amounts will
increase from $47,500,000 to $55,000,000 and a revised Annex I reflecting such
change and any changes in Percentage Shares of each Lender will be distributed
to all parties to this Agreement.
Section 2.04 FEES.
(a) COMMITMENT FEE. The Borrower shall pay to the Agent for the account of
each Lender a commitment fee based on the daily average unused amount of the
Aggregate Maximum Credit Amounts less the outstanding principal amount of the
Loans and LC Exposure for the period from and including the Closing Date, up to,
but excluding the earlier of the date the Commitments are terminated or the
Revolving Credit Termination Date at a rate per annum equal to applicable per
annum percentage set forth at the appropriate intersection in the table shown
below, based on the ratio of Total Funded Debt to EBITDA as in effect from time
to time. Accrued commitment fees shall be payable quarterly in arrears on each
Quarterly Date and on the earlier of the date the Commitments are terminated or
the Revolving Credit Termination Date.
TOTAL FUNDED DEBT TO EBITDA COMMITMENT FEE PERCENTAGE
Greater than or equal to 2.5 .5%
Greater than or equal to 2.0 but less than 2.5 .375%
Greater than or equal to 1.5 but less than 2.0 .375%
Greater than or equal to 1.0 but less than 1.5 .25%
Less than 1.0 .125%
(b) LETTER OF CREDIT FEES. The Borrower agrees to pay the Agent, for the
account of each Lender, commissions for issuing the Letters of Credit on the
daily average outstanding of the maximum liability of the Issuing Bank existing
from time to time under such Letter of Credit (calculated separately for each
Letter of Credit) at the rate of 2% per annum, provided that each Letter of
Credit shall bear a minimum commission of $1,000.00. Each Letter of Credit shall
be deemed to be outstanding up to the full face amount (plus any increases) of
the Letter of Credit until the Issuing Bank has received the canceled Letter of
Credit or a written cancellation of the Letter of Credit from the beneficiary of
such Letter of Credit in form and substance acceptable to the Issuing Bank, or
for any reductions in the amount of the Letter of Credit (other than from a
drawing), written notification from the beneficiary of such Letter of Credit.
Such commissions are payable quarterly in arrears on each Quarterly Date and
upon cancellation or expiration of each such Letter of Credit.
(c) FEE LETTERS. The Borrower shall pay to the Agent for their respective
accounts such other fees as are set forth in the fee letters between Borrower,
such parties and the Lenders, dated of even date herewith, on the dates
specified therein to the extent not paid prior to the Closing Date.
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Section 2.05 SEVERAL OBLIGATIONS. The failure of any Lender to make any
Loan to be made by it or to provide funds for disbursements or reimbursements
under Letters of Credit on the date specified therefor shall not relieve any
other Lender of its obligation to make its Loan or provide funds on such date,
but no Lender shall be responsible for the failure of any other Lender to make a
Loan to be made by such other Lender or to provide funds to be provided by such
other Lender.
Section 2.06 NOTES. The Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of EXHIBIT A,
dated (i) the Closing Date or (ii) the effective date of an Assignment pursuant
to Section 12.06(b), payable to the order of such Lender in a principal amount
equal to its Maximum Credit Amount as originally in effect and otherwise duly
completed and such substitute Notes as required by Section 12.06(b). The date,
amount, Type, interest rate and Interest Period of each Loan made by each
Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Notes, and, prior to any transfer
may be endorsed by such Lender on the schedule attached to such Notes or any
continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect any
Lender's or the Borrower's rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Notes.
Section 2.07 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower may prepay the Base Rate Loans
upon not less than one (1) Business Day's prior notice to the Agent (which shall
promptly notify the Lenders), which notice shall specify the prepayment date
(which shall be a Business Day) and the amount of the prepayment (which shall be
at least $10,000 or the remaining aggregate principal balance outstanding on the
Notes) and shall be irrevocable and effective only upon receipt by the Agent,
provided that interest on the principal prepaid, accrued to the prepayment date,
shall be paid on the prepayment date. The Borrower may prepay Eurodollar Loans
on the same conditions as for Base Rate Loans (except that prior notice to the
Agent shall be not less than three (3) Business Days for Eurodollar Loans) and
in addition such prepayments of Eurodollar Loans shall be subject to the terms
of Section 5.05 and shall be in an amount equal to all of the Eurodollar Loans
for the Interest Period prepaid.
Notwithstanding the foregoing, if the Borrower should voluntarily prepay
the Loans in their entirety, Borrower shall pay to the Agent, for the benefit of
the Lenders, a prepayment fee of 1.00% of the Aggregate Maximum Credit Amounts.
(b) MANDATORY PREPAYMENTS.
(i) If, after giving effect to any termination or reduction of the
Aggregate Maximum Credit Amounts pursuant to Section 2.03(b), the
outstanding aggregate principal amount of the Loans plus the LC Exposure
exceeds the Aggregate Maximum Credit Amounts, the Borrower shall (A)
prepay the Loans on the date of such termination or reduction in an
aggregate principal amount equal to the excess, together with interest on
the principal amount paid accrued to the date of such prepayment and (B)
if any excess remains
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after prepaying all of the Loans because of LC Exposure, pay to the Agent
on behalf of the Lenders an amount equal to the excess to be held as cash
collateral as provided in Section 2.09(b) hereof.
(ii) Upon any redetermination of the amount of the Borrowing Base,
if the redetermined Borrowing Base is less than the aggregate outstanding
principal amount of the Loans plus the LC Exposure, then the Borrower
shall within thirty (30) days of receipt of written notice thereof (A)
prepay the Loans in an aggregate principal amount equal to such excess,
together with interest on the principal amount paid accrued to the date of
such prepayment and (B) if a Borrowing Base deficiency remains after
prepaying all of the Loans because of LC Exposure, the Borrower shall pay
to the Agent on behalf of the Lenders an amount equal to such Borrowing
Base deficiency to be held as cash collateral as provided in Section
2.09(b).
(iii) If the Borrower raises any cash proceeds by the offering of
equity, 50% of the net cash proceeds obtained from such equity offering
shall be used to prepay the outstanding principal on the Loans, applied in
accordance with Section 2.07(c) to the Loans as the Borrower shall elect.
(c) GENERALLY. Any prepayments on the Loans made during the Revolving
Credit Period may be reborrowed pursuant to Section 2.01(a). Prepayments of
Eurodollar Loans required by Section 2.07(b) shall be subject to the terms of
Section 5.05 and shall be in an amount equal to all of the Eurodollar Loans for
the Interest Period prepaid.
Section 2.08 ASSUMPTION OF RISKS. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit or any transferee
thereof with respect to its use of such Letter of Credit or the proceeds
thereof. Neither the Issuing Bank (except in the case of willful misconduct or
gross negligence on the part of the Issuing Bank or any of its employees), its
correspondents nor any Lender shall be responsible for the validity, sufficiency
or genuineness of certificates or other documents or any endorsements thereon,
even if such certificates or other documents should in fact prove to be invalid,
insufficient, fraudulent or forged; for errors, omissions, interruptions or
delays in transmissions or delivery of any messages by mail, telex, or
otherwise, whether or not they be in code; for errors in translation or for
errors in interpretation of technical terms; the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
the failure of any beneficiary or any transferee of any Letter of Credit to
comply fully with conditions required in order to draw upon any Letter of
Credit; or for any other consequences arising from causes beyond the Issuing
Bank's control or the control of the Issuing Bank's correspondents. In addition,
neither the Issuing Bank, the Agent nor any Lender shall be responsible for any
error, neglect, or default of any of the Issuing Bank's correspondents, except
as a result of the Issuing Bank's, the Agent's or any Lender's wilful misconduct
or gross negligence; and none of the above shall affect, impair or prevent the
vesting of any of the Issuing Bank's, the Agent's or any Lender's rights or
powers hereunder, or under the Letter of Credit Agreements, all of which rights
shall be cumulative. The Issuing Bank and its
- 24 -
correspondents may accept certificates or other documents that appear on their
face to be in order, without responsibility for further investigation of any
matter contained therein regardless of any notice or information to the
contrary. In furtherance and not in limitation of the foregoing provisions, the
Borrower agrees that any action, inaction or omission taken or not taken by the
Issuing Bank or by any correspondent for the Issuing Bank in good faith in
connection with any Letter of Credit, or any related drafts, certificates,
documents or instruments, shall be binding on the Borrower and shall not put the
Issuing Bank or its correspondents under any resulting liability to the
Borrower, except as a result of the Issuing Bank's, the Agent's or any Lender's
wilful misconduct or gross negligence.
Section 2.09 OBLIGATION TO REIMBURSE AND TO PREPAY.
(a) If a disbursement by the Issuing Bank is made under any Letter of
Credit, except as otherwise provided in Subsection 2.09(d) below, the Borrower
shall pay to the Agent within two (2) Business Days after notice of any such
disbursement is received by the Borrower, the amount of each such disbursement
made by the Issuing Bank under the Letter of Credit (if such payment is not
sooner effected as may be required under this Section 2.10 or under other
provisions of the Letter of Credit), together with interest on the amount
disbursed from and including the date of disbursement until payment in full of
such disbursed amount at a varying rate per annum equal to (i) the then
applicable interest rate for Base Rate Loans through the second Business Day
after notice of such disbursement is received by the Borrower and (ii)
thereafter, the Post-Default Rate for Base Rate Loans (but in no event to exceed
the Highest Lawful Rate) for the period from and including the third Business
Day following the date of such disbursement to and including the date of
repayment in full of such disbursed amount. The obligations of the Borrower
under this Agreement with respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid or performed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever,
including, without limitation, but only to the fullest extent permitted by
applicable law, the following circumstances: (i) any lack of validity or
enforceability of this Agreement, any Letter of Credit or any of the Security
Instruments; (ii) any amendment or waiver of (including any default), or any
consent to departure from this Agreement (except to the extent permitted by any
amendment or waiver), any Letter of Credit or any of the Security Instruments;
(iii) the existence of any claim, set-off, defense or other rights which the
Borrower may have at any time against the beneficiary of any Letter of Credit or
any transferee of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, the Agent,
any Lender or any other Person, whether in connection with this Agreement, any
Letter of Credit, the Security Instruments, the transactions contemplated hereby
or any unrelated transaction; (iv) any statement, certificate, draft, notice or
any other document presented under any Letter of Credit proves to have been
forged, fraudulent, insufficient or invalid in any respect or any statement
therein proves to have been untrue or inaccurate in any respect whatsoever; (v)
payment by the Issuing Bank under any Letter of Credit against presentation of a
draft or certificate which appears on its face to comply, but does not comply,
with the terms of such Letter of Credit; and (vi) any other circumstance or
happening whatsoever, whether or not similar to any of the foregoing.
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Notwithstanding anything in this Agreement to the contrary, the Borrower will
not be liable for payment or performance that results from the gross negligence
or willful misconduct of the Issuing Bank, except where the Borrower or any
Subsidiary actually recovers the proceeds for itself or the Issuing Bank of any
payment made by the Issuing Bank in connection with such gross negligence or
willful misconduct.
(b) In the event of the occurrence of any Event of Default, a payment or
prepayment pursuant to Section 2.07(b) or the maturity of the Notes, whether by
acceleration or otherwise, an amount equal to the LC Exposure (or the excess in
the case of Section 2.07(b)) shall be deemed to be forthwith due and owing by
the Borrower to the Issuing Bank, the Agent and the Lenders as of the date of
any such occurrence; and the Borrower's obligation to pay such amount shall be
absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrower may now or hereafter have
against any such beneficiary, the Issuing Bank, the Agent, the Lenders or any
other Person for any reason whatsoever. Such payments shall be held by the Agent
on behalf of the Lenders as cash collateral securing the LC Exposure in an
account or accounts at the Principal Office; and the Borrower hereby grants to
and by its deposit with the Agent grants to the Agent a security interest in
such cash collateral. In the event of any such payment by the Borrower of
amounts contingently owing under outstanding Letters of Credit and in the event
that thereafter drafts or other demands for payment complying with the terms of
such Letters of Credit are not made prior to the respective expiration dates
thereof, the Agent agrees, if no Event of Default has occurred and is continuing
or if no other amounts are outstanding under this Agreement, the Notes or the
Security Instruments, to remit to the Borrower amounts for which the contingent
obligations evidenced by the Letters of Credit have ceased.
(c) Each Lender severally and unconditionally agrees that it shall
promptly reimburse the Issuing Bank an amount equal to such Lender's Percentage
Share of any disbursement made by the Issuing Bank under any Letter of Credit
that is not reimbursed according to this Section 2.10.
(d) Notwithstanding anything to the contrary contained herein, if no Event
of Default has occurred and is continuing and subject to availability under the
Aggregate Commitments (after reduction for LC Exposure), to the extent the
Borrower has not reimbursed the Issuing Bank for any drawn upon Letter of Credit
within two (2) Business Days after notice of such disbursement has been received
by the Borrower, the amount of such Letter of Credit reimbursement obligation
shall automatically be funded by the Lenders as a Loan hereunder and used by the
Lenders to pay such Letter of Credit reimbursement obligation. If an Event of
Default has occurred and is continuing, or if the funding of such Letter of
Credit reimbursement obligation as a Loan would cause the aggregate amount of
all Loans outstanding to exceed the Aggregate Commitments (after reduction for
LC Exposure), such Letter of Credit reimbursement obligation shall not be funded
as a Loan, but instead shall accrue interest as provided in Section 2.10(a).
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Section 2.10 LENDING OFFICES. The Loans of each Type made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 REPAYMENT OF LOANS.
(a) LOANS. Commencing on the Quarterly Date immediately following the
Revolving Credit Termination Date, the aggregate principal amount of the Notes
outstanding on the Revolving Credit Termination Date shall be payable in eight
(8) equal consecutive quarterly installments, each equal to 1/20th of the
outstanding principal amount of the Notes as of the Revolving Credit Termination
Date, with final payment of the remaining principal balance on the Notes due on
the Final Maturity Date.
(b) GENERALLY. The Borrower will pay to the Agent, for the account of each
Lender, the principal payments required by this Section 3.01.
Section 3.02 INTEREST.
(a) INTEREST RATES. The Borrower will pay to the Agent, for the account of
each Lender, interest on the unpaid principal amount of each Loan made by such
Lender for the period commencing on the date such Loan is made to, but
excluding, the date such Loan shall be paid in full, at the following rates per
annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as in effect
from time to time) plus the Applicable Margin, but in no event to exceed
the Highest Lawful Rate; and
(ii) if such a Loan is a Eurodollar Loan, for each Interest Period
relating thereto, the Eurodollar Rate for such Loan plus the Applicable
Margin (as in effect from time to time), but in no event to exceed the
Highest Lawful Rate.
(b) POST-DEFAULT RATE. Notwithstanding the foregoing, the Borrower will
pay to the Agent, for the account of each Lender interest at the applicable
Post-Default Rate on any principal of any Loan made by such Lender, and (to the
fullest extent permitted by law) on any other amount payable by the Borrower
hereunder, under any Loan Document or under any Note held by such Lender to or
for account of such Lender, for the period commencing on the date of an Event of
Default until the same is paid in full or all Events of Default are cured or
waived.
(c) DUE DATES. Accrued interest on Base Rate Loans shall be payable
quarterly commencing on March 15, 1999, and on each Quarterly Date thereafter
and accrued interest on each Eurodollar Loan shall be payable on the last day of
the Interest Period therefor and, if such Interest
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Period is longer than three months at three-month intervals following the first
day of such Interest Period, except that interest payable at the Post-Default
Rate shall be payable from time to time on demand and interest on any Eurodollar
Loan that is converted into a Base Rate Loan (pursuant to Section 5.04) shall be
payable on the date of conversion (but only to the extent so converted).
(d) DETERMINATION OF RATES. Promptly after the determination of any
interest rate provided for herein or any change therein, the Agent shall notify
the Lenders to which such interest is payable and the Borrower thereof. Each
determination by the Agent of an interest rate or fee hereunder shall, except in
cases of manifest error, be final, conclusive and binding on the parties.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS. Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
under this Agreement, the Letter of Credit Agreements, and the Notes shall be
made in Dollars, in immediately available funds, to the Agent at such account as
the Agent shall specify by notice to the Borrower from time to time, not later
than 11:00 a.m. Houston time on the date on which such payments shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day). Such payments shall be made
without (to the fullest extent permitted by applicable law) defense, set-off or
counterclaim. Each payment received by the Agent under this Agreement or any
Note for account of a Lender shall be paid promptly to such Lender in
immediately available funds. Except as otherwise provided in the definition of
"Interest Period", if the due date of any payment under this Agreement or any
Note would otherwise fall on a day which is not a Business Day such date shall
be extended to the next succeeding Business Day and interest shall be payable
for any principal so extended for the period of such extension. At the time of
each payment to the Agent of any principal of or interest on any borrowing, the
Borrower shall notify the Agent of the Loans to which such payment shall apply.
In the absence of such notice the Agent may specify the Loans to which such
payment shall apply, but to the extent possible such payment or prepayment will
be applied first to the Loans comprised of Base Rate Loans.
Section 4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein each Lender agrees that: (i) each borrowing from the Lenders under
Section 2.01 and each continuation and conversion under Section 2.02 shall be
made from the Lenders pro rata in accordance with their Percentage Share, each
payment of commitment fee or other fees under Section 2.04(a) and Section
2.04(b) shall be made for account of the Lenders pro rata in accordance with
their Percentage Share, and each termination or reduction of the amount of the
Aggregate Maximum Credit Amounts under Section 2.03(b) shall be applied to the
Commitment of each Lender, pro rata according to the amounts of its respective
Commitment; (ii) each payment of principal of Loans by the Borrower shall be
made for account of the Lenders pro rata in accordance with the respective
unpaid principal amount of the Loans held by the Lenders; (iii) each payment of
interest on Loans by the Borrower shall be made for account of the Lenders pro
rata in accordance with the amounts of interest due and payable to the
respective Lenders; and (iv) each reimbursement by the Borrower of disbursements
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under Letters of Credit shall be made for account of the Issuing Bank or, if
funded by the Lenders, pro rata for the account of the Lenders, in accordance
with the amounts of reimbursement obligations due and payable to each respective
Lender.
Section 4.03 COMPUTATIONS. Interest on Eurodollar Loans shall be computed
on the basis of a year of 360 days and actual days elapsed (including the first
day but excluding the last day) occurring in the period for which such interest
is payable, unless such calculation would exceed the Highest Lawful Rate, in
which case interest shall be calculated on the per annum basis of a year of 365
or 366 days, as the case may be. Interest on Base Rate Loans and fees shall be
computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 4.04 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall
have been notified by a Lender or the Borrower prior to the date on which such
notifying party is scheduled to make payment to the Agent (in the case of a
Lender) of the proceeds of a Loan or a payment under a Letter of Credit to be
made by it hereunder or (in the case of the Borrower) a payment to the Agent for
account of one or more of the Lenders hereunder (such payment being herein
called the "REQUIRED PAYMENT"), which notice shall be effective upon receipt,
that it does not intend to make the Required Payment to the Agent, the Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient(s) on such date and, if such Lender or the Borrower (as
the case may be) has not in fact made the Required Payment to the Agent, the
recipient(s) of such payment shall, on demand, repay to the Agent the amount so
made available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until, but excluding, the date the Agent recovers such amount at a rate per
annum which, for any Lender as recipient, will be equal to the Federal Funds
Rate, and for the Borrower as recipient, will be equal to the Base Rate plus the
Applicable Margin.
Section 4.05 SET-OFF, SHARING OF PAYMENTS, ETC.
(a) Upon the occurrence and during the continuance of an Event of Default,
the Borrower agrees that, in addition to (and without limitation of) any right
of set-off, bankers' lien or counterclaim a Lender may otherwise have, each
Lender shall have the right and be entitled (after consultation with the Agent),
at its option, to offset balances held by it or by any of its Affiliates for
account of the Borrower or any Subsidiary at any of its offices, in Dollars or
in any other currency, against any principal of or interest on any of such
Lender's Loans, or any other amount payable to such Lender hereunder, which is
not paid when due (regardless of whether such balances are then due to the
Borrower), in which case it shall promptly notify the Borrower and the Agent
thereof, provided that such Lender's failure to give such notice shall not
affect the validity thereof.
(b) If any Lender shall obtain payment of any principal of or interest on
any Loan made by it to the Borrower under this Agreement (or reimbursement as to
any Letter of Credit) through the exercise of any right of set-off, banker's
lien or counterclaim or similar right or otherwise, and, as a result of such
payment, such Lender shall have received a greater percentage of the principal
or
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interest (or reimbursement) then due hereunder by the Borrower to such Lender
than the percentage received by any other Lenders, it shall promptly (i) notify
the Agent and each other Lender thereof and (ii) purchase from such other
Lenders participations in (or, if and to the extent specified by such Lender,
direct interests in) the Loans (or participations in Letters of Credit) made by
such other Lenders (or in interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal and/or interest on the Loans held by each of the Lenders (or
reimbursements of Letters of Credit). To such end all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans made by other Lenders (or in interest due thereon, as the
case may be) may exercise all rights of set-off, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans (or Letters of Credit) in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.05 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.05 to share the benefits
of any recovery on such secured claim.
Section 4.06 TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 4.01, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
EXCLUDING, in the case of each Lender, the Issuing Bank and the Agent, taxes
imposed on its income, and franchise or similar taxes imposed on it, by (i) any
jurisdiction (or political subdivision thereof) of which the Agent, the Issuing
Bank or such Lender, as the case may be, is a citizen or resident or in which
such Lender has an Applicable Lending Office, (ii) the jurisdiction (or any
political subdivision thereof) in which the Agent, the Issuing Bank or such
Lender is organized, or (iii) any jurisdiction (or political subdivision
thereof) in which such Lender, the Issuing Bank or the Agent is presently doing
business which taxes are imposed solely as a result of doing business in such
jurisdiction (all such non-excluded taxes, 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 hereunder to the Lenders, the Issuing Bank or the Agent (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 4.06) such Lender, the Issuing Bank or the Agent (as the case
may be) shall receive an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount
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deducted to the relevant taxing authority or other Governmental Authority in
accordance with applicable law and provide the relevant Lender with a receipt
thereof.
(b) OTHER TAXES. In addition, to the fullest extent permitted by
applicable law, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, any
Assignment or any Security Instrument (hereinafter referred to as "OTHER
TAXES").
(C) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE BORROWER WILL INDEMNIFY EACH LENDER AND THE ISSUING BANK AND THE AGENT FOR
THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, BUT NOT LIMITED TO, ANY
TAXES OR OTHER TAXES IMPOSED BY ANY GOVERNMENTAL AUTHORITY ON AMOUNTS PAYABLE
UNDER THIS SECTION 4.06) PAID BY SUCH LENDER, THE ISSUING BANK OR THE AGENT (ON
THEIR BEHALF OR ON BEHALF OF ANY LENDER), AS THE CASE MAY BE, AND ANY LIABILITY
(INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT
THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY
ASSERTED UNLESS THE PAYMENT OF SUCH TAXES WAS NOT CORRECTLY OR LEGALLY ASSERTED
AND SUCH LENDER'S PAYMENT OF SUCH TAXES OR OTHER TAXES WAS THE RESULT OF ITS
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. ANY PAYMENT PURSUANT TO SUCH
INDEMNIFICATION SHALL BE MADE WITHIN THIRTY (30) DAYS AFTER THE DATE ANY LENDER,
THE ISSUING BANK OR THE AGENT, AS THE CASE MAY BE, MAKES WRITTEN DEMAND
THEREFOR. IF ANY LENDER, THE ISSUING BANK OR THE AGENT RECEIVES A REFUND OR
CREDIT IN RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH SUCH LENDER, ISSUING
BANK OR THE AGENT HAS RECEIVED PAYMENT FROM THE BORROWER IT SHALL PROMPTLY
NOTIFY THE BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF NO DEFAULT HAS
OCCURRED AND IS CONTINUING, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A REQUEST
BY THE BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS REQUESTED
APPLICATION FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN AMOUNT EQUAL TO
SUCH REFUND OR CREDIT TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY INTEREST SO
REFUNDED OR CREDITED), PROVIDED THAT THE BORROWER, UPON THE REQUEST OF SUCH
LENDER, THE ISSUING BANK OR THE AGENT, AGREES TO RETURN SUCH REFUND OR CREDIT
(PLUS PENALTIES, INTEREST OR OTHER CHARGES) TO SUCH LENDER, THE ISSUING BANK OR
THE AGENT IN THE EVENT SUCH LENDER, THE ISSUING BANK OR THE AGENT IS REQUIRED TO
REPAY SUCH REFUND OR CREDIT.
(d) LENDER REPRESENTATIONS.
(i) Each Lender represents that it is either (1) a banking
association or corporation organized under the laws of the United States
of America or any state thereof or (2) it is entitled to complete
exemption from United States withholding tax imposed on or with respect to
any payments, including fees, to be made to it pursuant to this Agreement
(A) under an applicable provision of a tax convention to which the United
States of America is a party or (B) because it is acting through a branch,
agency or office in the United States of America and any payment to be
received by it hereunder is effectively connected with a
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▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America. Each Lender that is not
a banking association or corporation organized under the laws of the
United States of America or any state thereof agrees to provide to the
Borrower and the Agent on the Closing Date, or on the date of its delivery
of the Assignment pursuant to which it becomes a Lender, and at such other
times as required by United States law or as the Borrower or the Agent
shall reasonably request, two accurate and complete original signed copies
of either (A) Internal Revenue Service Form 4224 (or successor form)
certifying that all payments to be made to it hereunder will be
effectively connected to a United States trade or business (the "FORM 4224
CERTIFICATION") or (B) Internal Revenue Service Form 1001 (or successor
form) certifying that it is entitled to the benefit of a provision of a
tax convention to which the United States of America is a party which
completely exempts from United States withholding tax all payments to be
made to it hereunder (the "FORM 1001 CERTIFICATION"). In addition, each
Lender agrees that if it previously filed a Form 4224 Certification, it
will deliver to the Borrower and the Agent a new Form 4224 Certification
prior to the first payment date occurring in each of its subsequent
taxable years; and if it previously filed a Form 1001 Certification, it
will deliver to the Borrower and the Agent a new certification prior to
the first payment date falling in the third year following the previous
filing of such certification. Each Lender also agrees to deliver to the
Borrower and the Agent such other or supplemental forms as may at any time
be required as a result of changes in applicable law or regulation in
order to confirm or maintain in effect its entitlement to exemption from
United States withholding tax on any payments hereunder, PROVIDED that the
circumstances of such Lender at the relevant time and applicable laws
permit it to do so. If a Lender determines, as a result of any change in
either (i) a Governmental Requirement or (ii) its circumstances, that it
is unable to submit any form or certificate that it is obligated to submit
pursuant to this Section 4.06, or that it is required to withdraw or
cancel any such form or certificate previously submitted, it shall
promptly notify the Borrower and the Agent of such fact. If a Lender is
organized under the laws of a jurisdiction outside the United States of
America, unless the Borrower and the Agent have received a Form 1001
Certification or Form 4224 Certification satisfactory to them indicating
that all payments to be made to such Lender hereunder are not subject to
United States withholding tax, the Borrower shall withhold taxes from such
payments at the applicable statutory rate. Each Lender agrees to indemnify
and hold harmless the Borrower or Agent, as applicable, from any United
States taxes, penalties, interest and other expenses, costs and losses
incurred or payable by (i) the Agent as a result of such Lender's failure
to submit any form or certificate that it is required to provide pursuant
to this Section 4.06 or (ii) the Borrower or the Agent as a result of
their reliance on any such form or certificate which such Lender has
provided to them pursuant to this Section 4.06.
(ii) For any period with respect to which a Lender has failed to
provide the Borrower with the form required pursuant to this Section 4.06,
if any, (other than if such failure is due to a change in a Governmental
Requirement 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 4.06 with respect to taxes imposed by the
United States which taxes would not have been imposed but for such failure
to provide such forms;
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PROVIDED, HOWEVER, that if a Lender, which is otherwise exempt from or
subject to a reduced rate of withholding tax, becomes 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.
(iii) Any Lender claiming any additional amounts payable pursuant to
this Section 4.06 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by
the Borrower or the Agent or to change the jurisdiction of its Applicable
Lending Office or to contest any tax imposed if the making of such a
filing or change or contesting such tax would avoid the need for or reduce
the amount of any such additional amounts that may thereafter accrue and
would not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender.
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 CAPITAL ADEQUACY; ADDITIONAL COSTS.
(a) EURODOLLAR REGULATIONS, ETC. The Borrower shall pay directly to each
Lender from time to time such amounts as such Lender may determine to be
necessary to compensate such Lender for any costs which it determines are
attributable to its making or maintaining of any Eurodollar Loans or issuing or
participating in Letters of Credit hereunder or its obligation to make any
Eurodollar Loans or issue or participate in any Letters of Credit hereunder, or
any reduction in any amount receivable by such Lender hereunder in respect of
any of such Eurodollar Loans, Letters of Credit or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"ADDITIONAL COSTS"), resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to such Lender under this Agreement or
any Note in respect of any of such Eurodollar Loans or Letters of Credit (other
than taxes imposed on the overall net income of such Lender or of its Applicable
Lending Office for any of such Eurodollar Loans by the jurisdiction in which
such Lender has its principal office or Applicable Lending Office); or (ii)
imposes or modifies any reserve, special deposit, minimum capital, capital ratio
or similar requirements relating to any extensions of credit or other assets of,
or any deposits with or other liabilities of such Lender, or the Commitment or
Loans of such Lender or the Eurodollar interbank market; or (iii) imposes any
other condition affecting this Agreement or any Notes (or any of such extensions
of credit or liabilities) or such Lender's Commitment or Loans. Each Lender will
notify the Agent and the Borrower of any event occurring after the Closing Date
which will entitle such Lender to compensation pursuant to this Section 5.01(a)
as promptly as practicable after it obtains knowledge thereof and determines to
request such compensation, and will designate a different Applicable Lending
Office for the Loans of such Lender affected by such event if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the reasonable opinion of such Lender, be disadvantageous to such
Lender, provided that such Lender shall have no obligation to so designate an
Applicable Lending Office located in the United States. If any Lender requests
compensation from the Borrower under this Section 5.01(a), the Borrower may, by
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notice to such Lender, suspend the obligation of such Lender to make additional
Loans of the Type with respect to which such compensation is requested until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.04 shall be applicable).
(b) REGULATORY CHANGE. Without limiting the effect of the provisions of
Section 5.01(a), in the event that at any time (by reason of any Regulatory
Change or any other circumstances arising after the Closing Date affecting (A)
any Lender, (B) the Eurodollar interbank market or (C) such Lender's position in
such market), the Eurodollar Rate, as determined in good faith by such Lender,
will not adequately and fairly reflect the cost to such Lender of funding its
Eurodollar Loans, then, if such Lender so elects, by notice to the Borrower and
the Agent, the obligation of such Lender to make additional Eurodollar Loans
shall be suspended until such Regulatory Change or other circumstances ceases to
be in effect (in which case the provisions of Section 5.04 shall be applicable).
(c) CAPITAL ADEQUACY. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower shall
pay directly to any Lender from time to time on request such amounts as such
Lender may reasonably determine to be necessary to compensate such Lender or its
parent or holding company for any costs which it determines are attributable to
the maintenance by such Lender or its parent or holding company (or any
Applicable Lending Office), pursuant to any Governmental Requirement following
any Regulatory Change, of capital in respect of its Commitment, its Notes or its
Loans or any interest held by it in any Letter of Credit, such compensation to
include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of such Lender or its parent or holding company (or
any Applicable Lending Office) to a level below that which such Lender or its
parent or holding company (or any Applicable Lending Office) could have achieved
but for such Governmental Requirement. Such Lender will notify the Borrower that
it is entitled to compensation pursuant to this Section 5.01(c) as promptly as
practicable after it determines to request such compensation.
(d) COMPENSATION PROCEDURE. Any Lender notifying the Borrower of the
incurrence of additional costs under this Section 5.01 shall in such notice to
the Borrower and the Agent set forth in reasonable detail the basis and amount
of its request for compensation. Determinations and allocations by each Lender
for purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to Section 5.01(a) or (b), or of the effect of capital maintained
pursuant to Section 5.01(c), on its costs or rate of return of maintaining Loans
or its obligation to make Loans or issue Letters of Credit, or on amounts
receivable by it in respect of Loans or Letters of Credit, and of the amounts
required to compensate such Lender under this Section 5.01, shall be conclusive
and binding for all purposes, provided that such determinations and allocations
are made on a reasonable basis. Any request for additional compensation under
this Section 5.01 shall be paid by the Borrower within thirty (30) days of the
receipt by the Borrower of the notice described in this Section 5.01(d).
Section 5.02 LIMITATION ON EURODOLLAR LOANS. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Eurodollar
Rate for any Interest Period:
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(i) the Agent determines (which determination shall be conclusive,
absent manifest error) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" in Section
1.02 are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Eurodollar
Loans as provided herein; or
(ii) the Agent determines (which determination shall be conclusive,
absent manifest error) that the relevant rates of interest referred to in
the definition of "Eurodollar Rate" in Section 1.02 upon the basis of
which the rate of interest for Eurodollar Loans for such Interest Period
is to be determined are not sufficient to adequately cover the cost to the
Lenders of making or maintaining Eurodollar Loans;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans.
Section 5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder, then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make Eurodollar Loans shall be suspended until such
time as such Lender may again make and maintain Eurodollar Loans (in which case
the provisions of Section 5.04 shall be applicable).
Section 5.04 BASE RATE LOANS PURSUANT TO SECTIONS 5.01, 5.02 AND 5.03. If
the obligation of any Lender to make Eurodollar Loans shall be suspended
pursuant to Sections 5.01, 5.02 or 5.03 ("AFFECTED LOANS"), all Affected Loans
which would otherwise be made by such Lender shall be made instead as Base Rate
Loans (and, if an event referred to in Section 5.01(b) or Section 5.03 has
occurred and such Lender so requests by notice to the Borrower, all Affected
Loans of such Lender then outstanding shall be automatically converted into Base
Rate Loans on the date specified by such Lender in such notice) and, to the
extent that Affected Loans are so made as (or converted into) Base Rate Loans,
all payments of principal which would otherwise be applied to such Lender's
Affected Loans shall be applied instead to its Base Rate Loans.
Section 5.05 COMPENSATION. The Borrower shall pay to each Lender within
thirty (30) days of receipt of written request of such Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:
(i) any payment, prepayment or conversion of a Eurodollar Loan
properly made by such Lender or the Borrower for any reason (including,
without limitation, the acceleration of the Loans pursuant to Section
10.01) on a date other than the last day of the Interest Period for such
Loan; or
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(ii) any failure by the Borrower for any reason (including but not
limited to, the failure of any of the conditions precedent specified in
Article VI to be satisfied) to borrow, continue or convert a Eurodollar
Loan from such Lender on the date for such borrowing, continuation or
conversion specified in the relevant notice given pursuant to Section
2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount so paid, prepaid or converted
or not borrowed for the period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the Interest Period for such
Loan (or, in the case of a failure to borrow, the Interest Period for such Loan
which would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Loan provided for herein over (ii) the
interest component of the amount such Lender would have bid in the London
interbank market for Dollar deposits of leading banks in amounts comparable to
such principal amount and with maturities comparable to such period (as
reasonably determined by such Lender).
Section 5.06 REPLACEMENT LENDERS.
(a) If any Lender has notified the Borrower and the Agent of its incurring
additional costs under Section 5.01 or has required the Borrower to make
payments for Taxes under Section 4.06, then the Borrower may, unless such Lender
has notified the Borrower and the Agent that the circumstances giving rise to
such notice no longer apply, terminate, in whole but not in part, the Commitment
of such Lender (other than the Agent) (the "TERMINATED LENDER") at any time upon
five (5) Business Days' prior written notice to the Terminated Lender and the
Agent (such notice referred to herein as a "NOTICE OF TERMINATION").
(b) In order to effect the termination of the Commitment of the Terminated
Lender, the Borrower shall: (i) obtain an agreement with one or more Lenders to
increase their Commitment or Commitments and/or (ii) request any one or more
other banking institutions to become parties to this Agreement in place and
instead of such Terminated Lender and agree to accept a Commitment or
Commitments; PROVIDED, HOWEVER, that such one or more other banking institutions
are reasonably acceptable to the Agent and become parties by executing an
Assignment (the Lenders or other banking institutions that agree to accept in
whole or in part the Commitment of the Terminated Lender being referred to
herein as the "REPLACEMENT LENDERS"), such that the aggregate increased and/or
accepted Commitments of the Replacement Lenders under clauses (i) and (ii) above
equal the Commitment of the Terminated Lender.
(c) The Notice of Termination shall include the name of the Terminated
Lender, the date the termination will occur (the "LENDER TERMINATION DATE"), and
the Replacement Lender or Replacement Lenders to which the Terminated Lender
will assign its Commitment and, if there will be more than one Replacement
Lender, the portion of the Terminated Lender's Commitment to be assigned to each
Replacement Lender.
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(d) On the Lender Termination Date, (i) the Terminated Lender shall by
execution and delivery of an Assignment assign its Commitment to the Replacement
Lender or Replacement Lenders (pro rata, if there is more than one Replacement
Lender, in proportion to the portion of the Terminated Lender's Commitment to be
assigned to each Replacement Lender) indicated in the Notice of Termination and
shall assign to the Replacement Lender or Replacement Lenders each of its Loans
(if any) then outstanding and participation interests in Letters of Credit (if
any) then outstanding (pro rata as aforesaid), (ii) the Terminated Lender shall
endorse its Notes, payable without recourse, representation or warranty to the
order of the Replacement Lender or Replacement Lenders (pro rata as aforesaid),
(iii) the Replacement Lender or Replacement Lenders shall purchase the Notes
held by the Terminated Lender (pro rata as aforesaid) at a price equal to the
unpaid principal amount thereof plus interest, facility and other fees, and
other amounts owing under the Loan Documents accrued and unpaid to the Lender
Termination Date, and (iv) the Replacement Lender or Replacement Lenders will
thereupon (pro rata as aforesaid) succeed to and be substituted in all respects
for the Terminated Lender with like effect as if becoming a Lender pursuant to
the terms of Section 12.06(b), and the Terminated Lender will have the rights
and benefits of an assignor under Section 12.06(b). To the extent not in
conflict, the terms of Section 12.06(b) shall supplement the provisions of this
Section 5.06(d). For each assignment made under this Section 5.06, the
Replacement Lender shall pay to the Agent the processing fee provided for in
Section 12.06(b). The Borrower will be responsible for the payment of any
breakage costs, as set forth in Section 5.05, associated with termination of the
Terminated Lender and assignment of Loans and Commitments to Replacement
Lenders.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 INITIAL FUNDING.
The obligation of the Lenders to make the Initial Funding is subject to
the receipt by the Agent and the Lenders of all fees payable pursuant to Section
2.04 on or before the Closing Date and the receipt by the Agent of the following
documents and satisfaction of the other conditions provided in this Section
6.01, each of which shall be reasonably satisfactory to the Agent in form and
substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Borrower setting forth (i) resolutions of its board of directors with respect to
the authorization of the Borrower to execute and deliver the Loan Documents to
which it is a party and to enter into the transactions contemplated in those
documents, (ii) the officers of the Borrower (y) who are authorized to sign the
Loan Documents to which Borrower is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and
(iv) the articles or certificate of incorporation and bylaws of the Borrower,
certified as being true and
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complete. The Agent and the Lenders may conclusively rely on such certificate
until the Agent receives notice in writing from the Borrower to the contrary.
(b) A certificate of the Secretary or an Assistant Secretary of each
Guarantor setting forth (i) resolutions of its board of directors with respect
to the authorization of such Guarantor to execute and deliver the Loan Documents
to which it is a party and to enter into the transactions contemplated in those
documents, (ii) the officers of such Guarantor (y) who are authorized to sign
the Loan Documents to which such Guarantor is a party and (z) who will, until
replaced by another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and
(iv) the articles or certificate of incorporation and bylaws of such Guarantor,
certified as being true and complete. The Agent and the Lenders may conclusively
rely on such certificate until they receive notice in writing from such
Guarantor to the contrary.
(c) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Borrower and Subsidiaries.
(d) A compliance certificate which shall be substantially in the form of
EXHIBIT C, duly and properly executed by a Responsible Officer and dated as of
the date of the Initial Funding.
(e) The Notes, duly completed and executed.
(f) The Security Instruments, including those described on EXHIBIT D, duly
completed and executed in sufficient number of counterparts for recording, if
necessary.
(g) Opinions of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P. and ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
Incorporated, counsel to the Borrower and Guarantors, in form and substance
satisfactory to the Agent, as to such matters incident to the transactions
herein contemplated as the Agent may reasonably request.
(h) A certificate of insurance coverage of the Borrower evidencing that
the Borrower is carrying insurance in accordance with Section 7.19.
(i) Balance sheet as of September 30, 1998.
(j) Such other documents as the Agent or any Lender or special counsel to
the Agent may reasonably request.
Section 6.02 INITIAL AND SUBSEQUENT LOANS AND LETTERS OF CREDIT.
(a) The obligation of the Lenders to make Loans to the Borrower upon the
occasion of each borrowing hereunder and to issue, renew, extend or reissue
Letters of Credit for the account of the Borrower (including the Initial
Funding) is subject to the further conditions precedent that, as of the date of
such Loans and after giving effect thereto:
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(i) no Default shall have occurred and be continuing; and
(ii) the representations and warranties made by the Borrower in
Article VII and in the Security Instruments shall be true on
and as of the date of the making of such Loans or issuance,
renewal, extension or reissuance of a Letter of Credit with
the same force and effect as if made on and as of such date
and following such new borrowing, except to the extent such
representations and warranties are expressly limited to an
earlier date or the Majority Lenders may expressly consent in
writing to the contrary.
(b) If a Loan is to be used by the Borrower in connection with a New
Acquisition, the obligation of the Lenders to make such Loan is subject to the
further conditions precedent that, as of the date of such Loans:
(i) Borrower or Subsidiary shall have entered into a Management
Services Agreement and an Accounts Receivable Purchase
Agreement with the new Acquired Entity in form and substance
satisfactory to Agent;
(ii) Borrower shall have submitted updated SCHEDULES 7.14, 7.19 and
7.22 to Agent;
(iii) Borrower shall have passed corporate resolutions approving
such New Acquisition;
(iv) The Agent shall have received copies of any legal opinions
received by the Borrower or any Subsidiary from the seller in
connection with any New Acquisition relating to due
incorporation of the seller; due authorization and execution
by the seller of the purchase documents; enforceability of the
purchase documents against the seller; in the case of a stock
acquisition, valid issuance of the purchased shares; and no
authorizations, approvals or consents required other than
those obtained;
(v) The Agent shall have received the Security Instruments
required by Section 9.03(g)(i) and an officer's certificate,
substantially in the form of EXHIBIT F attached hereto,
certifying the representations and warranties made by the
Borrower in Article VII and in the Security Instruments,
including those Security Instruments obtained in connection
with such New Acquisition, shall be true on and as of the date
of the Loan except to the extent such representations and
warranties are expressly limited to an earlier date or the
Majority Lenders may expressly consent in writing to the
contrary;
(vi) The Agent shall have received a borrowing base report in the
form of EXHIBIT E attached hereto;
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(vii) The Agent shall have received a Compliance Certificate in the
form of EXHIBIT C attached hereto; and
(viii)The Agent shall have received a completed Put/Call Reserve
Amount Certificate in the form of EXHIBIT I attached hereto,
unless each Corporate C Member has exercised the Corporate C
Member's Merger Option or the CDC Call Option has been
exercised.
and, if such New Acquisition relates to a dental practice in any
state in which neither the Borrower or any Subsidiary is currently
operating, or if such New Acquisition involves consideration paid by
the Borrower or any Subsidiary in an amount of $5,000,000 or more:
(vii) The Agent shall have received legal opinions regarding any New
Acquisition in form and substance satisfactory to Lenders; and
(viii)Relating to a dental practice in any state in which neither
the Borrower or any Subsidiary is currently operating only,
the Agent shall have received risk analysis letters regarding
any New Acquisition in form and substance satisfactory to
Lenders.
(c) Each request for a borrowing or issuance, renewal, extension or
reissuance of a Letter of Credit by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in Section 6.02(a)(iii)
(both as of the date of such notice and, unless the Borrower otherwise notifies
the Agent prior to the date of and immediately following such borrowing or
issuance, renewal, extension or reissuance of a Letter of Credit as of the date
thereof).
Section 6.03 CONDITIONS PRECEDENT FOR THE BENEFIT OF LENDERS. All
conditions precedent to the obligations of the Lenders to make any Loan are
imposed hereby solely for the benefit of the Lenders, and no other Person may
require satisfaction of any such condition precedent or be entitled to assume
that the Lenders will refuse to make any Loan in the absence of strict
compliance with such conditions precedent.
Section 6.04 NO WAIVER. No waiver of any condition precedent shall
preclude the Agent or the Lenders from requiring such condition to be met prior
to making any subsequent Loan or preclude the Lenders from thereafter declaring
that the failure of the Borrower to satisfy such condition precedent constitutes
a Default.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Lenders that
(each representation and warranty herein is given as of the Closing Date and
shall be deemed repeated and reaffirmed on
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the dates of each borrowing and issuance, renewal, extension or reissuance of a
Letter of Credit as provided in Section 6.02):
Section 7.01 CORPORATE EXISTENCE. Each of the Borrower and each
Subsidiary: (i) is a corporation duly organized, legally existing and in good
standing under the laws of the jurisdiction of its incorporation; (ii) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Material Adverse Effect.
Section 7.02 FINANCIAL CONDITION. The audited consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as at December 31, 1997 and
the related consolidated statement of income, stockholders' equity and cash flow
of the Borrower and its Consolidated Subsidiaries for the fiscal year ended on
said date, with the opinion thereon of Pricewaterhouse Coopers L.L.P. heretofore
furnished to the Agent and the unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at September 30, 1998 and their
related consolidated statements of income, stockholders' equity and cash flow of
the Borrower and its Consolidated Subsidiaries for the nine month period ended
on such date heretofore furnished to the Agent, are complete and correct and
fairly present the consolidated financial condition of the Borrower and its
Consolidated Subsidiaries as at said dates and the results of its operations for
the fiscal year and the nine month period on said dates, all in accordance with
GAAP, as applied on a consistent basis (subject, in the case of the interim
financial statements, to normal year-end adjustments). Neither the Borrower nor
any Subsidiary has on the Closing Date any material Debt, contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in the Financial Statements or in
SCHEDULE 7.02. Since September 30, 1998, there has been no change or event
having a Material Adverse Effect. Since the date of the Financial Statements,
neither the business nor the Properties of the Borrower or any Subsidiary have
been materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any Governmental Authority, riot,
activities of armed forces or acts of God or of any public enemy. The unaudited
pro forma projected consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries at the Closing Date, and the unaudited pro forma
projected consolidated statement of income of the Borrower and its Consolidated
Subsidiaries as of the Closing Date, heretofore furnished to the Agent, fairly
present the pro forma projected consolidated financial condition of the Borrower
and its Consolidated Subsidiaries as at the Closing Date.
Section 7.03 LITIGATION. At the Closing Date there is no litigation,
legal, administrative or arbitral proceeding, investigation or other action of
any nature pending or, to the knowledge of the Borrower threatened against or
affecting the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect.
- 41 -
Section 7.04 NO BREACH. Neither the execution and delivery of the Loan
Documents, nor compliance with the terms and provisions hereof will conflict
with or result in a breach of, or require any consent which has not been
obtained as of the Closing Date under, the respective charter or by-laws of the
Borrower or any Subsidiary, or any Governmental Requirement or any material
agreement or instrument to which the Borrower or any Subsidiary is a party or by
which it is bound or to which it or its Properties are subject, or constitute a
default under any such material agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Borrower or any Subsidiary pursuant to the terms of any such material agreement
or instrument other than the Liens created by the Loan Documents.
Section 7.05 AUTHORITY. The Borrower and each Subsidiary have all
necessary corporate power and authority to execute, deliver and perform its
obligations under the Loan Documents to which it is a party; and the execution,
delivery and performance by the Borrower and each Subsidiary of the Loan
Documents to which it is a party, have been duly authorized by all necessary
corporate action on its part; and the Loan Documents constitute the legal, valid
and binding obligations of the Borrower and each Subsidiary, enforceable in
accordance with their terms.
Section 7.06 APPROVALS. No authorizations, approvals or consents of, and
no filings or registrations with, any Governmental Authority are necessary for
the execution, delivery or performance by the Borrower or any Subsidiary of the
Loan Documents to which it is a party or for the validity or enforceability
thereof, except for the recording and filing of the Security Instruments as
required by this Agreement.
Section 7.07 USE OF LOANS. The proceeds of the Loans shall be used to
provide financing for New Acquisitions, for capital expenditures and for general
working capital purposes of the Borrower; PROVIDED, HOWEVER, that not more than
$5,000,000 of the Loans (in the aggregate) may be used by the Borrower for
general working capital purposes. The Borrower is not engaged princi pally, or
as one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower, each Subsidiary and each ERISA Affiliate have complied
in all material respects with ERISA and, where applicable, the Code regarding
each Plan.
(b) Each Plan is, and has been, maintained in substantial compliance with
ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.
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(d) No liability to the PBGC (other than for the payment of current
premiums which are not past due) by the Borrower, any Subsidiary or any ERISA
Affiliate has been or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with respect
to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the Borrower,
any Subsidiary or any ERISA Affiliate is required under the terms of each Plan
or applicable law to have paid as contributions to such Plan, and no accumulated
funding deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, exists with respect to any Plan.
(f) The actuarial present value of the benefit liabilities under each Plan
which is subject to Title IV of ERISA does not, as of the end of the Borrower's
most recently ended fiscal year, exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities. The term "actuarial present
value of the benefit liabilities" shall have the meaning specified in section
4041 of ERISA.
(g) None of the Borrower, any Subsidiary or any ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole
discretion at any time without any material liability.
(h) None of the Borrower, any Subsidiary or any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the preceding six calendar
years, sponsored, maintained or contributed to, any Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the Plan.
Section 7.09 TAXES. Each of the Borrower and its Subsidiaries has filed
all United States Federal income tax returns and all other tax returns which are
required to be filed by them and have paid all material taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate. No tax lien has been filed and, to the
knowledge of the Borrower, no claim is being asserted with respect to any such
tax, fee or other charge.
Section 7.10 TITLES, ETC.
(a) Each of the Borrower and its Subsidiaries and each Acquired Entity has
good and defensible title to its material (individually or in the aggregate)
Properties, free and clear of all Liens, except Liens permitted by Section 9.02.
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(b) All leases and agreements necessary for the conduct of the business of
the Borrower and its Subsidiaries and each Acquired Entity are valid and
subsisting, in full force and effect and there exists no default or event or
circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or leases, which would affect
in any material respect the conduct of the business of the Borrower and its
Subsidiaries.
(c) The licenses, rights, Properties and other assets presently owned,
leased or licensed by the Borrower and its Subsidiaries and each Acquired
Entity, include all rights, Properties and other assets necessary to permit the
Borrower and its Subsidiaries and each Acquired Entity to conduct their business
in all material respects in the same manner as its business has been conducted
prior to the Closing Date.
(d) All of the assets and Properties of the Borrower and its Subsidiaries
and each Acquired Entity which are reasonably necessary for the operation of its
business are in good working condition and are maintained in accordance with
prudent business standards.
Section 7.11 NO MATERIAL MISSTATEMENTS. No written information, statement,
exhibit, certificate, document or report furnished to the Agent and the Lenders
(or any of them) by the Borrower or any Subsidiary in connection with the
negotiation of this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statement
contained therein not materially misleading in the light of the circumstances in
which made and with respect to the Borrower and its Subsidiaries taken as a
whole.
Section 7.12 INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 7.14 SUBSIDIARIES. Except as set forth on SCHEDULE 7.14, the
Borrower has no Sub sidiaries. In the event that a new Subsidiary is formed and
an advance is requested under this Agreement, and the Lenders approve such
advance, Borrower will provide the Agent with a new, updated SCHEDULE 7.14.
Section 7.15 LOCATION OF BUSINESS AND OFFICES. The Borrower's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement. The principal place of business and
chief executive office of each Subsidiary are located at the addresses stated on
SCHEDULE 7.14.
Section 7.16 DEFAULTS. Neither the Borrower nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any material agreement or instrument to
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which the Borrower or any Subsidiary is a party or by which the Borrower or any
Subsidiary is bound which default would have a Material Adverse Effect. No
Default hereunder has occurred and is continuing.
Section 7.17 ENVIRONMENTAL MATTERS. Except as would not have a Material
Adverse Effect, neither any Property of the Borrower nor any Subsidiary nor the
operations conducted thereon violate any law, order or requirement of any court
or Governmental Authority or any Environmental Laws.
Section 7.18 COMPLIANCE WITH THE LAW. Neither the Borrower nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Section 7.19 INSURANCE. SCHEDULE 7.19 attached hereto contains an accurate
and complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by the Borrower and each
Subsidiary. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the closing
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which the Borrower or any
Subsidiary is a party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage in at least such amounts and against at least such
risks (but including in any event public liability) as are usually insured
against in the same general area by companies engaged in the same or a similar
business for the assets and operations of the Borrower and each Subsidiary; will
remain in full force and effect through the respective dates set forth in
SCHEDULE 7.19 without the payment of additional premiums; and will not in any
way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. SCHEDULE 7.19 identifies all material risks, if
any, which the Borrower and its Subsidiaries and their respective Board of
Directors or officers have designated as being self insured. Neither the
Borrower nor any Subsidiary has been refused any insurance with respect to its
assets or operations, nor has its coverage been limited below usual and
customary policy limits, by an insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last three
years. In the event that a new Subsidiary is formed and an advance is requested
under the Loans, and the Lenders approve such advance, Borrower will provide the
Agent with a new, updated SCHEDULE 7.19.
Section 7.20 MANAGEMENT SERVICES AGREEMENTS AND ACCOUNTS RECEIVABLE
PURCHASE AGREEMENTS. The copies of Management Services Agreements and Account
Receivable Purchase Agreements listed on Schedule 7.20 hereto. The above
Management Services Agreements and the Accounts Receivable Purchase Agreements
are valid, binding and enforceable against the parties thereto and the Borrower
has the right to ▇▇▇▇▇ ▇ ▇▇▇▇ and has granted a Lien on the Borrower's right to
receive proceeds under the Management Services Agreements and the receivables
purchased under the Accounts Receivable Purchase Agreements pursuant to the
Security Instruments, and the Lenders may enforce their remedies contained in
the Security Instruments against such collateral. The Borrower has obtained all
consents from Governmental Authorities necessary to perform under the
- 45 -
Management Services Agreements, the failure of which to obtain could have a
Material Adverse Effect. In the event that a new Subsidiary is formed, any
Management Services Agreements and Accounts Receivable Purchase Agreements
binding such Subsidiary shall be included within the terms of this
representation and warranty.
Section 7.21 RESTRICTION ON LIENS. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or arrangement (other than this
Agreement and the Security Instruments), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to other Persons on or in respect of their respective assets or
Properties, except for Property subject to Liens permitted under Section 9.02.
Section 7.22 MATERIAL AGREEMENTS. Set forth on SCHEDULE 7.22 hereto is a
complete and correct list of all material credit agreements, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
joint venture agreements, and other instruments in effect or to be in effect as
of the Closing Date (other than Hedging Agreements) providing for, evidencing,
securing or otherwise relating to any Debt of the Borrower or any of its
Subsidiaries in excess of $250,000, and all obligations of the Borrower or any
of its Subsidiaries to issuers of surety or appeal bonds issued for account of
the Borrower or any such Subsidiary in excess of $250,000, and such list
correctly sets forth the names of the debtor or lessee and creditor or lessor
with respect to the Debt or lease obligations outstanding or to be outstanding
and the Property subject to any Lien securing such Debt or lease obligation. In
the event that a new Subsidiary is formed and an advance is requested under this
Agreement, if Lenders approve such advance, Borrower will provide the Agent with
a new, updated SCHEDULE 7.22.
Section 7.23 HEDGING AGREEMENTS. SCHEDULE 7.23 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements of the
Borrower, the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net ▇▇▇▇ to market value
thereof, all credit support agreements relating thereto (including any margin
required or supplied), and the counterparty to each such agreement.
Section 7.24 YEAR 2000.
(a) The Borrower has (i) begun analyzing the operations of Borrower
and its Subsidiaries and Affiliates that could be adversely affected by
failure to become Year 2000 compliant (that is, that computer
applications, imbedded microchips and other systems will be able to
perform date-sensitive functions prior to and after December 31, 1999) and
(ii) developed a plan for becoming Year 2000 compliant in a timely manner,
the implementation of which is on schedule in all material respects. The
Borrower reasonably believes that it will become Year 2000 compliant for
its operations and those of its Subsidiaries and Affiliates on a timely
basis except to the extent that a failure to do so could not reasonably be
expected to have a Material Adverse Effect upon the financial condition of
the Borrower.
(b) The Borrower reasonably believes any suppliers and vendors that
are material to the operations of Borrower or its Subsidiaries and
Affiliates will be Year 2000 compliant for their own computer applications
except to the extent that a failure to do so could not
- 46 -
reasonably be expected to have a Material Adverse Effect upon the
financial condition of the Borrower.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of all Loans hereunder, all interest
thereon and all other amounts payable by the Borrower hereunder:
Section 8.01 REPORTING REQUIREMENTS. The Borrower shall deliver, or shall
cause to be delivered, to the Agent with sufficient copies of each for the
Lenders:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within 120 days after the end of each fiscal year of the Borrower, the audited
consolidated and unaudited consolidat ing statements of income, stockholders'
equity, changes in financial position and cash flow of the Borrower and its
Consolidated Subsidiaries for such fiscal year, and the related consolidated and
consolidating balance sheets of the Borrower and its Consolidated Subsidiaries
as at the end of such fiscal year, and setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year, and accompanied by
the related opinion of independent public accountants of recognized national
standing acceptable to the Agent which opinion shall state that said financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries as
at the end of, and for, such fiscal year and that such financial statements have
been prepared in accordance with GAAP, except for such changes in such
principles with which the independent public accountants shall have concurred
and such opinion shall not contain a "going concern" or like qualification or
exception, and a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any Default.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event
within 45 days after the end of each of the first three fiscal quarterly periods
of each fiscal year of the Borrower, consolidated and consolidating statements
of income, stockholders' equity, changes in financial position and cash flow of
the Borrower and its Consolidated Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated and consolidating balance sheets as at the
end of such period, and setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year,
accompanied by the certificate of a Responsible Officer, which certificate shall
state that said financial statements fairly present the consolidated and
consolidating financial condition and results of operations of the Borrower and
its Consolidated Subsidiaries in accordance with GAAP, as at the end of, and
for, such period (subject to normal year-end audit adjustments).
(c) BUDGET. As soon as available and in any event within thirty (30) days
after the end of each fiscal year of the Borrower, a budget for the Borrower and
its Consolidated Subsidiaries, as
- 47 -
approved by the board of directors of the Borrower, for the following fiscal
year setting forth in comparative form corresponding figures from the preceding
fiscal year, in reasonable detail and certified as to its good-faith preparation
by a Responsible Officer.
(d) NOTICE OF DEFAULT, ETC. Promptly after the Borrower knows that any
Default or any Material Adverse Effect has occurred, a notice of such Default or
Material Adverse Effect, describing the same in reasonable detail and the action
the Borrower proposes to take with respect thereto.
(e) OTHER ACCOUNTING REPORTS. Promptly upon receipt thereof, a copy of
each other report or letter submitted to the Borrower or any Subsidiary by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower and its Subsidiaries, and a copy of
any response by the Borrower or any Subsidiary of the Borrower, or the Board of
Directors of the Borrower or any Subsidiary of the Borrower, to such letter or
report.
(f) SEC FILINGS, ETC. Promptly upon its becoming available, each financial
statement, report, notice or proxy statement sent by the Borrower to
stockholders generally and each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal letters)
in respect thereof filed by the Borrower with or received by the Borrower in
connection therewith from any securities exchange or the SEC or any successor
agency.
(g) NOTICES UNDER OTHER LOAN AGREEMENTS. Promptly after the furnishing
thereof, copies of any material statement, report or notice furnished to or any
Person pursuant to the terms of any indenture, loan or credit or other similar
agreement, other than this Agreement and not otherwise required to be furnished
to the Agent pursuant to any other provision of this Section 8.01.
(h) BORROWING BASE REPORT. Promptly upon becoming available and in any
event within 45 days after the end of each of Borrower's fiscal quarters, a
borrowing base report, which shall contain supporting schedules and be in
substantially the form of EXHIBIT E attached hereto.
(i) ANNUAL REVENUE REPORTS. As soon as available and in any event within
120 days after the end of each fiscal year of the Borrower, a report prepared by
the Borrower for each dental center setting forth the revenues, expenses and
contributions to profit of such dental center in form and substance acceptable
to the Agent.
(j) QUARTERLY REVENUE REPORTS. Beginning December 31, 1998, as soon as
available and in any event within 45 days after the end of each of the first
three fiscal quarterly periods of each fiscal year of the Borrower, a report by
the Borrower for each dental center setting forth the revenues, expenses and
contributions to profit of such dental center in form and substance acceptable
to the Agent.
(k) PLAN REPORT. From time to time such other information regarding the
business, affairs or financial condition of the Borrower or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA) as the Agent may
reasonably request.
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(l) HEDGING AGREEMENT REPORT. As soon as available and in any event within
ten (10) Business Days after the last day of each calendar quarter, a report, in
form and substance satisfactory to the Agent, setting forth as of the last
Business Day of such calendar quarter a true and complete list of all Hedging
Agreements of the Borrower, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net
▇▇▇▇ to market value therefor, any new credit support agreements relating
thereto not listed on SCHEDULE 7.23, any margin required or supplied under any
credit support document, and the counterparty to each such agreement.
(m) CAPITAL EXPENDITURES BUDGET. Promptly upon becoming available and in
any event within 30 days after the end of each fiscal year of the Borrower, a
capital expenditure budget for the next fiscal year setting forth all proposed
capital expenditures to be incurred during such fiscal year.
(n) MODIFICATIONS OF MANAGEMENT SERVICES AGREEMENTS, ETC. Promptly upon
the execution thereof, executed copies of any modification or amendment of any
Management Services Agreement or Accounts Receivable Purchase Agreement.
(o) PUT/CALL RESERVE AMOUNT CERTIFICATE Within 45 days after each June 30
and December 31 of each calendar year until the earlier to occur of the Final
Maturity Date or the exercise of either the last Corporate C Member's Merger
Option or the CDC Call Option, a completed Put/Call Reserve Certificate in the
form of EXHIBIT I attached hereto.
The Borrower shall furnish to the Lenders, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of EXHIBIT C hereto executed by a Responsible Officer
(i) certifying as to the matters set forth therein and stating that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine the Borrower's Total
Funded Debt, Senior Funded Debt and EBITDA and whether the Borrower is in
compliance with Sections 9.11, 9.12, 9.13, 9.14, 9.15 and 9.16 as of the end of
the respective fiscal quarter or fiscal year.
Section 8.02 LITIGATION. The Borrower shall promptly give to the Agent
notice of: (i) all legal or arbitral proceedings, and of all proceedings before
any Governmental Authority affecting the Borrower, any Acquired Entity or any
Subsidiary, except proceedings which, if adversely determined, would not have a
Material Adverse Effect, and (ii) of any litigation or proceeding against or
adversely affecting the Borrower, any Acquired Entity or any Subsidiary in which
the amount involved is not covered in full by insurance (subject to normal and
customary deductibles and for which the insurer has not assumed the defense), or
in which injunctive or similar relief is sought. The Borrower will, and will
cause each of its Subsidiaries to, promptly notify the Agent and each of the
Lenders of any claim, judgment, Lien or other encumbrance affecting any Property
of the Borrower, any Acquired Entity or any Subsidiary if the value of the
claim, judgment, Lien, or other encumbrance affecting such Property shall exceed
$250,000.
Section 8.03 MAINTENANCE, ETC.
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(a) GENERALLY. The Borrower shall and shall cause each Subsidiary to:
preserve and maintain its corporate existence and all of its material rights,
privileges and franchises; keep books of record and account in which full, true
and correct entries will be made of all dealings or transactions in relation to
its business and activities; comply with all Governmental Requirements if
failure to comply with such requirements will have a Material Adverse Effect;
pay and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property prior to the
date on which penalties attach thereto, except for any such tax, assessment,
charge or levy the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained;
upon reasonable notice, permit representatives of the Agent or any Lender,
during normal business hours, to examine, copy and make extracts from its books
and records, to inspect its Properties, and to discuss its business and affairs
with its officers, all to the extent reasonably requested by such Lender or the
Agent (as the case may be); and keep, or cause to be kept, insured by
financially sound and reputable insurers all Property of a character usually
insured by Persons engaged in the same or similar business similarly situated
against loss or damage of the kinds and in the amounts customarily insured
against by such Persons and carry such other insurance as is usually carried by
such Persons including, without limitation, environmental risk insurance to the
extent reasonably available.
(b) PROOF OF INSURANCE. Contemporaneously with the delivery of the
financial statements required by Section 8.01(a) to be delivered for each year,
the Borrower will furnish or cause to be furnished to the Agent a certificate of
insurance coverage from the insurer in form and substance satisfactory to the
Agent and, if requested, will furnish the Agent copies of the applicable
policies.
(c) OPERATION OF PROPERTIES. The Borrower will and will cause each
Subsidiary to operate its Properties or cause such Properties to be operated in
a careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
in all material respects with all Governmental Requirements.
Section 8.04 ENVIRONMENTAL MATTERS.
(a) ESTABLISHMENT OF PROCEDURES. The Borrower will and will cause each
Subsidiary to establish and implement such procedures as may be reasonably
necessary to continuously determine and assure that (i) all Property of the
Borrower and its Subsidiaries and the operations conducted thereon and other
activities of the Borrower and its Subsidiaries are, in all material respects,
in compliance with and do not violate the requirements of any Environmental
Laws, and (ii) no oil, hazardous substances or solid wastes are disposed of or
otherwise released on or to any Property owned by any such party except in
compliance with Environmental Laws.
(b) NOTICE OF ACTION. The Borrower will promptly notify the Agent in
writing of any threatened action, investigation or inquiry by any Governmental
Authority of which the Borrower has knowledge in connection with any
Environmental Laws, excluding routine testing and corrective action.
Section 8.05 FURTHER ASSURANCES. The Borrower will and will cause each
Subsidiary to cure promptly any defects in the creation and issuance of the
Notes and the execution and delivery of the
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Security Instruments and this Agreement. The Borrower at its expense will and
will cause each Subsidiary to promptly execute and deliver to the Agent upon
request all such other documents, agreements and instruments to comply with or
accomplish the covenants and agreements of the Borrower or any Subsidiary, as
the case may be, in the Security Instruments and this Agreement, or to further
evidence and more fully describe the collateral intended as security for the
Notes, or to correct any omissions in the Security Instruments, or to state more
fully the security obligations set out herein or in any of the Security
Instruments, or to perfect, protect or preserve any Liens created pursuant to
any of the Security Instruments, or to make any recordings, to file any notices
or obtain any consents, all as may be necessary or appropriate in connection
therewith.
Section 8.06 PERFORMANCE OF OBLIGATIONS. The Borrower will pay the Notes
according to the reading, tenor and effect thereof; and the Borrower will and
will cause each Subsidiary to do and perform every act and discharge all of the
obligations to be performed and discharged by them under the Security
Instruments and this Agreement, at the time or times and in the manner
specified.
Section 8.07 ERISA INFORMATION AND COMPLIANCE. The Borrower will promptly
furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly
furnish to the Agent with sufficient copies to the Lenders (i) promptly after
the filing thereof with the United States Secretary of Labor, the Internal
Revenue Service or the PBGC, copies of each annual and other report with respect
to each Plan or any trust created thereunder, (ii) immediately upon becoming
aware of the occurrence of any ERISA Event or of any "prohibited transaction,"
as described in section 406 of ERISA or in section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written notice
signed by a Responsible Officer specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.08 MANAGEMENT SERVICES AGREEMENTS AND ACCOUNTS RECEIVABLE
PURCHASE AGREEMENTS. The Borrower will and will cause each Subsidiary to do all
things necessary to maintain and keep in full force and effect and to enforce
compliance with the Management Services Agreements and the Accounts Receivable
Purchase Agreements. In the event that a new Subsidiary is formed, any
Management Services Agreements and Accounts Receivable Purchase Agreements
binding such Subsidiary shall be included within the terms of this affirmative
covenant.
Section 8.09 GUARANTEE BY ACQUIRED ENTITIES. In connection with Borrower's
or any Subsidiary's purchase of all the outstanding stock of any Acquired Entity
pursuant to any Stock
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Purchase Agreement, upon the request of the Agent at any time thereafter, the
Borrower will cause such Acquired Entity to guarantee the Indebtedness upon
terms satisfactory to the Agent.
Section 8.10. DISSOLUTION OF JHCDDS, INC. Notwithstanding any provision
contained herein to the contrary, JHCDDS, Inc. may be dissolved without the
consent of the Agent or the Lenders. The Borrower shall provide the Agent with
notice of such dissolution upon its occurrence.
Section 8.11 COVENANT TO SWAP INTEREST RATES. The Borrower hereby
covenants and agrees that if, at any time, Total Funded Debt exceeds
$25,000,000, the Borrower shall, at the Agent's request, within twenty Business
Days after such occurrence, enter into a Hedging Agreement with one of the
Lenders, or with another party reasonably acceptable to the Majority Lenders,
whereby the Borrower will swap the floating interest rate relating to the amount
of Total Funded Debt exceeding $25,000,000 for a fixed interest rate on such
amount.
Section 8.12 YEAR 2000. The Borrower will promptly notify the Agent in the
event the Borrower determines that any computer application which is material to
the operations of the Borrower, its Subsidiaries or any of its material vendors
or suppliers will not be fully Year 2000 compliant on a timely basis, except to
the extent that such failure could not reasonably be expected to have a Material
Adverse Effect upon the financial condition of the Borrower.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of Loans hereunder, all interest thereon
and all other amounts payable by the Borrower hereunder, without the prior
written consent of the Majority Lenders:
Section 9.01 DEBT. Neither the Borrower nor any Subsidiary will incur,
create, assume or permit to exist any Debt, except:
(a) the Notes or other Indebtedness or any guaranty of or suretyship
arrangement for the Notes or other Indebtedness;
(b) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of
business which, if greater than 90 days past the invoice or billing
date, are being contested in good faith by appropriate proceedings
and reserves adequate under GAAP shall have been established
therefor;
(c) Debt under capital leases (as required to be reported on the
financial statements of the Borrower pursuant to GAAP) not to exceed
$2,000,000 in the aggregate;
(d) Debt of the Borrower under Hedging Agreements with the Lender or
otherwise approved by the Agent;
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(e) purchase money Debt not to exceed $2,000,000 in the aggregate;
(f) Debt described on SCHEDULE 9.01; and
(g) Subordinated Debt in connection with New Acquisitions.
Section 9.02 LIENS. Neither the Borrower nor any Subsidiary will create,
incur, assume or permit to exist any Lien on any of its Properties (now owned or
hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens disclosed on SCHEDULE 9.02.
(d) Liens securing capital leases allowed under Section 9.01(c), but only
on the Property leased with such capital Leases.
(e) Liens originally created to secure purchase money Debt permitted under
Section 9.01(e), which in each case shall not exceed 100% of the lesser of the
total purchase price and the fair market value of the Property acquired as
determined at the time of acquisition; PROVIDED, THAT, (i) the Property to be
purchased with the proceeds of such Debt shall be purchased not more than sixty
(60) days prior to the date of the creation of such Lien and (ii) such Lien
encumbers only the Property so acquired.
Section 9.03 INVESTMENTS, LOANS AND ADVANCES. Neither the Borrower nor any
Subsidiary will make or permit to remain outstanding any loans or advances to or
investments in any Person, except that the foregoing restriction shall not apply
to:
(a) investments, loans or advances reflected in the Financial Statements
or which are disclosed to the Agent in SCHEDULE 9.03;
(b) accounts receivable arising in the ordinary course of business;
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof,
in each case maturing within one year from the date of creation
thereof;
(d) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by Standard & Poor's Corporation
or ▇▇▇▇▇'▇ Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any
office located in the United States of any other bank or trust
company which is organized under the laws of the United
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States or any state thereof, has capital, surplus and undivided
profits aggregating at least $100,000,000.00 (as of the date of such
Lender's or bank or trust company's most recent financial reports)
and has a short term deposit rating of no lower than A2 or P2, as
such rating is set forth from time to time, by Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., respectively;
(f) deposits in money market funds investing exclusively in investments
described in Section 9.03(c), 9.03(d) or 9.03(e);
(g) investments in, or purchases of, dental practices, provided that:
(i) such purchase is an Asset Purchase or Stock Purchase and, if
such purchase is a Stock Purchase, such Acquired Entity shall be
merged with and into Borrower or a Subsidiary, and such Subsidiary
(if the surviving entity) shall have executed a Guaranty Agreement
pursuant to Section 9.19 hereof and executed Security Instruments in
favor of Agent in form and substance satisfactory to Agent;
(ii) (A) any investment of $5,000,000.00 or more in any one dental
practice, (B) any investment in any dental practice which has
incurred a net income loss calculated after adding back any
adjustments for any owner's compensation as though the dental
practice had been owned by the Borrower throughout the relevant
pre-purchase period, for any of its last three fiscal years, or (C)
any investment in any dental practice which has a total purchase
price in excess of eight (8) times the EBITDA of such dental
practice, shall require the prior written approval of the Majority
Lenders and the Borrower shall deliver to Agent at least ten (10)
Business Days prior to closing the purchase of any such dental
practice (1) pro forma financial statements demonstrating continued
compliance with all covenants in this Agreement following the
inclusion of the target in Borrower's consolidated enterprise, (2)
completed due diligence consisting of the information listed on
EXHIBIT G, as approved by the Agent, (3) due diligence review
conducted by Claymore Partners, Ltd. if such dental practice is in a
region in which neither the Borrower nor any Subsidiary owns a
dental practice as of the date hereof and the investment in such
practice exceeds $5,000,000, (4) audited or reviewed financial
statements of the dental practice to be acquired for the last three
(3) years and interim period or, in lieu thereof, confirmation of
profits, cash flows and accounts receivable of such dental practice
by a third party acceptable to Agent, (5) an updated Borrowing Base
Report in substantially the form of EXHIBIT E attached hereto, and
(6) any additional information and/or documentation reasonably
requested by the Agent;
(iii) for any investment of $2,000,000 or more but less than
$5,000,000 the Borrower shall deliver to Agent within ten (10)
Business Days after closing the purchase of any such dental practice
(1) pro forma financial statements demonstrating continued
compliance with all covenants in this Agreement following the
inclusion of the target in Borrower's consolidated enterprise, (2)
completed due diligence consisting of the information listed on
EXHIBIT G, as approved by the Agent, (3)
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compiled financial statements of the dental practice to be acquired
for the last three (3) years and interim period or, in lieu thereof,
confirmation of profits, cash flows and accounts receivable of such
dental practice by a third party acceptable to Agent, (4) an updated
Borrowing Base Report in substantially the form of EXHIBIT E
attached hereto, and (5) any additional information and/or
documentation reasonably requested by the Agent.
(iv) for any investment of less than $2,000,000, the Borrower shall
deliver to the Agent within ten (10) Business Days after closing the
purchase of any such dental practice (1) an updated Borrowing Base
Report in substantially the form of EXHIBIT E attached hereto, and
(2) copies of the tax returns of the target dental practice for the
last three years.
Section 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. The Borrower will
not declare or pay any dividend, purchase, redeem or otherwise acquire for value
any of its stock now or hereafter outstanding, return any capital to its
stockholders or make any distribution of its assets to its stockholders.
Section 9.05 SALES AND LEASEBACKS. Neither the Borrower nor any Subsidiary
will enter into any arrangement, directly or indirectly, with any Person whereby
the Borrower or any Subsidiary shall sell or transfer any of its Property,
whether now owned or hereafter acquired, and whereby the Borrower or any
Subsidiary shall then or thereafter rent or lease as lessee such Property or any
part thereof or other Property which the Borrower or any Subsidiary intends to
use for substantially the same purpose or purposes as the Property sold or
transferred.
Section 9.06 NATURE OF BUSINESS. Neither the Borrower nor any Subsidiary
will allow any material change to be made in the character of its business.
Section 9.07 MERGERS, ETC. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property or assets to any other Person, another
Subsidiary or in connection with Section 9.03(g), except that any Subsidiary may
merge into the Borrower or into any Wholly-Owned Subsidiary so long as the
surviving Wholly-Owned Subsidiary is a Guarantor.
Section 9.08 PROCEEDS OF NOTES. The Borrower will not permit the proceeds
of the Loans to be used for any purpose other than those permitted by Section
7.07 and not more than $5,000,000 of the Loans in the aggregate will be used for
general working capital purposes. Neither the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause any
of the Loan Documents to violate Regulation T, U or X or any other regulation of
the Board of Governors of the Federal Reserve System or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.
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Section 9.09 ERISA COMPLIANCE. The Borrower will not at any time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage in,
any transaction in connection with which the Borrower, any Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of
Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to terminate,
any Plan in a manner, or take any other action with respect to any Plan, which
could result in any liability to the Borrower, any Subsidiary or any ERISA
Affiliate to the PBGC;
(c) Fail to make, or permit any Subsidiary or ERISA Affiliate to fail to
make, full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary
or any ERISA Affiliate is required to pay as contributions thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate to permit
to exist, any accumulated funding deficiency within the meaning of Section 302
of ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan maintained by
the Borrower, any Subsidiary or any ERISA Affiliate which is regulated under
Title IV of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or permit any
Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan;
(g) Acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an ERISA Affiliate with
respect to the Borrower, any Subsidiary or any ERISA Affiliate if such Person
sponsors, maintains or contributes to, or at any time in the six-year period
preceding such acquisition has sponsored, maintained, or contributed to, (1) any
Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA
under which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201
or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or permit any
Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan
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maintained to provide benefits to former employees of such entities, that may
not be terminated by such entities in their sole discretion at any time without
any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, any
Subsidiary or any ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section 9.10 SALE OR DISCOUNT OF RECEIVABLES. Neither the Borrower nor any
Subsidiary will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.
Section 9.11 RATIO OF TOTAL FUNDED DEBT TO CAPITALIZATION. The Borrower
will not permit its ratio of Total Funded Debt to Capitalization as of the end
of any fiscal quarter to be greater than .6 to 1.0.
Section 9.12 NET WORTH. The Borrower will not permit its Net Worth to be
less than $30,733,000 at any time, with such minimum amount being permanently
increased by an amount equal to 75% of positive net income of the Borrower
during each fiscal quarter beginning with the fiscal quarter ended September 30,
1998, and 100% of equity capital raised by the Borrower after the Closing Date,
provided, such minimum amount shall not be decreased as a result of any losses
or negative earnings.
Section 9.13 LEVERAGE RATIO. The Borrower will not permit its Leverage
Ratio as of the end of any fiscal quarter (calculated on a rolling four quarter
basis) to be greater than 3.0 to 1.0. For any calculation period which would
include one or more quarters prior to any Stock Purchase or any Asset Purchase
or any other future acquisition of an entity, the "rolling four quarters" shall
include the "pro forma" EBITDA of the applicable Acquired Entity for such prior
periods adjusted to reflect costs and expenses which such Acquired Entity would
have included had the Management Services Agreements between Borrower and/or any
Subsidiary and such Acquired Entity been in effect (adding back appropriate
executive salaries and non-cash charge offs relating to this transaction). As
used in this Section 9.13, "LEVERAGE RATIO" shall mean the ratio of (i) Senior
Funded Debt to (ii) EBITDA.
Section 9.14 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit its
Fixed Charge Coverage Ratio as of the end of any fiscal quarter (calculated on a
rolling four quarter basis) to be less than the ratio for the relevant periods
set forth below.
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RATIO PERIOD
1.10 to 1.00 from the Closing Date through
and including 9/30/99
1.15 to 1.00 from 10/1/99 through and
including 3/31/2000
1.20 to 1.00 from 4/1/2000 and thereafter
For purposes of this Section 9.14, "FIXED CHARGE COVERAGE RATIO" shall mean the
ratio for the relevant period of (i) EBITDA, LESS taxes payable in cash, PLUS
lease and rental expense to (ii) lease and rental expense, PLUS interest, PLUS,
during the Revolving Credit Period, one-seventh (1/7) of the then-outstanding
principal balance of the Loans, PLUS, without duplication, current maturities of
long-term debt, PLUS capital leases. For any calculation period which would
include one or more quarters prior to any Stock Purchase or any Asset Purchase
or any other future acquisition of an entity, the "rolling four quarters" shall
include the "pro forma" EBITDA of the applicable Acquired Entity for such prior
periods adjusted to reflect costs and expenses which such Acquired Entity would
have included had the Management Services Agreements between Borrower and/or any
Subsidiary and such Acquired Entity been in effect (adding back appropriate
executive salaries and non-cash charge offs relating to this transaction).
Section 9.15RATIO OF TOTAL FUNDED DEBT TO EBITDA. The Borrower will not
permit its ratio of Total Funded Debt as of the end of any fiscal quarter to
EBITDA for the four fiscal quarters ending on such date to be greater than 4.0
to 1.0. For purposes hereof, EBITDA shall be calculated as provided in Section
9.13 above.
Section 9.16 CAPITAL EXPENDITURES. Without the prior written consent of
the Majority Lenders, the Borrower will not make any expenditures for fixed or
capital assets if, after giving effect thereto, the aggregate of all such
expenditures would exceed $8,500,000 during any consecutive 12 month period.
Section 9.17 ENVIRONMENTAL MATTERS. Neither the Borrower nor any
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
Section 9.18 TRANSACTIONS WITH AFFILIATES. Except pursuant to Management
Services Agreements and the Accounts Receivable Purchase Agreements, neither the
Borrower nor any Subsidiary will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate unless such transactions are otherwise
permitted under this Agreement, are in the ordinary course of its business and
are upon
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fair and reasonable terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
Section 9.19 SUBSIDIARIES. The Borrower shall not create any additional
Subsidiaries or permit any Subsidiary to do so without prior written approval of
the Agent. In every such case, each new Subsidiary shall forthwith execute and
deliver a Guaranty Agreement and Security Instruments in favor of the Agent. The
Borrower shall not and shall not permit any Subsidiary to sell or to issue any
stock of a Subsidiary or any interest in a Special Entity. The Borrower shall
not permit any Subsidiary to issue any stock except to the Borrower or any
Guarantors and except in compliance with Section 9.03 and all of the stock of
such Subsidiary shall have been pledged to the Agent for the benefit of the
Lenders in form satisfactory to the Agent.
Section 9.20 NEGATIVE PLEDGE AGREEMENTS. Neither the Borrower nor any
Subsidiary will create, incur, assume or suffer to exist any contract, agreement
or understanding (other than this Agreement and the Security Instruments) which
in any way prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property or restricts any Subsidiary from
paying dividends to the Borrower, or which requires the consent of or notice to
other Persons in connection therewith.
Section 9.21 OTHER AGREEMENTS. Neither the Borrower nor any Subsidiary
shall make or permit any material amendment or modification of the Management
Services Agreements or the Accounts Receivables Purchase Agreements, except for
those modifications required to comply with Government Requirements.
Section 9.22 ACQUIRED ENTITIES. Notwithstanding anything to the contrary
contained herein, the Borrower will not permit any Acquired Entity to create,
incur, assume or permit to exist any Debt (other than the Indebtedness) or Lien
(other than the Lien securing the payment of the Indebtedness), make any loans,
advances or investments in any persons, or sell or transfer any of its property,
whether now owned or hereafter acquired except for Debt and Liens in favor of
the Borrower and Liens permitted by Section 9.02.
Section 9.23 AMENDMENT OF CASTLE WEST LLC AGREEMENT. Until such time as
each of the Corporate C Members has exercised its Corporate C Member's Merger
Option or CDC California has exercised the CDC Call Option, neither the Borrower
nor any Subsidiary shall make or permit any material amendment or modification
of the Limited Liability Company Agreement of Castle West without the prior
written consent of the Agent.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT. One or more of the following events shall
constitute an "EVENT OF DEFAULT":
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(a) the Borrower shall default in the payment or prepayment when due of
any principal of or interest on any Loan, or any fees or other amount payable by
it hereunder or under any Security Instrument; PROVIDED, HOWEVER, if such
default is a default on a payment of fees (other than fees under Section 2.04),
and such default shall continue unremedied for a period of 30 days; or
(b) the Borrower or any Subsidiary shall default in the payment when due
of any principal of or interest on any of its other Debt aggregating $250,000 or
more, or any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt shall occur if the effect of such event
is to cause, or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Debt (or a trustee or agent on behalf of
such holder or holders) to cause, such Debt to become due prior to its stated
maturity; or
(c) any representation, warranty or certification made or deemed made
herein or in any Security Instrument by the Borrower or any Subsidiary, or any
certificate furnished to any Lender pursuant to the provisions hereof or any
Security Instrument, shall prove to have been materially false or misleading as
of the time made or furnished in any material respect; or
(d) the Borrower shall default in the performance of any of its
obligations under Article IX or any other Article of this Agreement other than
under Article VIII; or the Borrower shall default in the performance of any of
its obligations under Article VIII or any Security Instrument (other than the
payment of amounts due which shall be governed by Section 10.01(a)) and such
default shall continue unremedied for a period of thirty (30) days after the
earlier to occur of (i) notice thereof to the Borrower by any Lender or (ii) the
Borrower otherwise becoming aware of such default; or
(e) the Borrower shall admit in writing its inability to, or be generally
unable to, pay its debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, liquidation or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of the Borrower, in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower of all or any substantial part
of its assets, or (iii) similar relief in respect of the Borrower under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the
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foregoing shall be entered and continue unstayed and in effect, for a period of
60 days; or (iv) an order for relief against the Borrower shall be entered in an
involuntary case under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of $250,000
in the aggregate shall be rendered by a court against the Borrower or any
Subsidiary and the same shall not be discharged (or provision shall not be made
for such discharge), or a stay of execution thereof shall not be (i) fully
covered by insurance owned or held by the Borrower or such Subsidiary, as
applicable, under a policy or policies which are in full force and effect, or
(ii) procured, within thirty (30) days from the date of entry thereof and the
Borrower or such Subsidiary shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal; or
(i) the Security Instruments after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms, or
cease to create a valid and perfected Lien of the priority required thereby on
any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or the Borrower shall so state in
writing; or
(j) the Borrower discontinues its usual business; or
(k) Guarantors takes, suffers or permits to exist any of the events or
conditions referred to in paragraphs (e), (f), (g) or (h) hereof or if any
provision of any guaranty agreement related thereto shall for any reason cease
to be valid and binding on Guarantors or if Guarantors shall so state in
writing; or
(l) Any Acquired Entity or any Subsidiary takes, suffers or permits to
exist any of the events or conditions referred to in paragraphs (e), (f), (g) or
(h) hereof; or
(m) Any Management Services Agreement or any Accounts Receivable Purchase
Agreement terminates or a default by the Borrower occurs thereunder; or
(n) any modification or amendment of any Management Services Agreement or
any Accounts Receivable Purchase Agreement is made that could result in a
monetary impact to the Borrower without the prior written consent of the Agent;
or
(o) A Change of Control occurs.
Section 10.02 REMEDIES.
(a) In the case of an Event of Default other than one referred to in
clauses (e), (f) or (g) of Section 10.01 or in clauses (k) and (l) to the extent
they relates to clauses (e), (f) or (g), the Agent, upon request of the Majority
Lenders, shall, by notice to the Borrower, cancel the Commitments and/or declare
the principal amount then outstanding of, and the accrued interest on, the Loans
and
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all other amounts payable by the Borrower hereunder and under the Notes
(including without limitation the payment of cash collateral to secure the LC
Exposure as provided in Section 2.10(b)) to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) In the case of the occurrence of an Event of Default referred to in
clauses (e), (f) or (g) of Section 10.01 or in clauses (k) and (l) to the extent
they relate to clauses (e), (f) or (g), the Commitments shall be automatically
canceled and the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower hereunder and under
the Notes (including without limitation the payment of cash collateral to secure
the LC Exposure as provided in Section 2.10(b)) shall become automatically
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second to accrued interest on the Notes; third to fees; fourth pro rata to
principal outstanding on the Notes and other Indebtedness; fifth to serve as
cash collateral to be held by the Agent to secure the LC Exposure; and any
excess shall be paid to the Borrower or as otherwise required by any
Governmental Requirement.
ARTICLE XI
THE AGENT
Section 11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Security Instruments with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the Security Instruments, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 11.05 and the first sentence of
Section 11.06 shall include reference to its Affiliates and its and its
Affiliates' officers, directors, employees, attorneys, accountants, experts and
agents): (i) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of the Loan Documents be a
trustee or fiduciary for any Lender; (ii) makes no representation or warranty to
any Lender and shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement, or for the value, validity, effectiveness,
genuineness, execution, effectiveness, legality, enforceability or sufficiency
of this Agreement, any Note or any other document referred to or provided for
herein or for any failure by the Borrower or any other Person (other than the
Agent) to perform any of its obligations hereunder or thereunder or for the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower, its Subsidiaries or any other
obligor or guarantor; (iii) except pursuant to Section 11.07 shall not be
required to initiate or conduct any litigation or
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collection proceedings hereunder; and (iv) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any other document
or instrument referred to or provided for herein or in connection herewith
including its own ordinary negligence, except for its own gross negligence or
willful misconduct. The Agent may employ agents, accountants, attorneys and
experts and shall not be responsible for the negligence or misconduct of any
such agents, accountants, attorneys or experts selected by it in good faith or
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such agents, accountants, attorneys or experts. The Agent may deem
and treat the payee of any Note as the holder thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Agent. The Agent is
authorized to release any collateral that is permitted to be sold or released
pursuant to the terms of the Loan Documents.
Section 11.02 RELIANCE BY AGENT. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) reasonably believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent.
Section 11.03 DEFAULTS. The Agent shall not be deemed to have knowledge of
the occurrence of a Default (other than the non-payment of principal of or
interest on Loans or of fees or failure to reimburse for Letter of Credit
drawings) unless the Agent has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a "Notice of Default."
In the event that the Agent receives such a notice of the occurrence of a
Default, the Agent shall give prompt notice thereof to the Lenders. In the event
of a payment Default, the Agent shall give each Lender prompt notice of each
such payment Default.
Section 11.04 RIGHTS AS A LENDER. With respect to its Commitments and the
Loans made by it and its participation in the issuance of Letters of Credit,
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 and generally engage in any kind
of banking, trust or other business with the Borrower (and any of its
Affiliates) as if it were not acting as the Agent, and NationsBank and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 11.05 INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY THE AGENT
AND THE ISSUING BANK RATABLY IN ACCORDANCE WITH THEIR PERCENTAGE SHARES FOR THE
INDEMNITY MATTERS AS DESCRIBED IN SECTION 12.03 TO THE EXTENT NOT INDEMNIFIED OR
REIMBURSED BY THE BORROWER UNDER SECTION 12.03, BUT WITHOUT LIMITING THE
OBLIGATIONS OF THE BORROWER UNDER SAID SECTION 12.03 AND FOR ANY AND ALL OTHER
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS,
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EXPENSES OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST THE AGENT OR THE ISSUING BANK IN ANY WAY
RELATING TO OR ARISING OUT OF: (I) THIS AGREEMENT, THE SECURITY INSTRUMENTS OR
ANY OTHER DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY, BUT EXCLUDING, UNLESS A DEFAULT HAS OCCURRED AND IS
CONTINUING, NORMAL ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE
OF ITS AGENCY DUTIES HEREUNDER OR (II) THE ENFORCEMENT OF ANY OF THE TERMS OF
THIS AGREEMENT, ANY SECURITY INSTRUMENT OR OF ANY SUCH OTHER DOCUMENTS; WHETHER
OR NOT ANY OF THE FOREGOING SPECIFIED IN THIS SECTION 11.05 ARISES FROM THE SOLE
OR CONCURRENT NEGLIGENCE OF THE AGENT OR THE ISSUING BANK, 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 AGENT OR THE ISSUING BANK.
Section 11.06 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
acknowledges and 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 Borrower and its
decision to 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 this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security
Instruments or any other document referred to or provided for herein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder and copies of the documents required to be
provided to the Agent under Article VI, 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 the Borrower (or any
of its Affiliates) which may come into the possession of the Agent or any of its
Affiliates. In this regard, each Lender acknowledges that ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
is acting in this transaction as special counsel to the Agent only, except to
the extent otherwise expressly stated in any legal opinion or any Loan Document.
Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.07 ACTION BY AGENT. Except for action or other matters
expressly required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall (i) receive
written instructions from the Majority Lenders (or all of the Lenders as
expressly required by Section 12.04) specifying the action to be taken, and (ii)
be indemnified to its satisfaction by the Lenders against any and all liability
and expenses which may be incurred by it by reason of taking or continuing to
take any such action. The instructions of the Majority Lenders (or all of the
Lenders as expressly required by Section 12.04) and any action taken or failure
to act pursuant thereto by the Agent shall be binding on all of the Lenders. If
a Default has occurred and is continuing, the Agent shall take such action with
respect to such Default as shall be directed by the Majority Lenders (or all of
the Lenders as required by Section 12.04) in the written instructions (with
indemnities) described in this Section 11.07, provided that, unless and until
the Agent shall
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have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders. In no
event, however, shall the Agent be required to take any action which exposes the
Agent to personal liability or which is contrary to this Agreement and the
Security Instruments or applicable law.
Section 11.08 RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Lenders and the Borrower, and the Agent
may be removed at any time with or without cause by the Majority Lenders. Upon
any such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Majority Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent. Upon the acceptance of such
appointment hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article XI and Section 12.03
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 the Agent.
ARTICLE XII
MISCELLANEOUS
Section 12.01 WAIVER. No failure on the part of the Agent or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any of the Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under any of the Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
Section 12.02 NOTICES. All notices and other communications provided for
herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, courier or U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or in the Loan Documents, except that for notices and other
communications to the Agent other than payment of money, the Borrower need only
send such notices and communications to the Agent care of the Houston address of
NationsBank; or, as to any party, at such other address as shall be desig nated
by such party in a notice to each other party. Except as otherwise provided in
this Agreement or in the other Loan Documents, all such communications shall be
deemed to have been duly given when transmitted, if transmitted before 1:00 p.m.
local time on a Business Day (otherwise on the next succeeding Business Day) by
telex or telecopier and evidence or confirmation of receipt is
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obtained, or personally delivered or, in the case of a mailed notice, three (3)
Business Days after the date deposited in the mails, postage prepaid, in each
case given or addressed as aforesaid.
Section 12.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC.
(a) The Borrower agrees:
(i) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of the Agent in the
administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of the Agent and the Lenders
with respect thereto) of, and in connection with the negotiation,
syndication, investigation, preparation, execution and delivery of,
recording or filing of, preservation of rights under, enforcement of, and
refinancing, renegotiation or restructuring of, the Loan Documents and any
amendment, waiver or consent relating thereto (including, without
limitation, travel, photocopy, mailing, courier, telephone and other
similar expenses of the Agent, the cost of environmental audits, surveys
and appraisals at reasonable intervals, the reasonable fees and
disbursements of counsel and other outside consultants for the Agent and,
in the case of enforcement (including, without limitation, bankruptcy and
workout matters), the reasonable fees and disbursements of counsel for the
Agent, the Issuing Bank, and any of the Lenders); and promptly reimburse
the Agent for all amounts expended, advanced or incurred by the Agent or
the Lenders to satisfy any obligation of the Borrower under this Agreement
or any Security Instrument, including without limitation, all costs and
expenses of foreclosure;
(II) TO INDEMNIFY THE AGENT, THE ISSUING BANK, AND EACH LENDER AND
EACH OF THEIR AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS ("INDEMNIFIED
PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST AND PROMPTLY UPON
DEMAND PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY
BE INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT
ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF, ARISING OUT OF
OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR PROPOSED USE BY THE BORROWER OF
THE PROCEEDS OF ANY OF THE LOANS OR LETTERS OF CREDIT, (II) THE EXECUTION,
DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS, (III) THE OPERATIONS OF
THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES, (IV) THE FAILURE OF THE
BORROWER OR ANY SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY SECURITY
INSTRUMENT OR THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (V)
ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OF THE
BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS, (VI) THE
ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO
PAY UNDER ANY LETTER OF CREDIT, OR (VII) THE PAYMENT OF A DRAWING UNDER
ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR
OTHER IMPROPER PRESENTATION OF THE MANUALLY EXECUTED DRAFT(S) AND
CERTIFICATION(S), (VIII) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED
TO RECEIVE THE PROCEEDS
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RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS OR (IX) ANY OTHER ASPECT OF
THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES INCURRED IN CONNECTION
WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION,
SUIT, PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES)
OR CLAIM AND INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE
ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY
MATTERS ARISING SOLELY BY REASON OF CLAIMS BETWEEN THE LENDERS OR ANY
LENDER AND THE AGENT OR A LENDER'S SHAREHOLDERS AGAINST THE AGENT OR
LENDER OR BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE
PART OF THE INDEMNIFIED PARTY; AND
(III) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE
INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST
RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT (I) UNDER ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR ANY OF
THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE TREATMENT OR DISPOSAL
OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II) AS A RESULT OF
THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (III) DUE
TO PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR
PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (IV) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL
OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED
BY THE BORROWER OR ANY SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH
OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS; PROVIDED,
HOWEVER, NO INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION 12.03(A)(III)
IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING FROM THE ACTS OR
OMISSIONS OF THE AGENT OR ANY LENDER DURING THE PERIOD AFTER WHICH SUCH
PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE OBTAINED POSSESSION OF SUCH
PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS
MORTGAGEE-IN-POSSESSION OR OTHERWISE).
(b) No Indemnified Party may settle any claim to be indemnified without
the consent of the indemnitor, such consent not to be unreasonably withheld;
provided, that the indemnitor may not reasonably withhold consent to any
settlement that an Indemnified Party proposes, if the indemnitor does not have
the financial ability to pay all its obligations outstanding and asserted
against the indemnitor at that time, including the maximum potential claims
against the Indemnified Party to be indemnified pursuant to this Section 12.03.
(c) In the case of any indemnification hereunder, the Agent, the Issuing
Bank or Lender, as appropriate shall give notice to the Borrower of any such
claim or demand being made against the Indemnified Party and the Borrower shall
have the non-exclusive right to join in the defense against any such claim or
demand provided that if the Borrower provides a defense, the Indemnified
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Party shall bear its own cost of defense unless there is a conflict between the
Borrower and such Indemnified Party.
(D) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED
PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT
SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY
REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
INDEMNIFIED PARTY.
(e) The Borrower's obligations under this Section 12.03 shall survive any
termination of this Agreement and the payment of the Notes and shall continue
thereafter in full force and effect.
(f) The Borrower shall pay any amounts due under this Section 12.03 within
thirty (30) days of the receipt by the Borrower of notice of the amount due.
Section 12.04 AMENDMENTS, ETC. Any provision of this Agreement or any
Security Instrument may be amended, modified or waived with the Borrower's and
the Majority Lenders' prior written consent; provided that (i) no amendment,
modification or waiver which extends the final maturity of the Loans, postpones
the scheduled payment date of any amount owing under any Loan Document,
increases the Aggregate Maximum Credit Amounts, modifies the Borrowing Base,
forgives the principal amount of any Indebtedness outstanding under this
Agreement, releases any guarantor of the Indebtedness or releases all or
substantially all of the collateral, reduces the interest rate applicable to the
Loans or the fees payable to the Lenders generally, affects Section 2.03(a),
this Section 12.04 or Section 12.06(a) or modifies the definition of "Majority
Lenders" or "Revolving Credit Termination Date" shall be effective without
consent of all Lenders; (ii) no amendment, modification or waiver which
increases the Maximum Credit Amount of any Lender shall be effective without the
consent of such Lender; and (iii) no amendment, modification or waiver which
modifies the rights, duties or obligations of the Agent shall be effective
without the consent of the Agent.
Section 12.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Section 12.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) The Borrower may not assign its rights or obligations hereunder or
under the Notes or any Letters of Credit without the prior consent of all of the
Lenders and the Agent.
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(b) Any Lender may, upon the written consent of the Agent and, if no Event
of Default has occurred and is continuing, the Borrower (which consent will not
be unreasonably withheld), assign to one or more assignees all or a portion of
its rights and obligations under this Agreement; PROVIDED, HOWEVER, that (i) any
such assignment shall be in the amount of at least $5,000,000 or such lesser
amount to which the Borrower has consented and (ii) the assignee or assignor
shall pay to the Agent a processing and recordation fee of $3,000 for each
assignment. Any such assignment will become effective upon the execution and
delivery to the Agent of the assignment and the consent of the Agent and the
Borrower, if applicable. Promptly after receipt of an executed Assignment, the
Agent shall send to the Borrower a copy of such executed Assignment. Upon
receipt of such executed Assignment, the Borrower, will, at its own expense,
execute and deliver new Notes to the assignor and/or assignee, as appropriate,
in accordance with their respective interests as they appear. Upon the
effectiveness of any assignment pursuant to this Section 12.06(b), the assignee
will become a "Lender," if not already a "Lender," for all purposes of this
Agreement and the Security Instruments. The assignor shall be relieved of its
obligations hereunder to the extent of such assignment (and if the assigning
Lender no longer holds any rights or obligations under this Agreement, such
assigning Lender shall cease to be a "Lender" hereunder except that its rights
under Sections 4.06, 5.01, 5.05 and 12.03 shall not be affected). The Agent will
prepare on the last Business Day of each month during which an assignment has
become effective pursuant to this Section 12.06(b), a new ANNEX I giving effect
to all such assignments effected during such month, and will promptly provide
the same to the Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign participations in all or any
part of such Lender's interests hereunder pursuant to this Section 12.06(c) to
any Person, PROVIDED that: (i) such Lender shall remain a "Lender" for all
purposes of this Agreement and the transferee of such participation shall not
constitute a "Lender" hereunder; and (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver of any of
the Loan Documents except to the extent such amendment or waiver would (x)
forgive any principal owing on any Indebtedness or extend the final maturity of
the Loans, (y) reduce the interest rate (other than as a result of waiving the
applicability of any post-default increases in interest rates) or fees
applicable to any of the Commitments or Loans or Letters of Credit in which such
participant is participating, or postpone the payment of any thereof, or (z)
release any guarantor of the Indebtedness or release all or substantially all of
the collateral (except as provided in the Loan Documents) supporting any of the
Commitments or Loans or Letters of Credit in which such participant is
participating. In the case of any such participation, the participant shall not
have any rights under this Agreement or any of the Security Instruments (the
participant's rights against the granting Lender in respect of such
participation to be those set forth in the agreement with such Lender creating
such participation), and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation, PROVIDED that such
participant shall be entitled to receive additional amounts under Article V on
the same basis as if it were a Lender and be indemnified under Section 12.03 as
if it were a Lender. In addition, each agreement creating any participation must
include an agreement by the participant to be bound by the provisions of Section
12.15.
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(d) The Lenders may furnish any information concerning the Borrower in the
possession of the Lenders from time to time to assignees and participants
(including prospective assignees and participants); provided that, such Persons
agree to be bound by the provisions of Section 12.15.
(e) Notwithstanding anything in this Section 12.06 to the contrary, any
Lender may assign and pledge its Notes to any Federal Reserve Bank. No such
assignment and/or pledge shall release the assigning and/or pledging Lender from
its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 12.06, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower to file a registration statement with the
SEC or to qualify the Loans under the "Blue Sky" laws of any state.
Section 12.07 INVALIDITY. In the event that any one or more of the
provisions contained in any of the Loan Documents, the Letter of Credit
Agreements, or the Letters of Credit shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of the Notes, this
Agreement or any Security Instrument.
Section 12.08 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 12.09 REFERENCES. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
Section 12.10 SURVIVAL. The obligations of the parties under Section 4.06,
Article V, and Sections 11.05 and 12.03 shall survive the repayment of the Loans
and the termination of the Commitments. To the extent that any payments on the
Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Agent's and the Lenders' Liens, security interests,
rights, powers and remedies under this Agreement and each Security Instrument
shall continue in full force and effect. In such event, each Security Instrument
shall be automatically reinstated and the Borrower shall take such action as may
be reasonably requested by the Agent and the Lenders to effect such
reinstatement.
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Section 12.11 CAPTIONS. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
Section 12.12 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(A) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED
STATES FEDERAL LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY
THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. CHAPTER 346 OF THE TEXAS
FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND
REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.
(B) SUBJECT TO SECTION 12.17, ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT AND
THE LENDERS HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS.
(C) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER OR
ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(D) THE BORROWER, THE AGENT AND EACH LENDER HEREBY (I) IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY SECURITY
INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK
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TO ENFORCE THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT, THE SECURITY INSTRUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 12.13.
Section 12.14 INTEREST. It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to it. Accordingly,
if the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the full term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.14 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14. To the extent that Chapter 303 of
the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate, such Lender elects to determine the applicable rate ceiling under
such Chapter by the indicated weekly rate ceiling from time to time in effect.
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Section 12.15 CONFIDENTIALITY. In the event that the Borrower provides to
the Agent or the Lenders written confidential information belonging to the
Borrower, if the Borrower shall denominate such information in writing as
"confidential", the Agent and the Lenders shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without the Agent or the Lenders breaching their obligation of confidence
to the Borrower, (iii) are previously known by the Agent or the Lenders from
some source other than the Borrower, (iv) are hereafter developed by the Agent
or the Lenders without using the Borrower's information, (v) are hereafter
obtained by or available to the Agent or the Lenders from a third party who owes
no obligation of confidence to the Borrower with respect to such information or
through any other means other than through disclosure by the Borrower, (vi) are
disclosed with the Borrower's consent, (vii) must be disclosed either pursuant
to any Governmental Requirement or to Persons regulating the activities of the
Agent or the Lenders, or (viii) as may be required by law or regulation or order
of any Governmental Authority in any judicial, arbitration or governmental
proceeding. Further, the Agent or a Lender may disclose any such information to
any other Lender, any independent consultants, any independent certified public
accountants, any legal counsel employed by such Person in connection with this
Agreement or any Security Instrument, including without limitation, the
enforcement or exercise of all rights and remedies thereunder, or any assignee
or participant (including prospective assignees and participants) in the Loans;
PROVIDED, HOWEVER, that the Agent or the Lenders shall receive a confidentiality
agreement from the Person to whom such information is disclosed such that said
Person shall have the same obligation to maintain the confidentiality of such
information as is imposed upon the Agent or the Lenders hereunder.
Notwithstanding anything to the contrary provided herein, this obligation of
confidence shall cease three (3) years from the date the information was
furnished, unless the Borrower requests in writing at least thirty (30) days
prior to the expiration of such three year period, to maintain the
confidentiality of such information for an additional three year period. The
Borrower waives any and all other rights it may have to confidentiality as
against the Agent and the Lenders arising by contract, agreement, statute or law
except as expressly stated in this Section 12.15.
Section 12.16 EFFECTIVENESS. This Agreement shall be effective on the
Closing Date.
Section 12.17 BINDING ARBITRATION.
(A) ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO,
INCLUDING BUT NOT LIMITED TO, THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES OR THE SECURITY INSTRUMENTS, INCLUDING ANY CLAIM OR
CONTROVERSY OF ANY KIND BASED ON OR ARISING IN TORT, SHALL BE DETERMINED BY
BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE
ARBITRATION OF COMMERCIAL DISPUTES OR JUDICIAL ARBITRATION AND MEDIATION
SERVICES, INC. ("J.A.M.S."), AND THE RULES SET FORTH IN SECTION 12.17(B) BELOW.
IN THE EVENT OF ANY INCONSISTENCY, THE RULES SET FORTH IN SECTION 12.17(B) BELOW
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THE NOTES OR ANY
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OTHER SECURITY INSTRUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OR ANY CONTROVERSY OR CLAIM TO WHICH EITHER
THE NOTES, THIS AGREEMENT OR ANY OTHER SECURITY INSTRUMENT APPLIES IN ANY COURT
HAVING JURISDICTION OVER SUCH ACTION.
(B) THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF HOUSTON, TEXAS 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, AND THE ARBITRATOR SHALL, ONLY
UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARINGS FOR AN ADDITIONAL 60 DAYS.
(C) NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO (I) LIMIT THE
APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE OR
ANY WAIVERS CONTAINED IN THIS AGREEMENT, THE NOTES, THE GUARANTY AGREEMENT OR
THE OTHER SECURITY INSTRUMENTS; (II) BE A WAIVER BY ANY LENDER OF THE PROTECTION
AFFORDED TO IT BY 12 U.S.C. SS.91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR
(III) LIMIT THE RIGHT OF ANY LENDER TO (A) EXERCISE SELF HELP REMEDIES SUCH AS,
BUT NOT LIMITED TO, SETOFF, (B) FORECLOSE AGAINST ANY COLLATERAL, WHETHER REAL
OR PERSONAL PROPERTY, OR (C) OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS, BUT NOT LIMITED, INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER. ANY LENDER MAY EXERCISE SUCH SELF HELP RIGHTS,
FORECLOSE UPON COLLATERAL, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES
BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
PURSUANT TO THE NOTES, THIS AGREEMENT OR THE OTHER SECURITY INSTRUMENTS. 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 SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING THE RESORT TO SUCH
REMEDIES.
(D) THE PROVISIONS OF THIS SECTION 12.17 SHALL SURVIVE ANY TERMINATION,
AMENDMENT, OR EXPIRATION OF THE SECURITY INSTRUMENTS. EACH PARTY AGREES TO KEEP
ALL DISPUTES AND ARBITRATION PROCEEDINGS STRICTLY CONFIDENTIAL, EXCEPT FOR
DISCLOSURES OF INFORMATION REQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS OR BY
APPLICABLE LAW OR REGULATION.
(E) NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO LIMIT THE RIGHT OF THE
BORROWER TO OBTAIN INJUNCTIVE RELIEF AGAINST ANY LENDER PRIOR TO OR DURING THE
PENDENCY OF ANY ARBITRATION PROCEEDING BASED ON VIOLATIONS BY ANY LENDER OF ANY
LENDER'S AGREEMENTS WITH THE BORROWER, SO LONG AS THE INJUNCTIVE RELIEF IS
LIMITED TO RESTRAINING ANY LENDER FROM EXERCISING ITS RIGHTS AND REMEDIES UNTIL
THE ARBITRATION PROCEEDING (IN PROCESS OR INITIATED BY THE BORROWER OR ANY
LENDER IN
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CONJUNCTION WITH THE REQUEST FOR SUCH INJUNCTIVE RELIEF) HAS BEEN COMPLETED AND
ARBITRATION AWARD HAS BEEN MADE.
Section 12.18 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE SECURITY
INSTRUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE SECURITY
INSTRUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE SECURITY INSTRUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
[SIGNATURES BEGIN ON NEXT PAGE]
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The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: CASTLE DENTAL CENTERS, INC.
By:______________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇,
Title: Vice President and Chief Executive
Officer
Address for Notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:(▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.:(▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Signature Page - 1
AGENT: NATIONSBANK, N.A.
By:____________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
Lending Office for Base Rate Loans and
Eurodollar Loans:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Signature Page - 2
LENDERS: PNC BANK
By:_____________________________
Name:
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans and Address for
Notices:
1 PNC Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: 412/768-5149
Telephone No.: 412/▇▇▇-▇▇▇▇
Attention:
Signature Page - 3
Am SOUTH
By:_________________________________
Name:
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans and Addresses for
Notices:
____________________________________
____________________________________
____________________________________
Telecopier No.:___________________
Telephone No.____________________
Attention:________________________
Signature Page - 4
BANK BOSTON, N.A.
By:___________________________________
Name:_______________________________
Title:________________________________
Lending Office for Base Rate Loans and
Eurodollar Loans and Addresses for
Notices:
____________________________________
____________________________________
____________________________________
Telecopier No.:___________________
Telephone No.____________________
Attention:________________________
Signature Page - 5